March 10, 2021
Penfield TK Owner LLC v. New York Style Bagels, E2020003872, (Sup. Ct. Monroe Cty., March 10, 2021),
On March 10, 2021, the Monroe County Supreme Court issued one its first notable opinions regarding Commercial Landlords ability to collect back rent owing from businesses shut down, or otherwise effected by government orders resulting from the COVID-19 Pandemic, awarding a judgment of back rent to Plaintiff and Commercial Landlord Penfield TK Owner, LLC (“Plaintiff”), represented by Richard N. Franco, Commercial Litigation Associate at Davidson Fink LLP, against Tenant New York Style Bagels, owner of tenant Bruegger’s Bagels (“Bruegger’s”), who operated out of Plaintiff’s plaza in Penfield, New York. Plaintiff Landlord sought to recover $19, 636.32 for rent which Bruegger’s did not pay from March 2020 through August of 2020. Bruegger’s argued that the rent should be abated and excused due to the effects of the Governor’s Executive Orders in response to the COVID-19 pandemic, citing the doctrine of Frustration of Purpose and Impossibility. Plaintiff argued that Bruegger’s duty to pay under the Lease was not effected by a temporary restriction, that restaurants were not fully shutdown by an government order, and that Bruegger’s is, and has been open and operational throughout the pandemic, and thus the Lease is not frustrated or impossible.
The Court rejected Bruegger’s Frustration and Impossibility defenses, holding that, contrary to Bruegger’s contentions, the purpose of the lease was neither frustrated or impossible. The Court reasoned that the Governor’s Executive Orders did not shut down restaurants, but limited them to takeout and delivery only. In what is very favorable precedent to commercial landlords seeking to recover rent, the Court also held that “[e]ven assuming, arguendo, that Defendant’s business was entirely shut down until allowed to reopen when in-person dining was permitted on June 15, 2020, a three month disruption of a five year lease does not establish frustration of purpose”. This decision creates favorable legal precedent in our county, and in the upstate region, which are many commercial clients can now cite in seeking recovery of lost rental income due to the COVID-19 pandemic.