As a reminder, a “force majeure” event is one that excuses a party’s legal obligation to perform an obligation under a contract. We wrote on it in an earlier post on the pandemic. A contract must contain a force majeure provision in order for the Court to consider this defense – otherwise, the Court will analyze the parties’ defense under the more difficult theory of “impossibility of performance.” This post shares how federal courts around the country have ruled on the pandemic.
1. COVID-19 will not excuse a party’s failures to comply with deadlines or properly plead their case. Judges have criticized litigants that have attempted to use the pandemic for leverage in litigation while failing to comply with court rules or pleading requirements.
In the context of a service contract, a party claimed it was entitled to a return of deposits due to a force majeure clause. A federal court in Hawaii denied the claim on summary judgment, noting that the contract was silent about the deposits in the event of force majeure and plaintiff had failed to allege a claim for breach of contract. NetOne, Inc. v. Panache Destination Mgmt., 2020 U.S. Dist. LEXIS 99089, at *9 (D. Haw. June 5, 2020).
In a federal case in Florida, a tenant (Kirkland) failed to pay rent and the landlord brought suit. Kirkland argued that the pandemic excused its failure to pay rent. The Court rejected Kirkland’s argument, holding that Kirkland had failed to properly link the force majeure defense to its inability to pay rent. Palm Springs Mile Assocs. v. Kirkland's Stores, Inc., 2020 U.S. Dist. LEXIS 163880, at *6-7 (S.D. Fla. Sep. 8, 2020).
In the context of a business reorganization, a bankruptcy court held that while the pandemic would explain impacts on the Debtor’s business, it would not excuse a late filing. In re Seven Stars on the Hudson Corp., 618 B.R. 333 (Bankr. S.D. Fla. 2020).
2. Courts carefully review the facts of the case and narrowly construe force majeure provisions. Recognizing that the pandemic is a unique event, Courts have carefully parsed the facts and legal arguments to arrive at decisions the parties may not have contemplated or briefed.
In the context of a restaurant-tenant, an Illinois bankruptcy court held that the Pandemic clearly constituted a force majeure event and partially excused the restaurant’s obligation to pay rent. Even though the parties had not made this specific argument, the Court reduced the Debtor’s obligation in proportion to its reduced ability to generate revenue, noting that take-out and curbside options remained available. In re Hitz Rest. Grp., 616 B.R. 374, 379 (Bankr. N.D. Ill. 2020).
In an Ohio federal case, a defendant argued that impacts from the pandemic were foreseeable on March 12, 2020, before state restrictions were in place. Because the defendant did not include a force majeure provision in its settlement agreement, the Court could not consider whether the “force majeure” defense was available and the defendant could not meet the high burden of proof required for the defense of “impossibility of performance.” Belk v. Le Chaperon Rouge Co., U.S. Dist. LEXIS 117985, at *32 (N.D. Ohio July 6, 2020).
In a Louisiana federal suit, a landlord attempted to evict Bed Bath and Beyond for its failure to pay rent. The Court eventually held that the Pandemic excused the tenant’s failure to pay rent. The Court carefully reviewed the factual background and lease, granting Bed Bath and Beyond relief because it had attempted to cure and the lease default did not prejudice the landlord. Clearview v. Bed Bath & Beyond, Inc., 2020 U.S. Dist. LEXIS 160078, at *24 (E.D. La. Sep. 2, 2020).
Contact the experienced construction attorneys at Hirschler with any force majeure questions.
As president of Hirschler and head of the firm's litigation section, Courtney knows how to lead people and projects to a successful outcome.
Leveraging deep experience in the construction industry, Courtney advises public and ...
Kelly’s practice focuses on construction law, commercial and product liability law, with an emphasis on dispute resolution—including mediation, arbitration, jury and bench trials in state and federal court. She routinely ...
Nate fully engages in each case and shoulders his clients’ needs. Communication, efficiency and careful judgment define his practice. In every case, he investigates competing claims to thoroughly understand their strengths ...
A professional engineer (P.E.) and an experienced lawyer, Webb began practicing at Hirschler following four years of work as a consulting engineer. His multidisciplinary practice focuses on general business and corporate law ...
SubscribeSubscribe to Hirschler by Email
- Tools to Protect Construction Businesses from the Effects of a Third Party Bankruptcy
- The Death of “Pay-When-Paid” in Virginia: Truth or Rumor?
- A New Trap for Unwary Contractors: Holding Payment on One Project for Claims in Another
- What Employers Need To Know About the OSHA Emergency Temporary Standard on COVID-19 Vaccination and Testing
- Kelly Bundy Appointed to the Virginia Safety and Health Codes Board
- Jaime Wisegarver Outlines Labor Department Guidance on Travel Time Pay in Construction Executive
- New Defense to Joint Liability Available to Contractors
- What Employers Need to Know About Virginia’s New Overtime Wage Act
- OSHA Increases Amounts of Civil Penalties for 2021
- Have Force Majeure Defenses Based on COVID-19 Been Successful This Year?
- Mechanic's Liens
- Occupational Safety and Health Act (OSHA)
- COVID-19, Coronavirus Outbreak
- Dispute Resolution
- Government Contracts
- Department of Labor (DOL)
- Little Miller Act
- Workforce Development
- Department of Professional and Occupational Regulation (DPOR)
- Miller Act
- Fair Labor Standards Act
- Lien Waivers
- Virginia Employment Commission (VEC)
- Force Majeure
- Virginia Workers' Compensation Commission
- Joint Checks
- Unjust Enrichment
- Uniform Statewide Building Code
- Change Orders
- May 2023
- May 2022
- March 2022
- November 2021
- August 2021
- June 2021
- April 2021
- January 2021
- October 2020
- August 2020
- July 2020
- June 2020
- May 2020
- April 2020
- March 2020
- February 2020
- January 2020
- November 2019
- August 2019
- June 2019
- April 2019
- February 2019
- January 2019
- December 2018
- October 2018
- September 2018
- June 2018
- May 2018
- April 2018
- March 2018
- February 2018
- November 2017
- October 2017
- September 2017
- July 2017
- June 2017
- May 2017
- April 2017
- March 2017
- February 2017
- January 2017
- December 2016
- November 2016
- October 2016