Court: Pandemic Isn't a 'Casualty' Event

What Happened: Another retail tenant has failed in its bid to use COVID-19 as an excuse for not paying rent. The tenant in this case was a New York City outlet of national retail chain The Gap, which claimed, among other things, that the pandemic and its resulting shutdowns constituted a “fire or other casualty” event rendering the premises unusable and relieving the tenant of its rent duties under the lease.

Ruling: The New York federal court disagreed and awarded summary judgment—that is, victory without trial, to the landlord.

Reasoning: The casualty clause was designed to deal with the parties’ duties, including the landlord’s duty to make repairs in the event of physical damage to the property. COVID-19 clearly wasn’t the kind of physical event that the casualty clause envisioned. There were no repairs or restorations the landlord could make that would have eliminated the pandemic and the government shutdown orders. This interpretation, the court continued, was consistent with not only the intent of the lease but other recent court rulings finding that the pandemic doesn’t qualify as a “casualty” as that term is used in a commercial lease. The court then proceeded to reject The Gap’s frustration of purpose, impossibility, failure of consideration, and mutual mistake defenses.

  • Gap Inc. v. Ponte Gadea N.Y. LLC: 2021 U.S. Dist. LEXIS 42964, 2021 WL 861121