COVID-19 Did Not Prevent an Unlawful Detainer Action

CONTACT
Clifford R. Horner, Esq.
Patrick J. Sullivan, Esq.

Email Address: psullivan@hornerlawgroup.com

When a tenant is in default for nonpayment of rent an unlawful detainer action may be used to evict the tenant. In California, unlawful detainer actions are governed by Cal. Civ. Proc. Code § 1161 et seq. The basic elements of an unlawful detainer action for nonpayment of rent are: 1) the tenant is in possession of the premises; 2) that possession is without permission; 3) the tenant is in default for nonpayment of rent; 4) the tenant has been properly served with a written three-day notice; and 5) the default continues after the three-day notice period has elapsed.


In the recent case of Fitness International, LLC v. KB Salt Lake III, LLC (Cal. Ct. App., Sept. 26, 2023, No. B320562) 2023 WL 6230746 a court of appeal ruled that COVID-19 did not excuse a commercial tenant’s obligations to pay rent and renovate the property.


Summary:


In the recent case of Fitness International, LLC v. KB Salt Lake III, LLC (Cal. Ct. App., Sept. 26, 2023, No. B320562) 2023 WL 6230746, Fitness International, LLC (“Fitness International”) was operating an indoor fitness center when it entered into a lease with KB Salt Lake III, LLC (“KB Salt”) which required Fitness International to renovate the premises. Fitness International began construction in November 2019 and expected the construction to be completed in August 2020. In March 2020, however, the COVID-19 pandemic prompted government orders that closed indoor gyms but that allowed commercial construction to continue. Fitness International nevertheless stopped construction at the site, remained in possession of the premises, and stopped paying rent. KB Salt filed an unlawful detainer action, and the trial court granted KB Salt’s motion for summary judgment against Fitness International. Fitness International then appealed the unlawful detainer judgment.


Under the lease, Fitness International was obligated to pay rent and complete its renovation of the premises. Had COVID-19 not occurred, Fitness International would have been closed for 10 months while its premises were under construction during which time Fitness International would not have collected membership fees.


When considering Fitness International’s appeal, the court of appeal found that government orders which closed gyms did not stop construction from occurring inside the gym. Additionally, the court of appeal determined that the force majeure clause in the lease did not apply because the wording of the force majeure clause did not prevent the “act” of renovating the premises or paying rent (COVID-19 did not disrupt payment systems which then prevented Fitness International from making rent payments). The court of appeal also rejected Fitness International’s arguments about “temporary” frustration of purpose because California courts do not recognize such a doctrine. Lastly, the legal doctrine of temporary impossibility did not apply because Fitness International could not show that the cost of either continuing construction or paying rent had increased “exponentially.” Therefore, the court of appeal upheld the trial court’s unlawful detainer judgment against Fitness International and in favor of KB Salt.


Take Away:


Parties who are under contractual obligations should be careful to understand legal doctrines that may or may not excuse that party’s performance. While force majeure clauses, frustration of purpose, and temporary impossibility may seem facially applicable to a lease payment dispute, it is critical that parties understand the details of these legal doctrines before relying upon them.


By: Clifford R. Horner, Esq.

Patrick J. Sullivan, Esq.

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