Warren Estis, left, and Alexander Lycoyannis. Courtesy photos The 'COVID Defenses': An Appellate Update
In their June, 2021 Landlord-Tenant column, Warren Estis and Alexander Lycoyannis predicted that as "New York proceeds slowly but surely toward a semblance of pre-pandemic normalcy…the era of COVID-related defenses to commercial rent nonpayment may soon become a thing of the past." In this column, they discuss two recent rulings from the Appellate Division, First Department which bear directly on the issue.
April 05, 2022 at 01:49 PM
6 minute read
Since the onset of the COVID-19 pandemic, we have analyzed some of the many cases involving the "COVID defenses," i.e. defenses to commercial rent nonpayment predicated in some manner on the pandemic (see our columns of Dec. 2, 2020, Feb. 2, 2021 and June 1, 2021). In our June 1, 2021 column, we stated: "As New York proceeds slowly but surely toward a semblance of pre-pandemic normalcy…the era of COVID-related defenses to commercial rent nonpayment may soon become a thing of the past."
Two recent rulings from the Appellate Division, First Department bear directly on this issue. In Valentino U.S.A., Inc., v. 693 Fifth Owner LLC (160 NYS3d 858, 2022 NY Slip Op 01431 [1st Dept. 2022]), the Appellate Division affirmed that doctrines such as frustration of purpose and impossibility of performance are, indeed, generally unavailable to relieve commercial tenants from the consequences of COVID-related rent nonpayment. However, in Schulte Roth & Zabel v. Metropolitan 919 3rd Avenue LLC, et. al. (202 AD3d 641 [1st Dept. 2022]), the court also affirmed that, above all, commercial lease terms negotiated by sophisticated parties will govern COVID-related rent disputes.
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