AGW Sono Partners, LLC v. Downtown Soho, LLC

In December 2018, AGW Sono Partners, LLC (the landlord) (plaintiff) or its related party agreed to lease a space to Downtown Soho LLC (Soho) (defendant) for a 10-year period beginning on January 1, 2019. Under the lease, the space was required to be used for “the operation of a restaurant and bar selling food, beverages, and related accessories, together with uses incidental thereto,” and rent was to be paid monthly. Further, Soho was required to bear the costs of complying with laws and regulations. The lease did not contain a force majeure clause and excused only the landlord’s, not Soho’s, obligations in certain situations, such as a fire or government preemption in the event of a national emergency. Soho used the space to run a busy, upscale bar and restaurant (the bistro). In January and February 2020, Soho defaulted on its rent payments, seemingly due to a seasonal slowdown in business, and cured the defaults shortly after they occurred. In March 2020, Soho defaulted again, failed to cure, and failed to make any rental payments thereafter. In March 2020 and for several months, the governor of Connecticut declared an emergency due to the COVID-19 pandemic and issued a series of executive orders. The orders initially closed bars and restaurants for in-person dining and later allowed outdoor and limited in-person dining. Takeout dining was unaffected. Soho closed the bistro from March 11 through May 27, 2020, and then briefly reopened. However, the landlord demanded that Soho vacate the premises, which it did in September 2020. The landlord sued Soho, seeking damages. In its defense, Soho claimed that its performance of the lease was excused under the impossibility or frustration-of-purpose doctrine. The trial court rejected the defenses and awarded damages. Appeals followed.