SVAP II Pasadena Crossroads, LLC v. Fitness International LLC

SVAP II Pasadena Crossroads, LLC (SVAP) (plaintiff) leased space in a Maryland shopping center to Fitness International, LLC (defendant), known as L.A. Fitness (LAF), for the operation of a fitness facility. The lease required LAF to pay monthly minimum rent plus additional rent to cover taxes, common-area expenses, and trash removal. The lease contained a force-majeure provision stating that performance of contractual obligations was excused during a force-majeure event, defined as a time in which a party’s performance was delayed or hindered because of restrictive laws or other reasons beyond the party’s control. However, the provision expressly excepted LAF’s rent obligation, stating that rent payment was not excused by any force-majeure event. In March 2020, Maryland’s governor issued an order requiring the closure of all fitness centers to the public because of the COVID-19 pandemic. Before April rent was due, LAF informed SVAP that it would not be paying because the forced closure of LAF’s fitness center frustrated the lease’s purpose and constituted a force-majeure event rendering payment under the lease impracticable. LAF did not pay rent in April, May, or June but resumed payments in July after the governor allowed fitness centers to reopen. SVAP sued LAF for breach of contract, seeking $206,644.45 in back rent. LAF filed a counterclaim, arguing that SVAP had breached multiple contractual provisions, including one stating that SVAP would own the property during the lease term free of covenants or restrictions that might impact LAF’s property use. The trial court held in LAF’s favor. SVAP appealed.