Rock-Climbing: Frustrated or Impossible After COVID-19?
CBMS wrote about common defenses to contract performance in the wake of COVID-19 on April 30, 2020. A new lawsuit in the Federal Court for the Eastern District of New York shows how two of these defenses can be used in practice. Brooklyn Boulders, a rock-climbing gym under construction in Williamsburg, Brooklyn, is suing its landlords to get out of a lease, claiming that the coronavirus (also known as “COVID-19”) pandemic and related Executive Orders frustrated the purpose of the lease and made performance impossible. The lawsuit, filed May 6, 2020, is an example of the type of contract litigation that is likely to fill courts’ dockets in the months to come. Its outcome will be instructive for commercial landlords and tenants alike.
Brooklyn Boulders leased 30,000 square feet in Williamsburg in November 2018. The owners of Brooklyn Boulders intended to build and operate a specialized climbing facility with a café and co-working space. Construction on the space was ongoing when the COVID-19 pandemic hit New York City and Governor Cuomo issued Executive Orders requiring gyms to close and non-essential construction to cease.
Brooklyn Boulders tried to negotiate a termination of the lease with the landlords. When the landlords rejected the gym’s termination, the gym filed suit in the Federal Court for the Eastern District of New York seeking a declaration that the termination of the lease was lawful under the doctrines of frustration of purpose and impossibility of performance. In other words, the gym claims that the COVID-19 pandemic, and Governor Cuomo’s subsequent Executive Orders, destroyed the reason for entering the lease and made performance of operating a group fitness facility impossible. The gym owners claim that even when gyms are permitted to reopen, they will be required to follow social distancing guidelines which will substantially reduce their expected capacity and their profits.
This lawsuit shows how a common-law doctrine can be used to try to avoid liability for contractual obligations that have become difficult or impossible to fulfill in the wake of COVID-19. Commercial tenants may increasingly resort to litigating similar doctrines as social distancing requirements persist and rent obligations continue to be owed.
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