## Facts

- A landlord leased Philadelphia retail premises to a tenant under a long-term commercial lease executed in 2004 and extended through March 31, 2025.
- In March 2020, following Pennsylvania COVID-19 executive orders temporarily closing non-life-sustaining businesses, the tenant permanently vacated the storefront and stopped paying rent.
- After June 5, 2020, retailers in Philadelphia were permitted to reopen with restrictions, but the tenant did not reopen or resume rent payments.
- The landlord sued to recover arrears and other amounts allegedly due (including base and additional rent, late fees, interest, and attorneys’ fees and costs).
- The tenant asserted six counterclaims seeking declaratory and related relief, including frustration of purpose (discharge or, alternatively, rent abatement), impossibility/impracticability (discharge or, alternatively, rent abatement), lease termination based on a purported “taking” under an eminent-domain clause, and rescission.
- The lease’s force majeure clause included “restrictive governmental laws or regulations” but expressly stated it would not relieve the tenant from the obligation to pay rent (except for commencement-date delay).
- The lease’s eminent domain clause provided for automatic termination if the entire premises was “appropriated or taken under the power of eminent domain.”

## Issues

1. Whether the tenant plausibly stated claims for frustration of purpose or impossibility/impracticability to excuse or abate rent where the lease’s force majeure clause covered government restrictions and expressly preserved the rent obligation.
2. Whether COVID-19 shutdown orders and operating restrictions constituted a lease-defined “taking” of the entire premises triggering termination under the eminent domain clause.
3. Whether rescission was available based on the tenant’s pleaded theories arising from pandemic-related restrictions.

## Decision

- The court granted the landlord’s Rule 12(b)(6) motion and dismissed all six counterclaims for failure to state a claim.
- The force majeure clause’s express allocation of risk—covering restrictive governmental regulations while preserving rent obligations—foreclosed the tenant’s frustration and impossibility/impracticability theories as pleaded.
- The executive orders were not an appropriation or eminent-domain taking of the entire premises within the meaning of the lease’s termination provision.
- Because the substantive counterclaim theories failed, rescission was also dismissed.

## Legal Principles

- Under Pennsylvania contract law, courts enforce clear contractual risk allocation in a commercial lease and will not apply common-law excuse doctrines to override an express provision preserving the tenant’s rent obligation during force majeure events.
- A force majeure clause that includes restrictive governmental regulations may cover pandemic-related shutdown orders; if the clause states rent is not excused, the tenant remains obligated to pay rent despite operational restrictions.
- Impossibility or impracticability generally does not excuse payment obligations where performance is the payment of money and the contract assigns the relevant risk to the obligor.
- Temporary regulatory restrictions on business operations do not constitute an “appropriation” or eminent-domain “taking” of leased premises absent governmental possession or an equivalent deprivation contemplated by the lease’s taking clause.

## Conclusion

The court dismissed the tenant’s COVID-19-related counterclaims, holding that the lease’s force majeure provision preserved the tenant’s duty to pay rent despite government shutdown orders and that the orders did not effect a lease-defined taking that would terminate the lease.


1600 Walnut Corp. v. Cole Haan Co. Store, 530 F. Supp. 3d 555 (E.D. Pa. 2021)