## Facts

- A/R Retail L.L.C. (landlord) and Hugo Boss Retail, Inc. (tenant) were parties to a long-term commercial lease for luxury retail space at The Shops at Columbus Circle in Manhattan.
- Hugo Boss leased the premises as a high-traffic, high-visibility location for retail operations.
- The lease included a force majeure clause addressing delays caused by, among other things, government orders, but it did not excuse payment of rent.
- During the COVID-19 pandemic, executive orders required closure of non-essential retail; the mall closed and later reopened with occupancy and hours restrictions.
- Hugo Boss stopped paying rent after May 2020.
- The landlord sued for unpaid rent and attorneys’ fees.
- Hugo Boss asserted defenses and counterclaims seeking rescission/reformation (frustration of purpose; impossibility), termination under a “casualty” clause, rent abatement under a “hazard” provision, and recovery of rent allegedly overpaid during the period it could not operate as originally contemplated.

## Issues

1. Whether COVID-19 shutdown orders and reduced foot traffic frustrated the lease’s purpose so as to justify rescission or reformation.
2. Whether pandemic restrictions made the tenant’s performance (including rent payment) impossible or impracticable under New York law.
3. Whether the pandemic qualified as a “fire or other casualty” rendering the premises “wholly or substantially untenantable,” permitting termination under the lease.
4. Whether the pandemic qualified as a “hazard” under the lease, entitling the tenant to rent abatement.
5. Whether the lease’s force majeure clause and other provisions allocated the relevant risks so that rent remained due despite government orders.

## Decision

- The court granted the landlord’s motion for summary judgment in substantial part.
- The court held that COVID-19-related restrictions did not excuse the tenant’s rent obligations and did not support rescission or reformation based on frustration of purpose or impossibility.
- The court held the pandemic was not a “casualty” under the lease and did not render the premises “wholly or substantially untenantable” within the meaning of the casualty provision.
- The court held the pandemic was not a “hazard” under the lease that triggered rent abatement.
- The court did not resolve the tenant’s separate claim concerning alleged pre-pandemic rent overcharges because it was not included in the landlord’s motion.

## Legal Principles

- Courts enforce the parties’ allocation of risk in a negotiated commercial lease; equitable doctrines generally do not override express rent-payment terms.
- A force majeure clause may excuse delays in certain obligations when specified events occur, but it does not excuse rent where the lease requires rent to be paid regardless.
- Frustration of purpose is narrowly applied and requires that an unforeseen event substantially destroy the contract’s fundamental purpose; reduced profitability or reduced customer traffic ordinarily is insufficient.
- Impossibility requires objective impossibility, not economic hardship; temporary regulatory restrictions that do not destroy the subject matter or permanently bar the contemplated use typically do not excuse performance.
- “Casualty” provisions in commercial leases are commonly construed to require physical damage to the premises; public health conditions and access restrictions that do not physically alter the premises do not qualify.
- “Hazard” provisions are interpreted in context and generally address specified physical or environmental conditions, not general public health emergencies.

## Conclusion

The court enforced the lease’s rent obligation and rejected COVID-19-based defenses and counterclaims where the premises suffered no physical damage, retail use was only temporarily restricted, and the lease’s provisions—particularly the force majeure clause—did not provide rent forgiveness.


A/R Retail L.L.C. v. Hugo Boss Retail, Inc., 72 Misc. 3d 627, 149 N.Y.S.3d 808 (Sup. Ct. N.Y. Cnty. 2021)