## Facts

- A landlord and a restaurant-chain tenant executed a 2006 ground lease for property in Pennsylvania.
- The tenant agreed to construct and open a restaurant on the property by March 2009 and to pay annual fixed rent plus a percentage of gross sales.
- The tenant paid fixed rent but never constructed or opened the restaurant.
- The landlord sued for breach of contract in New York Supreme Court and moved for partial summary judgment on liability.
- The lease included a force majeure clause excusing delay when performance was “prevented” by causes beyond a party’s control, excluding rent payments.
- The tenant asserted that the 2008–2009 global economic downturn and resulting financial distress prevented performance.
- The tenant supported its position primarily with an affidavit describing a stock-price decline, debt reclassification, and a decision to conserve funds to meet debt obligations rather than build the restaurant.
- Supreme Court granted partial summary judgment on liability to the landlord; the tenant appealed.

## Issues

1. Whether the landlord established a prima facie breach of contract under the governing substantive law (Pennsylvania).
2. Whether the tenant’s nonperformance was excused under the lease’s force majeure clause based on the global economic downturn and the tenant’s financial condition.

## Decision

- The Appellate Division, Third Department affirmed the order granting the landlord partial summary judgment on liability.
- The court treated the landlord’s prima facie breach showing as undisputed.
- The court held the tenant did not meet its burden to invoke force majeure because the evidence showed a financial and business-choice rationale, not an event that prevented performance.
- The court held the tenant also failed to show what steps it took to perform despite the alleged excusing event, as Pennsylvania law requires.

## Legal Principles

- Under Pennsylvania law, a party invoking a force majeure clause must prove the alleged excusing event was beyond its control and not due to its own fault or negligence.
- The party claiming force majeure bears the burden to show what actions it took to perform the contract notwithstanding the alleged event.
- A broadly worded force majeure clause requiring that performance be “prevented” is not satisfied by performance becoming economically undesirable or by a discretionary reallocation of funds.
- Financial distress associated with a general economic downturn, without specific contractual language treating it as force majeure and without proof of prevention and efforts to perform, does not excuse nonperformance.

## Conclusion

The court affirmed summary judgment on liability for the landlord because the tenant breached the lease by failing to build and open the restaurant, and the tenant’s reliance on the economic downturn and its own financial priorities did not establish force majeure or otherwise excuse nonperformance under Pennsylvania law.


Route 6 Outparcels, LLC v. Ruby Tuesday, Inc., 88 A.D.3d 1224 (N.Y. App. Div. 3d Dep’t 2011)