Burns & Levinson won a precedential Suffolk Superior Court decision on February 8 granting partial summary judgment to Caffe Nero after its landlord, UrbanMeritage, LLC, terminated its 15-year lease, evicted the company from its Newbury Street location, and sought to recover unpaid rent and other costs. The dispute began after Governor Baker closed all Massachusetts restaurants in late March due to the Covid-19 pandemic and Caffe Nero was forced to close its 30 locations in Massachusetts for the months of April and May to comply with the order. Caffe Nero was able to come to agreeable terms – given the unprecedented circumstances – with every landlord except UrbanMeritage.
The court not only denied the landlord’s motion for summary judgment but granted Caffe Nero summary judgment by stating that the tenant’s obligation to pay rent was discharged under the doctrine of frustration of purpose while it was barred from letting customers drink or eat inside the leased premises, at least from March 24 to June 22, 2020. The court concluded that Caffe Nero did not breach its lease by not paying rent for this period and that UrbanMeritage’s notice of default was in error and not effective, and UrbanMeritage acted improperly in May when it terminated the lease for non-payment of rent in April. Importantly, the court also found that neither the force majeure provision, which addresses impossibility but not frustration of purpose, nor the independent covenant provision bars Caffe Nero’s defense.
“This is the first decision of its kind since the pandemic hit and it serves as a reminder and an incentive to landlords to do their best to negotiate with tenants and not go to drastic measures to pursue aggressive remedies from the courts,” said Burns & Levinson partner Andrea Martin, who led Caffe Nero’s litigation team. “Many landlords have been very flexible and forgiving during this extremely challenging time for restaurants and other retailers. In this case, the landlord was not willing to negotiate and sued our client, who like many other restaurants simply could not pay the rent due to the circumstances.”
In addition to Martin, who also co-chairs the firm’s Business Litigation & Dispute Resolution Group, the Burns & Levinson litigation team included partner Howard Susser and associate Michael DeIullis.
“This case is not just a win for our client Caffe Nero, but for any other restaurant facing a similar situation. We are thrilled that the court applied our arguments to the law to give the tenant a break. There are many options for restaurants and landlords to renegotiate agreements in a way that is beneficial for both parties, and we hope this decision will bring more landlords and tenants to the negotiating table as the pandemic continues to wreak havoc on the restaurant industry,” added Burns & Levinson partner Michael MacClary, who handles Caffe Nero’s real estate work as co-chair of the firm’s Real Estate Group.
About Burns & Levinson LLP
At Burns & Levinson, we provide high-level, client-centric and results-oriented legal services to our regional, national and international clients. We are a full-service law firm with over 125 lawyers in Boston, Denver, Providence, and London. Our areas of expertise include: business/finance, business litigation, divorce/family law, venture capital/emerging companies, employment, estate planning, government investigations, intellectual property, M&A/private equity, probate/trust litigation, and real estate. We partner with our clients to solve their business and personal legal issues in a collaborative, creative and cost-effective way. For more information, visit Burns & Levinson at www.burnslev.com.