Photo Credit: ShutterstockMy promise to you is that the phrases, “in these unprecedented times” and “new normal” will not be used in this blog post. This is not to suggest that these terms aren’t appropriate during the pandemic of COVID-19, it’s just that their overuse has pummeled any meaning and visceral impact into dust.
That caveat aside, wow, 2020 is not what I had expected. If I told you on New Year’s Eve that in three (3) months, you’d be ordered, indefinitely, to shelter in place in your home but for going out to buy subsistence living goods, almost all retail businesses would be closed, office buildings would be closed, workers sent home, all gyms and health clubs would be closed, most air travel unused, all professional sports canceled, all college students sent home mid-semester, all college sports shut down, including the Division I Men’s Basketball Tournament a/k/a “March Madness,” 30 million Americans would lose their jobs, hospitals would become overwhelmed with highly infectious patients, and our State and local governments would basically mandate how we live our everyday lives, all due to a type of flu-like virus, you would have thought I was describing a new exciting science fiction series on Netflix!
Regrettably, I am describing the world in which we all now reside.
Charles Darwin, the famous evolutionist once said, “it is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.” In a world where it is human nature to be resistant to change, we have all now been involuntarily forced into changing our daily lives. Like it or not, we all have an opportunity to turn this change into something good. We have more time to spend with family, more freedom to choose where and when we work, more time bonding with young children, more time spent outdoors, and much more.
I thought I would take the opportunity to discuss some rapidly evolving changes I have seen in the legal profession which truly highlight how lawyers and their clients adapt to certain events and circumstances.
Photo Credit: ShutterstockIf you’re an attorney with corporate clients, then you’re an attorney scrambling to understand how COVID-19 and government-imposed restrictions have impacted not only your client’s business but also the contracts into which they have entered. From business interruption insurance to missed contractual deadlines, and on to the tens of thousands of commercial tenant and landlord disputes, the Circuit Court of Cook County will be a very busy place.
For example, just recently, a consortium of mega-retailers including the Gap, Athleta, Banana Republic, Janie & Jack, and Old Navy filed a complaint in the Circuit Court of Cook County against Brookfield Properties, the nation’s largest shopping mall operator with properties across the United States. In the complaint, the plaintiffs, who are tenants in Brookfield Mall properties, ask the court for declarative relief such that:
“…the subject leases and applicable law nullified any obligation to pay rent beginning in March 2020, entitle Tenants to a refund of rent and expenses paid in advance for March 2020, and require that the Leases be modified and reformed, or rescinded, canceled, or terminated as a matter of law.”
The plaintiffs have made the following allegations in the lawsuit:
1. We entered into lease agreements with Brookfield Properties with the understanding that Brookfield would, “…provide (us) with commercial retail space suitable for the operation of retail stores selling apparel.”
2. “…the intended use of the (stores) was frustrated, became impossible, illegal, and impracticable,” based on the restrictions imposed by local authorities and Brookfield Properties.
3. Brookfield has wrongfully demanded that the stores pay rent during forced closures
4. Simultaneously, Brookfield has disputed our right to keep stores closed and to, “modify the Leases due to this radical change in circumstances.”
As you ponder the specific allegations in this complaint, it becomes clear that nearly any retail business operating from leased property that had been shut down due to government action/civil authority by virtue of being deemed non-essential by state and local governments could make similar claims. These are uncharted waters, and nobody has a playbook to deal with these complex legal issues. Whether you are a dental group that could not see patients, a chain of health clubs that were closed, or a computer repair shop reliant on walk-in customers, there is a potential case to be made that the actions of government and civil authorities and separately, the COVID-19 circumstances, were all unforeseeable and made commercial operations and obligation as contemplated in the leasing agreement impracticable.
It’s going to be a very busy Fall for commercial real estate and other litigation.
If you are a business or commercial property owner with questions about your lease agreement, please contact me at gudell@bupdlaw.com. Mr. Udell would be happy to answer your questions.
Glenn L. Udell represents the Real Estate category in Chicago as a member of the exclusive Haute Lawyer network of top attorneys. Visit his profile here.
For more, visit www.hauteliving.com/hautelawyer.
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