275 A.3d 316
Me.2022Background:
- 55 Oak Street LLC leased the Thistle Inn (including a restaurant seating up to 99) to RDR Enterprises under a five-year commercial lease; tenant paid $2,500/month base rent plus additional rent for taxes, insurance, utilities.
- The lease included a force majeure clause covering events like acts of God and governmental restrictions but contained no language expressly allowing a “partial” excuse of performance.
- Governor’s COVID-19 executive orders closed indoor dining from March 18, 2020 through May 31, 2020; RDR closed the restaurant, largely stopped paying the restaurant portion of rent, and never offered takeout/delivery.
- On June 1, 2020 limited indoor dining was permitted (at reduced capacity), but RDR chose not to reopen citing economic nonviability.
- Oak Street issued notices of default and termination and filed a forcible entry and detainer (FED) action after RDR did not vacate; the District Court excused rent March–May and reduced rent after June 1 to 40% (denying possession); the Superior Court affirmed; Oak Street appealed to the Maine Supreme Judicial Court.
Issues:
| Issue | Plaintiff's Argument (Oak Street) | Defendant's Argument (RDR) | Held |
|---|---|---|---|
| Whether the lease’s force majeure clause can partially excuse rent after May 31, 2020 | Clause is unambiguous and does not permit a "partial" excuse; force majeure applies only where performance is prevented, not where reopening is limited or unprofitable | Pandemic and governmental restrictions qualify as force majeure and partially excuse rent obligations after restrictions eased; court may apportion rent | Held: Clause unambiguous; no partial excuse. Force majeure applied only when performance was prevented (March 18–May 31), not to profitability-based decisions after June 1; District Court erred in apportioning rent. |
| Whether Oak Street is entitled to possession (writ) based on RDR’s nonpayment after May 31, 2020 | Nonpayment of rent constitutes default and terminates the lease, entitling landlord to a writ of possession; later recovery from bond does not negate the prior breach | RDR contends force majeure excused performance or that payment from the bond cured liability; Oak Street waived possession claim at hearing | Held: Tenant’s failure to pay rent (after the period the clause could apply) justified termination; Oak Street entitled to writ of possession. Payment via bond in litigation does not retroactively cure the breach. |
Key Cases Cited
- Testa’s, Inc. v. Coopersmith, 105 A.3d 1037 (Me. 2014) (standard for when contract language is ambiguous and review of interpretation)
- Opinion of the Justices, 123 A.3d 494 (Me. 2015) (describes force majeure as unanticipated, uncontrollable events)
- Rubin v. Josephson, 478 A.2d 665 (Me. 1984) (landlord entitled to possession when tenant default terminates lease)
- Hansen v. Sunday River Skiway Corp., 726 A.2d 220 (Me. 1999) (party asserting an affirmative defense such as force majeure bears the burden of proof)
- In re Hitz Restaurant Group, 616 B.R. 374 (Bankr. N.D. Ill. 2020) (applied a partial-force-majeure apportionment; cited by trial court and characterized by Maine court as an outlier)
- In re Cinemex USA Real Est. Holdings, Inc., 627 B.R. 693 (Bankr. S.D. Fla. 2021) (refused to excuse nonperformance based on economic concerns post-pandemic; contrasted with Hitz)
