AGW Sono Partners, LLC v. Downtown Soho, LLC
273 A.3d 186
Conn.2022Background
- Downtown Soho, LLC leased a South Norwalk premises (ten‑year commercial lease for a "first‑class" restaurant); Edin Ahmetaj personally guaranteed the lease.
- Downtown Soho defaulted on rent repeatedly in early 2020 and failed to cure a March 2020 default shortly before Connecticut COVID‑19 executive orders closed or severely restricted indoor dining.
- The bistro was closed March 11–May 27, 2020, later reopened with severe capacity limits and loss of bar sales; Downtown Soho paid no rent after February 2020 and vacated by September 2020.
- Plaintiff (AGW) re‑let the premises to Sono Boil on November 30, 2020 at a lower monthly rent and granted six months free rent; AGW sued Downtown Soho and Ahmetaj for breach of lease, unjust enrichment, and breach of guarantee.
- Trial court found for AGW, rejected defendants’ impossibility and frustration defenses, and awarded AGW damages through December 2020; on appeal the Supreme Court affirmed the defenses rulings but reversed and remanded on damages due to an improper allocation of the mitigation burden.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Impossibility / Impracticability | AGW: executive orders did not make performance impossible; lease allocates compliance risk to tenant. | Downtown Soho: government shutdowns made operation commercially impracticable/impossible. | Court: No impossibility—takeout/curbside and limited outdoor/indoor service remained; lease assigned risk to tenant. |
| Frustration of Purpose | AGW: lease use not limited to indoor dining; purpose not frustrated because off‑premises service remained lawful. | Downtown Soho: lease purpose (a high‑end indoor restaurant/bar) was substantially frustrated by orders banning indoor dining. | Court: Purpose not frustrated—lease did not preclude takeout/outdoor dining; doctrine narrowly applied. |
| Burden re: mitigation of damages | AGW: breaching tenant bears burden to prove landlord failed to mitigate; trial court shifted burden improperly to AGW. | Downtown Soho: trial court reasonably reduced accrual given AGW’s sparse evidence about re‑letting negotiations. | Court: Tenant bears burden to prove landlord failed to make commercially reasonable mitigation efforts; trial court erred in shifting burden. |
| Damages award / reletting credit | AGW: should recover full contract difference less mitigation (seek full remaining lease value). | Downtown Soho: trial court within discretion to reduce damages without full proof from AGW. | Court: Remanded for new damages hearing because trial court applied wrong legal standard on mitigation. |
Key Cases Cited
- Dills v. Enfield, 210 Conn. 705 (Conn. 1989) (sets Connecticut standards for impossibility/impracticability and risk allocation)
- Gap, Inc. v. Ponte Gadea New York, LLC, 524 F. Supp. 3d 224 (S.D.N.Y. 2021) (availability of curbside pickup undermined impossibility/frustration defenses)
- In re Cinemex USA Real Estate Holdings, Inc., 627 B.R. 693 (Bankr. S.D. Fla. 2021) (doctrine of impracticability not excusing rent where reopening at reduced capacity remained possible)
- Neal‑Cooper Grain Co. v. Texas Gulf Sulphur Co., 508 F.2d 283 (7th Cir. 1974) (increased cost alone does not excuse performance)
- Lloyd v. Murphy, 25 Cal. 2d 48 (Cal. 1944) (historic example denying impossibility defense for wartime restrictions)
- O'Hara v. State, 218 Conn. 628 (Conn. 1991) (impossibility not available when contract contemplates or allocates the risk)