Critzos, II v. Marquis
287 A.3d 1281
Md. Ct. Spec. App.2023Background
- Parties executed a written commercial lease (Jan. 1, 2016–Dec. 31, 2020) for Chesapeake Brewing Company (brewery/pub) in Annapolis.
- Governor Hogan’s March 2020 COVID-19 executive orders closed in‑person dining for a period but permitted carry‑out/delivery and later limited indoor dining (50% capacity).
- The Marquises stopped paying rent in April 2020, notified the landlord they wished to terminate the lease, and vacated the premises in May 2020.
- Landlord Critzos sued for unpaid rent; at bench trial the circuit court ruled for the Marquises, finding frustration of purpose and legal impossibility.
- On appeal the Appellate Court reviewed whether the pandemic and executive orders legally excused performance under the lease and reversed the trial court.
Issues
| Issue | Plaintiff's Argument (Critzos) | Defendant's Argument (Marquises) | Held |
|---|---|---|---|
| Frustration of purpose: Did the COVID‑19 orders discharge the lease? | Doctrine not met; the lease remained operable and economic hardship alone is insufficient. | Executive orders frustrated the lease’s sole purpose (in‑person restaurant/brewery) and justified termination. | Reversed: frustration not established—lease did not restrict operation to indoor dining and carry‑out/delivery remained permitted. |
| Legal impossibility: Did law make performance illegal or objectively impossible? | Not impossible; executive orders limited but did not outlaw the lease use; takeout/delivery and later limited indoor service were lawful. | Orders made the leased activity illegal, so performance was legally impossible. | Reversed: performance was not legally impossible (distinguished Wischhusen); law did not criminalize all performance required by lease. |
| Foreseeability / sovereign act factors (Montauk factors) | Pandemic effects were foreseeable; defenses should fail on foreseeability. | The scale of the March 2020 shutdowns was unforeseeable; orders were sovereign acts outside parties’ control. | Court: level of disruption was not reasonably foreseeable; executive orders were sovereign acts and parties were not instrumental. |
Key Cases Cited
- Montauk Corp. v. Seeds, 215 Md. 491 (articulates factors for applying frustration of purpose)
- Harford Cnty. v. Town of Bel Air, 348 Md. 363 (discusses frustration and legal impossibility doctrines)
- Wischhusen v. Am. Medicinal Spirits Co., 163 Md. 565 (excuses performance where law made contracted activity criminal)
- Brohawn v. Transamerica Ins. Co., 276 Md. 396 (economic difficulty alone does not discharge contractual duties)
- AGW Sono Partners, LLC v. Downtown Soho, LLC, 273 A.3d 186 (Conn.) (held lease not excused where takeout/delivery remained permitted)
- Murphy v. Liberty Mut. Ins. Co., 478 Md. 333 (describes COVID‑19 as an unprecedented, pervasive public‑health crisis)