90 Cal.App.5th 1179
Cal. Ct. App.2023Background
- Stone Brewing leased a Napa brewpub space from West Pueblo in a 20‑year lease (2016) that included a force majeure clause excusing performance if a party was "delayed, interrupted or prevented" from performing due to specified events.
- COVID‑19 closure and capacity orders in 2020–2021 intermittently banned or restricted on‑premises dining in Napa.
- Stone claimed the pandemic triggered the lease's force majeure clause and withheld rent for June–July 2020 and December 2020–March 2021; West Pueblo sued for unlawful detainer based on nonpayment for Dec 2020–Mar 2021.
- During discovery Stone admitted it had the financial resources to pay rent for the disputed months and even recorded profits in some months.
- The trial court granted West Pueblo summary judgment, finding the force majeure clause did not apply because Stone was not actually prevented from paying rent but chose not to.
- The Court of Appeal affirmed, holding the clause requires the force majeure event to have delayed, interrupted, or prevented timely payment (i.e., performance must have been impossible or impracticable), and Stone’s admissions defeated that claim.
Issues
| Issue | Plaintiff's Argument (Stone) | Defendant's Argument (West Pueblo) | Held |
|---|---|---|---|
| Whether COVID‑19 and closure orders invoked the lease's force majeure clause to excuse rent for Dec 2020–Mar 2021 | The pandemic "delayed, interrupted, or prevented" performance because it devastated revenues, making rent payment excused or deferred under the clause | The clause requires the force majeure event to actually delay/interfere with the act of paying; Stone admitted it had funds and thus was not prevented from paying | Held for West Pueblo: no triable issue — Stone admitted ability to pay; reduced profitability alone does not make performance impossible or impracticable |
| Whether extrinsic evidence (course of dealing, negotiations, Camp Fire) makes the clause ambiguous and supports Stone’s broader reading | Extrinsic evidence shows parties understood clause to cover events that merely made performance more difficult or expensive | Clause is unambiguous on its face; extrinsic evidence does not render it reasonably susceptible to Stone’s meaning | Held: clause unambiguous; extrinsic evidence unnecessary and does not create ambiguity |
| Whether out‑of‑state authority (e.g., Hitz) supports excusing rent where closures reduced revenue | Relies on cases finding pandemic or orders rendered tenants unable to pay so force majeure applied | Those cases are fact‑specific and often involved debtors with no realistic ability to pay; Stone’s admissions distinguish those decisions | Held: persuasive out‑of‑state cases are fact‑bound and distinguishable; California precedent requires impossibility/impracticability standard |
Key Cases Cited
- Butler v. Nepple, 54 Cal.2d 589 (Cal. 1960) (mere increase in expense does not excuse performance absent extreme or unreasonable difficulty)
- Oosten v. Hay Haulers Dairy Employee & Helpers Union, 45 Cal.2d 784 (Cal. 1955) (doctrines of impossibility and impracticability as defenses to performance)
- Wolf v. Superior Court, 114 Cal.App.4th 1343 (Cal. Ct. App. 2004) (extrinsic evidence admissible to determine whether contract language is reasonably susceptible to an interpretation)
- SVAP III Poway Crossings, LLC v. Fitness Int’l, LLC, 87 Cal.App.5th 882 (Cal. Ct. App. 2023) (pandemic‑related hardship did not show inability to pay; unprofitability alone insufficient)
- In re Hitz Restaurant Group, 616 B.R. 374 (Bankr. N.D. Ill. 2020) (court excused rent under force majeure where debtor had no realistic ability to pay; distinguished on facts)
- Intel Corp. v. Hamidi, 30 Cal.4th 1342 (Cal. 2003) (standards for de novo review of summary judgment)