On December 8, 2021, Justice Walker of the Eighth Judicial District Commercial Division issued a decision in Amherst II UE LLC v. Fitness Intl., LLC, 2021 NY Slip Op. 51289(U), holding that the COVID-19 pandemic did not render a lease valueless and so rejected a frustration of purpose defense, explaining:
The doctrine of frustration of purpose has been limited to instances where a virtually cataclysmic, wholly unforeseeable event renders the contract valueless to one party. Defendant cannot meet this extremely high standard, because the Pandemic did not render the Lease valueless. The Closure Orders and Ongoing Restrictions were temporary, Defendant occupied the Premises for in excess of six years prior to the Pandemic, and Defendant is currently operating at full capacity. For the reasons aptly stated by the court in 35 East 75th Street Corp. v Christian Louboutin LLC (2020 NY Slip Op 34063(U) [Sup Ct, NY Co 2020]), the effects of the Pandemic may not be used to invoke the doctrine of frustration of purpose:
This is not a case where the retail space defendant leased no longer exists, nor is it even prohibited from selling its products. Instead, defendant’s business model of attracting street traffic is no longer profitable because there are dramatically fewer people walking around due to the pandemic. But market changes happen all the time. Sometimes businesses become more desirable (such as the stores near the newly-completed Second Avenue subway stops) and other times less so (such as the value of taxi medallions with the rise of ride-share apps). But unforeseen economic forces, even the horrendous effects of a deadly virus, do not automatically permit the Court to simply rip up a contract signed between two sophisticated parties.
(Internal quotations and citations omitted) (emphasis added).