Court Holds Tenant Waived Right to Money Damages Based on Landlord’s Conduct After COVID-19 Restrictions Lifted

On January 30, 2024, Justice Andrew Borrok granted a motion to dismiss a tenant’s action for money damages brought against its landlord for unreasonably preventing it from reopening following the lifting of government restrictions surrounding COVID-19. The decision in 2M Hospitality Group, LLC v. Sahara Plaza, LLC, Index No. 653345/2023, concluded that a provision in the lease waived the tenant’s right to money damages based on the landlord’s failure to act reasonably or default under the lease. The Court also explained, in part:

It is undisputed that the Tenant has not paid rent during its closure and, to be clear, the Landlord may not be entitled to rent because it failed to provide quiet enjoyment of the space to the Tenant as required by the Lease and a constructive eviction may have occurred. This is however a shield not a sword under the circumstances. . . . Nor can the alleged violation of Administrative Code of City of NY § 22-902 based on the closure of the food hall form the predicate for a claim for money damages when the parties have expressly agreed that money damages would not be available under the circumstances. For completeness, the Court notes that perhaps the Tenant is entitled to injunctive relief to require the Landlord to provide access to the demised premises as money damages are not available.

The attorneys at Schlam Stone & Dolan frequently litigate cases involving landlord-tenant disputes and damages resulting from COVID-19 restrictions. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning such issues.