Page 182 - FDCC_InsightsSpecialIssue23

Jeffrey D. Van Volkenburg
Litigation Trends
By Jeffrey D. Van Volkenburg
Discussion concerning force majeure issues prior to 2020 usually focused on natural disasters and other events that, while significant and serious, were somewhat isolated to a particular geographic region or involved some type of one-time event that led to temporary change in operating conditions. As the dust begins to settle and we begin to take stock of where we are, versus where we were in late 2019 and early 2020, the concept of “force majeure” has obtained new vitality within the law of contract interpretation.
“In the parlance of contract law, ‘force majeure’ (superior or irresistible force) generally means that a party to a contract is excused of its obligations because some unforeseen event beyond that party’s control has prevented performance of those obligations or made performance excessively burdensome.”24 “A claim of ‘force majeure’ is equivalent to an affirmative defense.”25 Force majeure appears to have been first referenced in United States case law as early as 1817 in Beverly v. Brook26 and Levy v. Stewart.27 If we fast forward to 2020, litigation involving assertions of force majeure expanded dramatically. A quick search revealed close to 250 reported decisions across the country (state appellate and federal courts only) that discussed application of force majeure in the context of COVID related issues.
Courts have been relatively uniform in noting that application of a force majeure clause, usually in the context of commercial contracts, is a question of contract interpretation. See, Gap Inc. v. Ponte Gadea New York LLC, 524 F. Supp. 3d 224, 234 (S.D.N.Y. 2021) (“In this case, Gap has not framed a genuine issue of material fact in connection with its frustration defense. First, to the extent Gap contends that New York State’s blanket prohibition on non-essential business between March 22 and June 8, 2020, frustrated the purpose of the Lease, the possibility of just such a prohibition was referenced in the Lease itself, defeating any claim that the possibility was “wholly unforeseeable.” (Lease § 1.7(H) (defining a “Force Majeure Event” to mean “a strike or other labor trouble, fire or other casualty, governmental preemption of priorities or other controls in connection with a national or other public emergency or shortages of fuel, supplies or labor resulting therefrom, or any other cause beyond Tenant’s reasonable control.”) (emphasis added).
The Gap, Inc. opinion, and other writers on the subject, confirm that most pre-2020 commercial contracts did not maintain force majeure clauses that addressed pandemic related issues.28 Consequently, courts have been asked to shoehorn the pandemic-related claims into more standard language, which usually listed some, or all, of the following: floods, fire, acts of God, embargoes, war, governmental laws, regulations or restrictions, riots and strikes, labor shutdowns and insurrections.29 The near uniform reliance on mostly boilerplate language prior to 2020 led to significant issues as the pandemic impacted contractual relationships.
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