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Judge rules Newbury Street landlord owed nothing by tenant that couldn't pay rent after pandemic hit

You Get Nothing!

When Gov. Baker ordered restaurants shut last March, Caffe Nero missed the April rent payment for its Newbury Street outlet and asked landlord UrbanMeritage for some help because it could no longer operate a sit-down cafe.

UrbanMeritage refused and instead ordered the chain to pay up or vacate the premises tout suite. The landlord went to district court in May to evict Caffe Nero. And then it sued in superior court for all the rent it otherwise would have gotten until the coffeehouse could re-open in June - and for damages based on the value of the 12 or so years Caffe Nero had left on its lease, plus various expenses and lawyers' fees.

But in a ruling issued last month - and commented on this week by the Boston Business Journal - a Suffolk Superior Court judge told UrbanMeritage: You lose, you get nothing, good day sir!

Judge Kenneth Salinger said it was all there, black and white, clear as crystal, right in the contract UrbanMeritage had signed with Caffe Nero in 2017: To start, the contract specifically said Caffe Nero could only use the space, on which it spent $1.3 million and more than a year to outfit, to provide a sit-down coffeehouse that served "great coffee and food that customers could enjoy and linger over in a comfortable indoor space" - and that became impossible when Gov. Baker ordered indoor dining spaces shut effective March 24.

The contract, in fact, specified that Caffe Nero could use the indoor space "for no other purpose," which then lead to Salinger's second point: That Caffe Nero was protected by a legal doctrine known as "frustration of purpose," that it couldn't make its rent because of something completely out of its control: The rapid spread of a global pandemic and the governor's efforts to slow that by ordering indoor restaurant space shut. There's no doubt that Caffe Nero was frustrated in its purpose of making money through an indoor cafe when the governor has ordered such spaces shut, he wrote.

Had the lease allowed the chain for using the indoor space for something other than a sit-down cafe, that might be a horse of a different color, but the lease did not and so UrbanMeritage was wrong to try to evict the chain when it could no longer legally operate a site-down cafe.

Under the doctrine of frustration of purpose, Caffe Nero's obligation to pay rent was discharged when it was barred from letting customers drink or eat inside the leased premises, at least from March 24 to June 22, 2020. Therefore, Caffe Nero did not breach the Lease by not paying rent for this period, UMNV's notice of default was in error and not effects, and UMNV acted improperly in May when it terminated the lease for non-payment of rent in April.

Although Salinger sided with Caffe Nero, his ruling is still bittersweet for the chain: It disassembled its walk-in freezer and refrigerator, removed all the tables, chairs and other fixtures and permanently shut the location on Oct. 29.

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Comments

Urban Meritage are the same scumbags that forced out Eastern Stnadard, Island Creek Oyster Bar, and The Hawthorne from the Hotel Commonwealth.

Yes, I understand the common sardonic “imagine a landlord wanting to actually collect rent on their property” refrain, but a.) entrepreneurial commercial real estate involves risk just like operating a restaurant and b.) you can’t get blood from a stone. I’m not an MBA, but no money in means no money out, and these empty properties held by a company with a newly-minted reputation as inflexible and hostile towards tenants doesn’t seem like a winning business model.

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You know, maybe they would not have made it all back but for a place like Eastern standard it would have been booming again by summer and def by the fall. hell I was planning a big group outing there for my sons’s 21st!

You have to bet on people because a restaurant may lose revenue but people never go out of business..

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Voting closed 53

If you can't tailgate in style at Eastern Standard first?

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great coffee and food that customers could enjoy and linger over in a comfortable indoor space

that became impossible well before any lock down orders.

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Hahahahahahahahahahahahahahahhahahahahahahaahaj good one sporto!

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They should have bought landlord insurance for Covid.

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... I’d call this a victory. Caffe Nero is a big chain with shamefully vile espresso and stale pastries.
They could afford this fight.

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Voting closed 37

but I'll still take them over empty storefronts.

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.

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What's your favorite espresso place in and around Boston? I need something to look forward to.

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...even with the uber-snooty barista dude.

I have also had surprisingly good espresso drinks at the Boston Public Library cafe. It's a very pleasant place.

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Curio in Cambridge has great espresso and fantastic liège waffles. They do wine and savory snacks (rotating every week) on Fridays, too.

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I work in commercial property management and it is in the landlord's interest to work with tenants. Nothing is worse than empty space earing nothing, to prevent this, you help your tenants get through rough times. You can't get blood from stones.

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Voting closed 40

Landlords have really been cutting off their noses to spite their faces in this pandemic. I have heard so many horror stories, meanwhile, the first CARES act made sure landlords got automatic forbearance, obviously, since the former President is one of the biggest slumlords there is.

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Somebody signed a 15-year contract to sell beans and water? And another entity thought that was guaranteed money that they could recover in court?

Capitalism is great. Its participants are (expletive) arrogant and ignorant.

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