Judge Sides With Tenant In First Test Of MA Pandemic Rent Rules

BOSTON — In what is believed to be one of the first key rulings on whether businesses can be excused from paying rent during the pandemic shutdown, a Massachusetts Superior Court judge ruled in favor of a tenant.

Superior Court Judge Kenneth W. Salinger ruled last week that Caffé Nero did not have to pay rent to Newbury LLC for the nearly three months it was prevented from serving customers indoors because of the state's shutdown of businesses to slow the spread of the coronavirus. The ruling also said eviction and default notices given during the timeframe were not valid.

Newbury LLC is one of the bigger Back Bay landlords and operates commercial real estate properties under the name UrbanMeritage. Caffé Nero's monthly rent at its Newbury Street location is about $13,000 per month. Salinger applied the legal doctrine "frustration of purpose," saying rent payments are excused when "performance becomes impossible through no fault of either party."

While Caffé Nero eventually closed the location in October, the ruling could give leverage to other small businesses trying to negotiate rent reductions with their landlords. "This decision might encourage landlords and tenants to try and work things out," Andrea Martin, an attorney with Burns & Levinson who represented Caffé Nero, told the Boston Globe. "It’s not going to be a clear-cut case where landlords just automatically get their rent."

In a note to clients, the law firm Prince Lobel said the ruling was narrow in focus and could be over-turned on appeal. But the law firm said the ruling is noteworthy because the provisions in the lease are found in most "well-drafted" commercial real estate leases.

Caffé Nero requested a rent reduction shortly after Gov. Charlie Baker shutdown businesses on March 24. In June, UrbanMeritage sued Caffé Nero for more than $300,000 in back rent, damages and legal fees. Caffé Nero claims the landlord "made it clear" it wanted the business to leave. It was the only one of Caffé Nero's 30 locations to close as a result of the pandemic.