While virus-weary people all over the world worry about the new COVID variant and rush to get their latest, updated vaccination, the legal fallout over the last pandemic lingers on. One issue, relating to who is responsible for paying rent during construction projects, decided that closure orders issued by the government did not prevent a fitness center from continuing its construction projects. The health club’s owners must pay their rent.

Fitness International (FI) in Chatsworth, California, took over the lease of another facility in 2011. Five years later, FI amended its original lease agreement with KB Salt Lake (KB), the builder, which had required the gym to pay KB $11,850 for 11 years, with increases permitted each year. The lease also indemnified FI from losses that occurred “as a result of any inaccuracy or breach of any representation, warranty or covenant.” It also required FI to renovate and expand its current building.

The lease also contained a “force majeure” provision. According to Investopedia, this is a term for a contract clause that removes liability for “unforeseen and unavoidable catastrophes that interrupt the expected course of events and prevent participants from fulfilling their obligations.” The contract between FI and KB specifically defined these catastrophes as strikes, lockouts, loss of a building permit, riots, insurrections, war, “or other reasons of a similar or dissimilar nature…” The inability to pay is specifically excluded.

FI began its renovation in November 2019, and the project was supposed to be completed in August 2020. FI continued to pay rent during scheduled construction. In March 2020, California Governor Gavin Newsom declared a state of emergency and issued an executive order based on the COVID-19 pandemic. His order required the “immediate closure of gyms and fitness centers.” Other orders from the Los Angeles Health Department also extended the governor’s “stay at home” order. However, those who provided “services to essential infrastructure, including construction workers, were exempt from all orders.

In March 2020, FI informed KB that these emergency orders “constituted a force majeure event” that would excuse them from paying rent. KB did not agree and served FI with a “notice of potential default,” unless they paid their back rent of $336,707.63. After a period of discovery, KB moved for summary judgment in its subsequent suit for unlawful detainer that sought lease termination and recovery of its premises. Unlawful detainer is an action to evict a tenant. KB’s suit was based on its contract with FI’s specific exclusion for inability to pay rent. It also argued that the government closure orders did not pertain to construction.

KB further claimed that FI could not use “an irresistible superhuman cause,” the “doctrine of frustration of purpose,” or “the “doctrine of impossibility” to avoid its rent responsibilities. Additionally, the builder argued that there were no issues of material fact in its case against the gym. FI responded to all these arguments by saying that the COVID orders made it “illegal” for its construction to continue during the pandemic. FI claimed that the orders from Newsom and state agencies were force majeure events.

Los Angeles Superior Court Judge Melvin D. Sandvig agreed with KB Salt Lake on all issues and granted its summary judgment motion. Sandvig said KB had “established every element of its unlawful detainer cause of action.” The judge said that FI presented no evidence that showed rent did not have to be paid during the pandemic. He also rejects all of FI’s additional arguments about frustration of purpose, impossibility, and irresistible superhuman cause.

A unanimous three-justice panel from Division Seven of California’s Second District Court of Appeal affirmed Sandvig’s ruling. In an opinion written by Justice Jon L. Segal, the court affirmed Sandvig’s summary judgment, agreeing that there were no issues of material fact and that FI met all conditions of guilt that are necessary for unlawful detainer. The appeals court found no ambiguous language in the COVID closure orders and said that FI “misinterpreted and misapplied” the contract provisions between FI and KB.

Importantly, Segal stressed that no government order precluded cessation of construction. The court was also not persuaded by the fitness center’s attempt to differentiate commercial buildings from residential housing construction, which did briefly exclude commercial construction. He said that COVID closure orders did allow more than critical infrastructure projects, but pointed out that retail construction was not among them.

The opinion also faulted FI for failing to present evidence to support its arguments that paying rent would constitute a “financial drain” on the company. Fitness International LLC, also known as LA Fitness, reported revenue of $2.1 billion in 2021, according to Statistica. The appellate court also ordered FI to pay KB Salt Lake’s costs.