Stock photo: Leon Ardho, Pexels.com
Court of Appeals finds tenant gym without defenses, despite Walz executive order
In what is apparently the first COVID-19-related eviction case to come out of the state Court of Appeals, the court Monday limited the defenses that a non-paying tenant can raise.
But it also has provided a roadmap for future litigation that may be helpful to other tenants.
In SVAP III Riverdale Commons v. Coon Rapids Gyms, the appellate court ruled that a commercial tenant may not assert the common-law doctrines of impossibility or frustration of purpose to prevent eviction for non-payment of rent.
The precedential ruling, written by Judge Matthew E. Johnson, said that regardless of the gubernatorial order closing fitness centers, the tenant could be evicted for failing to keep up with its rent.
With unlucky timing, the defendants leased the space for a gym at the Riverdale Commons shopping center in Coon Rapids beginning July 1, 2019. Gov. Tim Walz issued his order on March 16, 2020.
Coon Rapids Gyms (CRG) closed its Xperience Fitness center, but continued to have access to the space and keep its property there. It resumed limited operations in June 2020.
The monthly rent was $63,031 but CRG—whose dues revenue had sharply decreased—did not pay any rent from April through July 2020. It started to pay rent in August but did not pay the back amount owed. SVAP commenced its eviction action in September 2020. A month later, both parties moved for summary judgment.
No new remedy
CRG argued its rent obligation should be excused based on the doctrines of impossibility and frustration of purpose. It also argued that SVAP did not perform its contractual obligation to provide property to be used as a fitness center.
SVAP retorted that it had complied with its lease obligations and the doctrines could not be shown to apply.
The Anoka County District Court granted SVAP’s motion and ordered issuance of a writ of recovery requiring the tenants to vacate the property.
The court turned to Chapter 504B of Minnesota Statutes, which governs evictions for non-payment of rent. Under the statute, tenants have the option to either show that rent has been paid or to pay the back rent plus costs. The statute allows as an affirmative defense proof that the landlord increased the rent or decreased services, in retaliation for the tenants’ good faith attempts to enforce their rights under the lease or to report landlord’s violations of law.
But CRG does not identify anything in the eviction statue that would allow it to avoid eviction on the grounds of impossibility or frustration of purpose, the court said. Similarly, it did not produce any supportive caselaw. The court has only recognized common-law defenses in residential leases, Johnson noted.
The Court of Appeals declined to recognize a new remedy, Johnson continued:
“We have stated many times that ‘the task of extending existing law falls to the Supreme Court or to the Legislature, but it doesn’t fall to this court.’”
It was at this point of the opinion that the court included an interesting footnote.
“We note, however, that nothing in this opinion would prevent CRG from asserting impossibility or frustration of purpose in another type of action, such as an action by SVAP to recover damages for CRG’ s unpaid rent, an action by CRG for reformation or rescission, or an action by CRG alleging ejectment,” the court wrote.
Continuing, the court said: ”Because of the limited scope of an eviction action, a judgment entered in an eviction action ‘is not a bar to an action involving the title to the property [or] an action to maintain or enforce equitable rights therein.’”
It then concluded that SVAP did not restrict CRG from the premises and CRG did not abandon them. Walz’s emergency order did not mean that SVAP violated its contract, the court concluded.
“Nothing in the lease agreement makes SVAP responsible for the temporary changes in law arising from the emergency executive orders,” Johnson noted.
Bottom line, Johnson concluded, the District Court did not err by granting landlord’s summary judgment motion.
Judges Jeffrey M. Bryan and Jennifer L. Frisch joined Johnson in the unanimous ruling.