Restaurant asks Supreme Court to intervene in COVID rent dispute

HARTFORD — Attorneys for a shuttered Norwalk restaurant argued before the Connecticut Supreme Court on Tuesday that Gov. Ned Lamont's early pandemic restrictions on indoor dining made it impossible for the owners to fulfill the obligations of their lease, freeing them from having to pay back rent.

The case is the latest asking the high court to weigh in on Lamont’s numerous executive orders related to the pandemic. Last December, the court upheld the validity of the governor’s orders related to bars and restaurants.

Lamont’s administration was not a party to the lawsuit before the justices on Tuesday, however, the case was essentially a contract dispute between the restaurant’s owners and their former South Norwalk landlord.

The restaurant, which went by the name Blackstones Bistro and The Village, faced struggles prior to the start of the pandemic in March 2020, and the owners were late paying the rent during the first two months of the year, according to court records. Days before Lamont ordered a halt to indoor dining on March 16, 2020, Blackstones closed due to a pair of employees testing positive for the virus, and remained completely closed for the next two months.

Even then, the restaurant was not earning enough money on takeout and limited-capacity dining for the owners to make their monthly $13,777 rent payments, according to court records and their attorney, Philip

Russell.

They failed to negotiate deferred or reduced rental payments, and the restaurant closed for good in September 2020. The landlord, AGW SoNo Partners, then sued for back rent and was awarded $200,308 at trial earlier this year.

During oral arguments over the appeal of that decision Tuesday, the justices questioned both sides about the restaurant’s lease, its business model and how both came to be affected by the pandemic.

“The problem with unanticipated things is that they are unanticipated, and we have laws that we try to fit into that,” Justice Gregory D’Auria said.

At one point, several of the justices appeared focused on wording in the lease requiring the operation of a “first class,” restaurant and bar, an expensive standard that Russell said became nearly impossible to sustain through takeout service. Other times, several justices pressed the attorneys to define the point at which public health orders become so onerous that it is impossible to do business.

“Where is the line? Because there was some profitability, it just wasn’t as much as you wanted,” Justice Raheem Mullins asked Russell.

Because of the high-end nature of the restaurant — where a typical check exceeded $100 — Russell argued that the governor’s original lockdown order rendered its business model impossible, and should have voided the lease. “The fact that they tried to do takeout is interesting … but not totally relevant,” he said.

Andrew Nevas, the attorney for the landlord, said the building’s owners were still required to make their regular mortgage and tax payments during the pandemic, adding that the governor’s orders did not free the restaurant’s owners from their obligations under the lease.

“There was no impediment to actual performance here,” Nevas said. “They were open for six months without paying rent.”

The justices also questioned that argument and raised the possibility that both parties were due some relief as a result of the pandemic and subsequent lockdown orders.

“The result you’re asking us to reach is that only one side suffers,” Justice Steven Ecker said.

The case raised several questions over the ability of unanticipated events to impact contracts, which courts around the country are grappling with as new lawsuits arise out of the COVID-19 pandemic. In his arguments, Nevas said a decision to essentially void the restaurant’s lease due to Lamont’s orders would have sweeping implications across the industry in Connecticut.

A judge in Massachusetts in February excused the owners of a Boston coffee shop from having to pay several months of back rent due to public health orders that severely curtailed their ability to do business.

After Blackstones Bistro closed last September, the building’s owners subsequently leased the space to Sono Boil, a crab and seafood restaurant. In court filings, Russell alleged that the new restaurant was offered reduced rent and other concessions at the time it signed its lease.