In the recent case of UNMV 205-207 Newbury, LLC v. Caffé Nero Americas, Inc., the Suffolk County Superior Court weighed in on the applicability of the frustration of purpose doctrine in connection with a commercial lease. In this specific case, the tenant ("Caffé Nero") operated a Caffé Nero restaurant under a 15-year lease that specified that the only purpose for which the tenant could utilize the leased premises was to operate a Caffé Nero location. On March 24, 2020, Governor Charlie Baker issued an executive order that prohibited any on-premises consumption of food or beverages at restaurants in response to the outbreak of the coronavirus pandemic. Caffé Nero thereafter wrote to its landlord and explained that it could not pay its rent for the month of April due to the mandatory closure of the cafe. The landlord responded by refusing to waive or reduce any of Caffé Nero's rent payments and, later, by proclaiming to terminate the lease and informing Caffé Nero that it must immediately quit and surrender the premises. Following further disputes and negotiations with the landlord regarding the amount that was owed for the unpaid rent, Caffé Nero vacated the premises in October 2020, having paid no rent for the months from April - October.
In a recent case, 275 Washington St. Corp. v. Hudson River Int'l., LLC, 465 Mass. 16 (2013), the Supreme Judicial Court ruled that a commercial landlord cannot recover post-termination damages under an indemnification clause until the original lease term expires. In 275 Washington St. Corp., the tenant vacated the premises and ceased paying rent 18 months into a 12-year lease. The lease included an indemnification clause that provided, "Tenant shall indemnify Landlord against all loss of rent and other payments which Landlord may incur by reason of such termination during the remainder of the term." After the tenant vacated, the landlord terminated the lease, and, relying on the indemnification clause, demanded that the tenant pay the landlord's lost rent over the entire 12-year lease term, in addition to the unpaid rent that accrued prior to termination of the lease. The landlord's total potential damages with interest exceeded $1,000,000.