Dan Miller Quoted by Daily Journal in Victory for Developer Based on Equitable Doctrines Applicable to Current Pandemic

Dan Miller Quoted by Daily Journal in Victory for Developer Based on Equitable Doctrines Applicable to Current Pandemic

As reported in the Daily Journal on April 10, 2020, an unusual arbitration ruling during the 2008 recession may help businesses now.

During the 2008 recession, Miller Barondess partner Dan Miller represented a real estate developer who was unable to sell the requisite number of condominium units resulting in a default under the loan agreement. Facing an imminent foreclosure sale, Dan obtained a preliminary injunction preventing the lender from foreclosing on a large condominium project based on impossibility of performance due to the economic crisis. The unforeseen and unprecedented credit crisis made it ‘impossible’ for the real estate developer to obtain financing necessary to sell units in a new building in Long Beach. So the developer prevailed despite being in clear breach of contract. [Arbitration Ruling 04/24/2009]  [Andrews’ Bank & Lender Liability Litigation Reporter 07/20/2009]

“There will be a lot more people invoking these doctrines and I think with a lot more success,” Miller said.  “Unless you have a situation like this, like a pandemic or a truly unforeseeable crisis, these doctrines are rarely invoked.”  

For the first time since that ruling, these equitable doctrines such as impossibility/impracticability and frustration of purpose could have wide applicability again due to the current pandemic. “This can apply in multiple contexts. If you’re a movie theater who has been forced to close down you could potentially go to your landlord and say, “Look, paying rent is impossible. The whole point of the lease was for me to operate a movie theater and that’s become impossible because people aren’t allowed to gather and my business is non-essential and I’ve been shutdown by these government orders and I can’t operate so I can’t pay my rent,” said Miller.

To learn more about Equitable Doctrines of Contract Performance in a Pandemic, click here.