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The pandemic caused the permanent closure of Caffe Nero’s Newbury Street location, but some struggling retailers may take encouragement from a Suffolk Superior Court ruling that the coffeehouse was improperly evicted by its Back Bay landlord.

Justice Kenneth Salinger this week ruled that the cafe wasn’t responsible for paying back rent to Urban Meritage during a period that Gov. Charlie Baker ordered non-essential businesses closed from March 23 to June 22.

“The key takeaway is: A landlord has to try to negotiate in good faith when presented with a completely unforeseen circumstance,” said Caffe Nero’s attorney, Andrea Martin of Burns & Levinson.

Urban Meritage terminated the 15-year lease, began eviction proceedings and filed a non-payment of rent lawsuit after the coffeehouse fell behind on rent payments. After reopening in June, Caffe Nero offered to pay the landlord a higher percentage of sales in lieu of fixed rent, but was rebuffed. The shop closed permanently in October.

Martin successfully argued that tenants aren’t responsible for paying rent if the permissible use of their space is banned by a government order. The case centers on the “frustration of purpose” legal doctrine, which excuses tenants from their lease obligations if the property can’t be used for its intended purpose. The coffeehouse’s lease stated the space was “solely” for the operation of a Caffe Nero “and no other purpose.”

Justice Salinger agreed and awarded a partial summary judgment to Caffe Nero.

“It would have made no business sense for the parties to enter into a lease providing that Caffe Nero may only use the leased premises for one narrow purpose, but must keep paying rent even if the only permissible use is no longer allowed or possible,” the ruling stated.

The ruling could have implications for a variety of retailers who have been struggling during the COVID-19 pandemic, Martin said. Most landlords and tenants have worked on lease modifications rather than resorting to litigation. 

“My impression is that landlords and tenants are still in talks and no one is really eager to sue each other yet. This case might prevent those lawsuits,” she said.

Urban Meritage did not respond to a request for comment.

Caffe Nero Wins Landmark Back Bay Eviction Case

by Steve Adams time to read: 1 min
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