For folks who cannot get enough of the argument that force majeure has excused anyone from performing an unpleasant or difficult contract obligation, you’ll want to watch Pacific Collective LLC v. Exxon Mobil, filed in Los Angeles County Superior Court, in Case No. 20-STCV-13294.
In that litigation, the Plaintiff California retail developer (Pacific) claims the state’s coronavirus lockdown was an “act of God” preventing it from completing a $4.2 million property acquisition with the seller. Apparently, Pacific Collective invoked a force majeure contract clause on March 30, a day before the acquisition was to close. It claimed the closing couldn’t be held without defying Los Angeles County “stay at home orders.” (That’s interesting, considering that funds today are wire transferred and closing document recording is digital. Then, there’s DocuSign.) Three days later, Exxon Mobil Corp. notified the developer it would cancel the sale and keep the company’s deposit, according to the lawsuit.
There’s more. The plaintiff also wants the court to issue an injunction preventing owner Exxon Mobil Corp. from selling to any other buyers. Until when? Until Pacific Collective gets the mood? In some jurisdictions, Sellers are required to mitigate damages in a contract dispute, and one method is to try to locate a substitute buyer for the defaulting Buyer. (In the sale of goods covered by the UCC, that’s known as “cover;” but this isn’t personal property at issue.)
Add to your reading list a piece in the April 17 New Yorker magazine piece by Carolyn Kormann, who interviews a disease ecologist hunting down viruses among cave-dwelling bats, blaming human activity for our exposure to deadly novel viruses. Last I looked, the article was here: https://www.newyorker.com/culture/annals-of-inquiry/the-pandemic-is-not-a-natural-disaster?utm_source=onsite-share&utm_medium=email&utm_campaign=onsite-share&utm_brand=the-new-yorker.
Eventually, an appellate court’s going to take on sorting out whether force majeure clauses cover horrible events like Covid-19 merely because the event is horrible – irrespective of what, or who, promoted the horror. If states don’t sort this out at the appellate, there will be more lawsuits over contract performance than any trial court system efficiently can manage. Then you’ll witness overwhelming forces at work!
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