Landlord Not Liable for Tenant's Lost Profits Caused by Construction Work

 What Happened: For Knicks fans, the Michael Jordan’s Steakhouse in the middle of New York City’s Grand Central Station must have felt like an anomaly doomed to fail. And, ultimately, it did. The restaurant lost money, and the owners blamed it on the landlord’s long-running construction project, especially the barriers that blocked customer access and obscured the view of the Michael Jordan-branded awnings that gave the steakhouse so much of its sizzle. So, it sued the landlord for $1.98 million in lost profits.

Decision: The New York court awarded the landlord summary judgment—that is, dismissed the tenant’s case without a trial.  

Reasoning: The lease expressly and unambiguously said that the landlord wasn’t liable for the tenant’s lost profits due to the construction work. Nor did the landlord violate its lease obligation to use “reasonable efforts” to carry out the construction so as not to “unreasonably interfere with the reasonable operation of Tenant’s business in the Premises.” Although the tenant introduced photos of the “disgusting conditions” the construction created, it didn’t produce any evidence of the landlord’s failure to use “reasonable efforts” or what else it should have done to avoid those disruptions. “The fact that the construction caused disruption does not mean that the work was carelessly done,” concluded the court.

• Penny Port, LLC v. Metropolitan Transp. Auth., 2020 N.Y. Misc. LEXIS 1271, 2020 NY Slip Op 30820(U)