What Happened: A gym that had to temporarily cease business operations due to state COVID-19 shutdown orders asked its landlord for a rent abatement. Negotiations with the property manager ensued during which the tenant made and the landlord accepted 20 percent payments. Ultimately, the negotiations resulted in no written agreement. When the lease expired, the landlord sued the tenant and guarantor for the $126,339 unpaid rent balance and other costs. The tenant insisted that the sides had reached an oral agreement to abate the rent. 

Ruling: The California court awarded the landlord $201,015.

Reasoning: The court ruled that there was no oral agreement to modify the lease citing the following evidence: 

• The lease expressly banned oral lease modifications while further requiring all modifications to be in writing and signed by both parties;
• The “pre-negotiation” term sheet that the manager emailed the tenant stated that “No negotiations will be binding on either party unless and until the parties document and execute an agreement fully memorializing the product of their negotiations,” and that “No agreement will be based on oral communications”;
• The manager made it clear that it deemed the tenant’s 20 percent payments as “good faith” payments rather than rent payments;
• The landlord continued to send the tenant billing statements not crediting the 20 percent payments as rent and showing the growing balance;
• The manager “regularly confirmed” that she needed upper management approval of the terms of any agreement reached on modifying the lease terms; and
• The landlord never received anything of value in consideration from the tenant for agreeing to abate the rent. 

The court also rejected the tenant’s force majeure and frustration of purpose defenses, reasoning that the government shutdown orders didn’t “destroy the value of a decades’ long lease agreement under which the gym had been operating for many years.”

• Bella Terra Assocs., LLC v. NPC FS, Inc., 2025 Cal. Super. LEXIS 67878, 2025 LX 569492