COMMERCIAL TENANT MAY NOT DEFEND A NONPAYMENT OF RENT EVICTION ACTION BASED UPON IMPOSSIBILITY OR FRUSTRATION OF PURPOSE

SV AP III Riverdale Commons, LLC (“SVAP”) v. Coon Rapids Gyms, LLC (“CRG”), 967 N.W.2d 81 (Minn.App. 2021).   In this matter, CRG did not pay rent for an extended period under its commercial lease.  During the pandemic, CRG was forced to close its doors to consumers due to the Governor’s executive order.   However, CRG continued to maintain possession of the premises during this period and stored its equipment on site.  CRG eventually began operating and paying rent, but, never paid the arrears.  SVAP filed an eviction action for non-payment of rent.  CRG raised the common law defense of impossibility and frustration of purpose due to the Governor’s executive order and that SVAP breached the lease by failing to provide a usable space for CRG’s business purpose of operating a gym (also because of the Governor’s executive order).   Although impossibility and frustration of purpose is potentially an affirmative defense for monetary damages in a breach of contract claim, rescission claim, or reformation of contract in district court, the Court of Appeals refused to recognize this affirmative defense in an eviction action for non-payment of rent, recognizing that the court in a unlawful detainer action is one of limited jurisdiction determining rightful possession and applying defenses defined by statute.  Further, the Court of Appeals held that a commercial tenant cannot avoid eviction by proving a landlord breach of the lease agreement as CRG claimed.  The proper remedy, if the tenant no longer possesses the property, is damages for the landlord’s breach and/or termination of the lease agreement and not the tenants continued possession under modified lease terms that avoid eviction.