Kel Kim Corp. v. Central Markets, Inc.

Brief Fact Summary.

.  Kel Kim Corporation (Plaintiff) leased space from Central Markets, Inc. (Defendants) to be used as a roller skating rink for a term of ten years.  The lease required the Plaintiff to maintain public liability insurance policy in the aggregate of at least One Million Dollars.  When Plaintiff’s policy expired, Defendants sent a notice of default, directing that it cure within 30 days or vacate the premises.  

Synopsis of Rule of Law.

.  Impossibility of performance applies only when the destruction of the subject matter of the contract or the means of performance makes performance objectively impossible.  Further, the impossibility must be produced by an unanticipated event that could not have been foreseen or guarded against in the contract. 

Only if the force majeure clause specifically includes the event that actually prevents a party’s performance will that party be excused.

Facts.

The Plaintiffs were notified that their insurance would not be renewed, and they were unable to get the requisite insurance elsewhere as a result of the liability insurance crisis.  They eventually secured insurance capped at $500,000, as no insurer would write a policy in excess of that amount on a roller skating rink.  The Defendants sent a notice of default, directing that it cure within 30 days or vacate the premises. 

The Plaintiff brought this declaratory judgment action, urging that it should be excused from compliance because performance was impossible or because the inability to obtain insurance was within the lease’s force majeure clause.  Special term granted Defendants’ motion for summary judgment and directed Plaintiff to vacate the premises, and the Appellate division affirmed. 

Issue.

Was Plaintiff excused from performance?

Held.

No, Plaintiff was not excused from performance.  Affirmed.

·         Plaintiff’s predicament was not within the embrace of the doctrine of impossibility.  It’s inability to obtain insurance could have been foreseen and guarded against when it undertook that obligation in the lease.

·         The force majeure clause did not specifically include Plaintiff’s inability to obtain insurance. 

Dissent.

None.

Concurrence.

None.

Discussion.

Both impossibility of performance and contractual force majeure clauses excusing nonperformance are to be construed narrowly by courts