The Lease, the Closures, and the Half-Million-Dollar Question

The Poway Shopping Center in San Diego County had been home to an LA Fitness location since 2002. The lease between SVAP III Poway Crossings, LLC — the shopping center's owner — and Fitness International, LLC had been in place for nearly two decades, surviving multiple renewals and extensions. By the time of the events giving rise to the lawsuit, the lease had been extended through October 2025 and Fitness had occupied the premises for more than 19 years.¹

In March 2020, Governor Newsom's executive orders closed non-essential businesses across California. Gyms were among the first to close and among the last categories to fully reopen. The closures were not brief: fitness facilities faced some of the most prolonged restrictions of any commercial category throughout 2020 and into 2021, with operations permitted only intermittently and at reduced capacity for extended periods.

Beginning in April 2020, Fitness International stopped paying rent. The gym's position was straightforward in concept: the government had ordered it to close, its business was destroyed or severely curtailed, and the purpose of the lease — to operate a fitness facility — had been frustrated by forces entirely outside its control. By October 2021, the accumulated unpaid rent stood at $520,361.29.²

SVAP filed suit for breach of contract in May 2020. Fitness responded with a cross-complaint and raised 37 affirmative defenses, including five substantive legal arguments for why its rent obligation should be excused. The trial court granted SVAP's motion for summary judgment, rejecting every defense. Fitness appealed.

Five Defenses Raised. Five Defenses Rejected.

The Fitness International case is notable precisely because the tenant did not simply argue one theory and lose. It raised every available legal argument for why its rent obligation should be excused. The Court of Appeal analyzed each one and rejected each one. The result is the most comprehensive California appellate roadmap yet produced on the limits of COVID-era commercial lease defenses.

The Key Legal Distinction the Court Drew

The central reasoning threading through all five rejections is a distinction that appears simple but has significant consequences: the court separated the obligation to operate from the obligation to pay. These are two different contractual duties, and excusing one does not automatically excuse the other.

Fitness International's position rested on an intuitive but legally flawed premise — that if the government prevents you from doing the thing you leased the premises to do, you should not have to pay for the premises while you cannot use it. California courts have not accepted that premise. The closure orders prevented Fitness from conducting its business. They did not prevent Fitness from tendering a check. Fitness acknowledged in discovery that it had the funds to pay rent throughout the closure period.³

This distinction — between an inability to operate and an inability to pay — is not unique to California. Courts in other jurisdictions reached similar conclusions on COVID commercial lease disputes. But the SVAP decision gave California the clearest and most comprehensive appellate authority on the question, and it has been cited in subsequent commercial lease disputes involving Fitness International at other California locations.

The Force Majeure Provision That Didn't Help

One of the most instructive aspects of the case is what happened to the force majeure clause itself. Section 22.3 of the lease did cover restrictive laws and government orders as force majeure events — which is exactly what COVID closure orders are. At first glance, a tenant might assume this clause would provide relief.

But Section 22.3 also contained the following language: performance delays "which can be cured by the payment of money" are not deemed force majeure events. The court applied that carve-out directly to the rent obligation. Paying rent is, by definition, an obligation that can be cured by payment of money. The force majeure clause excluded itself from applying to the very obligation Fitness was trying to excuse.²

The practical lesson for every commercial tenant who believes their force majeure clause provides a pandemic safety net: the exact language of that clause determines whether it applies. Many standard commercial lease force majeure provisions — particularly older ones drafted before pandemic risk was commonly anticipated — contain similar carve-outs for monetary obligations.

What This Means for Drafting and Negotiating Commercial Leases in California

The SVAP decision is not just a post-COVID case study — it is a drafting lesson. The outcome hinged significantly on how the lease's force majeure provision was written. A different clause — one without the monetary carve-out, or one that explicitly addressed pandemic closures — might have produced a different result. In the years since, commercial lease negotiations in California have changed substantially.

How DiJulio Law Group Handles Commercial Lease Disputes in Southern California

Commercial lease disputes in the Glendale and Los Angeles area take many forms — unpaid rent, landlord breach, disagreements over permitted uses, assignment and subletting disputes, and lease terminations that one party contests. The SVAP case illustrates both how courts analyze the core doctrines and how critical the specific lease language is to every outcome.

DiJulio Law Group represents landlords and commercial tenants in commercial and residential lease disputes, contract disputes, and real estate litigation throughout Glendale, Los Angeles, and Southern California. Whether the issue is enforcing rent obligations, defending against a breach of lease claim, or advising a client on how to document a dispute from the outset, understanding the legal framework that California courts will apply is the foundation of an effective strategy.

If you are a landlord with unpaid rent or a tenant facing a lease dispute — including one that arose during or after the pandemic period — the specific language of your lease and the documentation of your financial position are the first things to examine. The framework the SVAP court applied will be the same framework your dispute is analyzed under.