May June 20 Report

W ith hundreds of millions of people sheltering in place and entire industries grinding to a halt, many clients, customers, and suppliers may find themselves unable to fulfill their agreed-to obligations and will look to the protection of a force majeure provision in their contracts. Force majeure clauses excuse non-performance as a result of unforeseen and extraordinary circumstances. Black’s Law Dictionary defines “force majeure” as “an event or effect that can be neither anticipated nor controlled.” 1 Consistent with these requirements, a party may not invoke a force majeure provision if its non-performance could have been foreseen or mitigated, and non-performing clients should be aware that they will bear the burden of showing that the event was beyond their control and without their fault or negligence. Furthermore, force majeure only applies when the event makes performance impossible, not merely impracticable. There is no common law force majeure protection, though the defenses of impossibility and impracticability provide similar relief. 2 Thus, whether there is force majeure protection depends on the terms of the parties’ contract. Some contracts’ force majeure provisions specifically apply to events like epidemics, pandemics, or quarantines. However, even where contracts specifically cover such occurrences, clients should be mindful that they may be required to satisfy notice provisions in order to invoke force majeure terms: “[F]ailure to give proper notice is fatal to a defense based upon a force majeure clause requiring notice.” 3 Other force majeure provisions that do not specifically cover epidemics or pandemics, may protect against “acts of God.” In Ohio, an “act of God” means “any irresistible disaster, the result of natural causes, such as earthquakes, violent storms, lightning and unprecedented floods.” 4 The prototypical act of God, is “something in opposition to the act of man.” 5 A party attempting to avoid the invocation of a force majeure provision may argue that govern- ment-mandated closures do not qualify as acts of God. In Phelps v. School District No. 109, Wayne County , the court observed that “the closing of a school by the order of a school board or a board of health is not the act of God, however prudent and necessary it may have been to make such order,” and therefore the school was not excused from honoring its teachers’ contracts while the school was closed during an influenza outbreak. 6 Similarly, in Dewey v. Union School District , the court ruled that closure of a school because of a small pox outbreak while of “strong expediency,” was not of “abso- lute necessity,” and therefore the teachers must still be paid during the closure because, to excuse performance, “observance of the contract . . . [must] be [made] impossible by act of God,” not just that “there existed urgent and satisfactory reasons for stopping the schools.” 7 In contrast, in Sandry v. Brooklyn School District No. 78 of Williams County , the court found a school closure due to an influenza epidemic was “by compulsion and by act of God,” and therefore the district was not required to pay bus drivers during the period when schools were closed. 8 Importantly, even if a pandemic is an act of God, “in a situ- ation where two causes contribute to an injury, one cause which is defendant’s negligence and the other cause, an ‘Act of God,’ liability shall attach to defendant if plaintiff’s damage would not have happened but for defendant’s negligence.” 9 This area will likely be litigated as the impacts of COVID-19 continue to reverberate across the economy. One clear take- away is that to protect clients, attorneys should be sure to include epidemics, pandemics, and quarantines as force majeure events in future contracts. Medora Akers is a civil litigation attorney at Taft. 1 Force Majeure, Black’s Law Dictionary (11th ed. 2019). 2 See Haverhill Glen, L.L.C. v. Eric Petroleum Corp., 2016-Ohio-8030, ¶ 26, 67 N.E.3d 845, 850 (7th Dist.). 3 See, e.g.,Three RP Ltd. P’ship v. Dick’s Sporting Goods, Inc., No. CIV-18-003-RAW, 2019 WL 573413, at *6 (E.D. Okla. Feb. 12, 2019) (quoting Sabine Corp. v. ONGWestern, Inc., 725 F. Supp. 1157, 1168 (W.D. Okla. 1989) (internal quotation marks omitted)). 4 Triplett v. Cowan Lake State Park, Ct. of Cl. No. 2003-08932-AD, 2003-Ohio-7132, ¶ 4. 5 Monarch Ins. Co. of Ohio v. Electrosonics, Div. of Airadio Corp., No. 77AP-872, 1978WL 216935, at *5 (Ohio Ct.App. June 27, 1978). 6 302 Ill. 193, 134 N.E. 312 (1922) (quoting Gear v. Gray, 10 Ind.App. 428, 37 N.E. 1059, 1061 (1894)). 7 43 Mich. 480, 483, 5 N.W. 646, 647 (1880). 8 47 N.D. 444, 182 N.W. 689, 692 (1921) (Robinson, J., concurring). 9 Davis v. Ohio Dep’t of Transp., Dist. No. 9, Ct. of Cl., 2004-Ohio-3583, ¶ 11. By Medora Akers COVID-19 COMPELS A CLOSER LOOK www.CincyBar.org May/June 2020 CBA REPORT l 15 Feature Article