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Did Justice Devine preview his interpretation of COVID-19 force majeure clauses?

On Monday, July 13, 2020, the Texas Supreme Court denied mandamus relief to the Republican Party of Texas in its suit to compel the City of Houston and the city-controlled Houston First Corporation to hold an in-person convention. In a per curium opinion, in which Justice Boyd did not participate and to which Justice Devine dissented, the Texas Supreme Court found that it did not have mandamus jurisdiction under the Texas Election Code. The per curium court found that a contractual duty was not necessarily a “duty imposed by law in connection with the holding of an election or a political party convention.” See https://www.txcourts.gov/media/1448816/200525.pdf

In his dissent, Justice Devine reached a different conclusion on the issue of jurisdiction. That is not the subject of this post. Instead, this brief review discusses Justice Device’s analysis on the merits – whether the force majeure provision in the governing contract would have excused performance. See https://www.txcourts.gov/media/1448817/200525d.pdf

The initial force majeure provision provided that either party could terminate the agreement “due to Force Majeure” upon notice “no later than 7 calendar days after the occurrence of the cause.” After the pandemic arrived in March, the parties amended the force majeure clause:

For the avoidance of doubt, the parties acknowledge and agree that the following occurrences are within the scope and definition of Force Majeure under Section 12 of the Agreement: Pandemics affecting Houston or preventing use and occupancy of the Facility; and orders materially and substantially restricting the size of gatherings at the Facility issued by the Mayor of the City of Houston, Governor of the State of Texas, or the President of the United States, issued within 30 days of the Event.

Primary to Justice Devine was the timing of the “occurrence” – an issue we will likely see play out in multiple down-stream appellate decisions. The dissent continued: “[T]o invoke the clause, a party needs to be able to point to a distinct, objective event that triggers the clause’s applicability, and then, ‘no later than 7 calendar days after the occurrence,’ give the other party notice of the cause.” But COVID-19 has been “an ongoing public-health concern. For purposes of the force-majeure clause, it has not been—and cannot be—boxed in as a single, distinct occurrence.’” (emphasis in original). Justice Devine stated it is “impossible to know how to comply with the contract given how the clause is written” because it remained unanswered whether the occurrence was at 100 confirmed cases or 10,000.

We’ll be watching this carefully. What counts as an occurrence – whether it be some benchmark in the pandemic or government action – will likely be hotly litigated in the months to come.