IN THE



## A RIZONA 

## C OURT OF 

## A PPEALS

D IVISION O NE

VEREIT REAL ESTATE, LP, et al.
, Plaintiff s /Appell ees,

v.

FITNESS INTERNATIONAL, LLC , Defendant/Appell ant

.

No. 1 CA

- CV 22

- 0402

Appeal from the Superior Court in Maricopa County

No. CV2020

- 016464 The Honorable Timothy J. Thomason , Judge

AFFIRMED

COUNSEL

Titus Brueckner Spitler & Shelts PLC , Scottsdale By Bradley S. Shelts, Casey O. Miller Co

- Counsel for Defendant /Appellant

Klehr Harrison Harvey Branzburg LLP, Philadelphia, Penns y lvania By A. Grant Phelan Co

- Counsel for Defendant/Appellant

Ballard Spahr LLP
, Phoenix By Craig Solomon Ganz , Katherine E. Anderson Sanchez, Mitchell Turbenson C ounsel for Plaintiffs

/Appellee s FILED 4-11-2023VEREIT REAL ESTATE, et al. v. FITNESS INT'L Opinion of the Court

2 OPINION
Presiding Judge Samuel A. Thumma delivered the opinion of the Court, in which Judge Cynthia J. Bailey and Vice Chief Judge David B. Gass joined.

T H U M M A , Judge:

¶1 Th is appeal addresses whether defendant Fitness International, LLC ( T enant ) is excused from making rent and other payments to its landlords under long

- term commercial leases when the State of Arizona restricted use of the propert ies because of the COVID

- 19 p andemic. B ecause the applicable force majeure provisions and common law doctrines
, notably the frustration of purpose doctrine, relied on by Tenant do not excuse those payment obligations , the grant of summary judgment for plaintiffs is affirmed.

FACTS AND PROCEDURAL HISTORY

¶2 Tenant operates hundreds of fitness centers worldwide, three of which are at issue here

. The properties Tenant leases in Avondale and Marana are owned by plaintiff VEREIT Real Estate, LP , and are governed by 15

- year commercial leases ent ered in 2004 and 2011 respectively. The
proper t y Tenant leases in Glendale is owned by plaintiff Cole LA Glendale AZ , LLC, and was governed by a long

- term commercial lease from 2009 to September 30, 2020. Plaintiffs VEREIT and Cole (collectively
, Landlords) became assignees of the leases after they purchased the proper ties

. ¶3 T he three commercial leases are comprehensive . The y each are about 45 pages long, with nearly identical relevant terms
, and are governed by Arizona law. Under th e leases, i n return for use of the premises, Tenant had to pay rent and other charges

. The l andlord

- t enant relationship appears to have continued without significant strife before the COVID

- 19 pandemic.

¶4 On March 17, 2020, Tenant notified Landlords that it had closed its North American fitness centers because of COVID

. That written notice stated Tenant viewed its payment obligations under the leases as excused, citing various theories
, and asked Landlords to excuse those payments

. The record does not contain any written response by Landlords. O n March 20, 2020, Arizona Governor Doug Ducey ordered that all indoorVEREIT REAL ESTATE, et al. v. FITNESS INT'L Opinion of the Court

3 gyms and fitness clubs be closed to the public because of COVID

. Th at closure continued through May 17, 2020, an d after a brief suspension, from June 29 , 2020 through August 26, 2020. After that time, o ccupancy was limited until early March 2021. Tenant did not make lease payments f or April , May, June and August 2020 , totaling more than $900,000

. ¶5 After making written payment demands
, Landlords filed this action for payment

. Tenant ’s answer claimed many affirmative defenses, including that the force majeure provision in the Marana lease excused its payment obligation s for that property, as well as frustration of purpose
, impracticability and impossibility

. After some discovery, Landlords moved for summary judgment , arguing Tenant’s affirmative defenses did not apply

. Along with opposing Landlords’ motion, Tenant cross

- moved for partial su mmary judgment, arguing the force majeure provision of the Marana l ease excused Tenant’s payment obligations for that property

. Tenant argued that “ [it] is entitled to summary judgment as a matter of law under the Marana Lease and no additional facts can alter this outcome .”

¶6 After full briefing and oral argument, the superior court conclud ed that Tenant’s affirmative defenses were inapplicable , Landlords had shown no genuine dispute as to any material fact and Landlords were entitled to judgment as a matter of law

. T he court granted Landlords’ motion for summary judgment and denied Tenant’s partial cross

- motion for summary judgment

. After entry of final ju dgment, Ariz. R. Civ. P. 54(c ) (2023), 1 Tenant timely appealed. This court has appellate jurisdiction under Article 6, Section 9, of the Arizona Constitution and Arizona Revised Statutes (A.R.S.) sections 12

- 120.21(A)(1) and

- 2101(A)(1 ).

DISCUSSION

¶7 This court reviews de novo the grant of summary judgment, “viewing the evidence and reasonable inferences in the light most favorable to the party opposing the motion,” Andrews v. Blake , 205 Ariz. 236, 240 ¶ 12 (2003), to determine “whether any genuine issues of material fact exist,” Brookover v. Roberts Enter s ., Inc. , 215 Ariz. 52, 55 ¶ 8 (App. 2007). This court will affirm the grant of summary judgment if it is correct for any reason

. Hawkins v. State , 183 Ariz. 100, 103 (App. 1995) (citation o mitted)

. The court reviews Tenant’s various arguments in turn, at times consolidating the arguments it makes

.

1 Absent material revisions after the relevant dates, statutes and rules cited refer to the current version unless otherwise indicated.VEREIT REAL ESTATE, et al. v. FITNESS INT'L Opinion of the Court

4 I. The Force Majeure Provisions Did Not Excuse Tenant’s Payment Obligations

. ¶8 The Avondale and Glendale leases contain the following force majeure provisions:

If either party is delayed or hindered in or prevented from the performance of any act required hereunder because of governmental delays, strikes, lockouts, inability to procure labor or materials, failure of power, lack of availability of primary utility service, restrictive laws, riots, insurrection, war, acts of terrorism, fire, severe inclement weather such as snow or ice or other casualty or other reason of a similar or diss imilar nature beyond the reasonable control of the party delayed, financial inability excepted (any “Force Majeure Event”), performance of such act shall be excused for the period of the Force Majeure Event, provided, however, the party so delayed or preve nted from performing shall diligently proceed to make good faith efforts to remedy the cause of delay and to resume performance. Delays or failures to perform resulting from lack of funds or which can be cured by the payment of money shall not be Force Maj eure Events. Nothing in this Section shall excuse Tenant from the prompt payment of any rental or other charges required of Tenant hereunder.

¶9 The Marana lease contains a nearly identical provision
, but does not include the highlighted sentence that is incl uded in the Av ondale and Glendale leases

. Tenant concedes that the force majeure provision in the Avondale and Glendale leases do es not excuse its payment obligations

. Tenant argues , however, that the force majeure provision in the Marana lease did excuse its payment obligations for that property. No Arizona appellate decision addresses the effect of a force majeure provision , with four decisions only mentioning the phrase. See Russo v. Barger , 239 Ariz. 100, 102 ¶ 6 (App. 2016) (mentioning a purported translation of a force majeure ruling by a Mexican court); Tech. Constr., Inc. v

. City of Kingman , 229 Ariz. 564, 567 ¶ 7 (App. 2012) (“’The Court further notes that this Agreement does
not conta in a force majeure clause.’”) (quoting superior court’s ruling) ;VEREIT REAL ESTATE, et al. v. FITNESS INT'L Opinion of the Court

5 Stuart v. City of Scottsdale
, 1 CA

- CV 18

- 0154 , 2020 WL 7230239 at *1

– 2 ¶ 7 (Ariz. App. Dec. 8, 2020) (mem. dec.) (quoting an amendment to a contract that included a force majeure provision); Austin Ranch, L

. L

. C

. v. West Surprise Landowners Grp., L

. L

. C

. , 1 CA

- CV 08

- 0837 , 2010 WL 363830 at * 6 ¶19

– 21 ( Ariz. App. Feb 2, 2010) (mem. dec.) (finding arbitrator exceeded their authority by, among other things, rewriting an agreement to include

a force majeure provision)

. ¶10 I n general, a force majeure provision allows contracting parties to allocate the risk of unforesee able events beyond their control

.
“ F orce majeure clauses in commercial contracts are designed to excuse parties from performance of a contract when an unforeseeable event beyond their control has frustrated the parties ’ contractual purpose, made it impossible for one or both of the parties to perform or made it impracticable to do so.” Lisa C. Thompson, 11 A RIZ

. L EGAL F ORMS , B US

. O RG

. LLC & P ART

. § 14:17.50 (4th ed. 2022). “[F]orce majeure clauses may bar some common law defenses to performance so care must be taken in considering the use and language in a force majeure clause as it will control .” Id. A f orce majeure defense can only a ppl y whe n a contract contains a force majeure provision; force majeure is not a common law defense applicable when a contract lacks a force majeure provision. See, e.g. , Robert W. Emerson & Zachary R. Hunt, Franchisees, Consumers, and Employees : Choice and Arbitration , 13 Wm. & Mary Bus. L. Rev. 487, 559 & n. 600 (2022) (“There is no right to force majeure protection in common law; such provisions are creations of contract and are thus considered on their own precise terms ;” adding “ [i] f no force majeure clause exists, either party might be able to invoke the common law doctrine of frustration.”) (citation omitted). C ourt s typically use general contract interpretation rules when applying force majeure provisions

. See InterPetrol Bermuda Ltd. v. Kai ser Aluminum Int ’ l Corp. , 719 F.2d 992, 998

– 99 ( 9th Cir. 1983).

¶11 Under Arizona law, “ t he interpretation of a contract is a question of law, which this court reviews de novo.” Grosvenor Holdings, L.C. v. Figueroa , 222 Ariz. 588, 593 ¶ 9 (App. 2009). “A general principle of contract law is that when parties bind themselves by a lawful contrac t [,] the terms of which are clear and unambiguous, a court must give effect to the contract as written.” Grubb & Ellis Mgmt. Serv s ., Inc. v. 407417 B.C., L.L.C. , 213 Ariz. 83, 86 ¶ 12 (App. 2006) (citations omitted)

. These common law contract interpretatio n rules drive the analysis here.

¶12 T he force majeure provision of the Marana lease states that “d elays or failures to perform resulting from lack of funds or which can be cured by the payment of money shall not be Force Majeure Events. ”VEREIT REAL ESTATE, et al. v. FITNESS INT'L Opinion of the Court

6 Landlords argue that this sentence me ans the force majeure provision does
not excus e Tenant’s missed payments because those obligations could be cured by the payment of money. Tenant argues that this sentence does not apply to such payments, because it “is simply stating what shall not be a Force Majeure Event under the Lease []

-- financial distress or something that can be cured by paying money.” Contrary to Tenant’s argument, however, the phrases “ lack of funds ” and “ payment of money ” modify “[d] elays or failures

. ” Th us, under the provision, specified “[d]elays or failures”

-- those “resulting from lack of funds or which can be cured by the payment of money ”

-- are not F orce M ajeure E vents.
¶13 E ach party argues that the plain language of the provision provid es the answer. “Force Majeure Events” is a defined term, and such
an event must cause the delay, hindrance or prevention of the performance of an act otherwise required by the lease. The f irst sentence of the force majeure provision quoted above states that the “act” required by the lease must be “delayed or hindered in or prevented from” being performed “because of” a F orce M ajeure E vent , not that the “act” required by the lease is a F orce M ajeure E vent itself

. For example, “inclement weather ” mi ght delay one party from performing an act required by the lease and, in that
event , because the required act was “delayed . . . because of” a Force Majeure Event, the provision could excuse the performance of th e required
act . The delay
, hinderance or prevention , however, is not a Force Majeure Event itself . I nstead, a delay , hindrance or prevention is caused by (or the result or consequence of ) the F orce M ajeure E vent. T enant has not shown why this court should depart from the plain meani ng and amend the provision to provide otherwise. See Emps. Mut. Cas. Co. v. DGG & CAR, Inc. , 218 Ariz. 262, 267 ¶ 24 (2008) (“ When the provisions of the contract are plain and unambiguous upon their face

. . . the court will not pervert or do violence to the language used ”) (citation omitted)

. ¶14 Taking a broader look
, and recognizing that “ Force Majeure Events ” is a defined term, the provision generally provides that delays, hindrances and preventions of a requi red act “because of” F orce M ajeure E vents can excuse performance of that required act

. But t he last sentence of the provision in the Marana lease ( starting with “Delays or failures . . .”) provides an exception to that general rule

. A s the superior court held
, the
sentence provides that Force Majeure Events do not excuse delays or failures that can be cured by the payment of money

. Because the failure to make lease payments can be cured by the payment of money, it is not excused by the F orce M ajeure E vent, here the restrictive laws that required the gyms to close

. Thus, the court did not err in concluding the force majeure provision of the Marana lease did not excuse Tenant’s payments

.VEREIT REAL ESTATE, et al. v. FITNESS INT'L Opinion of the Court

7 ¶15 In addressing the “ N othing in this Section

. . . ” s entence that is not included in the Marana lease , the superior court concluded the lack of that language did not mean “that lease should be construed differently than the Avondale and the Glendale leases

. ” Instead, the court noted the additional sentence in the other leases was a “belt and suspenders” approach. Tenant argues the court erred in reaching that conclusion because Landlords “never took the position and never presented evidence that the ‘nothing in this Section’ provision was just ‘belt and suspenders.’” In pressing this argument, Tenant misconstrues both Landlords’ arguments and the court’s ruling.

¶16 Citing Landlords’ reply to support their motion for summary judgment, Tenant asserts that “Landlords did not argue that the force majeure p rovision alone did not excuse payment of rent under the Marana Lease.” But Landlords argued that the force majeure provision

-- stating that “ failures to perform . . . which can be cured by the payment of money ”

are not Force Majeure Events

-- meant that T enant’s “ failure to pay amounts owed under the Leases can be cured by the payment of money and, thus, the force majeure provisions do not apply.” The superior court agreed, stating that “ the language that ‘failures to perform . . . which can be cured by th e payment of money shall not be Force Majeure Events’ demonstrates an intention that payment of rent was not excused by any ‘restrictive laws,’” contrary to Tenant ’s arguments

. Thus, the court’s ruling responded to, and accounted for
, the parties’ arguments

. ¶17 The cases cited by Tenant to argue that the superior court’s ruling “was entirely improper” because it did not track the parties’ arguments do not apply. The unpublished decision in Bessler v. City of Tempe granted a motion for re consideration when both parties agreed that they had not argued a theory the court relied on

. See CV

- 19

- 04610

- PHX

- MTL , 2021 WL 4122247 at *3 (D. Ariz. Sept. 9, 2021) (mem. dec.) . And the other case cited by Tenant in arguing error, construed a federal loca l rule that does not apply. See Motorola, Inc. v. J.B. Rodgers Mech. Contractors
, 215 F.R.D. 581, 583 (D. Ariz. 2003). Here, the superior court explained its reasoning and why it disagreed with Tenant’s argument. In doing so, the court was
not improperly a dopting a n undisclosed theory. In raising the argument that the other two leases provide context to the third lease, Tenant has not shown the court erred or acted improperly in rejecting th at argument. Tenant has thus shown no error, reversible or otherwis e.
¶18 Tenant has not shown that the force majeure provision in the Marana lease allow ed it to suspend payments. Tenant has not shown that it was “delayed or hindered in or prevented from” paying the requiredVEREIT REAL ESTATE, et al. v. FITNESS INT'L Opinion of the Court

8 amounts under th at lease. The act that Tenant seeks to be excuse d from is payment under th at lease. Based on the plain language of the lease, payment would be excused only if Tenant could show that it was “delayed, hindered in or prevented from” performing that act. Tenant made no such showing. To the c ontrary, in responding to discovery, Tenant declared that it “ has not claimed any financial inability to pay rent during the closure periods due to the government mandated closures .” Tenant also objected to producing any financial inf ormation , asserting such documents and information were irrelevant

. ¶19 Finally, Tenant argues that the relevant performance is not the obligation to pay but
, instead
, is “[ Tenant ’ s ] right to operate the Premises.” Tenant contends that
, because it was hindered in the performance of this right, its obligations to make payments under the lease are excuse d . But under the lease terms, only the act delayed, hindered or prevented from being performed is excused. To conclude otherwise would imp ermissibly modify the lease by “add[ing] something to the contract which the parties have not put there.” Emps. Mut. Cas. Co. , 218 Ariz. at 267 ¶ 24 (citation omitted)

. Tenant has shown no error in the court concluding the force majeure provision in the Marana lease did not excuse Tenant from its payment obligation s

.
II. Frustration of Purpose Did Not Excuse Tenant ’s Payment Obligations.

¶20 Apart from the force majeure provision , Tenant argues its payment obligations were susp ended or terminated by the frustration of purpose doctrine

. Generally, “ f rustration of purpose deals with ‘the problem that arises when a change in circumstances makes one party’s performance virtually worthless to the other.’” 7200 Scottsdale Rd. Gen. Par tners v. Kuhn Farm Mach

. , Inc. , 184 Ariz. 341, 345 (App. 1995) (quoting R ESTATEMENT (S ECOND ) OF C ONTRACTS (R ESTATEMENT ) § 265 (19 81 ) ). Frustration of purpose “ is, in appropriate circumstances, a justification for nonperformance of a contract and is recognized in Arizona.” Mobile Home Ests

. , Inc. v. Levitt Mobile Home Sys

. , Inc. , 118 Ariz. 219, 222 (1978)

. To establish frustration of performance , a party must sho w

First, “the purpose that is frustrated must have been a principal purpose of that party” and must have been so to the understanding of both parties. Second, “the frustration must be substantial

. . . ; [it] must be so severe that it is not to be regarded as within the risks assumed

.VEREIT REAL ESTATE, et al. v. FITNESS INT'L Opinion of the Court

9 . . under the contract.” Third, “the non

occurrence of the frustrating event must have been a basic assumption.

. . . . ” Finally, relief will not be granted if it may be i nferred from either the language of the contract or the circumstances that the risk of the frustrating occurrence, or the loss caused thereby, should properly be placed on the party seeking relief.

7200 Scottsdale Rd. Gen

. Partners , 184 Ariz. at 348 ( quoti ng and citing R ESTATEMENT § § 261 cmt. b & c and 265 cmt. a & b )

. To be “substantial,” the “value of the counter

- performance to be rendered by the promisee must be totally or nearly totally destroyed.” Id. at 349 (citation omitted).

A. Tenant Waived I ts Tempo rary Frustration of Purpose Argument.

¶21 T enant argues that this court should adopt temporary frustration of purpose and apply it here

. Although not yet recognized in Arizona, the R ESTATEMENT provides that “frustration of purpose may be only temporary,” yielding a suspension (not termination) of contract obligations. See R ESTATEMENT § 269 cmt. a

. This case provides no reason for this court to decide whether to adopt temporary frustration of purpose.

¶22 As an alternative basis for its ruling, t he superior court stated that “ [e]ven if [it] were to entertain [Tenant ] ’s invitation to adopt a

‘ temporary frustration ’ rule, the obligation to pay rent would only be

‘ suspended ’ while the frustration existed

. ” B ecause the alleged temporary frustration of purpose occurred in 2020 , the court continued, “ there has been ample time for [Tenant] to pay the payments it did not pay in 2020.” Tenant, however, had failed to make those paym ents.
¶23 Although Tenant argue s that the COVID

- based restrictions

were a temporary frustration of purpose, it does not challenge in its opening brief the court’s conclusion that its rental obligations would only be “suspended”

– - not discharged altogether

-- while the temporary frustration of purpose existed

. Thus, Tenant waived the issue. See Robert Schalkenbach Found

. v. Lincoln Found

. , Inc. , 208 Ariz. 176, 180 ¶ 17 (2004). In its reply, Tenant tries to raise the issue, argui ng that “suspended” did not mean that “the rent obligation for the Closure Periods merely deferred to a later date

. ” By not raising this argument in its opening brief, however, it is waived

. See N

elson v. Rice , 198 Ariz. 563, 567 ¶ 11 n.3 (App. 2000).VEREIT REAL ESTATE, et al. v. FITNESS INT'L Opinion of the Court

10 B. Complete Frustration of Purpose Did Not Excuse Tenant’s Payment Obligations.

¶24 At oral argument in this court, Tenant conceded that it was not seeking relief under R ESTATEMENT § 265
, which defines complete frustration of purpose

. Even absent that concession
, Tenant could not prevail on a complete frustration of purpose theory. Tenant has not shown that a four

- month restriction imposed on 15

- year commercial lease s constitutes such a substantial frustration of purpose that the resulting value of leasing the premises is “totally or nearly totally destroyed.” 7200 Scottsdale Rd. Gen

. Partners , 184 Ariz. at 349; s ee also 9795 Perry Highway Mgmt

. , LLC v. Bernard , 273 A.3d 1098, 1106

– 07 (Pa. Super. C t . 2022) (78

- da y closure during a six

- year l ease was not a substantial frustration that would allow the frustration of purpose doctrine to excuse performance)

. ¶25 Both complete and temporary f rustration of purpose also fail because “the language of the contract” allocated the risk to Tenant when restri ctive laws limited performance

. 7200 Scottsdale Rd. Gen

. Partners , 184 Ariz. at 348. Under the doctrine of frustration of purpose, p erformance is excused only if the risk of loss was not “placed on the party seeking relief.” Id. B oth the Avondale and Glendale leases have explicit clauses stating that

“ [n]othing in this [force majeure provision] shall excuse Tenant from the prompt payment of any rental or other cha r ges required of Tenant hereunder.” As explained above, the Marana l e ase requires Tenant to pay
rent even during force majeure events. T hese clauses provide that T enant bears the risk of loss and is still required to make lease payments during such events. See Lisa C. Thompson, 11 A RIZ

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. § 14:17.50 (4th ed. 2022)

. Because Tenant bears the risk of loss under the lease provisions , it s performance cannot be excused under the doctrine of frustration of purpose

. See 7200 Scottsdale Rd. Gen

. Partners , 184 Ariz. at 348.

III. Tenant Waived Any Fa ilure of Consideration Argument.

¶26 In the superior court
, Landlord s argue d they provided sufficient consideration and Tenant did not dispute that argument. Tenant has thus waived any failure of consideration argument. See Odom v. Farmers Ins. Co. of Ariz. , 216 Ariz. 530, 535 ¶ 18 (App. 2007). Even a bsent waiver, Tenant has not show n there was a failure of consideration when it received
access to and used each of the properties for years before any COVID

related r estriction s and after those restriction s were lifted.VEREIT REAL ESTATE, et al. v. FITNESS INT'L Opinion of the Court

11 IV. Tenant Has Not Shown that Perform ance of Its Obligations W as Impracticable

. ¶27 Tenant argues that the superior court erred in rejecting its impossibility and impracticability arguments. Arizona and the R ESTATEMENT treat these concepts as the single defense of impracticality of performance. See 7200 Scottsdale Rd. Gen

. Partners , 184 Ariz. at 345 n.2; R ESTATEMENT § 261 cmt. d. Unlike frustration of purpose , which requires a showing that the counter party’s performance has become worthless, impracticability requires a party to show a substantial impediment to their performance

. 7200 Scottsdale Rd. Gen

. Partners , 184 Ariz. at 345. The R ESTATEMENT approach , adopted in Arizona , provides that “[w]here, after a contract is made, a party ’ s performance is made impracticable . . . h is duty to render that performance is discharged, unless the language or the circumstances indicate the contrary.” See R ESTATEMENT § 261 ; 7200 Scottsdale Rd. Gen

. Partners , 184 Ariz. at 345

. “Performance may be impracticable because extreme and unreasonabl e difficulty, expense, injury, or loss to one of the parties will be involved.” R ESTATEMENT § 261 cmt

. d. T he R ESTATEMENT recognizes temporary impracticability, see i d. § 269
, but that limited aspect of the doctrine has not yet been adopted in Arizona.

¶28 At oral argument in this court, Tenant conceded that it w as not arguing complete impracticability under R ESTATEMENT § 261. On the record presented, Tenant has not shown its payments were impractic able
, under either a complete or temporary impract icability theory. W hen the relevant duty is to pay an amount specified in the contract
, the party seeking the doctrine’s protection must show the impractica lity of making that payment. 7200 Scottsdale Rd. Gen. Partners , 184 Ariz. at 3 45

– 46. As discussed above, Tenant has not shown that making the payment was impracticable

. Tenant argues that performance was impracticable because the COVID restrictions caused an “ excessive and unwarranted financial burden.” But, as discussed above, Tenant provide d no evidence supporting that argument, objected to providing its financial information during discovery and argued such information was ir relevant

. On this record, Tenant has shown no error in the superior court addressing impracticability. See id.

V. Tenant Has Not Shown a Breach of the Covenants and Warranties

. ¶29 Tenant argues that rent was excused , claiming Landlords committed the first material breac hes of express covenants and warranties in the leases

. Section 2.2(b) of each lease states that “Landlord shall have good and insurable title . . . free and clear of all tenancies, covenants,VEREIT REAL ESTATE, et al. v. FITNESS INT'L Opinion of the Court

12 conditions, restrictions, encumbrances . . . which might in any manner to any extent prevent or adversely affect the use of the Premises by Tenant.” Tenant, however, has shown no breach of these provisions. Although , as Tenant argues, the restrictive laws did affect Tenant’s use of the property
, Tenant has not shown that such restriction resulted from a defect in Landlords ’ title. Nor do Tenant’s arguments about other paragraph s in that section expand the language of Section 2.2(b) beyond Landlord s’ requirement to have good and insurable title. And Tenant has not shown Landlords did not continuously have good and insurable title in compliance with these provisions.

¶30 Next Tenant argues that rent was excused based on Landlord s’ fail ure to provide quiet enjoyment
, violating the express terms of the lease and the common law

. Sectio n 22.1 of each lease states that “Tenant shall quietly enjoy the Building for the Term without hindrance or interruption by Landlord or any other person or persons lawfully or equitably claiming by, through or under Landlord, subject to the terms of this Lease. ” Tenants’ arguments fail because both the covenant in Section 22.1 and the common law covenant require acts by Landlord s or someone acting on be half of Landlord s that prevent the quiet enjoyme nt of the land

. See Thompson v. Harris
, 9 Ariz. App. 341, 345 (1969) ( “a covenant of quiet enjoyment . . . does not extend to acts of other tenants or third parties unless such acts are performed on behalf of the landlord or by one claiming paramount title ” )

. Tenant has failed to show th e COVID

- related restriction s imposed by Arizona ’s Governor were done by Landlord s or someone acting o n the Landlords ’ behalf or claiming paramount title

. ¶31 Finally , citing Section 1.9, entitled “Initial Uses” or “Primary Uses,” Tenant argues that Landlord s breached the express guarantee that “Tenant shall have the right throughout the Term to operate the Building, or any portion there of , for uses permitted under this Lease.” The leases, however, document the rights and responsibilities of Landlord s and Tenant about uses Landlord s would allow for the properties

. Although Section 1.9 specifies those authorized uses, it does not guarantee that Tenant could use the properties for those purposes. For example, the leases provide that Tenant must meet the licensing requirements to operate its business. If Tenant failed to do so and could not operate as a fitness center, it could not bring claims against Landlords because of that restr iction. Additionally, as Landlords noted at oral argument in this court , Section 8.2 allows T enant to “change the use of the building to any alternate legal use” not otherwise restricted. Th us, Tenant has not shown Landlords breach ed the permissible uses provisions of the leases

.VEREIT REAL ESTATE, et al. v. FITNESS INT'L Opinion of the Court

13 VI. Tenant Has Shown No Error in the Superior Court’s Consideration of Their Affirmative Defenses.

¶32 Tenant argues that Landlords did not show a lack of evidence supporting Tenant’ s affirmative defenses necessary to prevail on a motion for summary judgment. See Nat’l Bank of Ariz. v. Thruston , 218 Ariz. 112, 1 19 ¶28 (App. 2008). Although not required to disprov e each affirmative defense, a party moving for summary judgment is “required to ‘point out,’ by referring to evidence in the record, that insufficient evidence existed to support the [non

- moving party’s] affirmative defenses.” Id. at 1 19 ¶ 29.

¶33 Tenant’s answer contains 11 pages of “affirmative defenses” spanning 62 paragraphs. Cf. Ariz. R. Civ. P. 8(d). In th eir motion for summary judgment, Landlords addressed force majeure, impracticability, impossibility, frustration of purpose, failure of consideration, condemnation and breach of covenants. Landlords then explained that Tenant’s other affirmative defenses w ere just “rephrasings of the above

discussed affirmative defenses.” In doing so, Landlords attach ed Tenant’s interrogatory responses , explaining that the bases for the other affirmative defenses were the same ones raised and addressed in Landlords’ motion.

¶34 On appeal, Tenant has not shown that other affirmative defenses were not rephrasing the affirmative defenses Landlords addressed in seeking summary judgment. Tenant did not specif y which affirmative defenses it alleges were not addressed when responding to the motion in superior court. Nor has Tenant done so on appeal. Thus, any such argument is waived. See In re Aubuchon , 2 3 3 Ariz. 62, 64

– 65 ¶ 6 (2013) (“We are not required to look for the proverbial ‘needle in the haystack.’ . . . [A]rguments not supported by adequate explanation [ are waived ] .”) (citations omitted).

VII. Caselaw f rom Other Jurisdictions Is Not Binding.

¶35 The parties cite and provide supplemental citations to many
recent conflicting, non

- bin ding, unpublished trial court decisions from other jurisdictions interpreting similar contractual provisions under the local law in those jurisdictions

. 2 The parties, however, have not shown how

2 See , e.g. , VEREIT Real Est

. , L.P. et al. v. Fitness Int ’ l, LLC
, No. DC

- 20

- 18444 (14th Jud. Dist. Ct., Dallas C n ty., Tex., Aug. 8, 2022); Fitness Int ’ l, LLC v. VEREIT Real Est

. , L.P. , No. 2020

- 027207

- CA

- 01 ( 11th Jud

. Cir . Ct., Miami

Dade C n ty

. , F la, June 8, 2022 ); ROIC Four Corner Square, LLC v. Fitness Int ’ l, LLC , No. 21

- 2

- 04531

- 8 (Wash. Super. Ct.
, Oct. 8, 2021) ; BAI Century LLC v.VEREIT REAL ESTATE, et al. v. FITNESS INT'L Opinion of the Court

14 citation to these trial court decisions would be allowed in the issuing jurisdictions, meaning they have not shown how they are properly cited here. See Ariz. Sup. Ct. R. 111(d). R ecognizing that the cases offer no consensus and, instead, show conflicting outcomes, this court interprets the leases here under Arizon a law.

¶36 Landlords, however, cite t wo recent published appellate decision s addressing similar issues that track the analysis in this opinion. See Fitness Int ’ l, LLC v. Nat’l Retail Props., LP
, --- P.3d

--- 2023 WL 2132749 (Wash. Ct. App. Feb. 21, 2023) ; SVAP III Poway Crossing s , LLC v. Fitness Int’l, LLC , 303 Cal.Rptr.3d 863, 866, 87 Cal.App.5th 882 ( Jan. 20, 2023). Although not binding, the analysis in these opinions is instructive, as Poway Crossing s shows

. ¶37 In Poway Crossing s , t he California Court of Appeal affirmed summary judgment for a landlord against a tenant in a case involving similar facts and a similar lease

. See 303 Cal.Rptr.3d 863, 866, 87 Cal.App.5th 882 , 885

. In doing so, the court rejected the tenant’s arguments that its obligation to pay rent was excused due to the COVID

- 19 pandemic by, among other things, the landlord’s breach of the lease, a force majeure provision and the doctrines of impossibility, imprac ticability and frustration of purpose. Id

. at 875

. Poway Crossing s , interpreting the same

Fitness Int ’ l , LLC , No. 2021 L 1322 (Cir. Ct. Cook C n ty. , Ill. , Sept. 30, 2021) ; Fitness Int ’ l LLC v. DDRM Hill Top Plaza L.P. , 2021 U.S. D ist. LEXIS 202670 at *8 (C.D. Cal

. , Oct

. 20, 2021) ; STORE SPE LA Fitness 2013

- 7 v. Fitness Int ’ l, LLC , No. SACV 20

- 953 JVS (ADSx) (C.D. Cal.
, June 30, 2021) ; Capital v. Fitness Int’l
, No. 20STCV47017 (Cal. Super. Ct., Los Angeles
, Nov. 19, 2021) ; Charlotte Props. v. Fitness Int’l , No. 20CHCV00645 (Cal. Super. Ct., Los Angeles
, Jan. 12, 2022) ; Kb Salt Lake III, LLC v. Fitness Int’l, LLC , No. 21CHCV00790 (Cal. Super. Ct., Los Angeles
, Apr. 5, 2022) ; Kids from the Valley IX, LLC v. Fi tness Int’l, LLC , No. 21CHCV00657 (Cal. Super. Ct., Los Angeles
, Nov. 15, 2021) ; SVAP III Poway Crossings LLC v. LA Fitness Int’l LLC , No. 37

- 2020

- 00016039

- CU

- BC

- CTL (Cal. Super. Ct., San Diego
, Sept. 16, 2021) ; Fitness Int’l, LLC v. 93 FLRPT, LLC , No. 202 1

- CA

- 3508 (Fla. 12th Judicial Cir

. Ct

. , Manatee, Mar. 31, 2022) ; Fitness Int’l, LLC v. VEREIT Real Estate, Inc. , No. 21

- CA

- 74 (Fla. 13th Judicial Circuit Court, Hillsborough
, Aug. 29, 2022)

. Landl ords also provided the unpublished appellate decision
, Fitness Int’l, LLC v. City Center Ventures, LLC , No. A22

- 1057 (Minn. Ct. App. 2023). Although a published appellate decision, Hig h land s Broadway OPCO, LLC v. Barre Boss LLC
, --- P.3d

--- , 2023 WL 308999 (Col. App. Jan. 19, 2023)
, addresses pandemic

- related issues in the context of a commercial lease containing different provisions.VEREIT REAL ESTATE, et al. v. FITNESS INT'L Opinion of the Court

15 language found in Section 1.9 in the leases in this case, held that “the reasonable interpretation of Section 1.9 is that [ the landlord ] merely agreed not to restrict Fitness from using the premises in any way permitted under the lease.” Id. at 871

. The court reached that conclusion by also looking to section 8.2 , which allowed the t enant to change use of the premises. Id.

¶38 Poway Crossing s also held that a force majeure pr ovision nearly identical to the Marana lease did not excuse payment of rent. See i d.
at 871

– 72 . The court explained that “ while [they ] agree with [the tenant] that the closure orders are “restrictive laws,” [they] do not agree that these laws del ayed, hindered, or prevented [the tenant] from performing under the contract.” Id

. Poway Crossing s also rejected the t enant’s affirmative defenses
, explaining “ [n]othing about the pandemic or resulting closure orders has made [the tenant’s] performance of its obligation to [the landlord]

-- paying rent

-- impossible.” Id. at 872

. The court refused to adopt temporary frustration of purpose and found that a “tempor ary government closure of a fitness facility for a period of months when the premises have been leased for more than 19 years

-- and the lease term spans more than 23 years total

-- does not amount to the kind of complete frustration required for the doctr ine to apply.” Id . at 874 ; s ee also Fitness Int ’ l, LLC v. Nat’l Retail Props., LP , --- P.3d

--- 2023 WL 2132749 (Wash. Ct. App. Feb. 21, 2023)

.
VIII. Landlords Are Awarded Their Reasonable Attorneys’ Fees and Costs Incurred on Appeal.

¶39 Landlords seek their attorney s ’ fees and costs under Section 22.7 of each lease. Because Landlord s are the successful part ies on appeal, they are awarded their reasonable attorneys’ fees and taxable costs contingent upon their compliance with ARCAP 21

.
CONCLUSION

¶40 The judgment is affirmed.