The Missouri Court of Appeals Eastern District ruled Aug. 9 that a valet company that was effectively shut down during the pandemic can’t use the “doctrine of impossibility” to avoid repaying a loan.
The case appears to be the first in Missouri to address how the doctrine of impossibility applies to claims made during the pandemic. The Eastern District, however, found that the defendant, Premier Valet Services, didn’t meet that doctrine’s high standard — that they took “virtually every action possible” to meet the contract’s terms.
According to the opinion, Premier Valet Services took out a $260,000 loan in 2012 from Premier Valet LLC but failed to pay off the full amount by its maturity date in 2018 and still owed about $145,000 when the pandemic struck in March 2020.
In late 2020, the lending company filed a breach of contract claim against the valet service. Premier Valet Services in turn argued as an affirmative defense that it was impossible for it to repay the loan because shut-down orders for bars, restaurants and clubs in St. Louis County made it impossible for the business to operate.
But Judge Lisa P. Page, writing for the court, said there was no evidence that Premier Valet Services tried to obtain funds from other sources or attempted to renegotiate the terms.
“The fact that it may have been impossible to operate a valet services business during the COVID-19 pandemic does not render it impossible to perform the terms of the Note,” Page wrote. Judges Kurt S. Odenwald and Thomas C. Clark II concurred.
In support of its claim of impossibility, the defendant had cited a New York case that favored a commercial tenant that failed to pay rent during the pandemic. But the Eastern District said that trial-level case was never appealed, and subsequent appellate rulings in New York, as well as similar cases in Connecticut and Pennsylvania, have rejected such a holding.
John Reeves of Reeves Law in St. Louis, who represented the lender on appeal, said he was pleased with the decision.
“I think it’s clear in this context that the doctrine of impossibility couldn’t apply because the contract wasn’t to run your business successfully but rather to pay the amount of the money back, and the other side didn’t present any evidence showing why that was impossible to do even in light of COVID,” he said.
Matthew Jacober of Lathrop GPM in St. Louis, an attorney for the defendant, didn’t return a call seeking comment.
The case is Premier Valet LLC v. Premier Valet Services LLC et al., ED110242.