OWBR Ltd. Liab. Co. v. Clear Channel Communs., Inc. - 266 F. Supp. 2d 1214 (D. Haw. 2003)

Rule:

Courts interpreting force majeure provisions have held that nonperformance dictated by economic hardship is not enough to fall within a force majeure provision. Mere increase in expense does not excuse performance under a force majeure provision unless there exists extreme and unreasonable difficulty, expense, or injury.

Facts:

Plaintiff OWBR, d.b.a. Outrigger Wailea Resort sued defendants, a parent corporation and a subsidiary, for breach of contract. The contract provided that the plaintiff would host a music industry event/conference produced by Defendants and scheduled for February 13-17, 2002. The contract contained a force majeure clause. On January 16, 2002, less than thirty days prior to the event, the defendant subsidiary sent a letter to plaintiff cancelling the event. Defendants argued that, in the wake of September 11, 2001, it was "inadvisable" to travel to or to hold events in Hawaii five months after the terrorist attacks. On the other hand, plaintiff argued that the actual reason that the defendant subsidiary cancelled the event was because of the economic downturn, which although due in part to September 11, was too attenuated from the events of September 11 to excuse performance under the contract's force majeure clause.

Issue:

Did the contract’s force majeure clause excuse defendant’s non-performance of its obligations under the contract? 

Answer:

No.

Conclusion:

The court found that the force majeure clause did not contain language that excused performance on the basis of poor economic conditions, lower than expected attendance, or withdrawal of commitments from sponsors and participants. According to the court, increased cost alone would not excuse performance under a contract unless the rise in cost was due to some unforeseen contingency which altered the essential nature of the performance. In fact, the unforeseen cost increase that would excuse performance must be more than merely onerous or expensive. It must be positively unjust to hold the parties bound. Thus, in this case, the force majeure clause did not excuse the subsidiary's breach.