Legal Analysts

Showing posts with label coronavirus. Show all posts
Showing posts with label coronavirus. Show all posts

Thursday, August 19, 2021

Federal Judge allows CDC Eviction Moratorium to Remain in Effect

On August, 13, 2021, U.S. District Court Judge Dabney Friedrich held that the CDC eviction moratorium, which was extended by the Biden Administration through October 3, 2021 (“New CDC Moratorium”) should remain in effect.

This means that tenants may still be protected, subject to certain rules, until October 3, 2021.

As background, the CDC’s previous moratorium, which was first enacted in September 2020 and was challenged all the way up the US Supreme Court, expired on July 31, 2021.

Yet, before it expired the Supreme Court upheld its effectiveness until an appeal was decided on its merits, which remains pending. Now, the moratorium, which we discuss more fully here, remains in effect because Judge Friedrich ruled that it remains subject to the prior stay. on the basis that the New CDC Moratorium is subject to the D.C. Circuit Court’s stay.

Stay tuned for changes as Judge Friedrich’s decision is currently under appeal.

Tuesday, September 01, 2020

Legally Speaking: Rentals, Rights, Reality...What's a Landlord to do?

Wednesday, July 29, 2020

Hiring an At-Home-Teacher for Your Kids? 5 Legal Issues You Will Face

Are schools opening in the fall?

It's looking less likely with each passing day as we are experiencing a national death uptick from COVID and it has invaded Major League Baseball.

Even if schools do open, are you comfortable sending your children?

Maybe you are considering hiring an at-home teacher because you can't possibly continue to work, care for your children and play teacher simultaneously.

Before you do, read our 5-Point Plan to do this legally:

1. Minimum Wage/Overtime/Notice of Pay: Pursuant to the NYS "Domestic Workers Bill of Rights", an at-home teacher must be paid at least minimum wage for all hours worked. The current minimum wage for workers on Long Island is $13 an hour. Domestic workers must be paid at a rate of time and a half for all hours worked over forty (40) in a given week. In addition, employers must provide a Notice of Pay Form to the worker at the commencement of employment which includes the employee's regular hourly rate, overtime rate and regular pay day. Employers of domestic workers can face significant damages if they fail to comply with these wage and hour laws, including but not limited to backpay, double damages, and attorneys' fees.

2. Tracking Hours Worked: Even if you pay a domestic worker for all hours worked in accordance with the law, you can still face liability if you do not accurately and contemporaneously track hours worked. If the employer fails to keep contemporaneous records of hours worked (e.g. sign-in sheets), a court will presume that the employee's account of hours worked is accurate.

3. Workers Compensation Insurance: If a domestic worker works forty (40) or more hours per week or lives on-premises (e.g. a live-in nanny who also teaches the kids), the worker must be covered by workers compensation insurance. While coverage is not required if the domestic worker works less than forty (40) hours per week, obtaining a policy, even if not required, is advised because it protects you from a personal injury lawsuit brought by the teacher.

4. Potential Liability for Covid-19 Exposure: Individuals hiring a domestic worker may be exposed to a potential lawsuit if the domestic worker tests positive for Covid-19. While courts have not yet ruled on the admissibility of liability waivers for Covid-19, having a domestic worker sign a waiver that he/she assumes the specific risks associated with exposure to the virus may mitigate exposure. However, gross negligence cannot be waived. Therefore, employers should implement a safety plan including but not limited to: PPE, health screenings, prohibiting people in the house who are symptomatic/have had recent exposure to Covid-19, to mitigate potential liability.

5. Use of Nanny Cams: While use of nanny cams (i.e. video recording a nanny/at-home teacher without his/her consent) is generally permitted under New York State law, nanny cams may not be installed where a nanny has a reasonable expectation of privacy, (e.g. a bathroom or nanny's bedroom). In addition, recording audio, without the consent of at least one party to the conversation, may constitute a felony pursuant to New York State law.

Monday, July 20, 2020

No Alcoholic Drinks Without Food in NY Restaurants and Bars and Chips Don't Count

On July 16, 2020, Governor Cuomo signed Executive Order 202.52 which prohibits bars and restaurants from selling alcoholic beverages, unless it comes with the purchase of food. The Executive Order applies to on-premises consumption, take-out, and delivery and it is in effect until August 15, 2020.

A lot of mockery has been out there about this new EO. There have been arguments such as, “I can get Corona with a beer, but not with a beer and a chip.” Yet, that misses the point. The point is to make it impossible for jammed and standing bar parties. By adding a service of food requirement, the government is avoiding bar scenes that will quickly spread Coronavirus. Perhaps this is not the most effective line in the sand and there are likely better lines to draw, but whenever a law is passed, the line will create haters and fans. Better to know the line and keep your liquor license than to fight it until your bar closes, at least that is our perspective.

Restaurant and bar owners are also advised of the guidance set by the State Liquor Authority in light of the Executive Order 202.52:

- “Purchase of a food item which is consistent with the food availability requirement of the license under the Alcoholic Beverage Control Law” shall mean that for each patron in a seated party, an item of food must be purchased at the same time as the purchase of the initial alcoholic beverage(s). However, one or more shareable food item(s) may be purchased, so long as it/they would sufficiently serve the number of people in the party and each item would individually meet the food standard below.

- Food and/or beverages can only be consumed while seated at a table, bar, or counter.

- “A food item which is consistent with the food availability requirement of the license under the Alcoholic Beverage Control Law” shall mean:
  • For manufacturers with on premises service privileges: sandwiches, soups or other such foods, whether fresh, processed, pre-cooked or frozen; and/or food items intended to compliment the tasting of alcoholic beverages, which shall mean a diversified selection of food that is ordinarily consumed without the use of tableware and can be conveniently consumed, including but not limited to: cheese, fruits, vegetables, chocolates, breads, mustards and crackers.
  • For on premises retailers with a food availability requirement, including restaurants and taverns: sandwiches, soups or other foods, whether fresh, processed, precooked or frozen.

- “Other foods” are foods which are similar in quality and substance to sandwiches and soups; for example, salads, wings, or hotdogs would be of that quality and substance; however, a bag of chips bowl of nuts, or candy alone are not. (Updated July 23, 2020)

The SLA further reminds restaurant and bar owners of the purpose of the Executive Order which is to ensure that customers are enjoying a sit-down dining experience with drinks, rather than a drinking, bar-type experience that often involves or leads to socializing without proper social distancing and use of masks. Further, the SLA warns that any obvious efforts to circumvent the above rules will be deemed violations of the Executive Order.

Additionally, in New York City, a “Three Strikes and You’re Closed” policy is put in effect and establishments receiving three violations will be closed for business.

However, regardless of three strikes, an immediate revocation of a liquor license or business closure may occur due to egregious violations. Restaurant and bar owners should be aware of these guidelines to avoid liability and ensure compliance.

Wednesday, July 01, 2020

Landlord’s New World – Sue for Money Judgment, Not Eviction

Effective June 30, 2020, the Tenant Safe Harbor Act (“Act”) was signed into law by Governor Cuomo. Essentially, the Act prohibits courts from issuing a warrant of eviction or judgment of possession against a residential tenant for non-payment due to financial hardship during the COVID-19 covered period, but it allows landlords to obtain a money judgment for rent in a summary proceeding. Alternatively, landlords can simply commence a plenary action for the money judgment in district, county, or supreme court as jurisdictionally appropriate.

The Act defines “COVID-19 covered period” as March 7, 2020 until the date executive orders which closed or restricted public or private businesses, or required the postponement or cancellation of non-essential gatherings for any size for any reason expire. This means that until all businesses are allowed to be 100% open, a tenant may claim financial hardship and not be evicted.

As a result, A landlord who starts a summary proceeding to evict a tenant or lawful occupant for non-payment of rent will not be able to get a warrant of eviction or judgment of possession if the tenant or lawful occupant claims that he suffered financial hardship during the COVID-19 covered period. Tenants and lawful occupants are also allowed to raise it as a defense in the summary proceeding.

To determine whether a tenant suffered a financial hardship, courts shall consider the following, among other relevant factors:

  1. Tenant’s or lawful occupant’s income prior to the COVID-19 period;
  2. Tenant’s or lawful occupant’s income during the COVID-19 period;
  3. Tenant's or lawful occupant's liquid assets; and
  4. Tenant’s or lawful occupant's eligibility for and receipt of cash assistance, supplemental nutrition assistance program, supplemental security income, the New York State disability program, the home energy assistance program, or unemployment insurance or benefits under state or federal law.

The Act, however, does not prohibit landlords from obtaining a money judgment for rent if successful in a summary proceeding. Landlords are advised to contact counsel to discuss the best strategy to manage their tenants while complying with the various executive orders and laws in place due to the coronavirus pandemic.

Monday, June 29, 2020

EEOC Guidance on Antibody Tests and COVID-19 Tests

The Equal Employment Opportunity Commission (EEOC) published guidance concerning business practices that are both safe and compliant with anti-discrimination laws during the COVID-19 pandemic. The guidance discusses various relevant practices but most notable of which is the EEOC’s guidance on medical examinations prior to employees re-entering the workplace. According to the EEOC, antibody tests may not be required by employers for employees to re-enter the workplace, but employers may require employees to undergo a COVID-19 test to re-enter.

The EEOC advised that antibody tests should not be used to make decisions about returning to the workplace and currently does not meet the Americans with Disabilities Act (ADA)’s “job related and consistent with business necessity” standard for medical examinations for current employees. This standard applies to any mandatory medical test for employees. Thus, an antibody test may not be required for an employee to enter the workplace and employers should be aware that requiring antibody tests could be the basis of a discrimination claim.

On the other hand, tests which determine if someone has an active case of COVID-19 are permissible under the ADA and employers may use it to make decisions on whether an employee should return to the workplace. The distinction is that an employee who is currently infected with COVID-19 poses “a direct threat to the health of others.” However, employers should still be aware of the possibility of an employee testing false-positive or false-negative and employers should ensure that tests are accurate and reliable.

Nonetheless, employers are encouraged to practice social distancing, regular handwashing, and the wearing of PPE’s as there is no certainty that employees will not be infected with COVID-19 after the test is administered. In addition, employers should contact counsel to have a tailored COVID-19 safety plan compliant with federal anti-discrimination laws and regulations while ensuring a safe workplace for employees.

Wednesday, June 24, 2020

New Rules for Residential and Commercial Foreclosure Proceedings

Effective June 24, 2020, the following rules apply to residential and commercial foreclosure proceedings as per Administrative Judge Lawrence K. Marks memorandum dated June 23, 2020:

Like eviction proceedings, commencement documents must be filed only by NYSCEF or by mail and commencement papers for residential and commercial foreclosure proceedings are required to include:
  • A form plaintiff’s attorney affirmation, indicating that counsel has reviewed the various state and federal restrictions and qualifications on foreclosure proceedings and believes in good faith that the proceeding is consistent with those restrictions and qualifications; and
  • A form notice to defendants-tenants (in English and Spanish), informing them that they may be eligible for an extension of time to respond to the complaint in light of legal directives related to the COVID-10 pandemic, and directing them to a website link for further information.

In addition, regardless of whether an answer is filed, further hearing of the case shall be stayed until Executive Orders suspending deadlines for the prosecution of legal matters expire. However, the following may proceed:
  • Foreclosure matters wherein all parties are represented by counsel may be calendared for both initial and follow-up virtual settlement conferences;
  • Lenders may move for a judgment of foreclosure and sale on the ground that a property is vacant and abandoned; and
  • Lenders may also move to discontinue a pending case.

No motions shall be entertained or decided, except for motions to discontinue and motions for judgments of foreclosure for vacant and abandoned property only.

Stay tuned as Administrative Judge Lawrence K. Marks is expected to issue further directives on foreclosures at or before the Executive Orders suspending deadlines expire.

Friday, June 19, 2020

Courts to Reopen for Eviction Proceedings, New Forms Required

Beginning June 20, 2020, courts will accept new eviction matters – statewide eviction moratorium expires (Executive Order 202.28).

To facilitate this, the Chief Administrative Judge released a memorandum setting the procedures for residential and commercial eviction proceedings in New York State.

Now, commencement documents in eviction proceedings must be filed with the court by NYSCEF or mail. Further, until further order, petitions in commercial and residential eviction proceedings based on nonpayment of rent or on other grounds must include the following:
  1. Form petitioner’s attorney affirmation or petitioner’s affidavit (for self-represented petitioners), indicating that counsel / petitioner has reviewed the various state and federal restrictions and qualifications on eviction proceeding and believes in good faith that the proceeding is consistent with those restrictions and qualifications; and
  2. Form notice to respondent-tenants (in both English and Spanish), informing them they may be eligible for an extension of time to respond to the petition in light of legal directives related to the COVID-10 pandemic, and directing them to a telephone number and/or website link for further information.

As a reminder, eviction proceedings based on non-payment of rent by a tenant who is eligible for unemployment insurance or benefits under federal or state law or is otherwise facing financial hardship due to COVID-19 are prohibited until August 20, 2020 per Executive Order 202.28. In addition to the above forms, NYC currently has directives requiring good faith affidavits to be filed with the petition. You can read more about it HERE. Stay tuned should the Civil Court of New York City update their directives in light of the Chief Administrative Judge’s memorandum.

The memorandum further stays the hearing of the eviction matter until the Executive Orders suspending statutory time periods for legal matters expire. However, eviction matters commenced on or before March 16, 2020 in which all parties are represented by counsel shall be eligible for calendaring for virtual settlement conferences.

Also, the New York State Courts Electronic Filing System (NYSCEF) will accept New York City Housing Court matters later this summer.

Thursday, June 18, 2020

NYC Civil Court COVID-19 Directives on Evictions Based on Non-Payment of Rent

Beginning June 20, 2020, any petitioner seeking to commence a summary proceeding for nonpayment of rent shall file with the petition an affidavit by a person with knowledge of the facts, stating the following:
  • Petitioner has made a good faith effort to ascertain whether the respondent is a person eligible for unemployment insurance or benefits under state or federal law or otherwise facing financial hardship due to the COVID-19 pandemic;
  • Respondent is not such a person; and
  • Facts upon which the petitioner / individual signing the affidavit based such conclusion. See DRP 209.
Similarly, any individual seeking to obtain a default judgment for the respondent’s failure to answer in a summary proceeding based on the non-payment of rent must attach to the application, an affidavit with the above information. See DRP 210.

Lastly, the affidavit is also required to enforce a warrant of eviction that was awarded prior to March 20, 2020 based upon the nonpayment of rent. To enforce the warrant, the petitioner must seek leave of court to enforce the warrant and such motion must include the affidavit. See DRP 211.

The above directives were published in light of Executive Order 202.28 which extended the eviction moratorium to August 20, 2020 for eviction proceedings or enforcement based on nonpayment of rent or foreclosure of a mortgage, owned or rented, “by someone that is eligible for unemployment insurance or benefits under state or federal law or otherwise facing financial hardship due to the COVID-19 pandemic.”

The above directives apply to both residential and commercial properties and proceedings in all five boroughs and are all effective June 20, 2020, however, it is advised that the above affidavit also be prepared for eviction proceedings in Nassau and Suffolk County as Executive Order 202.28 applies statewide.

While Executive Order 202.28 and the Courts are well-intentioned, gathering the information required to complete the affidavit may be problematic for landlords. Often, a tenant who has not paid rent, has not reached out to the landlord to renegotiate their rent during the coronavirus pandemic, and is being evicted is unlikely to cooperate with a landlord’s attempt to get information. Nonetheless, landlords are advised to consult counsel in order to ensure that they follow the correct court procedures as one small mistake in filing may cause further delay, or even dismissal, of their court proceedings.

Monday, June 01, 2020

Legislation Prohibiting Evictions during COVID-19 Period on Governor’s Desk

Senate Bill S8192B / Assembly Bill 10290B passed both the Assembly and Senate and is currently on the Governor’s desk for signature. The legislation will prohibit the eviction of residential tenants who suffered financial hardship during the COVID-19 pandemic.

Specifically, the bill covers the period from March 7, 2020 until various Executive Orders which placed restrictions requiring closure of and restriction on businesses and establishments, or postponement or cancellation of non-essential gatherings continue to apply in the county of the tenant’s residence (“COVID-19 Covered Period”). Further, the bill allows residential tenants to raise a defense of financial hardship during such period in a summary proceeding and courts shall consider the tenant’s income prior to and during the COVID-19 Covered Period, liquid assets, and eligibility for cash assistance, disability, unemployment insurance, and state or federal programs.

This legislation expands Executive Order 202.8 which imposed a statewide eviction moratorium until June 18, 2020 and Executive Order 202.28 which extended the moratorium to August 20, 2020 for tenants facing financial hardship due to the COVID-19 pandemic. Unlike the previous Executive Orders, the legislation does not prohibit the initiation of summary eviction proceedings, it merely prohibits the courts from issuing judgments of possession and warrants of eviction. It does not prevent landlords from obtaining money judgments for unpaid rent.

While this legislation is a softer blow to landlords than a complete prohibition on the initiation of eviction proceedings, the main concern for landlords is that the COVID-19 Covered Period can last well up to 2021. Further, as landlords can only get a money judgment and not an eviction, the judgment does not stop the bleeding and would eventually require landlords to go back to court to obtain another judgment for rent prior to the tenants vacating the property.

A lawsuit has already been filed by landlords to nullify provisions of Executive Order 202.28 which prohibit landlords from pursuing eviction proceedings until August 19, 2020 and which allow tenants to use the security deposit toward rent payments. The landlords argue the Executive Order allows tenants to withhold rent without immediate repercussion and precludes landlords from utilizing security deposits as compensation for damages caused to the unit by the tenant. It is expected that if the bill is enacted into law, litigation will surely follow.

In the meantime, landlords should consult counsel for strategies on how to mitigate their risk due to tenants’ nonpayment.

Friday, May 29, 2020

NY Businesses and Building Owners Authorized to Enforce No Mask, No Entry Policy

On May 28, 2020, Governor Cuomo signed Executive Order 202.34, which authorized business operators and building owners to exercise their own discretion in denying entry to individuals who fail to comply with Executive Order 202.17 requiring face-coverings when in a public place.

Specifically, EO 202.34 allows business operators and building owners to use their discretion in denying entry and requiring or compelling removal of persons not wearing a face-covering, unless they are under the age of two or are not able to medically tolerate it as per EO 202.17. More importantly, EO 202.34 exempts such business operators and building owners from a claim of violation of the covenant of quiet enjoyment or frustration of purpose. However, the directive must still adhere to the Americans with Disabilities Act or any provision of either New York State or New York City Human Rights Law, or any other provision of law.

While businesses and building owners can now restrict entry, they should contact counsel to create a policy that ensures compliance with the anti-discrimination laws and mitigate exposure to discrimination claims.

Thursday, May 21, 2020

Commercial Personal Guaranties Deemed Unenforceable in NYC Council’s COVID-19 Relief Bill – Litigation to Follow if Enacted

On May 13, 2020, the NYC Council approved Int. No. 1932-A, which makes substantial changes to personal guaranties in commercial leases. The bill is on the Mayor’s desk to be enacted.

The bill’s purpose is to provide relief to NYC commercial tenants impacted by COVID-19. It temporarily prohibits the enforcement of personal liability provisions in commercial leases or rental agreements. It would amend the Administrative Code of the City of New York by adding Section 22-1005 and adding Paragraph 14 to Subdivision a of section 22-902 of the NYC Administrative Code.

If enacted, the bill would render guarantee provisions unenforceable against natural persons who are not a tenant in commercial leases or other rental real property. The law would only impact liability for the payment of rent and other charges caused by an occurrence of default, and subject to the following conditions:
1. The tenant must satisfy at least one of the following:
a)     The tenant was required to cease serving patrons food or beverage for on-premises consumption or to cease operation under EO 202.3;
b)     The tenant was a non-essential retail establishment subject to in-person limitations under guidance issued by the NYS Department of Economic Development pursuant to EO 202.6; or
c)     The tenant was required to close to members of the public under EO 202.7; and

2. The default or other event which caused the natural person to become personally liable for such obligation occurred between March 7, 2020 and September 30, 2020, inclusive.

Under the bill, an attempt to enforce a personal liability provision that the landlord knows or reasonably should know is unenforceable, pursuant to the above, shall be deemed commercial tenant harassment, which could result in compensatory and punitive damages and attorneys’ fees and court costs. See N.Y.C. Admin. Code § 22-903.

Sounds too good to be true for many tenants and often when it’s too good to be true, it’s untrue. Expect this law to be challenged on constitutional grounds should it be enacted. Specifically, the bill seems to impair the Contracts Clause of the United States Constitution because it retroactively affects personal guaranties entered into prior to the bill’s passing. For such a claim to succeed, the initial inquiry under the impairment of contracts clause contains three components:
  1. Whether there is a contractual relationship;
  2. Whether a change in law impairs that contractual relationship; and
  3. Whether the impairment is substantial. U.S.C.A. Const. Art. 1, § 10, cl. 1; American Economy Ins. Co. v. State, 30 N.Y.3d 136 (2017).
While tenants will surely argue that the bill doesn’t substantially impair the parties’ contractual relationship, as the bill only covers rent and payments for the period of March 7, 2020 to September 30, 2020, landlords will counter that the personal guarantee was a material term of the lease and a substantial reason that the landlord agreed to enter into the contract.

For analogy, the Court of Appeals has previously struck down similar government interference in contacts. In Patterson v. Carey, the Court of Appeals struck down a law which curtailed toll authority bondholders’ ability to increase their tolls for Jones Beach State Parkway on constitutional grounds. 41 N.Y.2d 714 (1977). 

If the NYC bill passes, it would likely undergo similar challenges and review as the law in Patterson and be deemed unconstitutional. The bill’s impairment to contractual rights agreed upon by landlords and guarantors would be substantial, especially considering that the bill does not merely delay a landlord’s right to enforce the guarantee during the period stated in the bill, it extinguishes it altogether.

Mayor DeBlasio has until June 12, 2020 to either sign, veto, or do nothing. If the Mayor signs the bill or does nothing, the bill will automatically become law. If the Mayor vetoes the bill, it is sent back to the Council. The Council can then override the Mayor’s veto with a 2/3 vote.

In the meantime, both landlords and tenants should contact their attorneys to ensure that their interests are protected and to prepare for expected lawsuits to follow. For ideas on how to creatively resolve lease issues due to coronavirus and for tips on important lease provisions when renegotiating, listen to our podcasts HERE and HERE.

Thursday, May 14, 2020

New Bankruptcy Filing Procedures in relation to a COVID-19 Mortgage Forbearance

The Coronavirus Aid, Relief, Economic and Security (CARES) Act allows borrowers to request a forbearance on their mortgage. (You can read more about the CARES Act and mortgage forbearance requests in our article HERE.) As bankruptcy filings are expected to rise due to the COVID-19 pandemic, the U.S. Bankruptcy Court system implemented a few system changes to their Case Management/Electronic Case Filing (CM/ECF) Database in relation to borrowers who have requested a forbearance. These changes are effective May 11, 2020.

Specifically, a new bankruptcy event, “Notice of Mortgage Forbearance” was created to docket such event on the CM/ECF database. In addition to clicking such event, a question was also added to ask, “is a Notice of Mortgage Forbearance being filed with this filing?” in relation to established events on Notice of Mortgage Change. This change has been made to prevent filers from choosing the “Notice of Mortgage Change” event when only a forbearance has been obtained.

As the Court works towards streamlining and implementing a more efficient process, readers are advised to contact their counsel to ensure that the Court’s bankruptcy process and its recent changes be followed to a T to prevent any delays or other issues with filings.

Wednesday, April 22, 2020

Does Your Commercial Insurance Policy Cover Business Interruption Due to COVID-19?

Business owners looking to their commercial policies for business interruption and loss of income coverage due to COVID-19 have likely run into a giant roadblock - an exclusion of loss due to virus or bacteria. Many insurers added these special endorsements to commercial policies after the SARS outbreak in the early 2000s, and yours probably looks something like this:

We will not pay for loss or damage caused by or resulting from any virus, bacterium or other micro-organism that induces or is capable of inducing physical distress, illness or disease.

These virus exclusions have led practitioners like myself scratching our heads for novel legal theories to find coverage where coverage is expressly denied. The New York State Assembly has taken notice and is trying to solve this problem for us with ASSEMBLY BILL A10226A

What Does The Bill Do?
The stated purpose of the bill is to "hold harmless businesses who currently hold business interruption insurance, for losses sustained as a result of the current COVID-19 health emergency, but for which no such coverage is currently offered." It accomplishes this by construing all policies insuring against loss of use and occupancy and business interruption "to include among the covered perils under that policy, coverage for business interruption during a period of a declared state emergency due to the coronavirus disease 2019 (COVID-19) pandemic." It also declares all virus exclusions null and void, and extends this special coverage for the duration of New York's declared state emergency. The new law would only apply to insureds with less than 250 full-time employees. 

To offset the costs, the bill allows insurers paying claims to apply for reimbursement from the Department of Financial Services who will collect funding for the reimbursements from other insurers, thus spreading the cost amongst all insurers except life and health  (a cost which presumably will be passed onto insureds as a surcharge). 

Most importantly, the bill is retroactive - deemed effective March 7, 2020 and applying to policies in effect on that date. 

What Should You Do Right Now?
Business owners should have their full policy examined to see: (1) if they have business interruption coverage; and (2) whether there is a virus exemption. While other exemptions may preclude coverage, these are the threshold questions. Retaining an attorney to evaluate your policy and to submit a claim is often a good investment because claims can be denied if the wrong language or explanation for your loss is given to your insurer, or if the claim is submitted in an untimely or improper manner. Talking yourself out of a covered claim because you didn't know what was covered and what wasn't is an avoidable mistake.

If your insurer denies coverage that you think you are entitled to, hiring an attorney to pursue a claim against your insurer is an appropriate next step. Federal Courts are still accepting new filings, and the Department of Financial Services is still accepting complaints from insureds.  

Policy holders with virus exemptions should contact their local assemblymember and/or state senator to express support for the proposed legislation. The New York State Senate website even lets you voice your support for the bill digitally clicking the check mark on the right side of THIS WEBSITE.

Keep your eye on our blog for status updates on this bill. If it passes and you benefit from its changes, it may make sense to submit a claim, in which case you should hire an attorney who can give you the best shot at meeting eligibility requirements. 

Is This Even Constitutional?
Expect insurers to push back on this bill because it will create, in their minds, an unfunded liability that was not bargained for when they set insurance premiums for policies in effect on March 7, 2020. Article 1 of the United States Constitution provides that "No State shall... pass any... Law impairing the Obligation of Contracts". The Fifth and Fourteenth Amendments to the United States Constitution prohibit the taking of  property without due process of law. In the past insurers have turned to both arguments when objecting to legislation that retroactively imposed new obligations. 

Long story short, the United States Supreme Court has held that the constitution permits contractual interference pursuant to a balancing test that evaluates (1) the extent of the interference, (2) the historic regulation of the industry affected by the law, (3) the legitimate public purpose for the law, and (4) whether the law is appropriate given the stated public purpose, with special deference given to laws addressing emergencies. Home Building & Loan Association v. Blaisdell, 290 US 398 (1934); Energy Reserves Group, Inc. v. Kansas Power and Light Co., 459 US 400 (1983). Litigation is inevitable and it appears that the Assembly has specifically drafted this bill with previous case law in mind.

The New York Court of Appeals has addressed retroactive insurance coverage changes in two important decisions. 

In Health Insurance Association of America v. Harnett, 44 NY2d 302 (1978), the Court of Appeals struck down legislation that required retroactive coverage for maternity care in health insurance policies, but it did so on the narrow ground that those policies were forced renewal, where the insurer could not unilaterally cancel or refuse to renew a policy after its period expired, and therefore they did not consent to the change in the substance of the policy. The Court of Appeals did recognize that the legislation could work in other circumstances, stating "while there was a genuine, identifiable public purpose to be served by the enactment of [the law], the predicament which spawned the legislation had not risen to the magnitude of a crisis which warranted overriding the terms of the agreements entered into by the parties". Contrasting the holding in Harnett, commercial policies affected by this bill are not automatically renewable and can be cancelled by the insurer. Further, the Assembly bill specifically references the fact that COVID-19 is a state emergency, giving the legislation the emergency gravitas called for. 

In American Economy Insurance Co. v. State of New York, 30 NY3d 136 (2017), the Court of Appeals upheld legislation that insurers argued retroactively imposed unfunded workers' compensation liability. The legislation did away with a special fund that was used to pay for workers' compensation claims that were closed but unexpectedly reopened many years later. This holding was on the narrow ground that the legislation did not change the actual legal enforceability of the contract between insurer and insured, only how the liability was paid for (i.e. passing the cost of the claim from the fund directly to the insurers). Here, the Assembly bill creates a type of fund that pays for the coverage imposed by retroactive changes, a provision that presumably is intended to bring the bill closer to what is permitted by American Economy Insurance Co., and further away from what is forbidden by American Economy Insurance Co., which cautions against the changing of contractual obligations between insurer and insured. 

Other state courts have attempted similar legislation. In Harleysville Mutual Insurance Co. v. State of South Carolina, 401 S.C. 15 (2012), the South Carolina Supreme Court struck down a law that retroactively changed the definition of an "occurrence" because it altered the contractual relationship between insurer and insured without addressing a pressing emergency. In Vesta Fire Insurance Corp. v. State of Florida, 141 F3d 1427 (11th Cir. 1998) legislation was permitted that limited property insurance cancellations in the wake of Hurricane Andrew. Likewise, in State of Louisiana v. All Property & Casualty Insurance Carries Authorized and Licensed to Do Business in State, 937 So2d 313 (La. 2006) the Louisiana Supreme Court upheld legislation that extended the filing deadline for claims, and the statute of limitations for insurers suing their insurers, in the wake of Hurricanes Katrina and Rita. 

So, is the proposed legislation constitutional? There are good arguments for both sides. On one hand, COVID-19 is undoubtedly an emergency and the proposed legislation serves a legitimate and pressing public purpose. The bill even attempts to fund the new liability imposed. On the other hand, the bill substantially changes the rights and obligations bargained for when the insurer issued policies in effect on March 7, 2020. It takes a specific exclusion and renders it null and void. This ham-fisted approach may prove too much - an axe when a scalpel would be more appropriate. 

Regardless, business owners need relief now. Being legally correct and receiving your insurance payout 5 years from now after a drawn out legal battle does nothing to help pay your mortgage or payroll right now. While this bill is a good idea, and if passed will bring new benefits to many business that would  not have received them otherwise, it's not a silver bullet that brings the relief business owners need immediately. It should be viewed as one arrow in the quiver and applied in conjunction with other relief programs such as the Paycheck Protection Program. 

Thursday, April 09, 2020

New York State Courts Release Reopening Details

As expected, Chief Administrative Judge Lawrence K. Marks has issued a new administrative order detailing the first stage of court operations for nonessential matters. A full copy of the order can be read HERE.

      1. Judges will commit themselves to deciding fully submitted motions in pending cases. 
      2. Judges will examine their dockets to find matters through which video conferencing can be helpful in resolving the matter. Parties may request a similar conference, where appropriate.
      3. Judges may conduct discovery and other ad hoc conferences to resolve disputes which should not require the filing of motion papers.

The Order also contains an important clarification and limitation: litigants may NOT file any new nonessential matters, and parties may NOT file any additional (new) papers in any pending nonessential matters.

This means no new motions, no new answers, no motion opposition papers, etc. Previous orders tolling deadlines in those matters still control. Currently deadlines are tolled by executive order of Governor Cuomo through May 7, 2020

Expect expansion of the courts' capabilities and filings in the near future after successful implementation of this phase.

Reminder that federal courts are still open and capable for accepting new matters and Lieb at Law attorneys are still litigating where court intervention is not needed. 

Tuesday, April 07, 2020

Are You at Risk to Exposure to COVID-19? Designate a Guardian with this Form

By Executive Order 202.14, Governor Cuomo has permitted the use of this form for "any parent, a legal guardian, a legal custodian, or primary caretaker who works or volunteers in a health care facility or who reasonably believes that they may otherwise be exposed to COVID-19... [to] designate a standby guardian" for their children:

Designation of Standby Guardian
(NOTE: As used in this form, the term “parent” shall include a parent, a court-appointed guardian of an infant's person or property, a legal custodian, or a primary caretaker, and the term “child(ren)” shall include the dependant infant of a parent, court-appointed guardian, legal custodian or primary caretaker
I _________________________ hereby designate 

________________________________________________________________________________________________________________________________________________________________(name, home address and telephone number of standby guardian) as standby guardian of the person and property of my child(ren) (You may, if you wish, provide that the standby guardian's authority shall extend only to the person, or only to the property, of your child, by crossing out “person” or “property”, whichever is inapplicable, above.)

(name of child(ren)).

This appointment as the standby guardian of my child(ren) would be in the best interests of my child(ren) because:

(insert justification for appointment of this person as the standby guardian)

The standby guardian's authority shall take effect: (1) if my doctor concludes in writing that I am mentally incapacitated, and thus unable to care for my child(ren); (2) if my doctor concludes in writing that I am physically debilitated, and thus unable to care for my child(ren) and I consent in writing, before two witnesses, to the standby guardian's authority taking effect; (3) If I become subject to an administrative separation such that care and supervision of the child will be interrupted or cannot be provided; or (4) upon my death.
In the event the person I designate above is unable or unwilling to act as guardian for my child(ren), I hereby designate 

(name, home address and telephone number of alternate standby guardian), as standby guardian of my child(ren).
I also understand that my standby guardian's authority will cease sixty days after commencing unless by such date he or she petitions the court for appointment as guardian.
I understand that I retain full parental, guardianship, custodial or caretaker rights even after the commencement of the standby guardian's authority, and may revoke the standby guardianship at any time.
I declare that the person whose name appears above signed this document in my presence, or was physically unable to sign and asked another to sign this document, who did so in my presence. I further declare that I am at least eighteen years old and am not the person designated as standby guardian.
Witness' Signature: 
Witness' Signature: 

Penalties for Violating Executive Orders on Coronavirus Expanded AGAIN

By Executive Order 202.14, Governor Cuomo enacted new penalties for violating Coronavirus Executive Orders, in addition to what we discussed in our blogs - Penalties for Keeping Your Real Estate Opened in Coronavirus Expanded and What Happens When You Ignore the Essential Services Executive Order

The new penalty order states as follows:
The enforcement of any violation of the foregoing directives on and after April 7, 2020, in addition to any other enforcement mechanism stated in any prior executive orders, shall be a violation punishable as a violation of public health law section 12-b(2) and the Commissioner of Health is directed and authorized to issue emergency regulations. The fine for such violation by an individual who is participating in any gathering which violates the terms of the orders or is failing to abide by social distancing restrictions in effect in any place which is not their home shall not exceed $1,000.
You've been warned. 

New York State Courts Are Reopening for Non-Essential Matters

New York State courts are reopening.

On April 7, 2020 Judge Marks issued a memorandum to all trial court justices and judges outlining his plan for reopening the trial courts to non-essential matters beginning on Monday April 13, 2020. A full copy of the memorandum can be found HERE.

Judge Marks' April 7, 2020 memorandum states:

Going forward, the existing prohibition on the filing of new non-essential matters will continue. However, although our planning is ongoing, starting next Monday, April 13, we will take certain preliminary steps to open up access - remote access - to the courts for non-essential pending cases. This means that judges should review their case inventories to identify cases in which court conferences can be helpful in advancing the progress of the case, including achieving a resolution of the case. Judges can also schedule conferences at the request of the attorneys, and can be available during normal court hours to address discovery disputes and other ad hoc concerns. The conferences will need to be conducted remotely, by Skype or by telephone. Judges' personal staff will be able to assist judges remotely, as needed.

New York State courts have been closed to non-essential matters since March 22, 2020 when Chief Administrative Judge Lawrence K. Marks issued Administrative Order 78/20, which we blogged about HERE.

What will change on Monday, April 13?
Immediately, it appears that the courts are finding success in their remote operations for essential matters are looking to expand those capabilities to non-essential matters which make up the bulk of the caseload in the trial courts. Not only does the memorandum permit judges to conduct remote conferences on cases that are already pending before them, it encourages them to do so. Judges can schedule conferences and parties can request them as well.

The memorandum advises judges to examine their calendars, prioritize cases that will benefit from conferences, decide pending motions to clear backlogs, and to reduce their dockets while there are no new filings.

The big takeaway is that judges' chambers will be staffed and operational - conducting conferences and resolving motions to help clear their dockets. Your pending lawsuits are no longer frozen and progress will be made.

What don't we know?
There are some key limitations in this memorandum that cannot be overlooked:

Going forward, the existing prohibition on the filing of new non-essential matters will continue.

It is clear that as of now, you cannot commence a new action in NYS courts (you can commence a new action in the Federal courts). That means no new lawsuits in NYS courts. It is not clear, however, if that means you can file new papers on pending actions. For instance, it is unclear if you are permitted to file a new motion on a pending action, or even an answer to a complaint that was already filed and served. For now, existing administrative and executive orders tolling time limitations still control.

What to expect going forward.
Judge Marks realizes that a total freeze on court operations is unnecessary. While in-person appearances in a judge's courtroom or chambers are sometimes necessary for a civil matter in the Supreme Court, it is rarely mandatory. Remote conferences can handle most preliminary conferences, discovery disputes, and status conferences. In-person appearances are unnecessary to resolve most motions, and oral argument can be conducted over Skype, Zoom, etc. Civil parts in the Supreme Court can operate at nearly 100% capacity without opening their doors to the bar. 

I expect Judge Marks to reopen the civil parts of the Supreme Court in stages, gradually increasing their capacity until everything except trials can move forward while the rest of the country remains closed due to COVID-19. 

Courts that heavily rely upon in-person appearances, such as landlord-tenant court and the housing court, will be slower to reopen, but those actions are stayed anyway so there is less emphasis on figuring out remote operations for those parts. 

Look for continuing guidance from Judge Marks and local administrative Judges later this week and early next week.

Can any of this become permanent?
It is no secret that it is exceptionally difficult to force large institutions to adopt opportunities presented by advances in technology. For example, even though we have electronic filing, attorneys still need to appear in person to file physical motion papers in some courts that are too stubborn to change their old procedures. Even though some states permit telephone conferences, some courts in New York force attorneys to appear in their courtroom just to tell the judge that they are on schedule with their discovery and don't need any help from the court. That is a waste of time, money, and the courts' limited resources.

Perhaps the changes forced by COVID-19 will open the courts' eyes to the increased efficiency and productivity that technology can bring to our stubborn industry. Listen to our podcast about the future of the courts HERE - Court System is Archaic | Modernization Needed ASAP.

Friday, April 03, 2020

Paycheck Protection Program - Regulations Explained

The Coronavirus Aid, Relief, & Economic Security Act (CARES Act), signed into law on 3/27/2020, includes expeditious relief for America's small businesses through loans funded at $349 billion.

§1102 of the CARES Act establishes the Paycheck Protection Program (PPP) under the SBA 7(a) Loan Program & §1106 provides forgiveness of up to the full principal of loan.

To fulfill the expeditious intent of providing relief to small businesses, the SBA issued its final rule on 4/2/2020 without the typical 30-day delay for effectiveness. 

We will be discussing the PPP in great detail on Real Estate Investing with Andrew Lieb this Sunday at noon on LI News Radio (WRCN / FM103.9) - If you are in business, don't miss this important segment - it could save your financial life. 

Here is a Summary of the Interim Final Rule found at 13 CFR Part 120
  • Loan Terms:
    • No collateral
    • No personal guarantee
    • No fees
    • Loan payments deferred 6 months (interest accrues)
    • 2-year maturity
    • 1% interest rate
    • Maximum loan $10MM
  • Loan Amount (calculation methodology):
    1. Aggregate payroll costs from last 12 months
    2. Subtract amounts paid to employee over $100K
    3. Divide net of steps 1 & 2 by 12
    4. Multiply step 3 by 2.5
    5. Add outstanding amount of an Economic Injury Disaster Loan made from 1/31/2020 to 4/3/2020 less advances
  • Loan Forgiveness Availability:
    • Employees are on the payroll for 8 weeks 
    • Money used for payroll, rent (lease dated before 2/15/2020), mortgage interest (obligation incurred before 2/15/2020), or utilities (service agreement before 2/15/2020)
    • 75% of loan forgiven must be used on payroll
    • Payroll includes:
      • Small business = Salary, wages, commission, cash tips, vacation / parental / family /medical / sick leave, allowance for separation / dismissal, employee benefits (health / retirement), state / local employment tax
      • Independent Contractor = wage, commission, income, or net earnings
    • Payroll doesn’t include: 
      • Employee with principal residence outside US
      • Salary over $100k (prorated)
      • Fed employment tax from 2/15/2020 to 6/30/2020
      • Qualified sick & family leave wages
    • To prove proper payments, lenders can rely on borrower’s documentation without any verification requirements
  • Application:
    • SBA Form 2483 (lender submits SBA Form 2484)
    • Applicant certifies that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the applicant.
    • Available from 4/3/2020 to 6/30/2020 or until exhausted
    • Borrower can only get 1 loan
    • First-come, first service
    • E-signature / consent permitted
  • Eligibility:
    • Must be small business, non-profit, independent contractor (sole proprietor)
    • Must have < 500 employees (certain exceptions if bigger) with principal place of residence in US
    • Must be in operations on 2/15/2020 with W2 employees
    • Must submit proof of eligibility of:
      • Payroll processor records
      • Payroll tax filings
      • Form 1099-Misc
      • Income & expenses for sole proprietorship
      • If don’t have above, bank records to demonstrate qualifying payroll
  • Ineligibility:
    • You are engaged in illegal activity under federal, state or local law (no legal marijuana) 
    • Household employer of nannies / housekeepers
    • Owner of 20% or more is incarcerated, on probation / parole, subject to indictment, criminal information, arraignment, or convicted of felony in last 5 years
    • Delinquent / defaults on SBA loan within last 7 years
  • Misuse Penalties:
    • Knowingly using loan for unauthorized purposes is fraud
    • False statements on application is up to 5 year imprisonment / up to $250K fine + up to 2 years imprisonment / up to $5K fine + up to 30 years imprisonment / up to $1MM fine
  • Lenders Fees Paid from SBA:
    • 5% of loans up to $350K
    • 3% of loans over $350K & less than $2MM
    • 1% of loans at least $2MM  
  • Agent Fees Paid by Lender from its Fees:
    • 1% of loans up to $350K
    • 0.5% of loans over $350K & less than $2MM
    • 0.25% of loans at least $2MM
·        Questions should be made to Lender Relations Specialist at the local SBA Field Office 

Thursday, April 02, 2020

“Unemployment on Steroids”: Cares Act Extends Unemployment Coverage to Independent Contractors and Provides an Additional $600 to Individuals Receiving NYS Benefits

In response to many workers losing their jobs as a result of COVID-19, the federal government is providing unemployment insurance assistance in addition to what is currently offered by the States. Some members of Congress aptly referred to the new law as “unemployment on steroids.” The law provides the following additional unemployment insurance benefits:
  • Extends eligibility to independent contractors, individuals who are self-employed, or cannot work (individuals who can telework are not covered) for a reason directly related to COVID-19. In order to apply for Pandemic Unemployment Assistance ("PUA"), you must first apply and be determined ineligible to receive New York State unemployment insurance benefits.
  • Provides an additional $600 a week to all individuals receiving State unemployment insurance benefits. In New York State, if you are receiving the minimum benefits, the maximum benefits ($504 per week) or somewhere in between, you will receive an additional $600 per week. The federal benefits are retroactive to January 27, 2020 and expires on July 31, 2020. It is unclear from the information currently available whether you are entitled to the additional $600 if you are receiving partial unemployment benefits from New York State (hours/salary are reduced by employer).
  • Provides an additional 13 weeks of benefits (NYS currently offers 26 weeks of unemployment benefits).