Coronavirus Frustrates the Purpose of a Sit Down Restaurant's Lease, No?

Can a tenant terminate a lease because their purpose was frustrated?

We are getting contacted by restaurateurs who want to get out of their lease because they have to close their sit down / dine in operation and only offer delivery / take out, but can they?

The appellate courts have held that "[i]n order to invoke this defense, 'the frustrated purpose must be so completely the basis of the contract that, as both parties understood, without it, the transaction would have made little sense.'"

On that holding, the doctrine of frustration of purpose seems like it may get a restauranteur out of their lease.

In that holding, an office was able to terminate their lease because the CO didn't permit office use. Through analogizing to where an office tenant utilized frustration of purpose to get out of a lease because of an "inability to lawfully use the premises" based upon the CO, it's possible that a restaurateur can utilize the doctrine of frustration of purpose to terminate the lease where the purpose of the lease was to offer sit-down dining and now the same is not allowed as a matter of law.

However, appellate courts have also held that "a frustration of purpose defense 'is not available when the event preventing performance was foreseeable.'"

Expect a lot of restaurants to make this argument going forward and the issue of foreseeability will be everything if it gets to a trial. 

Attention Insurance Companies - DFS Puts More on Your Plate

The Department of Financial Services' Circular No. 5 (2020) is making its rounds and requires all entities regulated by DFS to submit a COVID-19 Preparedness Plan. All regulated entities are required to submit the plan on or before Thursday, April 9, 2020.

DFS is requiring the Preparedness Plan to account for both operational and financial risks. On the operational side, the plan should include:

1. Preventative measures tailored to the entity’s specific profile and operations to mitigate the risk of operational disruption, which should include identifying the impact on consumers and vendors;
2. A documented strategy addressing the impact of the outbreak in stages, so that the entity’s efforts can be appropriately scaled, consistent with the effects of a particular stage of the outbreak;
3. Assessment of all facilities, systems, policies and procedures necessary to continue critical operations and services if members of the staff are unavailable for longer periods or are working off-site, including the effectiveness and security of remote access;
4. Employee protection strategies, critical to sustaining an adequate workforce during the outbreak, including employee awareness and steps that employees can take to reduce the likelihood of contracting COVID-19;[1]
5. Assessment of the preparedness of critical third-party service providers and suppliers;
6. Development of a communication plan to effectively communicate with consumers and vendors, and to deliver important news and instructions to employees, along with establishing forums for questions to be asked and addressed;
7. Testing of the plan to ensure that the policies, processes, and procedures are effective; and
8. Governance and oversight of the plan, including identifying the critical members of a response team, to ensure ongoing review and updates to the plan, including the tracking of relevant information from government sources and the entity’s own monitoring program.

On the financial risk side, the plan should include: 

1. Assessment of the overall impact of COVID-19 on reserve requirements, consumers’ ability to make timely premium payments, and resources required to timely process claims;
2. Assessment of the credit risk of counterparties and business sectors impacted by COVID-19;
3. Assessment of the credit exposure to counterparties and business sectors impacted by COVID-19 arising from investing and other financial transactions;
4. Assessment of the scope and the size of admitted assets or other investments adversely impacted by COVID-19 that currently are in, or potentially may move to, non-performing/delinquent status, including consideration of stress testing and/or sensitivity analysis of such assets or investments;
5. Assessment of the valuation of assets and investments that may be, or have been, impacted by COVID-19; and
6. Assessment of the overall impact of COVID-19 on earnings, profits, capital, and liquidity.

A full copy of Circular No. 5 (2020) can be found HERE. 

If it seems that DFS is just here to put more on your plate when you need it least, DFS has also issued a temporary COVID-19 relief order which improves the ability of banks and insurers to operate remotely. A full copy of the temporary relief order can be found HERE. 

Nassau and Suffolk County Evictions and Foreclosure Auctions on Hold

Effective 5:00 pm on March 16, 2020, no eviction orders shall be signed and no foreclosure auctions shall be held in all Nassau and Suffolk Courts. The hold is in effect until rescinded and it is in accordance with the protocol put into place by the Chief Administrative Judge of New York State Courts due to COVID-19.

You can see the Nassau County Administrative Order here and the Suffolk County Administrative Order here.

Courts Are Closed | Lieb at Law is Working For You

The Coronavirus is Affecting Us All
The spread of the novel coronavirus, COVID-19, has resulted in the disruption of everyone's daily lives, including the legal world. However, Lieb at Law is still operating at 100% capacity and working for you.
 
Lieb at Law is Fully Operational
Lieb at Law is a fully digital law firm. Thanks to our existing cloud systems, our staff is operating at full capacity from outside of the office. All attorneys, paralegals and support staff have full access to our telephone, case management, and file management systems. Because of our ability to work remotely, our office is currently not physically staffed. Please do not come to our office without an appointment. If you have any questions about your case, transaction, or any other legal matter, please contact us through phone or email and we will attempt to immediately assist you.

Lieb is Leading The Way on Remote Closings 
Real Estate Transactions (Closings) are moving forward and Lieb at Law is leading the move to fully remote closings, including requests to our government to change laws, rules, and regulations to facilitate remote notarizations (the only time that you currently need to see another human in a real estate deal). Our attorneys and paralegals are using every tool available to ensure closings occur on time, without cancelation. Our attorneys and paralegals will contact you to advise you exactly how your closing will proceed, and when.

Lieb is Still Litigating
The Court system is shutting down all non-emergency functions. New rules and procedures are being implemented every day and Lieb at Law is up to date with every change. Depositions, trials, mediations, arbitrations, court conferences, and other in-person proceedings are being adjourned administratively by the courts beyond April 30, 2020. If you had a legal proceeding scheduled to occur before April 30, 2020, it likely has already been adjourned. We are contacting our clients to inform them of these adjournments, but if you are unsure if you should appear at any scheduled proceeding, please contact us ahead of time to confirm its status. 

While the Courts are closed, we are still litigating. Discovery demands, and responses, motions, negotiations, and other proceedings that do not require in-person interactions are continuing. We will work diligently to ensure that your case is minimally affected by the Court closures. In fact, this is a great opportunity for settlement and we are working diligently to resolve cases outside of the court system.

Lieb Knows Employment Law
Lieb at Law attorneys are tracking the development of employment laws that are accompanying mass quarantines and the shuttering of businesses. Whether you are an employer or an employee, it is important that you know and understand your rights and obligations. We can answer all your employment questions, and we encourage you to follow our blog (blog.liebatlaw.com), call or email for all of the latest news and developments. 

Lieb is in Bankruptcy Law
We relaunched our bankruptcy practice (previously operated during the Great Recession) to combat the needs of our clients, particularly businesses that are facing revenue shortfalls and must restructure their debts to survive the quarantines. Contact us for a consultation should you or your business have questions about a Chapter 7, 11 or 13.

Lieb Leads the Way
We've been ready the entire time for this. We are agile and leverage technology like no other law firm around. Lieb at Law has always been at the forefront of the evolving legal landscape. During the Great Recession and the foreclosure crisis, we rose to the top and differentiated ourselves as a leader by knowing more about the new laws and regulations than anyone else. In fact, we trained the legal and real estate brokerage industries through our continuing education classes. Our talented attorneys and paralegals are dedicated to remaining the first to know and understand changes in laws that accompany tumultuous times. In 2020, Lieb at Law is even more capable. Whatever changes the novel coronavirus brings, you can trust that Lieb at Law will be leading the way with legal solutions. 

Please be safe and take all necessary precautions to protect yourself and your loved ones. 

Governor Cuomo Announces Legislation Providing Paid Leave and Job Protection to Employees

On Tuesday March 17, 2020, Governor Cuomo announced that the New York State legislature has agreed to paid sick leave and other protections for employees as a result of the impact of the Coronavirus. While the text of the bill has not yet been released and has not passed the legislature, the Governor announced that the legislation, which will become effective immediately upon enactment, will include the following:

• Employers with 10 or fewer employees and a net income less than $1 million will provide job protection for the duration of the quarantine order and guarantee their workers access to Paid Family Leave and disability benefits (short-term disability) for the period of quarantine including wage replacement for their salaries up to $150,000.
• Employers with 11-99 employees and employers with 10 or fewer employees and a net income greater than $1 million will provide at least 5 days of paid sick leave, job protection for the duration of the quarantine order, and guarantee their workers access to Paid Family Leave and disability benefits (short-term disability) for the period of quarantine including wage replacement for their salaries up to $150,000.
• Employers with 100 or more employees, as well as all public employers (regardless of number of employees), will provide at least 14 days of paid sick leave and guarantee job protection for the duration of the quarantine order. 

The legislation will also include annual sick leave (similar to the NYC law), which will be effective 180 days after enactment. The legislation, according to the Governor, will include the following:

• Employers with 4 or fewer employees and a net income less than $1 million will provide at least 5 days of unpaid sick leave each year.
• Employers with 5-99 employees and employers with 4 or fewer employees and a net income greater than $1 million will provide at least 5 days of paid sick leave each year.
• Employers with 100 or more employees will provide at least 7 days of paid sick leave each year. 

New Coronavirus Sick Leave Laws for Employers / Employees

On March 14, 2020, to combat Coronavirus' impact on employment, the House of Representative passed a bill.

This bill must still be passed by the Senate and signed into law by the President to be effective.

If effective, this bill will provide paid leave benefits to many employees in the form of an extension of the Family Medical Leave Act ("FMLA") and the implementation of a new Paid Federal Sick Leave law.

Employers should immediately begin preparing polices and leave request forms in anticipation of this new law going into effect to ensure compliance and avoid exposure.

Here is a summary of the new leave bill as currently constituted:

1) Extension of FMLA Leave

• Applies to employers with less than 500 employees.
• Applies to employees who have been employed for at least 30 calendar days.
• Excludes health care provides, emergency responders and employers with less than 50 employees where the "viability of the business as a going concern" would be jeopardized.
• The first 2 weeks are unpaid; Remaining 10 weeks at 2/3 employee's regular rate of pay.
• Leave can be taken for the following reasons:
• In adherence of recommendation of health care provider, that employee's presence at work would place others at risk because of the employee's exposure to Coronavirus or because the employee exhibits symptoms related to the Coronavirus (these conditions must render employee unable to both perform the functions of his/her job while complying with the recommendation/order);
• To care for a family member, where a health care provider or authority determines that the family member needs to remain isolated from the community because he/she has been exposed to the Coronavirus or exhibits symptoms of the Coronavirus; or
• To care for a child whose school is closed or his/her regular childcare provider is unavailable.

2) Paid Sick Leave

• Applies to employers with less than 500 employees. 
• Employers are required to pay employees up to 80 hours of paid sick leave.
• Paid sick leave may be used for the following reasons:
• To self-isolate because employee was diagnosed with Coronavirus;
• To seek medical care if employee is experiencing symptoms related to Coronavirus;
• To comply with recommendation/order by health care provider or public official that employee's presence in the workplace would jeopardize the health of others because of employee's exposure to the virus or the employee exhibiting symptoms of the virus;
• To care for a family member who qualifies under the previous provision; or
• To care for a child whose school is closed or his/her regular child care provider is unavailable. 
• Employers must pay all employees who qualify at the employee's regular rate of pay. However, if employee's leave is a result of the 4th or 5th reason above, employer must only compensate employee at 2/3 of his/her regular rate of pay. 

3) Timing/Job Protections/What is not Covered?

• The bill would take effect 15 days after it is enacted and would be effective only until the end of 2020.
• Position is protected until return from leave unless employer, who employs 25 or fewer employees, eliminates position due to a downturn in economic conditions as a result of the Coronavirus. However, employers would still have to make "reasonable efforts" to restore employee to the same or equivalent position.
• This bill, as presently constituted, does not provide protections for employees whose employment is suspended or terminated due to employer closures.

Real Estate Tips: How to Invest with Partners

Real Estate Investing Coach Andrew Lieb discusses how to structure your agreements when investing in real estate with partners. Have you considered each party's roles and responsibilities, capital contributions, buy out options, and how to limit exposure to your personal assets? It's time to structure your deals with more than a handshake.

Listen to this podcast here

Coronavirus & Foreclosure: It's about to get real

With quarantine, foreclosures are next.

We are heading for a recession and possibly a depression the likes of which we haven't seen before.

Jobs are going to be lost, tenants aren't going to pay rent, mortgage payments are going to be missed and banks will have no choice but to start to pursue foreclosure.

If you are currently in a foreclosure proceeding, you should know that the courts have just rescheduled (adjourned) all foreclosure settlement conferences (CPLR 3408) for at least 45 days while they work on new orders and directives for the process.

This is going to be a mess.

If you are concerned about your mortgage, you need to act immediately and negotiate a forbearance (i.e., banks often agree to refrain from pursuing a foreclosure for a period of time for no or reduced payments) with a lender before going into default.

Get ready - the next foreclosure crisis is here.

NYC Housing Court on Eviction Moratorium Due to Coronavirus

Effective March 13, 2020, the New York City Housing Courts are on a one-week moratorium on evictions in New York City, subject to further extension upon review. Further, New York City Housing Court is also directed to decline to issue new eviction warrants when a party has not appeared in court, until further notice.

This moratorium is imposed through a memorandum on the coronavirus from the Chief Administrative Judge of the State of New York Unified Court System. You can read the memorandum here.

Attention Idiots - You will get sued if you ignore quarantines & expose others to COVID-19

Coronavirus is NOT a HOAX - idiots - you are killing people.

A lot of people ask me what the MPH stands for after my name - Master in Public Health.

Plus, that Esq. thing makes me a litigator.

I keep reading about unqualified people telling you about coronavirus - well, I'm qualified & maybe it's time that we go back to relying on a meritocracy where you listen to the ones with diplomas on the wall rather than some rambling buffoon. This blog should help motivate you.

Did you know that Courts have ruled that "[a] duty to disclose has been held to exist where the
defendant knew or should have known that he or she had a communicable disease?"

Under the NYS Public Health Law §2(1)(l), a communicable disease "means infectious, contagious or communicable disease." Further, pursuant to 10 NYCRR 2.1 "Severe or novel coronavirus" is designated as a "communicable disease".

Based upon established case law, if someone is infected with coronavirus from an idiot who breaks quarantine they should sue for negligent transmission of the disease. Silver v. Levittown Union Free School District

I'm talking to you, idiot who took the plane to Florida
I'm talking to you, idiot who went to the daddy-daughter dance
I'm talking to you, idiot who went to a business event

This is not a joke, a drill, a hoax, a conspiracy or something the Democrats are doing to Trump - this is life & death.

If that doesn't matter to you, I hope the fact that you now know that you will be sued changes your mind.

If it doesn't, did you know that NYS Public Health Law §2120 permits involuntary commitment of dangerous and careless patients? Plus, §2101 has reporting requirements for physicians, superintendents or officers of institutions, householders, hotel or lodging housekeepers, or any other person where a report must be made to the health officer of the local health district.

What this means is if you are a conspiracy theorist on coronavirus, we are watching you, we are reporting on you, we will sue you and you will be quarantined anyway. Get it?

Please respect quarantines - they matter!