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Joe Campolo was named a “King of Long Island” at an awards ceremony hosted by Star Network and Schneps Communications, the publishers of popular community newspapers throughout the region.  The awards program and networking expo honored prominent businessmen of Nassau and Suffolk Counties across a variety of industries.  The program, along with its sister “Queens” event, brought together elite business leaders for networking and celebration at Leonard’s Palazzo in Great Neck on April 12, 2016.

A carbon monoxide detector could have prevented the tragic death in February 2014 of Steven Nelson, an employee at Legal Seafoods at the Walt Whitman Shops in Huntington Station, who fell victim to poisonous fumes from a malfunctioning water heater pipe at the restaurant.  The tragedy prompted a recent amendment to the New York State Executive Law to require the Uniform Fire Prevention and Building Code to address carbon monoxide detection in commercial buildings.  The Uniform Code now requires the installation of carbon monoxide detectors in all restaurant and commercial properties in the state.   Previously, detectors were required in one- and two-family homes, condominiums, co-ops, and multiple dwelling units, but restaurants and commercial buildings were excluded.

The law applies to “existing commercial buildings,” which includes commercial buildings constructed prior to December 31, 2015.  A detection device is mandated in any commercial building that (i) contains any carbon monoxide source (including a garage), and/or (ii) is attached to a garage, and/or (iii) is attached to any other motor-vehicle-related occupancy.  The law requires a detection device in each story of a building or “detection zone” with the presence of a carbon monoxide source.  Unlike in the residential setting, a combination smoke alarm/carbon monoxide detector will not satisfy the new requirement for commercial buildings.  The law contains heightened compliance requirements for new construction after December 31, 2015, including hard-wiring carbon monoxide detection as part of the building’s fire monitoring system.

The “transition period” to comply with the new law runs through June 27, 2016.  However, commercial building owners are encouraged to comply with the new law—which will protect employees, customers, and everyone else who enters a commercial space—as soon as practicable.  The goal of the new law is to protect employees against potential hazards.  Employers who lease commercial space should consult with their landlords and review their leases to facilitate the installation of the carbon monoxide detectors to comply with the law.  Please contact us with any questions or concerns about compliance with this critical safety measure.

By Scott Middleton

New York’s Court of Appeals recently decided a case extending a doctor’s duty beyond that of his or her patient.  Doctors, under certain circumstances, may now be responsible for injuries caused by their patients to third parties.

In Davis v. South Nassau Communities Hospital, 2015 NY Slip Op. 09229, the plaintiff commenced an action for injuries caused by Lorraine Walsh.  Walsh’s vehicle crossed the center line of the roadway, striking the bus the plaintiff was driving.  The defendants in the case included the hospital and medical professionals from Island Medical Physicians, P.C.

Walsh had been administered Dilaudid (an opioid narcotic painkiller) and Ativan (a benzodiazepine drug).  She was discharged without being warned about the effects these drugs, individually and combined, would have on her ability to operate an automobile.  She was given the drugs at 11:00 a.m. and was discharged 90 minutes later.

The side effects of Ativan include sedation, dizziness, weakness, unsteadiness and disorientation.  Dilaudid is between two and eight times more powerful than morphine and contains warnings that include “may impair mental and/or physical ability needed to perform activities such as driving.”  Walsh was not advised of these warnings.

The plaintiff sought damages for injuries sustained as a result of the defendants’ medical malpractice.  The medical defendants countered by asserting that they did not owe plaintiff a duty of care inasmuch as the plaintiff was a third party to the treatment rendered to Walsh.

The court determined that a “critical consideration in determining whether a duty exists is whether the defendant’s relationship with either the tortfeasor or the plaintiff places defendant in the best position to protect against the risk of harm.”  The Court of Appeals found that under the circumstances, the defendants owed the plaintiff a duty to have warned Walsh that the medication they administered impaired her ability to safely operate an automobile.  In this instance “the defendants’ relationship with the tortfeasor placed them in the best position to protect against the risk of harm.”

It is important to note that medical professionals need not do more under this case than warn the patient of the dangers.  The case does not examine the need to assess if the patient can understand the warning.  That being said, a creative attorney will most assuredly try to extend this new duty even further.  Therefore, an assessment of a patient’s ability to comprehend the warning may be a reasonable consequence of this decision.

As Judge Stein pointed out in her dissent, this decision is directly opposite to the long-standing precedent that a physician’s duty of care does not extend beyond the patient to the community at large.

From this point forward, doctors and healthcare facilities will be well advised to warn patients about the effects of drugs on the ability to drive and perhaps to assess the patient’s ability to comprehend the warning.  As we know, plaintiffs’ attorneys will always be creative in looking for and finding the deep pocket.

Joe Campolo, Managing Partner at Campolo, Middleton & McCormick, LLP talks with LI News Radio 103.9 FM host Jay Oliver about tips for hiring employees.

Joe Campolo, Managing Partner at Campolo, Middleton & McCormick, LLP talks with LI News Radio 103.9 FM host Jay Oliver about the importance of customer service and corporate culture.

New York business owners, take note: loopholes offering the potential to avoid personal liability for unpaid wages to employees have been recently eliminated.  Prior to these changes, owners of New York limited liability companies, as well as owners of LLCs and corporations created outside of New York (for example, Delaware), were not personally liable for paying wages to their New York employees.  Now, owners of New York corporations and LLCs, as well as owners of corporations and LLCs created outside of New York, could be personally liable for failure to pay wages.

An amendment to the law on limited liability companies (Limited Liability Company law) was modified, effective February 15, 2015, so that the 10 LLC members with the largest percentage ownership interest are personally liable, jointly and severally, “for all debts, wages or salaries due and owing to any of its laborers, servants or employees, for services performed by them for such limited liability company.”  This imposition of liability on the 10 largest LLC members creates an exception to the general shielding of an LLC member for claims made against the LLC.  The definition of “wages or salaries” includes all compensation and benefits payable by an employer to an employee, such as overtime, vacation, holiday and severance pay, employer contributions to pension funds, and insurance payments.  To hold the 10 largest LLC members personally liable for non-payment of such benefits, an employee must notify the member(s) in writing within 180 days of termination of employment of his or her intention to do so.

This amendment closely mirrors an already existing provision of New York’s law on corporations (Business Corporation Law) that holds the 10 largest shareholders of a corporation jointly and severally liable “for all debts, wages or salaries due and owing to any of its laborers, servants or employees…for services performed by them for such corporation” and also requires notice to such shareholders.  BCL § 630.  Therefore, by expanding personal liability for LLC members, the amendment removes one of the distinctions between corporations and LLCs in New York.  (There remain other differences, such as the relative flexibility of LLC governance and structure, that may still make the LLC an attractive option to business owners.)

Effective January 19, 2016, New York further expanded unpaid wage liability when Governor Cuomo signed an amendment to the BCL expanding this liability to foreign corporations that operate and have employees in New York State.  In removing the domestic incorporation limitation on personal shareholder liability for unpaid wages, the law allows employees of out-of-state corporations to seek payment of wages from the 10 largest shareholders.

These pro-employee amendments push New York further from the mainstream view in other states that a corporate owner is typically personally liable for the debts of his or her entity only in cases of the shareholder’s wrongdoing.  Importantly, the BCL and LLC Law do not distinguish among owners by any basis other than percentage of ownership, such as responsibility for incurring the debt in the first place.  The changes therefore underscore the importance for business owners to review their wage and hour payment practices and ensure compliance with these policies.

What happens when an attorney represents a corporate entity in the formation of that entity and then represents one of the shareholders in a corporate dissolution proceeding?  Should the attorney be disqualified because of the knowledge he/she obtained while forming the corporation?  Will that attorney be considered a necessary witness?  The Commercial Division in Suffolk County recently ruled on these issues deciding that, at least in this instance, the attorney should not be disqualified and would not be a witness.

In Altungeyik v. Ayknat, et al. (J. Pines), Plaintiff shareholder commenced a shareholder’s derivative action/dissolution proceeding against the other shareholder of the corporation and the corporation.  The matter proceeded to trial for the sole purpose of determining the value of the corporation – Euro Planet, Inc. (“Euro Planet”).  Once the matter had been set for trial, Plaintiff obtained new counsel who then sought to have Defendant’s counsel, Walter Drobenko, Esq., (“Drobenko”) disqualified on a number of grounds, specifically: (a) Drobenko previously represented the Plaintiff in the preparation of the shareholder’s agreement for Euro Planet; (b) Drobenko previously represented the Plaintiff in the preparation of a pre-nuptial agreement and an immigration application; and (c) Plaintiff and Drobenko negotiated to be partners in a new restaurant venture together.  Plaintiff claimed that Drobenko obtained personal and private information about Plaintiff while representing him and that the Drobenko would be a necessary witness in determining the value of Euro Planet because he drafted the shareholder’s agreement and determined the value of the shares.

In opposition to the disqualification motion, Drobenko stated that he only represented Euro Planet, not the Plaintiff or Defendant when the corporation was formed.  Additionally, although he acknowledged assisting the Plaintiff with a pre-nuptial agreement and immigration application, he argued that neither of those matters are substantially similar to the determining the valuation of Euro Planet. He also stated that he never discussed partnering with the Plaintiff in the purchase of a restaurant.  Drobenko further argued that he had no personal knowledge of the value of Euro Planet and would not be a necessary witness.  Lastly, Drobenko argued that Plaintiff’s disqualification motion was untimely because it was made after the commencement of trial.

In its decision, the Court noted that the party seeking to disqualify an attorney carries a heavy burden because every party has the right to be represented “by counsel of its own choosing” which is “a valued right which should not be abridged absent a clear showing that disqualification is warranted.”  Mediaceja v. Davidov, 119 A.D.3d 911 (2d Dep’t 2014).  To obtain disqualification of an adversary’s attorney, the moving party must prove: “(1) the existence of a prior attorney-client relationship between the moving party and opposing counsel, (2) that the matters involved in both representations are substantially related, and (3) that the interests of the present client and former client are materially adverse.”  Tekni-Plex, Inc. v. Meyer & Landis, 89 N.Y.2d 123, 131 (1996).  Rule 1.18(c) of the Rules of Professional Conduct also prohibits a lawyer from representing “a client with interests materially adverse to those of a prospective client in the same or a substantially related matter if the lawyer received information from the prospective client that could be significantly harmful to that person in that matter.”

Ultimately, the Court here decided that Drobenko should not be disqualified from representing the Defendant.  With respect to his prior representation of Euro Planet in the formation of the corporation, the Court noted that the Second Department has rejected Plaintiff’s exact argument and that Drobenko should not be disqualified in a valuation proceeding simply because of his prior representation.  The Court also noted that Plaintiff failed to show that Drobenko’s prior representation of the corporation concerned any confidential information regarding the value of the corporation.

The Court also held that Drobenko’s prior representation of Plaintiff with a pre-nuptial agreement and immigration application, as well as discussions about partnering in the purchase of a restaurant (if it was true), had no relation to the corporate valuation of Euro Planet. The Court also took issue with Plaintiff waiting as long as he did to make the disqualification motion which delayed the trial of what was intended to be an expedited matter.  Lastly, the Court found that Drobenko’s testimony would not be necessary as a witness because there was no evidence that he had any first-hand knowledge of the value of Euro Planet.

It is important to note that a Court’s analysis of whether to disqualify a particular adversary’s attorney will be a very fact-specific inquiry.  However, it appears, based on this decision at least, that the Courts are not going to disqualify an attorney unless the moving party can truly show that the matter is substantially related to prior representation and that the attorney learned information that could be harmful to the prior client.  Here, the Court agreed with Drobenko that he only represented the corporation, not the individual shareholders, when he assisted with the formation of the company and he is neither a witness nor should he be disqualified based upon such representation.

By Patrick McCormick

The Appellate Courts have been busy this fall rendering significant decisions involving landlord/tenant law.  Two decisions of interest are discussed below.

The first is a decision by the Appellate Term, Second Department[1] involving a landlord who engaged in self-help to regain possession of the commercial demised premises at issue.  The tenant commenced an unlawful entry and detainer summary proceeding under RPAPL §713(10), and apparently the landlord engaged in self-help to regain possession of the demised premises after commencement of the proceeding.

The court recognized a landlord’s right to engage in self-help, provided such is authorized by the parties’ lease.  Here, the landlord engaged in self-help—as authorized by the commercial lease—upon the tenant’s alleged breach of the lease after the notice called for therein.  The Appellate Term dismissed the tenant’s petition, not because the landlord improperly engaged in self-help, but because the tenant’s pleadings failed “to contain any allegations establishing that tenants were not in breach of a condition of the lease, that landlord had not complied with the lease provisions requiring notice, or that reentry by landlord was not accomplished peaceably.”

While achieving an apparent victory, the landlord was, in fact, not so lucky.  The Appellate Term affirmed the denial of the landlord’s request for possession and for use and occupancy.  The court recognized that RPAPL §743 permits the assertion of legal counterclaims on a summary proceeding.  The court emphasized that RPAPL §743 “does not allow a respondent to circumvent the requirements of RPAPL article seven for the maintenance of a summary proceeding to obtain a judgment of possession” (citations omitted).  When the tenants resumed possession, they did so—if landlord’s position was accepted—as squatters, the lease having been terminated, and no 10-day notice was served as is required to obtain a final judgment pursuant to RPAPL §713(4) (citation omitted).  Moreover, the landlord had not pleaded the elements of a Civil Court ejectment action.

Thus, although the tenant had reentered the premises, the court determined that the landlord was, nevertheless, obligated to comply with the notice requirements of the RPAPL prior to initiating a claim for possession.  Indeed, the Court chastised the landlord, holding “while the landlord may now be faced with additional litigation, this was brought about by landlord’s resort to self-help.  The court was available for landlord to seek an award of possession, but, having chosen to act on its own, landlord cannot now complain of being denied the opportunity to short circuit the procedural requirements of a summary proceeding, by way of counterclaim.”  Therefore, engaging in self-help may not result in expeditiously obtaining possession of the demised premises, and caution should be used before engaging in such.

The second case, from the Appellate Division, First Department,[2] involves a tenant’s claim that the landlord was improperly charging tenant an assessment for a façade restoration.  In affirming the lower court’s ruling that the tenant was not obligated to pay any part of the façade restoration assessment, the court looked to the unambiguous language of the parties’ lease.  The court recognized that the lease specifically provided that after the condominium conversion, “‘and in lieu of CAM [common area maintenance] Costs described in paragraph (B)(1) above,’ ‘Tenant shall pay…[its] Proportionate Share of [the] monthly Common Charges levied against the Commercial Unit; and other special or regular assessments against the Commercial Unit.’”  The court went on to recognize that the lease specifically provided that “‘costs for capital improvements, to the extent that same are not in furtherance of reasonable or necessary maintenance of the building,’ ‘shall not be included as CAM Costs.’”  The court rejected the defendant/landlord’s argument that the obligation to pay “other special or regular assessments against the Commercial Unit” required the tenant to pay a proportionate share of the façade assessment.  While the court did not go into detail in explaining its reasoning, the decision serves as a cautionary tale to both landlords and tenants that, whenever possible, the obligation to pay certain costs must be specifically detailed in the parties’ lease.

[1] Martinez v. Ulloa, 2015 WL 5775821(App.Term 2d Dep’t 2015)

[2] Rogan LLC v. YHD Bowery Commercial Unit LLC, 2015 WL 6510726 (1^st Dep’t 2015)