Category: Uncategorized

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)

By Scott Middleton

Many of our clients own commercial buildings or multifamily residential buildings and may not be aware of their legal exposure when having construction, renovation, or repair work performed on these buildings.

Labor Law sections 240 and 241 apply to these types of buildings and can be devastating to the unknowing owner. If any worker falls from height, or has an accident involving a gravity-related risk while the work is being performed, the owner and general contractor are absolutely liable.

To adequately protect owners, first and foremost, only reputable contractors should be hired. In the contract between the owner and contractor, the parties must agree that the contractor and any subcontractor will indemnify and hold the owner harmless for all losses arising out of the work to be performed. It is imperative that the owner be named as an additional insured on all policies of insurance and that the policies be reviewed to ensure they contain the proper language.

Assuming all of the foregoing is done and an accident occurs, what happens immediately after the accident is very important. Do not rely upon the contractor or subcontractor to do what is right. As the owner, get involved or have your attorney or other representative become involved in the investigation immediately. This initial investigation is of paramount importance in terms of preparing a defense.

The steps to take immediately are: prepare an accident report, secure and preserve any equipment involved, photograph the area, obtain statements from all involved parties and witnesses, make copies of all contracts and insurance policies (as well as certificates of insurance), and notify all primary and excess insurance carriers.

For large projects, the burden of the investigation is usually shifted to a general contractor or construction manager. For small projects, the owner should have a simple and clear policy for doing its own initial investigation. Of course, our office can always assist in this process.

All incidents involving gravity-related risks or industrial code violations resulting in injuries to construction workers must be considered serious. This is true no matter how minor or inconsequential an accident seems. Even minor injuries can develop into career-ending injuries, thereby exposing property owners to astronomical damages.

February 10, 2016

Labor & Employment Update for 2016
Our next East End Executive Breakfast event will feature an interactive panel of Long Island professionals discussing important legal and practical updates on a wide range of Labor and Employment topics for business owners, CEOs, managers, in-house counsel, and human resources professionals. Join us as we host Irv Miljoner, Director of the Long Island District Office, U.S. Department of Labor’s Wage & Hour Division, together with Markowitz, Fenelon & Bank as we address employment law issues that impact our business community.

February 10, 2016
8:00 am to 10:00 am

Sea Star Ballroom
431 East Main Street, Riverhead, NY 11901

CMM Managing Partner, Joe Campolo
will moderate our panelists as they discuss:

• Independent Contractor Classification
• Overtime Exemptions
• Differences between Federal and NY State Labor Law
• Shared Work Program
• Individual Liability
• Private Lawsuits

The event is complimentary but reservations are required.

PANELISTS:

Arthur Yermash advises business owners, executives, and general counsel on legal and business strategies in his role as Senior Associate at Campolo, Middleton & McCormick, LLP. He has drafted and negotiated hundreds of contracts for various business-related matters including employment, non-competition, non-disclosure, licensing, supply, and distribution agreements.

Arthur’s practice also includes the representation of clients in investigations by regulatory and government agencies including the New York State Department of Labor, the United States Department of Labor, the New York State Attorney General’s Office, and the Equal Employment Opportunity Commission. 

MODERATOR:
Joe Campolo, Esq.
Managing Partner, Campolo, Middleton & McCormick, LLP

Joseph N. Campolo is the Managing Partner of Campolo, Middleton & McCormick, LLP.  With broad experience in both commercial litigation and transactions, Joe advises business owners, executives, and Board members on legal and business strategies.

By Christine Malafi

It’s that time of the year again! Many employers are hosting holiday parties, where employees, and sometimes clients and customers as well, get a chance to relax, socialize, and take a break from the work to celebrate the holiday season. Raising employee morale during the holiday season is a good way to say thank you for their work all year, but despite the fun of a party, there are potential legal issues which could quickly make you forget the fun. To avoid problems from arising, it is advisable to act before the party to minimize potential headaches after the party.

Serving alcohol is always a risk–the potential for accidents and injuries, as well as inappropriate behavior, and lawsuits. Risk can be reduced by advanced planning. While liability generally does not attach to “social hosts” for accidents or injuries suffered off-premises by third parties as a result of alcohol served by the host, at least in New York, if an employee leaves a holiday party, and travels directly to another state, New York law may not prevent liability. Additionally, no one under the age of 21 years may be served alcohol at a holiday party, or liability will result if someone is injured by that underage holiday party drinker. The safest way to prevent potential liability relative to physical injuries involving alcohol use at a holiday party is to hire bartenders to serve the alcohol and make sure alcohol is not served to underage party guests.

Another risk associated with alcohol consumption is the level of “celebration.” As an employer, you do not want managers and/or supervisors acting inappropriately or provocatively, or flirting, with your staff. Some people tend to exude an excessive amount of cheer during the holiday season. The same workplace standards of a non-hostile work environment and non-harassing conduct apply to and should be enforced at holiday parties.

If the party will have music, employers should check the song list, and gift-giving should have limits. Joking and teasing, while permissible, should be without the bounds of a work setting. You don’t want to start the New Year with a humiliated employee commencing a hostile work environment or discrimination lawsuit.

Additionally, it is probable that a court will find that employees’ attendance at a holiday party relates to their employment, even if attendance is voluntary, potentially triggering workers’ compensation benefits for injuries sustained during the party (and potentially afterwards). Employers must take reasonable steps to protect their employees (and guests) from injury, whether at the workplace or an off-site location where the holiday party is held.

Finally, to avoid potential wage claims, if attendance at the party is required, the party should be held during normal work hours.

To help set your mind at ease before your holiday party, consider doing the following:

• Have transportation to and from the party available;
• Hire a professional bartender or caterer with sufficient liability insurance;
• Provide non-alcoholic drinks;
• Serve food, not only snacks;
• Have management/supervisors at the party on the lookout for excessive drinking and/or inappropriate behavior;
• Have a holiday lunch instead of a dinner;
• Invite employees’ family members to participate in the party;
• Make sure employees know that they do not have to attend the party if they chose not to; and
• Do not focus on one religion or holiday to the exclusion of any employee’s beliefs or observances.

A little advance planning can go a long way to help the success of your holiday party!

If you have any questions about your holiday party, please feel free to contact us.

Happy Holidays!

On November 19, 2015, in Sierra Cub v. Village of Painted Post, New York’s highest court, the Court of Appeals, reversed a decision by the Appellate Division, Fourth Department, which had found that an individual petitioner lacked standing to challenge actions of the Village of Painted Post on State Environmental Quality Review Act (“SEQRA”) grounds.  In so doing, the Court continued a trend towards loosening restrictions on people to gain relief from the courts based on claims of environmental harm.  The question of standing when it comes to SEQRA challenges asks whether the petitioner has a sufficient interest in the environmental issues to be permitted to ask the court for help.

In 1991, the Court of Appeals decided Society of Plastics Industries v. County of Suffolk.  A trade organization sought to challenge a Suffolk County ban on plastic bags on the ground that the County failed to comply with SEQRA.  The Court of Appeals dismissed the challenge, stating, in part, that “[i]n land use matters … the plaintiff, for standing purposes, must show that it would suffer direct harm, injury that is in some way different from that of the public at large.”  Because there was no showing of direct environmental (as opposed to economic) harm to the members of the trade organization, the Court of Appeals found they lacked standing to challenge the County law.

In 2009, in Matter of Save the Pine Bush Inc. v. Common Council of City of Albany, the Court of Appeals took up the standing question again, exploring whether members of an environmental group concerned with protecting the Pine Barrens in Albany County had a sufficient interest different from the public at large to claim they were directly injured by the challenged municipal actions.  The Court of Appeals agreed the petitioners had standing because they alleged “repeated, not rare or isolated use” of the pine barrens recreational area, so they suffered harm different that “the public at large.”

In the Village of Painted Post case, the Village entered into a lease to permit a railroad company to construct a water transloading facility on an 11.8 acre parcel of land.  It also entered into an agreement with a subsidiary of Shell Oil to sell it up to 1.5 million gallons of water per day, which would be loaded onto trains at the new transloading facility.   A number of environmental groups and individuals who resided along the railroad tracks challenged the lease and bulk water sales agreement on the ground that the Village failed to comply with SEQRA’s strict procedural requirements.  The lower court found that none of the environmental groups had standing, in part, because none of the individual petitioners claimed to be members and the organizational interest was too generalized to establish standing.  Further, the lower court found that all but one of the individual petitioners lacked standing because the noise they encountered from trains on the tracks and their concern about water quality from the sale of water was general harm of concern to the public at large.  One petitioner, however, Marvin, was found to have standing.  Marvin alleged he could see the loading facility from his house, and that noise from the trains kept him up at night.  The Appellate Division disagreed, finding that Marvin’s concern about the noise of the trains was no different from those of all the residents of the Village who resided near the tracks.

The Court of Appeals addressed only Marvin’s standing.  It found that it does not matter that more than one person is directly impacted by the noise created from increased train traffic.  It quoted with approval a 1973 US Supreme Court case [United States v. Students Challenging Regulatory Agency Procedures (SCRAP)], where the Supreme Court said:

“[W]e have … made it clear that standing is not to be denied simply because many people suffer the same injury … To deny standing to persons who are in fact injured simply because many others are also injured, would mean that the most injurious and widespread Government actions could be questioned by nobody.” )

The Court of Appeals thus rejected the reasoning of the Appellate Division that, “because there are multiple residents who are directly impacted, no resident of the Village would have standing to challenge the actions of the Village”.  Because Marvin alleged that increased train traffic kept him awake at night, even without differentiating between train traffic on the tracks and noise form the loading facility, he had standing to challenge the actions of the Village pursuant to SEQRA.

It thus appears that, as long as an individual can assert direct harm from the challenged municipal action of the type that falls within the interests that SEQRA is intended to protect, he or she will be found to have standing, even though many others suffer the same direct harm.

The result will be that more challenges to municipal actions will be decided on their merits.

By Patrick McCormick

Can an e-mail exchange create a binding contract?

The short answer is yes!

With the proliferation of electronic communications, it is not surprising that courts are increasingly called upon to address claims alleging the creation of a binding contract based upon an exchange of e-mails.

The Appellate Division, Second Department recently held that e-mail communications between parties were sufficient to create a binding contract.  Law Offs. of Ira H. Leibowitz v. Landmark Ventures, Inc., 131 A.D.3d 583, 15 N.Y.S.3d 814 (2d Dep’t 2015) involved breach of contract claims related to services provided by the plaintiff.  In examining e-mail communications between the parties, the Court found “[b]y the plain language employed” by the parties in e-mail communications, it was clear that the plaintiff made an offer to provide services for a certain fee and that the defendant accepted the offer, creating a binding contract.

The Appellate Division, Third Department addressed a similar situation in the recent case In re Estate of Wyman, 128 A.D.3d 1157, 8 N.Y.S.3d 493 (3d Dep’t 2015).  The decedent and the respondent purchased an improved parcel of real property.  After the decedent’s death, her executor commenced a proceeding against the respondent to turn over ownership of the entire parcel to the estate, claiming that a series of e-mails between the decedent and respondent had created an enforceable contract to transfer sole ownership of the property to decedent.  Upon examining the e-mails, the Appellate Division found that there was no contract because the e-mails did not establish a necessary term of the claimed contract: the price to be paid for the transfer of the property.  It appears from this decision that if the e-mails in question contained evidence of an agreement on price, the Court would have found a binding and enforceable contract in the e-mail exchange.

While communicating by e-mail may seem informal, these cases make clear that parties to an e-mail exchange must exercise care to avoid unintentionally creating a binding contract.  An otherwise valid contract cannot be undone simply by concluding with “Sent from my iPhone.”

October 1, 2015

The Long Island Press Bethpage Best of Long Island Awards nomination period is over, the voting is OPEN, and we’re on the ballot again!

As the winners of 2 “Bethpage Best of Long Island 2015” awards, for CMM and Joe Campolo, we’re honored to be in the running again. Please take a moment to vote for us, to help us maintain our title.

VOTE HERE!

In last month’s blog article, I shared my enthusiasm for the “startup entrepreneurial ecosystem,” specifically here on Long Island, and offered tips for starting your own successful business.  One of the most satisfying feelings in the world is making it official by forming an LLC or incorporating.  But then what?  To keep that excitement growing as you focus on building your business, it’s important to take steps early in the process to help your new venture start off strong.

Nellie Akalp, an Entrepreneur.com contributor and entrepreneur and CEO herself, recently published an article on Entrepreneur.com called “7 Actions to Take After Incorporating Your Business.”  The article raises important topics to consider and delve into more deeply with the advice of your attorney and advisors.

7 Actions to Take After Incorporating Your Business

By Nellie Akalp

October 16, 2015

Much has been written about incorporating a new business, including advice on how to incorporate and what business structure to pick. However, I have found that new business owners can have just as many questions after incorporating or forming a limited liability company (LLC).

As you can imagine, there are some essential differences between running a corporation and running a sole proprietorship, and it’s important to get all your legal ducks in a row as early as possible.

If you have recently incorporated or formed an LLC, here are seven items to check off your list.

1. Get an Employer Identification Number (EIN) from the IRS.

A corporation or LLC is a separate entity and needs its own EIN from the IRS. This is true whether you plan on hiring any employees or not. The EIN, much like a Social Security Number for individuals, is how the IRS tracks your business’s activities. This should be one of your first steps after forming an LLC. Without an EIN, you won’t be able to open a bank account for your business or file your business’s tax returns.

Tip: If you already had an EIN for your business when it was operating as a sole proprietorship or partnership, you’ll need to get a new ID number for your corporation. You can’t transfer the number from one business entity to another.

2. Apply for your business licenses. 

Forming a corporation or LLC forms the legal foundation for your business — it’s what turns your business into a legal entity. But you still need to get a business license in order to legally operate your business. Contact your local county office or city hall to find out what kinds of permits and licenses are necessary for your business type. Failure to do so can result in fines or you can even be forced to shut down your business altogether.

3. Meet with a tax adviser.

While this step isn’t mandatory, it’s a good idea. A brief meeting with a tax adviser can give you valuable insight into how you should file your taxes as a corporation or LLC. You can discuss whether you should elect S Corporation tax treatment from the IRS as well as what additional deductions are now available to you.

4. Open a business bank account.

After you have an EIN, you can open a bank account for your business. This allows you to accept checks and payments in your business’s name. In addition, you’re legally required to keep your personal and business finances separated once you incorporate or form an LLC. If you already had a business bank account for your sole proprietorship, you will need to close that account and open a new bank account under the new corporation.

At this point, it may also be a good idea to open a credit card for your business. This helps streamline your record keeping for business expenses, as well as helps start building credit history for your business.

5. File a Doing Business As (DBA).

Most businesses operate under several variations of their official company name. In order to legally do this, you need to file a DBA to notify the public that you’re operating under these names. For example, let’s say your official company name is “Example Company, Inc.” but you usually use a less formal name like “Example Company.” You’ll need to file a DBA for “Example Company.” One tip: Don’t file for a DBA until you have formed your corporation or LLC so the DBAs are under the corporation.

6. Protect your name with a trademark.

When you create a corporation or LLC, your name is protected in your state (or more specifically, no other business can file as a corporation or LLC in the same state). For some businesses, this is enough brand protection. Others choose to register a trademark for their company name in order to legally protect it in all 50 states.

7. Understand what you need to do to stay compliant.

One of the chief reasons to incorporate or form an LLC is to limit your personal liability. However, if you fail to keep your business in good standing, then you can lose this liability protection. Make sure you understand exactly what’s needed to keep your business compliant each year. Typically, this involves filing an annual report with your state each year, keeping up with your business federal and state taxes, and keeping your personal and business finances separate. Corporations will also need to hold an annual shareholder’s meeting.

Forming an LLC or corporation is the important first step to formalizing your new business. Best wishes on your new venture, and don’t forget to follow up with your other legal obligations. They’re simple steps and will keep your business legal and protected for years to come.

http://www.entrepreneur.com/article/251730