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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!

By Marc Alessi

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

Turning his neighbors’ overgrown yards into lucrative landscaping accounts at age 13, CMM attorney Marc Alessi probably wouldn’t have been surprised back then to learn that in 2015, he would be honored as an Innovator of the Year by Innovate Long Island.  Marc’s lifelong passion for entrepreneurship earned him an honor in the Biotech category for his work with SynchroPet, a biomedical device company he launched that has licensed three patents from Brookhaven National Lab for a new way to build P.E.T. (positron emission tomography) devices for both small animal and human medical imaging.  The inaugural Innovator Awards breakfast, which celebrated Long Island’s “best and brightest ideas,” was held on October 21 at Crest Hollow Country Club in Woodbury.

Of counsel to CMM, Marc focuses his practice on corporate law and real estate, assisting small to mid- sized companies and the entrepreneurs that run them.  His advice to clients stems from his own experience navigating Long Island’s entrepreneurial ecosystem: he has helped launch and finance a number of early stage companies across a variety of industries, including biotechnology, IT, construction, and real estate.  Marc is a founding member of the Hamptons Angel Network and a member of the Long Island Angel Network, previously serving as the executive director and a board member.  He also helped establish Accelerate Long Island, of which SynchroPet is a portfolio company.  Now Chairman and Founding CEO of SynchroPet, Marc raised the angel round of funding and built the team that is bringing the company’s first devices to the marketplace.

Marc’s enthusiasm for entrepreneurship has informed the variety of roles he has played throughout his career.  His history of public service began when he worked for the Civil Service Employees Association early in his career.  At CSEA, he says, “I learned that worker rights and the health of a business were not mutually exclusive.  That incentivizing workers is good for business.  This is a startup enterprise mentality!”

From there, Marc worked as the Downstate Director of Intergovernmental Affairs at the New York State Comptroller’s Office, where he assisted gubernatorial candidates.  Eventually, Marc was inspired to run for office himself.  He was first elected to the New York State Assembly in 2005 and served three terms representing the First Assembly District, which included the Towns of Brookhaven, Riverhead, Southold, and Shelter Island.  Marc naturally gravitated toward policy areas that would help create an incentive for investments in startup enterprises in New York State.  He met with venture capitalists, angel investors, and tech transfer personnel at the state’s top research facilities for advice on what policies at the state level would promote and reward entrepreneurship.

Marc eventually left the political arena to devote his time and experience to helping startups get off the ground and succeed long-term.  Marc says these interactions are the most rewarding part of his work as an attorney.

While the Innovator of the Year award recipient has a long list of achievements, he traces his success back to his early years, when the budding teenage landscaper eventually found himself running an 18-employee painting franchise at age 19 while a full-time college student.  That drive has only gotten stronger over the years.  Marc says, “I find it very gratifying to now have the experience to take an idea and help make it a product and build a business around it.  To have the power to take something from all talk to all action and build wealth from it – it’s an empowering place to be.”

Owners and would-be developers of property that contains environmental contamination face some tough choices: leave the contamination in place and hope that there is no government enforcement action or third party damage claim, clean it up on your own, or clean it up with government oversight.  For many years, the State of New York has had a program to encourage the latter course of action.  The incentive for those who participate in the State’s Brownfield Cleanup Program (“BCP”) is threefold.  First, at the end of the remediation, the applicant receives a Certificate of Completion, which indicates that the cleanup has been done to the satisfaction of the New York State Department of Environmental Conservation (“DEC”), thus opening the way to financing and redevelopment.  Second, the law grants certain limited liability protections so that the owner will not be sued by the State or private parties. Third, tax credits are available for some of the cleanup expenses.

The BCP law was amended this past summer.  The changes, which took effect on July 1, 2015, include new eligibility criteria, revised tax credits, and a streamlined program for lightly contaminated sites. To enter the program, the site must have contamination “at levels exceeding the soil cleanup objectives or other health-based or environmental standards, criteria or guidance adopted by DEC that are applicable based on the reasonably anticipated use of the property, in accordance with applicable regulations.”  Essentially, this means that some environmental testing has to be done in advance of the application and the data must indicate that contamination levels exceed DEC standards, which are different for residential, commercial, and industrial use.

Applicants to the BCP are separated into two categories – Participants and Volunteers. A Participant is one who was an owner or operator of the site at the time of disposal of hazardous waste or the discharge of petroleum or who otherwise failed to take reasonable care to stop continuing releases or prevent further releases. Participants are responsible for the cleanup under various environmental statutes and the DEC can require them to remediate the contamination, even if it has traveled off-site.  A Volunteer, on the other hand, is an applicant who is not liable for the contamination.  This could be a contract vendee or, under some circumstances, a new owner of the property who was not involved with the property at the time of the discharge. Usually, Volunteers are not required to clean up contamination off-site, which greatly reduces the remediation costs.  In addition, the new amendments to the BCP eliminate the Volunteer’s responsibility to reimburse the State for its oversight costs, another significant savings.

Those who successfully complete their cleanup obligations under the BCP within the applicable deadlines are eligible for tax credits.  The types and amounts of the credits vary greatly depending on the location of the property and the work completed.  On the other hand, there is now the option of entering the newly minted BCP-EZ program, which does not include tax credits but does provide a liability release after a successful cleanup.  This program is intended for lightly contaminated sites and is supposed to include streamlined public notice and oversight procedures to allow for faster turnaround times. The DEC is currently drafting regulations and estimates that the BCP-EZ track will be available by the summer of 2016.

With some exceptions, sites that are already subject to environmental enforcement actions are not eligible for entry into the BCP.  Thus, a property owner or buyer who is considering conducting a cleanup would have to apply for the program before notices of violation and other government enforcement actions preclude this option.  The advantages of the voluntary cleanup are not only the tax credits, but also the eventual liability release and the cooperative, rather than punitive, framework for the remediation process.

What if the owner of the contaminated site is a municipality?  The 2015 amendments to the BCP have injected new funding into the Environmental Restoration Program (“ERP”).  The ERP provides State subsidies for the investigation and cleanup of municipally owned brownfields. Upon request, the DEC can undertake the project on behalf of the local government. However, since funds are limited, it is advisable to act quickly.

The decision of whether to apply for and participate in the BCP depends on many variables.  It should be made after consultation with qualified environmental remediation professionals, including specially trained environmental attorneys and accountants.

The Commercial Division in Monroe County, New York recently decided an interesting case, Kellman v. Document Security Systems, Inc. (Rosenbaum, J.), that dealt with a topic familiar to many employers: vesting of stock options to a terminated employee under an employment agreement.

Defendant Document Security Systems, Inc. (“DSS”) develops, licenses, manufactures and sells anti-counterfeiting technology and products. Co-Defendant Secuprint, Inc. (“Secuprint”) is a subsidiary of DSS which was created to acquire assets of another company, DPI of Rochester LLC (“DPI”), a printing company owned by Plaintiff, Matthew Kellman, and another individual.  When DPI’s assets were acquired, Kellman was hired by DSS as Vice President of Sales.  In that role, Kellman received a salary as well as a grant of stock options for 50,000 restricted shares in DSS pursuant to an employment agreement (the “Employment Agreement”).  Pursuant to the Employment Agreement, the restricted shares “shall vest” in equal yearly installments over a five-year period as long as Kellman was still an employee of DSS on each anniversary date.

Kellman’s first 10,000 shares vested after his first anniversary.  Kellman was subsequently terminated over performance issues before reaching the second vesting date.  DSS, however, elected not to deem his termination “for cause” so as to allow him to collect severance payments.  Interestingly, another provision of the Employment Agreement stated that, if Kellman was terminated “without good cause,” he would be entitled to, among other things, the immediate vesting of any unvested capital stock granted to him pursuant to an Incentive Plan (an agreement separate and apart from the Employment Agreement), “or otherwise.” DSS elected not to provide Kellman with the remaining 40,000 shares of restricted stock, claiming that the options had not vested pursuant to the Employment Agreement.  Kellman then commenced this lawsuit alleging that Defendants breached the Employment Agreement and seeking damages equal to the value of the 40,000 shares.  Kellman ultimately moved for summary judgment on his claims, and Defendants also cross-moved for summary judgment.

The Court, in deciding the summary judgment motions, noted that Defendants’ CFO mistakenly removed the restrictions at one point from the restricted shares to Kellman and even sought to have a new stock certificate issued to him for those remaining shares.  However, upon realizing his mistake of removing the restrictions even though the restricted shares had not vested pursuant to the Employment Agreement, he later canceled the new certificate and had the shares canceled as well.  Despite the CFO’s error, the Court interpreted the Employment Agreement to have clear and unambiguous terms with respect to the vesting schedule of the 50,000 shares, and the CFO’s error did not waive the terms of the Employment Agreement.

Furthermore, despite Kellman’s contention that the phrase “or otherwise” in the Employment Agreement encompassed the restricted stock and, as such, immediately vested upon termination, the Court disagreed.  The Court noted that this provision did not apply to the restricted stock, which was subject to the clear and definite vesting schedule set forth elsewhere in the Employment Agreement.  To hold otherwise would render the vesting schedule meaningless, according to the Court.  Based upon the Court’s interpretation of the Employment Agreement, summary judgment was granted in favor of the Defendants and Kellman’s Complaint was dismissed.

This case provides an excellent example of the importance of having a clearly drafted employment agreement that defines the parties’ rights and obligations.  Had this employment agreement been drafted with less clearly defined terms, the Court could have ruled against the employer and determined that Kellman was entitled to an additional 40,000 shares of stock in the company.  It cannot be stressed enough how vital it is to consult with counsel to either draft or assist with preparing agreements such as employment agreements to avoid possible pitfalls.

Please Join Us for the East End’s First Executive Business Breakfast
A forum for networking and learning.

Together with Markowitz, Fenelon & Bank, LLP, we recognize the need for East End businesses to have a platform to meet other East End businesses, build relationships, share referrals, and learn something new.

October 29th, 2015
8:00 am to 10:00 am

We Invite You to Join Us at the Sea Star in Riverhead as Rich Isaac of Sandler Training Presents…

LinkedIn – A Business Relationship Tool

Learn How To Use LinkedIn to Increase Sales and Grow Your Business

You’ll learn:
• Powerful, insider best practices for LinkedIn for effective social selling
• The value of using LinkedIn to grow your pipeline
• How to leverage LinkedIn to generate warm referrals from your existing contact network
• How to harness LinkedIn to create a powerful, self-updating contact list
________________________________________
The event is complimentary but reservations are required.