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A Letter To Your Family

Posted: January 18th, 2014

So it’s the new year and you’ve promised yourself that you’re going to get your estate plan done. But having your documents in order is only part of a good estate plan.
What you need to do along with that is to prepare a letter that will help your family settle your affairs. You need to let them know what they need to do after you have died. Usually, what’s in this letter is more of a personal statement than actual written instructions and therefore not normally included in a legal document. But what you put in this letter should be consistent with the terms of your Will and/or other planning documents. This letter also becomes valuable if you become incapacitated, as it’s another method of making sure your wishes are known.

First and foremost, if you have made your own funeral arrangements or have special requests, make sure someone knows about them. It’s almost always too late if you put them in your Will. Make sure you communicate them clearly and provide the necessary details and documents. You could even include a pre-written eulogy. If nothing else, it may give your family some comic relief.

Next, certain people and institutions must be contacted upon your death, including your attorney, executor, trustee and tax specialist. Providing names, titles, addresses and telephone numbers now will make it easier for the person who needs to contact these individuals.

As part of this letter, put in where all your estate and financial documents are located. List any special assets, such as stock options and retirement accounts, that require action by your executor within a specific time frame. Consider a fireproof safe somewhere in your house versus using a bank’s safe deposit box.

Also make sure your family knows about any trust you have established. Include the name and address of the trustee and the contents of the trust. Don’t count on the original list of assets that are typically on the Schedule A at the end of the trust. You need to keep this updated as accounts and assets change.

Speaking of lists, it’s always good to include a complete (and current) list of all your jewelry and other valuables (china, glassware, art collections, antiques, etc.), including their location. Jewelry at the bottom of a garment bag or in with the cassette tapes tends to get thrown out. You may also include the names of those to whom the articles should be given. This list is sometimes (but not usually) part of the Will itself. The more common method is to just hand write the list of items, and whom you want to get each item, on a separate sheet of paper and sign it on the bottom.

Many of these items are only intrinsically valuable but often cause the most disagreements between family members. Consider including personal thoughts and messages for your beneficiaries. For example, you can name whom you want to receive your grandmother’s jewelry or your grandfather’s watch, as well as a bit of history relating to each memento or why you’re giving it to that particular person. While this list may not be legally binding, it’s very rare that these requests will not be honored.

Since one of the purposes of this letter is to aid your family in gathering your assets, add possible sources of benefits not mentioned in your Will. Some of these sources are Social Security, veterans’ organizations, employee, pension and retirement plans, and fraternal associations. Otherwise, these benefits might be overlooked.

The bottom line is that if you don’t make your wishes known, then those who are left get to make it up for themselves. This may be in line with what you wanted, but then again, it may only be in line with what they wanted.

Supreme Court to Hear Case Challenging the Face of Broadcast Television

Posted: January 18th, 2014

Tags: technology

Just about the only thing that the broadcast networks and the founders of Aereo—a service that sells live television programming online—can agree on is that the technology will fundamentally change the broadcast network business.

On January 10, 2014, the Supreme Court agreed to hear the dispute between television broadcasters and Aereo, a New York-based technology start-up that distributes broadcast signals through a network of small antennas in a “cloud,” allowing subscribers to record shows on the remote DVR and watch live and recorded programming from their mobile devices. The growing service is currently available in 10 cities for a monthly fee of $8 to $12.

At the heart of the case are “retransmission fees” – money paid to networks and their local stations by cable and satellite subscribers for access to their signals and the right to retransmit their programming. Retransmission fees are an enormous revenue source for broadcasters, who are estimated to collect $4.29 billion in retransmission fees from cable and satellite companies in 2014. Unlike cable and satellite services, Aereo does not pay the networks to distribute their broadcast signals. As such, the broadcast networks argue that Aereo’s business model is pure and simple theft, selling subscribers stolen programming. They argue that Aereo sells “public performances” of copyrighted work without the copyright owners’ permission, in violation of U.S. copyright law.

Broadcast networks also fear that if allowed to continue, Aereo’s business will lead cable and satellite companies to avoid hefty retransmission fees by streaming free TV signals. The business model would also undermine local broadcast networks in their negotiations with cable companies.

Aereo’s position, however, is that the company is simply a modern-day rabbit ears antenna that allows customers to watch free broadcast television over public airwaves. The Second Circuit agreed with Aereo in an April 2013 decision, finding that “Aereo’s transmissions of unique copies of broadcast television programs created at its users’ requests and transmitted while the programs are still airing on broadcast television are not ‘public performances’ of the [networks’] copyrighted works.” The Second Circuit decision upheld a decision from the Southern District of New York in which the court had denied the broadcaster-plaintiffs’ motion for a preliminary injunction barring Aereo from transmitting recorded programs to its subscribers while the programs were airing on broadcast television.

Some broadcast networks, including CBS, have claimed that a ruling for Aereo would prompt them to change their long-established networks into cable channels. Arguments in the high-stakes case are scheduled before the Supreme Court in April.

Sources and additional information:
WNET, Thirteen v. Aereo, Inc., 712 F.3d 676 (2d Cir. 2013)
Adam Liptak and Bill Carter, “Justices Take Case on Free TV Streaming,” New York Times, January 10, 2014.
Greg Stohr, “Broadcasters Get U.S. Supreme Court Review in Bid to Stop Aereo,” Bloomberg, January 11, 2014.
Joe Flint and Ryan Faughnder, “Supreme Court to Hear Aereo Case,” Los Angeles Times, January 11, 2014.

Around the Appellate Bench: Part 2

Posted: January 9th, 2014

By Patrick McCormick

There have been several interesting Appellate Court decisions in the past couple of months touching on a variety of issues. Cases discussing actual partial eviction, successor landlord liability and a tenant’s failure to timely cure an alleged default are discussed below.

In Croxton Collaborative Architects, P.C. v. T-C 475 Fifth Avenue, LLC,1 a commercial tenant sued its successor landlord alleging it was damaged because defendant landlord failed to remediate the “derelict” and “war-torn appearance” of the premises, which was caused by renovation work commenced by the prior landlord, in breach of the lease. Plaintiff commenced the action approximately five months after defendant bought the premises and assumed the lease. The Appellate Division reversed the lower court’s denial on landlord’s motion to dismiss the complaint.

The Court noted that lease paragraph 22.01 provided that “in the event of a transfer of title, the lease shall be deemed to run with the land and the transferee agrees to ‘assume’ and ‘carry out any and all such covenants, obligations and liabilities of Landlord hereunder.” Plaintiff apparently relied upon this lease provision to hold the new landlord liable for the conditions caused by the prior landlord. However, the Court relied upon lease paragraph 25.03 which it found “unequivocally provides that ‘under no circumstances shall the [lessor] . . . be (a) liable for any act, omission or default of any prior landlord; or (b) subject to any offsets, claims or defenses which [t]enant might have against the prior landlord.’” In finding that lease section 25.03 “trumps” section 22.01, the Court noted that section 25.03 was prefaced by stating “[a]nything herein contained to the contrary notwithstanding.”

While the Court did not engage in any detailed analysis, the lesson is clear—when representing purchasers, upon review of the existing leases to be assumed by the purchaser, counsel should look for exculpatory language similar to the language used in section 25.03 in this case. If such language does not exist, purchaser should be advised and cautioned that it could be liable for the acts or inaction of prior landlords and that an agreement by the prior landlord to indemnify purchaser for such claims may be warranted.

In a very brief decision in Darwin Management LLC v. Avenue C Food Corp.,2 the Appellate Term reminds tenants of the need to timely cure alleged defaults. In Darwin, landlord served a cure notice alleging tenant defaulted under the terms of the lease by installing an ATM outside the mixed-use premises. Tenant did not cure the alleged default until two weeks after the deadline set in the landlord’s cure notice.

In reversing the judgment of the lower court entered after a non-jury trial to dismiss the holdover petition, the Appellate Term held simply that “[t]he commercial lease terminated upon tenant’s failure to cure [citation omitted] and the court was without power to revive the terminated lease [citation omitted].” Simply stated, in the face of a default or cure notice, the tenant needs to unequivocally and timely cure the alleged default or timely obtain a Yellowstone injunction to toll the running of the cure period pending a determination of whether the tenant is in fact in default as alleged. The failure to cure or toll the cure period can result in the loss of possession of the demised premises.

Finally, the Appellate Term in Paris Lic Realty, LLC v. Vertex, LLC3 addressed a defense of actual partial eviction asserted by a tenant in a commercial nonpayment proceeding. The lease in question described the demised premises as “approximately 4,000 square feet on the third floor (including areas of the elevator and stairways).” Based on this description, the tenant cleverly argued it was ousted from part of the demised premises because it was not able to use the elevator for “extended periods of time during building construction.” The Appellate Term held that even if the elevator was part of the demised premises, there could be no actual partial eviction because the lease provided that there shall not be “any abatement or diminution of rent because of making repairs, improvements or decoration to the demised premises after the date for the commencement of the term.” If the lease did not contain this abatement provision, would the tenant have prevailed based on the description of the demised premises to include the elevator?

¹ —N.Y.S.2d —, 2014 N.Y. Slip Op. 00279 (1st Dep’t 2014)
² 42 Misc.3d 132(A), 2013 N.Y. Slip Op. 52233(U) (App. Term 1st Dep’t 2013)
³ 41 Misc.3d 145(A), 2013 N.Y. Slip Op. 52074(U) (App. Term 2d Dep’t 2013)

Teaching Doctors the Art of Negotiation

Posted: January 9th, 2014

By: Joe Campolo, Esq. email

Tags: negotiation

With recent health care changes, specifically the Affordable Care Act, negotiation skills will be tremendous value to medical professionals, administrators, and other stakeholders in the health care sector.

Recognizing the importance of negotiation, medical schools are starting to invest in communication training for students. A recent article by Dhruv Khullar in the NY Times Health Blog, Teaching Doctors the Art of Negotiation discusses how doctors negotiation on a daily basis, with both patients and colleagues and should be offered classes in negotiation training just as law, business and public policy schools do.

In this context, “negotiation is about exploring underlying interests and positions to bring parties together in a constructive way. It’s about creative, innovative thinking to create lasting value and forge strong professional relationships. It’s about investigating what is behind positions that may seem irrational at first to understand the problem behind the problem.”

To read the full article, click here

December 2013 – Firm Newsletter

Posted: December 28th, 2013

Now That You Have A Will, Where Should You Put It?

Posted: December 18th, 2013

By: Martin Glass, Esq. email

Tags: estate planning

Well, it’s about that time for New Year’s resolutions. Hopefully one of them is to do a Will. But once you do the Will, where do you put it? A safe deposit box seems like the perfectly logical place to store a Will and other estate planning documents. They are probably the most important documents you will ever have, so shouldn’t they be kept in the safest place?But is it a safety deposit box the best place? Or should you keep it in a fireproof safe in your home? With your lawyer? The court? Or somewhere else altogether?

One thing that I state now, and I’ll state it again (because it’s just that important): Whatever option you choose, make sure your executor knows what you did!

Although clients often instinctively want to put Wills in a safe deposit box, I personally prefer not to have my clients put their important estate planning documents there.

The problem arises with the fact that most banks seal a safe deposit box when informed of the death of the owner, and a court order must be issued to request that the box be opened to search for the Will. The banks will do this even if there’s a joint owner on the box. Although probate courts will generally issue this order “immediately,” in practice there is still a delay until the request is made to the court and the order is actually granted.

In New York, documents that are allowed to be released from the box are the original Will, any deed to a cemetery or burial plot and any life insurance policy for the named beneficiary. Everything else is inventoried (by the attorney and a bank official) and returned to the box.

The bank will typically then require Letters Testamentary or Letters of Administration (each being a letter allowing an executor or administrator to act on behalf of the decedent’s estate) before allowing access to the safe deposit box to remove all the other items. So, even if it turns out that there is no probate estate, you get to go to court anyway.

As you can see, there are administrative hassles involved with storing a Will or other estate planning documents in a safe deposit box. That said, for individuals who do not have another safe place to store a Will or prefer the safety of a safe deposit box, it may be the best choice.

Another option is to keep a Will with the attorney who drafted it. Again, this may or may not prove as easy as it sounds. For example, what happens if the attorney retires or dies? You also now have to remember to tell the attorney every time you or your executor moves. In addition, offices may move or close, and if you do not keep careful records, it may be difficult for your heirs to locate an original Will when the time comes.

The Internet does help in this regard, but it is not foolproof. What would happen if the attorney with your Will was nowhere to be found? Your heirs would have only a copy (if that) to submit to the court versus the original. That is more open to being contested and requires additional proof to be probated.

Finally, if the lawyer is not responsive for whatever reason, executors or others seeking to obtain estate planning documents from the attorney may also need to obtain a court order to compel production.

On the other hand, a lawyer’s office may be the best place to store a Will, depending on your circumstances. As long as the attorney has the Will and not you, it can never get “lost” or “destroyed” by a disinherited or disgruntled heir. You should weigh all factors for and against before making a decision.

Another option is you can file your Will with the court, which is also a safe option, but means that your Will becomes an official document, not a private one. If you decide to change the terms of your Will, you cannot get it back, so beneficiaries and former beneficiaries can see how their respective inheritances have changed (or been removed) during successive revisions. On the contrary, if a Will is a private document, you can destroy the original and all copies, and would be heirs who have fallen out of favor are none the wiser.

In addition, if you move out of the jurisdiction of the court, out of state or even out of the country, your court filed Will does not come with you. There can only be one original of your Will. That means if you drafted a Will while living in Westchester County, New York, and filed it with the Surrogate’s Court in White Plains, your executor and beneficiaries would need to obtain it from that court, even if you or they have since moved to Denver, Denmark or beyond.

It may be, after considering other options, that you decide to keep your Last Will and Testament in a fireproof safe in your home. This is often a good option and normally the one I recommend, especially if you have a safe that cannot easily be removed from the premises by anyone seeking to tote off valuables. In that case, if you also have a safe deposit box, I would recommend keeping a copy of the Will in there (clearly marked COPY, with instructions on where to find the original), in the unfortunate circumstance that the original can’t be readily found. Be careful not to create too many copies, since you may later revise important provisions of your Will and do not want multiple prior copies floating around that a beneficiary with a reduced share tries to “prove” is your correct and valid last Will. This can happen even among otherwise friendly parties, such as children and grandchildren.

What I don’t suggest you do is to put your Will in a shoebox or the freezer or in that special place that only your spouse would know. It almost shouldn’t need to be said but, those are not safe places. You don’t want to have your executor or heirs tearing apart your house looking for your estate planning documents.

As said earlier, regardless of the option you choose for storing your Will, make sure that your executors know what you did. The best estate plans only work if the right people know how to follow them and where to locate essential documents when the time comes.

Around the Appellate Bench

Posted: December 9th, 2013

By Patrick McCormick

In a decision dated November 13, 2013, the Appellate Division, Second Department decided a case involving a contractor, Matell Contracting Co., Inc., who performed work for a commercial tenant, attempting to enforce a mechanic’s lien against the owner of property, Fleetwood Park Development Co. 1

Fleetwood leased certain property to a new tenant and, pursuant to an agreement with the new tenant, permitted the tenant to renovate the leased property for use as a supermarket. The tenant retained Matell Contracting as general contractor. The tenant failed to pay $1,800,000 allegedly due for work performed by Matell and Matell filed a mechanic’s lien against the property. Matell then commenced an action to foreclose the mechanic’s lien against, inter alia, Fleetwood Park. Fleetwood asserted several affirmative defenses including that it did not consent to the subject work. Matell moved for summary judgment on the complaint on the ground that Fleetwood consented to the work and to dismiss several affirmative defenses asserted by Fleetwood Park. The Supreme Court denied the motion and Matell appealed.

In affirming that portion of the order denying Matell’s motion for summary judgment on the complaint and to dismiss the affirmative defense relating to consent, the Appellate Division examined the knowledge required of an owner before the owner will be liable for work performed for a tenant. The Appellate Division confirmed that Matell “presented evidence showing that Fleetwood Park had knowledge of, and acquiesced in, the work performed to convert the leased property into a supermarket . . .” But, of primary importance, the Appellate Division determined that Matell nevertheless failed to make a prima facie showing that Fleetwood Park actually affirmatively consented to the subject work. The Court confirmed the distinction between the situation where an owner has simply approved or agreed that the work be performed and where the owner affirmatively gave consent for the specific work directly to the contractor. It is this specific consent by the owner directly to the contractor that is required to be proved by a contractor attempting to hold an owner liable in connection with the foreclosure of a mechanic’s lien.

The second appellate decision comes from the Appellate Term in New World Mall, LLC v. New World Food Court, Inc2. and addresses whether a sublease is subject to a conditional limitation clause contained in a master lease.

The facts in New World are straightforward. Sublessor alleged that the sublease terminated following its service of a 10-day default notice on subtenant alleging nonpayment of late charges and electric charges. Sublessor alleged that it had the right to terminate the sublease because the sublease incorporated by reference all the terms of the master lease including the conditional limitation clause contained in the master lease. It should be noted that this type of incorporating by reference language is typical in subleases. The master lease required the tenant (sublessor) to pay certain “Minimum Rent” in the amount of $2,500,000 annually commencing on a specified date and “Interim Rent” of $60,000 per month before that specified commencement date. In contract, the sublease provided for the payment of “Basic Rent” of $110,000 per month for the first three years of the sublease plus other charges specifically designated as additional rents. The sublease did not contain a conditional limitation provision for a default in paying the Basic Rent or the additional rents.

The conditional limitation clause contained in the master lease provided that a default occurs: “If Tenant shall fail to pay (a) any Interim Rent or Minimum Rent when the same shall become due and payable, and such failure shall continue for ten (10) days after Landlord shall give notice of the failure to Tenant, or (b) any other charge required to be paid by Tenant hereunder, when the same shall become due and payable, and such failure shall continue for thirty (30) days after Landlord shall give notice of the failure to Tenant.” Despite the fact that the sublease incorporated by reference “the terms, covenants, conditions and other provisions” of the master lease, the Appellate Term determined that the default provision of the master lease “is not subject to incorporation into the sublease . . .”

The Court’s rationale was quite simple: the default clause in the master lease referenced defaults in payment of rent due under the master lease-specifically “Interim Rent” and “Minimum Rent.” The Court held that those terms had no “application” to the amounts due under the sublease “which are defined in other terms.” While somewhat troubling, the remedy is simple-either the terms, definitions and relevant default clauses in a sublease should mirror the same terms, definitions and clauses used in the master lease or, instead of taking the easy way out by simply incorporating the master lease into a sublease by reference, the sublease should contain any relevant or necessary term as if it were a stand-alone document.

1 Matell Contracting Co., Inc., v. Fleetwood Park Development, LLC, 2013 WL 5989744 (2d Dep’t 2013)
2 2013 WL 6098424 (App. Term 2d Dep’t 2013)

November 2013 Legal Brief – Firm Newsletter

Posted: November 28th, 2013

Benefits of Copyright Registration

Posted: November 24th, 2013

Tags: intellectual property

Many artists, especially entrepreneurs who are just starting off, often start talking to others about their work without realizing that they may be disclosing too much. Their creative ideas or works are assets, and if they do not establish ownership of these assets, the assets could be lost.

Artists often do not realize how important it is to establish ownership over their works, before displaying or disclosing them to the public.

Generally, copyright attaches automatically the moment the original work is created and “fixed” in a tangible medium. Copyright owners possess the right to prevent others from copying and selling the copyrighted work. However, in addition to those rights, the U.S. Copyright Act provides additional rights and protections to registered copyright owners.

First, copyright registration establishes a public record of the copyright ownership. This puts the public on notice of your ownership of the work. It also allows you to affix the copyright notice © to your work.

Second, the certificate of copyright registration serves as evidence in court of the validity of the copyright and your ownership. This is also helpful when a copyright owner seeks swift action and a response from an infringer. With a copyright registration, the effect of a “cease and desist” letter is stronger on an infringer who understands the consequences of a legal action.

Further, in a legal action, a registered copyright owner can obtain statutory damages — without having to prove actual damages, legal costs and attorneys’ fees. The range of statutory damages is between $750 and $30,000 per infringed work, which is discretionary upon the court. In addition, if the copyright owner can show willful infringement, the available damages may increase up to $150,000 per infringed work.

Copyright registration is easy and inexpensive, and offers considerable benefits to copyright owners. Failure to obtain timely copyright registration can also result in significant consequences, which can include theft and infringement. The application for copyright registration should be filed immediately upon the work’s creation, but in no event later than disclosing the work to the public.

For artists, or for those who have created any work that they do not others to copy, copyright registration should pay a fundamental role in helping to establish and maintain the value of your work. Failure to register your work can potentially leave you without the additional rights, protections and benefits under the U.S. Copyright Act, and without an effective means to pursue an infringer.