News (All)

By Patrick McCormick

Two recent cases address issues that arose when a tenant’s smoking and the resulting intrusion of second-hand smoke into a neighboring tenant’s apartment created objectionable living conditions. In Upper East Lease Associates, LLC v. Cannon, 30 Misc.3d 1213(A), 924 N.Y.S.2d 312 (2011, Dist. Ct., Nassau Co.; Ciaffa, J.) the Court held that landlords of “high-rise apartment” buildings have a “duty to prevent one tenant’s habits from materially interfering with another tenant’s right to quiet enjoyment. When a tenant’s smoking results in an intrusion of second-hand smoke into another tenant’s apartment, and that tenant complains repeatedly, the landlord runs a financial risk if it fails to take appropriate action.” In this case, the landlord commenced an action against the tenant seeking monetary damages for breach of a residential apartment lease. Tenant served an answer which included counterclaims alleging that: landlord violated the warranty of habitability owed to defendant; landlord failed to address unsafe and intolerable conditions; and, the tenant was deprived of the beneficial use and enjoyment of the premises forcing it to abandon the premises resulting in a constructive eviction. The tenant also alleged that the claimed breach of warranty of habitability entitled her to a refund of the rent previously paid and damages for breach of the lease.The tenant’s lease contained a provision specifically addressing the subject of second-hand smoke under which the tenant specifically acknowledged that the infiltration of second-hand smoke into the common areas of the building or into other apartments may constitute a nuisance and health hazard and agreed to prevent the infiltration of second-hand smoke into the common areas of the building or into other apartments. The lease clause provided that the prevention of such second-hand smoke infiltration was “OF THE ESSENCE” to the lease.This action was commenced after the apartment immediately beneath the defendant-tenant’s apartment became occupied by a new tenant in September, 2008. The new tenant’s lease contained the identical lease language regarding second-hand smoke. The next month, tenant began to complain to landlord about second-hand smoke infiltrating into the tenant’s apartment. The landlord attempted to caulk and seal around vents that may have been conductors of cigarette smoke from the neighbor’s apartment, but these measures were ultimately ineffective. The tenant requested to be relocated to a different apartment; the landlord initially agreed but sought an agreement to a new one year lease by the tenant which the tenant refused. The second-hand smoke problem continued unabated. Tenant did not pay January 2009 rent and vacated the apartment February 4, 2009.Emphasizing that the rights and obligations of the parties are governed by the provisions of the lease, together with the statutory implied warranty of habitability found in Real Property Law §235-b, the Court held that the key question revolved around “whether or not the second-hand smoke was so pervasive as to actually breach the implied warranty of habitability and/or cause a constructive eviction.” Recognizing that the answer was fact-sensitive, the Court found the second-hand smoke was “enough of a nuisance to warrant action by the landlord. Without doubt, the landlord, at least initially, took general appropriate actions to abate the nuisance. However, when those initial actions proved ineffective, the landlord was obligated to take further steps to alleviate the condition, or to accommodate defendant in a different apartment.” Thus, the Court found that under the “totality of circumstances” the landlord failed to meet its obligations to the tenant and precluded the landlord from pursuing its claim for rent that accrued after the tenant vacated the apartment. The Court also found that for the period of time the tenant occupied the apartment while “enduring the neighbor’s second-hand smoke” an abatement of rent was warranted. The Court granted a 10% rent abatement for October 2008, a 20% rent abatement for November 2008, a 30% rent abatement for December 2008, and a 40% rent abatement for January 2009. Because tenant vacated the apartment February 4, 2009, no abatement was granted for that month.It is important to note that the Court’s decision was dependent not only on the specific facts related to tenant’s complaints and landlord’s response, but also on the specific lease clause regarding second-hand smoke. While the Court may have reached the same conclusion if the lease was silent regarding second-hand smoke, that is not a certainty. Tenants who are concerned about second-hand smoke should attempt to obtain appropriate protections in their leases and landlords should endeavor to take appropriate and documented remedial measures upon receipt of tenant complaints, especially if a lease contains terms recognizing the potential nuisance of second-hand smoke.

In Ewen v. Maccherone — N.Y.S.2d—(App. Term 1st Dep’t 2011) 2011 WL 2088967 condominium unit owners sued their neighbors (not the condominium) for negligence and private nuisance alleging that the defendants’ excessive smoking resulted in second-hand smoke seeping into their unit. The Supreme Court, Appellate Term, held that the individual defendant’s smoking was not so unreasonable as to constitute a private nuisance and because there was no specific statute, by-law or house rule addressing second-hand smoke, the defendants owed no duty to plaintiffs to refrain from smoking in their unit.

In addition to the second-hand smoke from the neighbor’s excessive smoking, plaintiffs alleged the effect of the second-hand smoke was exasperated by a building-wide ventilation or “odor migration construction design problem.” Plaintiffs alleged that the second-hand smoke filled their kitchen, bedroom and living room causing them to vacate the unit and resulting in personal injury. The defendants moved to dismiss the complaint because the condominium’s declaration and by-laws did not prohibit smoking in the residential units and because the plaintiffs failed to join the condominium as a necessary party. The Appellate Term concluded that the plaintiffs failed to state a cause of action for private nuisance because the neighbor’s “conduct in smoking in the privacy of their own apartment was not so unreasonable in the circumstances presented as to justify the imposition of tort liability against them . . Critically, defendants were not prohibited from smoking inside their apartment by any existing statute, condominium rule or by-law. Nor was there any statute, rule or bylaw imposing upon defendants an obligation to ensure that their cigarette smoke did not drift into other residences.” The Court continued that “to the extent odors emanating from a smoker’s apartment may generally be considered annoying and uncomfortable to reasonable or ordinary persons, they are but one of the annoyances one must endure in a multiple dwelling building, especially one which does not prohibit smoking building-wide.” The Court determined that “in the absence of a controlling statute, bylaw or rule imposing a duty, public policy issues militate against a private cause of action under these factual circumstances for second-hand smoke infiltration” and dismissed the nuisance claim. The Court, having found that the defendants did not have a duty to refrain from smoking inside their apartment, also dismissed plaintiffs’ negligence claim.

The Courts in both these cases looked to the relevant controlling documents to support their respective conclusions. The Court in Upper East Lease Associates, LLC relied upon the relevant lease provision recognizing the potential “nuisance” of second-hand smoke to support its conclusion that the landlord owed a duty to protect its tenants, in certain factual circumstances, from second-hand smoke. Likewise, the Court in Ewen relied upon the absence of a controlling statute, condominium bylaw or rule imposing a duty on the unit owners in determining that, under the factual circumstances presented, no private claim existed.

Thus, landlords, tenants and condominium unit owners and boards should take care in drafting and reviewing the relevant controlling documents, whether a lease, bylaws or house rules, to delineate the rights and obligations of landlords, tenants, condominium boards and unit owners in connection with second-hand smoke.

As we informed you in our April 2011 newsletter, the New York Wage Theft Prevention Act (WTPA) was enacted December 2010 and became effective on April 9, 2011. As a reminder, among other new employer obligations and penalties, the WTPA requires that employers provide to all their employees written notice of their pay rate and pay dates, at the time of hire, on or before February 1 of each year, as well as every time there is a change in the employee’s pay. Employers must obtain signed acknowledgement of receipt of this notice from each employee.

To assist New York employers with compliance, the NY Department of Labor has issued form notice templates that employers may use to satisfy the WTPA notice and acknowledgement requirements. For your convenience, we have posted web links for the template notices, broken down by several employee categories.

The disclosures must be provided in English and in the primary language identified by the employee, so long as the New York Department of Labor has provided a notice template in that language. Currently templates in Spanish, Chinese, and Korean are available on the NYDOL website, with plans to add Creole, Polish, and Russian versions soon.

We’d like to note a few more provisions of the act that all employers should be aware of.

• The WTPA applies to all private sector employers.
• If you have employees who work outside of New York State, they are not covered.
• The Act requires employers to notify employees in writing of any change to the information in any notice at least seven days prior to the change.
• The pay notice can be distributed electronically, but there must be a system in place where the employee can acknowledge the receipt of the notice as well as print out additional copies.
• New-hire notices must be provided to employees hired on or after April 9, 2011 before they perform any work.
• Annual notices must be provided to all employees between January 1 and February 1, beginning in 2012.
• Employers are required to keep copies of the notices and acknowledgments for six years and must be able to provide them upon request.
• If an employee refuses to acknowledge the notice, the NYDOL has instructed employers to still provide the notice and to note the employee’s refusal to sign.

New York employers should review the below template notices and arrange to implement wage notices that are compliant with the WTPA. Employers who create their own wage notice forms, rather than use the standard DOL templates, may want to consult with counsel to ensure that their forms are compliant.

• Pay Notice for Hourly Rate Employees
• Pay Notice for Multiple Hourly Rates
• Pay Notice for Employee Paid a Weekly Rate or Salary for a Fixed Number of Hours (40 or fewer in a week)
• Pay Notice for Employees Paid a Salary for Varying Hours, Day Rate, Piece Rate, Flat Rate or Other Non-Hourly Pay
• Pay Notice for Prevailing Rate and Other Jobs Pay Notice for Exempt Employees
• Pay Notice for Exempt Employees

By Patrick McCormick

In its recent decision in Islands Heritage Realty Corp. v. Joseph, LT-002642-10, NYLJ 1202492662252, at *1 (Dist., NA, Decided April 28, 2011), Judge Scott Fairgrieve, in deciding a motion brought on by order to show cause to vacate a judgment of possession and warrant of eviction, determined that a month-to-month tenancy had been created by the parties’ conduct after they executed a settlement stipulation, even though the tenant agreed to vacate the demised premises no later than September 30, 2010.

Shortly before the day tenant agreed to vacate, Landlord’s agent signed an agreement dated September 9, 2010 that provided:

This 9 September 2010
Balance due to Pierre Borga [petitioner’s agent] for Court stipulation account $1500.00
expiring 9/30/2010.
New agreement if possible will be:
Starting October 1st 2010
2,300.00 Oct. 1st to Oct. 30, 2010
2,300.00 Security Deposit
$4,600
Peirre C. Borga

Respondent/Tenant submitted proof of payment under the “agreement” by two receipts — the first for $1,500.00 dated November 5, 2010 “toward the monthly amount due of $2,300.00 for the period of October 1, 2010 to October 31, 2010″ and the second dated December 20, 2010 for $800.00 “reducing the balance due to zero for the period of October 1, 2010 to October 31, 2010.”

Respondent argued the agreement and payments created a month-to-month tenancy requiring that the judgment and warrant be vacated. Petitioner argued that the agreement did not create a month-to-month tenancy and even if such a tenancy was intended, Respondent failed to fulfill the terms of the new agreement because the $2,300.00 security deposit was not paid and no other monthly payments were made.

The Court rejected Petitioner’s arguments and found that a month-to-month tenancy was created “by Petitioner accepting rent for October of 2010 in the sum of $2,300.00.”

The Court, in holding that “Petitioner may commence a new summary proceeding,” cautioned that “A landlord cannot maintain a nonpayment proceeding against a month-to-month tenant for rent which accrues after the lease expires and after the month-to-month tenant stops paying rent. The landlord’s sole remedy is to bring a holdover proceeding for the fair and reasonable value of past and present occupancy.”

Landlords are thus cautioned that acceptance of payment after a proceeding is settled (even if a written agreement in which a tenant agrees to vacate the demised premises is executed) will likely result in the creation of a month-to-month tenancy, the termination of which will require the commencement of a new holdover proceeding after the requisite notice is served.

Attorneys Fees Awarded Even Though Not Specifically Authorized by Sublease

In Access.1 Communications Corp. v. Shelowtz, 107939/2010, NYLJ 1202491389246 at *1 (Sup., NY, Decided April 11, 2011) the Court discussed numerous issues in an action by a sublandlord against a subtenant (a law firm) to recover rent accruing under the parties’ sublease after subtenant vacated the premises. While several issues worthy of discussion here were addressed, the award of legal fees to the sublandlord stands out.

The main Lease which, pursuant to the sublease, was controlling provided:

Tenant [subtenant] shall pay to Landlord {sublandlord] an amount equal
to the costs that Landlord [sublandlord] incurs in instituting or prosecuting
any legal proceeding against Tenant [subtenant].

While acknowledging the general rule that “attorney’s fees are incidents of litigation and a prevailing party may not collect them from the loser unless an award is authorized by agreement between the parties, statute or court rules,” the Court was persuaded that the clause in question permitted such recovery.

The Court held that while the lease “does not specify ‘legal fees,’ ‘attorney’s fees’ or ‘counsel’s fees,’ the only interpretation that would meet the intent of the parties is that the costs incurred by [sublandlord] in instituting or prosecuting a legal proceeding have to necessarily include reasonable attorney’s fees, because Access.1, which is an incorporated entity, may not commence and conduct legal proceeding (sic) and is required to appear by attorney under CPLR 321(a).” In determining the parties’ intent, the Court referenced a prior settlement stipulation entered into by the parties to settle a prior summary proceeding in which sublandlord reserved its right “to seek attorney’s fees against [subtenant] for its commencement and prosecuting of [the Civil Court] action.”

While the prior settlement stipulation might demonstrate an intent that subtenant be liable for sublandlord’s legal fees incurred in the prior summary proceeding, it is not clear how the Court concluded that the parties also intended that subtenant be liable for sublandlord’s legal fees in the subsequent action.

Landlords and tenants are both cautioned to take care in drafting settlement agreements (and leases) and in particular any clause that relates to liability for legal fees. Both the lease and settlement clauses at issue were sufficiently vague to result in motion practice over their meaning and intent and it is not at all certain how an appellate court will resolve the issues should an appeal be taken.

The Equal Employment Opportunity Commission “EEOC” issued its final revised Americans with Disabilities Act “ADA” regulations and accompanying interpretive guidance, the ADA Amendments Act “ADAAA”, which will become effective on May 24, 2011. The expanded regulations were designed to simplify the determination as to when employees qualify as disabled.

The Amendments Act retains the ADA’s basic definition of “disability” as an impairment that substantially limits one or more major life activities, a record of such an impairment, or being regarded as having such an impairment. However, it changes the way that these statutory terms should be interpreted in several ways, therefore necessitating revision of the prior regulations and interpretive guidance.

Based on the statutory requirements, the regulations set forth a list of principles to guide the determination of whether a person has a disability. For example, the principles provide that an impairment need not prevent or severely or significantly restrict performance of a major life activity to be considered a disability. Additionally, some short-term impairments may qualify as a disability if they substantially limit major life activities.

“Major life activity” is now defined under the rules to encompass not only those activities formerly included (caring for oneself, performing manual tasks, seeing, hearing, eating, sleeping, walking, standing, sitting, reaching, lifting, bending, speaking, breathing, learning, reading, concentrating, thinking, communicating, interacting with others, and working), but several more such as “interacting with others.” Inclusion of the activity of “interacting with others” will pose a continuing challenge for employers confronted with claims that problematic employee conduct caused by mental disabilities is protected.

The ADAAA also added the operation of a major bodily function as a major life activity, and the EEOC added to the statutory definitions to include virtually every physiological function. Thus, major life activities now include the functioning of the immune, musculoskeletal, neurological, brain, genitourinary, circulatory, and reproductive systems, and all major organs.

Whether an impairment is a disability should be construed broadly, to the maximum extent allowable under the law. The principles also provide that, with one exception (ordinary eyeglasses or contact lenses), “mitigating measures,” such as medication and assisting devices like hearing aids, must not be considered when determining whether someone has a disability. Furthermore, impairments that are episodic (such as epilepsy) or in remission (such as cancer) are disabilities if they would be substantially limiting when active.

The regulations also make clear that, as under the old ADA, not every impairment will constitute a disability. The regulations include a list of various conditions that “in virtually all cases” meet the definition of disability based on certain characteristics associated with these impairments. The list includes autism, cancer, cerebral palsy, diabetes, epilepsy, HIV infection, multiple sclerosis, muscular dystrophy, major depressive disorder, bipolar disorder, post-traumatic stress disorder, obsessive compulsive disorder, and schizophrenia. This includes workers who previously had the conditions and don’t show evidence now.

Businesses with 15 or more employees have to comply and must make reasonable accommodations for disabled employees unless such steps would pose an undue hardship. Accommodations can include restructuring a job, part-time schedules or granting leaves of absence, and making work areas more accessible. Although these regulations do not apply to the employment practices of businesses with fewer than 15 employees, such businesses, if they are considered places of public accommodation, are required to comply with the ADAAA’s changes to the definition of disability with respect to the goods and services they provide to the public.

By Patrick McCormick

Yellowstone injunctions — an injunction to stay the available cure period provided in a commercial lease and in the landlord’s notice to cure while the merits of the alleged default are litigated — have been commonplace since the Court of Appeals’ decision in First Nat. Stores v. Yellowstone Shopping Center, 21N.Y.2d 630, 290 N.Y.S.2d 721 (1968).

Two recent Appellate Division cases from the First and Second Departments remind us of the consequences of failing to promptly seek and obtain a Yellowstone injunction.

In Goldcrest Realty Company v. 61 Bronx River Owners, Inc., 2011 WL 1206171 (2d Dep’t 2011) the plaintiff sponsor of the subject cooperative and holder of unsold shares allocated to 15 apartments, moved by order to show cause for both a Yellowstone injunction and a preliminary injunction. The motion was made after receipt of 15 separate default/cure notices, after the expiration of the cure period and after receipt of termination notices but before the date set in the termination notices for the termination of the respective leases. The Court held in these circumstances that neither a Yellowstone nor preliminary injunction was available.

In an attempt to avoid the requirement that an application for a Yellowstone injunction be made before the termination of the lease and before the expiration of the cure period set forth in the lease and cure notice, the sponsor unsuccessfully argued that the rule did not apply to owners of unsold shares of a cooperative. While this creative argument may be the subject of a future blog, what is important here is the Court’s discussion of the need for prompt action after receipt of default/cure notices.

In reaffirming its prior holdings (see e.g. Korava Milk Bar of White Plains, Inc. v. PRE Props., LLC, 70 A.D.3d 646) the Court explained that once the cure period expired, the Court was powerless to revive a lease. The Court once again explained that the request for a Yellowstone injunction must be made both before the termination of the lease and before the expiration of the cure period set forth in the lease and cure notice. In so doing, the Court restated its express rejection (as previously stated in Korava Milk Bar of White Plains) of any prior decision “fixing a different or longer period of time in which an application for Yellowstone relief must be made.” The Appellate Division held that the Court below improperly granted the Yellowstone injunction “since the plaintiff did not seek Yellowstone relief within the cure period . . .” In addition, the Appellate Division also held, in agreement with the First and Third Departments, that a motion for a preliminary injunction “must also be made prior to the expiration of the cure period.”

In 166 Enterprises Corp. v. I G Second Generation Partners, L.P., 81 A.D.3d 154, 917 N.Y.S.2d 143 (1st Dep’t 2011) the plaintiff commercial tenant sought a Yellowstone injunction one day before the cure period was to expire. A temporary restraining order (TRO) was issued but the Court ultimately denied the motion holding that the tenant failed to demonstrate it was ready and able to cure the defaults alleged (failure to pay rent and late fees and procure the required amount of liability insurance). As there was one day left in the cure period when the motion was decided, the lease terminated the next day.

After expiration of the lease, tenant moved to renew and reargue, conceding its initial motion failed to address its ability to cure the claimed insurance default. The Court below granted the motion to renew/reargue and granted the Yellowstone injunction. The case eventually went to trial and tenant was found to have breached the insurance provision but the trial judge determined that the Yellowstone injunction had been granted nunc pro tunc as of the date of the original Yellowstone application and that therefore tenant still had one day to cure the default.

The Appellate Division, First Department, held that the trial Court “improperly concluded that Tenant still had the right to cure its breach.” The Court reasoned that after the initial motion for a Yellowstone injunction was denied, because the motion to renew/reargue was brought after the cure period expired, the Court did not have the power to grant Yellowstone relief. The Appellate Division also held that, while in certain extremely limited circumstances retroactive relief was possible, those circumstances did not exist in this case and that giving retroactive effect to the Yellowstone injunction upon the motion to renew/reargue was improper.

The simple lesson to be taken from these two cases is that tenants must move quickly upon receipt of a default/cure notice and must obtain Yellowstone or other injunctive relief before the expiration of the applicable cure period and before the expiration of the lease. The Court cannot reinstate the lease if it terminates upon the failure to timely obtain a Yellowstone injunction.

In case you didn’t know, this is my first foray into the world of blogging. That being the case, I thought that I’d spend this month just explaining some of the more general concepts of Elder Law and Estate Planning; a general introduction to begin. Although they are pretty basic (at least to me), I’ve found that there are a large percentage of people that don’t know anything about these primary ideas.

The first concept is “What are Elder Law, Estate Planning, and Trusts and Estates?” Unlike tax law or criminal law or motor vehicle law, there is no one body of law that we (as attorneys) can go to. Instead, it’s a mixture of Social Security, Medicare, Medicaid, Tax, Estates, Trusts, Mental Hygiene and even torts (personal injury) and Penal Law (criminal). The idea is that we look at all these types of law and see how they apply to our clients.

Digging a little deeper there really are two main concepts, Estate Planning and Asset Protection, which arise out of Elder Law and come into play. Estate Planning is simply making sure that whatever you have when you die goes to whomever you want it to go to. This is typically done by way of a Last Will and Testament or a Trust or some type of corporate succession plan. Asset Protection is making sure that you have something to actually pass to those people you named in your estate plan.

Now, the immediate question that comes to my mind is “who am I protecting my assets from?” Two of the largest “takers” of your assets are the government and the cost of your long term care. The government reduces your assets mainly in the form of taxes. They could be in the form of income tax, capital gains tax, gift tax or estate tax, to name a few. Long term care is basically you paying for home care or nursing care after a traumatic medical event.

In the coming months, I’ll discuss the various ways in which we can try to minimize what the government takes from us and the numerous changes in the laws, along with the various ways of then keeping your assets from the cost of nursing care. Along with all of that, I’ll try to keep you abreast of the various ways to move your assets from you to your loved ones, both during your lifetime and after you’ve passed. And, with a minimum amount of headache and loss to both you and your loved ones.