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CMM Business Breakfast: The Long Island Real Estate Landscape Reimagined

Posted: October 27th, 2017

Event Date: November 29th, 2017

The Long Island landscape has changed drastically since Levittown became a national symbol of postwar suburban sprawl, but the future remains uncertain. What challenges will today’s developers, municipalities, and residents face tomorrow in the ever-changing world of Long Island commercial and residential real estate? Join us for a wide-ranging panel discussion with a mix of important voices about the future of real estate on our island.

Our prominent panel of industry insiders will share their insights on critical topics including:

  • How the values and preferences of millennials are already shaping commercial and residential development projects
  • The impact of ride-sharing services such as Uber on plans for transit-oriented hubs
  • How to attract new companies to Long Island and grow existing companies when decades-old zoning codes limit expansion opportunities
  • The inventory shortage faced by young, would-be homebuyers as people remain in their homes longer thanks to longer life spans and the trend toward home-based elder care
  • Amazon’s ever-increasing presence and its effect on big box retailers, leaving large-scale vacancies in previously busy Long Island shopping centers
  • Rapidly growing 55+ senior communities and whether there’s a market for similar developments for young families

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

Panel:

Wednesday, November 29, 2017

Registration, networking, and complimentary continental breakfast: 8:00 a.m.

Panel discussion and Q&A: 8:30-10:00 a.m.

Radisson Hotel Hauppauge-Long Island, 110 Vanderbilt Motor Parkway, Brentwood, NY 11717

REGISTER HERE.

 

Thank you to our sponsors: Marcum LLP, Newmark Knight Frank, Fidelity National Title – Garden City and HKM Associates.

 

 

Marcum

Cybersecurity on Your Side: Nationwide Settles Data Breach Lawsuit Spanning 33 States

Posted: October 27th, 2017

It’s happening more and more these days: massive data breaches are affecting companies that people use on a regular basis for business or personal reasons.  Typically, hackers will infiltrate a company’s security system, exposing sensitive and personal information of that company’s customers.  Lawsuits then follow, typically in the form of a class action.  Back in May of this year, Target agreed to pay $18.5 million across 47 states as part of a settlement in a lawsuit stemming from a data breach that occurred in 2013.  As anyone who shops at Target may recall, this particular data breach occurred during the holiday season in 2013 and exposed credit and debit card information of tens of millions of customers.   In total, Target claimed that the 2013 data breach cost the company approximately $290 million.  Notably, following the Target settlement, California Attorney General Xavier Becerra said in a statement, “This should send a strong message to other companies: You are responsible for protecting your customers’ personal information.”

Target is just one of many companies across the country that have fallen victim to data breaches over the last five years.  One of those many other companies, Nationwide Mutual Insurance Company and its subsidiary Allied Property and Casualty Insurance Company (collectively “Nationwide”), recently announced a settlement of a lawsuit relating to a 2012 data breach incident.

In the lawsuit against Nationwide commenced by the Attorneys General of 33 states, it was alleged that in October 2012, Nationwide had a data breach that led to the exposure of personal information, including names, sex, occupations, driver’s license numbers, social security numbers, and other information of more than 1.27 million people.  This personal information was not only from Nationwide’s actual customers but also people who merely applied for insurance plans or quotes from Nationwide.  It was alleged that Nationwide failed to properly implement what is known as a “security patch” on the company’s shared computer systems, a critical measure intended to prevent hacking or computer viruses. This failure to properly implement the patch ultimately allowed hackers to gain access and penetrate the company’s databases, according to the lawsuit.  New York Attorney General Eric Schneiderman described Nationwide’s actions as “true carelessness while collecting and retaining information from prospective customers, needlessly exposing their personal data in the process.”  Nationwide denied any liability for the data breach.

On August 9, 2017, it was announced that Nationwide settled the lawsuit by agreeing to pay $5.5 million across the 33 states covered in the lawsuit.  As part of the settlement, Nationwide is also required to provide more transparency to consumers about data collection and retention practices.  In particular, Nationwide is required under the settlement agreement to hire an information technology officer and, over the next three years: (a) update its procedures and policies on maintenance and storage of consumers’ personal data; (b) conduct regular inventories of the patches and updates applied to its systems; (c) maintain and utilize system tools to monitor the security of systems used to maintain personal information; and (d) perform internal assessments of its patch management practices.  Nationwide must also disclose to consumers that it retains their personal information, even if they do not become Nationwide customers.

Interestingly, Nationwide was also named in two separate class action lawsuits after the 2012 data breach that were consolidated into a single lawsuit in federal court in Ohio.  Although the lawsuits were initially dismissed, a federal appeals court partially overturned the dismissal in September 2016 and the consolidated cases were remanded to the lower court for further proceedings.  Those cases were not resolved as part of this settlement.

Certainly, now more than ever, companies that handle and manage personal information should heed the words of the California Attorney General and realize that even smaller companies must have proper cybersecurity measures enacted and policies in place to prevent cyberattacks and to quickly respond to any such attacks to minimize exposure.  Please contact us to discuss how your company can protect itself and your customer data.

“That’s Not My Problem!” Or Is It? Successor Liability in New York Asset Purchases

Posted: October 27th, 2017

Congratulations…you just bought a business. But, what else did you “buy”?

Many M&A deals are structured as asset purchase transactions so that the buyer can acquire only those things that make money and leave the liabilities and obligations that cost money behind for the seller to resolve after the closing.  But, that’s not always what happens in reality.

Let’s begin with a bit of good news. In New York, the general rule is that a purchaser of a company’s assets is not liable for the seller’s liabilities and obligations except for those that are specifically identified as being acquired by the purchaser in the asset purchase agreement. [1]

But, simply structuring a deal as an asset purchase transaction does not, in and of itself, insulate the purchaser from “successor liability,” a legal theory wherein the purchaser is deemed to have assumed the liabilities and obligations of the seller.  New York courts recognize four exceptions to the general rule and have held that successor liability may be imposed where [2]:

  1. The purchaser/successor expressly or impliedly assumes the seller’s/predecessor’s liabilities;
  2. The purchaser/successor is a mere continuation of the seller/predecessor;
  3. The asset purchase transaction was simply a consolidation or merger of the seller and the purchaser (a de facto merger); or
  4. The transaction sale was an attempt to fraudulently evade the seller’s creditors or escape seller’s obligations to third-parties.

A clear example of where the exceptions to the general rule against successor liability would apply is where a business entity transfers its assets to a newly formed entity that is owned by the same shareholders/members, hires the same employees in the same positions, and leaves the liabilities behind in the original entity.  Not each situation is as clear-cut, and because each case is determined on the specific facts and circumstances, litigation over whether one of the exceptions applies tends to be protracted and quite costly.

Exception #1:  Express or Implied Assumption of the Seller’s Liabilities

This exception turns on whether the asset purchase agreement expressly states that the purchaser agrees to assume some or all of the seller’s liabilities (e.g. an express assumption of the seller’s liabilities), or whether the purchaser engages in some form of conduct that implies that it intended to pay the seller’s debts or otherwise assume its liabilities, such as where the purchaser voluntarily pays a seller’s debt that was not required by the asset purchase agreement (e.g., an implied assumption of the seller’s liabilities). [3]

If the purchaser agrees to pay or assume some, but not all, of the seller’s liabilities, the liabilities being assumed by the purchaser should be identified with specificity and scheduled in the asset purchase agreement (e.g., identifying the creditors that the purchaser agrees to pay, the amount owed to each creditor, what the payment is for, etc.). Such liabilities are commonly defined in the asset purchase agreement as “Assumed Liabilities.” The purchase agreement should also make it clear that the purchaser is acquiring only the Assumed Liabilities on the disclosure schedule and that the seller remains responsible for any and all known or unknown liabilities that are not listed on the disclosure schedule. Further, the purchase agreement should require the seller to indemnify the purchaser against any and all known and unknown liabilities, except for the Assumed Liabilities.

Exception #2:  Mere Continuation

The mere continuation exception turns on whether or not the transaction was simply a corporate reorganization disguised as an asset deal. Specifically, “[t]he mere continuation exception refers to a continuation of the selling corporation in a different form, and not merely to a continuation of the seller’s business. It applies where a purported asset sale is in effect a form of corporate reorganization.” [4]  In determining whether the purchaser is a mere continuation of the seller, New York courts consider several factors including: (1) commonality of directors; (2) commonality of stockholders; and (3) whether only one corporation exists at the conclusion of the transaction. [5]

A finding of successor liability is likely where the seller ceases to exist after the transaction is completed, as this would be indicative of a corporate reorganization.  In short, for the mere continuation exception to apply, the court would need to find that the purchaser and seller were so closely intertwined that the transaction was the equivalent of the seller simply changing hats.  [6]

Exception #3:  De Facto Merger

The “de facto merger” exception is the most commonly litigated exception to the general rule against successor liability.  Specifically, “the de facto merger doctrine creates successor liability when the transaction between the purchasing and selling companies is in substance, if not in form, a merger.” [7] New York courts have determined that successor liability exists when:

  1. The shareholders/members of the seller continue to be the shareholders/members of the purchaser (this is an essential component of the test);
  2. The seller discontinued its operations or is dissolved soon after the asset sale occurred;
  3. The purchaser assumed the liabilities ordinarily necessary for the uninterrupted continuation of the business of the seller (g., the purchaser assumes only those liabilities that are necessary to continue the business operations); and
  4. There is substantial continuity of the seller’s operations by the purchaser, as evidenced by the same management personnel, assets, and physical location. [8]

New York law treats a de facto merger in the same way as a traditional merger.

Exception #4:  Fraudulent Attempt to Evade Creditors

Under this exception, New York courts consider certain “badges of fraud” to determine whether a transfer was simply a fraudulent attempt to evade creditors.  These badges of fraud can include any of the following: (1) a close relationship among the parties to the transaction; (2) a secret and hasty transfer not in the usual course of business; (3) inadequacy of consideration; (4) the transferor’s/seller’s knowledge of the creditor’s claim and the transferor’s/seller’s inability to pay it; (5) the use of dummies or fictitious parties; and (6) retention of control of the property by the transferor after the conveyance.  [9]

The most important factor in this analysis is whether the seller retained control of the assets from which the creditors seek to recover.

Conclusion

While New York continues to adhere to the general rule against successor liability, the exceptions clearly demonstrate that there is no bright line test to insulate each transaction from judicial scrutiny and challenges by the seller’s creditors. In drafting an asset purchase agreement, the parties should consider whether they intend for the purchaser to assume any liabilities of the seller, whether there will be substantial continuity of the business as operated by the seller, and whether the transaction may leave a creditor or other third party with a claim for which there is no adequate remedy.  Due consideration of these factors at the outset of every asset purchase transaction is essential so that the intended allocation of risk and liability between the purchaser and seller is not only clearly specified in the purchase agreement, but also upheld in a courtroom.

[1] Cargo Partner AG v. Albatrans, Inc., 352 F.3d 41 (2d Cir. 2003); Aguas Lenders Recovery Group v. Suez, 585 F.3d 696 (2d Cir. 2009).

[2] Aguas Lenders Recovery Group v. Suez, 585 F.3d 696, 702 (2d Cir. 2009), citing Cargo Partner AG v. Albatrans, Inc., 352 F.3d 41, 45 (2d Cir. 2003); Schumacher v. Richards Shear, 59 N.Y.2d 239 (1983).

[3] Danstan Props. v. Merex, 2011 WL 135843 at 3 (S.D.N.Y. 2011).

[4] Cargo Partner AG v. Albatrans, Inc., 352 F.3d 41 (2d Cir. 2003); New York v. Nat’l. Serv. Indus., Inc., 460 F.3d 201, 205 (2d Cir. 2006).

[5] Id.

[6] Alvarado v. Dreis and Krump Manufacturing Co., 781 N.Y.S.2d 622 (NY. Sup. Ct. Bronx Cty. 2004)

[7] Cargo Partner AG v. Albatrans, Inc., 352 F.3d 41 (2d Cir. 2003).

[8] Id.

[9] Kaur v. Royal Arcadia Palace, Inc., 643 F.Supp.2d 276, 290 (E.D.N.Y.2007) (summary judgment) (citing Shelly v. Doe, 671 N.Y.S.2d 803, 806 (3d Dept. 1998)).

 

 

New York’s Family Health Care Decisions Act

Posted: October 27th, 2017

By: Martin Glass, Esq. email

Tags: ,

Let me say right up front that the best thing you can do when it comes to medical decision-making is execute a Health Care Proxy appointing an agent.  This agent can make your medical decisions if you are unable.

That being said, if you didn’t appoint anyone, in 2010 New York enacted the Family Health Care Decisions Act (FHCDA).  The law provides a procedure for appointment of a surrogate to make healthcare decisions for you if you lack the capacity to make your own medical decisions.  It even makes it possible for a family member or loved one to withdraw life support in an end-of-life situation.  Otherwise, without an agent, the medical facility would have to keep you alive until the courts figure it out.  Keep in mind that this end‑of‑life decision‑making process applies only in a hospital or nursing home setting.  It does not apply in a home care setting.

Although I’ve had some agents think otherwise, the initial presumption is that you have the capacity to make your own decisions.  This presumption is only overcome by an attending physician determining that you lack this capacity “to a reasonable degree of medical certainty.”  That determination must even be agreed to by a concurring determination independently made by a health and social services practitioner.

With a health care proxy, an Agent is appointed.  The Act allows a Surrogate to be appointed.  The law sets up a priority system of who can be appointed as the surrogate in the absence of a guardian or healthcare proxy agent.  The order of priority is as follows:

  • a spouse or domestic partner
  • an adult child
  • a parent
  • a sibling
  • a close friend

One of the biggest difficulties is that the Act does not and cannot (for obvious reasons) determine which child, parent, sibling or friend.  Should it be the child with the medical education, the oldest, or the one with the biggest mouth?  With a health care proxy, only one agent is appointed at a time with a pecking order of successor agents; you get to pick the agents and the order.

The law also establishes the decision‑making standard.  The surrogate must make the decision, including removal of life‑sustaining treatment, based on the “best interest of the patient” standard.  This is often difficult since you probably never spoke to the Surrogate about any of your healthcare preferences.  In considering what the best interests of the patient are, the law also requires the Surrogate to consider the patient’s religious and moral beliefs.  That may be helpful, or it may have the Surrogate move in a direction that is not necessarily where you wanted to go.

As I said at the beginning, rather than relying on the FHCDA to try to carry out your wishes, it is much better to appoint an agent under a Health Care Proxy.  That way, you can have discussions about your healthcare preferences, including end‑of‑life decisions, ahead of time.  But FHCDA can help families and individuals in serious medical situations where a healthcare proxy is not in place.

The information contained in this article is provided for informational purposes only and is not and should not be construed as legal advice on any subject matter. The firm provides legal advice and other services only to persons or entities with which it has established an attorney-client relationship.

Times Beacon Record: “Tesla Science Center Receives $1M Local Donation” spotlights Campolo and Alessi

Posted: October 27th, 2017

By Kevin Redding

The donation made by Eugene Sayan will help with plans to renovate the
Tesla Science Center at Wardenclyffe in Shoreham. Image from Marc Alessi

The Tesla Science Center at Wardenclyffe aims to be a major hub of exploration and innovation on Long Island, not only preserving Nikola Tesla’s life but actively helping to inspire the inventors of tomorrow. It is now another step closer to that thanks to the generosity of a local entrepreneur greatly inspired by the Serbian-American scientist.

During a celebration of the nonprofit’s long-term vision for its Shoreham site last month at the The Ward Melville Heritage Organization Educational & Cultural Center in Stony Brook, it was announced that Eugene Sayan — the founder and CEO of a Stony Brook-based health care efficiency company called Softheon Inc., will donate $1 million in support of the future museum, business incubator for scientific research and student-geared education facility.

With the donation, the center currently has $5 million of a $20 million capital campaign goal set up in March of this year. The funding will allow the center to begin phase one of its construction projects on the grounds of Tesla’s last remaining laboratory. The starting plan is to turn two abandoned buildings on the property into visitor and exhibition spaces for science education programs by next year, and renovate the historic, Stanford White-designed laboratory. Maintenance of the buildings and staff is also part of the overall budget.

“It’s truly amazing,” said Marc Alessi, the science center’s executive director, a driving force behind the center’s plans. “There’s certainly worldwide interest in this place, but Eugene’s donation is validation that there’s also an interest from local innovators in making sure this gets launched.”

Sayan, an Eastern European immigrant himself whose innovative company “strives to create simple solutions to complex problems,” has, unsurprisingly, always felt a strong connection to Tesla and looked to him as a source of inspiration while building his business. When he was made aware of Wardenclyffe during a meeting with the center’s national chair of fundraising Joe Campolo and learned of the plan to build something more than just a museum in Tesla’s name, he quickly involved himself in the effort. In the wake of Tesla Motors CEO Elon Musk’s $1 million donation to the center in 2014, Sayan wanted to be the first entrepreneur in the local area to make a significant contribution, while inspiring others to follow his lead.

“It’s an honor to support the Tesla Science Center and its celebration of the important work of Nikola Tesla,” Sayan said in a statement. “His work and innovation have made an impact on my life, and I’m very happy that Softheon is supporting such an important initiative on Long Island.”

Tesla Science Center President Jane Alcorn said Sayan’s benefaction, and others like it, will serve to successfully energize the legacy and impact of the inventor of alternating current electricity.

“Mr. Sayan is giving us support when we need it most,” Alcorn said. “We hope others will see the good that this can bring and consider giving a gift of this nature as well. Not everybody has the capacity to do something like this but when people who do have that ability act in a forward-thinking way like this, it benefits all of us. This contribution will make a real difference.”

The center’s board members estimate the entirety of their planned facility will be available to the public by 2022. Upon completion of the project, they said, not only will it include a museum and an immersive science center — including a STEM education program for students, TED Talk-style lectures and workshops for emerging scientists and entrepreneurs and traveling exhibits — it will house a Makerspace program offering lab rooms and classes in areas ranging from 3-D printing to synthetic fabrication and robotics. Incubator programs will also be set up to connect startup businesses from around the world to the site. If a company meets the center’s criteria, with Tesla-oriented focuses like electrical or mechanical engineering, its owners can apply for crowdsourcing and mentorships.

Plans are also in place to work with the Department of Education to implement Tesla into the K-12 science curriculums of surrounding school districts.

“Having a capability as a science center helps with sustainability,” he said. “People will keep coming back for family memberships, our new exhibits, to send their kids to robotics and coding classes. We eventually want to be the go-to source.”Alessi added that because the closest major regional science center, the Cradle of Aviation in Garden City, is a hike for North Shore residents, he hopes the science center will provide a similar experience for them.

He said it’s important the center become a place that would make its namesake proud.

“If Nikola Tesla walked onto this site after it’s opened and all we had was a museum dedicated to what he was doing 100 years ago, he would be ticked off,” Alessi said. “Just having a static museum here isn’t enough. On-site innovation really honors what Tesla was doing. [Tesla] was a futurist, he saw where things would go, and that’s what can inspire the Teslas of today and tomorrow. If you bring an 8-year-old child here who gets hands-on science experience, we’re going to inspire a future scientist. We want to help people see the value of science.”

Read it on TBR Newsmedia.

East End Business Community Votes CMM “Best of the Best” Law Firm

Posted: October 24th, 2017

Bridgehampton, NY – The East End business community has spoken, awarding Campolo, Middleton & McCormick the Gold Prize in the 2017 Dan’s Best of the Best competition in the category of Best Law Firm – South Fork.  The winners will be celebrated at a dinner reception on Friday, November 10 at the Suffolk Theater in Riverhead.

Sponsored by Dan’s Papers and Bridgehampton National Bank, Dan’s Best of the Best program serves as the ultimate guide to the premier businesses of Long Island’s East End, recognizing leaders in categories from wineries and restaurants to financial planners and nonprofits. Prevailing over a competitive field of East End businesses takes dedication to excellence and a commitment to deliver the best possible experience to this discerning group of residents and business owners.

Since opening its doors in Bridgehampton in 2014, CMM has become part of the fabric of the East End, welcoming many of its residents and top companies as clients and hosting networking and educational events for the community. A premier law firm headquartered in Ronkonkoma, CMM has deep Long Island roots.  Over the past generation, CMM attorneys—a roster that includes a former Suffolk County Executive, Suffolk County Attorney, County Legislator, State Assemblyman, Village Mayor, as well as judges, prosecutors, and Town and Village attorneys—have played a central role in the most critical legal issues and transactions affecting Long Island.

“Being voted the ‘Best of the Best’ is a testament to how united and loyal we are as a firm, as well as the impact we have made in helping East End businesses continue to grow and prosper,” said Joe Campolo, CMM Managing Partner. “We deeply appreciate being recognized with a Best of the Best award.”

About CMM
Campolo, Middleton & McCormick, LLP is a premier law firm with offices in Ronkonkoma and Bridgehampton, New York. Over the past generation, CMM attorneys have played a central role in the most critical legal issues and transactions affecting Long Island. The firm has earned the prestigious HIA-LI Business Achievement Award and LIBN Corporate Citizenship Award, a spot on the U.S. News & World Report list of Best Law Firms, and the coveted title of Best Law Firm on Long Island. Learn more at www.cmmllp.com.

Banking on Long Island featuring Kevin O’Connor of BNB Bank

Posted: October 20th, 2017

Joe Campolo caught up with Kevin O’Connor, President & CEO of BNB Bank, for a wide-ranging discussion focusing on the Long Island economy and how to keep our region growing. Explaining that BNB’s exponential growth over the past 10 years is no accident, Kevin discussed the bank’s philosophies for success from talent acquisition to lifelong client relationships, and how business leaders can translate their vision and passion for their companies into economic growth. Hear what’s on the horizon for local business and what Kevin thinks is the trick to keeping millennials on Long Island.

November 14 – Campolo Tapped to Host Third Entrepreneurs Edge Interview with Special Guest Eugene Alletto

Posted: October 19th, 2017

Event Date: November 14th, 2017

The Entrepreneurs Edge: Success on Long Island

Please join us at Entrepreneurs Edge, a highly anticipated annual celebration of the best of Long Island Business.

Protegrity Advisors, LLC and the Stony Brook University College of Business have announced that  visionary business leader Eugene Alletto, CEO/ Quarterback/Founder—BEDGEAR Performance®, will be interviewed by Joe Campolo, Managing Partner at Campolo, Middleton & McCormick and Advisory Board Chairman at Protegrity Advisors. Alletto will discuss his journey from humble beginnings in Hempstead to becoming one of America’s most dynamic business innovators and creative visionaries.  Campolo, an experienced interviewer, is known for his tough but respectful questions about real-life business experiences including successes, challenges and inevitable failures along the way. The event provides a unique behind-the-scenes look at what it’s like to build a successful business.

Date: Tuesday November 14, 2017
Agenda:
Meet & Greet Reception: 6:00 PM
Program: 7:00 – 8:30 PM
Location: Stony Brook University Wang Center Theater

Seating is limited! Click here to register.

For questions, please contact Joe Barry, College of Business at (631) 632-7253 or Joseph.barry@stonybrook.edu.

Sponsored by:

CMM Successfully Closes Sale of Prominent Scaffolding Business to Major National Player

Posted: October 19th, 2017

Ronkonkoma, NY – Campolo, Middleton & McCormick, LLP, a premier law firm with offices in Ronkonkoma and Bridgehampton, is pleased to announce that it has successfully closed the asset sale of a prominent scaffolding business to a large private equity-backed company for an undisclosed sum. Brooklyn-based All-Safe, LLC, a provider of turnkey hoisting, scaffolding, shoring, and bracing as well as job site protection solutions for commercial construction projects, retained CMM to guide it through the complicated sale to BrandSafway and SafwayAtlantic, which deliver access solutions in the New York, New Jersey, and Chicago metropolitan markets.

“We look forward to combining our assets and expertise with SafwayAtlantic, a leader in delivering comprehensive, world-class urban access solutions,” said Dan O’Brien, co-owner of All-Safe. “With guidance from Joe [Campolo], Don [Rassiger], and the entire CMM team, we felt confident throughout the entire process and closed on the deal extremely efficiently.”

One of the most robust M&A teams in the New York region, CMM has been involved in helping clients close billions of dollars worth of deals over the past 10 years. CMM attorneys and in-house financial experts work to creatively keep deals moving efficiently toward closing. The M&A team also has access to a critical network of relationships with M&A advisors, bankers, accountants, IDA loan advisors, and other professionals to assist in getting deals done. This background makes CMM the smart and convenient choice for sophisticated businesses who seek an alternative to the expense and anonymity of working with larger NYC firms.

Alan Sasserath, partner at Melville-based specialty accounting firm Sasserath & Zoraian, served as tax advisor to All-Safe on the transaction.