Another HMY Contract Win of Over $455,000

UNAMBIGUOUS CONTRACTS MUST BE INTERPRETED AS A MATTER OF LAW

Unambiguous Contracts Must Be Interpreted As A Matter Of Law

Recently, Lane T. Maxson, Esq., Managing Partner of HMY, successfully moved for summary judgment on behalf of Baumann & Sons Buses, Inc. (“Baumann”) against First Student Inc. (“First Student”), in a contract interpretation case that resulted in a decision and order in favor of Baumann of over $455,000, with accrued interest, plus attorneys’ fees.

The case involved the interpretation of two agreements. On September 13, 2018, Baumann and First Student entered into a Fleet Asset Purchase Agreement (the “FAPA”), whereby Baumann agreed to sell to First Student sixty-four (64) brand new school buses.

Both Baumann and First Student were school transportation contractors providing bus service for students across Long Island and beyond. Baumann had been selected as the student transportation contractor to supply bus service to the William Floyd Union Free School District (the “District”) for the contract term September 1, 2018 through July 31, 2023, and the 64 new buses were purchased by Baumann in anticipation of that award, through financing with two lenders, Daimler Chrysler (“Daimler”) and Santander Bank (“Santander”).

However, after the contract award and the purchase of the 64 Buses, Baumann chose not to accept the transportation contract with the District, and First Student was selected as the replacement transportation contractor. First Student agreed to purchase all 64 buses from Baumann.  In order for First Student to take immediate possession of the 64 buses and start transporting students for the District, simultaneously with the FAPA, the parties entered into a Vehicle Lease Agreement (“VLA”). Under the VLA, Baumann immediately delivered and First Student accepted complete possession and control of all 64 buses, and First Student began using those buses to transport students in the District. The VLA was necessary because First Student had yet to pay Baumann for the buses in order to take ownership in its own name.

Baumann commenced the action claiming that First Student breached both agreements by failing to pay the balance of the $6M purchase price under the FAPA, and the daily rental for the buses under the VLA. First Student claimed it was not responsible for those claims because Baumann had breached the integrated agreements by failing to get Santander to assign its financing of some of the buses, and counterclaimed for its attorneys’ fees under the “prevailing party” attorneys’ fees clause.

Citing the Court of Appeals, the Court recognized that “[i]n New York, agreements negotiated at arm’s length by sophisticated, counseled parties are generally enforced according to their plain language pursuant to our strong public policy favoring freedom of contract.  A contractual provision may be found to be unenforceable where the public policy of freedom of contract is overridden by another weighty and countervailing public policy. Because freedom of contract is itself a strong public policy interest in New York, a court may void an agreement only after balancing the public interests favoring invalidation of a term chosen by the parties against those served by enforcement of the clause, and concluding that the interest favoring invalidation are stronger.”

It heeded the Court of Appeals advice that that courts “may not by construction add or excise terms, nor distort the meaning of those used and thereby make a new contract for the parties under the guise of interpreting a writing,” and “evidence outside the four corners of the document as to what was really intended but unstated or misstated is generally inadmissible to add to or vary the writing. The purpose of the rule is to impart ‘stability to commercial transactions by safeguarding against fraudulent claims, perjury, death of witnesses . . . infirmity of memory . . . and the fear that the jury will improperly evaluate extrinsic evidence.’”

Relying upon this precedents, the Court addressed First Student’s position. “In this case, defendant seeks to raise a material question of fact by asserting that plaintiff is guilty of material breaches of the VAPA and VLA, in that they misrepresented that they had full corporate authority to undertake the transaction, and contend that Ronald Baumann misrepresented that he had advised them that both lenders, Daimler and Santander, were ready willing and able to facilitate the assumption by [First Student] of the Baumann obligations, and that the failure to assume the Santander obligations within 20 days of the Effective Date of the VAPA, with the resultant daily rental increasing from a daily rate of $1.00 per bus to $50.00 per bus, and the requirement that Baumann pay monthly financing charges to Santander was not due solely to the fault of [First Student].”

It found: “The VAPA and VLA contain no representation by Baumann that Daimler or Santander were in agreement to the assumption of Baumann’s obligations, and relieving Baumann from any further obligations under the existing loan agreements between them. Defendant’s effort to cast partial responsibility of the failure to complete the transaction within 20 days of the Effective Date on Baumann for failure to assign the Santander loan agreement is without merit. Plaintiff had no ability or obligation to “assign” their obligations to Santander and effect without the latter’s agreement to accept [First Student] as the obligor, in place of Baumann.” “Under the terms of the FAPA, [First Student] assumed the responsibility of obtaining consent of Daimler and Santander within 15 days of the Effective Date, and if not, to reimburse Baumann for their “out-of-pocket expenses” of $402,744.49, pay the full purchase price within 5 days thereafter, and, if not fully paid, to pay daily rental of $50.00 per bus until paid in full.”

The Court concluded: “Plaintiff’s motion for summary judgment is granted. Defendant had the option to obtain its own financing in order to pay for the buses. While the impact of the delay to the end of December, 2018 results in payment of substantial rental costs, and reimbursement of monthly payments made by Baumann to Santander during the pendency of the request for assignment, the provisions of the Agreements between the parties are unambiguous, and there is no public policy which weighs against enforcement.”

This newsletter is provided by Hamburger, Maxson, Yaffe & Martingale LLP to keep its clients, prospective clients, and other interested parties informed of current legal developments that may affect or otherwise be of interest to them, and to learn more about our firm, our services and the experiences of our attorneys. The information is not intended as legal advice or legal opinion and should not be construed as such

Another HMY Major Win with SEQRA Challenge

LOCAL MUNICIPALITIES HAVE STANDING TO CHALLENGE STATE AND COUNTY DESIGNATIONS OF REAL PROPERTY AS “AGRICULTURAL,” AND SUCH DESIGNATIONS MUST COMPLY WITH THE REQUIREMENTS OF SEQRA

Another HMY Major WinIn a series of Orders issued in two related cases of first impression, HMY Partner David N. Yaffe, Esq., retained as special counsel to the Village of Islandia, successfully established that the Village had “standing” to challenge the “agricultural” designations issued by the State and Suffolk County for several real properties located in the Village, and that the State and County failed to comply with the State Environmental Quality Review Act (SEQRA) in making those designations. As a result, the Albany County Supreme Court (Lynch, J.) annulled and vacated the agricultural resolutions and designations of the properties. See, Village of Islandia v. Ball, Albany County Index # 905550/2017; Village of Islandia v. Ball, Albany County Index No. 908006/2019.

The analysis of the cases was governed by the rarely litigated provisions of Agricultural and Markets Law (AML) § 303-b, pursuant to which Counties and the New York State Department of Agriculture and Markets are authorized to respectively select and designate real property for addition to Agricultural Districts in New York. As the Supreme Court noted, such designations are achieved in a “two-step process” in which a county legislature must first issue a Resolution recommending the addition of property to an Agricultural District, and then the State Commissioner of Agriculture may certify the subject property if the Commissioner finds that the inclusion is feasible and shall serve the public interest by assisting in maintaining a viable agricultural industry within the district. A designation of property as “agricultural” vests the property with a host of protections against local zoning restrictions and code enforcement (see, AML § 305-a(1)(a)), and also qualifies the property for “agricultural assessment values” that provide substantial reductions in annual real property tax obligations (see, AML § 304-a).

Utilizing AML § 303-b and SEQRA, the Village challenged the “agricultural” designations of three parcels of residential property in the Village. The property owner had recently purchased them and successfully asserted to the County and the State Commissioner that they were related to a horse farm also owned by the property owner which had itself received an “agricultural” designation.

In rejecting the State, County and property owner’s argument that the Village did not have “standing” to challenge the subject designations, Justice Lynch found, “the record evidences that [the Village] has alleged direct harm, distinct from the public at large. First, [the Village] has alleged its ability to enforce its zoning ordinance to preserve the residential character of the relevant residential neighborhood is directly impacted by inclusion in the agricultural district, for zoning enforcement is superseded by the Commissioner [of Agriculture] in accord with AML § 305-a(1)(a). Clearly, limitation on local zoning enforcement may impact the community or neighborhood character, as well as change in the land use intensity, including agricultural lands . . . . [Second,] [i]nclusion of the . . . lands in the agricultural district also impacts the land value for tax assessment purposes pursuant to AML § 304-a. . . . It is manifest [] that erosion of the [Village’s] real property tax base impacts community growth and/or neighborhood character, i.e. cognizable environmental impacts.” See, Village of Islandia v. Ball, Albany County Index # 905550/2017, Order dated January 30, 2020.

The Supreme Court went on to address the merits of the Village’s argument that the County and the State Commissioner had violated the requirements of SEQRA in making these particular designations. SEQRA mandates that, in issuing and conducting discretionary actions and approvals, local legislative bodies and agencies must consider and identify the relevant areas of environmental concern potentially affected by such action, take a hard look at them and make a reasoned elaboration of the basis for their determinations from an environmental perspective. Justice Lynch concluded that the County had failed to comply with SEQRA.

At the outset, the County argued that SEQRA did not apply to its resolutions recommending that the properties be placed in an Agricultural District, contending that an exemption from SEQRA review applies to “agricultural farm management practices.” See, 6 NYCRR § 617.5(c)(4). Justice Lynch found this argument to be “belied by the record . . . wholly unpersuasive and misplaced,” observing that “local legislative action to add land to the District does not constitute ‘agricultural farm management practices.’” He held that “inclusion of additional lands into the District must be evaluated to determine whether a significant adverse impact on the environment exists,” and resolutions of local legislative bodies concerning same are not exempt from this requirement.

Next, the Supreme Court found that the County Legislature failed to conduct any SEQRA review of its own and rather “delegated its duty to determine significance to the [County] planning staff, in gross violation of its SEQRA duties.” See, Village of Islandia v. Ball, Albany County Index # 905550/2017, Order dated August 21, 2020. Highlighting this failure, it noted “the absence of any discussion concerning the [Environmental Assessment Form (the EAF)] by any Member of the Legislature at the hearing or meeting.” Id.

Justice Lynch further found that the record was barren of any support for the County’s conclusion that there would be no impacts or only small impacts to community character as a result of the “agricultural” designation, and that it was “particularly troubling” that the EAF was completed without consideration of the claims and information presented by the Village Mayor. Justice Lynch rejected the statement in the County’s Resolution that “the proposed action will not exceed any of the criteria in [the SEQRA regulations],” finding that “[t]he record is silent to explain the basis for that determination,” and he also held that such silence “evinces the [County’s] failure to understand how to determine the environmental significance of the action.”

In addition, Justice Lynch rejected as “wholly conclusory” and devoid of “the reasoned elaboration requirement of SEQRA,” the statements in the County Resolution that “the proposal does not appear to threaten” and “the parcels do not appear to suffer” from impacts to the environment (emphasis supplied by the Court). As Justice Lynch concluded, “the Legislature gave lip service to its SEQRA obligation, and utterly failed to meet its procedural and substantive mandate to take a hard look at the community character impact, and to articulate the basis for its determination.”

Accordingly, the Supreme Court annulled the County’s SEQRA review and declared “null and void” the corresponding legislative approval to include the parcels in the Agricultural District. It also “vacated” the State Commissioner’s certification of the properties for inclusion in the Agricultural District. See, Village of Islandia v. Ball, Albany County Index # 905550/2017, Order dated August 21, 2020; see, Village of Islandia v. Ball, Albany County Index # 905550/2017, Order dated August 21, 2020.

This newsletter is provided by Hamburger, Maxson, Yaffe & McNally LLP to keep its clients, prospective clients, and other interested parties informed of current legal developments that may affect or otherwise be of interest to them, and to learn more about our firm, our services and the experiences of our attorneys. The information is not intended as legal advice or legal opinion and should not be construed as such

An HMY Major Win of Over $680,000

AN UNAMBIGUOUS LEASE, LIKE ANY CONTRACT, MUST BE INTERPRETED AS A MATTER OF LAW

Recently, Lane T. Maxson, Esq., Managing Partner of HMY, successfully moved for summary judgment on behalf of the Bellmore-Merrick Central High School District (the “District”) against the Board of Cooperative Educational Services of Nassau County (“BOCES”), in a contract interpretation case that resulted in a money judgment in favor of the District of over $680,000.00.

The case involved the interpretation of a 10-year lease between the parties, and a subsequent purchase agreement between the parties, executed about one year prior to the end of the lease term.  BOCES had agreed to purchase the leased property for $12 million.

The closing for the sale of the property occurred five months after the expiration of the lease term.  At the closing, BOCES refused to pay five months’ rent that the District claimed accrued pending closing of title, arguing that the lease had expired five months earlier and BOCES was, therefore, not obligated to pay rent.

The District disagreed, commenced an action for rent, and upon the District’s motion for summary judgment, the Hon. Vito M. DeStefano of the Commercial Division, Nassau County Supreme Court, agreed with the District.

In opposition to the motion, BOCES argued there was an ambiguity in the purchase agreement which expressly provided that the underlying lease could not be extended without a mutual agreement. In answer to this argument, Justice DeStefano reasoned that whether a writing is ambiguous is a question of law to be determined by the court and the determination of the intent of the parties to a contract should be made as a matter of law “whereas here, the intent is discernible from the four corners of an unambiguously-worded agreement.”

Justice DeStefano, “in viewing the Purchase Agreement in its entirely,” concluded that BOCES was obligated to pay the rent for the five month period because that agreement expressly stated the lease “‘shall be terminated at Closing’ (paragraph 4); the closing shall be July 1, 2018 or 30 days after obtaining approval of the lot subdivision, whichever is later (paragraph 5); ‘between the date hereof and the Closing Date… [t]he current lease to remain in effect’ (paragraph 21); and that ‘rent’ is ‘to be apportioned at the closing date’ (paragraph 8).”

In rejecting BOCES’ arguments (1) that the parties “must have contemplated” a closing prior to July 1, 2018, because the purchase agreement “intentionally and expressly did not extend the lease,” and (2) that the contractual apportionment of rent at closing was “intended to address the scenario where the parties closed” before the expiration of the lease term, Justice DeStefano reasoned: “While BOCES argues that the allocation provision only applied in the event the closing occurred prior to the end of the Lease term, ‘courts may not by construction add terms…under the guise of interpreting the writing.’ Moreover, the court declines to interpret the Purchase Agreement, as a matter of law, to include something that the parties have neglected to specifically include.”

Justice DeStefano also granted the District’s motion for summary judgment dismissing BOCES’ two counterclaims sounding in breach of contract and unjust enrichment.

With respect to the breach of contract counterclaim, BOCES claimed damages as a result of an alleged intentional delay on the part of the District to close title, but justice DeStefano concluded that “[h]aving closed on the purchase of the premises, with full knowledge of the District’s purported delay, BOCES’ claim to recover damages for the District’s delay in closing beyond the date contemplated by the Purchase Agreement is without mere merit. In any event, ‘delay, even “substantial delay,” in the closing of a real estate transaction does not constitute a breach of the contract of sale.’”

With respect to the unjust enrichment counterclaim, Justice DeStefano concluded that such recovery is “inappropriate if there exists a valid and enforceable contract between the parties. It is impermissible…to seek damages in an action sounding in quasi contract where the suing party has fully performed on a valid written agreement, the existence of which is undisputed, and the scope of which clearly covers the dispute between the parties.”

This newsletter is provided by Hamburger, Maxson, Yaffe & McNally LLP to keep its clients, prospective clients, and other interested parties informed of current legal developments that may affect or otherwise be of interest to them, and to learn more about our firm, our services and the experiences of our attorneys. The information is not intended as legal advice or legal opinion and should not be construed as such

An HMY Major Win of Over $680,000

AN UNAMBIGUOUS LEASE, LIKE ANY CONTRACT, MUST BE INTERPRETED AS A MATTER OF LAW

Recently, Lane T. Maxson, Esq., Managing Partner of HMY, successfully moved for summary judgment on behalf of the Bellmore-Merrick Central High School District (the “District”) against the Board of Cooperative Educational Services of Nassau County (“BOCES”), in a contract interpretation case that resulted in a money judgment in favor of the District of over $680,000.00.

The case involved the interpretation of a 10-year lease between the parties, and a subsequent purchase agreement between the parties, executed about one year prior to the end of the lease term.  BOCES had agreed to purchase the leased property for $12 million.

The closing for the sale of the property occurred five months after the expiration of the lease term.  At the closing, BOCES refused to pay five months’ rent that the District claimed accrued pending closing of title, arguing that the lease had expired five months earlier and BOCES was, therefore, not obligated to pay rent.

The District disagreed, commenced an action for rent, and upon the District’s motion for summary judgment, the Hon. Vito M. DeStefano of the Commercial Division, Nassau County Supreme Court, agreed with the District.

In opposition to the motion, BOCES argued there was an ambiguity in the purchase agreement which expressly provided that the underlying lease could not be extended without a mutual agreement. In answer to this argument, Justice DeStefano reasoned that whether a writing is ambiguous is a question of law to be determined by the court and the determination of the intent of the parties to a contract should be made as a matter of law “whereas here, the intent is discernible from the four corners of an unambiguously-worded agreement.”

Justice DeStefano, “in viewing the Purchase Agreement in its entirely,” concluded that BOCES was obligated to pay the rent for the five month period because that agreement expressly stated the lease “‘shall be terminated at Closing’ (paragraph 4); the closing shall be July 1, 2018 or 30 days after obtaining approval of the lot subdivision, whichever is later (paragraph 5); ‘between the date hereof and the Closing Date… [t]he current lease to remain in effect’ (paragraph 21); and that ‘rent’ is ‘to be apportioned at the closing date’ (paragraph 8).”

In rejecting BOCES’ arguments (1) that the parties “must have contemplated” a closing prior to July 1, 2018, because the purchase agreement “intentionally and expressly did not extend the lease,” and (2) that the contractual apportionment of rent at closing was “intended to address the scenario where the parties closed” before the expiration of the lease term, Justice DeStefano reasoned: “While BOCES argues that the allocation provision only applied in the event the closing occurred prior to the end of the Lease term, ‘courts may not by construction add terms…under the guise of interpreting the writing.’ Moreover, the court declines to interpret the Purchase Agreement, as a matter of law, to include something that the parties have neglected to specifically include.”

Justice DeStefano also granted the District’s motion for summary judgment dismissing BOCES’ two counterclaims sounding in breach of contract and unjust enrichment.

With respect to the breach of contract counterclaim, BOCES claimed damages as a result of an alleged intentional delay on the part of the District to close title, but justice DeStefano concluded that “[h]aving closed on the purchase of the premises, with full knowledge of the District’s purported delay, BOCES’ claim to recover damages for the District’s delay in closing beyond the date contemplated by the Purchase Agreement is without mere merit. In any event, ‘delay, even “substantial delay,” in the closing of a real estate transaction does not constitute a breach of the contract of sale.’”

With respect to the unjust enrichment counterclaim, Justice DeStefano concluded that such recovery is “inappropriate if there exists a valid and enforceable contract between the parties. It is impermissible…to seek damages in an action sounding in quasi contract where the suing party has fully performed on a valid written agreement, the existence of which is undisputed, and the scope of which clearly covers the dispute between the parties.”

This newsletter is provided by Hamburger, Maxson, Yaffe & McNally LLP to keep its clients, prospective clients, and other interested parties informed of current legal developments that may affect or otherwise be of interest to them, and to learn more about our firm, our services and the experiences of our attorneys. The information is not intended as legal advice or legal opinion and should not be construed as such

New York’s Child Victims Act Extension

In our March 11, 2019 and September 18, 2019 Newsletters, we reported on the Child Victims Act signed into law by Governor Andrew M. Cuomo.  Among other things, that law granted a one-year reprieve for victims of child sexual abuse whose ability to bring claims were barred by previously applicable statutes of limitation.  The one-year window established by that law enabled them to file a lawsuit against the perpetrator and any associated institution (e.g., church, temple, public school, parochial school, private school, workplace, day camp, etc.) on or before August 14, 2020.

However, in the wake of issues and potential hurdles to timely bringing such claims caused by the COVID-19 virus, on August 3, 2020, Governor Cuomo signed legislation (S7082/A9036) extending the look back window for victims of child sexual abuse by a full year.  Claims can now be filed under the Child Victims Act until August 14, 2021.

“The Child Victims Act brought a long-needed pathway to justice for people who were abused, and helps right wrongs that went unacknowledged and unpunished for far too long and we cannot let this pandemic limit the ability for survivors to have their day in court,” Governor Cuomo said, adding “as New York continues to reopen and recover from a public health crisis, extending the look back window is the right thing to do and will help ensure that abusers and those who enabled them are held accountable.”  Senator Brad Hoylman said, “The Child Victims Act has allowed more than 3,000 brave survivors to come forward to seek justice.  Yet it’s clear many New Yorkers who survived child sexual abuse haven’t come forward — especially during the COVID-19 crisis which has upended our courts and economy.  I’m extremely grateful to Governor Cuomo for signing our legislation extending the Child Victims Act for an additional year and the leadership of Senate Leader Andrea Stewart-Cousins for making the rights of survivors a priority, along with the Assembly sponsor, Linda B. Rosenthal.  Most of all, credit goes to the fearless survivors of child sexual abuse, who courageously shared their personal stories in order that more New Yorkers would have the chance to hold their abusers and the institutions that harbored them accountable.”

Assemblymember Linda B. Rosenthal said, “Survivors of childhood sex abuse can breathe a sigh of relief now that the lookback window of the Child Victims Act has been extended for one more year.  After fighting for the law’s passage for 13 long years, many feared the COVID-19 pandemic and the closure of the courts meant that the clock had run out on their opportunity to seek justice.  I thank the Governor for signing this bill into law, thus ensuring that all those seeking redress for the heinous abuse perpetrated against them will have until August 14, 2021 to do so.”

Combined with compassion and many decades of litigation experience, the attorneys at Hamburger, Maxson have successfully represented numerous victims of child sexual abuse in processing their claims against the Diocese of Rockville Centre and the Diocese of Brooklyn in connection with an Independent Reconciliation and Compensation Program previously established for survivors of child sexual abuse by Diocese clergy. We have the right team necessary to enable our clients to understand their legal rights, to assist them in telling their stories (often for the first time), all while vigorously prosecuting claims on their behalf.  It is our ultimate goal in these delicate matters, above all, to assist our clients in not only achieving monetary recovery, but in getting on the path to emotional healing.

Individuals who wish to consider filing a claim for monetary relief are well advised to consult with a knowledgeable attorney.  Any individual victim who would like to discuss the Child Victims Act further and consider retaining our law firm to assist and represent them should promptly schedule a free consultation with David N. Yaffe, Esq. at our office.  Please call us at 631.694.2400 to schedule.

This newsletter is provided by Hamburger, Maxson, Yaffe & McNally LLP to keep its clients, prospective clients, and other interested parties informed of current legal developments that may affect or otherwise be of interest to them, and to learn more about our firm, our services and the experiences of our attorneys. The information is not intended as legal advice or legal opinion and should not be construed as such

Essential Workers Discount | Estate Plans | Wills and Trusts

Essential Workers Discount | Estate Plans | Wills and Trusts

We hope that everyone is doing well during these unprecedented trying times.

We have been approached by numerous clients during this tumultuous time who wish to update or even create their estate plans, and with the help of video conferencing, we are able to offer our clients a way to check this important “to-do” off the list so they can focus on their families and staying healthy while maintaining social distance.

For those of you who have current estate plans in effect, now is a good time to reflect on whether you wish to make any changes.  If you do not yet have an estate plan, now is the time to think about your wishes concerning your health care and assets during your lifetime, and the distribution of your assets and decision-makers who will effectuate your wishes upon your passing.

Without a will, New York State intestacy law dictates who inherits from you upon your passing. A will is your opportunity to change the law’s automatic beneficiaries, and allows you the opportunity to choose who administers your assets on behalf of the beneficiaries, at what age a beneficiary can inherit, and in the case of those with minor children, to name a guardian.

Two examples: First, if a person is married with children and dies without a will, New York intestacy law dictates that the spouse inherits the first $50,000, plus one half of the remaining estate. The child(ren) of the decedent inherit the other remaining half. A child can inherit at the age of majority (18). It is very common, however, for people who are married with children to leave their entire estate to their spouse, and for the child(ren) to inherit only when the surviving spouse has passed, and usually at an age beyond 18.

Second, if a person is unmarried and without children, New York intestacy law dictates that the parents (if living) inherit the entire estate. Without any living parents, the siblings (or children of predeceased siblings, i.e., nieces and nephews) inherit equally. Having a will gives you the opportunity to pick and choose your heirs rather than have an entire class of people inherit.

There is no one-size-fits-all estate plan, as every family situation is unique. Your plan will be drafted in accordance with your express wishes and situation.

We highly recommend that our clients have the following basic estate planning in place:

  1. Wills;
  2. Powers of Attorney;
  3. Living Wills/Health Care Proxies; and
  4. Designations of Burial Agent.

The will designates who receives your assets upon your death.  The wills deal with probate assets (which are owned in your individual name without a joint owner or beneficiary).  In the case of a married couple with children, we suggest your will state that their assets pass to their spouse first, then, after the surviving spouse passes, to their children equally “per stirpes.”  Per stirpes means in the event of a predeceased child, that child’s children would “step up” and inherit the share.

The will also states at what age a child or grandchild can inherit (we suggest 25).  The will also names a Trustee who will manage the assets for any beneficiary under the age of 25, or for the surviving spouse if the survivor elects to establish a credit shelter trust.  You should name both an Executor (most appoint their spouse, if applicable), as well as an alternate Executor to handle the probate of your will.

The Power of Attorney gives very detailed authorizations to an agent to handle your finances in the event you are unable to do so.  Most people appoint their spouse, if applicable, as well as an alternate agent.  The power of attorney is “durable” which means it is not affected by your subsequent disability or incompetence.

The Health Care Proxy/Living Will designates who can make health care decisions for you in the event you are unable to do so.  Like the power of attorney, most people appoint their spouse, if applicable, as well as an alternate agent in the event the primary agent is unavailable and/or unable to make health care decisions for you.  The Living Will gives you the opportunity to decline certain treatments if there is no hope of recovery.

The Designation of Burial Agent appoints your agent (similar to the power of attorney and health care proxy, the spouse, if applicable), and allows you to make certain designations, such as where you wish to be buried or cremated, etc.  You should also appoint an alternate agent.

Once we receive the answers to the questions raised above, along with the full names, addresses and telephone numbers of all the children/decision-makers), we will e-mail drafts of these documents with a detailed letter of explanation.  Once the documents are reviewed and deemed satisfactory (or at any time prior), we can schedule a video conference to sign the documents before the required witnesses.

We are offering a 15% discount off our fee for the basic estate plan documents for our clients who are essential workers, as a thank you for your hard work and dedication to helping our community through this pandemic.

There are other estate planning tools available beyond the basic (although comprehensive) estate plan package detailed herein.  One example is a revocable trust, which is a vehicles to title assets where heirs are being disinherited or are unknown, and the goal is to avoid probate.  Another example is an irrevocable trust (also known as a Medicaid qualifying trust), where assets are transferred into trust to be managed by a trustee (NOT the grantors) to start the clock on the 5-year Medicaid look back period.  We are available to discuss these further.

Our trusts and estates partner is Christina A. Wilcox. She may be reached at cwilcox@hmylaw.com or 631.694.2400 x 232. Please feel free to reach out to discuss your estate plan. We are here to assist you.

This newsletter is provided by Hamburger, Maxson, Yaffe & McNally LLP to keep its clients, prospective clients, and other interested parties informed of current legal developments that may affect or otherwise be of interest to them, and to learn more about our firm, our services and the experiences of our attorneys. The information is not intended as legal advice or legal opinion and should not be construed as such

Landlord Notices | Employment Discrimination | 14-Day Demand for Rent and Fees

Landlord Can’t Give Notice To Cure And A Termination Notice At The Same Time

landlord_cant_give_notice_to_cure

In B&K 236 LLC v. DiPremzio, the Landlord commenced a summary proceeding which was predicated upon a “Ten (10) Day Notice to Cure and Notice to Tenant of Termination of Tenancy and Intention to Recover Possession,” which listed several alleged violations of the Occupancy Agreement, provided deadlines to cure the alleged violations, and purported to terminate the lease if the defects were not timely cured. The tenant challenged the legality of that Notice, and thus, the summary proceeding itself.

The Notice listed the following alleged violations of the tenant’s “Occupancy Agreement”: (1) failure to provide access for inspection; (2) smoking and obstruction of hallways; (3) having a dog; (4) allowing unauthorized occupants which caused overcrowding; and (5) illegally accessing the roof. The Notice concluded by stating:

TAKE NOTICE that you are hereby requested to cure said breach on or before June 5, 2017, that being more than (10) days after the service of this Notice to Cure upon you, and that upon your failure to cure the Landlord (B & K 236 LLC) hereby elects to terminate your tenancy in accordance with the applicable provisions of law.
TAKE NOTICE that in the event of failure to cure by June 5, 2017, unless you vacate and move you property from said premises on or before June 30, 2017, the day on which your term will expire, the Landlord (B & K 236 LLC) will commence appropriate proceedings to recover possession of said premises and remove you from said premises for holding over.

After allegedly failing to cure the defects by the deadline, the Landlord commenced a summary eviction proceeding. The Tenant-Respondent argued that the notice was defective, and thus deprived the Court of subject matter jurisdiction. However, the court rejected this argument, holding that even notice is defective that does not deprive the court of subject matter jurisdiction. “Failure of a petitioner to comply with a statutory notice requirement, where applicable, represents merely the failure to comply with a condition precedent to suit and cannot properly be said to affect the court’s jurisdiction.”

Nonetheless, the Court did agree with that the notice was defective, which proved fatal to the landlord’s case. The Court held:

None of the stated grounds is supported by a factual allegation. Petitioner does not state why or when it sought access to inspect respondent’s apartment; who was smoking in and obstructing the hallways, and when; the specific nuisance caused by the dog alleged to be in respondent’s apartment, if there is a dog; any description of the unauthorized occupants; when respondent illegally accessed the roof and the substantial obligation breached by respondent’s presence there. Further, each breach allegedly violates respondent’s “Occupancy Agreement.” However, petitioner does not provide any information about which sections of the agreement respondent violated. “The deficiency in the notice arises from its failure to cite any specific prohibition in the lease which had been violated.” The notice served here does not inform respondent of the conduct which violates his lease and is simply too vague and conclusory to constitute a proper predicate for this eviction proceeding.

The Court also rejected the landlord’s claim that a notice to cure and a notice of termination may be combined into one notice. The “notice to cure itself cannot function as a substitute for a notice of termination, and a termination notice may not predate the end of the cure period.” As such, the summary proceeding was dismissed.

Claim of Firing Because He Was Not Right “Cultural Fit” Warrants Jury Trial

claim_of_firing_because_he_was_not_right

Discrimination Dictionary Definition single word with soft focus

In Jain v. Tokio Marine Mgmt. Inc., the defendant Tokio Marine (TM), a commercial property and casualty insurer, hired plaintiff Rajiv Jain, a person of Indian descent, as a Senior Underwriter in its New York office in 2013. The crux of the dispute began when Jason Taylor took over as Jain’s boss and the interim Head of Property (“HOP”) of Tokio Marine’s New York office. Taylor and Jain experienced difficulties working together, culminating in Jain’s termination in November 2014. At that time, Taylor, together with the Global HOP and a human resources representative, met with Jain and terminated him. Jain claims that Taylor told him that Tokio Marine’s reasoning was that Jain was not the “right cultural fit.”

Relying on a Second Circuit Court of Appeals decision concluding the phrasing “better fit” or “fitting in” might have been about race and could create a fact issue for a jury, the Court here determined that the “cultural fit” language about Jain, even when isolated, was enough to create factual issues to warrant a jury trial, but especially so when used to describe the reasons why Tokio Marine did not promote Jain, precluding summary judgment.

Rent Demand With Additional Fees Found Reasonable, Fairly Apprises Tenant of Amount Due

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In 120 Beach 26th St. LLC v. Samuel, the residential tenant, Samuel, sought dismissal of a non-payment summary proceeding arguing the predicate 14-day rent demand was defective because it sought to recover rent arrears and additional fees that were not part of the possessory claim and failed to apprise him of the accurate amount owed in this non-payment proceeding. He cited the newly amended RPAPL § 702 providing “no fees, charges or penalties” may be sought in a summary residential proceeding.

More accurately, the new law enacted as part of the “Housing Stability and Tenant Protection Act of 2019” provides as follows:

In a proceeding relating to a residential dwelling or housing accommodation, the term “rent” shall mean the monthly or weekly amount charged in consideration for the use and occupation of a dwelling pursuant to a written or oral rental agreement. No fees, charges or penalties other than rent may be sought in a summary proceeding pursuant to this article, notwithstanding any language to the contrary in any lease or rental agreement.

We note that the tenant’s claim here, that “no fees, charges or penalties” may be sought in a summary residential proceeding, is a misconstruction of the new statute. The statute provides that no fees, charges or penalties “other than rent” may be sought in a summary residential proceeding. Because “rent” means the monthly or weekly amount charged in consideration for the use and occupation, and if the “fees” or “charges” sought are part of the consideration for the use and occupation, then a landlord should be able to seek them in a summary proceeding. Otherwise, “other than rent” would be rendered meaningless. The legislature did not say fees, charges or penalties may be sought in a summary residential proceeding.

The Court, however, never reached that argument. Instead, it found that the inclusion of additional fees in a rent demand merely gave tenant notice of landlord’s additional claim for contractual damages provided for in the lease and did not affect the rent demand’s validity. It found the amount sought in landlord’s rent demand was an approximate good faith estimate of rent owed.

It reasoned that a “rent demand is a condition precedent to commencement of a summary nonpayment proceeding, and as such, cannot be amended. The propriety of the rent demand is an element of landlord’s prima facie case. The predicate rent demand required by RPAPL § 711(2) must clearly state the approximate good faith estimate of the sum allegedly due as well as the period for which the rent is demanded.” It further found that it “has long been the standard that inclusion of attorneys’ fees or late fees in a rent demand merely gives Respondent notice of Petitioner’s additional claim for contractual damages provided for in the parties’ lease and does not affect the validity of the rent demand” and the “inclusion of late fees or other fees in the rent demand does not in and of itself invalidate the demand, instead, the inclusion of such fees is a factor the Court considers when reviewing the reasonableness of the demand and determining whether the tenant may have been prejudiced in its ability to respond to the demand, formulate defenses, and avoid litigation or eviction.”

The Court found that additional “fees” in the rent demand were for “Tenant Liability Insurance.” It did not evaluate whether they were part of the consideration for the use and occupation of the premises (and it is not clear whether that argument was even raised), but concluded that the “$19.00 in charges constitute less than 1 percent of the $3,350.00 in rent sought in the demand. That Petitioner is no longer permitted to collect the additional fees in the context of this summary proceeding does not in and of itself invalidate an otherwise valid rent demand. The standard of review for the predicate demand has not changed. It is still that of reasonableness in all attendant circumstances, and in the case at bar, the Court finds that the rent demand is reasonable and fairly apprises Respondent of the amount due.”

This newsletter is provided by Hamburger, Maxson, Yaffe & McNally LLP to keep its clients, prospective clients, and other interested parties informed of current legal developments that may affect or otherwise be of interest to them, and to learn more about our firm, our services and the experiences of our attorneys. The information is not intended as legal advice or legal opinion and should not be construed as such

Whistleblower; Employee Termination | First Amendment | Wills

Employee Terminated on Grounds Independent of Any Alleged Whistleblower Claim

employee terminated on grounds independent of any alleged whistleblower

In Tevlin v. Bd. of Ed. of Great Neck Union Free Sch. Dist., a former employee Tevlin brought an action under New York Labor Law §740 and Civil Service §75 stemming from his termination for poor attendance. Tevlin was a supervisor for security at the Great Neck Union Free School District responsible for 11 separate facilities and supervising 100 employees. Records indicated he began showing a pattern of excessive absenteeism–missing 69.5 days of work in the 2014-2015 year. He missed two unexplained weeks in May 2016 and charges were preferred. He claimed he was terminated due to a June 2016 incident–reporting what he believed was a “terroristic threat” by a bus driver to police, despite the transportation director deeming it unwarranted. The bus driver made a statement which Tevlin alleged was a “terroristic threat,” in which she showed a bus matron a picture of a friend of hers holding an assault weapon and indicating that her superiors should give her what she wants. Tevlin took part in a meeting with the director of transportation, and two other administrators. While Tevlin believed the situation should be reported to the Nassau County Police Department, the director of transportation and the other attendees disagreed. He then choose to inform a Nassau County Police Detective at a social event the next day of the situation, resulting in an investigation that did not end in any criminal charges for the bus driver.

In addressing the School’s motion for summary judgment, the Court recognized that under Civil Service Law §75-b “a public employer shall not dismiss or take other disciplinary or other adverse personnel action against a public employee regarding the employee’s employment because the employee discloses to a governmental body information regarding a violation of a law, rule, or regulation, which violation creates and presents a substantial and specific danger to public health or safety or which the employee reasonably believes to be true and reasonably believes constitutes an improper governmental action. However, where there are specific incidents of inappropriate, unprofessional, or insubordinate conduct which are found to demonstrate a separate and independent basis for the action taken, an employee may not assert a claim or defense under this section.”

It further recognized that under Labor Law §740 “an employer shall not take any retaliatory personnel action against an employee because such employee either discloses or threatens to disclose to a supervisor or to a public body an activity, policy, or practice of the employer that is in violation of law, rule, or regulation which violation creates and presents a substantial and specific danger to the public health or safety or provides information to or testifies before any public body conducting an investigation, hearing, or inquiry into any such violation of a law, rule, or regulation by such employer. On the other hand, this statute also provides that it shall be a defense to any action brought pursuant to this statute that the personnel action was predicated upon grounds other than the employee’s exercise of any rights protected under it. This section requires proof of an actual violation of law to sustain a cause of action and a plaintiff’s reasonable belief of a possible violation is not sufficient.”

In reviewing the details surrounding Tevlin’s absenteeism the Court noted that they “predated the incident involving the bus driver,” and found the issues with Tevlin’s “attendance at work well-documented,” beginning “more than a year and half before the alleged incident for which he categorizes himself as a whistleblower.” The Court said that the School District was “more than fair” in its treatment of Tevlin’s behavior, and provided him with “multiple opportunities to correct it, with each opportunity being squandered” by him.

The Court concluded that the School District had “established that there were specific instances of insubordination” by Tevlin “such that the grounds for his dismissal existed independent of any possible whistleblower claim he may have,” and granted summary judgment dismissing the complaint.

Removal of Student from Variety Show After He Went “Off-Script” Was Not A First Amendment Violation

removal of student from variety show after he went “off-script” was not a first amendment violation

In Vetrano v. Miller Place Union Free Sch. Dist., the plaintiff student sued his school district after he was not allowed to attend the second day of his High School’s annual two-day variety show because he improvised a line in a skit—satirizing the school’s enactment of a policy limiting bathroom use to one student at a time (Bathroom Skit)—that did not stick to the script approved by producer/director Mangiamele, also an Assistant Principal at the High School.  He received no other discipline. The District Court dismissed plaintiff’s action, brought under the Civil Rights Act and 42 U.S.C. § 1983, alleging the Miller Place Union Free School District, High School, Mangiamele, and Higuera, the District’s Superintendent of Schools, violated his constitutional rights to free speech, freedom of association, and due process. Finding that the Bathroom Skit constituted school-sponsored speech, the District Court concluded plaintiff’s First Amendment retaliation claim failed because he did not engage in protected speech.  Further noting he suffered at most a de minimis deprivation, the District Court concluded plaintiff did not show he suffered an adverse action in connection with his speech, and also concluded his freedom of association claim duplicated his meritless retaliation claim.

According to the District Court, each year the High School holds a variety show which consists of musical and other talent acts, separated by satirical skits performed by members of the senior class.  The skits often poke fun at faculty, school policies, and other school-related issues.

The Variety show is a school-sponsored event, with a general understanding that what is performed in the Variety Show has been approved by the High School and by Assistant Principal Mangiamele.  The skits are submitted for approval to the Executive Council, which passes them on to the Faculty Advisor for approval and after the Faculty Advisor approves the skit scripts, he or she submits them for approval to any faculty member who is mentioned by name or likeness.  If a faculty member is mentioned, he or she must approve the script in order for the students to be permitted to perform it in the Variety Show.  If a staff member does not approve the script, that person may not be mentioned in the Variety Show.

In addition, the Court noted that the Faculty Advisor follows the procedure for approving skits in accordance with the Code of Conduct’s expectations for acceptable conduct, and the anti-bullying and harassment policy.  The Code of Conduct articulates that all students, school staff, parents, and other visitors must meet the High School’s expectations for acceptable conduct while on school property and at school functions.  A “school function” is any school-sponsored event or activity held on or off school district property.

The Code of Conduct also prohibits conduct that is insubordinate, disruptive, or endangers the morals of others.  Insubordinate conduct includes failing to comply with the reasonable directions of teachers, school administrators or other school employees in charge of students, or otherwise demonstrating disrespect.  “Disruptive conduct” includes failing to comply with the reasonable directions of teachers, school administrators or other school employees in charge of students.  Conduct that endangers the morals of others includes harassment, bullying, or discrimination against any student.

Failure to comply with the Code of Conduct may result in certain disciplinary penalties and an Assistant Principal or Activity Director is authorized to remove a student from a school function when the student violates the Code, so long as it is consistent with the student’s right to due process.  The amount of due process to which a student is entitled before receiving a penalty depends on the penalty imposed.

The Code of Conduct specifies that participation in extra-curricular activities is a privilege earned by students who are in good academic standing and demonstrate good citizenship.  As a result, the Code of Conduct does not provide a hearing for students removed from an extra-curricular activity pursuant to Education Law § 3214.  Instead, the Code provides the student and the student’s parent a reasonable opportunity for an informal conference with the district official imposing the suspension to discuss the conduct and the penalty involved.

Plaintiff submitted his “Bathroom Skit” to the then-Executive Council President, who submitted them to Mangiamele for approval.  Mangiamele ensured that each of the faculty members represented in a Skit was given the script to review and approve.  The Bathroom Skit satirized the High School’s enactment of a policy which limited use of the bathroom to one student at a time, supposedly to combat smoking in the bathroom.

Mangiamele approved the skit as submitted and at the beginning of the Variety Show’s rehearsal, Mangiamele addressed the students as a group and advised them that they must stick to the script and not improvise lines.  Mangiamele also advised the students that they must make good decisions, and that any student who did not do so would be pulled from the show, potentially affecting upcoming events.  Mangiamele also reminded the students that faculty members signed off on the Skits, and that there were to be no changes to the approved Skits.

Before the show began, Mangiamele again sat the students in the gymnasium, and reminded them that they may not deviate from the approved script.  She advised the students to be on their best behavior and not to try anything that will get them in trouble and warned them that if they did not follow the rules, they can have other events taken away.

During the Bathroom Skit, the first skit of the show, the Plaintiff improvised the following line omitted from the drafts of the script approved by Mangiamele — “Is this why our Superintendent makes so much money, to ·write bathroom policy?”  Immediately after the Skit, Mangiamele spoke with the Plaintiff regarding his failure to stick to the script.  She told him they would discuss it the following morning, but that his actions may affect the second night of the Variety Show.  The Plaintiff agreed that the line in question was not part of the script but disagreed that his actions violated the rules.  The Plaintiff stayed for the remainder of the show and performed in two other Skits as planned.

Plaintiff was told on the day of the second Variety Show, that he would not be able to attend the second night of the Variety Show because he failed to stick to the approved script and did not follow the rules.  The Plaintiff received no other discipline.

The plaintiff then brought an action based on these facts in the Supreme Court of the State of New York for the County of Suffolk and pursuant to federal law, the defendants removed the action to the federal District Court, because the plaintiff’s Section 1983 claims invoke the Court’s federal question jurisdiction.

As for the First Amendment retaliation claim the District Court noted that generally “a plaintiff must establish that: (1) his speech or conduct was protected by the First Amendment; (2) the defendant took an adverse action against him; and (3) there was a causal connection between this adverse action and the protected speech.”

As to whether the plaintiff engaged in protected speech, the District Court noted that although students do not “shed their constitutional rights to freedom of speech or expression at the schoolhouse gate,” the rights of students “are not automatically coextensive with the rights of adults in other settings, which must be applied “in light of the special characteristics of the school environment.”  The District Court said the Bathroom Skit constituted unprotected school-sponsored speech, because the plaintiff performed the skit during a school-sponsored Variety Show.

The Court further said that the Plaintiff could only sustain his objection by establishing that the Bathroom Skit was somehow of such a private nature that it no longer bore the imprimatur of the school, but that the “record does not support this conclusion, as Mangiamele, a faculty member, produced and directed the show and a general understanding existed that show’s performances were approved by Mangiamele and the High School.”

Because the High School “directly involved itself in the production of the Variety Show and regulated its content by selecting” the acts and skits, “it could be more reasonably inferred by the public that the High School endorsed or sponsored the speech included in the performances.”

As to whether the plaintiff suffered an adverse action the Court noted that under an “objective standard, an adverse action must be more than de minimis to support a First Amendment retaliation claim.  This test is ‘highly context-specific,’ ‘and “must be applied here ‘in light of the special characteristics of the school environment.’” Because the plaintiff’s claim did not “arise from a suspension or other similar student discipline, but rather the barring of his performance in the second night of the Variety Show — a voluntary, extracurricular activity” and because “the participation in extracurricular activities is a privilege, not a right,” any adverse action was found to be de minimis.

Lastly, as  to whether a causal connection existed, the District Court concluded that “the undisputed record shows that the plaintiff improvised lines in the Bathroom Skit, despite multiple warnings that he must adhere to the script, and that the defendants disciplined the plaintiff for failure to abide by those warnings.  The plaintiff puts forth no evidence suggesting that the defendants barred him from participating in the second night of the Variety Show for anything other than the fact that he violated the rules, and nothing else in the record otherwise illustrates an improper motive.”

No Sufficient Act of Obliteration Found to Effectuate Revocation of Will

no sufficient act of obliteration found to effectuate revocation of will

In Estate of Mandel, the petitioners, decedent’s stepson and brother-in-law, moved for summary judgment dismissing an objection to probate the propounded instrument alleging it was revoked by an act of obliteration or cancellation of dispositive provisions. The will left most of the estate to decedent’s spouse, and if he predeceased, to her stepson. It was undisputed that when decedent executed the will there were no handwritten markings on it other than hers and the witnesses’ signatures, but the will offered for probate had handwritten markings on 9 of 27 pages and within 7 of its 15 articles striking through provisions where decedent’s spouse, stepson, his spouse, and their children were named, and adding objectant AM’s name, her son or decedent’s brother-in-law. Decedent’s initials appeared next to the handwritten markings. The Court found the markings did not affect the entire Will or a “vital part” of it and not “each and every” dispositive provision was obliterated, ruling there was not a sufficient act of obliteration to effectuate a revocation, granting petitioners summary judgment.

In so ruling, the Court noted that New York’s Estates, Powers and Trusts Law (“EPTL”) Section 3-4.1 sets forth the procedures for the revocation of wills, and that Courts “‘have been as unyielding in demanding strict compliance with the requirements of EPTL 3-4.1 for the revocation of a will as they have in demanding compliance with the requirements of EPTL 3-2.1 for the execution of a will’” and that a “‘testator executing a will must satisfy a fair number of strictly construed formal requirements,’” but a “testator revoking a will also must adhere to some formalities.”

“EPTL 3-4.1(a)(2)(A)(i) provides that a revocation, ‘if intended by the testator, may be effected…by…[a]n act of burning, tearing, cutting, cancellation, obliteration, or other mutilation or destruction performed by…[t]he testator.’ In order to effectuate a revocation by obliteration or cancellation, there must be the concurrence of an act of revocation and an intent to revoke. As the Court of Appeals has observed, ‘Intent alone will not suffice. It must be “consummated by some of the acts specified in the statute…”.’”

The Court noted that numerous courts have held that whether markings on an instrument constitute a sufficient act under the statute “is a preliminary matter of law for the court to decide,” and to “constitute a sufficient act, the markings must affect the entire will or a ‘vital part’ thereof. The precedents have recognized ‘vital’ as the signature of the testator or of an attesting witness, as well as ‘each and every dispositive provision of [the] will.’”

In concluding that the markings did not affect the entire will or a “vital part” thereof, the Court reasoned that not “each and every dispositive provision has been obliterated. It is indisputable that two clearly dispositive provisions remain unmarked: the Article FOURTH bequest of $100,000 in trust for the primary benefit of decedent’s pets, and the Article SEVENTH(D) alternative provisions for the residuary and any ultimate remainder of a testamentary trust.”

It also concluded that “proof of decedent’s extrinsic expressions of an intent to revoke cannot be heard where, as here, the markings on a propounded instrument are insufficient to constitute an act of revocation under the statute” and because no such act had been shown to have occurred, the Court could not consider the objectants’ extrinsic proofs of decedent’s intent to revoke.

This newsletter is provided by Hamburger, Maxson, Yaffe & McNally LLP to keep its clients, prospective clients, and other interested parties informed of current legal developments that may affect or otherwise be of interest to them, and to learn more about our firm, our services and the experiences of our attorneys. The information is not intended as legal advice or legal opinion and should not be construed as such

Overtime | Use & Occupancy | Tenancy-At-Will

Employee Failed To Prove He Worked “Gap” Periods In Unpaid Overtime Action

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In Kim v. Bogopa Inc., plaintiff Bong Chul Kim moved for summary judgment on his claim for unpaid overtime, seeking recovery of over $4,500 for violations of the Fair Labor Standards Act and related New York labor laws.

According to the decision, Kim began working as a Store Produce Manger in April 2005.  From at least the start of the year 2012 through July 2014, his hours were tracked by his employer through a punch-in/punch-out system.  Kim argued that his employer failed to compensate him for overtime because he was paid based only on the scheduled shift start and end times, and not the hours actually indicated by his punch-in and punch-out times, and that this “rounding scheme” resulted in his hours consistently being “rounded down.”  As an example, he argued that the records showed on July 30, 2012, his shift lasted 10 hours, excluding one hour (unpaid) for lunch break and he punched-in at 6:47 a.m. and punched-out at 6:06 p.m.  He alleged that for July 30, 2012, he was paid for that day eight hours in straight time and two hours in overtime; he seeks to be paid for an additional 19 minutes in overtime for that day (the sum of the 13 minutes from 6:47 a.m. to 7 a.m., and the 6 minutes from 6 p.m. to 6:06 p.m.).  After adding all the minutes for the other days for which he asserted he was not paid, Kim sought a total payment of $4,585.75 in overtime compensation, plus statutory damages equal to 100 percent of the outstanding amount, plus pre-judgment interest, plus $21,118.75 in attorney’s fees and $616.44 in costs.

His employer opposed the motion arguing that material issues of fact remain regarding 1) whether Kim was working during the pre-shift and post-shift minutes for which he sought compensation; 2) whether the employer had actual or constructive knowledge of any such work; and 3) whether Kim’s pre and post-shift time was spent performing his principal activities or activities that were integral to his principal activities or activities that were integral to his principal activities — a prerequisite for the time to be compensable.

In addressing the motion, that Court recognized New York’s rule provides that “an employer shall pay an employee for overtime at a wage rate of one and one-half times the employee’s regular rate in the manner and methods [as] provided in…the Fair Labor Standards Act of 1938, as amended….”  The Court further recognized that under the FLSA rules, although time clocks are not required, in those cases where time clocks are used, “employees who voluntarily come in before their regular starting time or remain after their closing time, do not have to be paid for such periods provided, of course, that they do not engage in any work.  Their early or late clock punching may be disregarded.  Minor differences between the clock records and actual hours worked cannot ordinarily be avoided, but major discrepancies should be discouraged since they raise a doubt as to the accuracy of the records of the hours actually worked.”

The Court said to establish liability on a claim for unpaid overtime, “the employee has the burden of proving that he or she performed work for which he or she was not properly compensated, and the employer had actual or constructive knowledge of that work,” and that “any activity that is ‘integral and indispensable’ to a ‘principal activity’ is itself a ‘principal activity’… and thus compensable under the FLSA even if performed before or after the regular shift.”  “Whether an activity is ‘integral and indispensable’ to an employee’s principal activities is a fact-dependent inquiry.”

“‘This regulation means that employees who clock in early do not have to be paid so long as they are not working.’  [A]n employee can clock in, grab a coffee, read the newspaper, and then start working once his scheduled shift begins — and an employer wouldn’t have to compensate him for that time.’  Stated another way, ‘time spent clocked in does not automatically equate to time spent working, and only time spent working is compensable.’”

The Court concluded that Kim “failed to submit an affidavit or other evidence indicating that he actually worked during the ‘gap’ periods; that is, the periods between punching-in and the start of a scheduled shift, or between the end of a scheduled shift and punching-out,” and denied the motion.

Landlord Granted Use & Occupancy Against Tenant For Subtenant’s Holdover

landlord-granted-use

In 34 W. 75th St. LLC v. Hynes, an ex-landlord sued its ex-tenant Hynes in a plenary action for unpaid use and occupancy (U&O).  In that same action, Hynes sued her ex-subtenant Thompson for indemnification in a third-party action.  Hynes’ renewal lease was to expire August 31, 2018, but Thompson indicated she would not be vacating and landlord commenced a holdover proceeding against Thompson.  The landlord argued Hynes defaulted by subletting the premises without its consent which Hynes conceded, but argued that she was not liable for U&O after she surrendered the keys to the landlord’s superintendent.

Hynes had resided in the apartment pursuant to a lease with the landlord commencing August 8, 2016, and extended by renewal lease expiring August 31, 2018.  During the subject period, Hynes paid $2,695.00 per month.  On August 1, 2018, Hynes signed a sublease with Thompson, also expiring August 31, 2018.  On August 26, 2018, Thompson notified Hynes that she would not be vacating the Apartment on August 31, 2018.  On September 26, 2018, the landlord commenced a holdover proceeding against Thompson.  On October 1, 2018, Hynes returned the keys to the landlord’s superintendent’s office.  On January 8, 2019, Thompson was evicted, and the landlord regained vacant possession.  However, the landlord received no compensation for the apartment from September 2018 through January 2019, and commenced a plenary action against Hynes for that compensation, and moved for summary judgment.

Because Hynes conceded that Thompson subsequently held over after the lease expired, the landlord argued that Hynes is liable for all unpaid use and occupancy through the date the landlord regained vacant legal possession on January 8, 2019.  In addressing this argument, the Court recognized that “‘upon termination of a lease, the tenant is obligated to remove the subtenant.  A wrongful holdover by a subtenant is deemed the same as a wrongful holding over of the prime tenant/sublessor.’  ‘Having failed to discharge his leasehold obligation to remove his licensee at the expiration of the lease term, the tenant remained responsible to the landlord for the licensee’s continued occupancy through the pendency of the summary holdover proceeding.’”

As to Hynes’ argument that she was not liable for use and occupancy past September 2018 because she surrendered the keys to the landlord’s superintendent on or about October 1, 2018, the Court said that “even crediting this assertion, however, Tenant effectively concedes owing use and occupancy through the end of October because, where rent is due and payable on the first of the month, tenants who vacate during the month are generally liable, absent an agreement to the contrary, for the entire month’s rent.  Moreover, even accepting that Tenant’s delivery of the keys constituted an offer of surrender, there must also exist a ‘meeting of the minds on the terms of surrender.’  Here, Landlord submits email correspondence between Tenant and Landlord’s agent clearly demonstrating that Landlord rejected surrender unless the Apartment was vacant.  This reflects the Lease, which explicitly states that ‘You have not moved out until all persons, furniture, and other property of yours is also out of the apartment.  If your property [persons, or furniture] remains in the Apartment after the Lease ends, Owner may either treat You as still in occupancy and charge You for use….’”  In addition, the landlord’s prompt commencement of the summary holdover proceeding to evict Thompson, “contradicts any argument that Landlord acquiesced to Subtenant’s occupancy.”  Thus, the landlord’s motion for U&O was granted.

10-Day Notice Jurisdictionally Defective; 30-Day Notice Required For Tenancy-At-Will

10-day-notice

In Laffey v. TCG Grp. LLC, the petitioners, including Emmett Laffey, moved to be restored to possession of a southwest corner office on the second floor of the subject premises, claiming respondents, including his brothers, Phillip and Mark, illegally locked them out.  According to the decision, Phillip and Mark, despite allegedly terminating Emmett in December 2015, waited until February 2019 to use “self-help” to evict him.  Emmett argued he was a one-third owner of the subject real estate with his brothers, and he never received a notice to vacate nor were summary proceedings brought before he sought to be restored.

Then, in a separate proceeding, the petitioners, TCG Group, LLC, Laffey Fine Homes of New York, LLC d/b/a Laffey Real Estate, U.S. 1 Laffey Real Estate Corp., Mark Laffey, and Philip Laffey, commenced a holdover summary proceeding against Emmett Laffey, Laffey Fine Homes International, LLC, and US 1 Laffey of Williston Park, Inc., by Petition dated March 12, 2019.  The Petition alleged that a 10-day notice was served upon Emmett Laffey to remove him as an alleged “licensee.”

The Court consolidated both matters for joint trial.  In its decision, the Court noted Emmett did not possess a specific right to exclusively occupy and control the southwest corner office – he had a one-third interest in a company that owned the building.

Nonetheless, the Court recognized that “a tenancy-at-will arises whenever a landlord permits another party to possess property without any agreement as to a termination date or rent payment terms,” and that a 30-day notice to terminate is necessary when a tenancy-at-will is created by an ex-employee holding over without the employer timely moving to evict the terminated employee.  “‘Also, if an employee remains in possession of a property for a considerable length of time after the relationship has been terminated, a tenancy at will may be implied by the courts, which tenancy may be terminated by a written notice of not less than 30 days given on behalf of the landlord, to the tenant, requiring the tenant to remove from the premises.  To create a tenancy at will, however, the post-employment occupancy must be sufficiently long to warrant an inference of consent to the holding different from that of an employee-licensee; how long an occupancy is required is a question to be determined from all the circumstances of the case.’”

Thus, the Court held that the 10-day notice required to terminate an alleged licensee that was served on Emmett Laffey was jurisdictionally defective.  “Emmett Laffey is a tenant-at-will and is entitled to a 30-day notice.  The self-help employed in the case at bar was illegal, and not done in a peaceful manner.”  The Court concluded that he was entitled to possession of the southwest corner office, and directed that he be given a key, “without prejudice to a proper holdover summary proceeding to evict Emmett Laffey as a tenant-at-will.”

This newsletter is provided by Hamburger, Maxson, Yaffe & McNally LLP to keep its clients, prospective clients, and other interested parties informed of current legal developments that may affect or otherwise be of interest to them, and to learn more about our firm, our services and the experiences of our attorneys. The information is not intended as legal advice or legal opinion and should not be construed as such

Yellowstone Injunction | Neighbors’ Cameras | Tithing

Yellowstone Injunction Denied When Tenant’s Breach Is Incapable Of Cure

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In Booston LLC v. 36 W. Realty Co. LLC, a commercial tenant, Booston LLC, moved for a Yellowstone injunction to maintain the status quo to protect its interest in its leasehold and obtain a stay tolling the time for it to cure a default and avoid forfeiture.  The landlord alleged the tenant violated the lease rider by failing to furnish and continue sufficient insurance coverage on the premises.

Since the Court of Appeals’ decision in First Nat’l Stores v. Yellowstone Shopping Ctr., 21 N.Y.2d 630, 290 N.Y.S.2d 721 (1968), tenants have developed a practice of obtaining a stay of the cure period before it expires to preserve a lease until the merits of a dispute over the default notice may be resolved in court (i.e., a “Yellowstone” injunction).  Effectively, tenants have learned from the mistake of the tenant in the case of Yellowstone who commenced an action for declaratory judgment on the last day of the cure period, but did not obtain a temporary restraining order.  The Court of Appeals ultimately held that in absence of the injunction, it was powerless to revive the expired lease.  Significantly, the courts have since granted such injunctive relief on less than the normal showing required for a preliminary injunction because of the threat of a forfeiture of the valuable leasehold interest.

Thirty years later, the Court of Appeals revisited its Yellowstone decision in the case of Grabuard Mollen Horowitz Pomeranz & Shapiro v. 600 Third Ave. Assocs., 93 N.Y.2d 508, 693 N.Y.S.2d 91 (1999).  In that case, the Court of Appeals analyzed what it recognized was the seminal decision to a “new era of commercial landlord-tenant law in New York State[,]” creating a “remedy for tenants when confronted with a tangible threat of lease termination.”

Importantly, in reaffirming the standards which a party requesting the Yellowstone injunction must demonstrate, the Court of Appeals re-enforced the restrictive nature of the common law remedy that has evolved out of its original decision in Yellowstone, concluding that “[t]hese standards reflect and re-enforce the limited purpose of a Yellowstone injunction: to stop the running of the applicable cure period.”

So it is a well-established tenet in Yellowstone applications that if the application is made after the expiration of the cure period, and even before the expiration of subsequent notice of termination of lease, a court is divested of any power to issue the injunction, regardless of the merits of the tenant’s position on the default, because the court cannot “stop” what has already run.

Several of our prior newsletters reported on decisions where Yellowstone injunctions were denied for the simple reason that a tenant cannot cure an incurable default.  Many of those decisions dealt with the tenant’s failure to obtain the required insurance coverage under a lease and make clear that a tenant obtaining a prospective insurance policy does not protect a landlord against unknown claims that might arise during the period in which no coverage existed.

That is what happened in this case:  the tenant did not keep in effect public liability coverage against claims for bodily injury or death in the amount of $2,000,000 in a single limit or under an original policy with an umbrella as the lease required, but instead furnished the landlord with an insurance certificate showing such coverage only in the amount of $1,000,000 in a single limit, and it failed to name the landlord as a named insured, in further violation of the insurance clause.  The tenant maintained that this breach was waived as it delivered to landlord copies of its insurance certificates for more than five years without objection, while accepting tenant’s rent payments.

The Court found this waiver argument “unavailing” because the lease contained a common provision entitled “No Waiver” that stated:

The failure of Owner to seek redress for violation of, or to insist upon the strict performance of any covenant or condition of this lease or any of the Rules or Regulations set forth or hereafter adopted by Owner, shall not prevent a subsequent act which would have originally constituted a violation from having all the force and effect of an original violation.  The receipt of owner of rent with knowledge of the breach of any covenant of this lease shall not be deemed a waiver of such breach and no provision of this lease shall be deemed to have been waived by Owner unless such waiver is signed by Owner….

The Court concluded that the tenant’s waiver argument “is, thus, clearly barred by the terms of the parties’ Lease.  In addition, putting aside the No Waiver clause that dictates the result herein, ‘[a] necessary lynchpin of a Yellowstone injunction is that the claimed default is capable of cure.’ If ‘the claimed default is not capable of cure, there is no basis for a Yellowstone injunction.’  The First Department has held that failure to procure insurance cannot be cured where the proposed cure does not involve ‘any retroactive change in coverage, which means that the alleged defaults raised by the landlord are not susceptible to cure’ and, therefore, there is no basis for a Yellowstone injunction.  The rationale for the First Department’s decisions is simple: a deficiency in past insurance coverage ‘does not protect the landlord against the unknown universe of any claims arising during the period of no insurance coverage.’  This rationale squarely applies here and as there is no means for the Tenant to obtain retroactive insurance coverage, the Yellowstone injunction must be denied.”

Homeowners Cannot Order Neighbors To Redirect Or Remove Cameras

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In Ienopoli v. Lent, the petitioners homeowners sought an order directing the respondents neighbors to remove or redirect their cameras under Civil Rights Law § 52-a alleging they are aimed at petitioners’ property, without consent, believing it was done with the intent to annoy, harass or threaten petitioners.

New York Civil Rights Law § 52-a gives an owner of residential real property “a private right of action for damages” against anyone “who installs or affixes a video imaging device” on property adjoining their residential real property with “the purpose of videotaping or taking moving digital images of the recreational activities which occur in the backyard of the residential real property without the written consent thereto of such owner,” when such action is taken “with intent to harass, annoy or alarm another person, or with intent to threaten the person or property of another person.”

A “backyard” is defined as “that portion of the parcel on which residential real property is located which extends beyond the rear footprint of the residential dwelling situated thereon, and to the side and rear boundaries of such parcel extending beyond the rear footprint of such residential dwelling.”

According to the decision, petitioners and respondents are neighbors residing at 9 Jerry Lane and 7 Jerry Lane, Glen Cove, New York, respectively. The parties’ properties abut and their backyards share a common fence line.  Petitioners claimed that respondents installed numerous cameras on their property aimed at petitioners’ property, including their backyard and windows, without petitioners’ consent.  Petitioners believed that the cameras were installed with the intent to harass, annoy, and alarm them, or with the intent to threaten petitioners’ person or property.

In addressing the requested relief under the statute, the Court was presented with photographs of the cameras, but it found it “impossible to discern from the photographs alone where the cameras are focused and if they indeed are aimed at petitioners’ windows and backyard as petitioners allege.  And aside from what the Court referred to as petitioners’ “bare statement” made “upon information and belief,” that the cameras were installed “with the intent to harass, annoy or alarm…or with the intent to threaten the person or property…there is no evidence submitted to establish same.”

In opposition, the respondents submitted an affidavit stating that the cameras were installed after the petitioners allegedly threatened him stating in sum and substance “You are this close to me burning your house down,” while putting his fingers close together as he said “this close.”  Respondent further stated that he installed the cameras “solely for the purpose of protecting his family and his property.”  He claimed that “the cameras do not tape or image petitioners’ backyard and were not installed to annoy, harass, or threaten petitioners.”

The Court concluded that the injunctive relief petitioners sought was not provided for by the plain language of the statute that provides for “a private right of action for damages.” Here, the petitioners sought “equitable relief in the form of an order directing respondents to redirect or move their cameras.” Additionally, it concluded “petitioners fail to establish that respondents installed their cameras with the requisite intent prohibited by the statute.”  The Court concluded that “nothing in the statute or the Sponsors Memorandum suggests that Civil Rights Law § 52‑a was enacted in any part to curtail the rights of property owners to secure their property through the use of security cameras.  Thus, petitioners fail to establish their entitlement to an order directing the removal or redirection of respondents’ cameras.”

Action Over Proper Tithe Amount Is Non-Justiciable

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In Wilson v. Christ Alive Christian Cntr., the defendant Church moved for summary judgment in an action by an ex-member, Wilson, who tithed $230,000 to the Church from a $2.3 million litigation award.

According to the decision, sometime in 2003, Wilson was involved in a motor vehicle accident that tragically took the lives of her husband and two children.  A lawsuit culminated in an award of $2,305,246.70 of which $1,900,000 was placed into a structured settlement and $405,247.70 was immediately paid to Wilson.  In 2007, Wilson voluntarily tithed $230,000 to the Church.  Five years after she made the tithing, she wanted the entire amount back, arguing that she was confused after being “counseled” by the Church’s pastor as to the proper tithe amount.  She testified that she intended to tithe 10 percent of her structured settlement monthly payments, not the 10 percent of the gross settlement recommended by the pastor.  She claimed “confusion” on her part — but she did not allege that the $230,000 was procured through fraud or duress.

In addressing the Church’s motion for summary judgment, the Court recognized that the “First Amendment forbids civil courts from interfering in or determining religious disputes, because there is substantial danger that the state will become entangled in essentially religious controversies or intervene on behalf of groups espousing particular doctrines or beliefs.  Judicial involvement is permitted when the case can be decided solely upon the application of neutral principles of…law, without reference to any religious principle.”

The Church argued that the action should be dismissed because it presented “non-justiciable ecclesiastical issues as to the religious interpretation of church doctrine concerning biblical tithing.”  Wilson countered, arguing that the First Amendment could not operate to shield the Church from liability “for exploiting a cognitively impaired, emotionally vulnerable woman.”  The Court held that “unfortunately for plaintiff, no matter how the inquiry is framed, it requires the issue of what would have been a proper tithe under these circumstances to be litigated in this forum, which is constitutionally impermissible.”  The Court concluded that although this was a “seemingly ‘unjust’ result,” it was nevertheless “constitutionally constrained to dismiss this matter as nonjusticiable.”

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