Covid-19

CLIENT ALERT: Landlord-Tenant Issues: Eviction Moratorium to be Extended

On May 7, 2020, Governor Cuomo announced that the prohibition on both residential and commercial evictions will be extended by sixty (60) days.

The initial moratorium on evictions that took effect on March 22, 2020 was imposed for ninety (90) days and was set to expire on June 20, 2020.  Recently however, the Governor has been under significant pressure from tenant advocacy groups to extend additional relief to tenants.  Phrases such as “tidal wave of evictions” have been used to describe what tenant advocacy groups see as a veritable sword of Damocles hanging over the heads of tenants who cannot, or do not, keep up with rent payments during the COVID-19 pandemic.  Conversely, most landlord advocacy groups have cautioned against drastic governmental actions that may endanger the ability of landlords to provide services to their tenants, many of those services being government mandated.  The moratorium on evictions will now expire on August 19, 2020.

The moratorium extension will also prohibit landlords from assessing late fees for non-payment by tenants. The Governor will also permit tenants to apply their security deposits to their current rent and pay back the security deposits over time.  Most security deposits are capped at one (1) month rent under the New York General Obligations Law.

Governor Cuomo also announced that his office is working on a financial relief package from banks to assist landlords.  No details about such landlord relief have been made available, and it is unclear as to whether the relief will be mortgage relief, grants, low interest loans or some other form of financial aid.  There was also no indication of the willingness on the part of the Governor’s office to assist landlords in obtaining relief from other financial obligations incurred by landlords, such as property taxes, utilities, providing heat or any other costs.

Please understand that the COVID-19 pandemic is an evolving situation.  Our best advice is to continue to monitor our website and government websites for new information.  We will continue to update our website as further information becomes available.

Read More

Returning to Work: Reopening the Workplace in a COVID-19 World

Although the timing, scope, and conditions for New York businesses to reopen currently remain uncertain, there is no doubt that once Governor Cuomo rescinds Executive Order 202.8 (which ordered 100% on-site workforce reduction for all non-essential businesses in New York) all businesses that are able to do so will reopen. Moreover, it seems apparent that reopening will occur long before the general threat of COVID-19 infections has completely subsided. That being the case, employers across New York will be facing some significant new issues and challenges as they resume operations while taking steps necessary to protect the health and safety of their employees. This is a brief overview of what steps employers should consider taking now as they prepare to reopen their workplaces, and of information that is available to employers to assist them in doing so.

Employee Health and Safety Issues

Section 654 of Title 29 of the U.S. Code requires all employers to furnish to their workers “employment and a place of employment, which are free from recognized hazards that are causing or are likely to cause death or serious physical harm.” While the Occupational Safety and Health Administration (OSHA) has not adopted any regulations specific to addressing COVID-19-related risks, certain existing OSHA regulations may apply to employers who, by virtue of their workplace environments (e.g., white collar office spaces), have previously given little consideration to “hazards” that could affect the health and lives of their employees. To assist employers, OSHA has published a comprehensive guide entitled “Guidance on Preparing Workplaces for COVID-19”. The preface to this Guide makes it clear that it is “not a standard or regulation, and it creates no new legal obligations.” Its stated purpose is to provide “recommendations as well as descriptions of mandatory safety and health standards” that are “advisory in nature” and “informational in content” in order to “assist employers in providing a safe and healthful workplace.”

A full summary of OSHA’s Guide is beyond the scope of this Alert but, unlike formal regulations that can at times be difficult to digest, it is written in plain English and at 34 pages requires no herculean effort to review. We strongly recommend that all employers become familiar with OSHA’s Guide, in particular the section entitled “Steps All Employers Can Take to Reduce Workers’ Risk of Exposure to SARS-CoV-2” (SARS-CoV-2 is the virus that causes COVID-19 illness). That section of the Guide covers such topics as the necessity of considering where, how, and to what sources of the virus employees might be exposed; consideration of individual worker risk factors (e.g., age, chronic medical conditions); the need for social distancing, and potentially other steps such as staggered work shifts, downsizing operations, delivering services remotely, and other exposure-reducing measures; and the need to emphasize basic infection prevention and infection control practices.  The Guide also emphasizes the need for employers to develop policies and procedures for employees to report when they are sick or experiencing symptoms of COVID-19; to enable prompt identification and isolation of potentially infectious employees; and the need to inform and encourage employees to self-monitor for signs and symptoms of illness. The Guide notes that Personal Protection Equipment (“PPE”) (e.g., masks) “may also be needed to prevent certain exposures,” but cautions that “[w]hile correctly using PPE can help prevent some exposures, it should not take the place of other prevention strategies.” The attorneys at Bleakley Platt stand ready to assist employers in devising and implementing appropriate policies, procedures and practices for their individual workplace environments.

We also consider it highly advisable that employers, including those in OSHA partially-exempt industries, document their COVID-19 workplace policies and procedures, as well as their ongoing compliance with them. Such evidence, or the lack of it, may prove to be highly relevant in the event an employee suffers an illness and claims that his or her employer violated its legal duty to provide a hazard-free workplace.

Employers should also consider the effect of recent EEOC guidance on return-to-work issues that employers and employees will face during this transition, including the acceptability of medical examinations, the confidentiality of medical information, and reasonable accommodations under the Americans With Disabilities Act and the Rehabilitation Act.

A Final Thought: Accommodation of Requests to Work From Home

Even after restrictions concerning the presence of on-site employees are lifted, some employees may still request that they be permitted to work from home. Some of these requests will likely come from employees who by virtue of their individual medical conditions may have special fears of returning to the workplace until the risk of COVID-19 infection is more significantly reduced. When such a request comes from an employee with a documented condition that involves a recognized heightened risk to his or her health, there may be a greater burden on the employer to demonstrate why working from home is not a reasonable accommodation.

As the foregoing overview makes clear, employers should be planning now for the day when their workplaces reopen. Developing necessary policies and procedures in advance of reopening will ensure that once restrictions on employees in the workplace are lifted, employers will be ready on Day One to ensure that the health and safety of their employees are protected, and that working on site can resume with a minimum of confusion or disruption. The attorneys at Bleakley Platt welcome the opportunity to assist employers in devising and implementing their workplace practices in a COVID-19 world.

Read More

The SECURE Act and Retirement Accounts

The retirement account has long been an advantageous tool for tax and estate planning. Workers could defer taxes on earnings by contributing to these accounts and deferring tax on distributions until they retired. Beneficiaries who inherited retirement accounts were able to “stretch” distributions over their lifetimes and therefore defer the income taxes resulting from such distributions. Well-drafted trusts which were named as beneficiaries of retirement accounts were also entitled to stretch distributions over the lifetime of the trust beneficiary. However, the Setting Every Community Up for Retirement Enhancement Act (the “SECURE Act”), enacted at the end of 2019 severely limits the ability of many individual and trust beneficiaries to defer distributions from inherited retirement accounts.

The SECURE Act was passed by an overwhelming majority of Congress on both sides of the aisle and many of its provisions are beneficial. Plan participants may now defer taking required minimum distributions until they reach of the age of 72 and may continue to make contributions throughout their lifetimes.

However, the SECURE Act contains a surprise tax hike for non-spouse beneficiaries of retirement accounts by requiring that most beneficiaries other than spouses withdraw all funds from an inherited retirement account within ten years after the death of the initial account holder. . These beneficiaries, which include children, grandchildren and most trusts, now lose the tax advantage of stretching distributions over their lifetime, which will usually result in additional income tax owed on the account distributions.

The SECURE Act contains exemptions from the ten-year payout requirement for “eligible designated beneficiaries”. These include:

• The spouse of the participant;
• The minor child of the participant (but the ten-year rule applies after the child achieves majority);
• Disabled or chronically ill beneficiaries, and
• Beneficiaries who are no more than ten years younger than the plan participant.

The effects of the SECURE Act on estate plans can be dramatic. We suggest you review your estate plan with your estate planning attorney if you have assets held in retirement accounts. This review is especially critical if your retirement accounts are to pass to trusts, which present unique issues. For example, although the SECURE Act preserves the lifetime payout for a spouse, certain trusts for the benefit of a spouse will lose the option for lifetime payout. Trusts for the benefit of disabled or chronically ill individual, including a spouse, may qualify for the lifetime payout but they must be carefully drafted to ensure compliance with SECURE Act requirements.

Our experienced Trusts & Estates attorneys can help you review your current estate plan and beneficiary designations and ensure that you maximize your ability to provide for your loved ones. Understanding the new rules imposed by the SECURE Act is even more critical at this time due to additional changes to retirement account rules contained in the CARES Act, the recent federal law designed to address the COVID-19 pandemic. We have covered the retirement account aspects of the CARES Act in a previous client update which can be found here.

During this time when social distancing is vitally important to prevent the spread of COVID-19, our attorneys can meet with you remotely via our videoconferencing technology. We can also assist you with executing any necessary estate planning documents remotely, which makes this time when New York and other states are on “pause” a great time to review your estate planning.

We extend our best wishes to you and your families during this very challenging time. Please do not hesitate to call us with any questions you may have.

Read More

Client Alert: Landlord-Tenant Issues – New York Tenant Safe Harbor Act

On April 7, 2020, new tenant friendly legislation was introduced in the New York State Senate and Assembly.  Titled the “New York Tenant Safe Harbor Act,” it would prohibit a landlord from evicting a tenant due to that tenant’s failure to pay rent for a period (i) commencing with the Governor’s declaration of a State of Emergency on March 7, 2020 and (ii) ending on a date six (6) months after the Governor lifts the State of Emergency.

The Safe Harbor Act (“SFA”) is an attempt to complement the Governor’s and Chief Administrative Judge’s prohibition on evictions, which expires in June 2020, to avoid a potential “tidal wave of evictions” at that time.

Landlords, however, will still have a remedy.  The SFA would allow a landlord to sue for and obtain a money judgment for any unpaid rent which accrues between March 7, 2020 and six (6) months after the State of Emergency ends.  Presumably, the landlord knows the tenant’s banking information and can ultimately recover all or a portion of the unpaid rent from any assets the tenant may have.

The SFA is not the only pending legislation to assist tenants who may have suffered economic losses due to the COVID-19 pandemic.  In contrast, NY Senate Bill S8125A and Assembly Bill A10224A would waive rent payments for residential or commercial tenants for a period of 90 days from the effective date of the law.

Whether either bill will pass, or when, cannot be determined as of this writing.  Both bills will surely face opposition from landlord groups, commercial property owners, cooperatives, and owners of rented homes and condominium units.  But because the SFA has considerably less negative economic impact on landlords and property owners, and the SFA is sponsored by the Chair of the Judiciary Committees in both the Assembly and Senate, the SFA may be more likely to become a law.

Please understand that the COVID-19 pandemic is an evolving situation.  Our best advice is to continue to monitor our website and government websites for new information.  We will continue to update our website as further information becomes available.

Read More

Client Alert: Business Interruption Insurance Coverage: Federal Legislation May Be On The Way

Insurance coverage for business interruption losses caused by the COVID-19 pandemic is the subject of proposed legislation in New York and a number of other states, as well as several lawsuits already commenced by insureds (see our other Client Alert about NY’s proposed legislation here). But whereas those efforts are largely directed at requiring insurers to provide coverage under existing business interruption insurance policy provisions – an uphill battle strongly resisted by the insurance industry – the US Congress is in the early stages of taking a different approach with proposed legislation that would create a new coverage mechanism specifically designed to address losses arising from a pandemic.

The proposed legislation, preliminarily called the Pandemic Risk Insurance Act of 2020 (“PRIA”), would create a Federal program of shared public and private compensation for business interruption losses resulting from any “pandemic or outbreak of communicable disease.” It would essentially consist of a reinsurance program administered by the Department of Treasury for commercial property and casualty insurers. The federal reinsurance coverage would be triggered when industry losses exceed a $250 million threshold, with aggregate losses capped at $500 billion per year for both insurers and the government. Insurers that participate in the program would be charged an annual premium for such reinsurance coverage. In return for this federal assistance for pandemic losses, insurers would agree to make business interruption insurance coverage available for insureds on terms that are not materially different from those applicable to existing business interruption coverage. Insurer groups maintain that most commercial property policies do not provide coverage for business interruption losses arising from the COVID-19 pandemic. If enacted, the PRIA would provide a public-private insurance scheme for needed coverage to businesses while limiting the exposure of insurers in unprecedented circumstances such as those currently being experienced during the COVID-19 pandemic. Although the PRIA is in only a preliminary stage in Congress, we will continue to report on its progress and its potentially significant implications for business owners in New York and across the country.

Read More

Client Alert: Impossibility, Frustration of Purpose, and Impracticability: Doctrines that may excuse contractual performance during the COVID-19 pandemic

In a previous Alert, we discussed how the operation of a force majeure clause in a contract may excuse a party’s performance in whole or in part. But what if a contract does not contain a force majeure clause? Other legal doctrines may still come into play to excuse performance under the circumstances created by the current COVID-19 pandemic.

Impossibility of Performance: The doctrine of impossibility can excuse a party’s contract performance when an unforeseen event makes performance objectively impossible. As with force majeure, the doctrine of impossibility is applied narrowly.  Notably, New York law is more restrictive than the law of many other states because it requires that performance be objectively impossible. Proving objective impossibility due to the COVID-19 pandemic will likely be easiest for “non-essential” New York businesses that have been required by Gov. Cuomo’s Executive Order 202.8 to reduce their in-person workforces by 100%. But whereas proof of objective impossibility may be relatively easy for a manufacturer that has been forced to close down production due to that workplace restriction, it may be a far more difficult burden of proof for a service-oriented business whose employees are able to work remotely from their homes.  Other factors will also affect the analysis, including the temporary nature of current workplace restrictions, a party’s ability or inability to complete the performance of its obligations through alternative means, whether a party’s performance is made wholly or only partially impossible, and whether performance is rendered permanently or only temporarily impossible. Bearing in mind that the doctrine of impossibility is traditionally applied in a narrow fashion, businesses that wish to take advantage of it to excuse their contractual performance will need to marshal all relevant facts in order to make a persuasive case.

Frustration of Purpose: This is another common law doctrine that may excuse performance, but only in a narrow set of circumstances. It applies when a change in circumstances after a contract was entered into makes one party’s performance worthless to the other, frustrating his purpose in making the contract. To excuse non-performance, the frustrated purpose must be so fundamental and essential to the contract that, without it, the parties would have never entered into their transaction in the first place. The objective intent of the parties, as exhibited by the language of the contract itself, is typically the key to determining whether the frustration goes to the essential purpose of the contract. The event causing the frustration must also have been unforeseeable, as the non-occurrence of the frustrating event must have been a basic assumption on which the contract was made. Generally, a contract will not be deemed to have been frustrated to the point of invoking the doctrine if the event merely renders the contract more expensive or difficult to perform, if an alternative method of performance is available, or if the event is the fault of one of the contracting parties. Although the burden of proof for invoking the doctrine of frustration is high, the unprecedented nature of the COVID-19 pandemic and the government-mandated restrictions imposed on businesses as a result of it may present circumstances that support its application in specific cases.

Impracticability: Sale of Goods Under The Uniform Commercial Code: Section 2-615 of the Uniform Commercial Code (“UCC”) provides that a seller of goods may be able to excuse his inability to deliver all or some of the goods where performance has been made “impracticable.” This section of the UCC is essentially a codification of the doctrine of impossibility. It provides, in relevant part, that a seller is not in  breach of his obligations under a contract for sale of goods if performance “has been made impracticable by the occurrence of a contingency the non-occurrence of which was a basic assumption on which the contract was made or by compliance in good faith with any applicable foreign or domestic governmental regulation or order whether or not it later proves to be invalid.” Section 2-615’s notable reference to performance being hindered by good faith compliance with “any applicable foreign or domestic governmental regulation or order” may have special relevance in the context of the COVID-19 pandemic, which we are seeing cause shortages and supply-chain interruptions in a host of different industries. Note that Section 2-615(c) requires that a seller whose performance has been made impracticable so notify the buyer promptly (“seasonably”) that there will be delay or non-delivery of the goods and, where partial performance is possible, allocate production in a way that is fair and reasonable.

The COVID-19 pandemic continues to disrupt commerce in innumerable ways, presenting many novel issues for businesses in New York and across the U.S. The attorneys at Bleakley Platt continue to monitor developments in the law as they occur, and welcome the opportunity to counsel our clients as they confront the challenges of doing business during this period of unprecedented uncertainty.

Read More

Client Alert: Estate Planning and the Coronavirus

Due to the COVID-19 pandemic, it is more critical than ever for everyone to have updated estate planning documents in place, especially individuals who are at high risk from the virus or have jobs that require close interaction with the public, such as essential medical professionals, police officers and firefighters.  The attorneys in our Trusts and Estates practice group are able to meet with you to discuss and complete your estate planning, while observing social distancing protocols through the use of telephone and video conferencing technology.  There are numerous options available to supervise proper execution of documents including remote witnessing and notarization protocols which have been permitted by recent executive orders issued by Governor Cuomo.

The following documents should be considered in every estate plan:

1. Last Will and Testament.  A Will allows you to determine how and to whom your estate assets will be distributed, and to select who will administer your estate and carry out your wishes. A Will also may provide for the guardianship of any minor children you may have at your passing.

2. Trusts. Various types of trusts can be implemented, in addition to or in lieu of a Will. Trusts confer numerous benefits including estate tax savings, asset protection, avoidance of probate, maintenance of privacy, and the protection of disabled loved ones.

3. Power of Attorney.  This document appoints agent(s) to manage your financial affairs if you are unable to do so.

4. Health Care Proxy.  This document appoints agent(s) empowered to make medical decisions, including decisions about end of life care, if you become unable to make them yourself.

5. Living Will.  This provides specific instructions to your Health Care agent regarding end-of-life medical decisions.

6. Standby Guardian Designation. This document permits individuals who work in health care facilities or who reasonably believe that they may be otherwise exposed to COVID-19 to appoint individuals who will have custody and legal decision making authority for their minor children, in the event of their death or incapacity.

Our attorneys are ready to assist you or your loved ones to implement or update your estate planning documents while many other aspects of our lives are on pause.   If you need assistance, please contact (i) Nancy Rudolph at nrudolph@bpslaw.com, (ii) Frances M. Pantaleo at fpantaleo@bpslaw.com, or (iii) James Ausili at jausili@bpslaw.com.  These unprecedented times present other unique estate planning opportunities, which we will discuss in future client alerts.   In the meantime, we hope you and your loved ones stay safe and well.

Read More

Client Alert: Is the COVID-19 Pandemic a Force Majeure Event?

The COVID-19 pandemic is causing businesses across the US to consider, many for the first time, the operation and effect of a mostly neglected provision in their contracts: the force majeure clause.

A force majeure clause allows a party to suspend or discontinue performance of its contractual obligations under specified circumstances. It may also limit a party’s liability. Often this clause is overlooked during contract negotiations as routine boilerplate, and covers generic events such as “disasters,” “acts of God,” “labor strikes,” “national emergencies,” or “circumstances beyond the control of the parties.” The question on the minds of many businesses now is whether the COVID-19 pandemic and the various workplace and other restrictions it has spawned qualifies as a force majeure event that will excuse a party’s performance of its contractual obligations in whole or in part. What follows is an introduction to the operation of force majeure clauses and how they may apply during the current COVID-19 public health emergency.

What constitutes a force majeure event in any particular circumstance depends first and foremost upon the terms of the parties’ contract. How the term is defined (what events are covered and/or excluded), who may exercise it, and under what circumstances — all subjects that may be covered in the parties’ agreement — are important threshold factors, as force majeure clauses are construed and applied narrowly by the courts. Not all contracts contain a force majeure clause, and in the absence of such a provision the courts will not imply one (note, however, that even in the absence of a force majeure clause other legal doctrines like impossibility of performance may be applicable, as discussed in a companion Client Alert here.)

Where a force majeure clause does not refer to a pandemic, epidemic, or similar circumstance as a basis for excusing performance (and many contracts do not contain such language), the question is whether more general phrases like “acts of God” and “events beyond the reasonable control of a party” may be construed to cover the downstream consequences of situation like the COVID-19 pandemic. The simple answer is “maybe,” as it requires both consideration of the contract’s terms as well as an analysis of the actual effects of the pandemic upon a party’s performance.

Impossibility of Performance vs. Mere Difficulty: if a party’s performance of a contract is simply rendered more difficult by an unforeseen situation like a pandemic, it likely will not qualify as a force majeure event to excuse performance altogether. On the other hand, if performance is rendered impossible, a stronger argument exists that the event is covered by the force majeure clause. Here again, the language in the contract can be crucial; where, for example, a manufacturer’s production is shut down by a government order prohibiting employees from working on site, making it impossible for the manufacturer to produce and deliver the goods it agreed to sell, a clause that specifically refers to “government act or regulation” will obviously provide a stronger foundation for claiming that performance is excused than will a clause that refers more generally to “unforeseen events.”

Linking the Force Majeure Event and Inability to Perform: there must be a link between the force majeure event and a party’s non-performance. For a business whose employees are able to work from home, the existence of a government mandate prohibiting employees from working on site will likely not qualify as a force majeure event. Likewise, if it can be shown that a party would not have performed regardless of the existence of the force majeure event, or is only using the existence of a force majeure event to avoid performance because the contract is no longer financially rewarding, performance will almost certainly not be excused.

Partial Performance: if a party is legitimately prevented from performing some but not all of its contractual obligations, a force majeure clause may be construed to excuse only so much of the performance as was actually impacted. Whether this is the case in any particular situation requires a careful consideration of all relevant facts. The important point is that a force majeure clause may excuse a portion of a party’s performance, but not necessarily all of it.

Suspension versus Termination of Performance: Even if a situation qualifies as a force majeure event under the parties’ contract, a question may arise as to whether that event entitles one or the other of the parties to terminate the contract, or whether instead performance is simply suspended until the force majeure event ends. There is no hard and fast rule in such a situation; the terms of the contract and all surrounding circumstances must be considered. As in the case of partial performance, a force majeure event may temporarily suspend a party’s contractual obligations, but it may not terminate them.

Notice and Mitigation: Any party seeking to take advantage of a force majeure clause should consult the terms of the contract concerning the requirements of giving notice to the other contracting party that a force majeure event as occurred. Some contracts contain detailed procedures and deadlines for such notice, and the courts have been known to require strict compliance with such provisions. Such a party should also take all reasonable and necessary steps to mitigate the effects of the force majeure event. The extent of the mitigation required is fact-specific and will depend on the language of the contract as well as the facts and applicable law.

The extent to which the COVID-19 pandemic and its effects constitute a qualifying force majeure event is extremely fact-specific and depends not only on the terms of the parties’ contract but on all of the facts and circumstances concerning its intended performance. We are likely to see considerable attention being given to force majeure clauses as the effects of the COVID-19 pandemic, and governments’ responses to it, continue to unfold. Please contact us to arrange a consultation to discuss your specific situation.

Read More

Client Alert: Changes to Property Tax Grievance Procedures in Westchester County

On April 20, 2020, Gov. Cuomo signed Executive Order 202.22, making some important changes to property tax grievance procedures in New York State and Westchester County in particular.

EO 202.22 permits the Cities and Towns of Westchester County to move the date to file property tax grievance back one month, and allows Boards of Assessment Review to conduct their hearings remotely, if necessary.

In Westchester, the Tentative Assessment Roll for the Towns, and a number of Cities, is ordinarily published On June 1.  Any property owner in such a municipality then has until the third Tuesday of June to file a grievance asking the Board of Assessment Review (BAR) to reduce the Assessment (“Grievance Day”).  The filing of a grievance is a necessary prerequisite to filing a court challenge in the event the BAR does not reduce the assessment or if the property owner does not consider the reduction sufficient.

EO 202.22 now permits a Town to move back, by up to 30 days (i.e., from June 1 to July 1, 2020), the date on which the Tentative Assessment Roll is published, and to also move Grievance Day back up to one month as well.  Note, however, that the Cities and Towns are not required to move the dates back. It is therefore important for every property owner to be aware of the dates adopted in the Town or City in which their property is located.

In addition, the Governor’s Order mandates that municipalities take steps necessary to permit property owners to review the 2020 Tentative Assessment Roll without having to physically visit a town hall in order to conduct such a review.  The Order also permits the BARs to alter the rules governing their hearings, including conducting the hearings remotely to ensure that the hearings can be conducted fairly but safely.

If you have any questions about how EO 202.22 may affect you as a property owner, or concerning property taxes in general,  please contact the attorneys in our Tax Certiorari, Condemnation and Valuation Department.

Read More

Client Alert: Virus claims are here: A range of policies may be impacted.

Many U.S. businesses are experiencing large financial losses due to the coronavirus pandemic.  Last month, governments imposed severe restrictions and businesses curtailed their customary operations in response to the crisis.  The loss of business income due to these events will result in significant first-party property insurance claims. The availability and scope of coverage available to businesses is likely to be disputed between insureds and insurers and litigated for years to come. Policy details and careful analysis will determine the success or failure of these claims.

First-Party Business Claims for Coverage:  Many “all-risk” policies afford coverage for “all risks of direct physical loss or damage by a covered cause of loss to a covered property.”  Policyholders will argue that the inability to use property for its intended purpose – to generate income – constitutes direct physical loss or damage to such property.  “Stay at home” orders may prevent customers from visiting the policyholder’s places of business or fully utilizing their services.  Some property  policies contain “interruption by civil authority” clauses that may afford coverage for those losses.

On March 27, the New York Legislature introduced Assembly Bill No. A10226, which provides:

[E]very policy of insurance insuring against loss or damage to property, which includes the loss of use and occupancy and business interruption, shall be construed to include among the covered perils under that policy, coverage for business interruption during a period of a declared state emergency due to the coronavirus disease 2019 (COVID-19) pandemic.

This proposed bill applies to policies issued to policyholders with fewer than 100 full-time employees who work at least 25 hours or more.  The bill could require coverage even for policies that specifically exclude virus-related claims. The bill is currently in the Assembly Committee. If passed, it is possible the insurance industry will question the constitutionality of the bill under Article 1 of the contract clause of the Constitution.

Exclusions and Defenses Against Coverage:  Insurers are likely to claim that no coverage exists because the existence of the virus in an office or community does not establish a necessary prerequisite for coverage—physical damage to property. Property insurance policies afford coverage to insureds for property damage and lost business income as a direct result of such property damage. The lost income can result from damage to the insured’s property, damage to the property of a customer or supplier, or government actions.

In addition to the issue of property damage, a range of defenses may be available to insurers to bar or limit payment.  These defenses may be in the form of exclusions, sub-limits or waiting periods for coverage, and time limitations for coverage.  The policies also require loss mitigation by insureds.  Thus, efforts to contain the virus and limit damages will be important.

Property owners should fully understand the scope of their coverage, keep records of the loss and promptly notify insurers. This will enhance proper claims investigation and adjustment such that resolution can be effectuated by both insureds and insurers.

Bleakley Platt stands ready to assist clients as they navigate the inevitable disputes that lie ahead over claims for coverage for lost business income, liability and employee safety losses from the pandemic.

Read More

Client Alert: Sweeping Changes to Medicaid Home Care, Effective 10/01/2020

While the Department of Health provided temporary relief to Medicaid recipients and applicants during the COVID-19 pandemic, the New York legislature has enacted new restrictions on Medicaid home care applications that are slated to go into effect on October 1, 2020.  These restrictions were recommended by the Governor’s Medicaid Redesign Team in an effort to reduce New York State’s rapidly expanding Medicaid budget.  Although applicants who seek Medicaid payments for nursing home care have long been subject to imposition of transfer penalties for gifts made in the five-year (60-month) “look back” period prior to the submission of the application,  New York has not previously penalized transfers of assets made by applicants for services in the home.  However, as of October 1, 2020, gifts made in the 30-months prior to submission of a Medicaid home care application will be penalized unless qualified as an exempt transfer.  Additionally, the legislation authorizes changes to the home care assessment and delivery process.

There are many unanswered questions about the full extent of the changes to the Medicaid home care program which will result from this new legislation.  Our Elder Law and Special Needs Practice Group can help you prepare for these changes.  It may be advisable to apply for Medicaid home care before the October 1, 2020 effective date.  We can help you take advantage of the exemptions from the Medicaid transfer penalties and explore whether it is advisable to prepare an irrevocable trust and transfer assets to the Trust now.  We are able to work with you and still maintain social distancing during this difficult time, as we have videoconferencing technology both for remote meetings and remote execution of necessary documents.

Read More

Client Alert: Medicaid Updates

Temporary Easing of Medicaid Documentation Requirements

The COVID-19 pandemic has been a cataclysmic event for our nation’s most vulnerable, particularly the elderly.  Nursing homes and assisted living facilities are on lockdown, and home care patients struggle to find and maintain care as the number of available home health aides has dropped precipitously.  New Yorkers who rely on the Medicaid program to finance their home care services face all these same challenges, with the added pressures of limited means.

In order to alleviate some of these pressures on New York’s most vulnerable, on April 2, 2020 the New York State Department of Health issued General Information System (“GIS”) 20 MA/04, directing Departments of Social Services throughout New York State to temporarily accept and process  Medicaid applications without submission of much of the paperwork which  is normally required.   In addition, local Departments have been ordered to automatically recertify eligibility during the COVID crisis and are prohibited from terminating eligibility due to failure to submit documentation.  The GIS also addresses social distancing concerns by allowing applications to be signed by a representative of the applicant.   Our Elder Law and Special Needs Practice Group can assist you or your loved one to complete the Medicaid application and get necessary care in place during this pandemic.  In addition, through the use of video and telephone conferencing, we can maintain social distancing throughout the process and can sign the paperwork as the applicant’s representative.

Read More

Client Alert: COVID-19 Estate Planning Update

With the COVID-19 pandemic currently ravaging New York State and the nation, there has never been a more critical time to review and update your estate planning documents.  Yet, until now, the social distancing rules currently in place have made it very difficult, if not impossible, for clients to execute some of the most important estate planning documents (like wills) because applicable law required witnesses to be physically present when these documents were signed.  However, just this past Tuesday, April 7, 2020, New York Governor Andrew M. Cuomo issued Executive Order 202.14, which allows for remote witnessing of these crucial estate planning documents via videoconferencing technology.  In a previous Executive Order, Governor Cuomo allowed a Notary Public to take an acknowledgment or oath remotely over videoconferencing software as well.

With these Executive Orders now in place, our firm can assist you with creating or updating any estate planning documents you or your loved ones may need while you remain in the comfort and safety of your own home and observe all social distancing guidelines.  Our firm provides videoconferencing technology which allows us to remotely meet with you and assist you with executing your documents via a computer, smartphone or tablet.

At a minimum, we recommend that you should have the following estate planning documents in place:

1. Health Care Proxy.  This document appoints a Health Care Agent, and Successor Health Care Agent, who can make medical decisions for you if you become unable to make them yourself.
2. Living Will.  This provides specific instructions to your Health Care Agent regarding end-of-life medical decisions.
3. Power of Attorney.  This document appoints an Agent who can manage your financial affairs on your behalf if you are unable to do so yourself.
4. Last Will and Testament.  A Will allows you (not the state’s default statutes) to determine how and to whom your estate assets will be distributed, and to select who will administer your estate and carry out your wishes. A Will also may provide for the guardianship of any minor children you may have at your passing.
5. Trusts. Various types of trusts can also be implemented, in addition to or in lieu of a Will, to be a part of an estate plan and these instruments can offer numerous benefits, including estate tax savings, asset protection, avoidance of probate, maintenance of privacy, and the protection of disabled loved ones.

We are happy to assist you or your loved ones with reviewing and updating your estate planning documents while many other aspects of our lives are on pause.  All of our firm’s Trusts and Estates attorneys are available to assist you during these difficult times.  If you have any questions about your existing estate plan or putting one into place, please feel free to contact us and we will be happy to assist you. These unprecedented times are also presenting other unique estate planning opportunities, which we will bring to you soon in future client updates.  In the meantime, we hope you and your loved ones stay safe and well.

Read More

COVID-19 CLIENT ALERT – LANDLORD-TENANT ISSUES

While the Governor has mandated that banks provide homeowners with “forbearance” regarding their home mortgage payments if the homeowner is facing financial hardships due to the COVID-19 pandemic, to date there has not been any corresponding requirement that landlords provide “forbearance” to tenants with respect to their rent obligations.  The rights available to tenants may well be determined by two considerations:  whether they are residential or commercial tenants; and the language in their leases.

Most residential leases are printed forms, prepared by the landlord, who generally does not negotiate the language of their lease.  Most leases for residential premises contain clauses which excuse a tenant from paying rent if the premises become uninhabitable due to “fire or other casualty” and a “covenant of quiet enjoyment”, which excuses payment of rent if a tenant is “constructively evicted.”  There is also a law which declares that all residential leases contain an implied warranty that residential premises shall be “fit for human habitation” and authorizes a rent abatement if the landlord does not meet this standard.

Such provisions will be of little benefit to a residential tenant who faces financial hardships due to the COVID-19 pandemic.  A residential tenant would be hard-pressed to argue that they are “constructively evicted” from premises when they are living in, and possibly working remotely from, their residence.

In contrast, commercial leases are extensively negotiated and the language sometimes ends up a blend of drafting styles between the landlord’s and tenant’s attorneys.  Commercial leases frequently contain a “covenant of quiet enjoyment,” but also provisions regarding business interruption due to fire, casualty, landlord disruption and a variety of other reasons.  These clauses can sometimes be used by a commercial tenant in situations where they are, in effect, locked out of their business premises.  At the moment, there is no judicial guidance about whether the COVID-19 pandemic constitutes a “casualty” or whether a landlord’s performance of a lease obligation is hampered by a “force majeure” or act of government.

All tenants will benefit from a recent Administrative Order issued by New York’s Chief Administrative Judge.  AO/87/20 banned eviction of tenants, both residential and commercial, for 90 days, effective March 22, 2020.  The same order banned the commencement of any new action or proceeding, or the filing of papers in connection with any pending action or proceeding.  As a result, any pending eviction is stayed and no new eviction actions or proceedings can be filed.

Additional help may be on the way.  NY State Senate Bill S8125A would waive rent payments for residential or commercial tenants for a period of 90 days from the effective date of the law.  Whether the law will pass, or when, cannot be determined as of this writing.  The bill will surely face opposition from landlord groups, commercial property owners, cooperatives, and owners of rented homes and condominium units.  But it will be a significant piece of legislation with wide ranging impacts if it were to become law.

Help may be on the way for landlords also.  Congress passed, and the President signed into law, the CARES Act, a $2.3 trillion dollar COVID-19 related financial relief act.  The CARES Act creates a fund for small business losses, which can possibly turn into grants, when the losses result from the COVID-19 pandemic.  Landlords who experience losses due to their tenants’ non-payment of rent are advised to apply for such small business loan to cover some or all of their losses.

Residential or commercial tenants who experience financial hardship due to the COVID-19 pandemic and who wish to maintain a good relationship with their landlord are advised to discuss with their landlord their need for short term relief from rent and other financial obligations.

Please understand that the COVID-19 pandemic is an evolving situation.  Our best advice is to continue to monitor our website and government websites for new information.  We will continue to update our website as further information becomes available.

Read More

Client Alert: FAQ: Commercial Real Estate Leasing, Lending, and Related Issues During the COVID-19 Health Crisis

My company is unable to use its rented space during the 100% in-person workforce reduction mandated by Gov. Cuomo.  Are we still required to pay rent?

Currently there is no law or Executive Order relieving residential or commercial tenants of their obligation to pay rent during the COVID-19 outbreak. A bill currently being considered in the NY legislature, S8125A, would suspend for 90 days the rent obligation of any residential or small business (< 100 employees) commercial tenant in New York that has “lost income or has been forced to close their place of business as a result of government ordered restrictions in response to the outbreak of coronavirus disease.” The bill would not merely defer the obligation to pay rent; it would permanently relieve the tenant of that obligation for the prescribed 90-day period (it states that the tenant “shall not and shall never be required to pay any rent waived during such time period.”) The bill goes on to provide that landlords with mortgage obligations would similarly be relieved of their obligation to service their mortgage debt during the same period, in accordance with a formula stated in the bill (and like a tenant’s rent obligation, a landlord’s mortgage obligation during the time period in question would not simply be deferred). Note, however, that it remains uncertain whether this measure or one like it will ever become law. Certainly the financial implications of it provide ample grounds for doubting the likelihood of its passage, but the extraordinary circumstances created by the COVID-19 pandemic may prove to motivate lawmakers to enact extraordinary measures like this one.

If no new law relieves my business of its obligation to pay rent, are there any other grounds for withholding payment?

A typical commercial lease states that payment of rent is an obligation independent from a landlord’s obligations under the lease; a commercial tenant ordinarily has no right to offset rent unless such a right has been negotiated into the lease. Commercial leases commonly, but not always, state that landlords have no liability (and there shall be no rent offsets) for closure of the building or for failure to provide services, access and utilities in emergency situations, subject to the landlord using reasonable efforts to provide or reinstate same. So the first step would be to review the lease to see what specific provisions might provide grounds for relief from the obligation to pay rent due to the COVID-19 health emergency. Here are some issues to consider:

Force Majeure: Most leases include a force majeure clause stating that performance of a landlord’s (and sometimes a tenant’s) obligations are excused to the extent prevented or delayed by listed acts and other events not within the party’s reasonable control (but specifically excepting the obligation of a tenant to pay rent). Courts tend to read these force majeure clauses restrictively, so the language would need to be broad enough to capture delays and inability to perform due to disease. If the coronavirus pandemic constitutes a force majeure under a lease, close attention should be paid to how that might affect lease provisions relating to interruption of services, utilities and access, delays in delivery of a premises, and delays in completion of leasehold improvements. Depending on how these clauses are written, a lease might provide more time for remediation of interruptions of services, utilities and access, delivery of the premises and completion of work. This could impact both rent abatement remedies and lease termination rights.

Interruption or Suspension of Access and Services: A lease may provide that a landlord shall provide 24/7 access to the premises. If such a clause exists, are there exceptions to that obligation? Some leases explicitly allow the landlord to close the building or suspend services, utilities or access in the event of an emergency, if the landlord has a reasonable concern of damage to the building or personal injury to the occupants, and, in some instances, as a result of government orders or actions. The interpretation of a landlord’s obligations and tenant’s remedies may differ depending on who elects to close off the access – the government, the landlord or the tenant. Some leases provide remedies (from abatement to termination rights after particularly long periods of interruption) after a certain period of time (and in some cases subject to notice from tenant to landlord) if there are interruptions of certain services, access and utilities attributable to the landlord. Other leases go further to cover the tenant after a specified period of time if the interruption in access or services occurs for any reason other than the tenant’s fault, which may implicate situations where the government has interfered with access or use. Parties need to review their leases to see if those provisions cover interruption of access (and not just essential services and utilities).

Quiet Enjoyment:  Most leases include a covenant of quiet enjoyment, where a landlord agrees not to interfere with the tenant’s possession of the premises absent default. Some leases may address abatement due to temporary condemnation by the government.

Casualty: Damage to or destruction of leased premises that renders them wholly or partially unusable is usually addressed in the casualty provisions of a lease. Damage that renders the premises permanently unsuable may give the tenant the right to terminate the lease, whereas damage that renders the premises temporarily or partially unusable may give the tenant a right to a rent abatement. While tenants may try to argue that the actual or potential presence of COVID-19 within the demised premises constitutes damage from a casualty, this would represent a significant departure from the typical application of a standard casualty clause. Broader lease provisions that refer to “untenantability” of – rather than physical “damage” to – the leased premises could potentially support a different outcome, but it is far from certain that a tenant would be entitled to terminate its lease or obtain a rent abatement under such a provision. In interpreting statutes that allow a tenant (usually in the absence of a casualty provision in the applicable lease) to terminate its lease because a casualty has rendered the premises unfit for occupancy, courts are likely to resist claims that the presence of an epidemic constitutes adequate grounds for such a termination.

Impossibility of Performance or Frustration of Purpose: Looking beyond the written terms and conditions of a lease, a tenant may assert that the imposition of a 100% in-person workforce reduction renders performance of the lease by both parties impossible, and/or that the essential purpose of the lease has been frustrated as a matter of law.

The reality is that most leases are favorable to the landlord, and therefore may not protect a tenant for closures as a result of the COVID-19 pandemic. The widespread impact of the virus on business activity, however, has led to a groundswell of requests by tenants to seek some rent relief from landlords for a limited period of time. Landlords will need to determine if their cash reserves and lenders will allow them to negotiate short term rent relief, in particular for those tenants who cannot operate their business remotely.

What happens if we don’t pay rent?

In all commercial and residential leases we have reviewed or prepared, a tenant’s failure to pay rent constitutes a default under the lease unless the landlord has authorized the tenant to withhold payment of rent. Such default invokes the landlord’s rights in the event of a default under the lease. Those rights undoubtedly include the right to recover possession and the amount of unpaid rent, plus the landlord’s reasonable attorneys’ fees.

However, the landlord is prevented from exercising those rights until April 19, 2020 at the earliest. Under Governor Cuomo’s Executive Order 202.8, the filing or service of any legal action, notice, motion or demand is prohibited until April 19, 2020.  In addition, under an Administrative Order by the Chief Administrative Judge in New York, all evictions in New York are stayed for a period of 90 days retroactive to March 23, 2020.  Keep in mind that, if the pandemic continues to disrupt the economy, the possibility exists that these prohibition periods may be further extended.

When read together the two Orders prevent a landlord from serving a default notice until April 19, 2020 at the earliest and actually evicting a tenant until June 21, 2020 at the earliest.  So while there will be no immediate consequence resulting from a tenant’s failure to pay its rent, the two Orders do not relieve the tenant’s obligation to pay the rent at some future date.

Our lease says the landlord can serve a notice of default with a demand to cure, and that if we don’t cure within the time required the lease will be terminated without further notice. Can that still happen? Is there a way to stop it from happening?

As discussed above, the landlord is prohibited from serving a default notice until April 19, 2020 at the earliest.  In all residential or commercial leases we have reviewed, the cure period is calculated from the date the default notice is served.  So, until April 19, 2020, the landlord cannot issue a default notice and cannot start the cure period running.

After April 19, 2020, the tenant can still stop the cure period from running by commencing a lawsuit to declare that the tenant is not in default under the lease and seek a “Yellowstone” injunction to stop the cure period from running.  These actions must be commenced, and the injunction must be obtained, before the cure period expires so the tenant must be prepared to act quickly.  Please consult our firm for advice if you are interested in obtaining a “Yellowstone” injunction.

What are commercial mortgage lenders’ and borrowers’ rights and obligations?

Under Gov. Cuomo’s Executive Order 202.9, financial institutions in New York have been ordered to provide 90 days of “forbearance” on loans and mortgages to individuals and businesses who are experiencing hardship due to the COVID-19 pandemic. What “forbearance” means in any specific case depends upon the particular circumstances of the borrower and lender, but borrowers experiencing hardship should consider this an invitation to contact their bank or financial institution to initiate discussions.

What are commercial lenders’ and borrowers’ rights and obligations regarding (i) debt secured by something other than real property (Pledge of stock, LLC interests, life insurance etc.) and (ii) unsecured debt

As a general rule, absent specific relief issued by the State in an Executive Order of otherwise, lenders’ and borrowers’ rights and obligations under secured and unsecured lending agreements remain in effect and unaltered by the COVID-19 crisis.  No E.O. issued or legislation passed to date affects these rights and obligations. That said, to the extent the pandemic may provide grounds under existing provisions in lending agreements for avoidance of an obligation or enforcement of a right (e.g., force majeure, impossibility of performance, frustration of purpose), that analysis should be undertaken with a view to, in the first instance, communicating with one’s lender or borrower, as the case may be, to ascertain whether there is substantive disagreement and, if necessary, formally notifying the other party of one’s position so as to preserve one’s rights and make the appropriate record should the dispute mature into a future legal proceeding.

How is this affecting land use deadlines?  Approvals?

Most municipalities are continuing to hold their regularly scheduled land use meetings, remotely or otherwise in compliance with State guidelines. There are procedures in effect for the proper submission and review of the applications and the appropriate notice and conduct of the hearings necessary for most land use approvals to proceed.

Accordingly, existing land use deadlines should be followed and the Boards are available to hear applications for extensions or modifications, if necessary.  As always, circumstances in every municipality can be different, so make sure you confirm with the local municipalities how best to proceed in your case.

How are transactions deadlines, such as mortgage commitment periods, and lease extension deadlines, being affected?

As a general rule, absent specific relief issued by the State in an Executive Order or otherwise, the deadlines contained in private contracts, leases or agreements remain in effect.  No E.O. issued or legislation passed to date affects deadlines in private agreements.

However, this pandemic is uncharted territory for all.  Litigation over these issues is certain and the parties and the Courts will eventually resolve these questions.  In the interim, we feel it is best to keep the lines of communication open, so that the parties can understand where they stand and whether additional steps must be taken to protect your interests.

My business is currently leasing space and the lease is about to expire, but the construction of our new space in another building is being delayed because of COVID-19.  How does this affect my company’s holdover rights?

As noted above, Landlords are prohibited from evicting tenants for 90 days, commencing March 23, 2020.  Other than that prohibition on eviction, the rights and responsibilities of the parties is still governed by the terms of their lease.

As noted above, this pandemic has affected landlords and tenants alike, and we recommend staying in contact with your current and future landlords as well as the construction companies and other interested parties.  Understand how each of these parties is planning on moving forward help to determine how best to proceed under the circumstances.

What new lease/mortgage provisions do we need in documents going forward?

The obligations of the parties to pay rent are generally governed by the terms of the agreement, including the following clauses:  Force Majeure; Interruption or Suspension of Access and Services; Quiet Enjoyment and Impossibility of Performance or Frustration of Purpose. Consideration should be given to revising these and related standard lease provisions so as to anticipate circumstances like the COVID-19 pandemic which we now know can create considerable uncertainty concerning a landlord’s and tenant’s rights and obligations absent explicit provisions addressing them.

Read More

COVID-19 CLIENT ALERT – Summary of the Coronavirus Aid, Relief and Economic Security (CARES) Act

On March 27, President Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a stimulus package of unprecedented proportions intended to provide economic relief and assistance to American individuals and businesses impacted by the COVID-19 pandemic.

The CARES Act is principally intended to address the significant disruptions in income being experienced by individuals and companies during the pandemic crisis, while also providing incentives for businesses to remain open and financial assistance for certain industries facing especially severe economic hardship.

Highlights:

• Direct payments to individuals: Most Americans will receive a one-time direct deposit of up to $1,200, and married couples will get $2,400, plus an additional $500 per dependent child. The payments will be available for incomes up to $75,000 for individuals and $150,000 for married couples.
• Waiver of early withdrawal penalties for retirement accounts: The bill waives the 10% early withdrawal penalty for distributions up to $100,000 for coronavirus-related purposes, retroactive to Jan. 1.
• Small businesses incentives: $350 billion is devoted to preventing layoffs and business closures while workers stay home during the COVID-19 pandemic. Businesses with 500 employees or fewer that maintain their payroll during the outbreak can receive up to 8 weeks of cash-flow assistance in the form of loans. If employers maintain payroll, the portion of the loans used for covered payroll costs (as well as interest on mortgages, rent, and utilities) will be forgiven.
• Enhanced unemployment benefits: $250 billion will be used to enhance unemployment insurance benefits by expanding eligibility and offering workers an additional $600 per week for four months, in addition to what state programs pay.  Unemployment benefits will extend through December 31 for eligible workers. Self-employed, independent contractors, and “gig” economy workers like Uber drivers all benefit from these provisions.
• Funding for hospitals and health care: The Act provides over $140 billion to support the U.S. health system, $100 billion of which is for the benefit of hospitals. The balance will be dedicated to providing personal and protective equipment for health care workers, testing supplies, increased workforce and training, accelerated Medicare payments, and supporting the CDC, among other things.
• Coronavirus testing: All testing and potential vaccines for COVID-19 will be covered at no cost to patients.
• Loans and other financial benefits for large corporations: $500 billion will be used to provide loans, loan guarantees, and other investments for large corporations, overseen by a Treasury Department inspector general. These loans will not exceed five years and cannot be forgiven.

In a future Client Alert, we will be providing more details concerning specific features of the CARES Act. In the meantime, we welcome your questions concerning how this measure affects your business and how we might assist you in taking advantage of the financial benefits and incentives it provides.

We extend our best wishes to you and your families during this very challenging time. Please do not hesitate to call us with any questions you may have.

Read More

Client Alert: Insurance, Construction & Deadlines

On March 29, 2020, Gov. Cuomo issued Executive Order 202.13 to provide further relief to individuals and small businesses coping with the COVID-9 pandemic health emergency, to clarify certain aspects of prior Executive Orders, and to temporarily modify certain existing laws. We provide highlights here of those portions of EO 202.13 that may be of particular interest to our clients.

Extension of the grace period for payment of insurance premiums

EO 202.13 modifies the NY Insurance Law to extend the grace period for the payment of premiums and fees for those individuals and small businesses (with fewer than 100 employees) facing financial hardship.  Specifically, it imposes a “moratorium” on “an insurer cancelling, non-renewing, or conditionally renewing any insurance policy issued to an individual or small business…for a period of 60 days, for any policyholder…facing financial hardship as a result of the COVID-19 pandemic.”   The moratorium also applies to group insurance policies and those who are insured under them.

In furtherance of EO 202.13, on March 30 the NYS Department of Financial Services (DFS) announced adoption of an emergency regulation giving consumers experiencing COVID-19 financial hardship 90 days to pay life insurance premiums. The DFS regulation requires life insurers to waive late payment fees, to not report late payments to credit rating agencies, and to allow premiums due but not paid during the 90-day period to be paid over the course of the following year in 12 equal monthly installments.  A full description of the DFS emergency regulation and guidance can be found here. 2020.13 also gives life insurance policyholders 90 days to exercise rights or benefits under a life insurance policy or annuity contract if they are unable to timely to exercise their rights or benefits as a result of the COVID-19 pandemic.

Clarification of “essential” construction activity

In EO 202.6, Gov. Cuomo exempted a variety of “essential businesses”, including various broadly-defined construction activities, from the 100% in-person workforce reduction mandate set forth in that Executive Order. EO 202.13 modifies EO 202.6 to make it clear that “only certain construction is considered exempt from the in-person restrictions as of March 28, 2020.” 202.13 authorizes the Empire State Development Corporation to determine which construction projects shall be essential and thereby exempt from the in-person workforce prohibition. The EDC has accordingly updated its guidance; a complete list of exempt “essential” businesses, including a more narrowly-defined list of exempt construction activities, can be found here. The EDC’s guidance makes it clear that “all non-essential construction must shut down.” Essential construction may continue, including work on “roads, bridges, transit facilities, utilities, hospitals or health care facilities, affordable housing, and homeless shelters.” Note however that at every site social distancing must be maintained, and that sites that cannot maintain distance and safety best practices must close.  Enforcement will be provided by the state in coordination with city/local governments, and may include fines of up to $10,000 per violation.

Alignment of expiration dates for restrictions on and
closures of private and public businesses and places of public accommodation

EO 202.13 also aligns the expiration dates contained in prior Executive Orders that created restrictions on or provided for closures of private and public businesses and places of public accommodation. 202.13 makes it clear that “all such Executive Orders shall be continued, provided that the expiration dates of such Executive Orders shall be aligned, such that all in-person business restrictions will be effective until 11:59 p.m. on April 15, 2020, unless later extended by future Executive Orders.”

Read More

Client Alert: COVID-19 and Public Bidding Procedures

COVID-19 has forced us to change the way municipalities go about public bidding.  Here are three key points to consider.

I.  Is a Bid Required?

Some emergency procurements do not require competitive bidding.  N.Y. General Municipal Law § 103(4) provides that “in the case of a public emergency arising out of an accident or other unforeseen occurrence or condition whereby circumstances affecting public buildings, public property or the life, health, safety or property of the inhabitants of a political subdivision or district therein, require immediate action which cannot await competitive bidding or competitive offering, contracts for public work or the purchase of supplies, material or equipment may be let by the appropriate officer, board or agency of a political subdivision or district therein.”  What constitutes an appropriate emergency situation is left to the local municipality.

In Executive Order 202, Governor Cuomo did allow schools to procure and use cleaning and maintenance products in schools without following bidding requirements.

II.  Submission of Bids

In light of the COVID-19 pandemic, electronic submission of bid documents may be a preferable option.  However, such a manner of submission it is only authorized under N.Y. General Municipal Law § 103 if a municipality’s governing board has authorized it.

Also, with the exception of “technology contracts,” the submission of bids or offers in electronic format may not be required as the sole method, and paper bids or offers must still be accepted.

Any method used to receive electronic bids or offers must also comply with article three of the State Technology Law (the “Electronic Signatures and Records Act”), and related regulations. Also, the method used must, at a minimum:

1. Document the time and date of receipt of the bids or offers received electronically,
2. Authenticate the identity of the sender,
3. Ensure the security of the information transmitted and
4. Ensure the confidentiality of the bid or offer until the time and date established for the opening of bids or offers.

III.  Opening of Bids

Historically, all public bids received by a municipality had to be opened and read publicly at the time and place specified in the advertisement for the bid.  Not anymore.

Under Executive Order 202.11, bid openings do not have to be open to the public.  Section 103(2) of the General Municipal Law, Section 144(1) of the State Finance Law, Section 376(8)(a) of the Education Law, and Section 359(1) of the Public Authorities Law were modified by the Governor to allow the non-public opening of bids; provided, however, that, where practical, municipalities must record or live stream bid openings so that the public has the opportunity to view the openings.

So, for bids that have already been advertised, municipalities should provide a notice/addendum that in-person attendance at the bid opening will not be allowed and specify the means that will be used to allow public viewing.

For future bids, municipalities should be noting that in-person attendance at bid opening will not be allowed, and provide information on how the opening can be viewed by the public.

Read More

Client Alert: I Tested Positive for COVID-19: When Can I Return To Work?

The New York State Department of Health (“DOH”) issued guidance that expressly sets forth the protocols for essential personnel to return to work after being exposed or infected with COVID-19.

According to DOH, “[p]ublic and private sector organizations that provide essential services or functions where personnel are needed to perform critical functions, including infrastructure, public safety, and other essential operations, may allow personnel who were exposed to or are recovering from COVI D-19 to work in the workplace setting, if needed to maintain essential operations.” “Essential services or functions include but are not limited to public health personnel, utility and water operators, skilled manufacturers and supporting supply chains, transportation infrastructure, law enforcement and emergency response personnel.”  New York Empire State Development has set forth specific guidance on what is essential, which is constantly being updated.

Here are the DOH protocols:

I.  Essential Personnel with Confirmed or Suspected COVID-19

May be permitted to work in the required workplace setting if all of the following conditions are met:

• Working from home would adversely impact essential services or functions, including critical public health and public works infrastructure in New York or the response to the COVID-19 public health emergency;
• Personnel have maintained isolation for at least 7 days after illness onset (i.e. symptoms first appeared) and have not had a fever for at least 72 hours, without the use of fever reducing medications, and with other symptoms improving;
• Personnel who are recovering from COVID-19 and return to work. must wear a facemask for 14 days following onset of illness.
• For the purposes of this guidance, a facemask is a well-secured mask that covers the mouth and nose. No personal fit testing is necessary for a facemask

II.  Essential Personnel Exposed to a Confirmed or Suspected Case of COVID-19

May be permitted to work in the required workplace setting if all of the following conditions are met:

• Working from home would not be feasible for job duties;
• Personnel are asymptomatic;
• Personnel quarantine themselves when not at work;
• Personnel undergo temperature monitoring and symptom checks upon arrival to work and at least every 12 hours while at work, and self-monitor (i.e. take temperature, assess for symptoms) twice a day when at home;
• Personnel required to interact with individuals within 6 feet should wear a facemask while working for 14 days following the last exposure;
• Personnel whose job duties permit a separation of greater than 6 feet should have environmental controls in place to ensure adequate separation is maintained, and do not need to wear a facemask;
• If personnel develop symptoms consistent with COVID-19 (e.g., fever, cough, or shortness of breath) while working, they should immediately stop work and isolate at home; and
• Testing should be prioritized for essential personnel with symptoms.

III.  Westchester County DOH Request for Release Letters

Conveniently, the Westchester County Department of Health has set up an online portal for those subject to mandatory quarantine or isolation by the County to request a COVID-19 release letter that can be provided to show an employee’s eligibility to return to school or work, after being exposed to or infected with COVID-19. Here is a link to that website.

Read More

COVID-19 CLIENT ALERT

The COVID-19 pandemic is causing all New York businesses to face unprecedented uncertainties and challenges in a host of areas central to their operations. The landscape of state and federal laws being passed, and regulations and executive orders being issued, is changing almost daily. We are monitoring these changes in federal and state laws, and are continuing to provide guidance and advice to our clients as they navigate these ever-changing and uncharted waters.  Although not comprehensive, below we provide some highlights of important changes that may affect your business.

1. Federal Stimulus

As of this writing the U.S. Senate has passed, and the House is considering, a major federal stimulus package that will include a variety of benefits for employers and employees alike. We are monitoring that and will be providing updates concerning significant features of it once enacted into law.

2. Loans and Mortgages

Under Gov. Cuomo’s Executive Order 202.9, financial institutions in New York have been ordered to provide 90 days of forbearance on loans and mortgages to individuals and businesses who are experiencing hardship due to the COVID-19 pandemic. What “forbearance” means in any specific case depends upon the particular circumstances of the borrower and lender, but borrowers experiencing hardship should consider this an invitation to contact their bank or financial institution to initiate discussions.

3. Suspension of Time Limits for Legal Proceedings

Gov. Cuomo’s Executive Order 202.8 suspended until April 19, 2020 any specific time limit for the commencement, filing, or service of any legal action, notice, motion, or other process or proceeding. This tolling of time limits applies to all criminal, civil, family court, surrogate’s court, and Court of Claims proceedings.  Filing of papers with all court clerk offices has also been suspended state-wide, with certain exceptions, and no new criminal or civil jury trials are being conducted until further notice. We expect the April 19 date will be subject to further extension if circumstances warrant.

4. In-Person Workforce Reduction

Pursant to Executive Order (“EO”) 202.8, all “non-essential” businesses and not-for-profit entities in New York were required to reduce their in-person workforces by 100% no later than March 22 at 8 p.m.  An entity providing “essential” services or functions, whether to an essential business or a non-essential business, are not be subject to this in-person work restriction, but may operate at the level necessary to provide such service or function.

The list of “essential” businesses not affected by this mandatory in-person workforce reduction is lengthy; a complete list can be found here. In general, it exempts essential health care, infrastructure, manufacturing, and retail businesses, services such as trash and recycling, mail, auto repair, and cleaning services, news media, and financial institutions. We welcome clients’ questions concerning whether they qualify as essential businesses or how they may apply to qualify if not currently on the list of essential businesses and services.

5. Hospitals, Medical Personnel and Services

The Governor’s Executive Order 202.10 contains a number of important provisions concerning hospitals and medical services, all of which are designed to maximize available facilities and increase the number of personnel permitted to provide medical services in New York. Our Healthcare Law attorneys would be happy to discuss your questions.

6. Employment Law

Many of the most significant changes brought about by the COVID-19 pandemic are happening in employment law, at both the state and federal levels. For example, the recently-enacted Families First Coronavirus Response Act (FFCRA) creates new obligations for employers with respect to paid sick leave and paid family leave. New York likewise recently passed legislation imposing new obligations on employers with respect to paid leave and providing new or enhanced state benefits to employees.  The details of these laws are beyond the scope of this Client Alert, but our Labor and Employment Law professionals are ready to help you navigate through these new laws and any that may hereafter be enacted. For a helpful summary of the FFCRA, please see Adam Rodriguez’s article here.

7. Evictions and Foreclosures

Gov. Cuomo’s Executive Order 202.8 suspends enforcement of all residential and commercial tenant evictions, and all residential and commercial property foreclosures, for a period of ninety days as of March 20, 2020. Note too that with the temporary state-wide suspension of new court filings ordered by New York’s Chief Administrative Judge, no new eviction or foreclosure proceedings can be commenced for the time being.

8. Real Property Tax

While numerous requests have been made to extend the deadline for the payment of Town and Westchester County taxes beyond April 30, 2020, to date no such action has been taken.  As of today, the Town and County tax remain due by the end of April.

Additionally, for property tax assessment purposes, in New York State, commercial property is valued using an income-based approach.  Vacancies and rent abatements or other decreases in income will have a profound effect on the market value of properties.  Similarly, market-wide vacancies and decreases in rent may also result in lower market values across the board. If the current assessment on a property reflects a value above the proper market value, you may be entitled to reduced assessment, resulting in a lower property tax bill. Keep in mind that tax assessments must be challenged each year and strict deadlines apply to filing these challenges.

9. Land Use Approvals

Under Executive Order 202.1, New York State suspended the Open Meeting Law.  This permits Town Boards and other approving agencies to meet remotely, allowing the land use process to proceed in many localities.  Local Building departments remain open for the most part, to issue non-discretionary permits and permits in compliance with the still-functioning Boards.

We extend our best wishes to you and your families during this very challenging time. Please do not hesitate to call us with any questions you may have.

 

Read More