COVER NL 09_06.qxd - Nassau County Bar Association

Transcription

THE JOURNAL OF THE NASSAU COUNTY BAR ASSOCIATION
www.nassaubar.org
September 2014
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Volunteers Needed at NCBA’s
Fourth Annual Pro Bono Legal FAIR
OF NOTE
( Free Assistance, Information and Referral )
NCBA Member Benefit – I.D. Card Photo
Obtain your photo for court identification
cards at NCBA Tech Center. Cost $10.
October 6, 7 & 8 • 9 a.m.-4 p.m.
EVENTS
DOMUS ON THE LAWN
Wednesday, September 10, 2014
5:30-7:30 p.m. at Domus
SAVE THE DATE!
JUDICIARY NIGHT
Thursday, October 16, 2014
5:30 p.m. at Domus
You should have received your invitation!
See page 6 for details
PRO BONO FAIR
Volunteer Attorneys Needed
3:00-7:00 p.m. at Domus
See article on this page for details
SAVE THE DATE!
Wassail
Thursday, December 11, 2014
6:00 p.m. at Domus
Details coming soon
SAVE THE DATE!
WE CARE Gingerbread University
Saturday, December 13, 2014
Details coming soon
WHAT’S INSIDE
FOCUS: REAL ESTATE/MUNICIPAL LAW
HUD’s Proposed Rule: Expanding
Obligations to Affirmatively Further
Fair Housing in Nassau
Page 3
Interpreting Koontz One Year Later
Page 3
A Working Guide to the Nassau County
Office of Consumer Affairs
Page 5
Independence Bank v. Valentine: Placing
Limits on CPLR 3408 Settlement
Conferences In Commercial Mortgage
Page 7
Foreclosure Actions
Avoiding the Hazards From an
Unscrupulous or Negligent Qualified
Intermediary in a 1031 Exchange Page 9
Wrongful Conviction or Wrongful
Exoneration? Something Is Happening,
and It Is Affecting Municipal Budgets
Page 9
GENERAL ARTICLES
Blurred Lines: Employees
Preparing to Compete
Vol. 64, No. 1
Thursday, October 23
By Gale D. Berg,
Director of Pro Bono Activities
Alan Hodish (standing, second from r) and his fellow NCBA mentors
with the students they mentored from Woodland Middle School, East
Meadow, at the annual Mentor Appreciation Luncheon. Standing from
left are Mark Mancher, Ted Rosenthal, Anthony Bagnuola and Alan
Hodish. (seated from l) Marc Resnick and Patricia Sokolich.
(Photo by Hector Herrera)
Attorneys Shaping Young Lives
Student Mentoring Program Celebrates 20 Years
By Valerie Zurblis
Alan Hodish never dreamed
that changing his career would
result in changing the lives of
thousands of young adults.
Twenty years ago, the longtime professional educator
switched to the legal profession, and through the Nassau
County Bar Association he
founded the award-winning
Student Mentoring Program to
instill a desire for kids at risk to
take themselves seriously, be
self-confident, and contribute
to society. Over the years, dedicated NCBA members serving
as mentors, advisors and just
listeners, have demonstrated
the enormous impact one caring adult can have on a young
person’s life by showing them
that they do have choices in
life, and that their choices can
lead to better lives.
“Research has shown that
children who have a caring
adult in their lives have a better chance of staying in school,
out of gangs and away from
drugs,” Hodish said. “These
positive effects are much more
likely to occur when a one-onSee MENTORS, Page 17
Fixing A Broken Trust: Local Innovation =
Page 14
National Recognition
ACCESS TO JUSTICE
The Access to Justice Program provides legal services
Volunteer Opportunities at the Bar
By Valerie Zurblis
The Nassau County Bar Association is
the leading resource for legal information
and education for the more than 1.3 million
people living in Nassau County. NCBA
members have a long tradition of stepping
forward to assist children, seniors, the
abused and neglected, students, homeowners, parents and teens, and those in need.
As a member of the Nassau County Bar
Association, you have many opportunities
to give back ... and most of our members
do!
Each one of our pro bono programs presents its own challenges and satisfactions.
When you speak to high school students,
give a presentation at a meeting of an
organization, consult with a senior citizen
at our in-house clinic, coach a high school
mock trial team, serve as a mentor to a
middle school student at risk, or help keep
a family from losing their home, you fulfill
this Association’s commitment to serve the
community. The following volunteer opportunities are available.
VOLUNTEER OPPORTUNITIES
Mortgage Foreclosure
Nassau County continues to have one of
the highest rates of mortgage foreclosures
in the state. Volunteers provide one-on-one
legal guidance at NCBA’s award-winning
Mortgage Foreclosure Clinics, held twice a
month, 3-6 p.m., at the Bar Association.
Attorneys may also represent homeowners
pro bono at a three-hour court-mandated
conference session held in Nassau
Supreme Court. Attorneys from all practice areas are welcome; training and mentoring is provided.
UPCOMING PUBLICATIONS COMMITTEE MEETINGS
Page 11
“In celebration of national
Pro Bono Week, and the success over these past three
years, the Nassau County
Bar Association together
with Nassau/Suffolk Law
Services and The Safe Center
LI will, once again, run the
free legal Pro Bono FAIR
(Free Assistance, Information and Referral) to be held
on Thursday, October 23rd
at Domus” announced Steven
G. Leventhal, NCBA’s 2nd
Vice President, Chair of
Access to Justice Committee
and Chair of the event.
Nassau residents are invited
to come to the Bar Association’s location in Mineola,
between 3-7 p.m., and meet
with an attorney, one-on-one,
for legal guidance. Attorneys
are needed to volunteer for
one of two shifts, 3-5 p.m. or
5-7 p.m.
Thurs., Sept. 11, 2014
l
Thurs., Oct. 16, 2014 – 12:45 at Domus
The Lawyer Assistance Program provides confidential help to lawyers
and judges for alcoholism, drug abuse and mental health problems
24/7. Call 1-888-408-6222. Calls are completely confidential.
to those in need, regardless of
their ability to pay; it promotes the fair administration
of justice; provides lawyers
with training and opportunities to provide the pro bono
legal services encouraged by
the Rules of Professional
Conduct; and promotes public respect for the law and the
profession. The Annual Pro
Bono Fair is an opportunity
for Nassau County residents
to consult with lawyers
knowledgeable in a wide
range of legal disciplines, and
fluent in a variety of languages. The generosity and
commitment of our members
makes our profession great,
and this Association is a
model for others around the
nation ...
Steven Leventhal,
Access to Justice
Committee Chair
ATTORNEYS NEEDED
Attorneys are needed to
volunteer to meet one-on-one
with residents to provide
See FAIR, Page 16
Get Involved Today ...
You’ll Be Glad You Did
Access to Justice
Work with the Nassau County Coalition
Against Domestic Violence, Nassau/Suffolk
Law Services, Legal Aid Society of Nassau
County, Assigned Counsel Defender Plan,
Hofstra and Touro law schools and Nassau
County government to provide information
on free and reduced fee legal resources,
coordinate legal services for the community
and strengthen the core of volunteer attorneys through education and professional
development.
Annual Pro Bono Legal FAIR
(Free Assistance, Information and Referral)
The community is invited to discuss any
legal issue with a volunteer attorney at this
annual one-day clinic presented during
national Pro Bono week in October. Attorneys in all practice areas are welcome.
See VOLUNTEER, Page 16
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Real Estate/Municipal Law
HUD’s Proposed Rule: Expanding Obligations
to Affirmatively Further Fair Housing in Nassau
Nassau County has a history of seg- HUD and the U.S. Department of
regation, racially/ethnically concentrat- Justice Civil Rights Division are worked areas of poverty, with disparities in ing collaboratively to identify and
access to community assets and dispro- address Fair Housing violations.
The underlying premise of
portionate housing needs. As
fair housing law is that housa recipient of a direct allocaing location can dictate the
tion of funding from the U.S.
degree to which a household
Department of Housing and
has access to critical opportuUrban Development (HUD),
nities and the foundation
the Nassau County Urban
needed to excel in our society,
Consortium has an obligation
such as high-performing
to affirmatively further fair
schools, sustainable employhousing as proscribed in the
ment, decent housing, safe
regulations promulgated by
neighborhoods, and options
HUD1 establishing the oblifor health care. Longstanding
gations of recipients of fundhousing patterns have led to
ing under the Fair Housing
Charlene J.
concentrated pockets of
Act, (which is Title VIII of the
Thompson
poverty with persistent segCivil Rights Act of 1968).2
regation along racial and ethIn July of 2013, HUD proposed a new rule and regulations3 to nic lines in Nassau County.
The Fair Housing Act not only proclarify and expand the obligations of
recipients of HUD funds to affirmative- hibits discrimination but, in conjuncly further fair housing. All municipali- tion with other statutes, directs HUD’s
ties within Nassau County, (whether program participants to take proactive
consortium members or not), should be steps to overcome these historic pataware that the regulations proposed terns of segregation, promote fair housunder this new rule, coupled with rules ing choice, and foster inclusive commuand regulations promulgated under nities for all. The Proposed Rule will
other related federal statutes, present require funding recipients to address
powerful tools for fair housing advo- fair housing issues including, but not
cates to address housing discrimination limited to, local or regional segregation,
and disparities across the County. racial or ethnic concentrations of pover-
ty, disparities in access to community
assets, disproportionate housing needs
based on race as well as other protected
classes and evidence of illegal discrimination.
The Challenges of “Home Rule”
in Nassau
Under Article IX of the New York
State Constitution, each incorporated
municipal government is granted varying “home rule” powers as set forth in
its municipal charter. Nassau County
includes three Townships, two Cities
and 64 incorporated Villages, each with
its own legislative authority with
respect to land use and zoning.
Many municipalities have local laws
and zoning regulations specifically
designed to limit housing density or
unit mix of multifamily dwellings.
Those advocating to preserve existing
community culture and demographics
have often thwarted efforts to site publically subsidized multifamily housing
projects in non-impacted areas. Alignment of political will, increased community engagement and continued education efforts must be utilized to surmount these obstacles.
Under the Proposed Rule, HUD
encourages linking the County’s
Consolidated Plan with the various
plans of Towns,’ Cities’ and Incorporated Villages’ Public Housing Authority
Plans as well as Capital Fund Plans, in
an effort to address fair housing disparities in a more comprehensive manner.
Once again, alignment of political will,
across all levels of government, will be a
major challenge to accomplishing this
goal.
In a recent federal housing discrimination complaint filed with the U.S.
Department of Housing and Urban
Development against the County of
Nassau and the County’s Office of
Community Development, the advocacy
group ERASE Racism alleges that
“[c]ontrary to its civil rights obligations,
the County has awarded financial
resources to members of the Consortium for affordable, family housing
which reinforces patterns of racial segregation in the County.”4
Furthermore, the complaint alleges
the County has failed or refused to
enforce the civil rights obligations of
consortium members, enabling them to
engage in “discriminatory” zoning practices.5 Also in April of this year, the
Department of Justice sued consortium
member Town of Oyster Bay and
Supervisor John Venditto alleging that
preferences given to Town residents for
See HUD, Page 21
Interpreting Koontz One Year Later
In Koontz v. St. Johns River Water right to just compensation, and the
Management Corp.,1 the issue before unconstitutional conditions doctrine
the U.S. Supreme Court was whether prohibits them.”4 The court did not prothe denial of a land-use permit can vide a bright line test as to what exacinvoke a violation of the Takings Clause tions will pass the Nollan/Dolan test.
under The Fifth Amendment of the U.S. Without clear guidance as to when a
Constitution. In answering this ques- demand crosses the line and becomes
tion, Justice Alito, writing for
“extortionate,” Koontz crea 5-4 majority, held that the
ates uncertainty regarding
long-standing principles of
how much is too much.
Nollan v. California Coastal
Additionally, we quesComm’n and Dolan v. City of
tioned how local governTigard2 do not change
ments across the nation
would respond to land-use
depending on whether the
applications in the wake of
land-use permit is approved
the Koontz decision. We wonor denied. The court also held
dered if municipalities might
that monetary exactions as a
grant or deny land-use applicondition for approval of a
cations, or refrain from
land-use permit must also
imposing conditions they
satisfy the Nollan/Dolan
“nexus” and “rough propor- Michael H. Sahn consider appropriate out of
fear of a Koontz-based constitionality”
As we pointed out last year, Koontz tutional challenge. In her dissent in
raises many questions and issues. For Koontz, Justice Kagan implied that the
one, the court used the term “extortion- balance has tipped in favor of the landate demands” to describe excessive use applicant, over the municipality, in
requirements placed on land-use appli- negotiations for a land-use permit.
cants that fail the Nollan/Dolan test.3
Powell: Overflight Easement
Yet, the opinion does not give a clear
Not a Taking
definition of that term. Instead, the
Over the past year, several federal
Court simply stated that when an applicant is forced to relinquish property and state courts have cited Koontz in
rights as a condition for a land-use different contexts. Yet, only two cases
approval, “extortionate demands of this involved land-use permits. Of those two
sort frustrate the Fifth Amendment cases, only one invoked Koontz in its
analysis. In that case, Powell v. County of the plaintiffs’ permit for the covered
of Humboldt,5 the California Court of porch and carport.
The plaintiffs challenged the constiAppeals, First District considered the
unconstitutional conditions doctrine as tutionality of the condition and argued
explained in Koontz but did not reach that it violated the Fifth Amendment of
the Nollan/Dolan test because it found the U.S. Constitution and California’s
that the threshold determination was takings clause because the condition
was not related to the impact
not met.
of the proposed project for
Powell involved an overwhich the plaintiffs were
flight easement condition
seeking a permit. Further the
required for building permit
plaintiffs maintained that
approval that the County
the Nollan/Dolan test proimposed on residential propvides an independent, standerty owners located in
alone test for determining
“Airport Compatibility Zone
whether a permit exaction is
C.” The easement granted
a compensable taking withthe County the right to (1)
out any independent requireallow flights and the noise
ment to prove a taking.
inherent thereto in the airThe court rejected this
space over the property; (2)
regulate or prohibit the Adam H. Koblenz argument and stated that
“Koontz confirms that Nollan
release into the air of substances such as smoke, dust, or steam and Dolan are unconstitutional condithat would impair visibility; regulate or tions cases that apply only when the
prohibit light emissions that might government seeks to pressure property
interfere with pilot vision; and (4) pro- owners to accept an uncompensated
hibit electrical emissions that would Fifth Amendment taking of their propinterfere with aircraft communication erty for public use.”7 Following Koontz,
or navigational systems.6 The previous the Powell court reiterated that before
owners of the plaintiffs’ property con- applying Nollan/Dolan scrutiny, the
structed a covered porch and carport threshold inquiry is whether the condiwithout permits. The County informed tion would rise to the level of a compenthe plaintiffs that as residential proper- sable taking for Fifth Amendment purty owners within Zone C the overflight
See KOONTZ, Page 19
easement was a condition for issuance
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The Legal Job Market: A Tough Business
This month, yet another class of law school graduates crop of new law school graduates. Unfortunately, no one
enters the marketplace eager to apply their newly- can predict when this will occur.
acquired skills and education. For far too many of these
All of this leads to (at least) two questions. First, how do
graduates, however, the law they will be confronting is not we help our currently unemployed and underemployed colfound in the C.P.L.R., the U.S. Code, or the Supreme Court leagues as they struggle to find suitable employment?
Reporter. Indeed, it cannot be found anywhere in a law Second, how do we position the Bar Association for potenlibrary. Rather, the law is found in economics textbooks, as tially reduced membership rolls?
law school graduates confront the law of supply and
The first question is particularly difficult, as neither the
demand.
Association nor its members can manufacture demand.
There is an axiom in the oil industry that the best rem- Nevertheless, there are some things that can be, and are
edy for high oil prices is high oil prices.
being, done to help.
Regrettably, it seems that the best remedy for
First, the Association has taken steps to
unemployed lawyers is more unemployed
facilitate the hiring of lawyers. A few years ago,
lawyers. The market for lawyers has been
the Association launched its Career Center,
adjusting in a predictable fashion, as the
available through the Association’s website at
declining demand for legal services, with a corwww.nassaubar.org, where members can post
responding increase in unemployed and underan anonymous resume, view posted openings,
employed lawyers, has led to a steep decline in
and schedule a personal job alert to receive an
law school applicants, from 100,000 in 2004 to
email when a new opening is posted. As of
55,000 in 2014. This in turn has led to a subAugust 1, 2014, the Career Center had 173
stantial decrease in law school enrollment, as
employers registered and 473 resumes posted.
prospective students weigh the direct costs of
Second, members of the Association can meet
three years of law school and the opportunity
with unemployed and underemployed lawyers
costs of three years of lost earnings against the
to provide career counseling and advice. The
likelihood that they may not be able to obtain
Association’s Lawyers Assistance Program, or
suitable employment upon graduation. Some
LAP, is currently doing this. However, these
argue that a partial solution would be to elimiefforts need not be limited to LAP, as all of us
John P. McEntee
nate the third year of law school to reduce the
can do our part.
student debt burden, yet such a change would
Recently, I met with a new member of the
likely encourage more people to enroll in law school, there- Association, a 2013 law school graduate working in the
by exacerbating the over-supply problem.
security department of a home improvement chain. He
described his frustration at his inability to land a legal
position since his graduation. During the course of the conAll of this leads to (at least) two questions.
versation I realized he believed I as President would be
First, how do we (the NCBA) help our currently able to solve his underemployment problem, and so I imagine he was greatly disappointed to learn I had no magic
unemployed and underemployed colleagues as
wand to wave. Nevertheless, we discussed the various
resources available to him, including the Career Center,
they struggle to find suitable employment?
together with strategies for networking both within and
Second, how do we position the Bar Association without the Association. I also attempted to provide some
reassurance that he would eventually find legal employfor potentially reduced membership rolls?
ment and that prospective employers would not find his
inability to find legal employment a reflection on his
A combination of factors led to the steep drop in demand employability, as law firms are well aware of the difficult
for legal services. One is simple economics, as the Great legal marketplace.
Recession reduced the number of people and businesses
Third, unemployed and underemployed attorneys can
willing and able to pay for legal services. Even as the econ- volunteer to participate in the Association’s clinics and
omy continues to recover, though, clients have been and programs, potentially gaining valuable courtroom experiare projected to remain conservative about engaging attor- ence while helping others.
neys. Another is technology, as email, knowledge manageTurning to the question of what the Association should
ment software, document assembly programs, and case be doing to take into account the financial impact of
management software allow attorneys to work more effi- potentially reduced membership rolls in the near future,
ciently. And yet another factor is the rise of internet web- the Association’s Board of Directors and Executive
sites such as LegalZoom that allow consumers to form cor- Committee, working with the Financial Oversight
porations, register trademarks, and prepare wills and Committee, will be examining the Association’s expenses
trust instruments without an attorney.
and ways to increase the Association’s reserves so that the
The law of supply and demand instructs us that at some Association remains on solid financial footing for future
point the legal market will reach equilibrium, at which generations. I expect to report on these efforts in the
point the legal market will be able to absorb each year’s months ahead.
FROM THE
PRESIDENT
Great
Member
Benefit!
Looking for
a New Job?
OR
Looking
for Help?
NCBA Career Center
/RQJ,VODQG¶V)LUVWOnline Job Board
For The Entire Legal Profession
Exclusively for
NCBA Members
¥Members see all newly
posted jobs for 3 days
before they can be viewed
by the general public.
¥Member resumes are
listed first in employer
searches.
See insert for details
The Nassau Lawyer welcomes articles that are written by the members of the Nassau County Bar Association, which would be of interest to New York
State lawyers. Views expressed in published articles or letters are those of the authors alone and are not to be attributed to the Nassau Lawyer, its
editors, or NCBA, unless expressly so stated. Article/letter authors are responsible for the correctness of all information, citations and quotations.
The Official Publication of the
Nassau County Bar Association
15th & West Streets
Mineola, N.Y. 11501
Phone: (516) 747-4070
Fax: (516) 747-4147
www.nassaubar.org
E-mail: info@nassaubar.org
NCBA Officers
President
John P. McEntee, Esq.
President-Elect
Steven J. Eisman, Esq.
First Vice President
Martha Krisel, Esq.
Second Vice President
Steven G. Leventhal, Esq.
Treasurer
Elena Karabatos, Esq.
Secretary
Richard D. Collins, Esq.
Executive Director
Keith J. Soressi, Esq.
Editor-In-Chief
Christopher J. DelliCarpini, Esq.
Associate Editor
Allison C. Shields, Esq.
Editor/Production Manager
Sheryl Palley-Engel
Assistant Editor
Valerie Zurblis
NCBA Director of Marketing and PR
Photographer
Hector Herrera
Focus Editor of the Month
Thomas McKevitt, Esq.
Upcoming 2014 Focus Issues
October – General/OCA Issue
November – Education Law
December – Tax/Commercial/
Bankruptcy Law
Committee Editors
Christopher J. DelliCarpini, Esq., Chair
Allison C. Shields, Esq., Vice Chair
Rhoda Y. Andors, Esq..
Deborah S. Barcham, Esq.
Gale D. Berg, Esq.
Sean E. Campbell, Esq.
Deanne Caputo, Esq.
Richard D. Collins, Esq.
Ellin Regis Cowie
James Fiorillo, Esq.
Avrohom Gefen, Esq.
Nancy E. Gianakos, Esq.
Robert S. Grossman, Esq.
Kristina S. Heuser, Esq.
Charles E. Holster III, Esq.
Paul Hyl, Esq.
George M. Kaplan, Esq.
Kenneth J. Landau, Esq.
Douglas M. Lieberman, Esq.
Cheryl Y. Mallis, Esq.
Thomas McKevitt, Esq.
Jeff H. Morgenstern, Esq.
Daniel W. Russo, Esq.
Anthony M. Sabino, Esq.
Rayne M. Sassower, Esq.
Michael A.H. Schoenberg, Esq.
Meryl D. Serotta, Esq.
Christina H. Singh, Esq.
Andrij V.R. Szul, Esq.
David Torreblanca, Esq.
Chris Wittstruck, Esq.
Published by Long Island Business News
(631) 737-1700; Fax: (631) 737-1890
Publisher
Scott Schoen
Graphic Artist
Nancy Wright
Nassau Lawyer (USPS No. 007-505) is published monthly, except combined issue of July
and August, by Long Island Commercial
Review, 2150 Smithtown Ave., Suite 7,
Ronkonkoma, NY 11779-7348, under the auspices of the Nassau County Bar Association.
Periodicals postage paid at Mineola, NY 11501
and at additional entries. Contents copyright
©2014. Postmaster: Send address changes to
the Nassau County Bar Association, 15th and
West Streets, Mineola, NY 11501.
Nassau Lawyer
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A Working Guide to the Nassau County Office of Consumer Affairs
When Superstorm Sandy attacked censed contractors, who took advantage
Nassau County on October 29, 2012, it of the vulnerability of Superstorm
resulted in horrific damage to the phys- Sandy’s victims. This article highlights
ical structures of dwellings as well as the multi-faceted services and protecbusinesses. In response, the Nassau tion provided without cost by the
County Bar Association expanded the Nassau County Office of Consumer
scope of its long-standing mortgage Affairs (NCOCA), particularly when
foreclosure consultation clinics to selecting a home improvement contractor.
immediately assist Nassau
Headed by Commissioner
County’s residents in navigatMadalyn F. Farley, the
ing post-Sandy relief options,
NCOCA is the first line of
holding its first clinic on
defense for consumers.
November 19, 2012.
Commissioner Farley has
The applications for assisbeen with the NCOCA since
tance required by the Federal
1987; she began as a mesEmergency
Management
senger
and
proceeded
Agency (FEMA) and the Small
through the ranks, serving
Business
Administration
as a Licensing Supervisor
(SBA), and their interplay
and
Executive
with the rules regulating priAdministrative Assistant
vate insurance carriers creatMartha Krisel
until her appointment as
ed a challenge that was
Commissioner in 2010. The
daunting for even experienced
attorneys. At the same time, property NCOCA was established in the midowners scrambled for permission to 1960’s and enforces Title D of the
expedite the rebuilding process while Nassau County Administrative Code,
piecing together documents necessary Section 21-10.0 et seq. Laws passed subfor building permit applications and sequent to 2010 are available online.1
insurance claims.
Although the extent of flooding and
This process was further complicated wind damage of Superstorm Sandy was
by the destruction of such paperwork unprecedented for even long-standing
during Superstorm Sandy. The kind- Nassau County residents and businessness of friends, neighbors and strangers es, there is nothing new about price
has been well-documented; this article gouging and unfair, deceptive trade
discusses strategies to avoid the under- practices during natural disasters.
belly of the aftermath, resulting from Certain contractors snapped into action
unscrupulous and in some cases unli- and successfully demanded large down
payments before construction began
only to abandon the job after minimal or
no performance took place. In some
instances, damages were purposely created or even exacerbated to maximize
the profit. Substandard materials coupled with low quality work left homeowners with more repairs than
Superstorm Sandy had initially caused.
NCOCA prohibits unfair, deceptive,
and unconscionable trade practices and
provides consumer protection to Nassau
residents through its database that
identifies licensed contractors and
administrative conciliation hearings
structured to resolve home improvement violations of law, held after a thorough investigation. In most instances,
judicial proceedings can be avoided.
The NCOCA’s Home Improvement
Licensing Division issues and renews
licenses to those seeking to operate residential home improvement businesses
in Nassau County. NCOCA is also
empowered to suspend or revoke licenses after administrative hearings, and
its website provides immediate information about the existence of home
improvement
licenses.
Although
Business License Applications can be
downloaded from the consumer affairs
website,2 the filing of the application
does not constitute permission to operate. A license must actually be issued
and in the possession of the licensee
before any contract can be signed or any
work can commence. The first step any
consumer should take to guard against
abuses in the home improvement industry is to check the data base in the
licensing division of NCOCA to verify
the validity of a license number and to
ascertain the number of complaints
filed against that business, both open
and closed. Additional information is
available through the Freedom of
Information Law (FOIL), which also
can be submitted through the website,
although detailed information about
pending investigations is not provided
until a final agency determination has
been made.
Through the investigations and complaints division of NCOCA, consumers
are able to file complaints, downloadable from the website, against
unscrupulous contractors, including
those who may have taken advantage of
them during Superstorm Sandy.
Complaints filed against businesses
must be supported by the underlying
contract or agreement and are then
evaluated by the investigation division;
the complainant also must declare the
veracity of the statement, subject to the
penalties of perjury. When received,
complaints are coded according to the
type of business or service that was performed, such as roofing, bathroom,
landscaping or siding. They are also
coded according to the specific violation
alleged; categories include misrepresen-
See CONSUMER AFFAIRS, Page 19
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•
•
•
•
•
•
LiƟgaƟon, and Title LiƟgaƟon
Foreclosures
Leases
Loan Structuring, Closure and Workouts
Real Estate Partnerships
Sales and AcquisiƟons
Secured and Unsecured Lending
Clients of the Commercial Real Estate pracƟce
include banks, corporaƟons, developers, financial
insƟtuƟons, professionals, contractors, landlords
and tenants on issues relaƟng to all types
of commercial real estate including hospitality,
retail, industrial, and resort properƟes.
990 Stewart Avenue I Garden City I New York 11530
1350 Broadway I New York I New York 10018
516-741-6565 I 212-239-4999
ALBANY I GARDEN CITY I NEW YORK CITY I WASHINGTON, D.C. I www.msek.com
Abraham B. Krieger
Real Estate PracƟce Chair
Second Department Appellate
Division, 10th Judicial District
Grievance CommiƩee Chair
Real Estate Group Members:
Michael Antongiovanni
Kiernan BasƟble
Lynn Brown
Anne J. Del Casino
Richard Eisenberg
Richard G. Fromewick
Edward J. Gutleber
Marie A. Landsman
Jack Rubinstein
Kevin Schlosser
Charles Skop
Hon. Joseph A. Suozzi
Like many ventures, the success of today’s law firm depends largely upon results-oriented
management acting on sound and timely business advice. Successful, growth-oriented law
firms don’t just “happen.” The professionals at Israeloff, Trattner & Co. know how to ask the
right questions, while providing creativity and energy in helping you deal with the issues
that confront your industry, the economy and their impact on your business. Isn’t it time
you made Israeloff, Trattner & Co, part of your team?
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AƩorney AdverƟsing.
6
n
September 2014
n
Nassau Lawyer
Judiciary Night
5:30 p.m. at Domus
Please join the Officers, Directors and
Members of the Association as we
honor the Judges of Nassau County
Pre-Registration Required
$70 per person (NCBA members)
$125 per person (non-members)
You should have received your
invitation in the mail....if not, please
Contact Special Events
(516)747-4070 or events@nassaubar.org
NCBA Sustaining Members
2014 - 2015
Martin P. Abruzzo
Mark E. Alter
Mark A. Annuziata
Ernest T. Bartol
Jack A. Bennardo
Neil R. Cahn
Ralph A. Catalano
Alan W. Clark
Richard D. Collins
James C. Daly
Willard H. DaSilva
Thomas P. Dougherty
Steven J. Eisman
Charo Ezdrin
Marc C. Gann
Frank Giorgio
John J. Giuffre
Hon. Frank A. Gulotta, Jr.
Andrew J. Hirschhorn
Alan B. Hodish
Elena Karabatos
Hon. Susan T. Kluewer
Martha Krisel
Lawrence M. Lally
Donald F. Leistman
Jonathan C. Lerner
Steven G. Leventhal
Shalom S. Maidenbaum
Peter J. Mancuso
Michael R. Martone
Robert A. McDonald
Christopher T. McGrath
Anthony J. Montiglio
Linda G. Nanos
Hon.Michael L. Orenstein
Gary Petropoulos
Susan Katz Richman
Leonard L. Rivkin
Marc H. Schneider
Jane P. Shrenkel
Ira S. Slavit
Hon. Arthur D. Spatt
Sanford Strenger
M. David Tell
Kathleen Wright
NCBA Speakers Bureau Out and About
The NCBA expresses its appreciation to the following members who have
responded to the call of the Speakers Bureau. These volunteers go out to various venues to speak to Nassau County residents on a variety of legal topics
and spread the word about NCBA programs and services available to the
public free of charge.
Neil Ackerman
Michael Adges
Andrea Brodie
Christine Cione
Honorable Joseph Covello
Christopher J. DelliCarpini
Shelly Eaton
Annilus Gilot
Adrienne Hausch
Shaun Hogan
Mickhaila Jasmin
David Lira
Cory Morris
Wanda Selinger
Rita Stein
Irene Villacci
If you would like to offer your speaking services for community groups,
contact Caryle Katz at ckatz@nassaubar.org to enlist in the NCBA Speakers
Bureau.
Become an NCBA Sustaining Member ...
Here’s Why!
By Valerie Zurblis
Every year thousands of attorneys
renew their membership in the Nassau
County Bar Association. In addition to
dues, some members, who strongly
value NCBA's mission and contributions for the betterment of the legal profession, show their appreciation by taking the further step to become a
Sustaining Member.
A recent survey found that the reasons for the added support vary widely,
but in most cases it boils down to personal convictions as well as the services, benefits and long time rewards of
membership. Following are some of the
responses.
Professional Growth
“The Nassau County Bar Association
has been my professional center for networking, continuing legal education,
and community relations for over 30
years. I am a sustaining member
because of all the professional opportunities the Association provides me.”
– Linda Nanos, Esq., Hempstead.
Member 30 years.
Community Service
“I am proud to belong to an organization that provides its members not
only with wide-ranging services that
benefit their professional careers but
also with the opportunity to participate
in events and programs that benefit
the public at large. In particular, I have
become very involved with the Community Relations and Public Education
Committee, which runs various programs for the Nassau County community, and with the Mock Trial Tournament, which offers high school students a unique and enjoyable experience ‘trying’ cases in the courtrooms of
the Nassau County Supreme Court.”
– Ira S. Slavit, Esq., Levine &
Slavit, PLLC. Member 4 years.
Reciprocation
“I believe it is important to give back
to the profession. Over the years I have
benefitted greatly from the many programs offered by the Association,
thanks to the efforts and generosity of
those who came before me. Now it's my
turn to support those efforts.”
– Tony Montiglio, Esq., Mineola.
Member 36 years.
Personal Development
“The personal and professional relationships that I’ve developed through
my membership help me every day, and
in ways that sometimes surprise me –
and I’m grateful for that.”
– Ralph A. Catalano, Esq.,
Catalano Gallardo & Petropoulos, LLP.
Jericho. Member 26 years.
In Lieu of Presence
“It’s interesting, because I have
never really thought about why I pay to
be a sustaining member before. I guess
it’s because I live on Long Island and
feel like it’s my way of supporting the
efforts of my local Bar Association. I
have always intended to become a
more active member of the NCBA, but
because my office is located in New
York City and due to other commitments and time constraints, I have
been unable to participate more. Being
a sustaining member is my way of
financially contributing to the organization, where I have been unable to do so
with my time.”
– Johnathan C. Lerner, Esq. ,
Lerner, Arnold & Winston, LLP,
Member 7 years.
Salute to History
“I have been a member of the Nassau
County Bar Association for 64 years
and could not be more proud of the
organization”. – Leonard Rivkin (ret)
Justice System Protection
“The Nassau County Bar Association
is a preeminent Bar Association with a
long distinguished history representing
the highest professional excellence,
integrity and ethics in safeguarding our
civil justice system and our clients’
rights to life, liberty and the pursuit of
happiness.”
– Alan W. Clark, Esq., The Law
Firm of Alan W. Clark & Associates,
LLC. Member 32 years.
For the Future
“I am a Sustaining Member of the
NCBA to ensure our Association's continued existence – with Domus, to serve
our profession, community, and the
public at large.”
– Susan Katz Richman, Attorney in
Chief, Nassau County District Court
Law Department. Past President and
Member 33 years.
For more information on how you
can become a Sustaining Member,
contact the NCBA Membership
Department, 516-747-4070 or email
info@nassaubar.org.
Nassau Lawyer
n
September 2014
n
7
Independence Bank v. Valentine:
Placing Limits On CPLR 3408 Settlement Conferences
In Commercial Mortgage Foreclosure Actions
It is by now well-documented that ed for mandatory settlement conferone of the many consequences of the ences in certain residential foreclosure
subprime mortgage crisis was a sub- actions. But it was fairly limited in
stantial increase in mortgage foreclo- scope – it applied only to those foreclosure actions on both residential and sure actions involving high cost home
loans or subprime or nontracommercial property. New
ditional home loans.1
York was one of the leading
states to respond to the subIn November 2009, as the
stantial increase in mortgage
mortgage foreclosure crisis
foreclosure actions by enactworsened, the New York
ing legislation aimed at
State
Legislature
took
addressing the catastrophic
action again and amended
foreclosure situation with
CPLR 3408 by broadening
which our courts were faced
the statute’s applicability
in the wake of the crisis.
such that the statute applied
Only now, six years after
to “any residential foreclothe markets crashed in 2008,
sure action involving a home
is litigation interpreting the
loan as such term is defined
many legislative enactments
in section thirteen hundred
Christopher A.
which were passed by the
four of the real property
Gorman
New York State Legislature
actions and proceedings law,
in response to the mortgage foreclo- in which the defendant is a resident of
sure crisis starting to wind its way the property subject to foreclosure.”2
through the courts.
One issue that remained unclear
One of the most important statutes until recently was the scope of CPLR
enacted by the New York State 3408. As commercial practitioners are
Legislature in response to the mort- well aware, in today’s day and age,
gage foreclosure crisis was the when a small to medium sized busiSubprime Residential Loan and ness seeks a loan, invariably the prinForeclosure Laws. This law enacted, cipals of the company must provide the
among other statutes, CPLR 3408. The lender with additional security by
original version of CPLR 3408 provid- signing a guaranty and, in many
instances, using their personal residences as collateral to secure the loan.
In Independence Bank v. Valentine,3
the Appellate Division, Second
Department was required to determine
whether CPLR 3408 applied in a circumstance where there was a default
on a mortgage, a guaranty was given to
secure a business loan, and a foreclosure action was commenced to foreclose on the guarantor’s personal residence. The court answered this question in the negative in Valentine,
thereby making clear the limited reach
that CPLR 3408 has in the context of
foreclosure actions that involve an
underlying transaction which was primarily of a commercial nature. But, as
detailed below, the decision may have
much broader implications – both for
the courts and the Bar representing
banks and other lenders in commercial
loan transactions.
Independence Bank v. Valentine
In Independence Bank v. Valentine,
the plaintiff, Independence Bank,
entered into a commercial term loan
agreement with Roz-Valt Corp. (“RozValt”) in the principal sum of $230,000.
The loan was memorialized by a promissory note, which was executed by
Roz-Valt’s
president,
Roselyn
Valentine (“Valentine”). According to
the loan agreement, “the primary purpose of the loan was to purchase
machinery and equipment, and to fund
other various start-up, closing, and
construction costs associated with
fashioning a ‘Quizno’s Sub’ shop in
leasehold
premises
located
in
Brooklyn.”4 As part of the transaction,
Valentine “executed a personal guaranty for the loan, and, as collateral
security for her obligation under the
guaranty, executed and delivered a
mortgage to the plaintiff in the amount
of $230,000, giving the plaintiff a subordinate lien on her primary residence
located in Queens.”5
Roz-Valt defaulted on the loan and
Valentine failed to honor her personal
guaranty. Independence Bank commenced an action to foreclose on the
mortgage. In her defense, Valentine
did not dispute the validity of the loan
documents or the default. Instead,
Valentine’s principal affirmative
defense in the action was that she was
entitled to a mandatory settlement
conference pursuant to CPLR 3408
because the property was a one to four
See CPLR 3408, Page 20
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8
n
September 2014
n
Nassau Lawyer
IN BRIEF
Member Activities
New York not-for-profit corporation
that assists children with special needs
The Nassau Lawyer welcomes submisparticipate in the sport of lacrosse. Mr.
sions to the IN BRIEF column announcing
Ward played college lacrosse at Yale
news, events and recent accomplishments
University.
of its members. Due to space limitations,
Robert J. Kurre of Kurre Schneps
submissions may be edited for length and
LLP was a featured speaker on
content.
“Advanced Medicaid: Spousal Refusal
Rosalia Baiamonte, a
Lawsuits, Fair Hearings and
partner
at
Gassman
Article 78 Proceedings, and
Baiamonte Betts, P.C., was
Retirement Funds” at the
named Chair of the Bar
Summer meeting of the Elder
Association’s
Judiciary
Law Section of the New York
Committee. Ms. Baiamonte
State Bar Association. Mr.
was elected the Financial
Kurre is a former chair of the
Officer of the State Bar
Bar Association’s Elder Law,
Association’s Family Law
Social Services and Health
Section. Stephen Gassman of
Advocacy Committee and certhe Firm will be giving an
tified as an elder law attorupcoming presentation on
ney by the National Elder
“Cross-Examination” at the
Law Foundation.
American Bar Association’s Hon. Stephen L.
Lee Rosenberg, a partner
Family Law Section in Stowe,
Ukeiley
at Saltzman Chetkof &
Vermont.
Rosenberg LLP, was appointTouro Law Dean Patricia
ed Editor-in-Chief of the New York
Salkin has been appointed co-chair of State Bar Association’s “Family Law
the New York State Bar Association’s Review.” Mr. Rosenberg is the immediCommittee on Legal Education and ate past-Chair of the Nassau County
Admission to the Bar. Dean Salkin was Bar Association’s Matrimonial Law
named the first female dean of Touro Committee and has previously served
Law Center in 2012 and serves as the on its Board of Directors.
fifth dean in the school’s history. She is
Mark E. Alter, senior partner in the
also a member of the Committee on Law Offices of Mark E. Alter, was nomLegal Education and Admission to the inated to the Super Lawyers List for the
Bar and a member of the City Bar’s second consecutive year. Mr. Alter was
recently completed Task Force on New selected in the category of Personal
Lawyers in a Changing Profession.
Injury Litigation (Plaintiffs). He earned
Jon Ward, a partner with Sahn his Juris Doctor from the Touro College
Ward Coschignano & Baker, PLLC, was Jacob D. Fuchsberg Law Center and is
recently appointed to the Board of a former Police Officer.
Directors of Challenger Athletics, Inc., a
Penny B. Kassel of The Law Offices
of Penny B. Kassel, P.C., will be presenting a seminar for the LIU Tax and
Accounting Institute on “Tax Issues of
an Elder Law Practice”, including capital gains and gift taxes, on September
18th at Long Island University, C.W.
Post campus.
New Partners, Of Counsel
and Associates
Michelle
Faraci
has
joined
L’Abbate, Balkan, Colavita, & Contini,
LLP as an associate in its Employment
Practices group. Ms. Faraci was previously a Deputy County Attorney in the
Labor and Employment Bureau of the
Nassau County Attorney's Office.
Julie A. Kolm has joined Lee A.
Schwartz, PLLC as an associate in the
firm’s Corporate and Real Estate
Departments.
New Firms and Locations
The Law Office of Beth Polner
Abrahams has changed its name to the
Polner Abrahams Law Firm and has
moved to 350 Old Country Road, Suite
101, Garden City. The firm concentrates in elder law, estate planning,
guardianship and special needs law.
Richard N. Tannenbaum, who practices matrimonial and family law, relocated his offices to Suite 700 at 666 Old
Country Road, Garden City.
MontanaroLaw, P.C. has opened its
offices at 100 Broadway, Suite 203
Massapequa. The firm provides both litigation and transactional services.
The In Brief section is compiled by the
Honorable Stephen L. Ukeiley, Suffolk
County District Court and Acting County
Court Judge. Judge Ukeiley presides in
Suffolk County’s Human Trafficking Court
and is an adjunct professor at both the
Touro College Jacob D. Fuchsberg Law
Center and the New York Institute of
Technology. He is also the author of The
Bench Guide to Landlord & Tenant Disputes
in New York.©
PLEASE E-MAIL YOUR SUBMISSIONS TO
nassaulawyer@nassaubar.org with subject
line: IN BRIEF
NCBA New Members
We welcome the following
new members
Attorneys
Joshua E Bienstock
Lauren Doddato
Cheryl Ann Max
Carol Eileen Ryder
Marc Sabow
Students
Ahmad Abdelaziz
Avigail Goldglancz
Anthony J. Ienna
Alexa Lofaro
Rebecca Lowry
Melanie J. Rosen
Ketienne Telemaque
NCBA Committee Meeting Calendar • Sept. 9 - Oct. 14, 2014
Questions? Contact Stephanie Pagano (516) 747-4070 spagano@nassaubar.org
Please Note: Committee Meetings are for NCBA Members
Tuesday, September 9
Labor & Employment
12:30 p.m.
Jeffrey Schlossberg
Wednesday, September 10
Alternative Dispute Resolution
8:00 a.m.
Betty Donlon
Access to Justice
12:30 p.m.
Steven Leventhal
Commercial Litigation
12:30 p.m.
Kevin Schlosser
Plaintiff’s Round Table
6:00 p.m.
Terrence Tarver
Veterans & Military Law
12:30 p.m.
Ed Cunningham
Women In The Law
12:30 p.m.
Barbara Gervase/Amy Hsu
Construction Law
12:30 p.m.
Vincent Pallaci
Criminal Court Law & Procedure
12:30 p.m.
Brian Griffin
Young Lawyers
6:30 p.m.
Andrea Brodie
Thursday, September 11
Publications Committee
12:45 p.m.
Chris DelliCarpini
Civil Rights
12:30 p.m.
Jason Starr
Surrogate’s Court Estates & Trusts
5:30 p.m.
John Graffeo/Lori Sullivan
Education Law
12:30 p.m.
Douglas Libby
Matrimonial Law
5:30 p.m.
John DiMascio Jr.
Friday, September 19
Friday, September 12
Technology & Practice Management
8:30 a.m.
John Whiteman
Tax Law
12:30 p.m.
Noelle Geiger
Attorney/Accountants
12:30 p.m.
Neil Katz
Community Relations & Public
Education
12:45 p.m.
Adam D’Antonio
Tuesday, October 7
Real Property Law
12:30 p.m.
Kevin McDonough/Mary Mongioi
Criminal Court Law & Procedure
12:30 p.m.
Brian Griffin
Ethics Committee
5:30 p.m.
Omid Zareh
Senior Attorneys
12:30 p.m.
Charles Lapp III
Wednesday, October 8
Alternative Dispute Resolution
12:30 p.m.
Betty Donlon
Women In The Law
12:30 p.m.
Barbara Gervase/Amy Hsu
Elder Law, Social Services & Health
Advocacy
12:30 p.m.
Moriah Adamo/Paul Hyl
District Court
12:30 p.m.
Mitchell Hirsch
Matrimonial Law
5:30 p.m.
John DiMascio Jr.
Technology & Practice Management
8:30 a.m.
John Whiteman
Thursday, October 2
Hospital & Health Law
8:30 a.m.
Geoffrey Kaiser/Kevin Mulry
Tuesday, October 14
Labor & Employment
12:30 p.m.
Jeffrey Schlossberg
* Committee Chairs and Co-Chairs denoted in Italic.
Nassau Lawyer
n
September 2014
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9
Avoiding the Hazards From an Unscrupulous or
Negligent Qualified Intermediary in a 1031 Exchange
Your client wants to sell commercial
real estate and purchase a new building.
Your client locates a purchaser. You
review leases, mortgages and inquire
about liens. The contract is prepared,
sent, and signed. The closing is scheduled. What about tax issues? Will your
client have to pay capital gains tax?
Generally, your client will be responsible for capital gains tax for the difference between the purchase and sale
price of the property. However, one
method to defer the capital gains tax is
through a like-kind transaction, commonly referred to as a “1031 Exchange”.
1031 Exchanges and
the Qualified Intermediary
The 1031 Exchange defers payment
of capital gains tax since the taxpayer is
simply exchanging one asset with
another “like” asset. Pursuant to 26
USC § 1031, the taxpayer recognizes no
gain or loss “on the exchange of property held for productive use in a trade, or
business or for investment if such property is exchanged solely for property of
like kind which is to be held either for
productive use in trade or business or
for investment.”1
With the exception of stocks, bonds,
securities, evidence of debt, partnership
interests, certificates of trust, or choses
in action,2 a taxpayer may use a 1031
Exchange for most types of real estate.
A taxpayer may use a 1031 Exchange
for the sale and subsequent purchase of
retail stores, office space, vacant or agricultural land, and rental housing.
Since there is no tax for an exchange
of property of equal value, your client
must never take possession of the
money from the sale of the building.
Receipt of money denotes a sale.
Therefore, funds from the transaction
must be immediately deposited in a
“safe harbor” with an accommodator or
a qualified intermediary (QI).
A QI is a person or entity – not the
taxpayer or one closely related to the
taxpayer – who “[e]nters into a written
agreement with the taxpayer ... and, as
required by the exchange agreement,
acquires the relinquished property from
the taxpayer, transfers the relinquished
property, acquires the replacement
property, and transfers the replacement
property to the taxpayer.”3 Generally,
the attorney representing the client
must not act as a QI.4
The client must strictly comply with
the statute to avoid paying tax.5 There
is a 45-day period from the date of the
closing to identify a replacement property.6 Identification consists of written
notification to the QI listing the address
Wrongful Conviction or Wrongful Exoneration?
Something is Happening, and it
is Affecting Municipal Budgets
Wrongful conviction cases have been high as $1,000,000 per year of incarcerin the headlines with increased frequen- ation, as was the case in the recent setcy of late. This is not just increased tlement by the City of New York of the
reporting; overturned convictions are on widely publicized “Central Park Five”
the rise. According to the National case. That case settled in June 2014 for
Registry of Exonerations, there were 50 $41,000,000.
exonerations in the first half of 2014,
Regrettably, Nassau County has not
which is on pace to be record breaking been spared from this trend. On April
and exceed the 91 exonera17, 2014, a federal jury in the
tions reported for 2013. The
Eastern District of New York
defense bar and a preponderawarded John Restivo and
ance of the media attribute
Dennis Halstead $18,000,000
this to a flawed criminal jus($36,000,000 total award)
tice system that relies too
each for their time served as
heavily on eyewitness identia result of convictions that
fications. Many prosecutors
were subsequently overand those within the law
turned. Restivo and Halstead
were convicted of the 1984
enforcement
community
rape and murder of a teenage
believe that the business of
Lynbrook
girl,
Theresa
overturning convictions has
Fusco. The victim’s family
gone too far and that persons
Shneur Nathan and attorneys representing
who are in fact guilty people
Nassau County in the civil
are being released on the
coattails of the truly innocent. suit maintain that the men convicted
Whichever side of the debate you may were in fact the culprits of this heinous
be on, one thing is certain: this uptick in crime, despite the existence of DNA eviexonerations – and the civil lawsuits dence showing that another, unprosethat follow – is putting an increased cuted individual was involved. The convictions of Restivo, Halstead, and a
strain on state and municipal budgets.
A recent Wall Street Journal analy- third former co-defendant were thrown
sis of 15 wrongful conviction lawsuits out only after they had each spent 18
since 2003 found that the average civil years in prison (note: the jury awarded
suit payout was $305,000 per year of the defendants $1,000,000 per year of
incarceration in cases where the plain- incarceration, respectively). While
tiff (in the civil suit; i.e., the wrongfully Nassau County is appealing this verconvicted defendant) had been incarcer- dict, it and other local governments
ated for five years or more.1 The current
See BUDGETS, Page 20
working valuation may in fact be as
and legal description of the potential
The Danger of the
replacement property. The client must
Unscrupulous Intermediary
close on the replacement
Unlike attorneys, QIs are
property within 180 days
not regulated by the State of
after the sale of the relinNew York. Although the
quished property. At the closDodd-Frank Wall Street
ing, the QI delivers the funds
Reform
and
Consumer
while the client receives the
14 attempted to
Protection
Act
deed. Hence, the exchange of
address this issue, no subseproperty without receipt of
quent regulation was recommoney avoids capital gains
mended under the Act.15
tax.
Presently, a QI can comminMost individuals assume
gle and use the escrow funds
that a QI operates like an
deposited by a client without
attorney using a client trust
violating any laws.
Michael A.
account. Under the Rules of
Although instances involvProfessional Conduct, an
Markowitz
ing a QI’s payment default
attorney must identify and
preserve funds belonging to another per- are infrequent,16 a client’s loss may be
son.7 The funds must be placed in a sep- in the millions. For example, in 2002,
arate account.8 The attorney must the Los Angeles District Attorney’s
maintain complete records of all funds Office convicted Linda Ableman for misand securities.9 The attorney must appropriating nearly $3 million as a QI
promptly pay or deliver the funds to the through her companies CitiEscrow and
client or third person.10 A lawyer that 1031 Exchange.17 In 2003, Nation-Wide
fails to maintain proper records or com- Exchange Services, Inc. filed for bankmingles escrow funds is subject to disci- ruptcy after losing millions held as a
plinary proceedings.11 It is a crime for a QI.18 In 2007, the 1031 Tax Group, LLC
lawyer to convert the escrow funds.12 filed for bankruptcy in New York, owing
The New York Lawyers Fund for Client more than $150 million to various credProtection may reimburse an individual itors, including many individuals that
that has escrow funds converted by a used the company as a QI.19
lawyer.13
See INTERMEDIARY, Page 21
10
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September 2014
n
Nassau Lawyer
PRO BONO ATTORNEY OF THE MONTH
By ELLEN KRAKOW
Nassau Suffolk Law Services’ Volunteer
Lawyers Project (VLP) and the Nassau County Bar
Association are very pleased to honor Scott Stone
as Pro Bono Attorney of the Month. Stone is a frequent participant in the landlord/tenant courtbased Attorney of the Day Project which operates
under the direction of Law Services’ Staff Attorney,
Roberta Scoll and the VLP. Stone has represented
62 clients facing eviction from their homes since
joining the Volunteer Lawyers Project in 2012. His
level of generosity and constant dedication to landlord/tenant pro bono work makes him most deserving of this honor.
VLP’s Attorney of the Day Project provides
direct pro bono representation to low income tenants facing eviction in nonpayment or holdover proceedings. The Project allows attorneys to volunteer
just for the day if they choose, to defend or forestall
evictions in the hopes of preserving housing or giving the tenants ample time to secure alternative
housing and avoid homelessness or shelter placement. Mr. Stone is an active participant in this
effort and as pro bono counsel, he is usually able to
dismiss the eviction proceeding or negotiate a settlement stipulation that either allows the client’s
tenancy to continue or, at a minium, gives them
additional time to look for alternative housing
before the tenancy ends. This critical legal service
Scott Stone
spares the client and their families the trauma and
despair of homelessness.
Scott Stone obtained his undergraduate degree
from Syracuse University and then went on to study
law at Hofstra Law School. He was raised in West
Hempstead and now lives with his wife, Elyse, and
their two young daughters, Maya and Dana, in
Bellmore New York. At The Law Offices of Scott
Stone PLLC, located in East Rockaway, N.Y. Mr.
Stone maintains a general practice, a substantial portion of which involves business transactions and corporate representation, commercial landlord/tenant
work (usually landlord representation), real estate
and tax certiorari. He also serves as Special Counsel
to the City of Glen Cove and the Incorporated Village
of Farmingdale for Tax Certiorari.
Asked why he devotes so much of his time to pro
bono work Stone responded, “ It’s a way to give
back, and I enjoy being able to do that.” Roberta
Scoll nominated Mr. Stone for the honor of
Attorney of the Month and believes strongly that
attorneys like Stone are the backbone of the
Project. She comments, “His dedication to the
Project and ability to assist so many clients in landlord tenant cases is what contributes to the
Project’s continued success. We are so grateful to
him and the many other generous attorneys who
give of their time every day.”
In light of the continuous, outstanding work
Scott Stone has done for the Volunteer Lawyers
Project, we are very pleased to recognize him as the
Pro Bono Attorney of the Month.
Ellen Krakow, Esq is a Pro Bono Project Coordinator for
Nassau Suffolk Law Services.
The Volunteer Lawyers Project is a joint effort of
Nassau Suffolk Law Services and the Nassau
County Bar Association, who, for many years, have
joined resources toward the goal of providing free
legal assistance to Nassau County residents who are
dealing with economic hardship. Nassau Suffolk
Law Services is a non-profit civil legal services
agency, receiving federal ,state and local funding to
provide free legal assistance to Long Islanders, primarily in the areas of benefits advocacy, homelessness prevention (foreclosure and eviction defense),
access to health care, and services to special populations such as domestic violence victims, disabled,
and adult home resident. The provision of free services is prioritized based on financial need and funding is often inadequate in these areas. Furthermore,
there is no funding for the general provision of matrimonial or bankruptcy representation, therefore the
demand for pro bono assistance is the greatest in
these areas. If you would like to volunteer, please contact Susan Biller, Esq. 516-292-8100; 631-232-2400.
We Make
Bonding Simple
Experience,
Competence,
Results.
Call us at
1-877-266-3798
or visit us at www.jaspersurety.com
Nassau Lawyer
Blurred Lines: Employees
Preparing to Compete
a manufacturer of rotating and stationary blades used in steam and gas turbines in Ithaca and Owego, New York,
accused its former employees Berry and
Hall of scheming to compete unfairly by
appropriating Stork’s confidential
information and recruiting its employees to a competitive manufacturing
facility that Berry and Hall planned to
in
nearby
Dryden.
establish
Accordingly, Stork sought injunctive
relief to prohibit Berry and Hall from
taking any steps to establish a competing enterprise during the term of their
post-employment covenants, which prohibited them from competing with
Before an Employee Leaves
Stork anywhere in the United States.
The majority of case law involving
In denying Stork’s motion for injuncpreparatory activities involves employ- tive relief, the court found no evidence
ees who are about to depart their cur- that Berry or Hall, in planning their
rent employment for greener pastures, competing facility in Dryden in the
but have not yet moved on. In
months after they departed
this context, the case law is
Stork, had made use of
clear regarding the types of
Stork’s time, facilities or propreparatory activity in which
prietary secrets in violation
employees may lawfully
of their covenants not to comengage:
pete with Stork in the United
“Although an employee
States. This despite the fact
may, of course, make prepathat Hall, just prior to his
rations to compete with his
departure from Stork, sent to
employer while still working
his personal email address
for the employer, he or she
sales information relating to
may not do so at the employoperations of Stork’s Dutch
er’s expense, and may not use
affiliate, which the court
Steven N. Davi
the employer’s resources,
held would not be useful to
time, facilities, or confidenBerry or Hall in the United States martial information.”1
ket.12 A contrary holding, the court reaIndeed, New York case law is rea- soned, “would have [had] the effect of
sonably consistent in separating lawful extending the term of the covenant for
preparation from unlawful competition an additional year – the length of time
prior to the end of the employment rela- which defendants indicate will be
tionship. This line is definitively required to make the proposed competcrossed, for instance, when an employee ing facility operational.”13
copies his employer’s business records
A somewhat different result was
for his own use;2 charges expenses to reached in JA Apparel Corp. v. Abboud,
his employer that were incurred while a federal district court decision from
acting in furtherance of his own self- 2008.14 In Abboud, defendant Joseph
interest;3 actively diverts his employ- Abboud engaged in certain activities
er’s business for his own personal bene- with an eye toward launching his new
fit or the benefit of others;4 or conspires “jaz” menswear line after the expiration
to bring about the mass resignation of of his non-compete agreement with his
his employer’s key employees.5
former employer JA Apparel. JA
On the other hand, New York courts Apparel claimed Abboud’s activities
have deemed as merely preparatory, violated the terms of his non-compete
and thus, permissible, more benign agreement, by:
activities occurring prior to the end of
1. acquiring a shirt factory, which
employment. These examples include
manufactured shirts that were sold
incorporating a new competing busito Nordstrom’s, in direct competition
ness;6 negotiating for, and purchasing,
with JA Apparel;
a competing business;7 forming and
2. agreeing on the essential terms
joining a new competitor prior to leavof a business relationship with a
ing the old employer;8 negotiating a
prominent design company in conlease and purchasing machinery or supnection with the new “jaz” line;
plies for the new business;9 or consult3. agreeing on specific deal points
ing with an attorney, preparing a cerfor the purchase of a company that
tificate of incorporation and stockholdproduced and imported sportswear
ers agreement, opening a corporate
and knitwear;
bank account, and preparing letterhead
4. negotiating and/or discussing
for the new business.10
licensing agreements with other companies for the production of coats and
After an Employee Leaves
outerwear for ties;
The extent to which a former
5. negotiating a consulting agreeemployee may engage in preparatory
ment with Lord & Taylor; and
activity during the restricted period of a
6. generally remaining an owner,
non-compete agreement is a topic that
director, and officer of another comhas not garnered a lot of attention in
pany, which either engaged in or proNew York case law. Indeed, there are
posed to engage in business competirelatively few New York cases that
tive with JA Apparel.
have analyzed the issue. The ones that
Abboud countered that the “mere
have, however, provide a clear lesson: planning to compete during a parties’
the terms of the restrictive covenant restricted period, as opposed to engagwill control in determining whether an ing in commercial activity, is not proemployee’s preparatory activity crosses hibited where the parties’ restrictive
the line to outright unfair competition.
covenant does not prohibit such activiFor instance, in Stork H & E Turbo
See EMPLOYEES, Page 22
Blading, Inc. v. Berry,11 plaintiff Stork,
During the term of a post-employment non-competition covenant, where
is the line separating lawful non-competitive preparatory planning to compete and concrete direct competition?
There is no bright-line standard.
Instead, whether actions taken during
the restricted period of a non-compete
agreement constitute permissible
preparatory planning or unlawful
direct competition is largely fact-driven. This article discusses some of the
more recent cases in New York – of
which there are relatively few – and
elsewhere on the subject.
n
September 2014
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12
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Nassau Lawyer
Fixing a Broken Trust: Local Innovation = National Recognition
For centuries, connoisseurs of fine
wines have cherished the act of decanting: the process of pouring the good
wine into a new vessel, while leaving
the dross behind. In recent years, the
same practice of decanting is now available in many states – including New
York – as a means of refining, rejuvenating and repairing existing, irrevocable trusts. A recent decision
in Nassau County highlights
the power of decanting for
dealing with changed circumstances, for optimizing tax
benefits, and for facilitating
effective trust administration.
nism, replete with undesired costs and
publicity. As a result, the trust and
estates bar – along with state legislatures – developed the concept of decanting: the mechanism whereby the
trustee of an “existing” irrevocable trust
distributes all or part of the trust principal to another “appointed” irrevocable
trust.
New York’s First-in-theNation Decanting Statute
In 1992, New York became
the first state to enact
decanting legislation, contained in the Estates Powers
& Trusts Law,2 affirming a
trustee’s absolute power to
Amending Estate Planning
invade principal. The statute
Documents through
explicitly stated that the disDecanting
cretion to decant a trust is
the exercise of a special
Because of changing cirLisa Knee
power of appointment, outcumstances, it is not uncomlining the process and
mon for estate planning documents to no longer accomplish their requirements for a transfer and identiintended purposes. After all, state and fying the conditions under which a
federal laws do change – repeatedly, transfer could be made. Of course, a
and a family’s economic and social cir- trust cannot be decanted if the trust
instrument explicitly prohibits decanticumstances can alter.
In recent years, there has been a ng or if there is substantial evidence
sharp increase in the number of trust that the grantor opposes decanting of
agreements that require some sort of the trust.
Under the statute, a trustee having
repair after they have become irrevocable. In some cases, the alteration is unlimited discretion to invade trust
based on the growing popularity of long- principal has the power to decant from
term trusts, such as dynasty trusts, an original trust to a new trust.3
that are no longer suited to current con- However, it required a legislative
ditions. In a similar vein, with the amendment to the statute in 2011,
advent of federal recognition for same- allowing those trustees with a limited
sex marriage, many same-sex couples power to invade principal also to be able
had already created separate trusts, or to appoint assets from an irrevocable
become the co-trustee of each other’s trust into a new trust with different
trusts, when they can now engage in terms.4
marital trust planning.
Even under the liberalized amendUnder the common law of many ments to the statute, decanting a trust
states as well as the provisions of the cannot reduce, modify or eliminate a
Uniform Trust Code (in 2014, adopted beneficiary’s current right to receive
by more than one-half of the states), income or principal, such as a right of
courts may modify a noncharitable withdrawal. However, an exception was
irrevocable trust, “upon consent of the established in the statute on behalf of a
settlor and all beneficiaries, even if the supplemental needs trust for a beneficimodification or termination is inconsis- ary with a severe disability.5
tent with a material purpose of the
The Kroll Decision
trust.”1
The first decision in New York under
In many situations, trust modification through the courts may be an the amended decanting statute, issued
impractical and unattractive mecha- by the Surrogate’s Court of Nassau
County,6 is a stark reminder of the
power of decanting as well as of the
need to follow statutory procedures and
requirements precisely. In 1992, Moses
Ratowsky created a “minor’s trust”7 for
the benefit of his then-19-month-old
grandson, Daniel. The trust provided
for mandatory income distributions to
Daniel, who also had the power to withdraw the entirety of the trust principal
at age 21. After the trust was created,
Daniel developed severe disabilities and
became the recipient of Medicaid and
SSI benefits.
Just prior to Daniel’s twenty-first
birthday, on May 2, 2012, the trustees
decanted the trust assets into a new
third-party supplemental needs trust
(SNT) that would avoid disqualifying
Daniel from receiving Medicaid and SSI
benefits. The decanting would, under
the amended EPTL, ordinarily become
effective thirty days later (May 31,
2012). Since that would occur after
Daniel turned age twenty-one (May 7,
2012), it could be viewed as an elimination of his “current right” to receive
income or principal.
However, the terms of the trust permitted Daniel’s father to consent to the
decanting on his son’s behalf, so that
the decanting could become effective
immediately. Objections were interposed in a court proceeding for approval
of the decanting to the new SNT – not
by the guardian ad litem appointed for
Daniel, but by the New York Attorney
General on behalf of the State
Department of Health, New York’s
Medicaid program administrator.
Fortunately, the Surrogate’s Court
for Nassau County in Kroll approved
the decanting on the grounds that the
decanting occurred, and was effective
(as a result of Daniel’s father consent),
prior to Daniel’s twenty-first birthday,
when he obtained vested rights in the
trust.8
The Attorney General also argued
that a self-settled SNT must contain a
payback provision, directing that - at
Daniel’s death – any remaining trust
assets must reimburse Medicaid for
assistance given to Daniel during his
lifetime, rather than going to Daniel’s
beneficiaries. The court rejected that
argument as well, finding that the new
SNT was not a self-settled trust and
was not required to have a “payback”
provision.9
Gift Tax Implications
The good news from Kroll is the flexibility that the legislative amendments
provide to decanting trusts in New
York, but it does raise an interesting
federal tax consideration.
In funding his grandson’s “minor’s
trust” in 1992, Mr. Ratowsky probably
relied on an exception to the rule that
annual exclusion gifts must be gifts of a
present interest. Even though annual
exclusion gifts are generally not applicable to gifts to a trust, they are permitted for those trusts – such as the
“minor’s trusts” created for Daniel –
where the beneficiary may withdraw
the entirety of the fund’s assets upon
attaining 21.
Unfortunately, the trust at issue in
Kroll ceased to be a minor’s trust when
the trustees decanted the principal to a
trust that eliminated Daniel’s withdrawal power. As a result, the IRS could argue
that Mr. Ratowsky’s 1992 gifts were no
longer sheltered by his annual gift tax
exclusion. Instead, those gifts that funded the trust would now be subject to Mr.
Ratowsky’s lifetime gift exemption
amount and to potential taxation.
Going Forward
The 2011 legislative amendments to
New York’s decanting law provide a
major benefit by bringing increased
clarity to trust decanting. As a result, it
is becoming easier – for clients and
trust professionals – to “tinker” with
hitherto-irrevocable trusts. The bad
news, as the Kroll decision illustrates,
is that any decanting of trusts must
precisely follow the new procedures.
Lisa Knee, CPA, J.D.,LL.M., is a tax partner in
the Melville office of EisnerAmper LLP.
1. Uniform Trust Code § 411.
2. EPTL §10-6.6.
3. EPTL §10-6.6(b).
4. EPTL §10-6.6(n).
5. EPTL §7-1.12.
6. In re Kroll, 971 N.Y.S.2d 863 (Surr. Ct. Nassau
Co., 2013).
7. IRC sec. 2503(c).
8. In re Kroll, 971 N.Y.S.2d 863 (Surr. Ct. Nassau
Co., 2013).
9. EPTL §10-6.6(j).
Restorative Justice in Criminal Sentencing
Nassau Academy of Law 3 credit CLE
Wednesday, September 17th
Mary found herself in a no-win situation. The
Kenyan native had been convicted of stealing from a
micro financing group of 30 women from her village
and was serving her two-year sentence in deplorable
conditions in Langata Women's Prison, the only maximum security prison for women in Kenya. The 43year-old mother of nine was now scheduled to be discharged, but awaiting her on the outside was her
husband as well as the community of women who
were all threatening to kill her as soon as she got out.
“Self help justice” is common place in this developing
country.
Fortunately, Nassau County Bar Association member Susan Slavin, who had temporarily left the practice of law to become a lay missionary in Nairobi, had
started the Restorative Justice Prison Project with a
knowledgeable group of Kenyan professionals. Mary
was their first client. Instead of traditional incarceration and retribution, restorative justice engages all
parties -- those who are harmed, the wrongdoers and
their affected communities -- in search of peaceful
solutions that promote reconciliation and shared
responsibility. By meeting with the community and
Mary's family prior to her release, Slavin’s committee
was able to facilitate healing and Mary's safe return
to live in her community.
Now members can learn more about restorative
justice and how it impacts the world, the country, and
Long Island at a unique Academy of Law program,
From Langata to Long Island: Restorative Justice in
Criminal Sentencing, to be held on September 17,
5:50 - 8:30 p.m. Attendees will hear firsthand
accounts, which sparked the idea for the 3 credit CLE,
of Susan Slavin's attempts to implement restorative
justice working with incarcerated women in Africa.
Paul Tullis, author of the New York Times article,
"Can Forgiveness Play a Role in Criminal Justice?",
will discuss how restorative justice is changing legal
systems in the U.S.
Delving into how restorative justice plays into
criminal sentencing in Nassau and Suffolk counties
will be a panel that includes Hon. Elaine J. Stack,
J.H.O., Family Court, Nassau; Hon. Fernando
Camacho, Court of Claims and Acting Supreme Court
Justice, Suffolk; Daniel Russo, Esq., Collins
McDonald & Gann; Nassau County Youth Court
ADAs Kara Kaplan and Arienne Reyer, and Jack
Evans, Esq., Center for Restorative Practices (Hope
for Youth), Touro Law Center.
Reservations may be made online at
nassaubar.org/calendar or contact the Academy, 7474464. There is no charge for Domus Circle Scholars,
but reservations are required.
Mary (r), her sisters and children pose with Susan Slavin,
who helped her leave prison and live peacefully on her
shamba (farm) in Kenya, Africa.
Nassau Lawyer
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America’s Longest Running Public Service Legal Talk Show
For twenty-five (25) years, NCBA
member Ken Landau has been hosting
the “Law You Should Know” radio program on WHPC (90.3 FM). WHPC is a
not for profit station,1 and the show is
presented as a public service, to educate
listeners about the law. Each week, a
guest speaker is interviewed by
Landau, informing listeners about a
particular legal topic. To date, approximately 1,000 programs have been produced – an average of 40 per year. First
airing in October of 1989,
“Law You Should Know”
appears to be the longest
running public service
legal talk show in the
United States.2
Most of the show’s
guests have been attorneys, and they have included judges, prosecutors,
law school deans and professors, authors, and bar association
presidents. The recent interview of NCBA
President, John McEntee will be aired
three times during the show’s normal
weekly schedule: Monday, September 22
at 4 p.m., Tuesday, September 23 at 1
p.m., and Sunday, September 28 at 7 a.m.
on WHPC 90.3 FM radio, or hear it voicestream online on at Nassau Community
College www.ncc.edu/whpc .
Over the years, the show has also
presented experts in other fields that
intersect with the law, such as medicine, engineering, management and
marketing. Although most of the guest
speakers have been from New York,
some have been interviewed over the
telephone from other states, and even
from abroad.
From the inception of the program,
Landau has been its host; but on a
number of shows, he has had a co-host.
Among the most memorable shows, he
stated, were those which were co-hosted
during the early years by his beloved
colleague Neil Shayne.3 He also found
particularly enjoyable a few programs
in which children helped interview
their parents.
Each show is one-half hour in length.
However, certain topics have been divided into two or three successive shows.
Although the primary
intent of the show is to
educate the general public
about the law, two shows
each year are specifically
directed at attorneys, who
can earn Continuing Legal
Education credits through
the Nassau Academy of
Law. The topic of the next
CLE broadcast is The
Rights of Animals. Part one will air
during the week of Sept. 29, and part
two will air during the week of Oct 6.4
When asked how the show came
about, Landau explained that, in 1989,
he was a guest on a business show on
WHPC, being interviewed about related legal issues; and afterwards, he
thought that it would be interesting to
have a show about the law. He submitted a proposal to the station, with some
initial suggested topics; and the proposal was accepted. Originally, his goal
was to present programs for one year,
thinking that he would exhaust all possible topics within that time. However,
new topics kept coming to his attention,
many of which were suggested by listeners. He is amazed that the show has
kept going for so long, and feels hon-
GRIEVANCE DEFENSE
McDONOUGH & McDONOUGH LLP
ored that WHPC has chosen to keep the
show in its lineup, year after year.
Asked to reflect on the last quarter
of a century, hosting the program, Ken
says that he has truly enjoyed helping
to educate the public about the law, as
well as attorneys; and that he is constantly striving to improve the quality
of each show, and to find new topics of
interest to the public and the legal
community. Ken may be reached with
your suggested topics, or comments, at
klandau@shaynedachs.com.
1. WHPC is “the voice of Nassau Community
LAW YOU SHOULD KNOW
LAW YOU SHOULD KNOW
LAW YOU SHOULD KNOW
College,” and is broadcast from its campus in
Garden City, NY.
2. There is a Pennsylvania radio show, which also
purportedly aired for the first time in 1989,
that touts itself as being “America’s longest
running legal talk show.” However, that show,
on commercial station WCHE, is limited to personal injury topics, and it features only the two
personal injury attorneys whose law firm sponsors it. (http://www.karphart.com/legal-talk/).
3. Neil T. Shayne was a founder and senior partner
of the law firm of Shayne, Dachs, Sauer & Dachs,
LLP in Mineola, N.Y. He passed away in 1998.
4. Advance registration is required. Go to
www.nassaubar.org to register online. Or,
request a registration form, by calling the
Academy at (516) 747-4464.
Hosted by: Kenneth J. Landau, Esq.
Shayne, Dachs, Sauer & Dachs, Mineola
on 90.3 FM WHPC
Meet the President of the
Nassau County Bar Association
Mon., Sept 22, 2014 • 4 p.m.
repeated Tues., Sept 23,, 2014 • 1 p.m.
John McEntee
and Sun., Sept 28, 2014 • 7 a.m.
The Rights of Animals
PART 1
(eligible for CLE credit*)
Mon., Sept 29, 2014 • 4 p.m.
or Tues., Sept 30, 2014 • 1 p.m.
or Sun., Oct 5, 2014 • 7 a.m.
PART 2
Mon., Oct 6, 2014 • 4 p.m.
or Tues., Oct 7, 2014 • 1 p.m.
or Sun., Oct 12, 2014 • 7 a.m.
*through the Nassau Academy of Law
For further CLE information call (516)747-4464 or visit www.nassaubar.org
on 90.3 FM radio or voicestream over the internet at www.ncc.edu/whpc
or download podcast at www.itunes.ncc.edu
or listen on your smartphone
with radio app Tunein.com
Senior Citizens
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Member:American
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Bar Associations
Association
Share your legal knowledge as a
consultant at the
NCBA’s Senior Citizen
Consultation Clinics
~Elder care, matrimonial, real estate, trust & estates
~Just 2 hours a month at Domus
Pro bono legal consultation only,
no legal services are performed.
Contact Demi Tsiopelas at the NCBA
516-747-4070 x210
dtsiopelas@nassaubar.org
16
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Nassau Lawyer
Mortgage Foreclosure/Sandy Recovery Clinics
Reach 100th Milestone
August 18th marked NCBA’s
100th award-winning Mortgage
Foreclosure/Sandy Recovery
Free Legal Consultation Clinic.
Every month, since March
2009, volunteer attorneys have
helped homeowners, who are
facing foreclosure, understand
their rights and alternatives,
educate them on the many
resource opportunities available, and give hope and direction to dispirited homeowners
looking to gain control of their
lives. After Superstorm Sandy
devastated homes in Nassau
County, the NCBA held additional clinics to include the
many issues involved with
restoration. Over the past five
years, more than 200 committed attorneys have provided
free legal counsel and referral
to approximately 7,700 Nassau
families including more than
500 children.
At the 100th milestone Mortgage Foreclosure/Sandy Recovery Clinic, (standing) Greg Fishkin, Sandy Relief/Settlement Conference
Coordinator and Gale D. Berg, Director of Pro Bono Attorney Activities, coordinate the clinic operations, while residents meet with volunteer attorneys. Richard Im (seated l) and John Coco (seated 3rd from l) are new to the Clinics and are observing seasoned Clinic regulars, Robert Sugarman (seated 2nd from l), and Stanford Kaplan (seated r). Volunteer attorneys from all practice areas of law are welcome. Training and mentoring is provided. Call Gale Berg at (516) 747-4070 for information to volunteer. NCBA Mortgage Foreclosure
Pro Bono Project is funded through a grant received from the New York State Attorney General Homeownership Protection Program.
(Photo by Hector Herrera)
VOLUNTEER ...
Continued From Page 1
Senior Citizen Consultation Clinics
Share your legal knowledge as a
consultant at the NCBA’s monthly
Senior Citizen Consultation Clinics.
Attorneys who practice law in elder
care, matrimonial, real estate and
trust and estates are most needed for
the monthly clinics, held 9:30-11 a.m.,
at the Bar Association.
Student Mentoring
Provide valuable adult guidance and
serve as a role model for at-risk middle
school students in one-on-one sessions
held at a local middle school. The commitment is twice a month for less than
an hour, but the rewards and appreciation you receive are immeasurable.
Mentors are always in demand.
Community Relations & Public Education
Develop and implement seminars
and projects and programs, including
the annual Law Day, to educate the
general public on the law.
FAIR ...
information and refer them for more
assistance if needed. Attorneys will not
provide legal representation and malpractice insurance will be covered for
volunteers participating in the event.
Some of the major areas include:
• bankruptcy and consumer debt
• divorce and family issues
• education and special education
• health and disabilities
• immigration
• mortgage foreclosure and housing
matters
• senior citizen issues
Mock Trial Tournament
Attorneys encourage and motivate
high school students to consider a
career in the legal profession by serving as a team coach or trial judge. The
students argue a case in a real courtroom during the annual New York
State Mock Trial competition.
Speakers Bureau
Love to talk about the law? Our
attorney speakers go into the community addressing students, business
groups and organizations to bring a
better understanding of the law to
local citizens.
BOLD Program
Fluent in a second language?
Volunteer to help counsel residents in
their native tongue through our
unique Bridge Across Language
Divides (BOLD).
We look forward to your participation!
Call: 516-747-4070
Email: info@nassaubar.org
Online: www.nassaubar.org
• Superstorm Sandy issues
Bi-lingual attorneys are especially
needed. Through our BOLD (Bridge
Over Language Divides) Program, we
are reaching out to residents who would
be more comfortable speaking with
attorneys in their native languages. We
plan to have bi-lingual attorneys fluent
in many languages, such as Spanish,
Greek, Portuguese, Turkish, Korean
and other languages upon request.
NCBA members who would like to
help in any of the practice areas, at
either the 3-5 p.m. session or 5-7 p.m.
session (or both), can contact Gale D.
Berg, Director of Pro Bono Attorney
Activities, at gberg@nassaubar.org.
Nassau Lawyer
MENTORS ...
“Sometimes the young
person has never spoken to
an adult professional
before, so I ask them, ‘Do
you think you could do my
job?’ They always say no.
But by the end of the year,
they answer ‘Yes, I can do
it!’
– Patricia Wright
Judge Warshawsky, who eventually
joined the program and served as a
mentor, explained, “There is always
something you can tap into to communicate with the kids. “We’ve discussed language, mathematics, video games, even
international affairs and Stephen King
novels. I get a great deal of satisfaction
seeing these kids grow, emotionally and
academically.”
Another mentor, Judge Fred Hirsh
agreed. “I can meet with kids outside
the classroom in a very informal setting
with no rules and no preconceived
notions. They get to spend time with an
adult who is not teaching or telling, but
just talking and listening about what is
important to them. We once spent 45
minutes discussing peanut butter and
jelly sandwiches – crunchy, super
crunchy or smooth; strawberry or grape;
white bread, toast or wheat. It’s a
remarkable experience.”
Mutual Commitment
The NCBA Student Mentoring
Program model is straightforward.
School counselors identify students who
may benefit from mentoring. Their
grades may be slipping or need some
help in emotional areas. Some feel they
don’t fit in with others or are bullied at
school. Many are products of single parent families raised by a mother or a
grandmother. Some may be having difficulties at home. The student then
agrees to meet with a volunteer mentor
twice monthly – no one is forced to join
the program. Then Hodish and his coordinators work with school officials to
September 2014
n
The Nassau County Bar Association Student Mentoring Program
partners with eight schools throughout Nassau County. An NCBA member volunteers to act as the liaison
with school counselors to match
each student with a mentee (see
list below). Members interested in
becoming a mentor this year call
Demi Tsiopelas at 516-747-4070 or
email info@nassaubar.org.
one mentoring program has been put
into place. Our long-standing NCBA
Student Mentoring Program has strongly filled that role.”
In 1990, Alan Hodish, after 20 years
in education, resigned from his job
teaching 5th and 6th graders at Jackson
Main Elementary School in Hempstead,
earned a law degree, and began the
practice of law. Although he had left
teaching, his inner need to continue to
help the kids at Jackson Main
remained. So in 1994, he went to the
Hon. Ira Warshawsky, then serving as
the chair of the NCBA Community
Relations and Public Education
Committee, with an idea that would
combine his passion and his profession,
and the NCBA Student Mentoring
Program was born.
“I wanted to form a partnership with
the Hempstead schools through the Bar
Association to help young adults, and to
get as many attorneys, judges and members of the Bar involved,” he said. “A
student mentoring program was the
perfect mix of both.”
n
assign a mentor to each mentee.
“Anyone can be a trusted advisor and
guide to a young person, but they do
have one thing in common – they both
are committed to the effort,” Hodish
said.
A mentor dedicates just 45 minutes
twice a month to meet one-on-one with a
student in a room designated for these
mentoring sessions with at least one
social worker present. The school provides a staff member or two to be present to help coordinate these sessions.
The meetings are held before school
starts to allow time for mentors to get to
court or their office by 9 a.m. There is
no further communication outside these
meetings, for the protection of the students as well as the mentors.
For Judge Joy Watson, her volunteerism came full circle. She lives in
Hempstead Village and mentors at
Hempstead Middle School. “I wanted to
give back to my local community,” she
said. “As circumstance would have it,
I’m also a member of the Courthouse
Kiwanis Club, which coincidentally
meets at NCBA. Through my involvement in both, we were able to send
three of my mentees to Kamp Kiwanis
upstate for a break from suburban life.”
Orientation sessions conducted by
the Long Island Mentoring Partnership
are held every year at the Bar
Association, but admittedly, much of the
training comes on the job. Caryle Katz,
NCBA Community Relations and Public
Education Administrator who has mentored several students, offers some
advice for those considering joining the
program. “If you have difficulty getting
a child to open up to you, don’t worry
about it,” Katz advises. “I mentored one
young girl who was so shy that she had
difficulty talking to me, so I did all the
talking. I felt I wasn’t getting through to
her and soon became discouraged. The
school counselor told me I had it all
wrong. She pointed out that the girl was
making the effort just to show up for the
meetings because she looked forward to
it. I hadn’t thought of it that way.
Indeed, I was making an impact and a
nice relationship gradually developed.”
Today, this student is attending nursing
school at NYU on scholarship.
Patricia Wright, a Nassau County
ADA who has served as a mentor for the
past 20 years, developed her own mentoring style combined with some teaching and a dollop of confidence thrown in.
“Sometimes the young person has never
spoken to an adult professional before,
so at the first meeting I ask them, ‘Do
you think you could do my job?’ They
always say no. But by the end of the
year, they answer ‘Yes, I can do it!’
“The transformation by the end of the
year is remarkable. This factor continues to convince me that mentoring does
make a difference in the lives of youth.”
This year, from October through
May, more than 100 volunteer mentors
will guide hundreds of young adults in
eight schools across Nassau County.
The year is capped off with a special
appreciation luncheon hosted at the
Bar Association for mentors and their
mentees, many who take the opportunity to come up to the microphone and
reveal how their mentors have changed
their lives and give heartfelt thanks.
For many mentors, this is the first time
they realize how their time and effort
have inspired the direction of a young
life.
NCBA members are known for their
generosity and willingness to give back
to the community. Over the past 20
years, many have answered the call
through the Student Mentoring
Program, none more devoted than Alan
Hodish, who, in 2008, received the
NCBA Director’s Award for his hard
work. “Unfortunately, today there are
more kids who could benefit from an
adult mentor, but we don’t have
enough,” Hodish said. “It is such a
unique opportunity, to be a positive
force in a young person’s life, and maybe
influence that person to head down a
positive path. The students are grateful.
They love us and we love them. That's
the bottom line.”
Barack Obama Elementary School
Hempstead
Dorian Glover
Jackson Main Elementary School
Hempstead
Donna Brady
Alverta B. Gray Middle School
Hempstead
Barbara Dower
Westbury Middle School
Dana Boylan
Jericho Middle School
John Reali
Doreen Reali
Turtle Hook Middle School
Uniondale
Patricia Wright
W. Tresper Clarke Middle School
East Meadow
Hon. Ira Warshawsky
Woodland Middle School
East Meadow
Alan Hodish
ATTORNEYS & JUDGES
Make a difference in someone’s life ....
Be a Mentor!
NCBA is looking for mentors for
Middle School students.
8 a.m. to 8:45 a.m. one day every other week
Oct. 2014 through May 2015
Students in the following
communities are awaiting
mentors:
Hempstead • Uniondale • Jericho
Westbury • East Meadow
Contact Demi Tsiopelas at the Nassau Bar
(516)747-4070 x210
dtsiopelas@nassaubar.org
17
18
n
September 2014
n
Nassau Lawyer
WE CARE
We Acknowledge, with Thanks,
Contributions to the WE CARE Fund
Donors
In Honor Of
Anna Akker & Matthew Plundo
Hon. Leonard B. Austin
District Court Law Department
Jennifer & Sean Diskin
Elaine Leventhal
Katherine Tiffany
Their Wedding
Birth of Callie Madison, granddaughter of Hon. Thomas Feinman
Hon. John G. Marks receipt of the Stephen Gassman Award
Tom Bucaria’s Birthday
Their Wedding
Hon. John G. Marks receipt of the Stephen Gassman Award
Adrienne Flipse Hausch
Donors
Speedy Recovery
Donors
In Memory Of
Hon. Marilyn K. Genoa
Mary Ann Aiello
Jay Davis
Hon. James P. McCormack
Hon. Sondra Pardes
Hon. Andrea Phoenix
Hon. Susan Katz Richman
Ellen M .Rosen
Hon. Denise L. Sher
Phyllis Wolf, mother of Elise Wolf
Michael Cardello, Jr., father of Michael Cardello III
Joyce Murphy, mother of Hon. Jerome Murphy
April Morris, niece of Hon. Sylvia Hinds-Radix
Barbara Schey, mother of Iris Horowitz, Esq.
Mary Croutier
Thomas P. McCormack, father of Hon. James McCormack
Thomas P. McCormack
Pam Holke
Allan Trentacoste
Helen Bilka, mother-in-law of Chief Clerk Wanda Bilka
In Honor Of Wedding Of Samantha Unger To Andrew Hollow, Daughter Of
Dede & Scott Unger, Granddaughter Of Hon. Elaine Jackson Stack
Stephen Gassman
Elaine Leventhal
Peter T. Affatato
Hon. Andrea Phoenix
Kathleen Wright
In Memory Of John C. Deleonardis
Hon. Angelo Delligatti
In Memory Of Joseph Roach, Father-In-Law Of Hon. Robert Bruno
Hon. James P. & Marie F. McCormack
Hon. Sondra Pardes
Hon. Andrea Phoenix
In Memory Of Sofie Zimmerman, Mother-In-Law Of
Hon. Steven and Peggy Jaeger
MaryAnn D’Esposito
Joanne & Hon. Frank Gulotta Jr.
Hon. Andrea Phoenix
Hon. Denise L. Sher
In Memory Of Agnes Villacci, Mother Of Irene Villacci
MaryAnn Aiello
Hon. Andrea Phoenix
Jill Stone
In Memory Of Jeanne Faith Harris, Daughter Of Sondra Harris
Dana J. Finkelstein
Hon. Andrea Phoenix
Joan & Steve Schlissel
In Memory Of Ignatius Notaro, Father Of Maryann D’Esposito
Hon. Carnell Foskey
Hon. Steven & Peggy Jaeger
Elaine Leventhal
Hon. Denise L. Sher
In Memory Of Deborah Keenan, Mother Of Harold Deiters
Contributions may be sent to:
NCBA Attn: WE CARE
15th & West Streets, Mineola, NY 11501
or at: www.nassaubar.org
Mary Ann Aiello
Hon. Ruth C. Balkin
Hon. Stacy & Chuck Bennett
Collins McDonald & Gann
Steven J. Eisman
Hon. Andrew M. Engel
Florence Fass
Samuel J. Ferrara
Dana J. Finkelstein
Richard Fromewick
Meryl & Stephen Gassman
Adrienne L. Hausch
Patricia Latzman
Elaine Leventhal
Joseph LoPiccolo
Michael Masri
Christopher T. McGrath
Officers and Board of Directors
of NCBA
Hon. Andrea Phoenix
Hon. Susan Katz Richman,
General
Joan & Steve Schlissel
Dave, Paige and Asa Lieberman
Jennifer Rosenkrantz
Joan & Stephen Schlissel
Lois Schwaeber
Hon. Denise L. Sher
Hon. Peter B. Skelos
Keith J. Soressi
Hon. Elaine Jackson Stack
Jill Stone
Dede Unger
WE CARE Advisory Board
Kathleen Wright
KOONTZ ...
poses if applied to the landowner outside the permitting process.8
The overflight easement failed this
threshold inquiry. The Powell court
examined both state and federal law
regarding airspace rights and explained
that California and Federal law provides minimum safe altitudes of flight
which allows an aircraft to fly at an altitude of 1,000 feet over congested areas
or over 500 feet in rural areas. Federal
law defines “navigable airspace” as airspace above these minimum altitudes
and grants the United States exclusive
sovereignty. Accordingly, the court concluded that the plaintiffs’ property
rights did not include a right to exclude
airplanes from using the navigable airspace above their property.
Because there was no evidence that
the easement would permit overflights
that invaded the plaintiffs’ private airspace, the easement did not constitute
a physical taking under the Fifth
Amendment. For that reason, the court
did not subject the condition to Nollan/
Dolan scrutiny. Additionally, the court
found no evidence to support a taking
even under California’s own distinct
takings clause which has been construed more expansively than the Fifth
Amendment in the context of aircraft
overflights.9
The court then affirmed the trial
court’s grant of summary judgment to
the county, finding the overflight easement did not affect a taking of the plaintiffs’ private property or airspace under
Fifth Amendment jurisprudence or
California law. As such, Powell does not
support the notion that the balance has
tipped in favor of the land-use applicant, over the municipality.
Centennial: No Taking Until
Permit is Denied
The other case citing Koontz within
the land-use permitting context, City of
North Las Vegas v. 5th & Centennial,
LLC,10 involved claims by landowners
for inverse condemnation and precondemnation damages. The facts are
worth noting even though the Supreme
Court of Nevada rejected the landowners’ Koontz based argument because it
found the cause of action was not ripe.
The City of North Las Vegas (the City)
began construction in 2002 on a sevenmile-long, eight-lane, high-speed roadway along North 5th Street (the
Project). The City’s 2004 amendment
(AMP-70-04) allowed for North 5th
Street to be widened up to 150 feet and
provided that development applications
be conditioned upon landowners giving
up a 75-foot right-of-way on the land
fronting that street. In 2008 the
landowners contracted to sell their 20
acres of land located in the northern
half of the Project. The buyer cancelled
because it believed AMP-70-04 placed
too many restrictions on the Property
for commercial development.
But, because the landowners never
applied for a development permit, they
never received or were denied a permit
conditioned on providing rights-of-way
to the City. Accordingly, the court stated “[s]ome other action would be necessary, such as a development application
and subsequent ordinance conditioning
the Landowners’ development on the
dedication requirements, to support a
finding that a per se regulatory taking
occurred.”11 The court stated that only
after the landowners submitted a development application would the court be
able to determine whether any condition passed the Nollan/Dolan essential
nexus and rough proportionality
requirements. Even so, the court was in
effect acknowledging that it would have
applied Koontz had an application actually been submitted and the case ripe
for adjudication.
Notwithstanding the court’s analysis
of government demands for monetary
exactions from a land-use permit applicant, the holding in Koontz seems susceptible to being extended beyond the
land-use permitting context. In fact, in
Horne v. U.S. Dept. of Agriculture, the
United States Court of Appeals for the
Ninth Circuit appliced the Koontz
analysis and the Nollan/Dolan rule to
regulatory fines and cost imposed by
federal regulation in non-land-use permitting context.12
The Horne case arose from
Congress’s enactment of the Agricultural Marketing Agreement Act of
1937,13 designed to bring consistency
and predictability to the Nation’s agricultural markets. Pursuant to the Act,
CONSUMER AFFAIRS ...
tation, poor workmanship or quality, and unsatisfactory repairs. Once the complaint is properly
filed, the case is assigned to an investigator who
first determines if the contractor is licensed. An
investigator will evaluate the adequacy of the
alleged matter and notify the contractor of the
complaint. If the contractor is not properly licensed
through the NCOCA in accordance with §21-11.2
of the Nassau County Administrative Code, a hearing is automatically scheduled and the contractor
is notified to attend.
After these steps are completed, an administrative conciliation hearing may be scheduled if violations exist. If a contractor has engaged in a prohibited act, the Commissioner of Consumer Affairs
has the discretion to suspend or revoke the contractor’s license, and/or levy a fine not exceeding
$5,000 for each violation, pursuant to Nassau
County Administrative Code §21-11.8. Once a
license is suspended or revoked, the contractor is
prohibited from providing services within Nassau
County until the license is reinstated. For issues
not resolved through the NCOCA, the investigation may be referred to the District Attorney for
the Secretary of Agriculture implemented the Marketing Order Regulating the
Handling of Raisins Produced from
Grapes
Grown
in
California14
(“Marketing Order”) to ensure “orderly”
market conditions by regulating raisin
supply. The Marketing Order drew a
distinction between “producers” and
“handlers.”15 Handlers are required to
divert a required percentage of each producer’s raisins to a reserve pool and prepare the reserved raisins for market.
The Marketing Order provides compensation to the handlers for these services.
The Hornes restructured their raisin
operation such that, in their view, the
Marketing Order would not operate
against them. The Secretary disagreed
and imposed a monetary penalty on the
Hornes for their failure to comply with
the reserve requirements. On remand
from the U.S. Supreme Court, the Ninth
Circuit analyzed whether the Marketing
Order and its imposition of penalties
work a taking in violation of the Fifth
Amendment.
While the Horne court reiterated that
generally, “the imposition and collection
of penalties and fines does not run afoul
of the Takings Clause,” the court found
the monetary exaction (the penalty
imposed) was specifically linked to specific property (the reserved raisins).16 In
light of this direct link, the court followed
Koontz to analyze the constitutionality
of the penalty imposed on the Hornes.
Further, the court applied the Nollan/
Dolan rule and concluded that it “serves
to govern this use restriction as well as it
does the land-use permitting process.”17
The court found the Secretary “imposed a
condition on the Hornes’ use of their
crops by regulating their sale.”18 The
court drew comparisons between Nollan
and Dolan and the raisin diversion program and stated “[a]ll conditionally grant
a government benefit in exchange for an
exaction. And, critically, all three cases
involve choice.”19
Yet, the court held the Marketing
Order and its penalties satisfied the
Nollan/Dolan test and did not violate
the Takings Clause because the diversion requirement furthered the end
advanced: obtaining orderly market
conditions. On this basis, the Marketing
Order satisfied the Nollan sufficient
nexus requirement. Additionally, the
court found that the means of the
criminal prosecution for working without a license,
or the consumer can file suit in civil court or small
claims court.
In addition to protecting consumers contracting
for home improvement services, the NCOCA protects consumers through other divisions that
include its retail division, weights and measures,
taxi and limousine division and its resources for
information and education. The NCOCA protects
consumers from bait and switch schemes, deceptive advertising of gasoline pricing, and sale of
expired products, in conjunction with other retail
watchdog initiatives.
The NCOCA is also responsible for the testing,
inspecting, and sealing processes of all weighing
and measuring devices used by commercial or public agencies; the weights and measures division of
NCOCA provides consumers with a sense of assurance that their purchases are accurately priced
and fully measured. The Taxi and Limousine
Commission (TLC), pursuant to ordinance 1132005, ensures that all “for hire” vehicles are properly registered with Nassau County. Inter-jurisdictional taxi drivers must have hack licenses issued
by the NCOCA. The NCOCA has the authority to
issue violations and levy fines for noncompliance,
as well as to impound vehicles.
The information and education division pro-
Nassau Lawyer
n
September 2014
n
19
Marketing Order’s diversion program
were at least “roughly proportional” to
Congress’s stated goal of ensuring an
orderly domestic raisin market.20
The Horne case is interesting
because it applied the Koontz holding in
a non-land-use permitting context. This
application seems to confirm Michael
Castle Miller’s thesis, in a recent
American University Law Review article, that the Koontz decision would have
a wide sweeping effect on Fifth
Amendment takings jurisprudence.21
Conclusion
The courts have not yet answered
the many questions Koontz raised.
Justice Kagan may be right, that perhaps the concern of costly litigation has
led municipalities to refrain from
imposing conditions they consider
appropriate. Or, the cases may have yet
to be tried and decided. Until a sufficient number of new cases are decided
applying Koontz in the land-use permitting context or the regulatory context
with monetary exactions affecting an
identifiable property right the uncertainty will continue.
Michael H. Sahn, Esq., the Managing Partner
at Sahn Ward Coschignano & Baker, PLLC.
He is a former co-chair of the NCBA’s Real
Property Law Committee. Adam H. Koblenz,
Esq., is a Partner at the firm. Sophia Villani, a
Summer Associate at the firm contributed to
this article.
1. 133 S.Ct. 2586 (2013).
2. See Nollan v. California Coastal Comm’n., 483
U.S. 825 (1987); Dolan v. City of Tigard, 512
U.S. 374 (1994).
3. Id.
4. Id.
5. Powell v. County of Humboldt, 222 Cal.App.4th
1424 (2014).
6. Id. at 1430.
7. Id. at 1439.
8. Id.
9. Id. at 1443.
10. City of N. Las Vegas v. 5th & Centennial,
LLC, 2014 WL 1226443 (Nev. Mar. 21, 2014).
11. Id. at *9.
12. 750 F.3d 1128 (9th Cir. 2014).
13. Agricultural Marketing Agreement Act, 7
USC § 601 et seq.
14. 7 CFR § 989.
15. Horne, 750 F.3d at 1134.
16. Id. at 1137.
17. Id. at 1142.
18. Id.
19. Id. at 1143.
20. Id.
21. Michael Castle Miller, The New Per Se Takings
Rule: Koontz’s Implicit Revolution of the
Regulatory State, 63 Am. U. L. Rev 919 (2014).
vides the NCOCA with a platform to offer consumers insightful education on important areas of
concern such as identity theft, expiration dates,
and the importance of using a licensed contractor.
Speakers are available through the NCOCA.
Three categories of common consumer complaints are not investigated by the NCOCA. These
are utility-related problems, including billing,
which are under the jurisdiction of the New York
State Public Service Commission.3 Banking complaints are regulated by the New York State
Banking Department, which has its own
Consumer Affairs Division.4 Insurance-related
complaints are regulated by the New York State
Department of Finance.5
Martha Krisel is First Vice President of the NCBA and has
served as Counsel to the Nassau County Office of
Consumer Affairs. With gratitude to Summer 2014 college
students Michelle Polizzano (University of Michigan) and
Lindsay Epstein (James Madison University) as well as
Summer 2014 Hofstra Law School student Peter Baik for
their research and assistance.
1. http://www.nassaucountyny.gov/agencies/OCA/
Legal/laws.html.
2. http://www.nassaucountyny.gov/agencies/OCA/
index.html.
3. http://www.dps.ny.gov/help.html.
4. http://www.dfs.ny.gov/consumer/fileacomplaint.htm.
5. http://www.dfs.ny.gov/insurance/dfs_insurance.htm.
n
September 2014
CPLR 3408 ...
20
n
Nassau Lawyer
family residence where the defendant resided.
Plaintiff moved for summary judgment, and the trial
court granted the motion.
On appeal, Valentine raised one argument –
namely, that she was improperly denied the opportunity to participate in a settlement conference pursuant to CPLR 3408. The Appellate Division, Second
Department concluded that, under the amended version of CPLR 3408, the only type of loan which qualified for CPLR 3408 settlement conferences was a
“home loan” as such term is defined by Real Property
Actions and Proceedings Law (“RPAPL”) § 1304.6
RPAPL § 1304 defines the term “home loan” as
one in which, inter alia, the borrower is a natural
person, the borrower incurs the debt “primarily for
personal, family, or household purposes,” and the
loan is secured by a mortgage on real property within the state that is “used or occupied, or intended to
be used or occupied wholly or partly, as the home or
residence of one or more persons and which is or will
be occupied by the borrower as the borrower’s principal residence.”7
Valentine argued that CPLR 3408 was applicable
because “she is a natural person and the mortgaged
premises are occupied by her as her primary residence.”8 But the Appellate Division, Second
Department, focusing on the language of both CPLR
3408 and RPAPL § 1304, rejected the argument. The
court explained:
CPLR 3408 does not apply to every residential
foreclosure action. Indeed, CPLR 3408 is limited to
residential foreclosure actions involving home
loans as the term ‘home loan’ is defined by RPAPL
1304. As so defined, home loans are those which
are made to a natural person and in which the
debt incurred is primarily for personal, family, or
household purposes....9
The court determined that, because the “borrow-
BUDGETS ...
should gear up for more lawsuits of this nature.
Martin Tankleff – himself exonerated in 2007 after
spending 17 years in prison – graduated from Touro
Law Center this summer and helped start the law
school’s wrongful conviction externship program. The
probability that these and other efforts will result in
additional high exposure lawsuits against local government entities is high. In fact, it is inevitable.
One need not look further than the rapidly developing situation in Brooklyn to see how quickly allegations against even a single police officer can
devolve into a full-blown crisis for a municipal budget. Brooklyn District Attorney Ken Thompson
ordered a review of approximately ninety cases,
about 50 of which were investigated by this now scrutinized former New York City Police Detective, Louis
Scarcella. In one such case, Jabar Collins was
released in 2010 after spending fifteen years in
prison based on the now questionable investigation of
Detective Scarcella. While Collins’ lawsuit against
the State of New York settled for $3,000,000 on July
er” under the loan agreement was the corporate entity, Roz-Valt, and not an individual, and because the
$230,000 debt was incurred by the corporate entity,
Roz-Valt, and not the individual, the loan did not
qualify under CPLR 3408.10
Finally, the court focused on the purpose of the
loan in concluding that it did not qualify under
CPLR 3408. Specifically, the court concluded that,
“since the purpose of the loan was to purchase
machinery and equipment, and to fund other various
start-up, closing, and construction costs associated
with fashioning a ‘Quizno’s Sub’ store, it was clearly
not primarily for personal, family, or household purposes.”11 Thus, the court concluded that because a
mandatory settlement conference under CPLR 3408
is only required for a home loan that falls under the
definition outlined in RPAPL 1304(5), and the loan
here does not qualify, the trial court properly rejected Valentine’s argument and granted summary judgment in favor of the bank.12
The Impact of
Independence Bank v. Valentine
Valentine teaches at least two lessons which may
have a broad impact beyond the facts of the case for
the courts and the Bar: (i) courts must be careful to
not apply the protective provisions available to a
“home loan,” as such term is defined by RPAPL §
1304(5), to borrowers in the context of commercial
mortgage foreclosure actions; and (ii) practitioners
representing lenders must be certain that, when representing clients in transactions which have both a
residential and a commercial component, as was the
case in Valentine, the loan documents clearly specify
the commercial nature of the underlying transaction.
Any attorney who has represented a lender in a
commercial mortgage foreclosure action within the
past few years has certainly encountered a situation
in which, although the pleadings lay out the clearly
commercial nature of the transaction at issue, the
borrower raises affirmative defenses founded upon
statutes which were intended to protect only residential, but not commercial, borrowers. For instance,
it is common for borrowers to raise a defense pursuant to RPAPL § 1304 that the lender failed to provide timely notice to the borrower that the loan is in
default and his or her home is at risk of foreclosure.13 Despite the clear delineation in RPAPL §
1304 that the statute only applies to what can be
characterized as a “home loan,” a RPAPL § 1304
defense is often raised by borrowers in commercial
mortgage foreclosure actions.
Valentine is significant because it clearly shows
that the protections afforded to residential borrowers
are limited to just such borrowers and that courts
will enforce those limitations in the context of commercial mortgage foreclosure actions – even if the
consequence is that a commercial borrower who uses
its individual principals’ residential property as collateral will result in the individuals losing the residential property in foreclosure.14
Second, Valentine involved what one might consider a fairly routine transaction – namely, the principal of a business mortgaged her residence in order
to provide the lender with security for its loan to the
10, 2014, he has a separate lawsuit against Scarcella
and New York City that is still pending. David Ranta
and Roger Logan were also recently released after
their cases, which were also investigated by
Scarcella, unraveled.
The precedents set by New York City settlements
affect case valuations and settlement negotiations in
other cases, and therefore matter to municipal budgets
and should be taken seriously by policy makers and
municipal lawyers. For example, shortly after the
“Central Park Five” settlement was announced, the
State of Illinois announced that it intended to enter a
$40,000,000 settlement with five individuals wrongfully convicted of rape and murder based on problems at
the state police crime lab.2
Local governments should reexamine the policies
and procedures of their police departments, crime
labs, and district attorney offices to make sure that
everything possible is being done to minimize the risk
of wrongful convictions without compromising public
safety. This may include requiring that all homicide
interrogations be recorded, as is required under the
laws of numerous states. This common sense measure
protects suspects against the strange phenomenon of
false confessions while protecting investigators
business. These sorts of transactions happen every
day – and are vital to the success of both lending
institutions and small businesses.
However, Valentine makes clear that practitioners representing lenders cannot view these transactions as “routine” any longer.
One of the most significant aspects of Valentine
was the fact that the loan documents specified the
commercial nature of the underlying transaction –
namely, that “the purpose of the loan was to purchase machinery and equipment, and to fund other
various start-up, closing, and construction costs
associated with fashioning a ‘Quizno’s Sub’ store.”15
This language in the loan documents led the
Valentine court to conclude that the loan “was clearly not primarily for personal, family, or household
purposes,” thereby bringing it outside the ambit of
RPAPL § 1304(5).16
Valentine teaches that a failure by lender’s counsel to properly document the specific commercial
nature of a transaction in the loan documents can
cause headaches down the line in the event of a
default. Failure to provide specificity in the loan documents as to the commercial nature of the transaction may leave a borrower with a window to claim
that the transaction’s true intent concerned “personal, family, or household purposes,” thereby affording
the borrower CPLR 3408’s protections.
Counsel representing lenders must heed the lesson taught by Valentine – in each transaction which
has both commercial and residential components,
counsel must provide detail as to the specific aspects
of the transaction which render the transaction commercial in nature. A failure to do so could leave open
to a borrower the argument that the transaction is a
residential loan subject to the protections of CPLR
3408 and RPAPL § 1304 (among other statutes), and
put counsel foreclosing on behalf of the lender in the
position of having to jump through many more hoops
in order to foreclose than would ordinarily be
required if the loan was viewed as a strictly commercial loan (e.g., having to attend mandatory foreclosure settlement conferences which may cause substantial delay in the foreclosure process).
Christopher A. Gorman is an attorney at the law firm
Westerman Ball Ederer Miller Zucker & Sharfstein, LLP,
based in Uniondale, New York. Mr. Gorman’s practice focuses upon all aspects of commercial litigation and business
disputes, including commercial and residential mortgage
foreclosure actions.
1. See Wells Fargo Bank, N.A. v. Meyers, 108 A.D.3d 9, 11 (2d Dept.
2013) (summarizing the legislative history of CPLR 3408).
2. See CPLR 3408(a).
3. 113 A.D.3d 62 (2d Dept. 2013).
4. Id.
5. Id.
6. Id.
7. See RPAPL § 1304(5)(a)(i)-(v).
8. See Valentine, 113 A.D.3d at 62.
9. Id.
10. Id.
11. Id.
12. Id.
13. Id.
14. Id.
15. Id.
16. Id.
against false claims of coercion. The Supreme Court of
New Jersey spearheaded an effort to incorporate suggestions of several social scientists into their lineup
identification procedures in hopes of minimizing the
risk of mistaken eyewitness identifications.3 These
reforms include requiring “double blind” lineups
where the detective administering a lineup and interacting with witnesses knows nothing about the case
and, therefore, cannot knowingly or unknowingly cue
the witness.
Simultaneous with these efforts, municipal managers and counsel must determine how to best defend
their taxpaying residents from current and future civil
lawsuits. It will take willpower, focus, and good judgment to make correct and just decisions in this surging
area of legal practice.
Shneur Nathan is a partner at Hale Law LLC, where he regularly represents municipalities and their agents in civil litigation, including wrongful conviction and other police related
matters.
1. Garner, Sean. “Central Park Case Could Cost Millions.” Wall
Street Journal March 24, 2014.
2. Mills, Steve. “$40 M for Five Wrongfully Convicted of Dixmoor
Rape, Murder.” Chicago Tribune June 25, 2014.
3. State v. Henderson, 27 A.3d 872 (N.J. Sup. Ct. Aug. 24, 2011).
INTERMEDIARY ...
A client’s loss when a QI misappropriates money is immediate and substantial. A contract deposit or life
savings may instantly disappear.20
However, the attorney representing the
client in a 1031 Exchange may also be
subject to a legal malpractice action.
Recently, in Endless Ocean, LLC v.
Twomey, Latham, Shea, Kelley, Dubin
& Quartararo, the Second Department
reversed the lower court’s decision to
dismiss a complaint for legal malpractice concerning an attorney advising its
client to select LandAmerica 1031
Exchange Services, Inc. (LandAmerica),
as the QI.21 In 2008, LandAmerica filed
for bankruptcy protection. At the time,
it was the third largest title company in
the country, providing intermediary
services in 450 uncompleted exchange
transactions.22 Pursuant to the complaint, LandAmerica commingled and
lost a portion of the client’s sale proceeds totaling $5.5 million. The court
held that the complaint set forth a proper cause of action for malpractice since
the plaintiff alleged that its attorneys
“were negligent in failing, inter alia, to
advise it to keep its exchange funds in a
qualified escrow account or trust, and
that this negligence was a proximate
cause of its damages.”23
HUD ...
affordable
housing
discriminates
against African Americans since the
Town is predominately white.6 The
complaint alleges that the Town of
Oyster Bay and the other named defendants “have engaged and continue to
engage in, pattern or practice of discriminating against African Americans
in violation of the Fair Housing Act.7
Two of the Town’s housing zoning and
incentive programs are at issue, the
Next Generation and the Golden Age
housing programs. These programs were
created with legislative approval of new
zoning classifications and offer incentives that encourage developers to build
below-market rate housing for first-time
homebuyers and senior citizens, respectively. Both programs give first priority
to current residents and children of the
residents of the Town of Oyster Bay. The
complaint alleges that these residency
preferences
discriminate
against
African-Americans because very few
African-Americans reside in the Town of
Oyster Bay as compared to the population of African-Americans in surrounding communities that are significantly
more diverse. Furthermore, the complaint asserts that “African-Americans
constituted less than one percent of families living in the Town of Oyster Bay
who were income eligible and otherwise
qualified to purchase housing under the
Next Generation program. Conversely,
whites made up as much as 90 percent of
the pool of eligible families.”8
Under the Proposed Rule, failure of the
Nassau County Urban Consortium members, collectively and individually,9 to
proactively address these concerns may
lead to heavy penalties for the consortium
including withholding future multi-million dollar HUD funding allocations.
Municipalities that are not currently
members of the Nassau County Urban
Consortium are certainly not immune to
challenges under the Fair Housing Act.
After almost a decade of litigation, in
April of 2014, federal Judge Arthur D.
Spatt of the Eastern District of New
Risk Management
To minimize the risk before placing
a client’s money with a QI, the attorney should obtain the QI’s insurance
and bonding information. In particular, the QI should be bonded with a
reputable company licensed in New
York. The QI should have an Errors &
Omissions (E&O) insurance policy.
The attorney should obtain a copy of
the insurance binder and the insurance agent’s contact information to
verify that the bond is in full force and
effect. The information also verifies
policy limits. The attorney should confirm whether the bond is “per occurrence” or “in aggregate”. “In aggregate” means the policy limit is an
annual coverage amount and limited
to the annual policy limit regardless of
the number of thefts during the year.
“Per occurrence” means that each
theft is covered up to the policy limit.
The QI’s bond should be “per occurrence” with E&O coverage for an
amount that exceeds the money delivered to the QI.
The attorney should inquire about
whether money is received in a separate identifiable account or commingled into a large pooled account. If held
as a pooled account, the exchanger
runs the risk of having a bankruptcy
court use the assets to pay a secured
creditor instead of the exchanger.
York entered a final judgment affirming
the court’s landmark conclusion that the
Incorporated Village of Garden City10
had violated the federal Fair Housing
Act, the U.S. Constitution, and other
civil rights statutes when it enacted a
zoning ordinance in 2004 in response to
public pressure to keep multifamily
housing out of the overwhelmingly
white Village. The court found that the
Garden City Defendants acted with discriminatory intent when they changed
zoning to ban the development of multifamily housing at the former Social
Services site in light of residents’ opposition to the prospect of affordable housing being developed. Furthermore, the
court found that the adoption of
the restrictive zoning had a disparate
impact on minorities in Garden City and
tended to perpetuate segregation in that
community.11 The Court ordered the
Village and its Board of Trustees to fund
and undertake a series of immediate
actions to address and remedy the discriminatory practices and ensure fair
housing opportunities going forward.
The Village of Garden City has taken
affirmative steps to comply with the
court’s order. The Village has also filed
an appeal setting forth the issues it
believes where incorrectly decided by
the court.
Nassau County remains one of the
most racially and ethnically segregated
counties within the nation. Persistent
pockets of poverty within one of the
nation’s wealthiest suburbs also align
with those communities that are most
racially and ethnically segregated. As
our population continues to grow more
diverse, municipalities at every level of
government should note that HUD, the
Department of Justice and the Federal
Court have put Nassau on notice.
Continuing policies and practices that
reinforce historical patterns of segregation will no longer be tolerated.
Charlene J. Thompson, Esq. serves as a member of the NCBA Board of Directors and the
Real Property Law Committee. She is
President and CEO of Thompson Economic
Development Services, LLC.
1. See 24 CFR §§ 570.602; §§ 91.225, 91.325,
91.425 and 903.7(o).
The attorney should inquire about
risk management or operational
audits. A copy of an independent audit
assuring solvency of the QI may reduce
a client’s anxiety.
Finally, the attorney should ask
about the QI’s reputation and how it
conducts business. Questions may
include the length the QI’s been in
business, the identity of the owners,
and whether the company has technical expertise to facilitate the exchange.
The risk of your client losing money is
reduced if the QI has a family of regulated companies such as a title insurance, banking organizations, or trust
companies.
Until federal and New York State
laws are enacted to regulate and
account for money deposited by an
exchanger, due diligence is required to
avoid an unscrupulous or negligent QI.
Nassau Lawyer
n
September 2014
n
21
1. 26 USC § 1031(a)(1).
2. 26 USC § 1031(a)(2).
3. Wo Yee Hing Realty, Corp. v. Stern, 99 A.D.3d
58, 949 N.Y.S.2d 50 (1st Dept. 2012) citing, 26
CFR 1.1031(k)–1[g][4][iii].
4. Id.
5. Redwing Carriers, Inc. v. Tomlinson, 399 F.2d
652 (5th Cir. 1968).
6. 26 USC § 1031(a)(3).
7. 22 NYCRR 1200 Rule 1.15.
8. In re Jean-Baptiste, 33 A.D.3d 191 (2d Dept.
2006).
9. 22 NYCRR 1200 rule 1.15(d).
10. 22 NYCRR 1200 rule 1.15(c).
11. In re Onuaguluchi, 36 A.D.3d 4 (2d Dept. 2006).
12. Wallman v. Travis, 18 A.D.3d 304, (1st Dept.
2005).
13. 22 NYCRR 7200, et seq. (The fund may reimburse losses caused by the dishonest conduct
of lawyers admitted to the practice of law in
New York State, up to a maximum of
$300,000 for each client loss).
14. Dodd-Frank Act, Pub. L. 111-203 (July 21,
2010), codified at 12 USC § 5603.
15. Consumer Financial Protection Bureau,
Report Pursuant to Section 1079 of the
Dodd-Frank Act (July 21, 2012).
16. Id. at 15 (23 incidents from 1989 to 2012 in
which individuals have misappropriated
exchange funds or invested customer assets
in risky investments that failed).
17. Los Angeles District Attorney Press Release
(May 20, 2004).
18. In re Nathion-Wide Exchange Services, Inc.,
US Bankruptcy Court, District of Minnesota
(Docket No. BKY 00-31923).
19. Griffin, Firm Files Bankruptcy owing $151
million, Denver Post, May 16, 2007.
20. The loss does not include possible capital
gains from failure to complete the like-kind
exchange under 26 USC § 1031 (see,
Revenue Procedure 2010-14).
21. Endless Ocean, LLC v.Twomey, Latham,
Shea, Kelley, Dubin & Quartararo, 113
A.D.3d 587 (2d Dept. 2014).
22. Intriligtator and Weinstein, “Safe Harbor”
Not Very Safe: The Bankruptcy of
LandAmerica 1031 Exchange Services
(http://www.cozen.com/admin/files/publications/realestate071509.pdf) (July 15, 2009).
23. See also, Winters v. Dowdall, 63 A.D.3d 650
(1st Dept. 2009) (plaintiff pleaded a cause of
action for legal malpractice based on theft of
exchange funds from the QI).
2. 42 USC § 3608. See also 42 USC § 5304(b)(2),
5306(d)(7)(B) (Housing and Community
Development Act of 1974, as amended); 42 USC §
12705(b)(15) (consolidated planning); and 42 USC
§ 1437C-1(d)(16) (public housing).
3. See Proposed Rule on Affirmatively Furthering
Fair Housing, 78 Fed. Reg. 43710-43743; July
19, 2013 (Proposed Rule).
4. See http://eraseracismny.org/press-room/6-pressreleases/322-hud-administrative-complaintagainst-nassau.
5. Id.
6. See U.S. v. Town of Oyster Bay, CV-14-2317,
(E.D.N.Y. April 10, 2014).
7. 42 USC § 3601 et seq.
8. Supra note 6, at Paragraph 20.
9. Current members of the Nassau County
Consortium include the County of Nassau, the
towns of Hempstead, North Hempstead and
Oyster Bay, the Cities of Long Beach and Glen
Cove, and the incorporated villages of Freeport,
Hempstead, Rockville Center, Bayville, Bellerose,
Cedarhurst, East Rockaway, Farmingdale, Floral
Park, Great Neck Plaza, Lynbrook, Malverne,
Massapequa Park, Mineola, New Hyde Park, Sea
Cliff, South Floral Park, Stewart Manor, Valley
Stream, Westbury and Williston Park.
10. See MHANY Mgmt. Inc. v. Inc. Village of
Garden City, No. 05-CV-2301, 2013 WL
6334107 (E.D.N.Y. Dec. 6, 2013) (E.D.N.Y.
2013).
11. Id.
Michael A. Markowitz is a solo practitioner
located in Hewlett, NY concentrating on real
estate, business and corporate transactions, real property, construction and commercial litigation.
REVEL IN YOUR
ACCOMPLISHMENTS
Analysis
the power to
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1. The Honor
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1. 28 U.S.C. §
Cabranes
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tions “very strongl ed that all indica2. See, e.g., Alpern
In his Opinion
v. Lieb, 1993 U.S.
LEXIS 3229
clusion that the y support” the con, Judge Cabran
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F2 Am., Inc., 902 Ill. 1993); Maisonville v.
by the decision
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DiPonio Construc F.2d 746 (9th Cir. 1990);
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McGuffin v.
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In reaching his
that a Rule 11
Royal Dutch Petroleum
SEPT
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tion does not dismiss
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5. See Kiobel v.
a claim or
Royal Dutch Petroleum
motion for sanctiod first that a Rule 11
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U.S. Dist. LEXIS
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advanced.20 As
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28812 *29, 43
to proceedings
6. Kiobel, 592
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F.3d at 80.
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ing actions
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U.S. Dist. LEXIS
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September 2014
EMPLOYEES ...
22
n
n
Nassau Lawyer
ty.”16 More specifically, while Abboud
admitted “‘that he made contact during
the [r]estricted [p]eriod with several
third parties ... about the possibility of
doing business with them after his
[r]estricted [p]eriod ... Abboud did not
execute any agreements with third-parties or engage in commercial activity
during the [r]estricted [p]eriod.”17
Critically, the non-competition provision in Abboud precluded Abboud’s
association with any entity that “proposes to engage” in competitive activity
with JA Apparel.18 With this in mind,
the court held Abboud had violated
his post-employment covenant to JA
Apparel because Abboud had indirectly
associated himself with a business
that “proposed” to compete with JA
Apparel.19 Nonetheless, and somewhat
paradoxically, the court did not issue
an injunction or award damages to JA
Apparel because Abboud, despite his
breach of the plain terms of the
covenant, did not actually sell merchandise during the term of the covenant
and did not intend to commence sales of
his new “jaz” line until more than a year
after the expiration of the covenant.20
Other Jurisdictions
Case law from jurisdictions outside
of New York also suggest that the plain
terms of the restrictive covenant will
go a long way to determining whether
preparatory actions taken during the
term of the covenant are permissible.
For instance, in Össur Holdings Inc.
v. Bellacure Inc.,21 a federal district
court in Washington took the employer
to task for not explicitly prohibiting
preparatory activity directly in the non-
compete agreement with defendants.
Össur was a designer and manufacturer of prosthetic and orthotic devices,
including knee braces. The defendant
employee, Shane Sterling, researched
and developed products including knee
braces while employed by Össur. Upon
his resignation from Össur, and during
the term of his post-employment noncompetition agreement with Össur,
Sterling purchased software, tools, and
equipment to begin work on his own
knee brace design in preparation for
competing with Össur. Sterling also
consulted with a business and finance
consultant and with an attorney, contacted Össur’s design firm to discuss
development of a prototype, incorporated his new company, and hired a former
employee of Össur.22
Össur claimed that Sterling’s numerous preparatory steps violated
Sterling’s non-compete covenant, which
provided that Sterling would not
“directly or indirectly, own, operate,
provide financial, technical, or other
assistance or services to, accept any
involvement with, or be connected with
as an officer, partner, proprietor, consultant, representative, agent or stockholder … any organization which
engages in business that is in direct
competition with [Össur].”23 The court
disagreed, however, noting that Össur,
as the drafting party, could have specifically prohibited the type of preparatory
activity at issue, rather than merely
prohibiting Sterling from “engag[ing] in
direct competition.”24
A Massachusetts state court decision
decided the same year as Össur follows
a similar line of reasoning. In Brooks
Automation v. Blueshift Technologies,
Inc.,25 former employees of Brooks
Automation filed a provisional patent
application and incorporated an entity
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Left for
Competing
company
called Blueshift Technologies, Inc.,
before their one-year non-compete
covenants to Brooks Automation had
expired.26 After the restricted period
expired, Blueshift went into direct competition with Brooks Automation,
prompting Brooks Automation to sue.
At trial, the jury was instructed that
in the absence of specific contract language prohibiting the employee from
preparing to compete, the former
employees were not barred from taking
steps in preparation to compete.27 And
in dicta, the court stressed that Brooks
Automation’s failure to incorporate
such a provision into the covenant,
though it could have, freed their former
employees to prepare to compete so long
as they did not misappropriate trade
secrets or solicit Brooks Automation’s
customers.28
In Citadel Investment Group, LLC v.
Teza Technologies, LLC,29 however, an
Illinois state court took a more narrow
view of defendants’ preparatory activity. In Citadel, two former employees
of Citadel, a high-frequency trading
group, were subject to a non-compete
agreement restricting them from engaging in a “competitive enterprise” for
nine months following their resignations.30 During the term of the
covenant, however, these former employees formed a competing business,
assembled a workforce, set up a trading
platform, conducted research, and
developed certain infrastructure as
well as a source code repository. Even
though they did not begin trading securities during the term of the covenant,
and made clear that they did not intend
to do so until after the covenant had
expired, the court concluded that their
preparatory steps constituted business
activities that were identical to those of
their former employer, and thus violated the non-compete agreements.31
Practical Implications
Although the results of these cases
diverge to a degree, there is a common
thread: the language of the restrictive
covenant will control in separating
acceptable preparatory activity from
impermissible competition. Indeed,
both Citadel and, to a lesser degree,
Abboud, provide the example of the
more exacting restrictive language –
not present in Stork, Össur, or Brooks
Automation – that is necessary to tie
the hands of a former employee during
the non-compete period. Thus, New
York employers wishing to bar departing employees by way of a post-employment restrictive covenant from engaging in certain preparatory activity
would be prudent to address the issue
at the drafting stage.
Steven N. Davi, as counsel in the labor and
employment law group of Farrell Fritz, P.C.,
represents and advises management clients
on a wide array of issues affecting the workplace, including restrictive covenant agreements. He is based in the firm's Uniondale
office.
1. Pure Power Boot Camp, Inc. v. Warrior Fitness
Boot Camp, LLC, 813 F.Supp.2d 489, 521-22
(S.D.N.Y. 2011).
2. Id. at 521-22.
3. Id. at 522.
4. Maritime Fish Prods. v. World–Wide Fish
Prods., 100 A.D.2d 81, 87–89 (1st Dept. 1984),
appeal dismissed, 63 N.Y.2d 675 (1984).
5. Duane Jones Co., Inc. v. Burke, 306 N.Y. 172,
187-88 (1954).
6. Walter Karl, Inc. v. Wood, 137 A.D.2d 22, 28
(2d Dept. 1988) (no evidence defendant’s new
business conducted business before employment termination).
7. Tulumello v. W.J. Taylor Intern. Constr. Co.,
Inc., 84 A.D.2d 903, 903-04 (4th Dept. 1981).
8. Frederic M. Reed & Co. v. Irvine Realty Group,
Inc., 281 A.D.2d 352 (1st Dept. 2001).
9. S. Tepfer & Sons, Inc. v. Zschaler, 25 A.D.2d
786, 787 (2d Dept. 1966).
10. Feiger v. Iral Jewelry, Ltd., 85 Misc.2d 994,
996 (Sup. Ct. N.Y. Co. 1975), aff’d, 52 AD2d
524 (1st Dept. 1976), aff’d, 41 NY2d 928 (1977).
11. 2011 NY Slip Op 51214(U) (Sup. Ct.
Tompkins Co. June 30, 2011).
12. Id. at ***14
13. Id. at ***11.
14. 591 F.Supp.2d 306 (S.D.N.Y. 2008), vacated
and remanded on other grounds, 568 F.3d
390 (2d Cir. 2009).
15. Id. at 337-338.
16. Id. at 338 (citing from defendant’s brief).
17. Id. (citing from defendant’s brief).
18. Id. at 337.
19. Id. at 340-43.
20. Id. at 344.
21. 2006 WL 2401249 (W.D. Wash. Aug. 18, 2006).
22. Id. at *1.
23. Id. at *4.
24. Id..
25. 20 Mass.L.Rptr. 541 (Mass. Super. January
24, 2006).
26. Id. at *1, 5.
27. Id.
28. Id. at *6-7.
29. 2009 WL 3416124 (Ill.Cir.Ct. Oct. 16, 2009),
aff’d, 924 N.E.2d 95 (Ill. App. 1 Dist. Feb. 24,
2010).
30. 924 N.E.2d at 99-100 (defining “Competitive
Enterprise”).
31. Id. at 102-03.
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