The New York Law Blog: June 2016
Subscribe | LinkedIn Group

Thursday, June 30, 2016

New York Legal News - Ongoing Investigation Into The P2P Lending Industry

New York Business Law, P2P Lending
New York is investigating whether peer-to-peer lenders are required to be licensed to operate in the state.

Peer-to-peer lending, sometimes abbreviated P2P lending, is the practice of lending money to individuals or businesses through online services that match lenders directly with borrowers. Since these peer-to-peer lending companies offer their services online, they are run with lower overhead and provide services cheaper than traditional financial institutions like those licensed in New York. As a result, these online peer-to-peer lenders can earn higher returns compared to savings and investment products offered by New York licensed financial institutions, and borrowers can borrow money at lower interest rates, even after the P2P lending company takes its fees for its services.

P2P lenders are used around the world as an alternative means for businesses in many countries to access funds for start-up, expansion and improvement. However, these companies are also subject to a good deal of regulation because, among other reasons, soliciting investments from the general public is illegal in some countries. In the U.S., the Securities and Exchange Commission can license and regulate some P2P companies when it borrows money from people in order to lend it out again.

Earlier this month, the New York Department of Financial Services sent a warning letter to 28 different P2P lending companies asking about their lending practices to determine whether these companies must be licensed in New York State. The letters are connected to New York's ongoing investigation of LendingTree.

The letters demand "immediate compliance" with New York's licensing requirements for debt collection, transmitting money and mortgage lending activities. If a P2P company believes that they do not need to obtain a license in New York, it must respond with a description of their products and services that it makes available to New Yorkers.

When considering start-up funds for your New York business, it is important to understand the potential risks and rewards of using P2P lending companies. Hiring an attorney familiar with this new industry will go a long way to assisting you to maneuver this complicated and multi-layered regulatory environment.
_____
*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com

Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

Tuesday, June 28, 2016

Revised New York Court Rule on Submitting Confidential Documents in Commercial Litigation

New changes in how New York Court's Commercial Division will have litigant file confidential documents submitted takes effect today.

The changes are part of an amendment to the division's Standard Form of Confidentiality Order that establishes a more formal process for submitting confidential documents in an e-filed case.

Litigants in counties with mandatory e-filing (like New York County) will be able to file redacted versions of the confidential documents, but then must move to seal the documents within seven days or they will be required to take steps to replace the redacted filings with un-redacted versions.

Previously, litigants could file confidential documents as hard copies with a motion to seal, or sidestep the process of obtaining a formal motion to seal and submit papers directly to the assigned judge's chambers without filing them. This created problems for New York appeals because without a proper motion on file, the appellate record would not include the confidential documents.

If your New York business is involved in commercial litigation, or is contemplating commercial litigation, make sure your attorney is aware of these new rules so that your confidential information remains confidential.
_____
*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com

Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

Monday, June 27, 2016

New York Business Basics: Registering Your Foreign Business in New York

NY Business Law, NY Corporate Law
If you own a business that was created outside of New York, then you need to register it if you want to do business here.

For our purposes, a "foreign" business is any business created outside of New York.  That also includes businesses created in another state.

According to New York law, foreign businesses are required to register if they are "transacting business" in New York.  While this term is not truly defined in the law, we can interpret that to mean that if you have a physical presence in New York, (an office, warehouse or store, for example) or have a sufficient connection (or "nexus") with the state that would require your business to collect sales tax in the state, then you most likely must register your foreign business.

However, you are not transacting business in New York if your foreign business is defending a lawsuit, holding a meeting, or simply having a bank account within the state.

To register your foreign business in New York, you must file an Application for Authority with the NYS Department of State.  While it is not necessary to do so, we recommend that you contact a New York attorney to handle this application for you, as there are different forms based upon what kind of foreign entity you are.

Should your foreign business fail to register and still does business in New York, then your business may not bring any lawsuit in a New York court, and may be liable to taxes to the State for revenue earned from doing business within it.

Therefore, it is advisable to register with New York State should you decide that your foreign business will be transacting business in the Empire State.
_____
*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com

Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

Saturday, June 25, 2016

Contracts with UK Companies to Provide Products to EU Nations: Frustration of Purpose as a Tool to Avoid Contracts

We have clients that are supplying products to UK companies and UK companies that are being supplied products by U.S. companies. With the surprising outcome of the Brexit vote, the purpose of these agreements are now frustrated because, often, these products are used in finished products assembled in EU nations.

This situation often arises in complex products.  For example, a U.S. business has a piece of technology that is integrated into a British component. The British component is then further integrated into a finished product manufactured in Germany.  The situation is not rare as you think.

Brexit Contracts, Frustration of Purpose, Avoidance of Contracts BrexitWe suggest an immediate review of your contracts. With the potential for UK companies to have decreases in sales, a fixed supply contact may be invalidated based on the Frustration of Purpose principle.  Obviously, the opposite may also be true. A UK company may be unable to provide products (Impossibility Principle) or provide products at the same cost because of Brexit.

While reviewing your agreements, it is important to understand the general principle of frustration of purpose, which is defined in The Restatement of Contracts, Second § 265:
 Where, after a contract is made, a party's principal purpose is substantially frustrated without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his remaining duties to render performance are discharged, unless the language or circumstances [of the contract] indicate the contrary.
New York courts and many other courts have accepted this basic definition in numerous cases.  The key is for the party attempting to "avoid/discharge" the contract to establish that:
  1. The contract is substantially frustrated;
  2. No fault for the frustration is attributable to the party utilizing the principle to its benefit;
  3. The occurrence of the event (in this case, Brexit), the non-occurrence of which was a basic assumption for the contract being made; and
  4. The contract does not have language to negate this argument.  
Hopefully, your attorney drafting your deal has anticipated a frustration argument. Even if the frustration issue has been considered, it is important to, promptly, analyze the potential effects of Brexit on your contracts.

For more information on the potential effects of the United Kingdom leaving the European Union, please contact one of our attorneys. Our attorneys work with MBAs, accountants and former executives from leading multinationals - our law firm is forming a team to study this issue.  Please check back soon for more information.
_____
*Sean Hayes may be contacted at: SeanHayes@ipglegal.com. Sean Hayes is co-chair of the Korea Practice Team and Chair of International Practice Group at IPG Legal.  He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty.  Sean is ranked, for Korea, as one of only two non-Korean lawyers as a Top Attorney by AsiaLaw.  He has, also, received the highest rating by AVVO and other legal rating services.

What Brexit Means For The New York Real Estate Market

New York Real Estate Law, Brexit
With the shocking news breaking that the United Kingdom has voted to leave the European Union, many New York businesses who transact business internationally, or who cater to an international clientele here at home,  are left to wonder what Brexit means for them.  For the real estate market, the effects are probably the easiest to sort out.

We have had many real estate and corporate clients contact us requesting advice on the effect the U.K. leaving the E.U. will have on their business in New York.  We will be writing about this issue over the next couple of weeks here and, also, on our sister blog at: The Korean Law Blog. 

First, don't expect an interest rate increase this summer because the volatility created by this unexpected news means that the Federal Reserve will want to keep rates as consistent as possible.  So if your New York business has interest in purchasing real estate, you should see a stable interest rate through the summer.

But, expect some more competition in New York from outside the nation.  A stronger U.S. dollar means that businesses from overseas will be turning their eyes to America as a safe haven for investment. So while interest rates will remain stable, residential and commercial real estate in New York will see increased interest from overseas businesses, which may mean increased purchase prices.

The dust is still settling on Brexit and its impact in a lot of markets.  For New York real estate, it's time to get ready for a slight increase in business and competition from overseas.

For more information on the potential effects of the United Kingdom leaving the European Union, please contact one of our attorneys.  Our attorneys work with MBAs, accountants and former executives from leading multinationals - our law firm is forming a team to study this issue.  Please check back soon.
_____
*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com
Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

Enforcing Foreign Judgments in New York: Personal Jurisdiction Necessary?

The New York State Court, in a case of first impression held that in personam jurisdiction is not necessary to  recognize and enforce judgments from a foreign court.  The case that decided the matter is Abu Dhabi Commercial Bank PJSC v. Saad Trading, Contracting & Fin. Services Co., 36 Misc. 3d 389, 948 N.Y.S.2d 533 (Sup. Ct. 2012).  The case is a case of first impression in New York and is a pivotal case that will, likely, lead to more cases like this case being heard in New York courts.

The court, in this New York case, granted summary judgment in favor of the Abu Dhabi Bank and, thus, recognized the U.K. judgment.  The facts of the case are typical in international judgment enforcement matters.  The Abu Dhabi Bank is a company established in the United Arab Emirates. Saad Trading is a Saudi Arabian limited partnership.  The Abu Dhabi Bank sued Saad Trading for breach of contract in a English court.  The Abu Dhabi Bank prevailed and was awarded a judgment of US$ 33 million.  The Abu Dhabi Bank wished to localize the judgment in New York.

Saad Trading, however, had no assets in New York and no contact with New York.  However, the savvy lawyers for Abu Dhabi bank realized that a judgment of a foreign court that is recognized in New York allows the court to force creditors to compel assets to be brought into New York for execution.

Saad Trading emphatically argued that "due process" would be violated, since no personal jurisdiction over the the company existed, since Saad Trading had no assets in New York and no contact whatsoever with New York.

The Court opined that the recognition of foreign judgments in New York is a mere administrative/ministerial function that does not require personal jurisdiction, since no new damages are being argued and the case does not need to be heard on the merits.

New York because of the ability of New York courts to compel the bringing of assets into New York is, often, a great place for enforcing foreign money judgments.

Other cases on enforcing foreign judgments that may be interesting to the reader:
_____
*Sean Hayes may be contacted at: SeanHayes@ipglegal.com. Sean Hayes is co-chair of the Korea Practice Team and Chair of International Practice Group at IPG Legal.  He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty.  Sean is ranked, for Korea, as one of only two non-Korean lawyers as a Top Attorney by AsiaLaw.  He has, also, received the highest rating by AVVO and other legal rating services.

Friday, June 24, 2016

NY's Highest Court Rejects Expansion of Common-Interest Doctrine: NY Legal New Updates

New York's Court of Appeals has reinstated the New York rule that the common-interest doctrine only applies in the context of actual or threatened litigation.

The common-interest doctrine is a legal concept in New York's Mergers & Acquisitions law that provides an exception to the general rule that attorney-client privilege is waived when protected information is shared with a third party provided that the communication furthers a near-identical legal interest shared by a client and a third party.  This doctrine protects M&A transactions in New York in this limited regard when companies seek to execute the transaction because both companies share a common legal interest at that time, but only when the information concerns legal advice in pending or reasonably anticipated litigation.  However, the doctrine does not extend to other communications between the buyer and seller.

Recently, the lower Appellate Division in New York attempted to expand the protection provided by the common-interest doctrine to parties whose common interest was so compatible and non-adverse, that they could be regarded more like joint venturers than separate companies with separate interests, and where the communication was mere advice on common legal interests.

However, the highest court in New York disagreed in the matter of Ambac Assurance Corp., et. al. v. Countrywide Home Loans, Inc., et. al., rejecting this expansion of the common-interest doctrine because it would make it more difficult to distinguish between common legal interests and business interests.  By maintaining the definition as limited to actual or threatened litigation, New York would maintain a bright-line rule determining what common legal interests actually are.

Why is this important to New York businesses?  Because this decision is a clear warning that shared legal advice in the context of anything other than actual or anticipated litigation in court is not privileged.  If you choose to have legal advice shared with a third party business - even if that business is one you may choose to merger with or acquire - that information is not shielded by attorney-client privilege. This ruling should make you think twice about who to have in the room with you when contemplating a significant change in your New York business.
_____
*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com
Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

Thursday, June 23, 2016

International Divorces in New York Courts: International Family Law Basics

Our law firm's New York attorneys handle many divorce and family matters for our international clients.  The major issues that arise are, typically, jurisdiction of the New York courts, service of process and the grounds for the New York divorce.  We wrote an article on the Grounds for a New York divorce and will be posting an article soon, also, on International Service of Divorce Documents in New York soon.
Foreign Divorce, International Divorce NY, Family Court

New York's Domestic Relations Law Section 230 allows New York courts to have jurisdiction over the parties in a divorce matter if and only if:
"1. The parties were married in the state and either party is a resident thereof when the action is commenced and has been a resident for a continuous period of one year immediately preceding, or 
2. The parties have resided in this state as husband and wife and either party is a resident thereof when the action is commenced and has been a resident for a continuous period of one year immediately preceding, or 
3. The cause occurred in the state and either party has been a resident thereof for a continuous period of at least one year immediately preceding the commencement of the action, or 
4. The cause occurred in the state and both parties are residents thereof at the time of the commencement of the action, or 
5. Either party has been a resident of the state for a continuous period of at least two years immediately preceding the commencement of the action."
If you fall into one of these categories, you may be able to divorce in a New York court.  Please beware that many local New York attorneys are not aware of international services issues.  Many believe that New York formalities will allow one to enforce the divorce abroad and guarantee the enforcement in New York.  The reality is far from this understanding.  We see this issue too often and need to fix issues caused by this issue - too often.

In order to enforce a divorce judgment abroad or to ensure that a New York court does not reopen a NY divorce judgment it is necessary to properly serve your spouse under the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters.  If you are considering retaining an attorney to assist, please make sure the attorney is adept, also, at international law issues related to NY divorces.
_____
*Sean Hayes may be contacted at: SeanHayes@ipglegal.com. Sean Hayes is co-chair of the Korea Practice Team and Chair of International Practice Group at IPG Legal.  He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty.  Sean is ranked, for Korea, as one of only two non-Korean lawyers as a Top Attorney by AsiaLaw.  He has, also, received the highest rating by AVVO and other legal rating services.

Tuesday, June 21, 2016

Commercial Lease Basics: Negotiate a Good Guy Clause For Your New York Start-Up

NY commercial lease, good guy clauses, personal guaranty
New York start-up businesses can negotiate a Good Guy Clause into commercial leases in New York to gain flexibility in terminating leases should things go wrong.

A Good Guy Clause is commonly used in New York City as a personal guaranty within a commercial lease.  In exchange for a guarantee from the tenant or an affiliate of the tenant to fulfill all obligations under the lease, the commercial landlord agrees to allow the New York tenant to terminate the lease early so long as all rent has been paid in full and the tenant gives sufficient notice.  The premises must be delivered "broom-clean" with all possessions and trash removed.

Good Guy Clauses in New York may protect both the commercial landlord and tenant.  These clauses protect commercial landlords in New York City because these clauses avoid landlord-tenant litigation and, if there is a party other than the tenant offering the guarantee - the individual offers additional assurance that the rent will be paid.  These Good Guy Clauses, also, may protect tenants in New York by giving them an option to terminate a lease in the event that the tenant's business is unprofitable.  This is why a Good Guy Clause is so important to New York business start-ups.

If you are a New York start-up negotiating a lease for commercial space, here are some things to consider before signing your commercial lease:
  1. With a personal guaranty comes personal responsibility.  That means you will be responsible personally for any shortfall in payments should you wish to terminate the lease.  If there is no personal guaranty, then all you lose is your business's security deposit.  
  2. Good Guy Clauses can include a clause where you waive your right to any return of your security deposit.  This is NOT standard language within the clause.  Look out for it. 
  3. Some landlords seek to make Good Guy Clauses conditional upon a minimum time of continued occupancy.  This kind of language negates the purpose of a Good Guy Clause, as most early terminations happen within the first few years of the lease term.  
When negotiating a commercial lease with a New York commercial landlord consider the following and consider hiring an experienced New York attorney.  
_____
*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com
Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

Obtaining A New York Liquor License - Application & Process Basics

New York liquor license
Qualifying for a liquor license in New York State may seem straightforward, but will get complicated if you do not know the basics.

The application process starts with choosing your business's location in New York, because it can impact your license application.  A New York business selling alcoholic beverages must be 200 feet from schools and religious buildings.

Generally, you must also consider that a license for on-premises liquor consumption may be granted for any premise within 500 feet of three or more existing premises licensed and operating with an on-premises liquor license. This rule can be waived by the New York State Liquor Authority if it determines that the license would be “in the public interest” after consulting with the local Community Board and holding a public hearing commonly referred to as "The 500-Foot Hearing".

Additionally, only qualified persons can obtain a New York State liquor license.  The personal qualifications are simple:  you must be (1) 21 years of age; and (2) a US citizen with no criminal convictions. Please note that a felony DWI and some out-of-state convictions can all disqualify your application.

Also note that in New York City, community boards must also be informed of your intention to pursue a liquor license within 30 days of filing your application.  You must also publish notice in a newspaper once a week for two successive weeks after you file your application.

Knowing what kind of liquor license your New York business needs also changes the application process.  In New York, the following liquor licenses are available:
  • On-premise retail license
  • Liquor store and wine store license
  • Beer & wine product license (store)
  • Special event permit
There are also wholesale liquor licenses available from the State of New York.  

While the above all sounds easy, the application process can take close to a year to process without the assistance of an experienced attorney.  Attorneys are allowed to partake in New York State Liquor Authority's Self-Certification program.  Attorneys filing retail applications on behalf of applicants can certify that statements and documents provided in the application are true and accurate and that the application meets all statutory requirements. This means a more timely process for the applicant. 
_____
*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com.
Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

Monday, June 20, 2016

Starting a New York Restaurant? Health and Safety Basics

NY Administrative Law, Business in NY
Starting a restaurant in New York involves significant consideration of state and local health and safety regulations.

Because restaurants and eateries are all about serving food, New York subjects restaurants to significant regulations regarding food health and safety. The New York State Department of Health has many regulations for food service establishments, including coverage of:
  1. employee cleanliness issues; 
  2. employee hand washing and food handling;
  3. employee health issues, such as prohibition from working if they have certain illnesses;
  4. washing of fruits and vegetables;
  5. reheating and thawing food;
  6. cleaning and sanitizing utensils; and
  7. garbage storage and disposal.  
The NYS Department of Health has a guide and other resources that can help you ensure you are meeting regulatory requirements.

In addition, if your restaurant is in New York City, there are additional handbooks containing local guidelines that you must follow, including how to obtain a New York City Food Handler's License. New York City takes health inspections seriously, requiring restaurants to post health grades in their front doors and windows.

The Federal Occupational Safety & Health Administration (OSHA) also has regulations relating to eye and face protection, hand protection, and workplace facilities.

With the above New York regulations in mind, you can expect regular inspections from your local health department, sometimes without notice. Health inspectors, especially in New York City, generally have a lot of latitude regarding what they can inspect, and health department inspections can cover a wide array of items in your restaurant. Inspectors can examine the food itself, food storage, cleaning stations, cooking equipment, facilities, building structure, and look for signs of insect and vermin infestation. The penalties for failing such inspections can be high fines and penalties, and even the shuttering of your New York restaurant.

Moreover, the stigma that follows with health inspection issues and failures will damage any good will your New York restaurant has created in the local community.
_____
*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com

Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

New York Family Law News: Hearings Necessary in New York Custody Disputes

NY Family Law
In a significant change in adjudicating custody disputes, New York's Court of Appeals recently ruled that, in most cases, custody and visitation orders should only be made after the parties have been given the right to a full hearing.

The recent Court decision in the matter of S.L. v. J.R., the highest court in the state heard an appeal from an order upheld by a lower appellate court that allowed a custody award to be upheld without conducting a hearing.  The reason the lower appellate court upheld the custody award is because it determined that no hearing is necessary where the court had enough  relevant information to make an informed decision as to what was the child's best interest.

In reversing the appellate decision, the New York Court of Appeals noted that hearings allow trial-level judges to review the credibility of witnesses and the character and temperament of parents.  Also, trial courts must generally hold hearings because a custody award should be established long term because it is in the best interests of children to not be shuttled between divorced parents.

Holding a hearing would also prevent reliance on hearsay statements and other affidavits whose opinion and credibility are untested.

Now more than ever, if you are involved in a New York custody dispute, find an attorney skilled in managing and handling hearings where evidence must be submitted in admissible form, and who has experience in preparing witnesses for offering testimony and is familiar with the latest court standards and procedures.

The implications of this decision remains to be seen.  However, if you care about the best interests of your children in New York custody disputes, you must be prepared to show you are a good parent at a trial-like hearing.
_____
*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com

Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

Sunday, June 19, 2016

Winding Up Your New York Business: Essential Steps to Business Closure in New York

If you are looking to close your New York business, these are some of the many essential steps you should take:

Vote To Close The Business:  No matter what form your business has taken, you must get all owners' approval to close the business.  In some forms, it is easier to do than others.  For example, if your New York business is a sole proprietorship, you simply make the decision on your own. If it is a New York limited liability company or partnership, you and your partners must agree to dissolve the business based upon the rules set out in your organizing documents and the laws of the State of New York.  Regardless of business form, you should consult an attorney to outline the proper steps to ending your New York business.

Dissolve Your Business With Government:  If your New York business filed documents with any level of government, you need to properly dissolve the organization properly so that you are no longer liable for taxes.  Proper dissolution of your New York business also puts creditors on notice of the ending of your business. This can be as simple as filing a form with whatever level of government you had originally filed.  Again, it is advisable that you consult with an attorney to compile the proper documents.

Cancel All Other Government Entanglements:  If your New York business has any outstanding licenses, permits or other certifications that are active at the time of dissolution, you must cancel those documents with the proper governmental entities.

Remember, before any debts are paid or money is distributed, be sure to pay all taxes owed at all levels of government.

Notify Creditors, Vendors, Employees and Customers:  When you are ready to end your New York business, you must tie up all loose ends.  Notify vendors of last dates of deliveries.  Contact your bank and creditors and arrange for funds to be transferred.  If you have outstanding business loans, be sure to have a plan in place for paying off these debts.   For example, you may need to arrange for an asset sale to cover outstanding debts.

This is not an exhaustive list - it is but a sample of  many other steps that your attorney must assist you with in order to properly end your New York Business.
_____
*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com

Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

New York Legal News: New York City May Require High Salt Warnings Of Chain Restaurants

NY Business Law, NY Legal News
A New York appeals court ruling has cleared the way for New York City to begin enforcement of its rules requiring restaurants to warn of high-salt content.

Recently, the First Department of the New York Appellate Court held that New York City can require chain restaurants to post warnings on items high in salt content. In doing so, the Court also lifted a stay on enforcement of the rule that was granted after the National Restaurant Association appealed a trial court ruling.

The National Restaurant Association challenged the requirement, claiming that it was an unlawful and unprecedented burden on restaurant owners, resulting in confusion for customers.  It also claimed that the rule was arbitrary and capricious.

New York City is the first to require restaurants with 15 or more locations nationwide to post a warning next to menu items with more than 2,300 milligrams of sodium. Violators are subject to fines.

In February of 2016, a Manhattan Supreme Court Judge held that New York City was within its rights to adopt this rule because "information is power" and that there was a rational basis between the rule and its purpose lowering blood pressure and reducing the risk of heart attacks and strokes.

With its recent decision, the Appellate Court has paved the way for New York City to enforce high salt warnings and fine chain restaurants who fail to do so.
_____
*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com
Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

Saturday, June 18, 2016

New York Debt Collection Definitions And Basics

In those instances where third parties do not pay what you are owed, it is important for New York businesses to know the basics of New York debt collection.

A creditor is a person or entity to whom money is owed. Normally, a creditor gives something of value to a borrower (money or services) in exchange for a promise that the borrower will pay them back. In most cases, repayment is accompanied by an additional payment of interest. Examples of creditors include credit card companies, banks, or any other person or company that lends money.  However, other businesses, such as medical professionals can be considered creditors when they provided valuable services in exchange for a promise to pay.

A secured debt is a debt or loan that is guaranteed by collateral. Collateral is an item of value that the creditor takes as payment if the debt is unpaid. Prime examples of secured debts are mortgages, which are secured by real property, and car loans.

An unsecured debt is backed by a promise to pay at a later date, and is not guaranteed by any collateral. Prime examples of unsecured debt are credit cards and medical bills.

If you have a debt in New York that is unpaid, the best way to address it is to turn it over to a collection agency, who will attempt to collect what is owed.  New York creditors may also sell your debt to another company. In New York, buying and selling of debts is legal. There are companies in New York that specialize in buying and collecting on old debts. These companies stand in place of the original New York creditor and must report debts accurately and treat borrowers fairly.

If a debt remains unpaid, creditors may also choose to sue for the remainder owed. In New York, the statute of limitation for filing a debt collection lawsuit is six years from the date of default. The date of default is approximately one month after the last payment was posted. But, in matters concerning credit card debts, the statute of limitations may be as short as three years from the date of default.

If the creditor receives a judgment, the statute of limitations for collecting the judgment is twenty years.

If your New York business has debts that remain unpaid, it is important to consult an attorney, who will help you determine the best avenue to take to collect your debt.
_____
*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com

Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

New York Legal News: Mixed Signals On Online Poker Bill

NY Legal News, NY Legislation, NY Online Poker
Photo by Bellagio.com
New York took one step forward - and possibly two steps back - as the State Senate overwhelmingly passed an online gambling and poker bill, but a key lawmaker in the State Assembly declared the effort to pass the same "dead."

The New York State Senate passed a bill that would legalize online poker in the state, which would make New York the 4th state to allow its residences to gamble online.  Under the proposed legislation, online poker revenue would be taxed at a 15% rate and the state would get $10 million per online poker license.

Advocates for the bill call it a safe, regulated option that would generate millions in revenue for state education and other initiatives.

However, the New York State Assembly has not passed their version of the online poker legislation, with the chair of the Assembly's racing and wagering committee, calling efforts to get it passed this legislative session "dead,"which is an indication that there are not enough votes in the legislative body to pass the bill.

It remains to be seen if online poker and gambling will become law in New York in the future, but it appears that, at least for now, New Yorkers will have to keep traveling outside of the state to play poker.  
_____
*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com
Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

Friday, June 17, 2016

Essential Information On New York Small Business Taxes

NY Tax Law, NY Corporate Law
New York small businesses want to be in the Empire State, but in many cases the taxes on small businesses can be a drawback that small business owners must consider.

New York sole proprietorships do not pay any corporation franchise taxes or filing fees.  The sole proprietor pays the state and federal personal income tax individually.

New York partnerships are considered "pass-through" businesses where the incomes passes to the individuals who own them.  New York partnerships do not pay federal or state income taxes, but are subject to state filing fees, which are calculated based on gross income.  The effective maximum tax in New York is $4,500.

New York limited liability companies can be classified as a partnership, a corporation or as a "disregarded" entity. New York limited liability companies that classify as a corporation pay the corporation franchise tax under the same rules as traditional corporations.  New York limited liability companies that classify as a partnership follow the same filing fee scheme as New York partnerships. The effective maximum tax in New York is $4,500.

New York S corporations are traditional corporations which allow income to pass through the company to its owner, so long as certain conditions are met.  Despite this, New York still requires New York S Corporations to pay a corporation franchise taxes.  The effective maximum tax in New York is $4,500

New York C corporations have a multitude of options.  New York C corporations can choose a simple calculation that usually results in paying approximately 7% of its net income.  New York small businesses with net income less than $290,000 usually get a slightly discounted rate.  New York C corporations can also calculate taxable income based on its business and investment capital less liabilities, or can choose to pay based upon gross receipts.  Consult with a qualified tax attorney to decide which method is best for your New York C corporation's needs.

No matter which business model or method your New York small business has chosen, you should always consult an experienced tax attorney to determine the best method for your needs.
_____
*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com

Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

New York Legal News: Vimeo Prevails In Copyright Infringement Appeal

Vimeo, an internet service provider that allows users to upload audio and video content, is not liable for copyright infringement after in New York after the Second Circuit Court of Appeals reversed a Manhattan Federal Court decision.

By reversing and remanding the decision of a Manhattan Federal Court, the Second Circuit Court of Appeals has affirmed that the Digital Millennium Copyright Act (DMCA) grants an internet service provider a "safe harbor" from infringement claims, regardless of the publish date of recordings.

In the matter of Capitol Records v. Vimeo, Capitol Records sued in Manhattan Federal Court for copyright infringement, claiming that Vimeo should be held liable for users publishing copyrighted materials, including music recorded before 1972.

The Second Circuit disagreed, holding that construing DMCA as leaving service providers like Vimeo subject to liability for the acts of users posting materials that may infringe copyright "defeats the very purpose Congress sought to achieve in passing the statute."

The Second Circuit also rejected Capitol Records's claim that Vimeo should be held liable for videos uploaded onto its site that a reasonable employee should have had "red flags" of copyright infringement.

The Second Circuit also rejected Capitol Record's argument that Vimeo showed "willful blindness"  towards audio infringement since it monitors only video content.
_____
*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com

Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

Alternative Dispute Resolution: New York Arbitration Basics

NY Arbitration Law, NY Business Law
Many New York small businesses are turning to alternative means of dispute resolution, like binding and non-binding arbitration, so it is important to understand the basics of arbitration.

Arbitration is an out-of-court proceeding where parties contract to have a third party neutral, called an arbitrator, hear evidence and then make a decision. Often, parties to a contract agree to arbitration when they sign an agreement, which outlines the location of the arbitration and apportionment of fees.

Arbitration can be binding, which means that the parties must follow the arbitrator's decision, or non-binding, which means that either party may reject the arbitrator's decision and go to court as if the arbitration never took place.

Arbitration can be voluntary, where the parties agree to arbitrate, or required by law. It is quite common for parties to a contract to agree to an arbitration clause for disputes arising out of and related to the subject matter of the contract.

Arbitration comes with certain advantages to New York businesses.  It is usually a faster, simpler process that is easier to schedule than litigation and takes less time.  It is also a private proceedings in a setting outside of the public eye of the courtroom. Finally, if the dispute is technical in nature, parties can find an arbitrator with the requisite technical knowledge needed to decide the dispute.

However, there are some disadvantages to arbitration.  For example, you have only one chance to win, as a binding arbitration ruling cannot be appealed.  Setting aside an arbitration decision in New York is difficult because you would need to prove that the arbitrator was biased or that the arbitrator's decision violates public policy.  Also, arbitrations often have their own rules of discovery that limit what parties can access. Finally, the costs of arbitration can be significantly higher than court filing fees.

Whether your New York small business wishes to pursue arbitration as an alternative to courtroom proceedings or not, you should consider hiring an attorney with knowledge and experience in both arenas.
_____
*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com

Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

Thursday, June 16, 2016

Employee "At Will": New York Employment Law Essentials

If your New York business is about to start hiring employees, then it is essential that you know what hiring someone as an employee "at will" is and what rights and protections they are afforded under New York law.

New York is generally considered an "employment at will" state.  This means that a private sector employer can hire and fire an employee at will as he or she pleases.  The discharged employee will usually have little to no legal recourse, even when the firing is based on incorrect information or is unreasonable.

Of course, there are exceptions to this general rule:
  1.  Union Contract: If the employee is a union member and employed under a union contract, then s/he is entitled to the protections written into that contract. Even if s/he is not a union member, the employee might be protected by a written agreement. 
  2. Employee Handbook: If an employer distributes an employee manual or handbook containing rules and conditions under which an employee at will may be discharged or steps created that may precede discharge, then the employee may be afforded those rights outlined. An experienced employment attorney can advise you on any specific situation. 
  3. Politics: If the employee was discharged because of his / her participation in a lawful political or recreational activity, the employee may have a claim for wrongful termination.  
  4. Whistleblower:  If an employee is fired for reporting a violation of law which creates and presents a specific danger to public health or safety, or is fired for refusing to participate in such an activity, then the employer may be exposed to a claim for back pay, reinstatement and attorney's fees by the whistle-blowing employee. 
  5. Jury Duty:  Since attendance at jury duty is a civic obligation of all citizens, an employer who is notified in advance of a employee's jury summons cannot fire that employee at will for that absence. 
  6. Worker's Compensation:  An employer cannot fire an employee at will because s/he filed a Worker's Compensation or claim for disability benefits.  This is considered to be a retaliatory discharge of employment and is actionable.
  7. Human Rights Law:  New York Law prohibits employers from firing an employee at will because of his or her race, religion, gender, place of national origin, age, marital status or disability.  In New York City, employers cannot fire an employee based on sexual orientation, arrest or conviction, partnership status, and status as a victim of certain crimes.  These grounds are probably the most commonly claimed violations in most New York employment lawsuits.  
Outside of the above exceptions, New York employers are well within their rights to fire an employee at will.   But it is always advisable to consult with an attorney with knowledge of New York employment law if you and your business are unsure about your given situation. 
_____
 *Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com

Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

New York Franchise Law Basics: Top 4 Signs Of Fraud

If you are thinking about entering into a franchise agreement in New York, then you should know the top 4 warning signs that should raise your awareness that there may be some fraud involved.

All of the laws in New York that are intended to protect potential investors in franchises are not meant to act as a substitute for good business sense, so be aware of these 4 issues that should raise a red flag in your mind:

  1. Failure to disclose necessary details: Under New York law, no offer or sale of a franchise can take place until the franchisor has registered franchise disclosure documents (FDD) with the state.  Sometimes called a prospectus, the FDD contains 20 different items of information about the franchise, the history of the company, required fees and investment costs, among other things.

    If you do not receive an FDD at least ten business days before you are asked to sign a contract or pay money to a franchisor, then you should be wary. Reputable franchisors in New York will not only offer it, but will ask you to sign and acknowledge receipt of it. Make sure the date is correct and that you keep a copy of the receipt for your records, as disreputable franchisors may back-date a receipt as a way to work around the 10-day rule. 
  2. High Pressure Sales Tactics: The reason that New York Law affords you ten days after receipt of the FDD is to afford you time to examine the disclosures and make an unhurried decision about whether or not to invest.  You should never feel pressured to buy a franchise in New York or be forced to make a rash decision.  You are the investor.  You are in control of your investment. 
  3. Claims of Minimal Risk and Unrealistic Profits: There is a risk associated with buying a new franchise in New York, no matter how successful a chain a franchisor may have. Be wary of guarantees of high profits with little risk - if it sounds too good to be true, it probably is. 
  4. Unjustified Start-Up Fees: Not only should you know what the initial fees are, but you should know if the initial fees include services or goods that the franchisor will receive before the business even opens. That is a red flag. You should also know if the fees are refundable.  Sometimes, crooked franchisors doing business in New York have sold franchises and skipped out of state with the franchise fee. 
The best protection for prospective investors in franchises in New York is to hire an attorney and to learn about franchise risks before you invest big money.
____
*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com

Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

New York Legislature Debate: Can Uber And Lyft Expand Throughout New York State?

New York state lawmakers are debating legislation that would give motorists insurance coverage to transport passengers booking trips on ridesharing companies around the state.

Uber and Lyft, both of whom have seen great success in New York City, have been lobbying Albany to expand their services into upstate New York.  However, New York lawmakers remain divided over how much app-based the ridesharing services should be required to pay in insurance costs.  Uber has opposed a bill emanating from the legislature, claiming that insurance costs would be too high.

Uber wants to operate state-wide to allow it to purchase insurance so that communities who want it can start welcoming its services.  However, some lawmakers believes that the ridesharing companies need to work out rules of operations with cities and towns around the state.

Unless a new agreement is reached before the end of this week, it would seem that these ridesharing companies may need to return to Albany next year when the 2017 legislative session opens if they want to expand their services throughout New York state.
_____
*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com

Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

Wednesday, June 15, 2016

When Must Your NY Business Agreements Be In Writing?

While it is always advisable to put all your New York business agreements in writing, there are special rules that govern whether a particular contract must be in writing.

  1. Sales of goods:  Like most states, sales transactions are governed in New York by the Uniform Commercial Code, which has a specific section on when it is necessary for your agreement to be in writing.  The section is referred to as the Statute of Frauds.  The Statute of Frauds in New York states that contracts in New York for the price of $500 or more is not enforceable unless there is some writing sufficient to indicate that a contract has been made.

    Please note that this doesn't necessarily require a contract - only some writing proving there is a contract.  Of course, the UCC contains conditions and further details on the issue, so consult an attorney before undertaking a commercial transaction.
  2. Any Contract That Takes More Than A Year To Perform:  The NY General Obligations Law requires that contracts that will take the parties more than one year to perform must be in writing.  This includes employment contracts.  However, New York employers should note that employment with no specific terms (also known as "at will" employment) do not need to be in writing because they can be terminated at any time.
  3. Guaranty To Pay Another's Debt:  The NY General Obligations Law requires any guaranty to pay the debt of another to be in writing.
  4. Negotiating Services for Loan / Real Estate Brokerage:  The NY General Obligations Law requires all real estate transactions and transactions related to loans to be in writing unless the person providing the services is a licensed real estate broker or an attorney.
  5. Sale / Lease of Real Estate:  The NY General Obligations Law provides that all conveyances of real property and leases longer than one year in duration must be in writing.
  6. "It Depends":  There are many other instances where an attorney will advise you that it is the best practice to preserve your rights with a writing.  Based on my experience as a litigator, I encourage all agreements to be laid out clearly in writing to make it easier down the road to prove the existence of an agreement should the need arise to go to court, mediation or arbitration.

That is why your New York business agreements should always be written and drafted by an experienced attorney.
_____
*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com

Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

IRS 501(c)(3) Organizations vs. IRS 501(c)(4) Organizations: New York Non-Profit Law Basics

We have clients at our law firm operating non-profit businesses in New York that require advice on IRS 501(c)(3) vs IRS 501(c)(4) organizations.  We hope this and a few other articles we have will be useful for the reader.

Whether your New York nonprofit should apply for tax exemption under IRS 501(c)(4) depends upon the type of organization you have and the political activities it may be undertaking.

New York nonprofits that are civil leagues and local associations that further a social welfare objective, but do not quite meet the level of a charitable organization (religious, educational, charitable purposes), may pursue exemption under 501(c)(3).  For example, a local civic association, homeowner's association, or the local Lions Club, are organizations that meet this description.

New York nonprofits that wish to freely conduct political or lobbying efforts, gain support or opposition for political candidates or take action to pass or repeal laws and legislation should choose to apply for 501(c)(4) exemption.

A New York nonprofit that obtained 501(c)(3) exemption is limited to conducting "insubstantial" lobbying efforts that allocate less than 10% of its total operating budget.  A New York nonprofit that obtained 501(c)(4) exemption may engage in unlimited lobbying and political activity so long as there is some relation to the purpose of the organization.

You should note that should your NY nonprofit obtain 501(c)(4) exemption, individuals and businesses that donate to your organization will most likely be unable to take a tax deduction.

If you are considering applying for exemption under IRS 501(c)(4) for your New York nonprofit, you should consult an attorney that knows the eligibility requirements and costs and benefits to each classification so you can make an informed decision.

Please note that we will be writing about more issues related to non-profit law over the next few weeks.
_____
*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com\
Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

New York May Make Airbnb Short-Term Rentals Illegal: New York Rental Law Updates

NY Airbnb, NYC Airbnb, NY Real Estate
New York may pass legislation by the end of the week making it illegal for New Yorkers to list short-term rentals on Airbnb.

In a rare show of bipartisan support, a bill to ban Airbnb-style posts for short-term sublets could get floor votes on the floors of the New York State Assembly and New York State Senate this week.  If the Anti-AirBnB Law is signed into law, advertising short-term sublets or any use other than permanent residency of these sublets will be illegal.

The legislation seems focused on commercial users of Airbnb who turn their residences into illegal and unregulated hotels.

Under these new laws, the liability for advertising short-term rentals would shift from building owners to the renters and those who place the advertisements on sites like Airbnb, with penalties ranging from $1,000 for a first offense to $7,500 for third and subsequent violations.

Airbnb claims that the majority of New Yorkers, it has polled, oppose such penalties and want governments to make short-term rentals legal, claiming that the proposed legislation hurts responsible home sharers.  On the other hand, real estate organizations, housing advocates and the hotel unions in New York support the proposed legislation.

New York is Airbnb's largest market in the States, but the two have been butting heads since 2010 when New York passed a law prohibiting people from short-term rentals when they are not present in the apartment.  

Airbnb has spent close to $800,000 in the past six years in an unsuccessful attempt to lobby in both Albany and New York City. New York City has pledged to ramp up enforcement of Airbnb-type violations, allocating $10 million dollars over the next three years to go after individuals violating short-term rental laws.

Passage of the proposed legislation in New York would be the latest of recent setbacks for Airbnb. Last week, San Francisco voted to force Airbnb hosts to register with the City.  And Los Angeles is considering regulations and penalties dictating how Airbnb users can rent out homes.  Airbnb has raised over $1 billion nationally to oppose such efforts

By the end of the week, we should know whether New York will make Airbnb advertising of short-term rentals illegal.
_____
*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com
Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

Tuesday, June 14, 2016

Registering Your New York Nonprofit For Fundraising Purpopses

NY Charities, NY Fundraising, NY Nonprofit
If your New York nonprofit is fundraising in New York, then you may likely need to register with the New York Attorney General's office.

Before soliciting contributions from individuals, foundations, corporations or government agencies within New York, a New York nonprofit must register with the NY Attorney General's General Charities Bureau, unless it falls within one of the many exceptions:

Exceptions to the New York Nonprofit Filing Requirements
  1. Religious organizations or other organizations with a religious purpose (i.e., a religious school);
  2. Educational institutions that solicit contributions only from alumni, the student body, faculty, trustees and their families, and other educational organizations that report to or are chartered by the Board of Regents of the State University of New York are exempt;
  3. PTAs (Parent-Teacher Associations);
  4. Fraternal, patriotic, social or alumni membership organizations that limit their solicitations to its membership;
  5. Law enforcement support groups, veterans organizations, and volunteer firefighter/volunteer ambulance service organizations;
  6. Any other organization that (a) does not use professional fundraisers in New York; and (b) its gross contributions (which includes contributions and grants, but excludes membership dues) from New York of less than $25,000 per year are exempt.
If your New York nonprofit does not fall within any of the above exceptions, then your New York nonprofit must file a CHAR410 application with the NY State Department of Law Charities Bureau Registration section, along with accompanying documents.

Like most nonprofit filings, it is advisable for your New York nonprofit to consult an attorney to determine whether you must register, and to handle the filing and registration.

Once filed and registered, you do not have to renew your New York nonprofit's registration.

If your New York nonprofit is serious about fundraising, it should consult an attorney to determine when and if you need to register with the NY Charities Registration Bureau.
_____
*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com.

Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

Applying For NY State and Federal Tax Exemption For Your New York Nonprofit

NY Nonprofit, NY Charities, NY Tax Exemption, Federal Tax Exemption
Now that you created your New York nonprofit,  let's discuss how your New York nonprofit can apply for state and federal tax exemption.

After your New York nonprofit has held its first organizing meeting, you will need the continued assistance of an experienced attorney to file documents with the federal government and New York State.  By this point, you should have already consulted an attorney about the formation of your organization and hopefully the attorney made sure that you have created an entity that the IRS will find qualifies for tax exemption.

For the federal government, you will need to complete and file IRS Form 1023, which is a long and detailed form that asks for extensive information about your New York nonprofit's organization, history, finances, structure, governance policies, operations and more. The IRS Form 1023 should be accompanied by appropriate supporting documents that your attorney will request that you produce.

Smaller New York nonprofits may be eligible for the streamlined and simpler IRS Form 1023-EZ that can be submitted online if your New York nonprofit's annual gross receipts are less than $50,000 and total assets are less than $250,000.  Your attorney will know which IRS form best suits your New York nonprofit.

After submission of your completed application, the IRS may send you a letter asking for clarification of certain issues before issuing a determination letter. This letter often includes a deadline by which you must respond.  This letter is a serious matter and must be handled promptly - an inaccurate, untimely or inappropriate response may jeopardize your application!

Some time after submission of your responses, you will receive a determination letter stating whether your New York nonprofit qualifies for tax exemption status.

For New York State, NY Form ST-119.2 is the appropriate document for you to submit to apply for a tax exemption certificate from the NY State Department of Taxation, but it should be accompanied by your 501(c)(3) determination letter and other documents that your attorney will need to attach.

With all applications, patience is key.  Both the federal government and New York State have been known to take several months to process applications for tax exemption.  Your attorney should be the point of contact for all correspondence and interaction on behalf of your New York nonprofit with all levels of government during this process.

With the right attorney guiding and advising you through the application process, your New York nonprofit has the best chance to qualify for state and federal tax exemption.
_____
*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com
Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

Suing The New York Government? Exceptions And Extensions To Statutes of Limitation / Notification Periods


NY Litigation, NY Statute of Limitations, NY Trials
When you are suing the New York government, there are strict time limitations for notice and filing your claim, but they are not without exception or without the ability to extend under special circumstances.

Recently, we featured a blog about the statute of limitations when suing a New York municipal entity or authority.  However, there are exceptions to the rule and motion practices you can attempt to pursue if none of those exceptions apply.  These statutes of limitations and the statutory period of notice of claims are tricky depending on the nature of the claim and the legal status of the claimant, so consult an attorney immediately should you choose to sue a New York municipal entity or authority.

If your claim against a New York municipal entity or authority involves a claim by an infant (person under the age of 18) or a person who is legally incompetent, the time to file a Notice of Claim remains 90 days, but the time to bring suit is tolled pursuant to CPLR 208.  However, any derivative claim by a parent or guardian is still governed by the normal statute of limitations that, depending on the entity or authority, is between a year and one year and ninety days.

If your claim against a New York municipal entity or authority involves a claim for wrongful death, the time to file a Notice of Claim accrues from the date of appointment of an executor or administrator of the decedent's estate.  The statute of limitations for a wrongful death claim against a New York municipal entity or authority is extended to 2 years from date of death.

However, a Notice of Claim for the decedent's conscious pain and suffering must be made within 90 days from the date of death, and the claim must be filed within the normal year and ninety day period after date of death.  Failing to recognize the difference is a common misstep for litigants.

If your claim does not involve the above, and you miss the 90-day Notice of Claim filing period, you will need judicial intervention to bring your claim.  To have a chance of having a Court grant you leave to file a late Notice of Claim, your application must be brought within the applicable statute of limitation period, you must prove that the New York municipal entity or authority obtained actual written notice of the incident at issue within the 90-day period and that the filing of a Notice of Claim will not prejudice the New York municipal entity or authority.

If you are going to sue a New York municipal entity or authority, you better find an attorney who knows the exceptions and extensions that apply to the correct statute of limitations and notification periods.
_____
*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com.

Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

Monday, June 13, 2016

Starting A Nonprofit Corporation in New York

Here is a not-so-quick introduction of how to start a nonprofit corporation in New York.

A 501(c)(3) organization, which are formed for religious, charitable, scientific, literary or educational purposes, is eligible for federal and state tax exemption.  But before you can have a tax exempt organization, you need to create an organization in New York.  Here is what you need to do to create a organization in New York.

Creating a Nonprofit Organization in New York
  1. Choose Directors
    Choose 3 initial directors over the age of 18, preferably people who live in New York.
  2. Select a Name
    Choose the name of your nonprofit corporation that is distinguishable from the name of any other corporation.  To assist you, New York's Department of State has a business name search database of New York businesses to determine whether your name is available.
  3. Select the Address
    Determine the address and location of your New York nonprofit to create a Certificate of Incorporation to be filed with the State of New York.
  4. Articulate the purpose of your nonprofit for your Certificate
    This can be tricky because it must contain more than what your nonprofit's purpose actually is. An insufficient statement of purpose that does not meet either state or federal requirements will delay creating your organization and obtaining tax exemption. Your attorney should have boilerplate language available for you to utilize that should pass all levels of scrutiny.
  5. Prepare bylaws
    Before you file your certificate, you will need to have bylaws that comply with New York law that contain rules and procedures for holding meetings, electing officers and other corporate formalities that your nonprofit will need to follow. While you need not file your bylaws, they will be needed later on when you file for tax exemption.
  6. Set up a Records Binder
    Your New York attorney should organize your important documents and provide a record binders for future documents like minutes, resolution and other important documents that will be accumulated over the time your New York nonprofit is operating.
  7. Select the Type of Nonprofit
    Determine the type of nonprofit you are filing, as defined by the law:
    • Type A nonprofits are formed for any lawful non-business purpose or purposes including, but not limited to, any one or more of the following non-pecuniary purposes: civic, patriotic, political, social, fraternal, athletic, agricultural, horticultural, animal husbandry, and for a professional, commercial, industrial, trade or service association;
    • Type B nonprofits are formed for any one or more of the following non-business purposes: charitable, educational, religious, scientific, literary, cultural or for the prevention of cruelty to children or animals;
    • Type C nonprofits are formed for any lawful business purpose to achieve a lawful public or quasi-public objective, which must be explained in a separate statement identifying the lawful public or quasi-public objective which each business purpose of the corporation will achieve;  
    • Type D nonprofits are formed when authorized by any other corporate law of New York for any business or non-business, or pecuniary or non-pecuniary, purpose or purposes specified by such other law, regardless of whether its purposes are also with Type A, B or C.
Your New York attorney will, also, likely request other documents for the processing of the non-profit incorporation.  No worries, with a proactive attorney - most matters go smoothly.
 _____
*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com
Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

Suing the New York Government? Statute of Limitations/Notification Claims in New York

Lawyers in New York State
Commencing litigation, in New York City, against a private entity is an undertaking, but suing the New York City government in New York starts with a big time crunch.

In New York, if you are suing any state or local government municipality or authority, you have, in most cases, 90 days to submit a Notice of Claim to the proper entity. The time period starts accruing from the date that the event triggering your claim occurred. In the Notice of Claim, you must give your personal information, the date, time and location of occurrence, a brief description of the incident in question and a brief description of the damages claimed.

This Notice of Claim, in New York, must then be delivered to the proper entity - or entities if you are not sure if one or many are involved - at the proper location. To find a listing of entities and municipalities and addresses for service of process, New York City publishes the searchable New York City Green Book online.

After filing the Notice of Claim, the noticed entity has the right to a 50-H hearing (referring to a section of the NY General Obligations Law), which is an investigative proceeding much like a deposition where the entity has an opportunity to ascertain additional facts about the claim.

Different municipal entities and authorities have different statutes of limitations, ranging from one year to one year and ninety days, depending upon who you are and why you are suing the entity.

When taken altogether, this means your attorney needs to ramp up the initial work-up and investigation of your matter faster than the average case in litigation.  Always remember that time is of the essence when bringing a claim against the government of New York.
_____
*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com.

Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

Laborers Who Fall From Elevation Mean "Absolute" Liability For Owners And Contractors


NY Premises liability, Labor Law, Falls From Elevation
New York property owners and contractors employing laborers working at elevation must make sure the workers are given proper protection or be subjected to "absolute" liability should the worst happen.

I had a client who was a New York apprentice laborer working on the construction site of a charter school. While climbing the ladder in the proper manner and reaching the top rung, the ladder swayed and my client fell more than one story to the floor below, hitting a metal toolbox on his way down to the floor. His injuries were extensive - his body broken.  His family, including his infant son, was left without insurance because he could no longer work.  He underwent many surgeries to repair his broken back.  I sued the owner and general contractor on his behalf, claiming that they failed to supply him with sufficient safety equipment.

Workers like my client who fall from elevation are protected by NY Labor Law § 240(1), which holds contractors and property owners responsible for failing to provide their workers with proper protection when working with ladders, scaffolds, hoists and other methods where workers labor at elevation.  That law subjects owners and contractors to liability as a matter of law, for any injuries that result from such failure since workers are scarcely in a position to protect themselves from accident.  In fact, the Court of Appeals interpreted the section in Rocovich v. Consolidated Edison  Co.,  imposing “absolute liability” for a breach which caused an injury - even if the worker himself was somehow negligent.

Within a year, my team and I worked up the case to the point where, close to a year after the accident, we mediated the matter and secured a seven-figure settlement for our client.

The lesson NY property owners and general contractors can learn from this is that laborers should be given every available manner of safety equipment if s/he is going to be working at any level above the ground.
_____
*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com
Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

Stay Away From Subjective Phrases In Your Contracts

When negotiating your contracts, stay away from subjective phrases that could be interpreted differently by the parties, or you may be leaving yourself open to a Court's interpretation.

The goal of every business is to make money, and lots of it.  Negotiating contracts with subjective phrases are a sure way to lose money because those contracts lead to delay, breaches and more time spent in Court than doing business.

Subjective phrases are those that are shaded by feelings, experiences and depend upon one's individual point of view.  More often than not, they are loosely-defined words and phrases that may mean one thing to you, but something else to the other party.  These phrases are like landmines in your contract, and must be avoided, if possible:
  • Avoid phrases like "reasonable" or "best effort." While attorneys may make a distinction between the two, courts have inconsistently applied the two, sometime even merging the standards.  While that would be alright if business goes smoothly, it could create protracted litigation if things turn bad. 
  • Avoid phrases like "material" and "substantial" unless you specifically define its meaning in your contract.  Failure to define a term is an invitation for allowing a Court to define it for you in its own way, and invites creative litigators to shape the facts and circumstances to their advantage.  
The easiest way to avoid phrasing that leaves your contract open to interpretation is to consult with an attorney with both transactional and litigation experience.  They have the best perspective to offer you in your negotiations.  The goal is to make sure that when everyone leaves the negotiation table, everyone is pleased with the deal, but has the same understanding of the rights and responsibilities that everyone just agreed upon.

Subjective phrases will turn your understanding of an agreement upside down, and opens you up to litigation.  Avoid these subjective phrases if you can.
_____
*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com.

Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

Proper Or Penalty? When Are Liquidated Damages Clauses Enforced in NY?

NY Contract Law, Business in NY
When NY businesses contract with others, and those contracts include a clause for liquidated damages, be careful that it is enforceable and proper, and not a penalty, or you are negotiating your way into Court!

In New York, parties generally are free to set the terms of their own contracts and may agree on the damages for breach in certain circumstances.
Specifically, parties are free to agree to liquidated damages clauses, which is an agreement in advance of any breach as to what amount of damages are due where (1) they are difficult or impossible to calculate and (2) where the amount agreed upon bears a reasonable relationship to the probable loss.

Our law office sees these a lot in contracts for services, like alarm services, and also in installment agreements where timely performance is necessary to maintain value.

On the other hand, when damages resulting from a breach are readily calculable or where the agreed upon amount is grossly disproportionate to the probable loss, a liquidated damages clause agreed upon in advance is not enforced because the Court will consider it a penalty.

Penalties are unenforceable on public policy grounds in New York - even if you asked for the penalty! Courts do not want businesses fearing economic hardship in order to grant a windfall over and above a harm that can be actually measured.

Courts will also consider a number of other factors that may tip the balance in Court to determine whether a liquidated damages clause is enforceable or a penalty, such as:
  • whether both parties were sophisticated in nature;
  • whether both sides were represented by counsel; and
  • whether the clause was bargained for at arms-length.
As you can see - how a Court will act is determined by the facts and circumstances of your particular contract.  And, your NY business can have better control of your contract if you consult an attorney to handle your contract negotiations.  

Trusting your business to an attorney means negotiating a proper liquidated damages clause you can enforce for your NY business, avoiding creating a possible penalty for yourself - and keep yourself out of court!
_____
*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com.

Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.