On May 31, 2020, following Governor Andrew Cuomo’s issuance of Executive Order 202.35 on Friday, May 26, 2020, New York’s Empire State Development (“ESD”) updated its guidelines for construction projects across the state.

Construction is a Phase One industry, and while certain parts of the State have already entered Phase One of recovery/reopening, New York City and much of the southern portion of the State has not yet met the criteria to begin reopening beyond “essential” construction activities. The ESD’s updated guidelines do not change the definition of “essential,” but now permit certain on-site staging activities in anticipation of a broader construction reopening. Last week, Governor Cuomo anticipated June 8, 2020 for a full, statewide construction reopening.

Personnel are permitted on-site for the following staging and preparation activities:

  • Clean, sanitize, and/or disinfect common and work areas;
  • Test run hoists, elevators, cranes, and other equipment;
  • Establish new and multiple entrances/exists to control the movement of personnel and allow for health screening, including temperature taking;
  • Install hand hygiene/wash stations or retrofit existing ones with touchless faucets and dispensers;
  • Install health screening stations or devices at entrances;
  • Affix social distancing, hygiene, and cleaning/disinfection signage, including posters, markers, and directional arrows;
  • Deliver and stockpile personal protective equipment (e.g. face coverings, face shields, gloves); and
  • Order, unload, and rough set materials that specialty contractors or subcontractors need to perform work (e.g. structural supports, piping, conduits, drywall).

Additionally, every business, even those already operating as essential under the ESD’s guidelines, must prepare a Safety Plan in line with the template found here. While this Safety Plan does not need to be filed with any state or local agency, it must be kept on premises in case of Department of Health or local health/safety authority inspection.

 


As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice.  For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.

As the COVID-19 (Coronavirus) pandemic continues to have devastating effects on our nation’s economy, particularly for small businesses and restaurants struggling to make ends meet and stay afloat, relief has become available for certain personal guarantors of NYC commercial leases.  On May 26, 2020, Mayor Bill de Blasio signed into law Section 22-1005 of the NYC Administrative Code, which prohibits the enforcement of personal liability provisions in commercial leases involving COVID-19 impacted tenants.

Pursuant to Section 22-1005, a personal liability provision in a commercial lease providing for one or more individuals who are not the tenant under the lease to be wholly or partially personally liable for payment of rent, utility expenses, taxes owed, or fees and charges related to routine building maintenance, upon the occurrence of a default or other event under the agreement, shall not be enforceable against such individuals if the following two conditions are satisfied:

(1) The tenant satisfies the conditions of subparagraph (a), (b) or (c):

(a) The tenant was required to cease serving patrons food or beverage for on-premises consumption or to cease operation under executive order number 202.3 (closed all on-premises activities at restaurants and bars) issued by the governor on March 16, 2020; or

(b) The tenant was a non-essential retail establishment subject to in-person limitations under guidance issued by the New York state department of economic development pursuant to executive order number 202.6 (reduced in-person workforce at any work locations by 50%) issued by the governor on March 18, 2020; or

(c) The tenant was required to close to members of the public under executive order number 202.7 (closed all barbershops, hair salons, tattoo or piercing parlors and related personal care services) issued by the governor on March 19, 2020.

(2) The default or other event causing such individuals to become wholly or partially personally liable for such obligation occurred between March 7, 2020 and September 30, 2020, inclusive.[1]

Accordingly, the passage of this new section of the NYC Administrative Code allows individuals who are guarantors for COVID-19 impacted businesses including, but not limited to, restaurants and bars, gyms, retail stores, and barbershops to breathe a sigh of relief, at least for now,[2] during these uncertain times.

[1] We have not as of yet seen any guidance addressing whether a default existing before March 7, 2020 and continuing thereafter would satisfy the condition set forth in this paragraph.

[2] Constitutional challenges to Section 22-1005 are likely to arise, particularly concerning whether such an exercise of the State’s police power is reasonable and appropriate.


As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice.  For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.

From the start of the unprecedented closure of the New York State Courts to new, “non-essential” filings until yesterday, commercial tenants had no remedy against a landlord seeking to terminate a lease as a result of a covenants or payment default.  The so-called Yellowstone Injunction, named after a 1968 Court of Appeals case, has protected tenants served with a notice of termination for over 50 years by preserving the status quo and staying any cure period, thereby giving tenants an opportunity to litigate the propriety of any alleged default before the lease was terminated.  Because once terminated a lease cannot be revived, tenants relied on this widely used and often granted injunction to preserve their interest in the leased premises.

Administrative Order 78/20 (AO/78/20), however, which remains in effect and which bars the submission of any “non-essential” new filings, was silent as to whether Yellowstone applications were considered “essential.”  As such, tenants effectively were precluded from seeking Yellowstone relief.  This is in stark contrast to Executive Order 202.8, which bars eviction proceedings, but did not bar lease terminations.  In essence, tenants were therefore forced to sit and watch their lease terminate, and hope that once the Courts open up, they would be able to seek relief from a terminated lease, despite longstanding caselaw to the contrary.

Yesterday, however, the Supreme Court, New York County, permitted the filing of an application for a Yellowstone Injunction. In Philippe MP LLC v. Sahara Dreams, LLC (no index number assigned), the Plaintiff, a restaurant in Defendant/landlord’s hotel, requested “essential” filing status for its application for a Yellowstone Injunction.  Specifically, the restaurant argued that as a result of the various Executive Orders prohibiting restaurants from offering table service, it was forced to lay off employees and cease operations.  As a result, the restaurant argued that the “casualty” clause in its lease was triggered, its rent was abated, and thus the amount the landlord sought in its notice to cure was defective rending the notice itself a nullity.

In its affidavit seeking “essential” filing status, the restaurant cited both its inability to operate, and also the potential hypocrisy created by the ban on evictions, without a corresponding moratorium of lease terminations.  The Hon. Lynn R. Kotler agreed, and deemed the filing essential.  As of the date and time of this publication, the request for a temporary restraining order has not been decided either way, but, at a minimum, the tenant was able to get into the Courthouse.  We will continue to monitor the progress of this case and update this article accordingly.


As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice.  For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.

New Jersey Governor Phil Murphy signed Executive Order #142 on Wednesday, May 13, 2020, permitting suspended non-essential construction projects to resume starting, Monday, May 18, 2020 at 6:00 a.m. In his briefing this afternoon, Governor Murphy commended the efforts and progress the State has made to date against the spread and impact of the COVID-19 pandemic. While careful to note that the crisis is not over and that diligent social distancing efforts remain crucial, the Governor cited improved infection and hospitalization numbers as the basis to begin a measured re-opening of the State’s economy.

Beginning Monday morning, all construction projects not designated as essential under Executive Order 122 may resume, as may drive-in/drive-thru events and curbside pick-up for non-essential retail businesses. Jobsite restrictions will remain in place, however. The Executive Order requires that, at a minimum, active construction sites must institute the following policies:

a. Prohibit non-essential visitors from entering the worksite;

b. Engage in appropriate social distancing measures when picking up or delivering equipment or materials;

c. Limit worksite meetings, inductions, and workgroups to groups of fewer than 10 individuals;

d. Require individuals to maintain six feet or more distance between them wherever possible;

e. Stagger work start and stop times where practicable to limit the number of individuals entering and leaving the worksite concurrently;

f. Identify congested and “high-risk areas,” including but not limited to lunchrooms, breakrooms, portable restrooms, and elevators, and limit the number of individuals at those sites concurrently where practicable;

g. Stagger lunch breaks and work times where practicable to enable operations to safely continue while utilizing the least number of individuals possible at the site;

h. Require workers and visitors to wear cloth face coverings, in accordance with CDC recommendations, while on the premises, except where doing so would inhibit the individual’s health or the individual is under two years of age, and require workers to wear gloves while on the premises;

i. Require infection control practices, such as regular hand washing, coughing and sneezing etiquette, and proper tissue usage and disposal;

j. Limit sharing of tools, equipment, and machinery;

k. Where running water is not available, provide portable washing stations with soap and/or alcohol-based hand sanitizers that have greater than 60% ethanol or 70% isopropanol;

l. Require frequent sanitization of high-touch areas like restrooms, breakrooms, equipment, and machinery;

m. When the worksite is an occupied residence, require workers to sanitize work areas and keep a distance of at least six feet from the occupants; and

n. Place conspicuous signage at entrances and throughout the worksite detailing the above mandates.

The Executive Order also specifically notes that the protective equipment required under item h above must be provided by the employer at its expense. Construction site visitors who refuse to comply must be denied entry.

As with permitting essential vs non-essential construction projects, we expect that enforcement of the on-site safety procedures will be delegated to local authorities, with each municipality responsible for ensuring that all projects within its borders meet the State standards.

This represents a significant step in returning the economy to a more normal footing since April 8, 2020, when the Governor issued Executive Order 122 pausing all non-essential construction projects, other than emergency and make-safe work, beginning April 10, 2020.

 


As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice.  For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.

Since first issuing declarations of emergency in early March, the Governors of New York, New Jersey and Connecticut have been coordinating their COVID-19 response measures fairly closely, in recognition of the physical proximity and economic dependency of their States.

Each State is among each other’s top trade partners, and hundreds of thousands of people cross state lines for work every day (including over 400,000 residents of New Jersey and Connecticut who commute into New York City).  These connections have taken on a whole new significance with the arrival of the novel coronavirus — the single most significant measure being implemented to fight the spread of the virus is social distancing.

Since early March, as COVID-19 began to take hold in New York, Governor Cuomo has emphasized the challenges created by regional inconsistency in the imposition of social restrictions.  The Governors of New Jersey and Connecticut, along with four other states, acknowledged the risk in disparate approaches at various points, most recently announcing their intention to coordinate the gradual reopening of businesses over the coming months.

However, while the Governors have been aligned on many social distancing measures, their treatment of the construction industry has fallen increasingly out of sync since the initial implementation of workplace restrictions.

When the initial social distancing restrictions were put in place, New York, New Jersey and Connecticut were consistent in treating construction work as essential, enabling work to continue largely unfettered.  That changed for New York on March 27, 2020 when Governor Cuomo imposed significant restrictions on the scope of permissible construction work, but Connecticut and New Jersey remained the same.  The discrepancy between New York and New Jersey was the subject of an earlier post.

Two weeks later, New Jersey followed New York’s approach of narrowing the extent of permitted construction.  Again, no change was made by Connecticut.  In addition, even though both New York and New Jersey were on the same page about restricting non-essential construction, they were not aligned as to what constituted “essential” construction.  Plus, even if New Jersey had adopted New York’s criteria, the consensus would not have lasted long.  New York ended up making substantial changes to its essential business criteria just two days later.

So, as of now, the construction industry looks different in each of New York, New Jersey and Connecticut.  For reference, each State’s description of permissible construction is listed below.  But don’t get too comfortable. The criteria is expected to change in mid-May, as New York and New Jersey are expected to begin the transition to reopening businesses.

New York’s social distancing framework is currently scheduled to expire May 15, 2020, per Executive Order 202.18.  Governor Cuomo has begun laying out New York’s plan for reopening in a staged manner, both based on geography (areas with low infection rates first) and business type (safer businesses like construction and manufacturing).

Governor Murphy has not specified a date for terminating his “stay-at-home” order, but has confirmed his intention to coordinate with other states, which he believed would be a matter of weeks, not months.  What that coordination will look like is unclear.  Governor Murphy was asked about his plan earlier this week, when he announced the State’s “road map” of 6 principles to evaluate in determining whether the State is ready for business.  He said that New Jersey may consider opening the entire State at once, rather than by geographic area, and is also considering staging the opening of businesses based on significance to the economy and virus transmission risk level, giving manufacturing as an example of a less risky business sector.  It is not clear whether construction restrictions will be lifted early.

Connecticut’s Governor Lamont extended his State’s social distancing measures until May 20, 2020, but, as the Governor pointed out in an interview this week, it will not have any impact on the construction industry, which has never been subject to restrictions.

Stay tuned.

NEW YORK PERMITTED CONSTRUCTION:

Emergency construction, (e.g. a project necessary to protect health and safety of the occupants, or to continue a project if it would be unsafe to allow it to remain undone, but only to the point that it is safe to suspend work).

Essential construction:

  • construction for, or your business provides necessary support for construction projects involving, roads, bridges, transit facilities, utilities, hospitals, or healthcare facilities, homeless shelters, or public or private schools;
  • construction for affordable housing, as defined as construction work where either (i) a minimum of 20% of the residential units are or will be deemed affordable and are or will be subject to a regulatory agreement and/or a declaration from a local, state, or federal government agency or (ii) where the project is being undertaken by, or on behalf of, a public housing authority;
  • construction necessary to protect the health and safety of occupants of a structure;
  • construction necessary to continue a project if allowing the project to remain undone would be unsafe, provided that the construction must be shut down when it is safe to do so;
  • construction for projects in the energy industry in accordance with Question No. 14 in the FAQ at: https://esd.ny.gov/sites/default/files/ESD_EssentialEmployerFAQ_033120.pdf;
  • construction for existing (i.e. currently underway) projects of an essential business; or
  • construction work that is being completed by a single worker who is the sole employee/worker on the job site.

NEW JERSEY PERMITTED CONSTRUCTION:

Essential construction projects:

  1. Projects necessary for the delivery of health care services, including but not limited to hospitals, other health care facilities, and pharmaceutical manufacturing facilities;
  2. Transportation projects, including roads, bridges, and mass transit facilities or physical infrastructure, including work done at airports or seaports;
  3. Utility projects, including those necessary for energy and electricity production and transmission, and any decommissioning of facilities used for electricity generation;
  4. Residential projects that are exclusively designated as affordable housing;
  5. Projects involving pre-K-12 schools, including but not limited to projects in Schools Development Authority districts, and projects involving higher education facilities;
  6. Projects already underway involving individual single-family homes, or an individual apartment unit where an individual already resides, with a construction crew of 5 or fewer individuals. This includes additions to single-family homes such as solar panels;
  7. Projects already underway involving a residential unit for which a tenant or buyer has already entered into a legally binding agreement to occupy the unit by a certain date, and construction is necessary to ensure the unit’s availability by that date;
  8. Projects involving facilities at which any one or more of the following takes place: the manufacture, distribution, storage, or servicing of goods or products that are sold by online retail businesses or essential retail businesses, as defined by Executive Order No. 107 (2020) and subsequent Administrative Orders adopted pursuant to that Order;
  9. Projects involving data centers or facilities that are critical to a business’s ability to function;
  10. Projects necessary for the delivery of essential social services, including homeless shelters;
  11. Any project necessary to support law enforcement agencies or first responder units in their response to the COVID-19 emergency;
  12. Any project that is ordered or contracted for by Federal, State, county, or municipal government, or any project that must be completed to meet a deadline established by the Federal government;
  13. Any work on a non-essential construction project that is required to physically secure the site of the project, ensure the structural integrity of any buildings on the site, abate any hazards that would exist on the site if the construction were to remain in its current condition, remediate a site, or otherwise ensure that the site and any buildings therein are appropriately protected and safe during the suspension of the project; and
  14. Any emergency repairs necessary to ensure the health and safety of residents.

CONNECTICUT PERMITTED CONSTRUCTION:

The State’s original workplace distancing restrictions issued on March 20, 2020 by Executive Order 7H incorporated the Federal guidance on essential businesses, which included construction within its 16 “critical infrastructure sectors.”  Similar to Governor Cuomo’s approach, Governor Lamont directed Connecticut’s Department of Economic and Community Development (DECD) to issue specific guidance on what businesses were deemed essential.  Construction work is within the scope of several essential business categories on the DECD list, and comprises its own category as well, described as:

Construction including:
• all skilled trades such as electricians, HVAC, and plumbers
• general construction, both commercial and residential
• other related construction firms and professionals for essential infrastructure or for emergency repair and safety purposes
• planning, engineering, design, bridge inspection, and other construction support activities

The full DECD list of essential business can be found here.

 


As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice.  For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.