THE JOURNAL OF THE NASSAU COUNTY BAR ASSOCIATION

September 2013 www.nassaubar.org Vol. 63, No. 1

By Gale D. BergDirector of Pro Bono Activities

“In celebration of national Pro BonoWeek, and because it was so successfulthese past two years, the Nassau CountyBar Association along with Nassau/SuffolkLaw Services and the Coalition AgainstDomestic Violence will, once again, runthe free legal Pro Bono FAIR (FreeAssistance, Information and Referral) to

be held on Thursday, October 24th atDomus,” announced Martha Krisel,NCBA’s 2nd Vice President and Chair ofthe event. Nassau residents are invited tocome to the Bar As sociation’s location inMineola, between 3-7 p.m., and meet withan attorney, one-on-one, for legal guid-ance. Attorneys are needed to volunteerfor one of two shifts, 3-5 p.m. or 5-7 p.m.This year, with Superstorm Sandy and all

See FAIR, Page 15

UPCOMING PUBLICATIONS COMMITTEE MEETINGSThurs., Sept.12, 2013 l Thurs., Oct. 10, 2013 – 12:45 at Domus

OF NOTENCBA Member Benefit – I.D. Card PhotoObtain your photo for court identificationcards at NCBA Tech Center. Cost $10. October 8, 9 & 10 • 9 a.m.-4 p.m.

The Lawyer Assistance Program provides confidential help to lawyersand judges for alcoholism, drug abuse and mental health problems.Call 1-888-408-6222. Calls are completely confidential.

FOCUS: REAL ESTATE LAW

Recent Appellate Term Rulings MakeGaining Possession of Collateral MoreDifficult for Foreclosing Lenders and Purchasers Page 3

Establishing, Maintaining and Expanding Nonconforming Uses Page 3

Navigating Unchartered Waters in Land Use Development Page 5

Real Estate Mortgage Foreclosure Receiverships Page 7

Legislature Responds to Foreclosure Issues Page 7

GENERAL ARTICLES

Viacom Requests New Judge in Case Against YouTube Page 11

WHAT’S INSIDE

NCBA DOMUS OPEN RESCHEDULED!Golf and BBQMonday, September 16, 2013Eisenhower “The Red” Course12:00 p.m. Registration

CRPE CommitteePublic Education SeminarAffordable Care Act - “Obamacare”Tuesday, September 24, 7-9 p.m. at DomusSee page 10 for details

SAVE THE DATE!Judiciary NightThursday, October 17, 20135:30 p.m. at DomusYou should have received your invitation!See page 6

Third Annual Pro Bono Legal FairVolunteer Attorneys NeededThursday, October 24, 20133:00-7:00 p.m. at DomusSee page 17

SAVE THE DATE!WE CARE Gingerbread UniversitySaturday, December 7, 2013Details coming soon

SAVE THE DATE!WassailThursday, December 12, 2013Details coming soon

EVENTS

Follow us on facebookNATIONAL PRO BONO WEEK

Volunteers Needed atNCBA’s Third Annual Pro Bono Legal FAIR

Last month six law students fromSouthern University Law Center in BatonRouge, Louisiana paid a visit to the NassauCounty Bar Association to learn how attor-neys coordinated their efforts to assist res-idents harmed last year from SuperstormSandy. The students, many of whom weresurvivors of Hurricane Katrina, broughtwith them a strong belief and passion forhelping others and were impressed with allthe help that came in from all over the

country – especially the many lawyers whocame to help residents. One student, Iriane Lee, from New

Orleans, had to relocate to Houston afterKatrina. “I was in awe of all the work thathad to be done,” she said. “The Sandy peo-ple were worse off than myself. I knew howI felt at the time, and I wanted to find someway to serve other people.” NCBA Second Vice President Martha

Krisel explained to the students how NCBAquickly put in place free legal consultationclinics for residents, based on the model cre-

ated for NCBA’s mortgage foreclosure clinicswhich encompassed a triad of government,private and not-for-profit entities workingtogether to best help the people. “The beautyis that this arrangement is non-adversarial,”she said. “The government working with vol-unteer lawyers is the only way to achieve suc-cess. We all have limited resources.”Krisel encouraged the students to volun-

teer to get hands-on experience. “Don't giveup, get more experience. It will pay off,” sheadvised. “The law is a great profession, butit’s more challenging than ever.”

Barbara Kraut Retires After 30 Years at the BarFor 25 years, Barbara Kraut has

been known as the “go-to” person forContinuing Legal Education at theNassau Academy of Law, the education-al arm of the Nassau County BarAssociation and one of the largest andmost respected providers of continuinglegal education for attorneys on LongIsland. She is arguably the one personmost responsible for keeping Nassauattorneys current with the law. Afteroverseeing thousands of CLE seminars,helping tens of thousands of attorneysand jurists, and working with 21 Deans,Barbara has decided to retire from theBar.Her announcement was met with sur-

prise, but also was a chance for many,particularly some of the past deans ofthe Academy, to express their gratitudefor all that Barbara has accomplished.NCBA President Peter J. Mancuso, whoalso served as the Dean of the Academy(2005-06), noted, “What a wonderful per-son she is, and what a tremendous job

she has done of guiding our NAL offer-ings through the shifting sands of CLEin New York State over the years! Shehas been recognized for her devotion toher work and for her constant efforts to

See BARBARA KRAUT, Page 2

By Valerie Zurblis

Visiting in the Great Hall are law students (l-r) Quinn Eubanks, Kyla Hemphill, SummerianGreen, NCBA Second VP Martha Krisel, Law Professor Donald North, NCBA Director of ProBono Attorney Activities Gale Berg, and law students Iriane Lee, Theresa King andDiangelo Frazer. (Photo by Hector Herrera)

Free Assistance, Information and ReferralThursday, October 24

By Valerie Zurblis

Louisiana Law Students Gain Insight on Sandy Disaster Response

Barbara Kraut, Director of the NassauAcademy of Law

2 n September 2013 n Nassau Lawyer

improve the quality and diversity of our course offerings.She has also been a good friend to many of us whoselives have been touched by her kind and caring ways.”Other past deans were just as complimentary. “I

always appreciated Barbara’s good cheer and ‘Can Do’attitude, and this did not occur on single occasions;indeed it has been, and still continues to be, a part ofwho Barbara is,” noted Dean Owen Walsh (1989-91). “Itwas most encouraging in good times and especially inthe rare times of stress. The Associa tion will miss her,as will I, and I dare say, all those who havecome in regular and extended contact with her.” “She has always been open to innovation and

has sought programs that would both enlightenand stimulate the listeners,” added Dean ElaineJackson Stack (2002-03). “Her response to sug-gestions about a new and different programwould seldom be negative; rather she’d smile andsay, ‘now that’s a good idea.’” Dean Donna Marie-Korth (2003-04) summed it

up. “I can honestly say that Barbara is truly one ofmy most favorite people – I love her! She is alwayskind and considerate, has a sense of humor, is laidback yet efficient, encouraging, supportive, friend-ly, warm, the list goes on and on. She is fun to workwith, and always gets the job done. No matter whatissue cropped up – and there were indeed some throughthe years – she always dealt with it with grace andaplomb – always charming and helpful to all. She seesthe good in people and is incredibly welcoming andinclusive to new folks. What an asset she has been! Iadore her. She will be sorely missed by all.”

Educational Sense of DutyAlways mindful of the newest laws,

legal issues and procedural changes,Barbara has made it her mission tomake sure that the attorneys who prac-tice law in the Nassau area are wellinformed and prepared to serve theirclients. Over the years, she has provided lit-erally thousands of seminars educatingthousands of attorneys through the AcademyCLEs. Working closely with the current Deanof the Academy, Board of Directors, attorneysand judges, Barbara helped to provide some ofthe most creative, educational and interestingprograms that are on the cutting edge in all prac-tice areas, from adoption to workers comp. The NassauAcademy of Law earned the reputation as being first inthe region to offer CLE as soon as new laws were enact-ed, such as the recent new divorce laws, same sex mar-riage laws, and the new anti-bullying Dignity for AllStudents Act. All along, Barbara has combined the gravity of

her mission with a touch of levity. “Among the manythings I remember [and will miss] about Barbara isher incredible ability to come up with titles for ourprograms that were both catchy and informative,”said Dean Stack. “You would always know what theprogram was about. As you read about it, most of thetime you would smile because Barbara had used somecurrent TV show title, book or song title or somethingsimilar, giving it a twist. I marveled at her ability to dothis again and again. And she always made it look soeasy.”Perhaps members may remember “ ’Till Death ... or

Divorce ... Do Us Part,” or “The Automobile Case: ACrash Course.” “My favorite was ‘LUST for the ’90s.’That one was about Leaking Underground StorageTanks,” Barbara said. “We also had a program for mat-rimonial attorneys called ‘Wedding Bell Blues.’ As theattorneys came into the room to sign in, we played thesong, ‘Going to the Chapel.’ ”

Raising the BarBarbara started her career as a third grade teacher

and substitute teacher before going to AdelphiUniversity to become a paralegal. She eventuallyworked with Hofstra’s Law School clinics. In 1984, shewas hired by then NCBA Executive Director MarjorieDion and started working in NCBA’s Lawyer ReferralService. Four years later, former Executive DirectorDeena Ehrlich moved her to the Nassau Academy ofLaw where she began working with her first dean, NeilShayne. “We had always taped our CLE programs, butit was Neil’s idea to rent them to the members,”Barbara recalls. “Later Dean Joel Asarch came up withthe idea to provide CLE during lunch in our Dean’s

Hours. We also used to sponsor whirlwind weekendtrips to Washington, D.C. for group admission to theU.S. Supreme Court and all the Federal courts.” In1998, she helped shepherd the Bar Association and theAcademy through the thorny accreditation processwhen CLE became mandatory for all attorneys whopractice in New York State. Barbara always managed to recruit some of the best

and most well-informed program speakers, includingeminent lawyers and jurists in their practice areas, topresent CLE seminars.”Getting lawyers to give lectures

isn’t easy,” noted Dean Ralph Catalano (2012-13).“Lectures take time and effort to prepare and to deliv-er. Getting lawyers to come to lectures isn’t alwayseasy – even with mandatory CLE requirements. Lawlectures can be boring. Barbara has a gift for identify-ing lawyers who are also good teachers; for cajoling,flattering, pressing and persuading them to volunteertheir time and expertise; and for knowing what topicswill and will not ‘fill-the-seats.’ ”Dean Ira Warshawsky (1995-97) pointed out anoth-

er of her exceptional talents. “Unfortunately, not everylecturer was well received, so we had to figure out,diplomatically, how not to ask them back the followingyear. Barbara learned how to handle the egos of manyof our lecturers and participants. She was, by far, a bet-ter diplomat than I,” he said. Barbara’s institutional knowledge and knack for

remembering the names of NCBA members, their fam-

ily members’ names and what was happening in theirlives, will also be missed. “When you teach, it is impor-tant to learn the names of your students. I’m good atnames, but I’m not good at remembering what I ate lastnight,” she joked.In addition to arranging more than 100 CLE semi-

nars each year, Barbara puts together the importantBridge the Gap weekend, which helps new law schoolgraduates transition to the real world of law practice.She supervises the Bar’s Tech Center, where attorneyscan learn various computer skills and programs. Mostof the CLE programs are recorded, and Barbara admin-isters the rentals in DVD and CD format. To further educational opportunities for law stu-

dents, every March Barbara organizes the annual Hon.Elaine Jackson Stack Moot Court Competition, the onlybar association-run moot court contest held in NewYork state. Top third year law student teams fromHofstra University School of Law, Touro School of Law,St. John’s University School of Law and CUNY Schoolof Law at Queens College are invited to argue a uniqueproblem written by an NCBA member. Barbara obtainsdozens of volunteer attorneys to serve as judges, briefscorers and time keepers in the two-day round robin

competition. The Academy’s newest initiativelaunched by Deans Andrew Engel(2010-11), Dee Barcham (2011-12)and Ralph Catalano (2012-13) isthe Domus Scholar Circle, whichallows a member attorney to attendall the CLE programs he or she wouldlike for an entire year at a one-timefee of $219. Hundreds of membershave taken advantage of the deal toexpand their legal knowledge in areasof interest other than their core practiceareas, helping them expand the serviceprovided to their clients. With Barbara’sleadership, the program has been atremendous success. “Most of the atten-dees at our CLEs are now Domus Scholar

Circle members, taking advantage of the terrific educa-tional opportunities NAL offers,” she said.

Making as many of those opportunities aspossible is Number One on her list.Always passionate about her semi-nars, Barbara is known to loudlyprotest that there are never enoughdays open on the NCBA calendar to usefor CLE. “Do I have any meltdowns?Yes. Did I want to run away? Yes, attimes. But I never did, mainly because ofmy great support staff throughout theyears – Patti Anderson, MaureenHymson, Donna Sylvia-Gerdik, MindySanta Maria, and, it goes without saying,Hector Herrera,” she said. Last year, Barbara’s long-time dedica-

tion to the legal profession was recognizedwhen she received the Long Island

Business News Leadership in Law Unsung HeroesAward. She is also an active member of ACLEA –Association of CLE Administrators International. Once she leaves Domus for good, Barbara plans to

play, relax and enjoy more time with her husbandArtie, daughter Susan and son-in-law Michael, sonMichael and daughter-in-law Lynne, and 4 grandchil-dren – Stephanie, Jason, Julia and Caroline. “I love togo to the theatre, and play the lottery (she intends tokeep playing every week with the NCBA staff pool). Mycar won’t know where to go now!”NAL’s current Dean Sondra Pardes will have the

tough job of managing changes to come. “As members ofthe NAL board, we all relied on the assumption thatBarbara had everything under control ... because shedid!” Dean Pardes said. “Barbara has always been anembodiment of all we cherish at Domus – always cheer-ful and ready to take on any challenge with enthusi-asm. She made the complicated business of creatingand scheduling multiple programs and working withhundreds of people while dealing with constant inter-ruption look not only easy, but fun. I will miss hersteady hand at the NAL tiller- but I will miss my dearfriend even more.”As Dean Warshawsky aptly observes, “While we

Deans came and went, (and probably none made it tothat position without her approval, but that is onlyhearsay), Barbara became the foundation, the main-stay, of NCBA’s legal education program in all its formsfor nearly three decades. She was and is its institution-al history. She will be sorely missed.”

BARBARA KRAUT ...Continued From Page 1

Photos by Hector Herrera

Nassau Lawyer n September 2013 n 3

Recent Appellate Term Rulings Make Gaining Possession of Collateral More Difficult for Foreclosing Lenders, PurchasersThe laws regulating New York’s residential land-

lord-tenant relationships are “a patchwork of legisla-tion that has responded to decades of social, economicand political pressure.”1 In the arena of mortgage fore-closure and its cooperative housing equivalent, theUCC Article 9 sale, the social economic and politicalpressure, particularly from the AppellateTerm, Second Department, has been tomake it more and more difficult, and, in thecase of residential cooperative units, maybeeven impossible, for a lender or any pur-chaser at these sales, to gain lawful posses-sion of the property.

Must the Attorney be an ‘Exhibitionist’?Based upon the 2011 decision from the

Appellate Term, Second Department inHome Loans Inc. v. Moskowitz,2 it might notbe possible to evict occupants after purchas-ing real property at a foreclosure saleunless you individually show each suchoccupant the referee’s deed.3An essential predicate to a motion or summary pro-

ceeding for post-foreclosure possession is for the fore-closure purchaser, or his assignee, to somehow pres-ent the referee's deed to the occupants whom the fore-closure purchaser seeks to remove. Where the pur-chaser is the foreclosure plaintiff and all occupantsare subject to the jurisdiction of the foreclosure court,4the plaintiff/purchaser can move in the foreclosureaction for a ”Writ of Assistance,” a statutory relief,5which codifies a relief recognized since the earliestdays of New York common law. Where parties in pos-session were not subject to the foreclosure judgmentthe more common mode of obtaining possession, atleast in downstate counties where court congestionhas made motion practice a lengthy affair, is a sum-

mary proceeding found in sub-paragraph 5 of the NewYork Real Property Actions and Proceedings Law(“RPAPL”) section 713.The Writ of Assistance statute is silent on any

predicate demand, but the typical decretal paragraphin most judgments of foreclosure directs “that the pur-

chaser or purchasers at said [foreclosure]sale be let into possession on production ofthe Referee’s deed or deeds” or similarwording. To maintain a summary proceeding

under RPAPL §713, the petitioner needs toperform two discrete acts, usually, but notnecessarily simultaneously: 1) service of a 10-day demand for posses-

sion, and 2) that “the deed delivered pursuant to

such [foreclosure] sale, or a copy of suchdeed, certified as provided in the civil prac-tice law and rules, has been exhibited tohim.”6The term ‘exhibited’ is not defined in the

RPAPL nor is the author able to locate a statutory def-inition anywhere else in New York law.In 2002, a Westchester County Supreme Court

Justice in Colony Mtg. Bankers v. Mercado,7 hearing aWrit of Assistance motion predicated on a Notice prop-erly served pursuant to RPAPL § 735, held that “pro-duction means exhibiting” of the deed. This equatingof one statutorily undefined term with another mayhelp reconcile an earlier pronouncement of theAppellate Division. In Lincoln Sav. Bank v. Warren,the Second Department opined in a Writ of Assistancecase that, prior to issuance of the Order, “the referee’sdeed should have been exhibited to and possessiondemanded from [the occupants].”8 Thus, the Court inColony Mtge. Bankers held that “to exhibit connotes

actual presentation to view the document” and, assuch, the attachment of the deed to the Notice wasinsufficient except as to parties personally served.While foreclosure practitioners spent much time andverbiage fretting over Colony Mtge. Bankers, it wasseen as a trial level case with distinguishable facts.

Then, in 2011, the Appellate Term, SecondDepartment decided Moskowitz, wherein they cited toColony Mtge. Bankers, holding that, “in light of thestrong policy prohibiting unlawful evictions (see gen-erally Bill Jacket, L 1981, ch. 467), attaching a copy ofthe referee’s deed to a 10-day notice to quit served by‘nail and mail’ was insufficient to satisfy the require-ment of exhibition of the deed pursuant to RPAPL §713.” The Moskowitz decision held the service defi-cient even though the foreclosure purchaser servedpredicate notice for a summary proceeding “by ‘nailand mail’ service, after four attempts at personal serv-ice had been made at different times on differentdays.” Does this automatically lead to the conclusion that

each and every occupant must be shown the referee’sdeed before a sufficient predicate for a summary proceeding or Writ of Assistance is established? Atleast one judge, sitting in an upstate Justice Court,

See COLLATERAL, Page 15

Dan M.Blumenthal

Establishing, Maintaining and Expanding Nonconforming UsesZoning ordinances are enacted with the intent to

create a compatibility of uses within specific geo-graphic areas of a municipality. However, there arecertain uses that disrupt the balance that the ordi-nances are enacted to create. These are known as non-conforming uses. A non-conforming use is “[a] use ofproperty that is no longer authorized due to rezoning,but lawfully existed prior to the enactment of theexisting zoning ordinance …”1 “Due to constitutionaland fairness concerns regarding the undue financialhardship that immediate elimination of nonconform-ing uses would cause to property owners … courts andmunicipal legislators have adopted a grudging toler-ance of such uses.”2 As a result, nonconforming usesare “permitted to continue, notwithstanding the con-trary provisions of the ordinance.”3 Nevertheless, theoverriding public policy of zoning is to reasonablyrestrict and eventually eliminate these types of uses.4To that end many municipalities have adopted spe-

cial code provisions which establish conditions or cir-cumstances whereby the right to continue a noncon-forming use will be lost if the use ceases for a pro-

scribed period of time. For example, the Town Code ofthe Town of Huntington states that if a nonconform-ing use ceases to remain continuous and active for aperiod of one year, then that use is lost and the prop-erty in question must be used for a purpose authorizedby the Code.5 In other words, failure to continue anonconforming use may very well mean itsend.In many instances, properties containing

non-conforming uses are significantly morevaluable than other properties in their sur-rounding area and the primary concern ofowners of these uses is to protect their eco-nomic interest. Conversely, municipalitiesgenerally view non-conforming uses asdetrimental to property values of the sur-rounding community because they are atodds with the designed and preferred devel-opment of the area.6Since the goal is to ultimately eliminate

these uses, when a question concerning thevalidity of a nonconforming use arises, the burden ison the property owner to “demonstrate that the prop-erty was indeed used for the nonconforming purpose… at the time the zoning ordinance became effective.”7This can be a daunting task for property owners, par-ticularly when the code in question was adopted in the1930s or 1940s. As in any case, as time passes docu-ments become lost or misplaced and memories beginto fade. Generally speaking, the best evidence toestablish a nonconforming use is the live testimony ofindividuals with firsthand knowledge of the history ofa property and its continuous use in a nonconforming

manner. In fact, the Town of Babylon goes as far asrequiring the presentation of actual witnesses at apublic hearing when the request involves any useother than a single family home.8 Clearly, the difficul-ty of satisfying this burden becomes proportionallymore difficult based on the age of the code.

Finding an individual that recalls partic-ular facts of land uses or structures for acode enacted in the 1930s would mean find-ing an individual between approximately 90and 100 years of age. While not impossible,as years pass the burden to establish theuse becomes increasingly more onerous aspeople pass away and memories fade.Simply put, uses that have existed for manyyears can be lost because there is no onethat can attest to the use of the propertyprior to the adoption of the zoning ordi-nance. If the property owner fails to locate indi-

viduals with direct knowledge of the prop-erty, the only alternative is to try to establish the usethrough the submission of documentary evidence.Documents such as property tax records, aerial photo-graphs, surveys and Sanborn Maps can, in somecases, provide valuable information about a site’s his-tory and uses. Whether a collection of documents andphotographs are sufficient to establish continuousnonconforming usage obviously depends on the quali-ty of the evidence in relation to the nonconformity theproperty owner is seeking to protect. Regardless, it isincumbent upon the property owner to create the best

See NONCONFORMING, Page 17

John C. Farrell

Real Estate Law

Does this automatically lead to the conclusion that each and every occupantmust be shown the referee’s deed before a sufficient predicate for a summaryproceeding or Writ of Assistance is established?

4 n September 2013 n Nassau Lawyer

Welcome back! I hope that you enjoyed some time away dur-ing what was, for the most part, a lovely summer. As it drawsto a close, the pace of our activities here at Domus quicken, asthey do every year.Since last July, Keith Soressi has served as our Executive

Director. He manages our Bar Association and supervises itsrelated entities, the NCBA Fund, Inc., which is our charitablearm, and the Nassau Academy of Law, which is our education-al arm. At times these are daunting tasks, but nowhere in ourgoverning documents is his role defined. A few passing refer-ences to the Executive Director are made in the NCBA bylaws;none in the NCBA Fund bylaws; and the Nassau Academy ofLaw bylaws merely state that the NCBA Executive Directorshall also be the NAL Executive Director, in which position hesupervises our NAL Director.I will propose to the Boards of Directors of

NCBA and of the NCBA Fund that we amend eachof their bylaws to broadly describe our ExecutiveDirector’s duties, which include his responsibilitiesto manage our staff, develop an annual budget,keep our finances in order, and carry out Boardpolicies, among many other important functions.Reducing these responsibilities to writing will alsohelp to more clearly mark the dividing line in ourBar Association between management, which isour Executive Director’s responsibility, and gover-nance, which is that of our elected volunteer lead-ership. In an organization like ours with volunteerleaders who change every year, this line can oftenbecome blurred in practice, to our detriment.The balance of this article is devoted to the

contents of a letter that was recently sent to ChiefJudge Lippmann under the signatures of Im -mediate Past President Marian Rice and myself on behalf of our Bar Association:This letter is written at the direction of the Board of

Directors of the Bar Association of Nassau County (“NCBA”),the largest suburban bar association in the country.

For the past few years, it is our observation that the Officeof Court Administration has imposed court rules on mattersstriking at the core of our profession without the meaningfulparticipation of many active vibrant bar associations across thestate, including our own.In the recent past, the trend continued with the announce-

ment of the mandatory pro bono requirements for attorneysseeking admission in the courts of New York. This rule wasenacted without any comment period, based upon the recom-mendations of a Committee charged with the task of imple-mentation. The 166,000 attorneys admitted to practice in NewYork State were not provided a meaningful opportunity toweigh in on whether the concept itself was appropriate. Whilewe were gratified that our past president, William Savino, wasappointed to the Committee, the Committee was not represen-tative of the lawyer population in New York in geographicterms, areas of practice or firm size.While our opinion was not sought, the NCBA did convene a

Task Force and filed a report with the Committee expressingthe views of our membership on the issue of mandatory probono requirements for any attorney, but also providingthoughtful recommendations on how the already announcedrule could be more fairly implemented.The second unfortunate exclusion came in the form of the

recent amendments to Part 118 mandating that voluntarypro bono hours and donations to qualified legal servicesorganizations be reported on attorney registration state-ments. The intention of the Office of Court Administration toprovide public access to the charitable donations of attorneysruns contra to any accepted notion of charity. Again, the con-cerns of the attorney population were neither solicited nor

considered. In so stating, it is recognized that the Office ofCourt Administration is not required to solicit comments.Putting aside the intrusive nature of the rule, discus-

sions with local and state bar associations may have boughtto the forefront the collateral consequences of the manda-tory reporting requirement. By way of example, since theLawyer Assistance Trust ceased funding for LawyerAssistance Programs statewide, NCBA has limped alongseeking funding for its award-winning program helpingcountless judges, attorneys, their families and their clients.The narrow definition of the qualifying legal services spec-ified in Part 118 excludes such programs, and as such,misses out on an opportunity to support the profession’slaudable efforts to protect the families and clients of attor-neys and judges suffering from a myriad of debilitating

addictions and conditions. Compared to the sig-nificant cost of access to justice, inclusion oflawyer assistance funding in this rule wouldhave facilitated fund-raising efforts for the com-parably modest funds required to supplementand continue the NYSBA, NYC Bar and NCBALawyer Assistance Programs. Discussion of thelarger picture may have resulted in changes tothe rules that would have served the dual pur-poses of these worthy goals. Finally, the most recent appointments to the

Committee on Non-Lawyers and the Justice Gapwholly ignore practicing attorneys from the geo-graphic areas of Long Island and upstate NewYork. Additionally, more than 75% of attorneys inNew York (and in NCBA) practice as solo practi-tioners or in small law firms. These attorneys,comprising the majority of the attorneys regulat-ed by OCA, are not represented on this

Committee reviewing a subject striking at the core of our pro-fession. Excluding Mr. Maldonado, the remaining privateattorneys practice at New York City mega-firms – clearly notrepresenting the problems faced by most New York attorneysand clearly not representing the interests of the shamefulnumber of under and unemployed attorneys in New York.The remaining representatives from legal service providers,law schools and active access to justice advocates do not pro-vide the balanced canvass of representative attorneys uponwhich thoughtful discussion of the issue may be conducted,notwithstanding the addition to the Committee after the factof Thomas Maligno, the inspiration for the NCBA’s annualpro bono legal services award, whose experience, respectfully,is not that of a practicing attorney.Changes to our profession are inevitable. While pro forma

compliance with the initiatives adopted without input fromthe attorney constituents in this state may be compelled,meaningful change cannot be. Failing to solicit the valuableopinions of the attorneys regulated by OCA will not foster theculture of service intended by these changes.We ask that the Office of Court Administration invite a

dialogue with – and the active participation of – the attorneysit regulates on a representative basis so that together we canidentify programs and initiatives that support your effortswith respect to access to justice while considering the legiti-mate concerns and the enormous contributions of the mem-bers of our profession and our bar associations. Together wecan accomplish much.

Together We Can Accomplish Much

The Nassau Lawyer welcomes articles that are written by the members of the Nassau County Bar Association, which would be of interest to New YorkState lawyers. Views expressed in published articles or letters are those of the authors alone and are not to be attributed to the Nassau Lawyer, its editors, or NCBA, unless expressly so stated. Article/letter authors are responsible for the correctness of all information, citations and quotations.

FROM THEPRESIDENTPeter J. Mancuso

PresidentPeter J. Mancuso, Esq.President-ElectJohn P. McEntee, Esq.First Vice PresidentSteven J. Eisman, Esq.Second Vice PresidentMartha Krisel, Esq.TreasurerSteven G. Leventhal, Esq.SecretaryElena Karabatos, Esq.Executive DirectorKeith J. Soressi, Esq.

Editor-In-ChiefChristopher J. DelliCarpini, Esq.Associate EditorAllison C. Shields, Esq.Editor/Production ManagerSheryl Palley-EngelAssistant EditorValerie ZurblisPhotographerHector Herrera

Focus Editor of the MonthThomas McKevitt, Esq.Real Estate Law

Upcoming 2013 Focus IssuesOctober – General/OCA IssueNovember – Intellectual Property LawDecember – Tax Law

Committee EditorsChristopher J. DelliCarpini, Esq., ChairAllison C. Shields, Esq., Vice ChairDeborah S. Barcham, Esq.Gale D. Berg, Esq.Deanne Caputo, Esq.Richard D. Collins, Esq.James Fiorillo, Esq.Avrohom Gefen, Esq.Nancy Gianakos, Esq.Robert S. Grossman, Esq.Kristina S. Heuser, Esq.Charles E. Holster III, Esq.Paul Hyl, Esq.Gail Jacobs, Esq.George M. Kaplan, Esq.Kenneth J. Landau, Esq.Douglas M. Lieberman, Esq.Thomas McKevitt, Esq.Cheryl Y. Mallis, Esq.Jeff H. Morgenstern, Esq.Daniel W. Russo, Esq.Meryl D. Serotta, Esq.Michael A.H. Schoenberg, Esq.Andrij V.R. Szul, Esq.Chris Wittstruck, Esq.

Published by Long Island Business News (631) 737-1700; Fax: (631) 737-1890

Editor and PublisherJohn L. KominickiGraphic ArtistNancy Wright

Nassau Lawyer (USPS No. 007-505) is pub-lished monthly, except combined issue of Julyand August, by Long Island CommercialReview, 2150 Smithtown Ave., Suite 7,Ronkonkoma, NY 11779-7348, under the aus-pices of the Nassau County Bar Association.Periodicals postage paid at Mineola, NY 11501and at additional entries. Contents copyright©2013. Postmaster: Send address changes tothe Nassau County Bar Association, 15th andWest Streets, Mineola, NY 11501.

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NassauLawyerNassauLawyer

NCBA Officers

For the past few years, it is our observationthat the Office of Court Administration hasimposed court rules on matters striking atthe core of our profession without the meaningful participation of many activevibrant bar associations across the state,including our own.

AttorneysGuido Gabriele IIISergio S. HerreraVeronica Renta IrwinDujeong Jenny KimDaphne E. TelfeyanKhara A. Tusa

StudentsJason S. BirrielMatthew Joseph BoyleAnudeep DhugaAlbert V. DumaualAnthony J Fasano Jr.Robert FuesslerSahar Hamlani

Matthew IngberSonia A. KaczmarzykErin Elizabeth KeenanBrittany MaioloLauren MontesLouis P. PaolilloCarmelle RobillardThomas S. Wolinetz

We welcome the following new members

NCBA New Members

In MemoriamWilliam Houslanger Francis B. Looney

Nassau Lawyer n September 2013 n 5

Highly publicized, recent decisionsby the United States Supreme Courthave dealt with a variety of social poli-cy issues such as health care reform,marriage and civil rights. The Court’sdecision in Koontz v. St. Johns RiverWater Management District (“Koontz”)has received much less public attention.Yet, Koontz has wide sweep-ing consequences for landowners, developers and localmunicipalities involved in thereview and approval of appli-cations for land-use permits.In fact, it has been fearedthat the decision will “work arevolution in land-use law”1by depriving local govern-ments of the ability to chargereasonable permit fees. In Koontz, the developer

sought permits from theWater District to build ashopping center on 3.7 acres of landthat comprised part of a 14.9-acre tractof wetlands located on the south side ofFlorida State Road 50, east of Orlando.To build the shopping center, it wasproposed that the 3.7 acres of the wet-lands be filled; the remainder of thetract would remain as wetlands. Florida law requires permit appli-

cants seeking to build on wetlands tooffset any resulting environmentaldamage with mitigationmeasures. Initially, the devel-oper offered to mitigate theenvironmental effects of hisplan proposal by deeding aconservation easement to theWater District that wouldcover nearly three-quarters ofhis property. The WaterDistrict rejected this proposal.The developer could obtainapproval from the WaterDistrict for construction of the3.7 acre shopping center onlyif he:(1) reduced the size of his proposeddevelopment and, inter alia, deededto the Water District a conservationeasement on the resulting largerremainder of his property; or (2) hired contractors to make im -provements to Water District-ownedwetlands several miles away.

The developer objected that theWater District’s demands were undulyburdensome and the Water Districtdenied the application. The developer then filed suit against

the Water District based upon state lawthat provides for money damages foragency action that is an “unreasonableexercise of the state’s police power con-stituting a taking without just compen-sation.”2 The Florida trial court foundthe Water District’s action unlawfulhaving failed to satisfy the require-ments of the U.S. Supreme Court’sprior rulings in Nollan v. CaliforniaCoastal Comm’n and Dolan v. City ofTigard.3 The Nollan/Dolan cases heldthat “the government may not condi-tion the approval of a land-use permit

on the owner’s relinquishment of theowner’s portion of his property unlessthere is a ‘nexus’ and ‘rough proportion-ality’ between the government’sdemand and the effects of the proposedland use.”4The Florida District Court of

Appeals affirmed the trial court, butthe Florida State SupremeCourt reversed on twogrounds. First, it held that the peti-

tioner’s claim failed because,unlike in Nollan or Dolan,the Water District deniedthe developer’s application.In Nollan/ Dolan, the com-plaining landowners weregranted approvals, but withconditions they alleged wereburdensome and confiscato-ry. Second, the Florida State

Supreme Court held that a demand formoney to mitigate the impacts of adevelopment proposal by a municipalgovernment as part of a land useapproval cannot give rise to a claimunder Nollan and Dolan. InNollan/Dolan, the demands on theapplicants were not conditioned uponthe payment of money to offset per-ceived negative impacts of theapproval. Rather, the demands were for

the conveyance of propertyor property rights. The developer filed a

Petition for Writ ofCertiorari from the decisionof the Supreme Court ofFlorida. Based on the Writ,the issue before the U.S.Supreme Court was whetherthe denial of a land-use per-mit can invoke a violation ofthe Takings Clause underthe U.S. Constitution.In answering this ques-

tion, Justice Samuel A.Alito, Jr. writing for the 5-4 majority, inwhich he was joined by Chief JusticeRoberts along with Justices Scalia,Kennedy and Thomas, held that thelong-standing principles of Nollan/Dolan,which “provide important protectionagainst the misuse of the power ofland-use regulation,” do not changedepending on whether the land useapplication is approved or denied. TheCourt also held that a government’sdemand for money as part of anapproval from a land-use permit appli-cant must also satisfy theNollan/Dolan test. The Court’s analysis focused on

whether the Water District’s actionssatisfied the requirements of the “nexusand rough proportionality” tests estab-lished in Nollan and Dolan. The Courtstated, in relevant part: Nollan and Dolan accommodate bothreal realities by allowing the govern-ment to condition approval of a per-mit on the dedication of property tothe public so long as there is a“nexus” and “rough proportionality”

See LAND USE, Page 16

Michael H. Sahn

Adam H. Koblenz

Real Estate Law

Proceeding in the Wake of the Supreme Court’s Ruling in Koontz v. St. Johns River Water Management District

Navigating Unchartered Watersin Land Use Development

6 n September 2013 n Nassau Lawyer

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SUPERSTORM SANDY RECOVERY

Island Park Clinic Helps Local Sandy VictimsResidents still suffering from

Superstorm Sandy took advantage ofthe opportunity to consult one-on-onewith a volunteer attorney at a specialclinic held last month in Island Park.The clinic, which was coordinated byNCBA Past President Peter Levy andNCBA Second Vice President MarthaKrisel, was organized in cooperationwith the Nassau County Attorney’s

Office and the Island Park Chamber ofCommerce at the South Shore JewishCenter. To date, NCBA attorneys have

helped nearly 1,000 people still recover-ing from the region’s most devastatingstorm. This program was fundedthrough the New York State AttorneyGeneral Homeownership ProtectionProgram.

Chamber of Commerce and attorney volunteers at the Island Park clinic (l-r) John J.Vobis, Seth Rosner, Michael Scully of the Island Park Chamber of Commerce, ChamberPresident Glenn Ingoglia, Past NCBA President Peter Levy and NCBA SandyRelief/Settlement Conference Coordinator Greg Fishkin. (Photo by Hector Herrera)

The foreclosure crises of the last sev-eral years imposed a significant burdenon the court system in New York. From2005 to 2010, the number of foreclosurefilings increased from 22,601 to 50,827.In Nassau County alone they increasedfrom 1,310 to 5,378.1Both the courts and the New York

State Legislature have responded withvarious measures. In 2008, Chapter 472 was signed

into law by Governor DavidPatterson which required set-tlement conferences for allmatters which involved sub-prime loans in owner occupiedresidences. For those casesfiled after September 2008, acourt conference was mandat-ed to be held 60 days afterproof of service had been filedby the Plaintiff.In 2009, the Legislature

enacted Chapter 507 whichrequired settlement confer-ences for all owner-occupiedresidences, regardless whether a sub-prime loan was involved or not. Thislaw also required courts to send copiesof the Request for Judicial Intervention(RJI) or the homeowner contact infor-mation to Division of Housing andCommunity Renewal approved housingcounseling agencies, and requiredplaintiffs in foreclosure actions whoobtain a judgment of foreclosure tomaintain the property until ownershiphad been transferred and the new deedrecorded. In addition, Chapter 507 cre-

ated a cause of action for a municipali-ty, a tenant lawfully in possession, orthe board of managers of a condomini-um association or homeowners associa-tion to recover the cost of maintenance.In 2010, “robo-signing” was re -

vealed. This was a practice in whichrepresentatives from lending institu-tions, most notably Bank of America,would review thousands of foreclosuredocuments in short periods of time and

sign notarized documents tobe submitted in courtactions. In response to thispractice, on October 20,2010, Chief Judge JonathanLippman issued a new courtrule requiring attorneys forall banks and lenders in fore-closure actions to submitaffirmations stating thatthey took steps to verify theaccuracy of documents sub-mitted in the action. For aperiod of time the number offilings throughout the state

dropped considerably.2The Office of Court Administration

(OCA) offered a program bill to addressthe issue of what it called the “shadowdocket.” These were cases where theforeclosing lender filed and served asummons and complaint, but neverfiled a RJI. According to OCA, therewere thousands of cases wherebyhomeowners had actions pendingagainst them, but did not have their“day in court” to resolve the matter. The

Nassau Lawyer n September 2013 n 7

Real Estate Mortgage Foreclosure Receiverships

Although it appears that the worst of the foreclo-sure crisis is now in the “rear view mirror,” someexperts believe that a new phase of residential andcommercial foreclosures may be triggered byincreased interest rates that will follow the federalgovernment’s eventual termination of its currentquantitative easing monetary policy.Another reason why foreclosure actions are not

“disappearing,” is that because of the general econom-ic recession, many tenants are still in the process offiling for bankruptcy reorganization or liquidation.Given the expectation that there will be a continu-

ing need for real estate receiverships, this article willfocus on certain procedural and practical aspects ofreceiverships.

Procedural IssuesNotwithstanding that a mortgage document pro-

vides that the mortgagee-plaintiff is entitled to theappointment of a receiver without notice and themortgagee consents thereto, some judges require thatnotice be given to the mortgagor-defendants, relyingon Section 202.7(f) of the Uniform Rules.Where a bond is posted that is more than adequate

to protect the plaintiff’s interest in the property, amotion for a temporary receiver may be denied.Moreover, a motion for receiver will be granted onlywhere legal or other remedies are “inadequate, inef-fective, or had been exhausted.” In determiningreceivership motions, courts will generally consider,inter alia,(a) alternative remedies available to the creditor,

(b) the extent to which receivership will enhancethe likelihood of satisfaction,(c) the risk of fraud or insolvency if a receiver is not

appointed.“Thus, even where a mortgage or other contract

provides that appointment of a receiver is a matter ofright, courts have discretion whether toappoint a receiver.”1There must be an action pending, before

a receiver may be appointed and if the com-plaint only seeks, as relief, the appointmentof a receiver, the motion will be defective. Generally, a movant must demonstrate a

reasonable probability that it will prevailand the chances of recovery will be lost ormaterially impaired, absent appointment ofthe receiver. Notwithstanding a debtor’scontractual consent, some judges are reluc-tant to appoint receivers on an ex parteapplication, given that it is a drastic remedy.On the motion by any party or on the

court’s own initiative, a receiver may be removed for,inter alia, incompetency or lack of integrity and areceiver may, with reasonable cause, seek to resign.

Receivers’ Rights and ResponsibilitiesAlthough there at one time had been some confu-

sion as to whether receivers could receive a percent-age of both the monies disbursed and the moniesreceived, the law is now clear that receivers mayreceive a percentage of the total amount collected upto 5%.2 Sums collected do not include tenants’ securi-ty deposits which are held in trust for tenants, butthey could include a co-op’s reserve fund.3Compensation may be denied if a receiver grossly

mismanaged the property, commingled receivership

funds with personal funds or otherwise committed aserious breach of the receiver’s fiduciary duties.Additionally, if there are insufficient funds to pay thereceiver, the court may direct that the party who hadmoved for appointment of the receiver must pay thereceiver’s compensation.4

A receiver has the right, but not the obli-gation, to pay bills for work done prior tothe receivership. The salient issue iswhether payment is beneficial to the estate.Upon a receiver being appointed and filingof his oath and bond, receivers are oftenbombarded with past due bills from a vastarray of vendors.With certain exceptions, receivers are

bound by pre-existing leases. Courts mayset aside fraudulent or collusive leasesbecause of inadequate rental amounts orrent payments in anticipation of foreclo-sure.Generally, a receiver is not obligated to

adopt contracts or step into the shoes of owners if thereceiver believes it would be unprofitable or undesir-able to do so. A receiver is accorded a reasonable timeto decide whether to adopt or disavow contracts. If thereceiver has neither signed nor ratified such agree-ments, they are generally not enforceable against thereceiver. If a receiver is sued successfully, the claimant will

have a claim as an existing indebtedness of thereceivership which may be allowed in distribution ofthe estate if there is a distribution. It cannot beenforced against the assets within the control of thereceiver and the mortgagor may still be sued for pre-

Scott E. Mollen

Thomas McKevitt

See RECEIVERSHIPS, Page 20

See FORECLOSURE, Page 21

Real Estate Law

-

Melville Law Center 225 Old Country Road Melville, NY 11747 631.761.0800

CityPlace Tower 525 Okeechobee Blvd, Suite 1670 West Palm Beach, Florida 33401 561.899.0222

With offices in New York and Florida and attorneys licensed in both states, we are a resource to colleagues and clients seeking multi-juristictional experience and legal resources in both areas of the country.

Legislature Respondsto Foreclosure Issues

Procedural Issues and PracticalObservations

Member ActivitiesJohn P. McEntee, President-Elect

of the Bar Association, has been namedto the Board of Trustees of MolloyCollege. Mr. McEntee is a partner atFarrell Fritz, P.C. where he concen-trates on commercial litigation.

Thomas R. Slome, Chairof the Bankruptcy Practiceand co-Chair of the CorporateFinance Practice at Meyer,Suozzi, English & Klein, P.C., was recently electedSecretary of the Board ofDirectors of Big Brothers BigSisters of Long Island (BBB-SLI). Mr. Slome, who hasbeen a Director since 2011,earned his Juris Doctor fromRutgers Law School. BBB-SLI, a non-profit organiza-tion, is the oldest and largestyouth mentoring group in theUnited States.Farrell Fritz, P.C. partners John J.

Barnosky, Ilene S. Cooper andRobert E. Sandler were recentlyselected for inclusion in The BestLawyers of America (2014). Both Mr.Barnosky, who earned his LL.M fromNew York University School of Lawand Juris Doctor from St. John’sUniversity School of Law, and Ms.Cooper, who earned her Juris Doctorfrom Hofstra University School of Law,were selected in the area ofLitigation – Trusts & Estates. Mr.Sandler, who earned his Juris Doctorfrom St. John’s University School ofLaw, was selected in the category ofReal Estate Law.

Leslie A. Berkoff, a partner atMoritt Hock Hamroff LLP, was recent-ly appointed to serve as co-Chair of theInternational Women’s InsolvencyRestructuring Confederation’s (IWIRC)Advisory Council. Ms. Berkoff alsoserves as Chair of the firm’s Bank -

ruptcy Practice Group. Sheconcentrates her practice inthe area of bankruptcy andrestructuring litigation andcorporate workouts. Ms.Berkoff was Chair of theIWIRC from 2004-2008 andhas served on its Board ofDirectors for over fifteenyears. She has also previ-ously served as co-Chair ofthe American BankruptcyInstitute’s (ABI) HealthcareInsol vency Committee andis an active member of theMediation and HealthcareCommittees. In addition,

Ms. Berkoff was co-Editor of the ABI’sHealthcare Bankruptcy Manual,Third Edition and presently serves onthe Mediation Panel for the Easternand Southern Districts of the UnitedStates Bankruptcy Courts in NewYork and the United States Bank -ruptcy Court in Delaware, as well asthe Commercial Mediation Panel forNassau County. Ms. Berkoff earnedher Juris Doctor from Hofstra Univer -sity School of Law.Bond, Schoeneck & King PLLC

partners Craig L. Olivo and TerryO’Neil were recently recognized asTop-Rated Lawyers in Labor &Employment Law by The AmericanLawyer and Corporate Counsel

Magazine. Mr. Olivo, who representspublic sector clients, earned his JurisDoctor from Notre Dame Law School.Mr. O'Neil is the Deputy ManagingMember of the firm's Garden Cityoffice. He is also listed in The BestLawyers in America 2013 and waspreviously named to New York SuperLawyers in 2011. Mr. O’Neil earnedhis Juris Doctor from St. John’sUniversity School of Law. In addition,Howard M. Miller, Terry O’Neiland Mark N. Reinharz, also of thefirm, were selected for inclusion in theBest Lawyers listings.

Karen J. Tenenbaum of Melville-based Karen J. Tenenbaum P.C. wasrecently appointed Chair of theFinancial Literacy Committee of theNew York State Society of CertifiedPublic Accountants, Nassau Chapter.Ms. Tenenbaum concentrates her prac-tice on New York State and federal taxcontroversies.

Charlotte A. Biblow, a partner andhead of the Environmental practicegroup at Farrell Fritz, P.C., was electedPresident of the Board of Directors ofSustainable Long Island. Ms. Biblow isa contributor to the firm’s Long IslandLand Use & Zoning blog and authors acolumn in the New York Law Journalon State Environmental Regulation.She also serves on the boards of theQueensborough Community CollegeFund, Inc. and the Women’s Fund ofLong Island. Ms. Biblow earned herJuris Doctor from St. John’s UniversitySchool of Law.

John Zervopoulos, an associatewith Salenger, Sack, Kimmel & Bavaro,LLP and the managing attorney of thefirm’s Woodbury office, has been namedto the Board of Directors of the NassauSuffolk Trial Lawyers Association. Mr.Zervopoulos, who represents victims ofpersonal injury, also serves as a volun-teer Arbitrator for the Queens CountyCivil Court. He earned his Juris Doctorfrom Hofstra Law School.

Jennifer Cona, managing partnerat Genser Dubow Genser & Cona,recently conducted a complimentaryElder Law Clinic on trusts. The confer-ence was hosted by the Long IslandAlzheimer’s Foundation (LIAF). Ms.Cona is a member of the LIAF Board of

Trustees as well as the Legal AdvisoryBoard.

The Honorable Stephen L. Ukeiley,a Suffolk County District Court Judgeand editor of this column, has publishedhis second book, The Bench Guide toLandlord & Tenant Disputes in NewYork (Second Edition) (2013). The bookis intended for practitioners, Judges,law students and litigants.

New Partners, Of Counsel andAssociates

Mili Makhijani has joined CatalanoGallardo & Petropoulos, LLP as of coun-sel and will be practicing in the area ofprofessional liability defense. Ms.Makhijani, who earned her Juris Doctorfrom Hofstra Law School, is a formerLaw Secretary to Nassau CountySupreme Court Justice Randy SueMarber. Janine Townsend has alsojoined the firm as an associate.

Michael Walker Jr. has joinedForchelli, Curto, Deegan, Schwartz,Mineo & Terrana LLP as a Bankingand Finance practice group associate.Mr. Walker was previously a JudicialIntern for the Honorable A. KathleenTomlinson, Magistrate Judge of theU.S. District Court, Eastern District ofNew York. He also previously served asa Legal Assistant for the AmericanSociety of Composers, Authors andPublishers. Mr. Walker is presentlyawaiting admission to the New YorkState Bar.

New Firms And LocationsThe Law Office Of Leslie H. Tayne

P.C. located in Melville has beenrenamed the Tayne Law Group, P.C.Ms. Tayne, a member of the firm, con-centrates her practice in the areas ofdebt resolution and bankruptcy alter-natives.

The In Brief section is compiled by theHonorable Stephen L. Ukeiley, SuffolkCounty District Court Judge. Judge Ukeileyis an adjunct professor at both the TouroCollege Jacob D. Fuchsberg Law Center andthe New York Institute of Technology, andauthor of The Bench Guide to Landlord &Tenant Disputes in New York©.PLEASE E-MAIL YOUR SUBMISSIONS TO Nassau Lawyer: nassaulawyer@nassaubar.org with subject line: IN BRIEF

MEMBER BENEFITJoin the Lawyer Referral

Information Service PanelThe Nassau County Bar Association Lawyer Referral Information Service (LRIS) is an effective means of introducing people with legal problems to attorneys experienced in the area of law in which they need assistance. In addition, potential new clients are introduced to members of the Service Panel. Membership on the Panel is open exclusively as a benefit to active members of the Nassau County Bar Association. Professional insurance coverage is required.

To join, please go to the Nassau Bar website, www.nassaubar.org, and download the application form, choose the panels on which you would like to serve, sign the agreement form, provide a copy of your current professional insurance coverage, and fax or mail with your check or credit card information to:

NASSAU COUNTY BAR ASSOCIATIONLawyer Referral Information Service

15th and West StreetsMineola, NY 11501

Questions? Contact Pat Carbonaro, LRIS CoordinatorTel: (516)747-4070 x. 219

Fax: (516)747-4147

8 n September 2013 n Nassau Lawyer

Hon. Stephen L.Ukeiley

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Offices of Castiglia Rubinstein &Associates, William J.Birmingham repre-sents clients in civil lit-igation matters, includ-ing: landlord-tenantactions, foreclosure set-tlement, breach of con-tract and personalinjury claims. Mr.Birmingham has suc-cessfully conductedlandlord-tenant trialsresulting in the evic-tion of tenants due toholdover and nonpay-ment of rent.In May 2007, Mr. Birmingham

graduated magna cum laude fromJohn Jay College of Criminal Justicewith a major in Law, the Courts andthe Criminal Justice System. Whileattending John Jay College, he wasthe recipient of the Scholar-Athleteof the year for 2006 and 2007. Mr. Birmingham graduated from

Villanova University Law School inMay 2011. While at Villanova, Mr.Birmingham participated in the Civil

Justice Clinic where he representedindigent clients seeking unemploy-ment insurance benefits and socialsecurity disability benefits. He alsointerned with the PennsylvaniaInnocence Project to investigateinmate claims and case history. Mr. Birmingham also had an

opportunity to internwith the United StatesDistrict Attorney’sOffice in the EasternDistrict and theNassau County DistrictAttorney’s Office. Today, Mr. Birming-

ham is licensed in NewYork. Mr. Birminghamis an active and con-tributing member ofthe NCBA’s YoungLawyers Committeeand of the New YorkState Bar Association.

The YLC congratulates Mr.Birmingham on his accomplish-ments and contributions to the legalcommunity and the community-at-large and believes Mr. Birminghamwill continue to excel in his endeav-ors in the coming years.

Andrea M. Brodie, Esq. is the seniorassociate at Saltzman Chetkof &Rosenberg LLP in Garden City and Chairof the Young Lawyers Committee.

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Adam D’AntonioThis month, the Nassau County Bar Asso -

ciation is pleased to honor Adam D'Antonio, Esq. as the Pro Bono Attorney of the Month forhis dedication to the Nassau County BarAssociation (NCBA) Mortgage ForeclosureProject.*Adam is an accomplished attorney who has

experience working in both the public and private sectors. After graduating as theValedictorian from the C.W. Post Campus ofLong Island University, Adam earned his JDfrom Touro College Jacob D. Fuchsberg LawCenter where he ranked third in his class andwas an executive member of the Law Review.During his legal career, Adam has served onvarious committees at the local and nationallevel ranging from higher education tofundraising and community relations. He cur-rently serves as Chair of the Nassau CountyBar Association’s Community Relations andPublic Education Committee. He started his professional career in the pub-

lic sector interning with the Honorable F. DanaWinslow, Nassau/Suffolk Law Services in theLandlord/Tenant Division and Honorable

Arthur D. Spatt. Thereafter, Adam served as aNassau County Assistant District Attorneywhere he prosecuted over 3,000 dockets with anactive caseload of approximately 300 cases con-ducting jury selection, hearings and trials. Atthe same time, he managed and prosecuted allmisdemeanors and violations pending in theGlen Cove City Division. After fulfilling his commitment to the public

sector, Adam transitioned into civil practice.He is a federal and state litigator with anemphasis on bankruptcy and residential fore-closure defense.Adam spends numerous hours each month

volunteering at the NCBA Mortgage Fore -closure Clinic where he counsels homeownersfacing financial crisis. He is always willing toassist those in need of guidance and to offerreassurance. Adam takes the time to addressthe concerns of our attendees and works withthem to determine their needs and objectives.At our clinic, he counsels individuals onChapter 7 and Chapter 13 bankruptcies as wellas on foreclosure defense and other loss mitiga-tion options relating to residential foreclosures.

“I have always been committed to helping oth-ers. Volunteering at the Nassau County BarAssociation is important because I can partici-pate in a program that provides valuable assis-tance to those who otherwise might not haveaccess to the help that they need,” he explains.Adam is a member of the New York State

Bar, Bar of the Federal District Court for theEastern District of New York, and the Bar ofthe United States Supreme Court. He practicesin Wood bury, New York and handles casesthroughout the New York metropolitan area.His insight and knowledge continue to give

peace of mind to those less fortunate. For hisexample, we are proud to acknowledge his gen-erosity and service to the community by honor-ing Adam D’Antonio as the Pro Bono of theMonth.

*Attorneys interested in working on theMortgage Foreclosure Project or have any ques-tions can contact Gale D. Berg, Director of ProBono Attorney Activities, at the Nassau CountyBar Association by phone (516) 747-4070 or by e-mail at gberg@nassaubar.org.

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usage an

Nassau Lawyer n September 2013 n 11

In an ever-mounting struggle againstonline piracy, media giant Viacom hasrequested a new judge to oversee itscase versus the online video siteYouTube. The request comes only a fewmonths after Judge Louis Stantongranted summary judgment in favor ofYouTube, finding it was enti-tled to safe harbor protectionunder the Digital MillenniumCopyright Act (DMCA).The Digital Millennium

Copyright Act,1 passed in1998, provides “online serviceproviders,” defined as “aprovider of online services ...including an entity offeringthe transmission, routing orproviding of connections fordigital online communica-tions,”2 a “safe harbor” fromliability to copyright holdersin the case of copyright infringement onits website. However, there are somelimitations to the safe harbor provision.The service provider may not have“actual knowledge” that material consti-tutes infringement,3 nor may the serviceprovider be “aware of facts or circum-stances from which infringement isapparent,”4 and the service providermay not be “willfully blind” to suchinfringement. The service provider mustalso have a system in place to removeany infringing content, and terminateany repeat offenders.Viacom, admittedly, had a tough task

ahead of it, in proving YouTube hadactual knowledge or was “willfullyblind” to infringing content – frequentlyreferred to as the “red flag” test. Though

not precedent in this particularinstance, in the case of Perfect 10, Inc. v. CCBill LLC,5 the court ruled thatignoring website names with “illegal”and “stolen” in the actual URL did notconstitute a “red flag.”6 Additionally,unless a service provider knows that a

specific video is infringing ona specific copyright, theDMCA has been read to holdthat the service provider doesnot have “actual knowledge”of infringement.7Indeed, Judge Stanton

held true to previous trendsin his ruling. Citing the factthat YouTube has an extraor-dinary amount of contentuploaded to its site every day,it was not under an affirma-tive duty to monitor, norcould YouTube know of, spe-

cific instances of copyright infringe-ment.8 Additionally, Judge Stanton heldthat the DMCA excused YouTube ofdoing any independent search to identi-fy whether certain clips on its websitewere infringing upon any copyrightedcontent.9Judge Stanton clearly states his opin-

ion on the governing standard:“[K]knowledge of the prevalence ofinfringing activity, and welcoming it,does not itself forfeit the safe harbor. Toforfeit that, the provider must influenceor participate in the infringement.”10Though YouTube disabled a viewer’s

ability to flag a particular video forinfringement, stopped regularly moni-toring its site for infringement, and keptinfringing videos on its website until

specifically informed of such infringe-ment by the content owner, none ofthose actions, in the court’s view consti-tuted control over infringing videos, or specific knowledge of infringingvideos.11Viacom has requested not only that

the court overturn Judge Stanton’s deci-sion, but also that the Court removeJudge Stanton to “preserve the appear-ance of justice.”12 Viacom believes thatthere is an issue of fact as to whetherYouTube turned a blind eye to infring-ing videos.13 Whether the Court obligesViacom’s request, the decision by JudgeStanton, as it stands now, holds wide-

reaching implications for copyright own-ers. The DMCA’s takedown procedure,which puts the onus on copyright hold-ers to police the Internet for infringe-ment of their work, and inform any serv-ice provider of such infringement, hasled to many copyright owners beingoverzealous with their takedown notices– with Google at one point reportingthat 40 percent of the takedown noticesit received were invalid.14Forcing content owners to forever

scour the Internet, and the admittedlyincredible amount of content onYouTube in particular, as the SecondCircuit appears to have done at leastunder the current DMCA laws, will beincredibly burdensome upon contentowners. Though Viacom may actuallyhave the funds and personnel to active-ly police for infringement, smaller copy-right holders may be forced to endureinfringement of their work for simplelack of resources. Additionally, if copyright owners are

expectedly overbroad in determiningwhat is or is not infringement, thensome legitimate fair uses of infringingcontent may be removed under theDMCA. Fair use is an affirmativedefense to copyright infringement,15which analyzes the purpose and charac-ter of any infringing use, the nature ofthe copyrighted work, the amount andsubstantiality of the portion of the copy-righted work used, and the effect of theinfringing use on the market place forthe copyrighted work.16 Fair use is anoft-cited defense for infringement, and isintended to foster news reporting and

Viacom Requests New Judge in Case Against YouTube

See VIACOM, Page 22

Keith P. Black

NASSAU ACADEMY OF LAW

Nassau Lawyer n September 2013 n 1312 n September 2013 n Nassau Lawyer

14 n September 2013 n Nassau Lawyer

This training program will assist practitioners on how to use the Electronic Filing system. Training will include:

how to ascertain a User ID and Password how to navigate the website how to file documents how to pay fees ...and other related subjects

GUEST SPEAKER

Jeffrey Carucci Statewide Coordinator for

Electronic Filing

NYS Office of Court Administration

Hon. Thomas A. Adams Administrative Judge Nassau County Clerk Nassau County

Invite You To Attend An

ELECTRONIC FILING

TRAINING PRESENTATION

7:30 p.m. At Central Jury Room

Nassau Supreme Court Building

To Pre-Register online Please go to the following website: WWW.NYCOURTS.GOV/EFILE, then under NYSCEF training click register today or go to the following link: http://NASSAUSUPREME-EORG.EVENTBRITE.COM/

Online Registration is open until Friday, September 13, 2013.

E-FILING WILL SOON BE MANDATORY IN NASSAU COUNTY!

PRE REGISTRATION IS SUGGESTED

Questions? Charles Bahamonde, Management Analyst

516.493.3137 cbahamon@courts.state.ny.us

&

has read the decision that way. In U.S. Bank v.Eichenholtz,9 the respondent/occupant in a proceedingpursuant to RPAPL §713(5) argued that theMoskowitz decision mandated that the referee’s deedbe ‘personally exhibited’ to the occupant. The JusticeCourt found that even service on a person of suitableage and discretion was insufficient to constitute‘exhibiting.’ However, contrarily, in a Suffolk Countyproceeding, Hudson City Savings Bank v. Lorenz,10where notice was served by conspicuous service on thefourth attempt, the court, citing the Court of Appealsin Bossuck v. Steinberg,11 reasoned that due processin civil litigation does not require in-hand service andthat, as an upstate Justice Court determined in2006,12 to impose a duty of personal, individual exhi-bition on each occupant onto a summary proceedingwould “create a higher standard for service for thenotice and the deed than is needed for the notice ofpetition and petition.”13 The Judge in Hudson CitySavings went on to opine that he was not bound byMoskowitz under stare decisis due to the legislatureaddressing its concern about unlawful eviction of bonafide tenants by adopted RPAPL §1305, establishingadditional notice requirements and rights of tenantsto remain in foreclosed properties. Does this ‘cure’ the seemingly preposterous sce-

nario wherein an occupant of a foreclosed property canrender himself ‘eviction proof’ simply by avoiding face-to-face contact with a process server? Probably not.The real solution is for the legislature to substitutesome defined act, (i.e. annex or simply serve in accor-dance with RPAPL §735) and eliminate the term‘exhibit’ from RPAPL §713. In the interim, if, as thecourts have suggested, ‘exhibit’ is to be given its plainmeaning of “to present to view,”14 perhaps ‘nail andmail’ in a separate back, un-obscured by a Notice willsuffice to satisfy the statute.

Can a Secured Lender Evict Occupants After a UCC Article 9 Sale?

In Federal Home Loan Mtg. Assoc. v. Perez,15 theAppellate Term, Second Department found no basis inthe RPAPL for secured lenders to seek possession of aforeclosed cooperative unit after a UCC sale. The lead-ing treatise on foreclosure had posited that a lendercould gain possession based on an execution or basedon a terminated license.16 In Perez, the assignee of theUCC 9 sale bid brought a petition for possession andthe trial court denied the occupants motion to dismiss,finding that a purchasing lender at a UCC article 9sale had rights to possession, alternately underRPAPL § 713(1), the section for possession based onan execution, or RPAPL § 713(7), the section applica-ble to licensees. The Appellate Term reversed, finding that neither

RPAPL § 713(1) nor RPAPL § 713(7) applied, norcould the purchaser find relief under RPAPL § 713 (5),the provision for possession after a real property fore-closure, and posited that “if a new category of sum-mary proceeding is to be created, it is for the legisla-ture, not the courts, to create it (see Rosenstiel v.Rosenstiel, 20 A.D.2d 71 (1963).”17 The Rosenstielcase18 cited by the Appellate Term is a frequentlycited case wherein termination of a greater interest(that of an estranged spouse) was held not to beenforceable as a terminated license. The Rosenstieldecision has become the basis for courts hearing sum-mary proceedings to defer marital rights issues to thefamily courts or matrimonial parts of the SupremeCourt. A lender has the option of commencing a judicial

proceeding to foreclose a loan secured by the stock and

lease in a cooperative apartment;19 however the vir-tually universal mode of foreclosing a co-op loan is forthe lender to hold a non-judicial sale under UCCArticle 9. Because no court is involved, the sale doesnot generate an execution,20 thus making RPAPL §713(1) inapplicable.The court in Federal Home Loan found that the

respondent/former shareholder was, at a minimum, aholdover tenant, presuming the proprietary lease hadbeen terminated, a fact not in the record, and not alicensee. Under RPAPL § 713(7), a holdover proceed-ing may be maintained on the ground that the respon-dent is a licensee of the person entitled to possessionof the property at the time of the license and thelicense has expired, the licensor has revoked thelicense, or the licensor is no longer entitled to posses-sion of the property.21 A license is a permission,express or implied, to enter upon or occupy real prop-erty, or a personal, revocable, non-assignable privilegefrom the person entitled to possession.22 The posses-sion of a license is usually non-exclusive.23 Thus, evenif the proprietary lease was terminated, the formerholder of a cooperative interest, which include a pro-prietary lease granting exclusive possession of the

unit, cannot be seen as a licensee.The court in Federal Home Loan also rejected

“RPAPL 713(5), which provides for the maintenance ofa summary proceeding to recover ‘real property’(RPAPL 701[1]) where ’the property has been sold inforeclosure’ [as] unavailable” to recover a cooperativeunit as not being a sale of ‘real property,’ despite thesui generis nature of cooperatives24 wherein for manypurposes co-op leaseholds are treated as realty.However, as discussed above, the express require-ments of RPAPL § 713(5) are that the party seekingpossession ‘exhibit’ their deed to the occupants theyseek to dispossess. Since there is no deed for a co-op,as discussed in the first part of this article, any claimunder RPAPL § 713(5) must fail. The ancient and now codified remedy of ejectment25

also seems to be unavailable as the legislature, in cod-ifying the remedy, expressly denied standing to “amortgagee, or his assignee, or other representative.”26The remaining solution appears to be for the

lenders to actually seek transfer of the stock and leaseinto the name of the lender after a UCC sale or, wherethe co-op won’t permit corporate ownership, transfer ofthe stock and lease to an individual nominee.Alternately, lenders have a right to re-sell the premis-es occupied, subject to any conditions and approvalsfound in the co-op’s governing documents.27 The sale ofoccupied co-op apartments may be impractical and willassuredly negatively affect purchase offers. If thesesolutions are unsatisfactory, the lenders, servicers andinvestment trusts that hold loans secured by coopera-tive interests will need to invest some of their politicalcapital in seeking a change from Albany. It should be noted that, under most co-op governing

documents, the loss of the shares to a secured party isan independent default under a proprietary lease and,

as such, the co-op would have standing to seek pos-session of a unit after a UCC sale by a secured lender.If the lender/purchaser is able to show the co-op thatsuch a possessory action is in the best interest of allconcerned, co-op boards and managers might be will-ing to proceed against the foreclosed shareholders.The common thread in the two recent decisions of

our Appellate Term is the re-examination of long-standing practices of the lending industry. While it isbeyond argument that the industry is deserving ofscrutiny, additional impediments to lenders for recov-ery on bad loans may be counter-productive. The aver-age New York foreclosure now takes 445 days fromdefault to sale,28 with significant ‘due process’ afford-ed home owners. The literal interpretation for theterm “Exhibit” by the court in Home Loans Inc. v.Moskowitz effectively bans substitute service. It is dif-ficult to imagine the legislature intending to make itpossible for the occupant of a foreclosed property toavoid eviction by simply averting his or her gaze. It isequally hard to imagine that, while recognizing Co-operative housing as a security interest, the legisla-ture didn’t provide a mechanism for the secured partyto get possession of the collateral after foreclosing thesecured interest. The court in Federal Home LoanMtg. Assoc. v. Perez, recognizes this anomaly and cor-rectly points to the legislature to create a new sub-sec-tion for RPAPL § 713 relating to cooperatives and,may we suggest, either defining “exhibiting” or simplychanging RPAPL § 713(5) to permit annexing a copyof the deed to the 10-day notice.

Dan M. Blumenthal is of counsel to Schneider Mitola LLP,Garden City, concentrating on landlord-tenant, foreclosureand leasing for co-ops, condominiums and real property.

1. La Guardia v. Cavanaugh, 53 N.Y.2d 67, 70, 440 N.Y.S.2d 586(1981).

2. Home Loan Servs., Inc. v. Moskowitz, 31 Misc.3d 37 (App.Term,2d Dept. 2011).

3. Alternately, and more commonly, a properly certified copy there-of. See CPLR 2105; Pacific v. Cuevas, 176 Misc.2d 846 (Civ.Ct.,Kings Co. 1998).

4. See, The Green Point Savings Bank v. Defour, 162 Misc.2d 476;see also, Nationwide Associates, Inc. v. Brunne, 216 A.D.2d 547).Occupants entering into possession after the filing of a Notice ofPendency may also be proper parties to removal by writ of assis-tance.

5. RPAPL § 221.6. RPAPL § 713.7. 192 Misc.2d 704 (Sup.Ct., Westchester Co. 2002).8. Lincoln Sav. Bank v. Warren, 156 A.D.2d 510(2d Dept. 1989).9. 37 Misc.3d 536 (Justie Ct., Yorktown 2012).10. Hudson City Savings Bank v. Lorenz, 39 Misc.3d 538 (Dist.Ct.,

Suffolk Co. 2013).11. 58 N.Y.2d 916, 460 N.Y.S.2d 509 (1983).12. Novastar Mtge., Inc. v. LeForge, 12 Misc.3d 1179(a) (Sup.Ct.,

Green Co. 2006).13. Id.14. Merriam Webster on-line dictionary #2 definition,

http://www.merriam-webster.com/dictionary/exhibit. 15. 40 Misc.3d 1, 968 NYS2d 317 (A.D. 2d Dept., 2013).16. Bergman, Bruce, New York Mortgage Foreclosures, §37.07. 17. Federal Home Loan, 40 Misc3d at 4.18. 20 A.D.2d 71 (1st Dept. 1963). 19. See, U.C.C. § 9-601(a)(1).20. A prerequisite to notice and a basis for a summary proceeding

under RPAPL 713-1. 21. RPAPL § 713(7).22. Todd v. Krolick, 96 A.D.2d 695, 696 (3d Dept. 1983).23. Chu v. Lee, 39 Misc.3d 147(A) (A.T. 2d decided May 14, 2013).24. In Re State Tax Commn. v. Shor, 43 N.Y.2d 151, 156 (1977)

(“The ownership interest of a tenant-shareholder in a coopera-tive apartment is sui generis. It reflects only an ownership of aproprietary lease, and therefore arguably an interest in a chat-tel real, conditional however upon his shareholder interest inthe co-operative corporation, an interest always treated as per-sonal property. The leasehold and the shareholding are insepa-rable. For some special purposes, the real property aspect maypredominate”).

25. RPAPL Art. 6.26. RPAPL 611(3).27. LI Equity Network, LLC v. Village in the Woods Owners Corp.,

79 A.D.3d 26 (2d Dept. 2010)(finding that secured party salewas subject to the governing documents of the co-op corporationnotwithstanding the broad language of UCC 9–610).

28. http://www.dfs.ny.gov/consumer/hetptimeline.htm.

Nassau Lawyer n September 2013 n 15

COLLATERAL ...Continued From Page 3

the consequences it caused, the Baranticipates having more individualsseeking answers to their questions. Todate, NCBA has held more than 23 clin-ics concentrating on Superstorm Sandyand its aftermath, both at the NCBAmain office and in various hard hit com-munities in Nassau County.“The NCBA is always very proud of

its members who donate countless

hours toward our Access to Justice ini-tiatives. When our volunteer attorneyscombine forces at our annual FAIR, theresidents of Nassau County have aunique opportunity to gather invalu-able information about their legaloptions. We look forward to this specialevent, and are grateful to the attorneyswho take the time to make this possible...” stated Krisel.Attorneys are needed to volunteer to

meet one-on-one with residents to pro-vide information and refer them formore assistance if needed. Attorneys

will not provide legal representation.Some of the major areas include: • bankruptcy and consumer debt • divorce and family issues • education and special education• health and disabilities• immigration • mortgage foreclosure and housing

matters• senior citizen issues • Superstorm Sandy issuesBi-lingual attorneys are especially

needed. “Through our BOLD (BridgeOver Language Divides) Program, we

are reaching out to residents who wouldbe more comfortable speaking withattorneys in their native languages,”Krisel added. “We plan to have bi-lin-gual attorneys fluent in many lan-guages, such as Spanish, Greek,Portuguese, Turkish and Korean andother languages upon request.”

NCBA members who would like tohelp in any of the practice areas, ateither the 3-5 p.m. session or 5-7 p.m.session (or both), can contact Gale D.Berg, Director of Pro Bono AttorneyActivities, at gberg@nassaubar.org.

FAIR ...Continued From Page 1

between the property that the gov-ernment demands and the socialcosts of the applicant’s proposal. Ourprecedents thus enable permittingauthorities to insist that applicantsbear the full costs of their proposalswhile still forbidding the governmentfrom engaging in “out-and-out ...extortion” that would thwart theFifth Amendment right to just com-pensation. Under Nollan and Dolanthe government may choose whetherand how a permit applicant isrequired to mitigate the impacts of aproposed development, but it may notleverage its legitimate interest inmitigation to pursue governmentalends that lack an essential nexus andrough proportionality to thoseimpacts.6

Koontz raises many questions andissues. For one, the Court uses the term“extortionate demands” to describeexcessive requirements that municipal-ities place on land-use applicants thatdo not pass the Nollan/Dolan test.7The opinion does not give a clear defini-tion of that term. There is no bright linetest as to whether a demand is “extor-tionate.” The Court explained thatwhen an applicant is forced to relin-quish property rights as a condition fora land-use approval, “[e]xtortionatedemands of this sort frustrate the FifthAmendment right to just compensation,and the unconstitutional conditionsdoctrine prohibits them.”8 To illustratethis point, the Court stated that: [o]ur decisions in the [Nollan/Dolan]

cases reflect two realities of the per-mitting process. The first is thatland-use permit applicants are espe-cially vulnerable to the type of coer-cion that the unconstitutional condi-tions doctrine prohibits because thegovernment often has broad discre-tion to deny a permit that is worth farmore than property it would like totake. By conditioning a building per-mit on the owner’s deeding over apublic right-of-way, for example, thegovernment can pressure an ownerinto voluntarily giving up propertyfor which the Fifth Amendmentwould otherwise require just compen-sation. So long as the building permitis more valuable than any just com-pensation the owner could hope toreceive for the right-of-way, theowner is likely to accede to the gov-ernment’s demand, no matter how

unreasonable.9

The Court was “[m]indful of the spe-cial vulnerability of land use permitapplicants to extortionate demands formoney ...”10 The Court also recognizedthat “[e]xtortionate demands for prop-erty in the land-use permitting contextrun afoul of the Takings Clause notbecause they take property but becausethey impermissibly burden the rightnot to have property taken without justcompensation.”11 Presumably, if thegovernment’s demand fails the propor-tionality test, it then gives rise to a con-stitutional claim because it is an imper-missible burden. Yet, the Court’s opin-ion does not provide clear guidance asto when a demand crosses the line andbecomes “extortionate.” Koontz also raises another important

question. How does the denial of a land-use permit application lead to a consti-tutional claim when the applicant hadno vested right to the permit to beginwith? Stated another way, if there is no“vested” right to a permit or zoningapproval, how can an applicant be enti-tled to Constitutional protection if thegovernment denies an application? The Koontz decision may have a pro-

found impact on how local governmentsengage applicants for land-use permitsin the future. Justice Kagan may beright, particularly as municipalitiesmay fear a Koontz-based constitutionalchallenge to both approvals anddenials. Koontzmay lead municipalitiesto grant or deny land use applications,or refrain from imposing conditionsthey consider appropriate for potential-ly the wrong reason; namely, the con-cern of litigating costly legal battles. It will be interesting to see how local

governments across the nation respondto land use applications in the wake ofthe Koontz decision. Local governmentboards may give greater deference tothe land-use applicant as they weighthe imposition of conditions or considera denial of an application in which theyhave asked for measures to mitigateimpacts or the payment of money formitigation purposes that the applicanthas rejected. These are very complexissues and Koontz leaves much open tointerpretation for future land-use per-mitting by local governments. The dissent suggests that the bal-

ance has now tipped in favor of theland-use applicant, over the municipal-ity, at the bargaining table for a land-use permit. It remains to be seenwhether the Koontz ruling erodes theability of local municipalities and appli-cants to negotiate beneficial terms and conditions that protect the publicinterest, but do not run afoul of theConstitution.

Michael H. Sahn, Esq. is the ManagingPartner of Sahn Ward Coschignano & Baker,PLLC. He is a former co-chair of the NCBA’sReal Property Law Committee. Adam H.Koblenz, Esq., an Associate at the firm, con-tributed to this article.

1. Koontz v. St. Johns River Water ManagementDistrict, 570 U.S. ___, 133 S.Ct. 2586 2602(2013).

2. Id. at 2593.3. See Nollan v. California Coastal Comm’n, 483U.S. 825 (1987); Dolan v. City of Tigard, 512U.S. 374 (1994).

4. 113 S.Ct. at 2591. 5. Id.6. Id. at 2595 (internal citations omitted).7. Id.8. Id.9. Id. at 2594.10. Id. at 2603.11. Id. at 2596.

16 n September 2013 n Nassau Lawyer

LAND USE ...Continued From Page 5

The Nassau County Bar Association has a long-standing tradition of presenting the Nassau County Supreme Court with portraits of

Supreme Court Justices.

The formal portrait dedication ceremony for

Justice Anthony J. Falanga

Justice Ute Wolff Lally

Justice Ira B. Warshawskywill be on Friday, October 18th, 2013

The ceremony will be held at 2 p.m. in the Ceremonial Courtroom in Nassau County Supreme Court

For more information contact:

Dan Bagnuola, Director of Community Relations for the

Nassau County Courts at 516-493-3262

Portrait Friday, October 18 • 2:00pm

Presentation

record possible in the event of a judicialchallenge to the determination of themunicipal board or official chargedwith reviewing applications for noncon-forming uses. Once a nonconforming use has been

established, property owners must beconscious of special regulations applica-ble to their use. Most municipalitieshave adopted restrictions governing theexpansion of nonconforming usesbecause, while these uses are permittedto continue, “… they may not beenlarged as a matter of right.”9Therefore, it is within the sound discre-tion of the municipality to permit orpreclude the expansion of nonconform-ing uses.10

While some municipalities permitlimited expansion of nonconforminguses and structures, others strictly pro-hibit it. For example, in the Town ofBabylon, a legal nonconforming struc-ture may be expanded as of right by25% of the existing floor area and by25% of land area for a nonconforminguse.11 Conversely, the Town of Hun -tington completely prohibits expansionof nonconforming uses.12Clearly, the right to continue a non-

conforming use is constitutionally pro-tected and the courts will protect prop-erty owners’ rights to maintain saiduses. However, expansion and/or modi-fication of these uses may not be possi-ble even when the additional use couldbe considered compatible with theauthorized use. For example, inMcDonald v. Zoning Board of Appealsof the Town of Islip,13 the court, citingto a municipality’s right to restrict theexpansion of nonconforming uses,upheld the determination of the ZoningBoard to deny the expansion of a pre-existing, nonconforming landscapingand excavation business to include amulching and recycling operation.Thus, even though mulching and recy-cling is arguably an ancillary use of alandscaping business, it was still con-sidered an impermissible expansionand the right to prohibit the expansionwas upheld by the court.There is, however, one exception to

this rule which applies when the landis considered a resource (i.e., mines,quarries, landfills, etc.). In thoseinstances the courts have taken a“vested rights” approach.14 A vestedright inures to the property owner

when he or she invests a substantialsum of money into a property pursuantto a validly issued permit. Once a rightis vested, the municipality is estoppedfrom preventing the project or use fromgoing forward.16 According to the Court of Appeals,

there are special considerations thatshould be made because “as a matter ofpracticality as well as economic neces-sity, a quarry operator will not exca-vate his entire parcel of land at once,but will leave areas in reserve, virtual-ly untouched until they are actuallyneeded.”17 Simply put, where a proper-ty owner evidences his or her intent touse an entire parcel for a particularuse, through a significant financialcommitment or otherwise, they will beallowed to expand the use to the entireparcel. Clearly, establishing, maintaining

and expanding nonconforming uses is adifficult endeavor. Due diligence isessential when dealing with noncon-forming uses because property ownersand prospective purchasers stand tolose a great deal if the nonconforminguse is not preserved.

John C. Farrell is a land use and municipallaw attorney with Sahn Ward Coschignano &Baker as well as a member of the Town ofBabylon Zoning Board of Appeals.

1. Toys R Us v. Silva, 89 N.Y.2d 411, 416 (1996)citing from 1 Anderson’s American Law ofZoning § 6.01, at 481-482 [Young 4th ed.]

2. Toys R Us v. Silva, 89 N.Y.2d 411, 416; Seealso, Cinelli Family Ltd. Partnership v.Scheyer, 50 A.D.3d 1136, 1137 (2d Dept. 2008).

3. Glacial Aggregates LLC v. Town of Yorkshire,14 N.Y.3d 127, 135 (2010); People v. Miller,304 N.Y. 105, 107 (1952).

4. Id.; Pelham Esplanade v. Board of Trustees ofVillage of Pelham Manor, 77 N.Y.2d 66, 72(1990).

5. See, §198-105; See also, Babylon Town Code§213-226 (Nonconforming use lost if discontin-ued for a period of six months); HempsteadBuilding Zone Ordinance § 5 (nonconforminguse lost on “abandonment”); North HempsteadTown Code §70-208 (E) (Nonconforming uselost if discontinued for a period of one year);Oyster Bay Town Code § 246-4.2.2.5(Nonconforming use lost if discontinued for aperiod of one year).

6. Buffalo Crushed Stone Inc. v. Town ofCheektowaga, 13 N.Y.3d 88, 97 (2009).

7. Jones v. Town of Carroll, 15 N.Y.3d 139, 143(2010) quoting Syracuse Aggregate Corp. v.Weise, 51 N.Y.2d 278, 284-285 (1980).

8. Babylon Town Code §213-26(D).9. Buffalo Crushed Stone Inc. v. Town ofCheektowaga, 13 N.Y.3d 88, 97 (2009); quotingRudolf Steiner Fellowship Foundation v. DeLuccia, 90 N.Y.2d 453, 458 (1997).

10. Incorporated Village of Laurel Hollow v.Owen, 247 A.D.2d 585, 586 (2d Dept. 1998).

11. Babylon Town Code §213-23(B).12. See, Huntington Town Code §198-102 and

§198-103. See also Oyster Bay Town Code §246-4.2.2.3 (prohibiting the enlargement ofnonconforming uses beyond an existing structure).

13. McDonald v. Zoning Board of Appeals of theTown of Islip, 31 A.D.3d 642 (2d Dept. 2006).

14. See, Jones v. Town of Carroll, 15 N.Y.3d 139,144; See also, Glacial Aggregates LLC v.Town of Yorkshire, 14 N.Y.3d 127, 135(2010); Buffalo Crushed Stone, Inc. v. Townof Cheektowaga, 13 N.Y.3d 88, 97 (2009);Syracuse Aggregate Corp. v. Weise, 51 N.Y.2d278, 285 (1980).

15. Town of Orangetown v. Magee, 88 N.Y.2d 41(1996); Ellington Constr. Corp. v. ZoningBoard of Appeals of Inc. Village of NewHempstead, 77 N.Y.2d 114, 122 (1990).

16. Town of Orangetown v. Magee, 88 N.Y.2d 41(1996).

17. Jones v. Town of Carroll, 15 N.Y.3d 139, 144.

Nassau Lawyer n September 2013 n 17

NONCONFORMING ...Continued From Page 3

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The Nassau County Bar Association along with Nassau/Suffolk Law Services invites all attorneys to volunteer for our Third Annual Pro Bono Legal Fair.

Any Nassau resident can come to the Bar Association’s headquarters located at the corner of 15th & West Streets in Mineola with a question and meet with

an attorney one-on-one for legal guidance.

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• bankruptcy • mortgage foreclosure and • divorce and family issues housing matters• education and • senior citizen issues

special education • Superstorm Sandy issues• health and disabilities• immigration

• Veterans’ issues

COU UAS NS TA Y

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Volunteers please contactGale D. Berg at (516)747-4070 or

gberg@nassaubar.org

VOLUNTEER ATTORNEYS NEEDED

COUNSEL TO THE PROFESSION

• DEPORTATION• EXCLUSION• REMOVAL• APPEALS• EMPLOYER SANCTIONS

• POLITICAL ASYLUM• WORK PERMITS• VISAS• “GREEN CARDS”• CITIZENSHIP

250 Fulton Avenue, Suite 200 • Hempstead • NY 11550(516) 489-8786 • FAX (516) 486-4933

Spanish SpokenMember: American Immigration Lawyers Association

Lecturer & Panelist: Nassau County Bar Association, Suffolk County Bar Association

• IMMIGRATION LAW •

LAW OFFICES OFHOWARD R. BRILL, P.C.

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MMaakkee aa ddiiffffeerreenncceeiinn ssoommeeoonnee’’ss lliiffee ––BBee aa MMeennttoorr!!

NCBA is looking for mentors for

Middle School students.

Students in (y)our followingcommunities are awaiting

mentors:

8 a.m. to 8:45 a.m. one dayevery other week

Oct. 2013 through May 2014

Hempstead • Uniondale • JerichoWestbury • East Meadow

Contact Elaine Leventhal at 516-747-4070 x.212

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ATTORNEYS & JUDGES

a

A D V E R T I S E I N T H E

Call 631-737-1700 � advertising@libn.com

Clearly, the right to continue a nonconforminguse is constitutionally protected and the Courtswill protect property owners’ rights to maintainsaid uses.

18 n September 2013 n Nassau Lawyer

Contributions may be sent to: NCBA, Attn: WE CARE, 15th & WestStreets, Mineola, NY 11501 or at: www.nassaubar.org

We Acknowledge, with Thanks, Contributions to the WE CARE FundDonors In Honor OfHon. Kenneth S. Diamond Kathryn Hopkins receipt of the Long Beach

Lawyers’ Lawrence Elovich Leadership AwardDistrict Court Law Department Tom Bucaria’s BirthdaySteven J. Eisman Eric Rosenblum’s Installation as President of the Nassau

Lawyers AssociationSteven J. Eisman Gregory Peterson, recipient of the Gitelman Award Meryl & Stephen Gassman Marriage of Ali, daughter of Leonard LeedsStephen Gassman Birth of Yofiel Yosef Mordehai SilberBarbara & Artie Kraut Marriage of David & Lisa, son of Leslie & Douglas RothkopfLeo & Susan Mindick Meryl & Steve Gassman, most worthy honorees, really special

peopleSusan Katz Richman Rebuilding Together’s Newest Board Members Barbara Nilsen

& Ed KliegmanHon. Marie G. Santagata Emily Franchina as Vice Chair of Fellows NYS Bar FoundationHon. Marie G. Santagata Irene Villacci becoming President-Elect of Women's Bar

Association of the State of New YorkHon. Marvin & Carole Segal 50th Anniversary of Arlene & Peter MeraniHon. Arthur D. Spatt Kathryn Driscoll Hopkins receipt of the 2013

Lawrence E. Elovich Leadership Award

Donors In Memory OfPat Carbonaro Greg Walker, nephew of Joanne FerranteFreda Eiberson Col.(Ret.) Jack MardenSteven J. Eisman Rita O’Brien, wife of Hon. William O’BrienFarley & Kessler Hon. Joel K. AsarchBarbara & Artie Kraut Mother Jeanne Gans of the Aldewereld Family Elaine Leventhal Greg WalkerA.Thomas & Iris Levin Doris C. WhiteCatherine Martyn Mother of Arlene ZalayetNCBA & NAL Boards & Staff Larry & Lydia Rosenkranz’s son, LouisHon. Marie G. Santagata Catherine EnglandHon. Marie G. Santagata Betty Rivkin, wife of Leonard RivkinHon. Arthur D. Spatt My Beloved Wife DorothyHon. Elaine Jackson Stack Dr. Paul Kaufman, husband of Roberta N. KaufmanJill Stone Dr. Paul KaufmanJill Stone Miriam Sherman, mother of Gail & Howie

GeneralMichael Dinkes

WE CARE

Lance D. ClarkeJane Cristal Hon. Joseph A. DeMaro

Hon. Susan & Jeffrey KluewerLeo & Susan MindickHon. Marie G. Santagata

In Honor of Meryl & Stephen Gassman

In Memory of Joseph J. Lo Piccolo, Father of Joseph A. Lo PiccoloSteve Eisman Samuel Ferrara

Hon. Steven JaegerSusan Katz Richman

In Memory of Thomas Russo, Father of Daniel RussoPatti AndersonBarbara KrautElaine LeventhalKenneth L. Marten

Nassau Academy of LawHon. Sondra PardesStaff of Nassau County Bar AssociationMichael E. Tockman

Nassau County Bar Association

15th & West Streets, Mineola

SAVE THE DATEWE CARE presents

GINGERBREAD UNIVERSITYTWO SESSIONS - morning & afternoon

Saturday, December 7, 2013

Details Coming Soon!

Dear Elaine and members of the Bar Association:

Please accept my heartfelt thanks on behalf of the children, families and staff of Winthrop University Hospital for your recent donation to the Child Life Program. The Child Life Program strives to improve the lives of hospitalized children, infants through adolescents. All of the bags full of goodies were a welcomed addition to our program. The crayons, puzzles and clothes were enjoyed by the children in the playroom and at their bedside. All the toiletries were great for when the children were discharged home! It is difficult to be in the hospital for any length of time. Because of your generosity, we are able to provide the children with countless hours of fun and diversion. Your thoughtfulness has brought and will continue to bring many smiles to the children's faces. It was so special of you to think of the children here at Winthrop. Sincerely,

Nicole Adams BS, CCLS

Child Life Program

Dear Elaine & Members of the Nassau County Bar Association, Just a quick note to say thank you, thank you, for today's donation of numerous large bags full of clothing - in fact, they filled an entire SUV trunk - for the individuals and families in crisis we serve throughout the year. We are so grateful for the wonderful support you and your members continually give us. The clothes will be put to good use, and most likely they will be all gone by Labor Day weekend or shortly thereafter. Thank you for helping us serve Nassau County's most vulnerable citizens. Sincerely yours,

Sara C. Weiss

Director of Development

Rev. Tom Goodhue

Executive Director

Nassau Lawyer n September 2013 n 19

By Valerie Zurblis

In 1988, when Stephen Gassman was president ofthe Nassau County Bar Association, he put out a call tothe membership to support a new program called “WECARE.” “Why should a bar association, consumed withissues directly affecting the profession, engage in sucha project?” he asked at the time. “The question is posedrhetorically, and the answer is obviously suggested inthe appellation of the program - we care.” Fast forward to last month, August 5th, when WE

CARE’s 25th anniversary and appreciation of itsfounder were celebrated at the Stephen W. SchlisselWE CARE Golf and Tennis Classic, the group’s largestfundraising event. More than 400 attorneys, judges,friends, business and community leaders came togeth-er at Tam O’Shanter and The Mill River Clubs inBrookville to enjoy the camaraderie of golf, tennis,awards, dinner and raffles. At the same time, a netprofit of approximately $290,000 was raised that will bedispersed through charitable grants to improve thequality of life for children, the elderly and others inneed throughout Nassau County.Twenty-five years after the seed for WE CARE was

planted, Long Island’s legal community has raisedmore than $3 million which has gone to assist hundredsof local charitable causes. Food pantries, shelters andsafe houses for victims of domestic violence; legal serv-ices for the indigent; scouting, summer camp and afterschool activities for disadvantaged youth and programsfor senior citizens have benefitted from WE CARE.Funds went to scholarships for deserving high schoolseniors and law school graduates engaged in communi-ty service, educational programs for separating anddivorcing spouses and their children, and medicalresearch assistance. WE CARE funds were used to build a mock court

room for students at Alverta B. Gray Schultz MiddleSchool in Hempstead, to start a Girl Scout troop forgirls living on one of the most dangerous streets inHempstead, and to help court employees and attorneysharmed by last year’s Superstorm Sandy. The chil-dren’s center in Family Court was kept open andNassau County Supreme Court became the first courtin the state to have defibrillators available, due to dona-tions from WE CARE. Two months after they weredonated the defibrillator helped save an attorney’s life.WE CARE is going stronger than ever, and NCBAmembers have more than proved that they care, andcontinue to care.

Strong Beginning of Tradition of GivingWhen it was created in 1988, WE CARE sponsored

an annual holiday party for more than 200 foster chil-dren and their foster parents. Held during the

Christmas holiday week, and chaired by Kenneth L.Marten, the purpose of the event was not just to providea joyous time for the children. “The plight of these fos-ter children is one of the silent shames of our society,”Gassman said at the time. “As lawyers, we cannot keeptheir plight silent. This party is designed to publicizethis issue and hopefully motivate people to come to theassistance of these children.”

The following spring, WE CARE sponsored anannual food drive in cooperation with Long IslandCares, under the supervision of Sandy Chapin.“Again, we address a segment of society that hasreceived little attention on Long Island, but whoseneeds are real and need to be met,” Gassman noted.

The Blue Ribbon Committee on Pro Bono, chaired bySecond Vice President A. Thomas Levin, was taskedto find ways to help senior citizens, AIDS victims andthe homeless. Gassman set up WE CARE’s first Advisory Board to

formulate programs and solicit the funds needed tooperate the programs. Included in the leadership teamwere Roland Brint, Judge Sandra J. Feuerstein, FrankA. Gulotta, Jr., Carol Hoffman, William F. Levine, E.Allan Riebesehl, Edward T. Robinson III, Stephen W.Schlissel, Nicholas Scourby, Fern Steckler, and thenPresident-Elect Frank E. Yannelli. Today, the WECARE Advisory Board includes more than 50 attor-neys, jurists and non-attorney community liaisons whosupport the mission. WE CARE is co-chaired by anattorney – Adrienne Flipse Hausch and a jurist – Hon.Andrew M. Engel.

No Shortage of ProjectsThe annual Children’s Holiday Party is held in

February, where underprivileged and needy childrencome to NCBA’s building and are treated to a funafternoon of music, games, ice cream and the chanceto see up close police cars, motorcycles and horses andfire engines, demonstrating that these officers arefriends, not foes. Each year WE CARE members treatdeprived children to Mets’ and Ducks’ baseball games.There are continuing food drives, clothing drives, book drives, even bicycle drives. Members serveThanksgiving dinner to seniors who have no familiesnearby, and baskets of food are delivered to families inneed. Leftover food from WE CARE events is donatedto the Interfaith Nutrition Network (The INN) andIsland Harvest. Attorneys use saws, hammers anddrills to rebuild houses on Long Island. Donations aresent to the Nassau County Jail for toys for the chil-dren of prisoners and to the children’s cancer ward atWinthrop University Hospital. New opportunities tohelp are added by enthusiastic members every year.WE CARE raises its funds directly from the NCBA

membership, the legal community and the publicthrough numerous fundraising activities, including thepopular Dressed to a Tea fashion show, ARTrageous artsale and Gingerbread University, in addition to theStephen W. Schlissel Golf and Tennis Classic. Twenty-five years ago, Stephen Gassman said WE

CARE would “help us demonstrate that the ‘greedy’lawyers so often portrayed by the media are more fic-tion than fact, that the members of the Bar do care,and demonstrate their commitment to their fellow cit-izens.” WE CARE has certainly demonstrated thatattorneys are indeed caring and dedicated to doing theright thing by means of visible projects to help allevi-ate the plight of the disadvantaged and those who findthemselves in need.

25 Years of Caring Celebrated at the Stephen W. Schlissel Golf and Tennis Classic

Meryl and Stephen Gassman (r), who founded the WECARE Fund 25 years ago, received plaques from WECARE Co-Chair Hon. Andrew M. Engel (l). (Photo byHector Herrera)

(l-r) WE CARE Co-Chair Hon. Andrew M. Engel, NCBAPast President and current President of the NCBA FundMarian C. Rice, WE CARE Co-Chair Adrienne FlipseHausch, honorees Stephen and Meryl Gassman, StephenW. Schlissel, Event Chair Harold Deiters and NCBAPresident Peter J. Mancuso. (Photo by Hector Herrera)

Photos by Hector Herrera

vious receivership debts and obliga-tions.A receiver is not empowered to act

until a sufficient bond has been execut-ed, filed and approved. Once a bond hasbeen approved, the receiver’s rightsrelate back to the date when the orderof appointment was granted andentered, so that the receiver’s rightsprevail over third parties who haveintervened in the meantime. An actionon the bond may not be brought untilthe receiver’s accounts have been set-tled so as to determine the amount andnature of the receiver’s liability.

Secondary Appointments, Accounts and Taxation

A receiver may not employ counselunless authorized by the court.However, under exceptional circum-stances, a court may ratify the unau-thorized engagement of counsel by areceiver.5 Thus, although a receiver’scounsel is selected by the receiver, thecourt must authorize the hiring.If a receiver is an attorney, the

receiver will generally be expected to dohis or her legal work and will not beentitled to additional compensation forsuch legal services. If a receiver believesit appropriate, under the circum-stances, to retain his or her law firm toprovide legal services, such retentionrequires court approval.Although a receiver should generally

not employ attorneys for any of the par-ties to assist the receiver, if it is done onconsent and approved by the court, itmay be permissible. Similarly, a receiv-er may retain a property manager andother ancillary appointees, but such

retention must also be with theapproval of the court.Receivers may incur reasonable

expenditures necessary to preserve theproperty of the estate. Expenses are usu-ally addressed in the order of appoint-ment and if not, should be the subject ofa subsequent application. A receivermust maintain written accounts ofreceivership transactions, itemizingreceipts and expenditures and theaccount should be available for inspec-tion by any person having an apparentinterest in the property. Moreover, areceiver must account for paymentsmade to himself or herself and to anyattorney or other ancillary person with-out authorization of the court.Where the purpose of the receiver-

ship has been accomplished and theaccounts of the receiver have been set-tled, an order of the court is entered dis-

charging the receiver. A temporaryreceivership normally would not contin-ue after a final judgment unless other-wise directed by the court.Additionally, a receivership may be

terminated where there was fraud orcollusion in obtaining the receivershipeven if the receiver was innocent of anywrongdoing or complicity. A receivermay also be discharged when the partywho requested the receiver fails toadvance sufficient funds to the receiverto manage the property and where theincome generated from the property isinsufficient to meet operating expenses.

Commercial Real Estate IssuesReceivers must be qualified and be

on an approved list.6 (Also true withrespect to residential properties.)The receiver should promptly notify

all tenants that rents or other paymentsare to be paid to the receiver (Notice toAttorn). This provides a receiver with anopportunity to dialogue with tenantsand instill a sense of stability. It alsohelps to identify problems.If a tenant pays the rent to the

owner, notwithstanding the receiver-ship, the tenant remains liable to receiv-er. Failure to pay may subject a tenantto contempt of court. The practicalapproach is often to pursue an appropri-ate landlord-tenant court proceeding.The order of appointment should

authorize the receiver to promptly takecontrol of assets, books and records. Thereceivership order should also authorizeretention of counsel to commence sum-mary proceedings or other lawsuits andalso authorize retention of other entitiesnecessary to operate the property. Theorder should also authorize the receiverto enter into leases that don’t exceed aspecified number of years. If the orderlacks this provision, the receiver shouldseek court authorization.Routine legal services are expected

to be performed as part of a receiver’sservices, without additional compensa-tion, if the receiver is a lawyer. EastChatham Corp. v. Iacovone.7 (Mostcases on this issue involve cases wherea receiver had failed to obtain advancepermission from the court to retaincounsel).A receiver may be a petitioner in a

summary proceeding (RPAPL § 721[9])and for venue purposes, the county ofresidence of the receiver is the county ofhis or her appointment or the county inwhich the receiver actually resides.8Security deposits must be maintainedas required by RPAPL § 1325(2-1) andGeneral Obligations Law, Article 7.

Multi-Family Residential PropertiesIn New York City, the receiver must

register with the NYC Department ofHousing Preservation and Developmentunder the Multiple Dwelling Law(MDL).A receiver should check for violations

of record and correct any “immediatelyhazardous” and “hazardous violations”(as defined in the Housing MaintenanceLaw). See Section 304(6-a) of the MDLfor penalties for noncompliance. Theappointment order should authorize thereceiver to correct immediately haz-ardous and hazardous violations.9A receiver should also confirm the

physical occupancy of the building andcondition. The appointment ordershould authorize the receiver to spendmoney for repairs and maintenance.The order will often limit the amount ofmonies that may be spent absent courtapproval. A receiver is legally obligatedto maintain the receivership property ingood repair and may be held liable forany damage that results from failing toproperly maintain the property. Areceiver should be bonded and insuredand anyone who wants to sue a receiverrequires court permission.10A receiver’s right to collect rent will

be jeopardized if the premises are nothabitable. In Fourth Federal SavingsBank v. 32-22 Owners Corp.,11 the courtheld that the warranty of habitabilitydefense could be interposed against areceiver in a foreclosure proceeding.12 Courts have noted that the order of

appointment required the receiver tomake repairs necessary to the preserva-tion of the property and to correct haz-ardous violations, and that a lack offunds in the Receiver’s hands would notvitiate the warranty of habitability,since the Court could order the partywho applied for the appointment of thereceiver to pay for the necessary repairsif the receiver lacked sufficient funds.Additionally, a receiver is considered anowner for the purpose of rent regula-tion13 and must comply with all appli-cable rent regulations.Rent regulation laws provide certain

immunities to receivers. The Emer -gency Tenant Protection Act relievesreceivers of responsibility for maintain-ing certain records and for rent over-charges, under certain circumstances.There are analogous provisions in theRent Stabilization Law.14If a property is not properly main-

tained, tenant may sue for breach ofcontract and claim constructive evic-tion. However, such tenant must showthat it actually vacated.

Practical Advice from JudgesI have discussed receiverships with

several Justices of the New York StateSupreme Court. Their observationsinclude the following.Certain parties will object to a

receivership on frivolous grounds.Parties would usually benefit from par-ticipating in a constructive manner inthe selection of the receiver and in thecrafting of an appropriate order ofappointment. Although someone may be on an

approved receiver list, it does not meanthat the judge knows that he or she istruly the best person for the job. Judgeswant receivers who are not strangersand who will consult with the court andthe parties. The technical legal skillsand the receiver’s personality cannotnecessarily be divined from a list ofapproved receivers. Receivers could be very expensive.

Sometimes, the applicant must paysome money up front, to cover initialexpenses. The receiver must act quicklyand needs to incur expenses to get

20 n September 2013 n Nassau Lawyer

RECEIVERSHIPS ...Continued From Page 7

“A receiver is not empowered to act until a sufficient bond has been executed, filed andapproved.”

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Nassau Lawyer n September 2013 n 21

the receivership up and running.Judges sometimes encounter the needto appoint a receiver when the ability topay the receiver is questionable. In suchcases, they may need a receiver who iswilling to defer or reduce his or hercompensation.Occasionally, a party may say a

receiver’s attorney’s fee or otherexpense is too high. Occasionally, theparty requesting the receivership mayagree to fund the difference betweenwhat an objecting party would concedeis a reasonable range and the price ofhiring the entity or individual whomthe receiver and the lender believeshould be hired. A receiver should select the appro-

priate managing agent, who will per-form well and file all appropriatereports required by state and munici-palities. A receiver must prevent amanaging agent from giving below mar-ket leases to friends or using vendorswho are friends, but not necessarilycompetent or cost effective.A receiver must promptly focus on

collection of rent and violations. If theproperty is in foreclosure, then theowner had money problems. That usu-ally means there was deferred mainte-nance and a lack of important repairs.Courts may go back to the party thatrequested the receivership to fund therepairs.Since there must be an accounting at

the end of the receivership, a receivershould start, on day one to keep careful

financial records. Some judges wantperiodic reports to minimize surprises. A receiver must be vigilant with

respect to potential conflicts with ancil-lary appointments and discuss suchpotential appointments with the judgebefore any motion for their appoint-ment is made. Receivers should alsotimely address insurance coverage.A receiver is not an ordinary litigant.

A receiver is an agent of the court andcan call the judge and discuss matterswithout the parties on the telephoneline. Many judges want to be “kept inthe loop” since they are the ones whomade the decision to put the receiver inplace and then selected the receiver. Areceiver should discuss the preferredcommunication protocol with the judge.Courts have lots of discretion as to

scope of the appointment order. Judgeswill not look to get involved in “day today” issues. But their doors will be openif there are complaints about the receiv-er or if the receiver needs guidance.Receivers may ask the lawyers for theparties for suggestions as to how toresolve the issues. Courts will some-times ask the parties and/or their coun-sel if they have a recommendation for aparticular receiver.

Selecting Attorneys and AgentsReceivers should be transparent and

communicative with the interested par-ties and especially the court. Receiversshould welcome input from everyoneand then they should make the deci-

sions and seek court authorization ifnecessary.With respect to lawyers, managing

agents, and brokers, the receiver mustthoroughly explore possible conflicts.Moreover, receivers should do their“homework” as to whether such reten-tion is appropriate for the subject typeof property.

Attorney for the Receiver: Shouldthe attorney be a transaction lawyer ora litigator? If a litigator, what kind?Real estate litigation? Breach of con-tract? Specific performance? Titleclaims? Landlord-tenant?

Managing Agent: Does the manag-ing agent have experience with build-ings of the size and complexity of thesubject property? Where are the otherbuildings managed by the agent? Anyin Nassau County? Is the agent doingother work for the debtor? Is the pricecompetitive? Are all necessary servicesincluded?

Leasing Agent: Many of the forego-ing questions apply to leasing agents aswell, plus: Is the agent leasing a com-peting building? Is that a plus or aminus? Does the managing or leasingagent have a possible business conflictbecause it wants to either purchase thebuilding or the mortgage note or makea commission or fee or other economicbenefit from a potential buyer?

Termination: Are there appropriatetermination provisions to address thefact that the receivership will terminateor the receiver may be dissatisfied with

the agent’s performance?

ConclusionThe receiver is an officer of the court

and a fiduciary, with the obligation toprotect the estate. A receiver should notonly protect herself or himself from pro-fessional public embarrassment andliability, but be mindful that the receiv-er’s performance reflects upon the judgewho made the appointment. If there isconflict, the judge may be embarrassedand will be burdened with additionalwork in the form of extensive motionpractice and delay of pending litiga-tions.

Scott E. Mollen is a partner at Herrick,Feinstein LLP, a weekly columnist on realestate litigation for the New York LawJournal and an adjunct professor at St.John’s University School of Law.

1. Finch v. Ray, 208 A.D. 51 (3d Dept. 1924).2. See CPLR 8004(a).3. DeSantis v. White Rose Assocs., 152 Misc.2d567 (Sup.Ct., N.Y. Co. 1991)

4. CPLR 8004(b).5. CPLR 6401[b].6. See Part 36 of the Rules of the Chief Judge (ofthe State of New York).

7. 26 A.D.2d 433 (1st Dept. 1966).8. Weinstein-Korn-Miller, New York Practice, 6401.02.9. RPAPL §1325.10. Schwartz v. Kurlander, 279 A.D.2d 465 (2d

Dept. 2001).11. 236 A.D.2d 300 (1st Dept. 1997).12. See Apple Bank for Savings v. One ArdenStreet Assocs., 165 Misc.2d 1011 (Sup.Ct.,N.Y. Co. 1995)

13. Emergency Tenant Protection Act, §2500.2.14. Emergency Tenant Protection Act §§

2502.3(3), 2502.7(2), 2506.1(f)(2).

program bill, S.4530/A.5582 was signedby Governor Cuomo on July 31, 2013 asChapter 306 of the Laws of 2013. Thislaw creates a new section 3012-b of theCPLR which requires several new proce-dures for plaintiffs in foreclosure actions.Before the action is commenced, theattorney must attach a certificate to thecomplaint declaring that the attorneyhas reviewed the merits of the action,and that after consulting with represen-tatives of the plaintiff or reviewing perti-nent documents, the attorney has con-cluded to the best of his or her knowl-edge, information and belief, that thereis a reasonable basis for commencementof the action. The attorney must alsoattach copies of the relevant instrumentsof indebtedness and any instruments ofmodification consolidation and assign-ment.If the required documents have been

lost, the attorney must attach supple-mental affidavits by the attorney or rep-resentatives of the plaintiff. The law also

amends CPLR 3408 to require the plain-tiff to file proof of service within 20 daysof service. If the plaintiff fails to providecopies of the documents required by thislaw, the court, upon motion by a party orits own motion, may dismiss the com-plaint or make a final or conditionalorder as it deems just, including thedenial of the accrual of interest, attor-neys’ fees, or other fees relating to theunderlying debt. Such dismissal shall bewithout prejudice and not on the meritsof the action.Currently there are several other

bills pending in Albany which wouldalso address various aspects of the fore-closure situation. A.7395/S.5251, whichpassed only in the Assembly this pastsession, would enact the “ForeclosureFraud Prevention Act of 2013.” This billwould essentially criminalize the prac-tice of robo-signing, by creating the misdemeanor of Residential MortgageForeclosure Fraud in the SecondDegree. Such a crime is committedwhen an agent of a residential mort-gage business intentionally engages infraud of deception by authorizing,preparing, executing, offering or pre-

senting for filing any written instru-ment which such person (a) knows con-tains a material false statement and (b)knows or believes that the instrumentwill be filed with a court or other publicoffice. The Class E Felony of ResidentialMortgage Fraud in the First Degree iscommitted when a person’s acts satisfyall of the elements of MortgageForeclosure Fraud in the SecondDegree with respect to five (5) or morepending or prospective residentialmortgage foreclosure actions within aone (1) year period, or being a “highmanagerial agent” of a residentialmortgage business in which he or sheknows one or more agents are engagedin Residential Mortgage ForeclosureFraud and also fails to take reasonablemeasures to prevent such conduct fromcontinuing.A.1082/S.44 would amend the Real

Property Law by requiring all partieswith recorded property interests torecord a mortgage ownership assign-ment document with the recording offi-cer (usually the county clerk) whichidentifies the owner of the mortgageinterest. The form must be recorded

within 90 days or the mortgagees orassignees would be subject to a $250fine. This bill passed the Assembly in2010 and 2011, but never passed in theSenate. This year the bill was reportedout of the Judiciary Committee but didnot advance further.A.88/S.3655 would amend the Real

Property Actions and Proceedings Lawto require mortgage foreclosure plaintiffsto provide contact information of theemployee or agent responsible for main-tenance of the foreclosed property to themunicipality in which the foreclosedproperty is located. This informationwould also have to be posted on thevacant property. This bill passed theAssembly in 2012, and in 2013 wasreported from the Assembly JudiciaryCommittee, but did not advance further.

Thomas McKevitt represents the 17thAssembly District and is the assistant floorleader of the Republican Conference. He isalso Special Counsel to Sahn WardCoschignano & Baker, PLLC in Uniondale.

1. 2010 Report of the Chief Administrator of theCourts, Appendix 3.

2. 2011 Report of the Chief Administrator of theCourts, p.2.

FORECLOSURE ...Continued From Page 7

Senior Citizens Need Your Advice!

Contact Elaine Leventhal at the NCBA 516-747-4070 or eleventhal@nassaubar.org

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— Elder care, matrimonial, real estate, trust & estates— Just 2 hours a month at Domus

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education without having to worryabout infringement suits. Works thatwould otherwise be considered fair-use may be improperly removed ifleft to the whims of content owners.It appears that copyright owners

may be woefully ill-equipped to com-ply with the DMCA under theSecond Circuit’s interpretation of thelaw. Whether the ruling stands or isoverturned will have dramatic effectson how copyright law is enforced, notonly in New York but across theUnited States. It seems, however, astrange dichotomy the court has cuthere – that website owners are not atall responsible for actively checkingcontent uploaded to its websitebecause that would be too burden-some, but at the very same time it isnot burdensome to content owners toscour the Internet for their ownworks, however numerous they maybe. It will be interesting to seewhether or not a new judge, or judgesacross the country in similar cases, isreceptive to that sort of dichotomy.In any case, the face of copyright

enforcement in this country is onethat appears to be changing as thenow seven-year-old Viacom case con-tinues. It is important, not only forcontent owners, but for intellectualproperty attorneys, to monitor theViacom case. Advising content own-ers not only of their rights, but intheir responsibilities particularly asit regards the ever-changing techno-

logical landscape, will becomeabsolutely critical in protecting aclient’s rights. Depending on howViacom ultimately is decided, eithercontent owners or website ownersmay drastically see their rights andliabilities shift. This could causemuch more robust barriers to entryon either the content or website-sidesof business.

Keith Black is an Attorney currently withAmerican Greetings Properties in NewYork City. He has drafted and negotiatedseveral television and home video con-tracts, including contracts for Internet-exploitation of television shows andmovies.1. 17 U.S.C. § 512.2. Online Service Providers, U.S. CopyrightOffice, http://www.copyright.gov/ onlinesp.

3. 17 U.S.C. § 512(c)(1)(A)(i).4. Id. at § 512(c)(1)(A)(ii).5. 488 F.3d 1102 (9th Cir. 2007).6. Id. at 1114.7. Id.8. Viacom Int’l Inc. et al v. YouTube et al., 07civ 2103 (LLS) (S.D.N.Y. Apr. 18,2013)(“Viacom Remand”) at 10.

9. Id.10. Id. at 13.11. Id. at 19-20.12. Viacom Int’l Inc. et al v. YouTube et al.,

13-1720-cv Appellate Brief 2d Cir. at 57,available at http://www.groklaw.net/pdf4/ViacomOpeningBrief2ndappeal.pdf.

13. Id. at 22.14. See Ted Gibbons, Google Submission

Hammers Secrion 92A, PC World NewZealand (Mar. 16, 2009), <http://www.pcworld.co.nz/article/483729/google_sub-mission_hammers_section_92a/>15. 4-13MELVILLE B. NIM MER & DAVID NIM-MER, NIMMER ON COPYRIGHT § 13.05(Matthew Bender rev. ed. 2010).

15. 4-13 Melville B. Nimmer & DavidNummer, Nimmer on Copyright § 13.05(Matthew Bender rev. ed. 2010).

16. 17 U.S.C. § 107.

22 n September 2013 n Nassau Lawyer

VIACOM ...Continued From Page 11

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Analysis1. The Honorable Jose A.CabranesIn his Opinion, Judge Cabraneswas persuaded by the decisions andreasoning of the Sixth and SeventhCircuits, which have held that deci-sions on Rule 11 motions are disposi-tive of a claim and are therefore notproperly resolved by an order of amagistrate judge.12

In reaching his conclusion, JudgeCabranes reasoned first that a Rule 11motion for sanctions, which gives riseto proceedings separate and distinctfrom the underlying actions andinvolves parties distinct from those inthe underlying action, is the function-al equivalent of an independentclaim.13 As such, when a court deter-mines whether a monetary award isappropriate, the “claim” has been dis-posed of and nothing but the entry of ajudgment, or its functional equivalent,remains.14 Second, Judge Cabranesreasoned that a narrow statutoryexception – allowing magistratejudges to summarily punish acts ofcriminal conduct that occur in themagistrate’s presence – to the generalprinciple that magistrate judges maynot dispose of claims when acting byreferral already exists and there wasno basis to expand this exception byjudicial action.15Judge Cabranes concluded accord-ingly that a magistrate judge isauthorized by law only to recommend,not impose, sanctions absent the con-sent of the parties.16

2. The Honorable Pierre LevalJudge Leval found that the Actempowers magistrate judges to hearand determine a wide range of mat-ters, save for those matters expresslyexcepted within the Act.17 Moreover,Judge Leval relied upon the amend-ments to the Act made by Congress in2000, which further vested magistratejudges with a range of contempt pow-ers.18 Judge Leval viewed this asindicative of the fact that Congressintended to allow magistrate judges

the power to impose monetary sanc-tions and concluded that all indica-tions “very strongly support” the con-clusion that the Act empowers magis-trate judges to impose sanctions,except in the form of sanctions thatdispose of a claim or defense.19While Judge Leval agreed withJudge Cabranes that sanctions thatare case dispositive require de novoreview, he stated that a Rule 11 sanc-tion does not dismiss a suit or preventa claim or defense from beingadvanced.20 As such, Judge Leval con-cluded that a magistrate judge isauthorized by law to impose by way ofOrder, Rule 11 sanctions without theconsent of the parties.213. The Honorable Chief JudgeDennis JacobsChief Judge Jacobs declined to jointhe opinion of either Judge Cabranesor Judge Leval and instead stated thatthe issue – whether magistrate judgeshave the authority to order Rule 11sanctions themselves, or only to makea recommendation of Rule 11 sanc-tions to the district court – is an issuethat divides the district courts withinthe Second Circuit and the CircuitCourts themselves.22 Chief JudgeJacobs went on to state that he woulddefer the issue to Congress.23

SignificanceIt follows from the Second Circuit’sdecision in Kiobel that there is nobinding precedent in the SecondCircuit as to whether a MagistrateJudge has the power under the Act toimpose sanctions. Consequently, untilsuch time as Congress or the UnitedStates Supreme Court addresses thisissue or resolves the Act’s inherentambiguity, the analysis of JudgesCabranes and Leval – albeit dicta –provides a roadmap for practitioners,and judges alike, on each side of thisissue.

Kathryn C. Cole, a former clerk to theHonorable Richard C. Wesley of the SecondCircuit Court of Appeals, is a commercial lit-igation associate at Farrell Fritz, P.C.

1. 28 U.S.C. § 636(b)(1)(A) (2002). 2. See, e.g., Alpern v. Lieb, 1993 U.S. Dist.LEXIS 3229 (N.D. Ill. 1993); Maisonville v.F2 Am., Inc., 902 F.2d 746 (9th Cir. 1990);DiPonio Construction Co., Inc., v. Int’l Unionof Bricklayers, 2010 U.S. Dist. LEXIS 62047,* (E.D. Mich. June 23, 2010); McGuffin v.Baumhaft, 2010 U.S. Dist. LEXIS 59497 (E.D.Mich. June 16, 2010).3. Kiobel v. Millson et al., 592 F.3d 78 (2d Cir.2010).4. See Kiobel v. Royal Dutch Petroleum Co., 456F. Supp. 2d 457 (S.D.N.Y. 2006).5. See Kiobel v. Royal Dutch Petroleum Co., 2004

U.S. Dist. LEXIS 28812 *29, 43 (S.D.N.Y. 2004).6. Kiobel, 592 F.3d at 80.7. Id.8. Kiobel, 2004 U.S. Dist. LEXIS 28812, at 32-34.9. Id. at *34. 10. See Id. at *37. 11. Kiobel, 592 F.3d 78.12. Id. at 85; see also Bennett v. General CasterService of N. Gordon Co., 976 F.2d 995, 998(6th Cir. 1992) (“nothing in the Act express-ly vests magistrate judges with jurisdictionto enter orders imposing Rule 11 sanc-tions”); Alpern v. Lieb, 38 F.3d 933, 936 (7thCir. 1994) (“the power to award sanctions,like the power to award damages, belongs inthe hands of the district judge.”)13. Kiobel, 592 F.3d at 86-87.14. Id. at 87.

15. See 28 U.S.C. § 636(e)(2); Kiobel, 592 F.3d at87-88.16. Kiobel, 592 F.3d at 89.17. Id. at 91 (the Act “broadly empowers magis-trate judges to ‘hear and determine’ anypretrial matter designated to them by thedistrict court, with the exception of a speci-fied list of matters. As for the mattersfalling within this excepted list, the extentof the magistrate judge’s powers is to takeevidence and submit recommendations tothe district court…[and] such additionalduties as are not inconsistent with theConstitution and laws of the United States”)(citing 28 U.S.C. § 636[b][1][B]). 18. See Federal Courts Improvement Act of2000, Pub. L. 106-518 § 202 (2000) (address-ing “Magistrate Judge ContemptAuthority”).19. Kiobel, 592 F.3d at 98. 20. Id. at 97-98; see also Lawrence v. WilderRichman Sec. Corp., 467 F.Supp. 2d 228,232-33 (D. Conn. 2006); Laser Med. ResearchFound. v. Aerofloat Soviet Airlines, 1994 U.S.Dist. LEXIS 15210 *2 (S.D.N.Y. 1994);Magee v. Paul Revere Life Ins. Co., 178F.R.D. 33, 37 (E.D.N.Y. 1998). 21. See also Maisonville v. F2 Am. Inc., 902 F.2d747-48 (9th Cir. 1990). 22. Kiobel, 592 F.3d at 106-07. 23. Id. (“I respectfully suggest that this knotneeds to be untied by Congress or by theSupreme Court.”).

©2010 Long Island Business News, all rights reserved

Farrell Fritz, P.C.1320 RXR Plaza

Uniondale, NY 11556

In our federal court system, magis-

trate judges play a critical role in the

administration of justice. The Federal

Magistrate Judge Act (“Act”), 28 U.S.C.

§ 636, authorizes magistrate judges to:

[H]ear and determine any pretrial

matter pending before the court,

except a motion for injunctive relief,

for judgment on the plead-

ings, for summary judg-

ment, to dismiss or quash

an indictment or informa-

tion made by the defendant,

to suppress evidence in a

criminal case, to dismiss or

to permit maintenance of a

class action, to dismiss for

failure to state a claim upon

which relief can be granted,

and to involuntarily dismiss

an action.1

On occasion, lapses during

the pre-trial phase have led

to the imposition of sanctions by mag-

istrate judges under Federal Rule of

Civil Procedure 11.2

Recently, the United States Court

of Appeals for the Second Circuit pub-

lished a decision that addressed,

among other things, whether magis-

trate judges have the authority to

issue Rule 11 sanctions themselves, or,

instead, are authorized only to make a

recommendation to the District Court

Judge for the imposition of Rule 11

sanctions.3 This decision is an impor-

tant one for federal court practition-

ers, as it addresses an issue that

divides both the federal courts within

the Second Circuit as well as the

Circuit Courts themselves.

Factual & Procedural Background

A putative class action was brought

in the Southern District of New York

pursuant to the Alien Tort Statute, 28

U.S.C. § 1350, arising out of defen-

dants involvement in oil exploration

and development in Nigeria.4 Chief

Judge Kimba Wood referred plaintiffs’

Rule 23(c) motion for class certifica-

tion to Magistrate Judge Henry B.

Pitman for a report and recommenda-

tion. On March 31, 2004, Magistrate

Judge Pitman recommended that the

District Court deny plaintiffs’

motion.5

Plaintiffs objected to

Magistrate Pitman’s Report

and Recommendation, and

defendants filed an

Opposition to those objec-

tions. In the Opposition,

defendants’ attorneys stated:

(1) “Now we have learned

that seven of [plaintiffs’]

identified witnesses are

being paid for their testimo-

ny;” (2) “[T]here can be no

doubt that the witnesses are

giving testimony that [plain-

tiffs’] counsel knows to be

false;” and (3) “[W]e know that

between February 29, 2004 and April

2, 2004, [plaintiffs’ counsel] wired

$15,195 to the Benin Republic for the

benefit of the witnesses.”6 On the

basis of these statements, plaintiffs

moved for an order imposing Rule 11

sanctions on the ground that these

statements had no evidentiary sup-

port. Defendants’ attorneys opposed

the motion, arguing that that the

statements were supported by record

evidence.7

In an “Opinion and Order” dated

September 29, 2006, Magistrate

Judge Pitman denied plaintiffs’

motion with respect to the first state-

ment, but granted the motion with

respect to defendant’s second and

third statements.8 For the second

statement, Magistrate Judge Pitman

imposed a $5,000 sanction on each

attorney who signed the filing.

Magistrate Pitman declined to

impose sanctions for making the

third statement because “[a]lthough

defendants’ counsel overstated the

amount of money sent to benefit the

[w]itnesses, the amount of the over-

statement was small…and did not

materially change the nature of the

statement.”9 Magistrate Judge Pitman

did, however, award plaintiffs one-

third of their attorneys’ fees arising

from their partially successful Rule

11 motion.10

Defendants’ attorneys appealed

Magistrate Judge Pitman’s “Opinion

and Order” to the District Court.

Applying a deferential “clearly erro-

neous or contrary to law” standard of

review under 28 U.S.C. § 636(b)(1)(A),

Chief Judge Wood affirmed Magistrate

Judge Pitman’s Order.

Defendants’ attorneys thereafter

appealed Chief Judge Woods’ Order

on two grounds: (1) Magistrate Judge

Pitman was not authorized to issue a

dispositive decision, such as an Order

imposing Rule 11 sanctions, absent

the consent of the parties; and (2) the

imposition of Rule 11 sanctions on

the basis of the statements identified

by plaintiffs could not be sustained

because of the record evidence sup-

porting those statements.11 The

Second Circuit reversed Chief Judge

Wood’s Order solely upon the second

ground. The Panel, however, chose

not to ignore the now-mooted first

ground for appeal but instead pub-

lished their conflicting views. The

Second Circuit’s analysis of the moot-

ed issue – whether magistrate judges,

when acting pursuant to a district

court’s reference, are authorized to

issue orders, or only make recommen-

dations to district judges on whether

Rule 11 sanctions should be imposed

– provides persuasive guidance for

practitioners on each side of this

issue until such time as Congress or

the United States Supreme Court

addresses the matter.

S E P T E M B E R 2 0 1 0 I V O L . 6 0 I N O . 1 I WW WW WW .. NN AA SS SS AA UU BB AA RR .. OO RR GG

The authority of Magistrate Judges to impose Rule 11

Sanctions after Kiobel v. Royal Dutch Petroleum Co.

Kathryn C. Cole

J U LY / A U G U S T 2 0 1 0 I V O L . 5 9 I N O . 1 1 I WW WW WW .. NN AA SS SS AA UU BB AA RR .. OO RR GG

Debt should never be the sole reason behind treatment of

an employee or applicant The ongoing economic crisis has caused a

significant increase in the number of indi-

viduals who are filing for bankruptcy on

Long Island, throughout New York, and

across the nation. More and more people, in

a final effort to escape crushing debt, have

sought to obtain a financial “fresh start” by

availing themselves of the protections of the

Bankruptcy Code to stop creditors from

attaching their assets or foreclosing on their

property. Since individuals who seek bankruptcy

protection are already financially burdened,

the Bankruptcy Code bars employers from

taking certain actions against bankrupt employees

and job applicants which may be detrimental to their

“fresh start.”In particular, Section 525 of the

Bankruptcy Code, 11 U.S.C. § 525, protects

persons who have sought bankruptcy protec-

tion from being terminated by their employ-

er or otherwise discriminated against in

respect to their employment. An employer

may not terminate the employment of, or

discriminate with respect to employment

against, an individual solely because that

individual: (1) is or has been a debtor; (2) has

been insolvent; or (3) has not paid a debt

that is dischargeable in bankruptcy.

Employers must be cognizant that they do not vio-

late Section 525 as to employees and, perhaps, job

applicants who have filed for bankruptcy protection

or who indicate that they intend to file.

Employees Who Have Declared Bankruptcy

Section 525 is implicated in a variety of circum-

stances. Suppose, for instance, that the

President of a company learns that an

accountant employed by the company has

filed for bankruptcy protection. The

President may experience some trepidation

in allowing that individual to have contin-

ued access to corporate records and funds.

However, under Section 525 the company

would be precluded from demoting or termi-

nating the debtor solely on account of his or

her bankruptcy. For example, in In re Hicks 65 B.R. 980

(Bankr. W.D.Ark. 1986), the court relied on

Section 525 in holding that a bank discrimi-

nated against a bank teller by transferring her to a

position having no customer contact after the teller

filed for bankruptcy under Chapter 7. The

bank attempted to justify the transfer of the

bankrupt teller into a bookkeeper position

by arguing that the reassignment did not

involve any decrease in compensation and

that it was made: (1) to prevent the “embar-

rassment” of the teller; (2) to prevent any

harm to customer relations and public confi-

dence; and (3) because the bank could not

bond a teller with financial difficulties. The

court ruled in favor of the teller, and found

that the discrimination prohibition of

Section 525 is violated “when the

Bankruptcy law vs. employment discrimination

Banking/Bankruptcy Law Focus

Stuart I.Gordon

Matthew V.Spero

Nassau Lawyer n September 2013 n 23

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