In Academy Street Associates, Inc. v. Spitzer, Academy Street Associates, Inc. (Academy) brought a case to force Elliot Spitzer -- then the Attorney General of the State of New York (A.G.) -- to accept a proposed amendment to a condominium offering plan.

When the New York County Supreme Court dismissed Academy’s claim as untimely, an appeal to the Appellate Division, First Department, ensued.

Even though Academy had originally sought declaratory relief, the action was really a special proceeding (pursuant to CPLR Article 78) seeking to compel a state official to perform his or her legal duties. While such a case could be brought, a four-month “time-bar” or “statute of limitations” period applies and the clock starts to tick the moment the state official fails to perform that function.

In this case, the A.G. had a 30-day period to respond to Academy’s proposed amendment. When the A.G. failed to act within that timeframe, Academy then had four-months to file its Article 78 case. Since almost a year had elapsed before it filed suit, the action was untimely, and AD1 was left with little choice but to affirm the lower court’s decision.

Although Academy argued that the A.G. should not be permitted to assert the “statute of limitations” defense -- as Academy had been repeatedly assured that the proposed amendment was being processed -- the AD1 did not believe those representations “[rose] to the level of affirmative wrongdoing so as to equitably estop [the Attorney General] from asserting the statute of limitations defense.”

With that, Academy’s case was quickly rendered academic.

To download a copy of the Appellate Division’s decision, please use this link: Academy Street Associates, Inc. v. Spitzer 

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (0)

While the interests of landlords and tenants frequently diverge, the relationship can get quite contentious when the former decide to  convert existing residential structures into condominiums or cooperatives. Owners often have a financial incentive to evict existing tenants so that the units can be sold at market rates, while tenants would prefer to remain in their apartments to avoid the cost and inconvenience of having to move. They also seek an opportunity to become “owners” themselves, hoping to profit from purchasing their units at “insider” prices.

According to a recent New York County Civil Court decision there are an array of protections available to tenants in buildings undergoing a conversion.

In 322 West 57th Owners LLC v. Penhurst Productions, the owner wanted to convert his rental building into a condominium and submitted an “offering plan” to the New York State Department of Law for formal review. In furtherance of that process, and in order to prepare the units for sale to the general public, the owner refused to renew the leases of some twenty-three unregulated tenants who resided in the building.

When these tenants refused to vacate, the owner commenced summary holdover proceedings in the New York County Civil Court to remove them from the premises on the grounds that their leases had expired. The tenants asked that the court dismiss these cases because of the protections afforded them by the “Martin Act.”

The Martin Act -- part of New York’s General Business Law -- regulates the conversion of buildings to cooperative or condominium ownership, and has three main steps:

1. the owner must submit a plan for filing with the Attorney General and distribute this plan to the current building tenants;
2. the Attorney General reviews the plan and accepts it for filing, thus allowing the owner to enter into purchase contracts for the units; and
3. once the owner has obtained the requisite number of contracts, the plan is declared effective by the Attorney General.

In “non-eviction” conversion plans, all “tenants in occupancy” on the date the Attorney General accepts the plan for filing hold an “exclusive right to purchase” and may not be evicted on the expiration of their tenancies, and, are further protected against unconscionable rent increases. Here, the tenants argued that as “tenants in occupancy,” the owner could only evict them for non-payment of rent or other “good cause.”

Finding that these tenants were in actual possession and occupying their units at the time the conversion plan was accepted for filing, the Civil Court concluded that the tenants qualified for the Martin Act’s protection and dismissed the 23 proceedings.

According to news reports, 322 West 57th Owners LLC will next be converting these dismissals into an appeal. So, stay tuned.

For a copy of the New York County Civil Court’s decision, please use this link: 322 West 57th Owners LLC v. Penhurst Productions

Posted by Jonathan H. Newman, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

Here's a case that will turn your stomach.

What would you say if we told you that the New York State of Court of Appeals refused to penalize merchants  who sold "expired" foodstuffs and other aged items to unsuspecting members of the public?

Well, we didn't want to believe it either.  But, sure enough, there's actually a decision from our state's highest court, refusing to characterize the sale of outdated merchandise as a "deceptive or misleading" business practice.

In Matter of Food Parade, Inc. v. Office of Consumer Affairs of County of Nassau, Food Parade doing business as Greenfield Shoprite (Shoprite) was fined $3,600 by the Nassau County Department of Consumer Affairs for offering to sell some 144 expired products (which included vitamins, baby formula, nasal decongestant, and tanning oil). Shoprite appealed the agency's decision claiming no wrongful act had been committed--since the items were "plainly marked as outdated." The Nassau County Supreme Court agreed and canceled the agency's fine.  Incredibly, both the Appellate Division, Second Department, and the New York State Court of Appeals affirmed that outcome.

The appellate courts were of the opinion that the merchant's conduct was not a "deceptive or unconscionable trade practice," as defined by the governing Nassau County statute, with our state's highest court discounting the arguments presented by the local Department of Consumer Affairs, in part, as follows:

The agency argues that in displaying expired products for sale, the supermarket misled consumers by making an "implied representation" that the items were unexpired. That could well be true if the items were undated. Here, however, the dates were expressly represented, and a contrary conclusion as to the age of the items cannot be drawn by implication, so as to form the basis for a penalty. In short, the agency cannot ascribe to Shoprite an implied representation at odds with what undisputedly appears in writing.

While the local law may have been self-limiting in scope, we believe the courts could have relied upon state law--such as the General Business Law--which discourages "[d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service."

Are we to assume products are not fresh and that they are unfit for use when offered for sale by our local grocer or supermarket? Frankly, such a standard strikes us as nonsensical and works to reinforce questionable business practices.  As Judge Graffeo noted in a dissenting opinion:

Under state law, when a retailer places a product on the shelf for sale to a consumer, it impliedly warrants that the product is fit for its intended uses (see UCC 2-314[2][c]). It was therefore not irrational for the County to conclude that, when a product may not actually be fit for its intended uses because it has expired, its placement on the shelf alongside unexpired products, and without any statement alerting consumers that its fitness cannot be guaranteed, amounts to a misleading practice. A reasonable consumer would presume that a retailer would not continue to display items on its shelves that may no longer be effective, even if used appropriately.

We believe Judge Graffeo got it right.

Have you ever watched how people shop?  While most consumers don't bother looking at labels or expiration dates, some individuals--like senior citizens--have considerable difficulty reading or finding the information. And, frankly, they shouldn't have to bother. The onus should be on the merchant to ensure that products offered for sale are "fit" for consumption and may be safely utilized. Allowing the sale of expired products (without full and complete disclosures) furthers no cognizable public purpose we can identify.

By the way, what do you think the chances are that the Judges of the Court of Appeals would knowingly purchase expired medications or dine on expired foodstuffs?  

For a copy of the Court of Appeals's decision in Matter of Food Parade, Inc. v. Office of Consumer Affairs of County of Nassau, please click on the following link:
http://www.nycourts.gov/reporter/3dseries/2006/2006_07601.htm

For a copy of the Appellate Division's decision in this case, please click on the following link: http://www.nycourts.gov/reporter/3dseries/2005/2005_05300.htm

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

After nine days without power, New York City's residential customers impacted by the recent outage may file claims seeking to recover damages "for actual losses of food spoiled due to lack of refrigeration," up to a maximum of $350. While all claims must be "itemized," losses in excess of $150 are typically required to be accompanied by proof (like cash register tapes, store or credit card receipts, canceled checks, identifying price labels or UPC bar codes from merchandise, and photographs of spoiled items). As a goodwill gesture, though, Con Edison has recently announced that it is waiving its "proof" requirement for the victims of the July 2006 outage. (Isn't that gracious?)

Considering the relatively low compensation being offered, we think the utility's form requires needless information and detail. Con Edison knows full well who was impacted by the outage. Why compound the inconvenience customers experienced--many living nine days without services like air conditioning, elevators or refrigerators--with tedious paperwork that requires them to identify each food item by type, quantity ("pounds, ounces, dozen"), and cost?

And, in our opinion, reimbursement of up to $350 is an insult. Consumers should be fairly and adequately compensated for their losses. Even Attorney General Elliot Spitzer has called for change. In a press release, dated July 24, 2006, Spitzer demanded a hike in compensation levels. In fact, his office recommended an increase in the monies payable to consumers back in March 2000, to no avail.

We believe enough is enough and call for legislative action. With about $12 billion in annual revenues and $25 billion in assets, Con Edison can afford to cut the victims of the July 2006 outage a bigger break.

For a copy of Con Edison's "Residential Claim for Food Spoilage," please click on the following link:
http://coned.com/customercentral/brochures/residential_claim.pdf

For a copy of the Attorney General's press release, dated July 24, 2006, please click on the following link:
http://www.oag.state.ny.us/press/2006/jul/jul24b_06.html

For a copy of the Attorney General's March 2000 report, entitled "Con Edison's July 1999 Electric Service Outage," please click on the following link:
http://www.oag.state.ny.us/telecommunications/blackout/coned.pdf

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (2)

In our local papers, including today's New York Times, Kevin Burke, Chairman and Chief Executive Officer of Con Edison, has published a full-page open letter addressed to the hundreds of thousands of Queens residents who were recently without power for some nine days. Interestingly, Mr. Burke deliberately skirted words of apology, regret, or remorse. Rather, he expressed an "awareness" of the hardships faced and "gratitude" for our neighbors' "patience and strength." Burke assured that the utility would work to restore public "trust and confidence" and offered the following action plan:

Moving forward, I promise you that we will find out what caused this extraordinary series of events in our system, and we will repair, rebuild and improve the damaged infrastructure.

Well, Mr. Burke, it seems that you won't need to look very far to uncover the outage's cause.

In a press release dated July 24, 2006, Attorney General Elliot Spitzer noted that the problems which precipitated the recent blackout were identical to those which plagued our City back in July of 1999; some seven years ago. In March of 2000, the AG's office identified the effects that intense heat had on the utility's underground cables and offered thirteen specific recommendations, none of which appear to have been implemented by the company since the report's original release. In particular, the AG suggested that Con Edison:

- develop a test for detecting equipment vulnerable to heat stress, overload or other sudden failure;

- establish a protocol for power grid management that includes mandatory reporting to local and state officials;

- improve crisis communications with customers, government and the public, including more accurate reporting of customer power loss and the time needed to bring customers back on line; and

- increase the amount the company pays customers for food and perishables ruined by lack of refrigeration, and compensate customers for appliances damaged by power outages.

With about $12 billion in annual revenues and $25 billion in assets, Con Edison is supposedly one of the nation's largest investor-owned energy companies providing electric, gas and steam service to more than 3 million customers in New York City and Westchester County. In view of the expansive breadth and scope of the company's reach, the utility's failure to heed the warnings of the late 1990's is completely indefensible and cause for concern. It strikes us as a deliberate act of neglect, omission or disregard that warrants pubic rebuke and reproach. And, unlike our City's Mayor--who recently suggested that the utility deserved our "thanks"--we believe there should be formal hearings and the utility's management held accountable (criminally and/or civilly) for the mishap. At a minimum, some penalty or sanction of a substantial nature should ensue.

We're sorry, but expressing "gratitude" and proffering vague assurances that significant infrastructure problems will be addressed in the future (when they have been ignored in the past), just doesn't cut it.

For a copy of the Attorney General's press release, dated July 24, 2006, please click on the following link:
http://www.oag.state.ny.us/press/2006/jul/jul24b_06.html

For a copy of the Attorney General's March 2000 report, entitled "Con Edison's July 1999 Electric Service Outage," please click on the following link:
http://www.oag.state.ny.us/telecommunications/blackout/coned.pdf

-------------
The text of Mr. Burke's open letter follows:

To the Residents of Northwest Queens

The recent power outage in Queens was a painful ordeal for residents and businesses in the area. I am deeply aware of the many hardships you faced--disruption of daily routine, enduring the heat without air conditioning and the uncertainty as to when everyday life would resume. I am grateful for your patience and strength which were severely tested during the outage. While you endured, Con Edison worked hard to restore service, and we will strive to restore your trust and confidence in us.

I am proud of the men and women of Con Edison who work long hours under difficult conditions to serve New Yorkers every day. We thank the crews from other utilities that came to our aid when we needed it most. We also thank the City of New York, especially the Office of Emergency Management and the Police Department, and the Red Cross for providing much needed support services to residents in the area.

Moving forward, I promise you that we will find out what caused this extraordinary series of events in our system, and we will repair, rebuild and improve the damaged infrastructure.

In a crisis affecting thousands, it's easy to forget the Con Edison employees are committed to delivering energy safely and reliably every day. It is a commitment we take seriously.

Sincerely,
s/
Kevin Burke
Chairman and Chief Executive Officer
Con Edison

Continue reading "SHAME ON YOU, MR. BURKE!" »

Posted by Lucas A. Ferrara, Esq. at 5:59 PM | Permalink | TrackBacks (0) | Comments (0)