Author: Thomas S. Tripodianos

On May 17, 2024, the New York State Assembly passed Bill A10342, amending the state’s insurance law to authorize standalone business interruption insurance. On Sept. 27, 2024, Governor Kathy Hochul approved A.B. 10342.

This significant legislative change enhances the availability and scope of coverage for New York businesses, providing additional protection against unforeseen closures.

Key Provisions of the New Law

1. Expanded Definition of Business Interruption Insurance
   • The law defines business interruption insurance to include coverage for losses arising from:
     • Property damage affecting insured or neighboring property.
     • Acts or threats of violence occurring on the business premises.
     • Government orders mandating closure.
2. Standalone Policies Now Available
   • Previously, business interruption insurance was typically bundled with property insurance. Under the new law, businesses can now purchase standalone policies tailored specifically to their needs.
3. Access to Excess Line Insurers
   • Licensed excess line brokers can now procure business interruption insurance from insurers not authorized to transact business in New York. This change broadens the market and increases options for businesses struggling to find coverage from in-state insurers.
4. New Financial Requirements for Insurers
   • The law imposes minimum capital and surplus requirements for insurers offering standalone business interruption coverage, ensuring they have sufficient financial reserves to cover claims.

Implications for New York Businesses

• Greater Access to Coverage: Businesses now have the flexibility to obtain business interruption insurance as a separate policy, allowing for more customized protection.
• Enhanced Protection: The explicit inclusion of government-mandated closures and threats of violence as covered events resolves prior ambiguities that led to coverage disputes.
• Potential Cost Adjustments: Insurers may increase premiums due to new financial requirements, and businesses should carefully evaluate coverage terms before purchasing policies.
• Increased Availability: Businesses unable to secure coverage from traditional insurers may now obtain it from excess line insurers through licensed brokers.

Next Steps for Businesses

We recommend that New York businesses:

• Review existing business interruption coverage to determine if standalone coverage provides additional benefits.
• Consult with their insurance broker to explore policy options from both admitted and excess line insurers.
• Assess risk exposure to ensure adequate protection against potential interruptions due to property damage, violence, or government-mandated closures.

If you would like more information regarding this topic please contact Thomas S. Tripodianos at ttripodianos@wbgllp.com or call (914) 607-6440

Legal Alert: Update on Corporate Transparency Act (CTA) Reporting Requirements

Fifth Circuit Lifts Suspension of District Court Injunction – CTA Reporting Requirements Not Currently Enforceable

The U.S. Court of Appeals for the Fifth Circuit has reinstated the district court’s preliminary injunction that temporarily halts the enforcement of the Corporate Transparency Act (CTA) reporting requirements. This decision reverses the Fifth Circuit’s earlier ruling on December 23, 2024, which had stayed the district court’s injunction and reinstated the CTA’s reporting requirements. The CTA’s obligations are, therefore, currently unenforceable pending further legal proceedings.

Key Developments

1. Nationwide Injunction Reinstated:

• On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a preliminary injunction in Texas Top Cop Shop, Inc. v. Garland, enjoining the nationwide enforcement of the CTA.
• On December 23, 2024, the Fifth Circuit had stayed this injunction, briefly allowing the CTA’s reporting requirements to be enforced.
• As of December 26, 2024, the Fifth Circuit has removed its stay, reinstating the district court’s injunction and rendering the CTA’s reporting requirements currently unenforceable.

2. Legal Context and Ongoing Challenges:

• Several federal cases continue to challenge the constitutionality of the CTA. The Department of the Treasury and Department of Justice assert the CTA’s constitutionality, citing supporting decisions from other jurisdictions, such as the Eastern District of Virginia and the District of Oregon.
• The National Small Business United v. Yellen litigation exempts specific plaintiffs from the CTA’s reporting requirements, including:
• Isaac Winkles and entities where he is a beneficial owner.
• Members of the National Small Business Association as of March 1, 2024.

3. Impact on Revised Deadlines:

• The Department of the Treasury had previously extended reporting deadlines to January 13, 2025, and beyond for entities affected by the earlier stay. These deadlines are now subject to further uncertainty due to the reinstated injunction.

Action Items for Affected Entities

While the CTA’s enforcement is currently suspended, reporting companies should remain prepared for potential reinstatement of the reporting requirements. Consider the following steps:

• Monitor Developments: Stay informed of updates from the courts and the Department of the Treasury regarding the CTA’s enforcement status.
• Prepare Documentation: Continue gathering and verifying beneficial ownership information to ensure readiness for compliance should the injunction be lifted again.
• Consult Legal Counsel: Seek guidance on how the reinstated injunction impacts your specific reporting obligations and deadlines.

Conclusion

The legal landscape surrounding the CTA remains fluid, with significant implications for reporting companies. Entities are encouraged to review their compliance strategies and remain vigilant for further developments. For assistance navigating the CTA’s requirements or understanding your reporting obligations, please contact our office.

If you would like more information regarding this topic please contact Thomas S. Tripodianos at ttripodianos@wbgllp.com or call (914) 607-6440

On December 23, 2024, the U.S. Court of Appeals for the Fifth Circuit issued a decision that reinstates the Corporate Transparency Act (CTA) reporting requirements for most entities, following a stay of the preliminary injunction granted earlier this month. This decision has significant implications for reporting companies subject to the CTA’s beneficial ownership information (BOI) reporting requirements.

To accommodate reporting companies impacted by the legal uncertainties during the injunction period, the Department of the Treasury has announced revised deadlines for compliance. Below are the updated deadlines and key details.

Revised Reporting Deadlines

1. Entities Created or Registered Prior to January 1, 2024:

• Deadline to file initial BOI reports extended to January 13, 2025 (previously January 1, 2025).

2. Entities Created or Registered Between September 4, 2024, and December 23, 2024:

• If the filing deadline fell between December 3, 2024, and December 23, 2024, the deadline is extended to January 13, 2025.

3. Entities Created or Registered Between December 3, 2024, and December 23, 2024:

• Entities have an additional 21 days from their original filing deadline to submit their initial BOI reports.

4.Entities Qualifying for Disaster Relief:

• These entities may have further extended deadlines beyond January 13, 2025, as applicable.

5.Entities Created or Registered On or After January 1, 2025:

• These entities must file initial BOI reports within 30 days of receiving actual or public notice of their creation or registration.

Exemptions for Specific Plaintiffs

Entities and individuals involved in the ongoing litigation in National Small Business United v. Yellen are not currently required to report BOI information. This includes:

• Isaac Winkles and reporting companies where he is a beneficial owner.
• Members of the National Small Business Association as of March 1, 2024.

Legal Context and Court Decisions

1. Nationwide Injunction: On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a preliminary injunction in Texas Top Cop Shop, Inc. v. Garland enjoining the enforcement of the CTA nationwide. This decision created significant uncertainty for reporting companies.

2. Reinstatement of the CTA: On December 23, 2024, the U.S. Court of Appeals for the Fifth Circuit stayed the district court’s injunction, allowing the CTA and its reporting requirements to be enforced once again.

3. Ongoing Legal Challenges:

• Several cases challenging the constitutionality of the CTA remain pending in federal courts.
• The Department of the Treasury and Department of Justice maintain that the CTA is constitutional, as supported by decisions in other jurisdictions, including the Eastern District of Virginia and District of Oregon.

Action Items for Reporting Companies

• Review Deadlines: Ensure compliance with the revised reporting deadlines outlined above.
• Verify Exemptions: Determine if your company qualifies for an exemption based on involvement in specific litigation or disaster relief.
• Prepare BOI Reports: Use this additional time to gather and verify beneficial ownership information to avoid penalties for non-compliance.
• Monitor Developments: Stay informed of further legal updates as additional rulings may impact the enforcement and requirements of the CTA.

If you would like more information regarding this topic please contact Thomas S. Tripodianos at ttripodianos@wbgllp.com or call (914) 607-6440

At the beginning of 2024 Welby, Brady & Greenblatt, LLP published a Legal Alert concerning the FinCEN Reporting Obligations Under the Corporate Transparency Act (CTA). You can find that Legal Alert here. The Financial Crimes Enforcement Network has setup a website to facilitate the reporting of the necessary information here. you can file online or complete a form and submit online. You will need identification documents for each beneficial owner as well as some identifying information of the entity. If we can be of further assistance please let us know.

If you would like more information regarding this topic please contact Thomas S. Tripodianos at ttripodianos@wbgllp.com or call (914) 607-6440

New York State Senate Bill S3539, revised on May 25, 2023, and sponsored by Senator Breslin, addresses the issue of payment and retainage in construction contracts. The bill’s key provisions include:

1. Amendment of Payment Terms: It amends section 756-a of the general business law to condition the release of retainage from the contractor upon achieving the “substantial completion” terms described in the contract.
2. Retainage Limitations: It amends section 756-c to cap retainage at a maximum of 5% of the contract sum and establishes a maximum period of thirty days post-final approval for the release of retainage.
3. Objective: The bill aims to reduce delays in the release of retainage on private construction jobs that meet “substantial completion” requirements, addressing long waiting times and disputes that often burden contractors and subcontractors, including Minority and Women Owned businesses.
4. Implementation Details: The bill mandates the specification of substantial completion in private construction contracts and reforms the payment process of retainage to reduce disputes and delays between owners and contractors.
5. Prior Legislative History and Fiscal Implications: The bill follows similar legislative efforts in previous years, with no fiscal implications for state and local governments.
6. Effective Date: The act becomes effective immediately and applies to contracts entered into after its effective date

If you would like more information regarding this topic please contact Thomas S. Tripodianos at ttripodianos@wbgllp.com or call (914) 607-6440

The New York State Legislature is planning to significantly increase the influence and authority of the plaintiffs’ bar, according to a recent article in the New York Law Journal. The proposed changes (A.7138 and S.795) aim to strengthen the position of plaintiffs’ lawyers in civil litigation and enhance their ability to pursue legal claims on behalf of their clients. The proposed laws would revise New York General Business Law section 349 That section currently prohibits the more limited universe of “[d]eceptive acts or practices” in a business context, and it allows private actions for only injunctive relief and paltry $50 statutory damages.

The legislative reforms would involve several key modifications to existing laws. One of the primary changes in the proposed legislation seeks to reduce various legal defenses that defendants often utilize in civil cases. This includes limitations on the use of contributory negligence as a defense and stricter standards for summary judgment motions, which could potentially make it harder for defendants to have cases dismissed early in the litigation process.

Furthermore, the reforms aim to enhance the rights and protections for whistleblowers who expose corporate misconduct. This could encourage individuals with knowledge of illegal activities to come forward and seek legal remedies, while also providing them with safeguards against retaliation.

Overall, the proposed changes in New York State intend to give plaintiffs’ lawyers greater tools and opportunities to pursue legal actions on behalf of their clients, potentially leading to increased accountability for corporations and professionals involved in various areas of litigation.

If you would like more information regarding this topic please contact Thomas S. Tripodianos at ttripodianos@wbgllp.com or call (914) 607-6440

As a hardworking professional, you deserve to be paid for your services and materials. But did you know that waiting too long to enforce your lien rights could put your payment at risk? It’s crucial to stay informed about lien deadlines and take action promptly. Don’t wait until the last minute to file your lien, as the consequences of missing the deadline far outweigh any temporary advantages.

Contractors often delay filing a lien until close to the deadline for various reasons. They may think that they can only demand payment after a certain period or believe that payment will eventually come without the need for a lien. Some even wait to file, thinking it will help negotiations or defer legal fees. While these reasons might seem reasonable, they can put your payment in jeopardy.

Mechanic’s liens create a cloud on the property’s title, which means that if someone buys the property you worked on, they will have to address the contractor’s lien before finalizing the sale. This situation makes it difficult for property owners to sell their homes or secure refinancing. The longer you wait to file a lien, the longer the property remains encumbered, delaying any potential transactions.

But that’s not all. Let’s talk about the concept of the “Lien Fund.” According to the New York Lien Law, subcontractors can only recover on their lien claims if they can establish the existence of a Lien Fund. This means that funds must be owed from the owner to the contractor, amounting to at least the same value as the lien. If the subcontractor fails to prove the validity of the Lien Fund, their lien may be dismissed.

The purpose of the Lien Fund concept is to prevent unfair double liability for property owners. If an owner has already paid the contractor in full, they should not be responsible for paying subcontractors simply because the contractor failed to make payments. Essentially, a subcontractor’s lien is based on the contractor’s claim against the owner. The same concept applies to sub-subcontractors, who must establish a contractor-subcontractor Lien Fund.

The longer you wait to file a lien, the more depleted the Lien Fund becomes. If the owner has paid the contractor before you file your lien, your remedy would be to seek payment from the contractor directly. The owner’s liability to subcontractors is strictly limited to the amount of the Lien Fund, which is the outstanding amount owed to the general contractor.

Don’t put your rightful payment at risk by waiting to file your lien. Act now to protect your rights and ensure you receive the compensation you deserve. Waiting only increases the chances of depleting the Lien Fund, making it harder for you to recover what you’re owed.

Contact our experienced team today to discuss your lien rights and take the necessary steps to secure your payment. Don’t wait any longer-time is of the essence!

If you would like more information regarding this topic please contact Thomas S. Tripodianos at ttripodianos@wbgllp.com or call (914) 607-6440

“We’re removing the requirement to be vaccinated and to participate in sports and extracurricular activities. We’re removing that requirement for our schoolchildren,” Adams said. “We will also provide additional flexibility to business by lifting the private-sector mandate on Nov. 1. This puts the choice in the hands of New York businesses.”

If you would like more information regarding this topic please contact Thomas S. Tripodianos at ttripodianos@wbgllp.com or call (914) 607-6440

Governor Hochul signed the Construction Industry Wage Theft bill (The labor law is amended by adding a new section 198-e) into law on Labor Day.

The law which affects contracts entered into on or after January 4, 2022, makes general contractors (including a  construction manager, general or prime contractor, joint venture, or any combination thereof) jointly responsible -limited to three years-for wage theft violations committed by subcontractors. An individual or a representative could file a lawsuit against the employer-subcontractor and the general contractor.  Additionally, the attorney general may bring an action to collect unpaid wages and penalties on behalf of employees.

Generally, employees and subcontractors cannot waive a contractor’s liability for unpaid wages, benefits, wage supplements, and other remedies, including attorneys’ fees and costs incurred by an employee pursuing unpaid wages.  There is, however, an exception for unions that may waive the requirement through collective bargaining.

Also excluded from the act are certain classes of residential construction projects.

General Business law is also amended by adding a new section 756-f to provide that a contractor may request certified payrolls to apprise the contractor of a subcontractor’s payment status in paying wages and making any applicable fringe or other benefit payments  or contributions.  In addition, the contractor may ask that the subcontractor provide   (a) the names of all workers of such subcontractor on the project, including the names of all those designated as independent contractors;  (b)  when applicable, the name of the contractor’s subcontractor with whom such subcontractor is under contract; (c)  the anticipated contract start date; (d) the scheduled duration of work; (e) when applicable,  local unions with whom such subcontractor is a signatory contractor; and (f) the name, address and phone number of a contact for such subcontractor.  The subcontractor’s failure to timely comply with a request for information shall be a basis for a contractor to withhold payments owed to a  subcontractor at any tier.

If you would like more information regarding this topic please contact Thomas S. Tripodianos at ttripodianos@wbgllp.com or call (914) 607-6440