Articles Posted in Business Transactions

rabbi.jpg Our firm is often retained to represent parties relating to their employment at religious institutions. Such employment refers to, among other persons, the clergy, whether it is a Rabbi or Cantor at a Synagogue, a Minister or Reverend at a Church, or an Imam at a Mosque. A dispute may arise between a clergyperson and the institution at which they officiate. Such disputes may be the result of the termination of said employment, the interpretation of an employment agreement, or the failure of the institution to make payments pursuant to a retirement agreement or pension. This blog post will discuss the various legal issues relating to such disputes.

The first issue relating to a clergy’s employment is whether the individual at issue is an independent contractor or an employee. An exact legal definition of these categories is beyond the scope of this post. However, many smaller institutions attempt to categorize their clergy as independent contractors. This usually means that no taxes are withheld from their pay, and they are free to set their own hours and employment conditions. An employee is subject to W-2 tax withholding, and must generally keep regular hours and is subject to a greater degree of control by the institution in question.

If the individual clergy is classified as an employee, the next question is whether there is a written legal contract for their employment. Most clergy will have a written agreement with the religious institution which sets forth their terms of employment, salary (including any bonuses or pensions), benefits, renewal terms, and duties which they are expected to perform. Such agreement will usually be for a set period of time (for example, five years), and may contain provisions for renewal after expiration.

sages.jpgNews outlets have recently reported a case involving a dispute over the sale of a synagogue located on the Lower East Side of New York City. Certain individuals, claiming to be members of the Board of Trustees, have submitted a petition to the New York State Attorney General seeking approval for a sale in the amount of Thirteen Million Dollars.

At issue is a dispute over whether the individuals who claim to be Board Members are, in fact, legally elected Board Members of the institution in question. Since the synagogue has been in existence for seventy-six years, there are many legal issues related to the authority of any individuals may have the authority to petition the Court to allow a sale of the property, which is also being used as a nursing home for the aged. An excellent overview of this highly contentious case to date may be found by reviewing a recent article in the New York Observer.

Readers of this blog may recall that this subject has been written about by us previously. A dispute involving a Hindu temple was analyzed in a recent post. Of course, every case has its own unique set of facts, but it is important to note that Courts are reluctant to intervene in decisions that are essentially religious in nature, for example, if a spiritual leader decides to excommunicate certain members. Such excommunicated members will have a difficult time finding a Court to overturn such a decision, due to First Amendment concerns.

surr.jpgQuite often, our firm is consulted by both landlords and tenants regarding the termination of a lease prior to its legal end date. For example, a lease may have a term which runs through December 31, 2020. In certain situations, the parties may agree to terminate the lease prior to this date. This can happen for several reasons. A tenant may need to move out for personal reasons, or because conditions at the premises are not acceptable. A landlord may decide not to hold a tenant to a lease term if they believe they can re-rent the premises at a higher rent. In commercial lease situations, a business renting a store or other commercial space may decide it needs to close for financial reasons, and wants to return the space to the landlord without a legal conflict.

In such situations, we recommend that all parties engage legal counsel to draft a Surrender of Lease agreement. A Surrender of Lease Agreement is a document negotiated between a landlord and a tenant through their legal counsel. It amends the original lease agreement so that the lease term can end at an earlier date than initially contemplated by the parties. There are several important issues which must be negotiated and delineated in such an agreement, which will be discussed in this blog post.

The first issue is the date of the surrender. This is the date that the tenant agrees to vacate the premises and return the keys to the landlord. It is standard that the tenant also agrees to leave the premises in “broom clean” condition and without any major damage, just as it had agreed in the original lease. Our firm often recommends that a tenant hire a professional cleaning service to ensure that there are no issues with the condition of the premises after move-out.

elmo.jpg
In the news are stories concerning costumed characters in Times Square. For those who have not visited the center of New York City lately, individuals dressed up as Elmo, Super Mario, and Spider-Man, and others have been congregating in Times Square. They entertain tourists, and many people like to have their pictures taken with them. Unfortunately, some of these “characters” have become aggressive, demanding money from tourists for having their photos taken, and recently, “Spider-Man” has been arrested for an altercation with a New York City police officer.

New York City officials are now considering their options regarding licensing these individuals and imposing other legal restrictions on them. Legally, there are several issues in play. The right of any individual to congregate in a public place and to ask others for money may be protected by the First Amendment to the United States Constitution, which protects freedom of speech and freedom of assembly from governmental restriction. Of course, there may be reasonable limitations placed on such freedoms, especially where it may interfere with the safety of others. Previous court decisions in New York have ruled that the right to ask others for money in a public place constitutes freedom of speech and cannot be considered criminal behavior.

Another legal issue is the whether the right to appear in public as certain characters from fiction is an infringement upon the owners of those characters. The legal rights to both the names and appearances of many of the characters appearing in Times Square, such as Elmo and Spider-Man, are owned by large corporations. The costumes, names, and persona of these characters are protected by legal trademarks. This means that no one can generally use these characters for commercial purposes without the consent of the trademark holder. Such consent usually also involves payment of royalties to the trademark owner.

keys.jpg A recent article in the New York Times discusses the issue of landlords making cash offers to “buy out” tenants of their rent regulated tenancies. Our firm has handled these situations, representing both landlords and tenants in different transactions regarding such buyouts.

The reason behind such offers is the rent regulation system currently in place in New York City. Many, but not all, apartments in New York are subject to rent regulation. Rent regulation applies to apartments renting below a certain amount, but does not apply to rentals of a condominium or cooperative unit by its owner. Whether an apartment may be subject to rent regulation is a complicated issue and can be the subject of additional legal proceedings, with which our firm also has extensive experience.

Once an apartment is subject to rent regulation, a tenant residing therein has certain legal rights regarding their tenancy. The first right is the amount of the rent paid by the tenant. This amount is determined by an extremely complicated formula, in which the following factors are taken into account: the rent paid by the prior tenant, increased by a “vacancy allowance,” plus increases may be allowed for improvements made by the landlord to the apartment, such as the installation of new appliances, new windows, and so forth. Renewal leases are subject to particular limited on rent increases determined annually by the Rent Guidelines Board.

redskins.jpg Recently in the news is a decision by the United States Trademark Trial and Appeal Board concerning the registration of the trademark for the Washington Redskins football team. Longtime readers of this blog will recall that a prior post explained the difference between copyrights and trademarks. To summarize, a trademark is legal protection for a trade or business name used to identify goods and services in interstate commerce. To obtain such protection, one generally applies to the United States Patent and Trademark Office in Washington, D.C. The applicable procedure is one which can be done online. Our attorneys are familiar with the application process and can assist potential applicants.

Once the application is submitted, an examiner at the United States Patent and Trademark Office will review the proposed trademark. They will check as to whether the proposed mark is “confusingly similar” to any prior registered mark, and may deny the application if it is. Other technical issues may also be raised by the trademark examiner.

If the applicant has an issue with the decision of the trademark examiner, then the trademark examiner’s decision can be appealed to the United States Trademark Trial and Appeal Board (TTAB). Any such appeal would be heard by a panel of three Administrative Trademark Judges. Each Judge will then vote on the appeal, with the majority becoming the decision of the TTAB in a particular case.

464 PG 02.JPG A prior blog post discussed the legal issues relating to the sale of a business or professional practice. One issue mentioned in that article was that of a non-compete clause. This blog post will discuss that issue in further detail as it applies to commercial leasing.

As a great deal of commercial space in the New York metropolitan area involves shopping centers and strip malls in which the stores are in close proximity to each other, a non-compete clause may be essential for a tenant. A non-compete clause in a commercial lease involves an agreement between the landlord and the potential tenant that the landlord will not rent space to a competitor of the tenant, or to a business that draws the same customers who may choose to do business with one tenant as opposed to another. A non-compete clause also comprises the tenant’s promise not to engage in particular business activities. For example, if the tenant sells office supplies, then the tenant may ask for a clause in their commercial lease by which the landlord is prohibited from renting any space in the same shopping center to another store that sells office supplies. In subsequent leases with new tenants, the landlord needs to include the prohibition from selling office supplies so that new tenants do not violate the landlord’s promise to the office supply tenant.

Of course, it is essential that such a clause be drafted with specificity and contain language sufficient to make it clear which competitors, specific activity and types of businesses are prohibited. For example, using the office supply example above, a non-compete clause must be very specific in the types of sales that are prohibited. Many establishments such as grocery stores and drugstores sell items such as writing implements and stationery, even though it is not their primary business. A non-compete clause should be crafted for the specific inventory of the store in question while also providing the business with opportunity for growth and change in inventory as needed.

mosque.jpeg Observant Muslims in New York State who seek financing for the purchase of residential or commercial real estate may have issues with traditional mortgage loans. The reason for this is that, under traditional interpretations of Koranic law, the payment or receiving of interest is considered forbidden (“haram”). While a thorough theological explanation is beyond the scope of this article, the main principal involved is that, under strict Islamic law, the exchange of capital alone for debt is not balanced by any significant advantage to the borrower, because it is not associated with the type of risk that a business venture would entail. Therefore, a loan of funds which generates interest for the lender, to be paid by the borrower, is considered profiteering and contrary to the laws of Islam.

Therefore, a traditional mortgage loan, in which funds are lent for the purchase of a property, either residential or commercial, and the funds are paid back over time to the lender with interest, would be considered non-compliant with Islamic law. This prohibition would apply both to the borrower as well as to the lender.

This raises a dilemma for an individual who wishes to purchase real property. The first solution which comes to mind is simply to pay the full purchase price for the property, and not obtain any type of loan. However, most people do not have the funds to pay for a property “up front,” and therefore require a loan of some type in order to complete the transaction. Most home purchases in New York State require a 10% downpayment of the purchase price. For example, if the purchase price is $500,000.00, the purchaser would pay $50,000.00 prior to closing, and the remainder at closing. At closing, most purchasers would then use funds loaned to them by a bank or other institutional lender to complete the transaction. The lender would record the mortgage on the property to secure the loaned funds. The purchaser would repay these funds over time, paying annual interest on the amount borrowed.

pujols.jpg Recent blog posts have discussed the legal ramifications of the use of performance enhancing drugs (“PED’s”) by baseball players, especially as it relates to Yankees slugger Alex Rodriguez. Several recent developments regarding these issues have raised a new legal point, a discussion of which may be helpful to our blog readers.

More specifically, former player Jack Clark, who has been retired from baseball since 1992, stated during his radio show that he believes that current Angel player Albert Pujols has used PED’s throughout his career. Reaction to this statement was immediate, with Pujols denying he had ever used PED’s, and stating that he would sue Clark for libel. In addition, the radio station employing Clark as a talk show host promptly fired Clark and distanced themselves from his comments.

The legal issues that we will discuss here are whether Pujols should sue for libel, and the likelihood of success of such a lawsuit. Legal claims for libel (written statements) and slander (spoken statements) are commonly called defamation actions. Broadly, they are claims that someone either spoke or wrote an untrue statement that harmed one’s reputation in the community. In order to prove such a claim, one would first have to prove that the statement was made, that such statement was untrue, and that one’s reputation was harmed as a result of the untrue statement.

aroid.jpeg New York Yankees slugger Alex Rodriguez (hereinafter “A-Rod”) was recently suspended for 211 games by Major League Baseball for his involvement with performance-enhancing drugs. However, as of this writing, A-Rod is currently playing third base for the Yankees. Why is this? The reason is that the collective bargaining agreement between the Major League Baseball Players Association (MLBPA) and Major League Baseball (MLB) allows any player suspended for this reason to appeal his penalty to a neutral, third-party arbitrator, and to continue to play until the arbitration appeal is resolved.

The existence of a neutral arbitrator in these situations is quite common in most labor – management agreements. In fact, the first executive director of the MLBPA, Marvin Miller, had a background working for the United Steelworker’s Union prior to taking the MLBPA position. Because of his prior experience negotiating with U.S. Steel, he recognized the importance of a neutral, third party arbitrator to resolve disputes. In the 1968 Basic Agreement between MLB and the MLBPA, the parties agreed to the appointment of such an arbitrator.

In 1976, Peter Seitz, as arbitrator, resolved a dispute involving whether a player could “play out his option” and become a free agent after his existing contract expired and was renewed for one year by his team. Seitz ruled that the team’s renewal option was for one year only, and, after that renewal or “option” year, a player would become a free agent, free to negotiate with any team. The team owners were quite chagrined at this outcome, and immediately fired Seitz, but the ruling stood, giving players the leverage to negotiate a new labor agreement allowing them to become free agents after a certain period of major league service time.