The spread of the novel coronavirus disease (“Covid-19”) has had a significant impact on the Courts and litigation matters in general. Although litigation is generally proceeding, new filings, deadlines, and schedules will be affected by various new rules and protocols that have been issued by the Courts. These new rules and protocols are likely to change as new information concerning Covid-19 becomes known, and we will keep you updated as new information arises. Below is a summary of current developments, including court closures and the suspension of statutes of limitations, to help our clients stay informed about some of the significant changes resulting from this situation.
NY Suspensions and Modifications
Pursuant to an Executive Order, New York Governor Andrew Cuomo has suspended and/or modified many state court related rules and procedures including the following:
Statutes of Limitations: The time limit for the commencement, filing or service of any legal action, notice, motion or other process or proceeding, as prescribed by the procedural laws of New York (or by any other statute, local law, ordinance, order, rule or regulation) was tolled from March 20, 2020 until April 19, 2020. That means, for example, that New York’s six-year statute of limitations period for breach of contract claims will not run during this period. The Executive Order applies to the procedural laws of New York including, but not limited to, the Civil Practice Law and Rules, the Criminal Procedure Law, the Family Court Act, the Court of Claims Act, the Surrogate’s Court Procedure Act and the Uniform Court Acts.
In-Person Shareholder Meetings: New York has temporarily suspended the provisions of the Business Corporation Law that require meetings of shareholders to be noticed and held at a physical location.
Eviction and Foreclosures: There will be no enforcement of an eviction of any residential or commercial tenant, or a foreclosure of any residential or commercial property, for a period of 90 days.
Abatement of Interest for Taxpayers: There will be a 60-day abatement of interest for taxpayers who are required to file returns and remit sales and use taxes by March 20, 2020, for the sales tax quarterly period that ended February 29, 2020.
Access to Courts
Essential Filings Only: The New York State Courts are not accepting any “non-essential” filings. “Essential Filings” include criminal matters, family court proceedings, applications pursuant to the Mental Hygiene Law, extreme risk protection orders and housing matters. This new rule would general preclude the filing of new civil/commercial lawsuits which do not fall within one of these categories.
Service of New Lawsuits: The Courts “anticipate that, in light of the filing prohibition and the Governor’s extension of statutes of limitation, service of (unfiled) summons and complaints, or other legal process, should and will be suspended by parties in non-essential matters. However if, notwithstanding the courts’ new rules, a party nonetheless services a new summons and complaint or other process in a “non-essential matter,” especially in a manner that confuses participants, it may be addressed in a follow-up administrative directive.” (http://nycourts.gov/limited-filings.shtml). If you are served with a summons and complaint, petition, or other legal process, please contact one of our attorneys below for specific guidance based on the particular circumstances.
Existing Litigations: As to lawsuits and litigations that are already filed,
federal and state courts across the country have drastically scaled back their operations in accordance with “social distancing” guidelines. Most courts have adjourned all civil matters, including trials and oral arguments, apart from “Essential Filings” set forth above. On March 19, the Chief Administrative Judge of the Courts of New York issued an administrative order “discouraging” the prosecution of “pending civil matters (including discovery) in a manner that requires in-person appearances or travel, or otherwise requires actions inconsistent with prevailing health and safety directives relating to the coronavirus health emergency.” That order further directed that “the parties shall use best efforts to postpone [discovery or other litigation] proceedings by agreement and stipulation for a period not to exceed 90 days.” If no such agreement is reached, “the proceedings shall be deferred until such later date when the court can review the matter and issue appropriate directives” and “in no event will participants in civil litigation be penalized if discovery compliance is delayed for reasons relating to the coronavirus public health emergency.”
Appellate Divisions: The Appellate Divisions for the First and Second Departments (New York City, Westchester, Nassau and Suffolk Counties) have suspended hard copy filings and perfection deadlines indefinitely and until further notice. These appellate courts also will not be entertaining any motions aside from emergency applications and will be calendaring only arguments scheduled beyond a certain date (the second week of April in the First Department and April 2 in the Second Department).
Federal District Courts: Similarly, the United States District Courts for the Southern and Eastern Districts of New York have postponed trials scheduled to begin before April 27, while trials already pending will continue to conclusion. The District Court for the Southern District of New York is limiting in-court appearances in civil matters to “Emergency Matters,” such as temporary restraining orders, which are encouraged to be conducted via teleconference or videoconference.
The Eastern District has imposed various visitor restrictions and will allow individual judges to decide whether to hold hearings, conferences and bench trials. Similarly, civil case operations in the Southern District will proceed at the discretion of individual judges, with in-court appearances limited strictly to emergency matters. Nonetheless, adjournments of scheduled appearances can be expected.
Second Circuit Court of Appeals: The United States Court of Appeals for the Second Circuit is currently hearing its appeals and motions calendars as scheduled. However, the Second Circuit has extended certain deadlines by 21 days to minimize the disruption caused by Covid-19.
United States Supreme Court: The United States Supreme Court has postponed oral arguments calendared for this month’s session running March 23 to March 25 and March 30 to April 1.
In light of the above changes, parties to litigation should consult counsel concerning scheduling matters on individual cases and strategic and tactical considerations associated with current court operations.
Business Interruption Coverage
As businesses confront a range of losses related to Covid-19, they will look to insurance to cover those losses. While insurers’ coverage decisions will be fact specific and based on the specific terms and conditions of the particular insurance policy, a central issue will be whether there has been physical damage caused by a covered peril. Commercial property insurance policies often insure against a loss of business income caused by covered physical damage to the insured’s own property. Disputes may arise as to whether the loss of use of property that has become uninhabitable or unusable because of COVID-19 contamination sustained a “physical loss” for purposes of business interruption coverage. The answer will depend on several factors, including the policy language, specific facts and governing law.
In addition to the physical loss condition, most policies will require the damage to be caused by a “peril not otherwise excluded” in order to trigger business interruption coverage. Therefore, policy exclusions may preclude coverage for business interruption losses, even where such losses arise from physical loss.
All clients should review their business interruption policies and contact us if you have any questions.
Electronic Notary
New York has authorized notarization via audio visual technology subject to the following conditions: (1) there must be a live video conference allowing for direct interaction between the person and the notary; (2) the person must present a valid photo ID; (3) the person must state that they are present in the state of New York; (4) the person must sign and email/fax likely the document to the notary on same date; (5) the notary may notarize the document and email or fax it back to the person.
If an original of the notarized document is required, the original and the e-notarized document must be sent to the notary within 30 days. The notary may then notarize the original using the e-notarization date.
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We hope that you stay safe and healthy throughout this crisis. If you need assistance or have questions during this evolving crisis relating to any litigation matters that are pending or which you are thinking about initiating, please do not hesitate to contact any of the attorneys in our litigation department, who are prepared to assist you in any manner. In light of governmental mandates, the offices of Kane Kessler, P.C. are working remotely at full capacity. Our attorneys are still available at all times through email, phone, and videoconferencing to address any of your legal needs and answer any of your questions.
For additional information about recent developments or any litigation issue, please feel free to contact Dana Susman (at 212-519-5136, dsusman@kanekessler.com); Reid Kahn (at 212-519-5129, rkahn@kanekessler.com); Arthur Rosenberg (at 212- 519- 5147, arosenberg@kanekessler.com); Jeff Daichman (at 212-519-5142, jdaichman@kanekessler.com); or any other attorney in our Litigation Department.