NY State Senate Bill S8359

Archive: Last Bill Status - In Senate Committee Judiciary Committee

Introduced
In Committee
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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
May 19, 2020	referred to judiciary

S8359 (ACTIVE) - Details

See Assembly Version of this Bill:: A10423
Current Committee:: Senate Judiciary
Law Section:: Real Property Law
Laws Affected:: Add §235-i, RP L
Versions Introduced in 2021-2022 Legislative Session:: S40, A1987

S8359 (ACTIVE) - Summary

Provides that COVID-19 constitutes an event that could not have been foreseen or guarded against in a commercial lease contract where such contract is frustrated or objectively impossible, either wholly or in part, as a consequence of the outbreak of novel coronavirus, COVID-19.

S8359 (ACTIVE) - Sponsor Memo

 
BILL NUMBER: S8359

SPONSOR: HOYLMAN
 
TITLE OF BILL:

An act to amend the real property law, in relation to judicial interpre-
tation of commercial leases regarding whether COVID-19 was an event that
could have been foreseen or guarded against

 
PURPOSE OF BILL:

The purpose of the CLEAR Path Forward Act is to reduce litigation,
encourage landlords and tenants to negotiate a settlement without going
to court, minimize business disruption in our communities, and bring
clarity and consistency to judicial interpretations across the state
with respect to whether COVID-19 was an event that could have been fore-
seen or guarded against in a commercial lease contract.

 
SUMMARY OF SPECIFIC PROVISIONS:

Subsection (1) provides that, where the court determines that perform-

ance under a commercial lease contract is frustrated or made objectively
impossible, the court shall no longer need to make the secondary deter-
mination of whether COVID-19 constitutes an unforeseeable event.

Subsection (2) provides direction to the court adjudicating the issue of
impossibility or frustration of purpose by providing objective factors
for consideration of a court of competent jurisdiction, including but
not limited to: the tenant's loss of income compared to similar time
periods, prohibitions and guidance from governmental authorities, and
whether the temporary loss in income is capable of being recovered. This
provision further provides that the Court shall review financial
documentation in camera for privacy considerations, to the extent neces-
sary.

The act shall take effect immediately.

 
JUSTIFICATION:

Under New York law, a party to a commercial lease may establish impossi-
bility of performance or frustration of contract by proving that (1) the
destruction of the subject matter of the contract or the means of
performance makes performance objectively impossible and (2) the impos-
sibility must be produced by an unanticipated event that could not have
been foreseen or guarded against in the contract.  The CLEAR Path
Forward Act prevents unnecessary litigation and divergent court deci-
sions across the state with respect to the second element of whether the
event which caused the business disruption was foreseeable. This is not
a determination that should be delegated to our overburdened landlord
and tenant courts to determine on a case-by-case basis. If COVID-19 was
unforeseeable in Rochester, the scope of the pandemic was similarly
unforeseeable in New York City and the rest of the state.

Importantly, the litigant will still need to prove that performance was
made "objectively impossible." The goal is to give clear guiding princi-
ples for commercial lease re-negotiations across New York so the parties
are encouraged to reach an amicable settlement as opposed to over-bur-
dening the court system with litigation.

We face a situation where our landlord tenant courts will be stretched
beyond their limits once they are re-opened. The ability of the landlord
tenant courts to conference each commercial lease case for settlement as
per custom will be significantly impaired due to calendar congestion and
social distancing requirements. As such, it remains essential to encour-
age the parties to a commercial lease to attempt settlement negotiations
in accordance with clear parameters that are fair to both sides.

CLEAR Path Forward also puts our local small businesses on equal footing
with their large "chain" competitors who may be more likely to take an
aggressive posture and accumulate attorney fees in a protracted liti-
gation to achieve a substantial rent abatement. This bill discourages
unnecessary litigation and brings both sides to the bargaining table to
minimize business disruptions and provide a clear path forward to both
landlords and tenants.

 
PRIOR LEGISLATIVE HISTORY:

This is a new bill.

 
FISCAL IMPLICATIONS:

To be determined.

 
EFFECTIVE DATE:
This act shall take effect immediately.

S8359 (ACTIVE) - Bill Text download pdf


                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  8359

                            I N  S E N A T E

                              May 19, 2020
                               ___________

Introduced  by  Sen. HOYLMAN -- read twice and ordered printed, and when
  printed to be committed to the Committee on Judiciary

AN ACT to amend the real property law, in relation to judicial interpre-
  tation of commercial leases regarding whether COVID-19  was  an  event
  that could have been foreseen or guarded against

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. The real property law is amended by adding  a  new  section
235-i to read as follows:
  §  235-I.  UNFORESEEABLE EVENT: COVID-19. 1. IF A COURT AS A MATTER OF
LAW FINDS PERFORMANCE UNDER A COMMERCIAL LEASE CONTRACT IS FRUSTRATED OR
OBJECTIVELY IMPOSSIBLE, EITHER WHOLLY OR IN PART, AS  A  CONSEQUENCE  OF
THE  OUTBREAK  OF  NOVEL CORONAVIRUS, COVID-19, SUCH COURT SHALL FURTHER
HOLD THAT COVID-19 CONSTITUTES AN EVENT THAT COULD NOT HAVE  BEEN  FORE-
SEEN OR GUARDED AGAINST IN SUCH CONTRACT.
  2.  WHEN  A PARTY CLAIMS THAT PERFORMANCE UNDER A COMMERCIAL LEASE HAS
BEEN FRUSTRATED OR MADE OBJECTIVELY  IMPOSSIBLE,  EITHER  WHOLLY  OR  IN
PART,  AS  A CONSEQUENCE OF COVID-19, THE PARTIES TO SUCH CONTRACT SHALL
BE AFFORDED A REASONABLE OPPORTUNITY  TO  PRESENT  EVIDENCE  AS  TO  THE
EXTENT OF THE ALLEGED FRUSTRATION OF PURPOSE OR IMPOSSIBILITY, INCLUDING
BUT NOT LIMITED TO:
  A. TENANT'S LOSS IN INCOME COMPARED TO SIMILAR TIME PERIODS;
  B.  PROHIBITIONS  AND  GUIDANCE FROM GOVERNMENTAL OR INDUSTRY AUTHORI-
TIES; AND
  C. WHETHER THE TEMPORARY LOSS IN INCOME WAS OTHERWISE RECOVERED BY THE
TENANT.
  THE COURT SHALL REVIEW ANY PRIVATE FINANCIAL DOCUMENTATION OFFERED  AS
EVIDENCE  PURSUANT TO THIS SUBDIVISION IN CAMERA TO THE EXTENT NECESSARY
TO PROTECT THE PRIVACY OF THE TENANT.
  § 2. This act shall take effect immediately.


 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD16262-01-0

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The New York State Senate

senate Bill S8359

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Archive: Last Bill Status - In Senate Committee Judiciary Committee

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S8359 (ACTIVE) - Details

S8359 (ACTIVE) - Summary

S8359 (ACTIVE) - Sponsor Memo

S8359 (ACTIVE) - Bill Text download pdf

Comments

senate Bill S8359

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Sponsored By

Brad Hoylman-Sigal

Archive: Last Bill Status - In Senate Committee Judiciary Committee

Your Voice

Actions

S8359 (ACTIVE) - Details

S8359 (ACTIVE) - Summary

S8359 (ACTIVE) - Sponsor Memo

S8359 (ACTIVE) - Bill Text download pdf

Comments