Property

Caveat Emptor: Real Property Law’s “Get Out of Jail Free” Card v. The Property Condition Disclosure Act

TLR BLOG

By Alessandra Albano 

I.      Introduction

The doctrine of caveat emptor, or the real-life “get out of jail free” card, is a common law doctrine that traces back to our English roots and has greatly influenced many state laws over time.[1] The premise of “let the buyer beware”[2] was replaced by some state legislation requiring disclosure statements in the purchase and sale of residential real property. While the use of the doctrine varies from state to state, it has been regarded favorably in New York for centuries.

In New York, the remnants of the doctrine of caveat emptor can be seen today, as the state has taken a different approach from its old roots.[3] Prior to March 1, 2002, New York was considered a caveat emptor state, in which it abided by the common law doctrine on all matters pertaining to the sale of residential real estate.[4] The doctrine imposed “no duty on the seller to disclose any information concerning the premises when the parties deal at arm’s length unless there is some conduct on the part of the seller which constitutes active concealment.”[5] To be successful in an action for active concealment, fraud, or nondisclosure, the purchasing party must prove that the selling party thwarted the purchasing party’s efforts in fulfilling its responsibilities, including its due diligence, which is outlined by the doctrine of caveat emptor.[6]

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The Dram Shop Act: A Useful but Often Forgotten Tool by Estate Litigators

TLR BLOG

The Dram Shop Act: A Useful but Often Forgotten Tool by Estate Litigators
By. Kyle G. Durante, Esq.*

When thinking of estate tort litigation, the causes of action that come to mind for most practitioners and legal professionals are wrongful death,[1] survival/conscious pain and suffering claims,[2] and, for some, the violation of the right of sepulcher,[3] all the while, failing to realize the advantages and practical application of the Dram Shop Act. The Dram Shop Act, and its outgrowth of related statutes, allows practitioners to potentially seize additional recovery on behalf of their client when a decedent has died under certain circumstances; to wit: as a consequence of a person’s unlawful assistance and/or contribution towards a tortfeasor’s intoxication, which caused and/or contributed towards the decedent’s death.

Section 11-101 of New York General Obligations Law (hereinafter “GOL”) provides in pertinent part:

[a]ny person who shall be injured in person, property, means of support, or otherwise by any intoxicated person, or by reason of the intoxication of any person, whether resulting in his death or not, shall have a right of action against any person who shall, by unlawful selling to or unlawfully assisting in procuring liquor for such intoxicated person, have caused or contributed to such intoxication; and in any such action such person shall have a right to recover actual and exemplary damages.[4]

Moreover, section 11-103 of GOL provides in pertinent part:

[a]ny person who is injured in person, property, means of support or otherwise by a person whose abilities are impaired by the use of a controlled substance,[5] or by reason of such person’s impairment, shall have a right of action against any person who caused or contributed to such impairment by unlawfully selling to or unlawfully assisting in procuring a controlled substance for such person.[6]

A Dram Shop claim premised on the above-referenced statutes permits the recovery of damages in addition to any claim for wrongful death, sepulcher and/or survival claim; these and other common claims are premised upon a tortfeasor’s tortious conduct, while a Dram Shop claim is premised upon a statutory violation.[7] Moreover, in agreement with the stated purpose in the enactment of the Dram Shop Act, a Dram Shop claim permits the injured and/or his or her personal representative on behalf of his or her estate,[8] in the instance of death, to assert a claim against the person and/or entity that provided the intoxicated individual with the intoxicating substance.[9] As stated by the New York Assembly in enacting the Dram Shop statutes:

[u]nfortunately, recovery against the impaired individual is often not available for various reasons. The most common being that the individual is without significant assets or insurance to cover damages.

This bill recognizes that fault is not only on the person under the influence of drugs, but should be shared by the seller or procurer of illegal controlled substances. But for these illegal dealings in drugs, many accidents or intentional injuries would not occur.[10]

These statutes permit the injured and/or his estate to recover damages that otherwise would not be recoverable—a claim that would otherwise not be permitted at common law.[11]

In order to successfully pursue a claim pursuant to GOL § 11-101 and/or GOL § 11-103, the plaintiff must only prove that the person to be held liable must have “caused or contributed” to the tortfeasor’s condition, which ultimately led to the plaintiff’s injury and/or death, as opposed to GOL § 11-100,[12] which requires the plaintiff to prove that the defendant knowingly provided alcohol to a person under the age of 21. Thus, pursuant to GOL § 11-101 and/or GOL § 11-103, an injured and/or his estate will be able to recover damages against the person who provided the tortfeasor with alcohol and/or an intoxicating substance, so long as the plaintiff is able to prove that the act of providing the alcohol and/or controlled substance “caused or contributed” to the plaintiff’s injury and/or death.[13]

One of the significant differences between GOL § 11-101 and GOL § 11-103 is the category of defendants the statutes are applicable against. GOL § 11-101 only applies to the commercial sale of alcohol, and “one who merely provides alcoholic beverages, without remuneration or profit, [can] not be held liable under the Dram Shop Act.”[14] Nevertheless, GOL § 11-103 is applicable to commercial and/or individual providers of controlled substances.[15] The application of either of these Dram Shop statutes could produce a significant recovery for an injured person and/or his or her or her estate.

Based upon the number of published decisions citing these provisions, especially GOL § 11-103, it does not appear that practitioners are utilizing all means of recovery on behalf of their clients when asserting claims for wrongful death, sepulcher and/or a survival claim. Any time a decedent dies under circumstances where the tortfeasor may have possibly been under the influence of alcohol and/or a controlled substance at the time of their tortious act, practitioners must contemplate a possible Dram Shop claim, which could permit their clients to recover damages above and beyond common law torts.

* Associate Attorney, Abrams, Fensterman, Fensterman, Eisman, Formato, Ferrara, Wolf & Carone, LLP.; Juris Doctor, Summa Cum Laude, Touro College Jacob D. Fuchsberg Law Center; Bachelor of Arts in Political Science, The University at Buffalo, The State University of New York; Associate of Science in Criminal Justice, Erie Community College.

[1] A wrongful death cause of action permits the decedent’s intestate distributees to recover compensatory damages, which they sustained as a result of the decedent’s death and, in certain situations, special damages, punitive damages and attorney’s fees and costs. See N.Y. Est. Powers & Trusts Law [hereinafter “EPTL”] § 5-4.4 (McKinney 2018). The essential prima facie elements of a wrongful death claim are: “(1) the death of a human being, (2) the wrongful act, neglect or default of the defendant by which the decedent’s death was caused, (3) the survival of distributees who suffered pecuniary loss by reason of the death of the decedent and (4) the appointment of a personal representative of the decedent.” Chong v. N.Y.C. Transit Auth., 441 N.Y.S.2d 24 (App. Div. 2d Dep’t 1981) (internal citations omitted). See also Cruz v. City of New Rochelle, No. 13CV7432 (LMS), 2017 WL 1402122 (S.D.N.Y. Apr. 3, 2017) (applying New York substantive law and holding similarly).

[2] When a tort causes the decedent’s death, a wrongful death cause of action may lie but, in addition to such claim, the underlying tort that caused the decedent’s death does not abate merely because of death. EPTL § 11-3.2. A survivor claim permits the decedent’s estate, by virtue of a personal representative, to commence an action against the tortfeasor for the underlying tort and/or a tort that was committed against the decedent prior to his death, even if never filed by the decedent (so long as the claim is filed within the statute of limitations). Id. § 11-3.2(b); Stolarski v. Family Servs. of Westchester, Inc., 973 N.Y.S.2d 725 (App. Div. 2d Dep’t 2013). See also N.Y. C.P.L.R. § 215 (McKinney 2018) (discussing the statute of limitations for intentional torts); id. § 214 (discussing the statute of limitations for a negligence claim); id. § 210 (discussing the tolling and extending provisions in connection with the death of a claimant).

[3] A sepulcher cause of action is a common law right of the “surviving next of kin . . .  to the immediate possession of a decedent’s body for preservation and burial and that damages will be awarded against any person who unlawfully interferes with that right or improperly deals with the decedent’s body.” Lott v. State, 225 N.Y.S.2d 434 (Ct. Cl. 1962). See also Estate of Scheuer v. City of New York, 780 N.Y.S.2d 597 (App. Div. 1st Dep’t 2004); Henderson v. Kingsbrook Jewish Med. Ctr., 936 N.Y.S.2d 318 (App. Div. 2d Dep’t 2012); Melfi v. Mount Sinai Hosp., 877 N.Y.S.2d 300 (App. Div. 1st Dep’t 2009) (holding “the common-law right . . . gives the next of kin the absolute right to immediate possession of a decedent’s body for preservation and burial, and that damages will be awarded against any person who unlawfully interferes with that right or improperly deals with the decedent’s body.”). The essential prima facie elements of a sepulcher cause of action are: 1) that the defendant interfered with the plaintiff’s right to possess the decedent’s body; 2) the plaintiff had a right to possession of the remains; 3) the interference was unauthorized; 4) plaintiff was aware of the interference; 5) the interference caused the plaintiff mental suffering, or emotional/psychological injury, which is generally presumed; and 6) that the defendant proximately caused the plaintiff’s injury. Mack v. Brown, 919 N.Y.S.2d 166 (App. Div. 2d Dep’t 2011); Shepard v. Whitestar Dev. Corp., 977 N.Y.S.2d 844 (App. Div. 4th Dep’t 2014).

[4] N.Y. GOL § 11-101(1) (McKinney 2018).

[5] The term “controlled substance” includes substances as defined by sections 3302 and 3306 of the New York Public Health Law.

[6] GOL § 11-103(1)(a) (McKinney 2018) (footnote not in original). For a discussion of additional Dram Shop Claims, see GOL § 11-100 (McKinney 2018) (discussing liability when a person provides alcohol to a tortfeasor who is under the age of 21).

[7] See supra note 3; GOL § 11-101; § 11-103.

[8] Hereinafter, any reference to an action taken by a decedent’s estate is to be construed to mean a personal representative, as defined by EPTL § 1-2.13, on behalf of the estate.

[9] Assemb. 6145, 1983 Leg., Reg. Sess. (N.Y. 1983) (statement of Assemb. McCabe); S. 4185, 1983 Leg., Reg. Sess. (N.Y. 1983) (Sen. Barclay).

[10] Id.

[11] Terrigino v. Zaleski, 544 N.Y.S.2d 283, 285 (Sup. Ct. Monroe Cnty. 1989).

[12] Section 11-101 of the GOL is another portion of the Dram Shop Act, which permits the recovery of damages against a defendant who knowingly provides alcohol to a person under the age of 21, where that underage person caused the plaintiff’s injury and/or death. See supra note 6.

[13] Terrigino, 544 N.Y.S.2d at 285.

[14] Id. (citing Huyler v. Rose, 451 N.Y.S.2d 478 (App. Div. 4th Dep’t 1982); Gabrielle v. Craft, 428 N.Y.S.2d 84 (App. Div. 3d Dep’t 1980)). See also D’Amico v. Christie, 518 N.E.2d 896 (N.Y. 1987).

[15] Terrigino, 544 N.Y.S.2d at 286 (quoting People v. Lam Lek Chong, 379 N.E.2d 200 (N.Y. 1978) (“‘. . . any passing of drugs from one person to another would constitute a sale,’ and it is not necessary that the supplier receive something in return in order to constitute a sale.”) (alteration in original).

Dueling Claim Construction Standards at the PTAB and District Courts

TLR BLOG

Dueling Claim Construction Standards at the PTAB and District Courts

By John Sepulveda

The United States Patent and Trademark Office (“USPTO”) and the federal district courts currently use two different standards to construe patent claims in patents and patent applications.  The two standards are (1) the Broadest Reasonable Interpretation (“BRI”) Standard and (2) the Phillips Standard created by the Court of Appeals for the Federal Circuit (“CAFC”) in 2005.[1]

In general, the USPTO currently uses the broader BRI standard during patent prosecution and during America Invents Act (“AIA”) trial proceedings[2] conducted by the Patent Trial and Appeal Board (PTAB), a USPTO administrative tribunal.[3]  However, depending on the expiration date of the patent, the PTAB also uses the Phillips standards to construe patent claims.  Federal district courts and the International Trade Commission (“ITC”) use only the Phillips standard to construe patent claims.  Thus, the use of the two different standards is unfair because the USPTO, in general, uses an arguably broader standard in its AIA trial proceedings than federal courts use during patent infringement litigation.

Recently, the Director of the USPTO, Andrei Iancu, signed a Notice of Proposed Rulemaking (“NPRM”).[4]   If adopted, the proposed rules will shift how patent claims are interpreted in an issued patent or patent application by the PTAB.  This change creates greater consistency and predictable outcomes in litigation that would provide a much fairer playing field for patent owners.

BRI Standard

The BRI standard is applied to patents that will not expire before a final PTAB written decision.[5]  Under the BRI standard, the claim or claims at issue are given their “broadest reasonable construction in light of the specification of the patent in which it appears.”[6]  The USPTO sometimes uses this standard during patent prosecution to give claims their broadest reasonable interpretation.  The USPTO also uses this standard during reexamination proceedings and reissue proceedings, depending on whether the patent will expire before the final PTAB written decision.  During prosecution and AIA trial proceedings, the BRI standard can be used to invalidate patents whereby the claims of the challenged patents are interpreted based on an expanded scope of prior art.

Courts have justified the USPTO’s use of the BRI standard for several reasons.  First, the USPTO has used the BRI standard for over 100 years.  Moreover, the courts have asserted that the approach “serves the public interest” by interpreting claims broadly during examination such that they are not given “broader scope than is justified.”[7]  Any perceived unfairness during both reexamination and reissue proceedings is remedied, as an applicant may amend claims to “correct errors in claim language and adjust the scope of claim protection as needed.”[8]

There are several issues with the use of the BRI standard.  First, district courts may grapple with whether issue preclusion (collateral estoppel) applies to PTAB construction.  In addition, agency determinations have been held to have a preclusive effect in district court litigation.[9]  However, the CAFC has stated that for PTAB claim construction decisions made under the BRI standard, issue preclusion is unlikely to apply because differing claim construction standards are applied in each case.[10]  Thus, the PTAB ultimately does not litigate the same issue that is before the district court.[11]  Additionally, there have been cases of a patent being found valid and infringed in a district court action using the Phillips standard that have been subsequently found invalid by the USPTO under the BRI standard.[12]

Phillips Standard

The Phillips standard is used in cases where the patent at issue has already expired or will expire within 18 months from entry of the post-issuance petition.[13]  This standard is used in these cases because the owner’s opportunity for amending is “substantially diminished” when the patent expires.[14]  The claims are construed to have “the meaning that the term would have to a person of ordinary skill in the art in question at the time of the invention . . . .”[15]  This is often referred to as “the ordinary and customary meaning.”[16]

One potential issue is that the Phillips standard can sometimes produce a narrower construction than the BRI standard, since the BRI standard focuses on the patent specification and excludes the other types of evidence taken into account by the Phillips standard.[17]  Therefore, the federal courts reliance on the Phillips standard may have the effect to impact strategy decisions and forum selection for both parties.

How the CAFC Has Applied These Standards Recently

In a recent case, In re Smith International, Inc.,[18] Smith owned a patent directed to a downhole drilling tool that included a “generally cylindrical tool body.”[19]  The patent was the subject of an ex parte reexamination, brought during the infringement case Smith initiated against Baker Hughes.[20]

Claim 28, as amended, read as follows:

  1. An expandable downhole tool for use in a drilling assembly positioned within a wellbore having an original diameter borehole and an enlarged diameter borehole, comprising:

a body; and

at least one non-pivotable, moveable arm having at least one borehole engaging pad adapted to accommodate cutting structures or wear structures or a combination thereof and having angled surfaces that engage said body to prevent said arm from vibrating in said second position;

wherein said at least one arm is moveable between a first position defining a collapsed diameter, and a second position defining an expanded diameter approximately equal to said enlarged diameter borehole.[21]

During reexamination, the PTAB affirmed the examiner’s BRI interpretation of “body” in the claims as a broad term that could encompass other components, such as “mandrel” and “cam sleeve,” because the claims lacked further limiting features and the specification did not prohibit such a reading.[22]  Given this interpretation, several claims were found to be anticipated and obvious.[23]  The Federal Circuit reversed this decision, finding that the PTAB’s construction of “body” was unreasonably broad.[24]  Whereas the claims recited “body” without any elaboration, the specification did not use the term in a generic manner.  The term “body” was consistently referred to as a component that was distinct from other components such as the mandrel.  The court rejected the PTAB’s reasoning that the specification did not proscribe its broad reading.[25]

The court held that BRI “is an interpretation that corresponds with what and how the inventor describes his invention in the specification, i.e., an interpretation that is ‘consistent with the specification.’”[26]  The court held that interpretation by the PTAB was not the broadest reasonable interpretation, but instead the “broadest possible interpretation” absent an express definition or prohibition.[27]

Proposed USPTO Rules

A NPRM was signed on May 3, 2018 by USPTO Director Andrei Iancu.[28]  Under the proposed approach, the USPTO would construe patent claims and proposed claims based on the record of the inter partes review (“IPR”), post-grant review (“PGR”), or covered business method patents (“CBM”) proceedings, taking into account the claim language itself, specification, and the prosecution history pertaining to the patent.[29]  According to the proposed rules, the USPTO would apply the principles that the Federal Circuit articulated in Phillips.[30]  The USPTO is also proposing amending the rules for PTAB trial proceedings to add that the USPTO will consider any prior claim construction determination concerning a term of the claim in a civil action, or an ITC proceeding, that is timely made of record in an IPR, PGR, or CBM proceeding.[31]  The purpose of the proposed rules includes ensuring consistency in claim construction between the PTAB and proceedings in district court or at the ITC, and to increase judicial efficiency.[32]

Takeaways

The proposed change in the claim construction standard from BRI to the Phillips standard could lead to greater uniformity and predictability between the claim constructions adopted by the PTAB and the federal courts.  If adopted, the new rules will harmonize the standard used for patentability and infringement.  The BRI standard has been outcome determinative in many proceedings.  In its current state, the discrepancy in claim interpretation standards often leads to unfair results.

[1] See Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005).  During patent infringement lawsuits, United States federal district courts construe patent claims using the Phillips standard.

[2] The AIA trial proceedings conducted by the PTAB include reexamination proceedings, reissue proceedings, inter partes review, post-grant review, covered business method patent proceedings, derivations, and interferences.

[3] The relevant AIA trial proceedings include the reexamination proceeding and the reissue proceeding.  A reexamination proceeding is a process whereby a third party or inventor can have a patent reexamined by a patent examiner to verify that the subject matter it claims is patentable.  MPEP § 2209 (9th ed. Rev. 8, Jan. 2018).  A reissue proceeding is instituted to correct an error in the patent such that the error resulting in the patent is deemed wholly or partly inoperative or invalid.  Id. § 1401.

[4] Gene Quinn, PTO Proposes Rulemaking to Implement Phillips Claim Construction at PTAB, IP Watchdog (May 8, 2018), http://www.ipwatchdog.com/2018/05/08/pto-proposed-rulemaking-phillips-claim-construction-ptab/id=96995/.

[5] The Federal Circuit’s en banc decision in Phillips expressly recognized that the USPTO employs the “broadest reasonable interpretation” standard.  415 F.3d at 1316.

[6] In re Cuozzo Speed Tech., LLC, 793 F.3d 1268, 1275 (Fed. Cir. 2015) (citation omitted).

[7] Id. at 1276; see also In re Yamamoto, 740 F.2d 1569, 1571 (Fed. Cir. 1984).

[8] See Cuozzo, 793 F.3d at 1290 (citing Yamamoto, 740 F.2d at 1572).

[9] See, e.g., B & B Hardware, Inc. v. Hargis Indus., Inc., 135 S. Ct. 1293, 1304-05 (2015).

[10] See SkyHawke Tech., LLC v. Deca Int’l Corp., 828 F.3d 1373, 1376-78 (Fed. Cir. 2016).

[11] See id.

[12] See PPC Broadband, Inc. v. Corning Optical Comm’s RF, LLC, 815 F.3d 734 (Fed. Cir. 2016) (discussing the analysis as to how the BRI and the Phillips standard can lead to different results).

[13] MPEP § 2111 (9th ed. Rev. 8, Jan. 2018).

[14] See In re Rambus Inc., 694 F.3d 42 (Fed. Cir. 2012).

[15] Phillips, 415 F.3d at 1314.

[16] Id.

[17]  See generally Facebook, Inc. v. Pragmatus AV, LLC, 582 F. App’x. 864 (Fed. Cir. 2014).

[18] 871 F.3d 1375 (Fed. Cir. 2017).

[19] Id. at 1377.

[20] Id. at 1378.

[21] Id. (emphasis in original).

[22] Id. at 1382.

[23] Smith, 871 F.3d at 1379.

[24] Id. at 1382.

[25] Id.

[26] Id. at 1383 (citation omitted).

[27] Id. (emphasis in original).

[28] Changes to the Claim Construction Standard for Interpreting Claims in Trial Proceedings Before the Patent Trial and Appeal Board, 83 Fed. Reg. 21221 (proposed May 9, 2018) (to be codified at 37 C.F.R. pt. 42).

[29] Id. at 21222.

[30] Id. at 21222-26.

[31] Id.

[32] Id. at 21223 (“The Office’s goal is to implement a fair and balanced approach, providing greater predictability and certainty in the patent system.”).

Has a Recent Supreme Court, Appellate Division Decision Changed the Way New York Courts Will Treat Conservation Easements?

TLR BLOG

By Brian Troy, J.D. Class of 2018 Touro Law Review Junior Staff Member

On July 20, 2016, the Second Department of the Supreme Court, Appellate Division handed down a decision in favor of a landowner defending against a land trust that claimed the owner was in violation of a conservation easement that burdened his land.[1] This case, Orange Cnty. Land Tr., Inc. v. Tamara Amelia Farm, LLC, was brought to the Appellate Division by the plaintiff/appellant Orange County Land Trust, Inc. (“OCLT”).[2] The defendants/appellants were the previous owner, Tamira Amelia Farm, LLC, and the current owners, Vincenzo Oppedisano and Clemente Farm, LLC. (“Clemente”).[3]

A conservation easement is a restriction on the use of one’s property to maintain open space and to preserve the land’s natural properties and conditions.[4] The easement requires a voluntary agreement between a private landowner and not-for-profit conservative organization or public body.[5] Conservation easements will usually contain “permanent, perpetual restrictions on the use and development of the landowner’s property.”[6] These restrictions run with the land and are enforceable in perpetuity against any future landowners.[7] For these reasons, conservation easements usually reduce the value of the land to which they are attached.[8] There is a strong public policy favoring the creation and enforcement of conservation easements, as they are one of many tools New York uses to preserve the natural resources and scenic beauty of the state.[9]

The plaintiff alleged multiple violations of the conservation easement.[10] These violations included the building of a barn in a prohibited area, the construction of an access road to the barn, and failure to obtain approval for building the barn.[11] The barn and access road were built in what the easement referred to as the “farm area” of the property.[12] OCLT claimed that improvements such as the barn and road were not permitted in this area.[13] Construction projects and improvements were restricted to the 29-acre “farmstead complex,” while the 50-acre farm area was to be used for agricultural purposes.[14]

When interpreting the easement, the court looked to its language to try and determine the intent of the parties.[15] The stated purpose of the conservation easement was “to conserve productive agricultural and forestry lands and natural resources associated with the Property for the benefit of the public and for future generations, and also to conserve the scenic character of the Property for the benefit of the public and for future generations.”[16] The court stated that this purpose applied both to the farm area and the farmstead complex.[17] The court reasoned that because the easement had an agricultural element in its stated purpose, the building of a barn in the farm area was consistent with its purpose.[18]

It is standard for a land trust to include terms in a conservation easement requiring the landowner to receive permission before any construction or improvements take place on the burdened property.[19] Although Clemente clearly violated the easement by neglecting to ask OCTL for permission to construct the barn and access road, the court decided that OCTL waived any redress for this violation when it agreed to consider applications retroactively.[20] The court dismissed OCLT’s retroactive withholding of permission as unreasonable “under the terms of the easement and the circumstances.”[21] The New York Court of Appeals denied review of Orange Cnty. Land Tr.[22]

This case presented several issues that New York courts have yet to address regarding conservation easements.[23] A further examination of the issue of whether OCLT unreasonably withheld consent would have been both beneficial to this case, and future cases that encounter standard of consent issues.[24] The defendants had expressed confusion and difficulties regarding the process for applying to OCLT for the permissions in the first place, and it is unclear what the standards for withholding consent are in these situations.[25] The court did not discuss this, and doing so would have provided clarity on an issue that has not been discussed in New York.[26]

The court also had an opportunity to examine how restrictive covenants will be treated in New York when they are part of a conservation easement.[27] Public policy against restrictions on the free use of land requires a strict construction of restrictive covenants, and all ambiguities should be construed against the party creating the restrictions.[28] The presence of these covenants in conservation easements, however, introduces the competing public policy of enforcing conservation easements, which would promote construction of the terms in favor of the restriction.[29] The easement in Orange Cnty. Land Tr., contained a provision stating that all terms should be construed in favor of the holder, which raises questions as to the validity of such provisions depending on which public policy the courts find more compelling.[30] The court did not discuss this provision in their decision.[31]

This decision has attracted the attention of land use attorneys in New York, forcing them to wonder how strictly conservation easements will be enforced in the future.[32] The decision may undermine the enforcement of a widely used tool for conserving New York’s natural and agricultural resources.[33]

[1] Orange Cnty. Land Tr., Inc. v. Tamara Amelia Farm, LLC, 34 N.Y.S.3d 618 (N.Y. App. Div. 2016), appeal denied, No. 2016-1178 (N.Y. Feb. 14, 2017).

[2] Id.

[3] Id.

[4] “Conservation easement” means an easement, covenant, restriction or other interest in real property, created under and subject to the provisions of this title which limits or restricts development, management or use of such real property for the purpose of preserving or maintaining the scenic, open, historic, archaeological, architectural, or natural condition, character, significance or amenities of the real property. . . .

N.Y. Envtl. Conserv. Law § 49-0303 (McKinney 2016).

[5] Id.

[6] Jessica E. Jay, Land Trust Risk Management of Legal Defense and Enforcement of Conservation Easements: Potential Solutions, 6 Envtl.L. 441, 451 (2000).

[7] Id. at 452.

[8] Id. at 453. “Giving away rights, such as the right to develop, reduces the value of a landowner’s property.” Id.

[9] “The policy of the state shall be to conserve and protect its natural resources and scenic beauty and encourage the development and improvement of its agricultural lands for the production of food and other agricultural products.” N.Y. Const. art. XIV, § 4.

[10] Orange Cnty. Land Tr., Inc., 34 N.Y.S.3d at 618.

[11] Id. at 620.

[12] Id.

[13] Id.

[14] Jessica Owley, Interpreting Conservation Easements in New York, Land Use Prof Blog (Aug. 15, 2016), http://lawprofessors.typepad.com/land_use/2016/08/a-recentconservation-easement-case-from-new-york-has-a-lot-of-land-trusts-worried-in-2004-the-orange-county-land-trust-e.html.

[15] Orange Cnty. Land Tr., Inc., 34 N.Y.S.3d at 620.

[16] Id.

[17] Id.

[18] Id. “Contrary to the plaintiff’s contention, construction of the barn did not violate the easement, because such construction was consistent with the easement’s agricultural purpose and its particular requirements. . . .” Id.

[19] See Sample Conservation Easement 1, Schoharie Land Trust, http://schoharielandtrust.org/index.php/get-started/benefits-to-you/state-tax-incentives/56-stewardship/conservation-easement/102-sample-conservation-easement-1 (last visited Mar. 11, 2016).

[20] Orange Cnty. Land Tr., 34 N.Y.S.3d at 618.

[21] Id.

[22] Orange Cnty. Land Tr., Inc. v. Tamara Amelia Farm, LLC, No. 2016-1178, 2017 WL 581856 (N.Y. Feb. 14, 2017).

[23] See Owley, supra note 14.

[24] Id.

[25] Owley, supra note 14.

[26] Id.

[27] See Orange Cnty. Land Tr., 34 N.Y.S.3d at 618.

[28] See Wetlands Am. Tr., Inc. v. White Cloud Nine Ventures, L.P., 782 S.E.2d 131, 165-66 (Va. 2016). The decision, in this case, includes an interesting discussion on this topic. The majority held in favor of applying strict construction to an ambiguity in a conservation easement, while a dissenting opinion argued for abolishing strict construction when conservation easements are involved. Id.

[29] Id. (Roush, J., dissenting).

[30] See Owley, supra note 14.

[31] See Orange Cnty. Land Tr., 34 N.Y.S.3d at 618.

[32] See Owley, supra note 14.

[33] See Land Trust Alliance: New York Program, Land Trust Alliance, http://www.landtrustalliance.org/what-we-do/our-regional-programs/northeast/new-york-program (last visited Feb. 21, 2017).

Regulating Transient Rentals

TLR BLOG

By Stephen Weinstein, J.D. Class of 2018 Touro Law Review  Junior Staff Member

Airbnb; HomeAway; VRBO; Flipkey. The explosion of the sharing economy has led to the creation and massive boom of the short-term residential rental market, also known as transient rentals. Hotels, once regarded as the main lodging for transient guests, are currently losing revenue and market share to transient rental hosting companies.[1] Even though some municipalities have laws in place regulating transient rentals prior to the transient rental market’s recent growth, enforcement of these existing laws have been a major issue.[2] The municipalities that did not have laws in place beforehand are trying to catch up to the rapid expansion of transient rentals in order to ensure enforceable regulations are in place.

A transient rental is defined differently based on the governing jurisdiction.[3] However, generally, transient rentals are defined as a third-party rental of a residential dwelling for a duration of fewer than 30 days.[4] These dwellings may be owner or non-owner occupied.

Local governments may take a variety of approaches to regulate transient rentals. Ideally, local governments base their governing legislation on the needs of their local community members when deciding to regulate the duration, manner, location, and participants of transient rentals in addition to considering the impact it will have on the community as a whole.[5] Some local governments place additional limitations on transient hosts, such as how many times the host may rent his property in a given period,[6] number of units offered in a particular building type,[7] and maximum occupancy,[8] among other limitations.[9] A survey of the current law in several major United States cities portray three main approaches to transient rental regulations with distinct differences among the various jurisdictions.[10] The first approach encompasses local governments that have no laws governing transient rentals, so it is inferred that transient rentals are allowed to operate.[11] Alternatively, if governments have transient rental laws in place, but there are not adequately enforced, transient rentals are able to operate.[12] The second approach encompasses legislation prohibiting non-owner occupied residential transient rentals altogether.[13] The final approach encompasses local governments that explicitly allow transient rentals, typically under 30 days, subject to certain requirements and taxation.[14]

Residential transient rentals are developing into an important economic and hospitality market in the United States, as well as globally. As with any change, fear of the unknown may take over and prevent people from accepting positive forward moving growth. New and amended laws surrounding transient rentals are coming into effect rapidly in an attempt to keep up with the growing marketplace.[15] When a local government is considering enacting a transient rental law, the local government, among other factors, should consider the big picture of how the law will affect its residents, the character of the community, and the revenue opportunity for small businesses and hosts.[16] These local governments should strongly consider enacting a set of laws allowing transient rentals, subject to specified conditions that advance the goals of each unique munici

[1] Biz Carson, Once Someone Tries Airbnb, They’re Less Likely to Prefer a Hotel, says report, Bus. Insider (Feb. 16, 2016), http://www.businessinsider.com/once-someone-tries-airbnb-theyre-less-likely-to-prefer-a-hotel-says-report-2016-2.

[2] Research Dep’t and Internet Bureau, Office of the Attorney Gen. of the State of N.Y., Airbnb in the City 2, 8-9 (2014), http://www.ag.ny.gov/pdfs/Airbnb%20report.pdf [hereinafter Airbnb Report].

[3] See, e.g., Miami Beach, Fl., Mun. Code § 142-1111(a) (2016), https://www.municode.com/library/fl/miami_beach/codes/code_of_ordinances?nodeId=SPBLADERE_CH142ZODIRE_ARTIVSUDIRE_DIV3SUUSRE_S142-1111SHRMREAPUNTO (defining transient rentals as less than 6 months and 1 day); N.Y. Mult. Dwell. Law § 4.8(a) (McKinney 2016) (defining transient rentals as less than 30 days).

[4] N.Y. Mult. Dwell. Law § 4.8(a) (McKinney 2016).

[5] See generally Morgan A. Stewart, Short-Term Rentals: Navigating the New Economic Marketplace, Multifamily Executive (Apr. 26, 2016), http://www.multifamilyexecutive.com/business-finance/commentary/short-term-rentals-navigating-the-new-economic-marketplace_o.

[6] Cleveland, Ohio, Mun. Code § 337.251 (2016), http://library.amlegal.com/nxt/gateway.dll/Ohio/cleveland_oh/cityofclevelandohiocodeofordinances?f=templates$fn=default.htm$3.0$vid=amlegal:cleveland_oh.

[7] Chi., Ill., Ordinances § 4-14-060(e) (2016), https://www.cityofchicago.org/content/dam/city/depts/rev/supp_info/TaxRulingsandRegulations/HotelTax-SharedHousingSubstituteOrdinance.pdf.

[8] Portland, Or., Mun. Code § 33.207.020(a) (2015), https://www.portlandoregon.gov/bps/title33_complete_print.pdf.

[9] Nashville, Tenn., Mun. Code § 6.28.030(Q) (2015), https://www.municode.com/library/TN/metro_government_of_nashville_and_davidson_county/codes/code_of_ordinances?nodeId=CD_TIT6BULIRE_DIVIGERE_CH6.28HORO_6.28.030SHTEREPRST.

[10] This Blog surveyed San Diego, North Las Vegas, New York City, Santa Monica, Miami Beach, Portland, Chicago, Cleveland, and Nashville.

[11]See, Las Vegas, Nev., Mun. Code §17 (2011), https://www.municode.com/library/nv/north_las_vegas/codes/code_of_ordinances; San Diego, Cal., Mun Code § 113.04 (2000), http://docs.sandiego.gov/municode/MuniCodeChapter13/Ch13Art01Division04.pdf.

[12] See generally Airbnb Report, supra note 2.

[13] See, Miami Beach, Fl., Mun. Code § 142-1111(a) (2016), https://www.municode.com/library/fl/miami_beach/codes/code_of_ordinances?nodeId=SPBLADERE_CH142ZODIRE_ARTIVSUDIRE_DIV3SUUSRE_S142-1111SHRMREAPUNTO; N.Y. Mult. Dwell. Law § 4.8(a); Santa Monica, Cal., Mun. Code §6.20.030 (2015), http://www.qcode.us/codes/santamonica/view.php?topic=6-6_20-6_20_030&frames=on.

[14] See, Chi., Ill., Ordinances § 4-13-310 (2016), https://www.cityofchicago.org/content/dam/city/depts/rev/supp_info/TaxRulingsandRegulations/HotelTax-SharedHousingSubstituteOrdinance.pdf; Cleveland, Ohio, Ordinance 30-16 (Feb. 8, 2016), http://www.clevelandcitycouncil.org/ClevelandCityCouncil/media/CCCMedia/Documents/City-Planning-Comm-of-Whole-6-6-16.pdf; Nashville, Tenn., Mun. Code § 6.28.030(A) (2015), https://www.municode.com/library/TN/metro_government_of_nashville_and_davidson_county/codes/code_of_ordinances?nodeId=CD_TIT6BULIRE_DIVIGERE_CH6.28HORO_6.28.030SHTEREPRST; Portland, Or., Mun. Code § 33.207.020(a) (2015), https://www.portlandoregon.gov/bps/title33_complete_print.pdf.

[15]See Avery Hartmans, Governor Cuomo just signed a bill that could deal a huge blow to Airbnb in New York, Bus. Insider (Oct. 21, 2016), http://www.businessinsider.com/gov-cuomo-signed-new-york-airbnb-bill-2016-10.

[16] See Airbnb, Airbnb: Generating $4.5 Billion for Restaurants (2016), https://www.airbnbaction.com/wp-content/uploads/2016/10/restaurant-report-final-10-14-16.pdf; Airbnb Citizen, Airbnb, Airbnb Home Sharing Activity Report: Los Angeles (May 9, 2016), https://www.airbnbaction.com/airbnb-home-sharing-activity-report-los-angeles/) (13% of hosts reported that their income prevented these hosts from losing their home to foreclosure while 10% of hosts reported that their transient rental income saved these hosts from eviction); Things to do, Airbnb, Inc., https://www.airbnb.com/things-to-do (last visited Jan. 30, 2017).