We have many clients whose application for a forgivable loan under the Paycheck Protection Program are currently pending and waiting for new funding from Congress, the US Senate passed a bill today to allocate $320 billion in additional funds. Action by the US House is expected Thursday.
Read more here from the New York Times.
Again, our advice is to apply and be patient. Congress will be fully funding this program.
Tens of thousands of Ohio businesses have been forcibly closed due to the order of Ohio Health Director Dr. Amy Acton, who on her own decided which categories of businesses would be deemed “essential” and “non-essential” during the COVID-19 crisis.
Today, a hearing was held before Judge Algenon Marbley, Chief Judge of the United States District Court for the Southern District of Ohio, on a motion for Temporary Restraining Order in the case of Hartman et al. v. Acton et al. In that case, Finney Law Firm attorneys Curt C. Hartman, Rebecca L. Simpson and Christopher P. FInney along with the 1851 Center for Constitutional Law argued simply that Tanya Hartman and her bridal shop, Gilded Social, are entitled to a due process hearing as to whether retail shops such as hers are properly categorized as “non-essential” and therefore subject to mandatory closure by the State. In other words, she simply asked for a hearing to ascertain the propriety of her closure under Ohio law and the US Constitution.
Now, I preface this by noting that I previously have appeared in front of Judge Marbley, and not only respect him as a Judge, but genuinely like him . He has at all times shown himself to be a knowledgeable and wise jurist, and a kind man as well.
Today, Judge Marbley, for a variety of reasons, ruled that Ms. Hartman and tens of thousands of similarly-situated businesses in Ohio have no right to a due process hearing following their forced closure by the State — at least on the emergency basis sought.
Rather, he scheduled a second hearing on May 11 on a Preliminary Injunction, a similar kind of relief but one that would last until resolution of the merits of the case.
One reason enunciated by Judge Marbley I found particularly unfortunate for the decision was that Ohio could not possibly hold hearings for the tens of thousands of businesses who might appeal their closure order. In other words, that due process would simply be overwhelming to the state bureaucrats if that right was recognized.
This notion is a frightening one indeed, reminding me of the forced internment of more than 120,000 US citizens of Japanese heritage during World War II without due process. In 1944, Fred Korematsu (Korematsu v. United States, 323 U.S. 214 (1944)) challenged the “yellow scare” incarceration of Japanese Americans based solely upon their ancestry. Naturally, the outrageous, unconstitutional and racist Order was borne of fear that Japanese Americans might hold dual loyalties and harm the United States during the War. The U.S. Supreme Court ultimately upheld President Roosevelt’s Executive Order 9066 that resulted in that forced internment, citing that irrational fear. From Wikipedia:
In a majority opinion joined by five other justices, Associate Justice Hugo Black held that the need to protect against espionage by Japan outweighed the rights of Americans of Japanese descent. Black wrote that: “Korematsu was not excluded from the Military Area because of hostility to him or his race”, but rather “because the properly constituted military authorities…decided that the military urgency of the situation demanded that all citizens of Japanese ancestry be segregated from the West Coast” during the war against Japan.
Can you imagine if Justice Black had added as a reason for that now-discredited decision that the U.S. Courts could not possibly sustain petitions for freedom by 120,000 individuals? It would deeply offend our claim as a nation to equal justice under the law. What if the Governor incarcerated all 10,000,000 Ohioans (which effectively he has done)? Would it be an exception to a Habeas Corpus petition that the system would be overwhelmed to provide justice to that many Ohioans?
We don’t lose our Constitutional rights when everything is going swimmingly. Rather, they become subverted from circumstances that instill such fear in our populace that the Courts elect to ignore the clear meaning of our Constitution. In other words, fear drives bad court decisions.
Today, the State of Ohio repeatedly played the fear card — the boogie man of disease and death — if we simply afforded Ohio businesses due process rights in response to the devastation of their life’s work. And it worked.
Judge Marbley has a chance to correct this unfortunate decision at the upcoming Preliminary Injunction hearing and we hope to provide him with the legal arguments and evidence he needs to reach the correct conclusion to allow due process rights to be afforded to these businessmen and women who have had their hard work and risk of capital snatched from them by unthinking, uncaring arbitrary bureaucrats.
We very much look forward to Round #2.
According to Lieutenant Governor John Husted, Ohio is working to process a massive increase in applications for Ohio unemployment benefits. More people have applied for Ohio unemployment benefits over the last month than had applied for such benefits in the last two years.
Additionally, the CARES Act expanded unemployment benefits to cover self-employed and independent contractors and promised an additional $600 per week on top of what the state pays. This has all resulted in slow processing times and numerous questions.
The State is working to answer those questions and decrease processing times. Here are some updates:
If you have questions on this or other relief available for small businesses, self-employed, and independent contractors during the COVID 19 crisis, please contact Rebecca L. Simpson at 513.797.2856.
The SBA burned through $342 billion in Paycheck Protection Program’s (“PPP”) loan funds in just over a week. And of course it ran out of funds long before all applications were processed, leaving many businesspersons waiting to see if the program will be properly and fully funded (we think it will).
Where did the money go?
Well, the SBA has issued a good and short PowerPoint presentation on the destination of the loaned funds to date. That is here.
If you need help accessing PPP funds or the companion Emergency Income Disaster Loan funds, please contact Rebecca L. Simpson (513-797-2856).
Unless you’ve been living under a rock somewhere, chances are the current COIVD-19 pandemic has affected at least one, and likely multiple facets of your life. But how do these circumstances impact contractual obligations made pre-COVID-19? Can the pandemic or the economic turmoil it is has created serve as a justification or excuse for getting out of a contract? For instance, if you contracted to purchase real estate in February, before all of the furloughs and Stay at Home Orders, do you still have an obligation to close on that purchase? While the case law surrounding this question is likely to dramatically expand in light of recent events, the answer could likely be “no” under Ohio law, at least as it stands today.
As an initial proposition, contracts are governed by the “four corners rule,” meaning they will be interpreted consistent with what appears on the face of the document. Chan v. Miami Univ., 73 Ohio St. 3d 52, 57 (1995) (“[A]n instrument must be considered and construed as a whole, taking it by the four corners as it were.”). Where unambiguous, no additional terms will be read into the contract, and the terms that are contained within the document will be given their ordinary meaning. Fidelity & Casualty Co. v. Hartzell Bros. Co., 109 Ohio St. 566, 569 (1924) (“This court cannot make a new contract for the parties where they themselves have employed express and unambiguous terms. In the construction of contracts the language employed must be given its usual and ordinary meaning.”).
Parties to a contract are, thus, bound by the contract’s plain and unambiguous terms and are obligated to do that which they have promised in the contract, subject to certain narrow exceptions…
Contracts often contain “force majeure” clauses. Roughly translated, force majeure is Latin for “superior forces.” Often, you will see this interpreted or referred to as an “Act of God.” What this means in a practical sense is that there is some sort of unforeseeable, intervening circumstance that justifies non-performance under the contract. For example, you have a contract to rent an apartment unit (a lease) but, right before you move in, a bolt of lightening strikes the apartment building and it burns to the ground. Depending on the language of the force majeure clause, this would likely be a qualifying unforeseeable circumstance that could nullify the lease.
Relative to real estate transactions, force majeure clauses are perhaps more often seen in the commercial context than the residential. Many standard realtor’s contracts do not contain such clauses. These clauses may also appear in certain consumer transactions – think contracts for goods or services to be performed.
Consistent with the four corners rule, courts cannot “read in” a force majeure clause where one does not appear on the face of the contract. Therefore, if your contract does not contain a force majeure clause, you likely cannot claim it as a reason for terminating the contract or skirting your obligations thereunder. See Wells Fargo Bank, N.A. v. Oaks, 2011 Ohio Misc. LEXIS 4812, at *7 (Franklin C.P. June 24, 2011) (rejecting force majeure argument where the contract did not contain a force majeure clause).
Where a contract does contain a force majeure clause, courts are likely to interpret such clauses in a very narrow fashion. Thus, if the clause does not specifically contemplate disease, pandemic, unexpected unemployment, or business closures, it may not provide relief in the specific COVID-19 context.
Despite the non-existence of an applicable force majeure clause, one might think that his or her general inability to pay that which they promised under the contract or worsening financial conditions might excuse performance under the contract. While this may seem like a logical conclusion at first glance, the law dictates that “[m]istaken assumptions about future events or worsening economic conditions, however, do not qualify as a force majeure.” Stand Energy Corp. v. Cinergy Servs., 144 Ohio App. 3d 410, 416 (1st Dist. 2001); see also Wells Fargo, at *7-8 (“[E]conomic down-turn is a risk that every business person necessarily undertakes when they enter into a contract . . .That this country incidentally suffered an economic downturn during the term of their contract does not discharge them from their contractual obligations.”). “A party cannot be excused from performance merely because performance may prove difficult, burdensome, or economically disadvantageous.” State ex rel. Jewett v. Sayre (1914), 91 Ohio St. 85, 109 N.E. 636, 12 Ohio L. Rep. 291.
This body of case law generally speaks to “objective” versus “subjective” impossibility. While the law might sanction non-performance based on objective impossibility (i.e., no one could reasonably fulfill their obligations under the circumstances), it typically does not excuse performance based on subjective impossibility (i.e., a particular party cannot fulfill their obligations under the circumstances).
In the real estate context, for instance, what about the health risks posed by out-of-state buyers or sellers traveling for closings? Fortunately, we live in an era that offers a wealth of technological options here. For example, many title companies are offering “remote” closings. If this is a concern for you, consider reaching out to Ivy Pointe Title for your closing needs, as they offer a staff of experienced title professionals, e-notary licensure in both Ohio and Kentucky, and remote closings, which allow parties to close on real estate transactions from the comfort and safety of their own homes where necessary.
All this being said, parties to a transaction can often jointly agree to terminate or delay performance if they so choose, though a subsequent writing may be required to effectuate this agreement in a manner that will be enforceable and protect both sides down the road. If you are party to a transaction and the other side has threatened non-performance where there has been no agreement to terminate or delay, these are likely some of the arguments you will see. On the other hand, if you are concerned about your ability to perform under a contract, there may be additional language within the “four corners” of your contract that could provide some relief. Contracts are exceedingly unique from one another, such that there really is no “one size fits all” approach.
Finney Law Firm has a team of legal professionals with experience ranging from real estate to employment to general commercial law, and we would be happy to review your contract and provide feedback as to your options or help with drafting amendments thereto. Please feel free to reach out to me at (513) 943-5673 or [email protected] to set up a remote consultation.
Additionally, our attorneys have authored a number of blog entries relative to the COVID-19 crisis and hosted webinars as to potential relief for employers, small businesses, and 1099 employees that may also be of interest. And for more on commercial or real estate transactions and “force majeure,” click here.
We hope you are all staying safe and healthy during this unprecedented time.
As a result of the current pandemic, millions more Americans are working from home than there were just a month ago. This significant change in circumstances presents a good opportunity for employers to review their policies when it comes to recording the hours worked by their employees, and the payment of overtime.
Remember that employees who earn at least $684 a week, and who are otherwise “exempt” from the overtime requirements of federal and state law, do not have to be paid additional wages or salary when they work more than 40 hours in a week. Keeping track of the hours these exempt employees work when they are working at home, therefore, is not important from a legal point of view.
This is a good time, however, for employers to make sure that they are correctly classifying their employees as exempt or non-exempt. If an employee is misclassified as “exempt” when he or she is not truly exempt from the overtime laws, the employer can be exposed to significant liabilities for unpaid overtime compensation and additional amounts.
For non-exempt employees, working from home creates some definite challenges when it comes to keeping track of hours worked, and making sure they are paid appropriately. All employers are required to keep accurate records of the hours worked by their non-exempt employees. Note that it is the employer’s responsibility – not the employee’s responsibility – to make sure that these accurate records are kept and maintained. For obvious reasons, it can be harder to keep track of an employee’s hours worked when he or she is working remotely, as opposed to when he or she is working on the employer’s premises.
To make sure that employers comply with their duty to keep accurate time records, they should either have a software solution in place that keeps track of when an employee clocks in and out, or require employees to submit daily timesheets. Employees should also be reminded to clock in and out for lunch, and should be refreshed on the employer’s policies regarding authorization for overtime work.
It is also a good idea to tell employees, when working from home, that they are expected to maintain the same work schedule that they had when working at the employer’s physical location.
Whether you are an employer or an employee, if you have questions or need clarification about this complicated area of the law, please feel free to reach out to one of our employment attorneys. And stay safe!
Over the weekend, I spoke with about a dozen 1099 or business-owner clients who (a) either still did not know about the Paycheck Protection Program or (b) did not intend to apply for various reasons. Some discussion of that.
Every businessperson has their hands full right now, navigating the shoals of uncertainty and change the COVID crisis has presented, but this program almost certainly is well worth your time and attention.
This morning, Finney Law Firm attorney Rebecca L. Simpson conducted a seminar hosted by the Cincinnati Area Board of Realtors on the Paycheck Protection Plan. A hearty thanks to Christy Beaver for pulling together this program.
This morning’s seminar focuses on how Realtors can qualify and apply for the program.
It is posted here.
This seminar comes on the heels of another seminar hosted by Empower U about the Paycheck Protection Program focusing on employers with W-2 employees.
A link to that previous webinar is here.
Please contact Rebecca L. Simpson (513.797.2856) if you need assistance with the PPP program.
Today, Finney Law Firm and the 1851 Center for Constitutional Law filed suit in Federal District Court in Columbus, Ohio to enjoin the mandatory “stay at home” orders of the Ohio Department of Health. Named as a Defendant in the action Dr. Amy Acton in her official capacity as Director of the Ohio Department of Health.
The Plaintiff, Tanya Rutner Hartman, owner of Gilded Social: The Fancy Occasion Shop, a Columbus bridal shop, alleges that the official orders of Dr. Acton fail to have any meaningful due process protections built in for a fair hearing to determine what is an “essential” business and can stay open while the state imposes restrictions to prevent further spread of the virus.
The case has been assigned to Chief Federal District Court Judge Algenon L. Marbley for the Southern District of Ohio, sitting in Columbus. He has ordered the State of Ohio to brief the matter by 5 PM Friday, April 17, 2020 (tomorrow) and will hold a telephonic hearing Monday at 10 AM. He has promised a decision by Wednesday, April 22, 2020.
A copy of the Complaint is here.
The news release from the 1851 Center is here.
A Cleveland.Com story on the case is here.
For more information, contact Maurice Thompson of the 1851 Center for Constitutional law or Christopher Finney (513.943.6655).
The stated desire of Congress and the Administration in the Paycheck Protection Program (“PPP”) has been to get money into the hands of business owners — and keep workers off the unemployment line — absolutely as quickly as possible.
But that hasn’t prevented the endless delays and bickering between the democrat House and the GOP Senate in getting full appropriation for the program approved.
Read here that the Small Business Administration website now reads that it is “unable to accept new applications for the Paycheck Protection Program based on available appropriations funding. Similarly, we are unable to enroll new PPP lenders at this time.”
Watch this blog for further updates and contact Rebecca L. Simpson (513.797.2856) for more information on this program. She is keeping updated on the rules and the daily developments.