Posted on January 23, 2012 by Brett S. Theisen

New Jersey Grants Out-of-State Wineries Direct Access to Consumers & Retailers

On January 17, 2012, Governor Chris Christie signed into law a bill allowing out-of-state winemakers to sell directly to New Jersey consumers and retailers. The bill was in response to the Third Court’s decision in Freeman v. Corzine, which we reviewed on this blog a year ago. The decision invalidated a New Jersey law allowing certain New Jersey farmers and wineries to skip wholesalers and sell directly to retailers and consumers. The Court determined that the law ran afoul of the Constitution’s Dormant Commerce Clause because it imposed restrictions benefiting in-state wineries and farmers at the expense of their out-of-state competitors. This new law is intended to balance the competing rights of in-state and out-of-state wineries.

The Third Circuit ordered the case remanded to the District Court to remedy the constitutional violation. In short, the District Court was being asked to choose between (1) extending the same in-state privileges to out-of-state wineries and farms, or (2) nullifying the privileges enjoyed by in-state wineries and farms. Rather than leaving the matter with the courts, state legislators introduced several competing bills aimed at resolving the violation. On July 25, 2011, at the request of all parties, the District Court ordered the case “administratively terminated” through March 2012 in anticipation of a legislative resolution.

After months of back and forth negotiations, the new law finally garnered enough votes to pass on the final day of the 2010-2011 legislative session. The law is a compromise measure that will resolve the constitutional issues identified in Freeman v. Corzine and protect New Jersey wine growers’ right to sell directly to consumers. As a result, the District Court litigation has been rendered moot.

Specifically, the new law creates a new “Out-of-State winery license,” available to applicants that do not produce more than 250,000 gallons of wine per year and are duly licensed in another state. The new license permits direct sales to New Jersey consumers, including internet sales. Out-of-State licensees will also be permitted to sell directly to consumers at up to 16 tasting-room locations in the State (compared to 15 locations for In-State wineries). Direct sales and distribution to retailers are also permitted for an additional fee. The new law will take effect on May 1, 2012.


Brett S. Theisen is an Associate in the Gibbons Financial Restructuring and Creditor's Rights Department.
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Posted on January 18, 2012 by Mark B. Conlan

Pennsylvania's Alcohol Sale Privatization Debate: What Does It Mean for Retail Beer and Wine Sellers?

Pennsylvania’s state-run stores could be on the verge of losing their decades-old monopoly on wine and liquor sales. On December 13, 2011, the Pennsylvania House of Representatives’ Liquor Control Committee voted 15-10 to approve an amended version of Pennsylvania House Bill 11, (“Pa. H.B. 11”), which would allow the state’s 1,200 beer retailers to sell wine to the public, in competition with the Pennsylvania Liquor Control Board’s (“PLCB”) 620 state-run stores. Notably, large supermarket chains within the state stand to gain an enormous benefit from the proposed law, which would allow for the first time in-store wine sales, as well as limited in-store tasting events. The proposed legislation now sits before the full House, awaiting floor debate, additional amendments, and a possible vote. The process could begin as early as this month.

Under the amended proposed law, a license to sell wine, called an “enhanced distributor’s license,” would be available to any “holder of a distributor license” - i.e., an entity currently selling beer in the state - after payment of a “conversion fee” of $50,000. In addition, an enhanced distributor would be required to pay an annual $15,000 renewal fee. The enhanced distributor licenses would be subject to the same population-tied cap as the current distributor licenses. Presently, the number of distribution licenses available for the retail sale of beer is limited to one license for every 3,000 inhabitants in any county, exclusive of licenses granted to certain public venues and other venues specifically identified by the Legislature.

The original version of Pa. H.B. 11 sponsored by House Majority Leader Mike Turzai and supported by Gov. Tom Corbett, would have gone even farther in breaking up the state-run monopoly. The original bill called for the complete privatization of all retail and wholesale wine and liquor sales in the state by closing and selling all state-run stores. A study commissioned by the bill’s proponents indicated that the sales could generate between $1.3 and $1.9 billion up front, with an additional $400 million in annual revenues thereafter. Following the sale of state-run stores, there would be a public auction of 1,250 retail licenses to sell beer, wine, and liquor to the highest bidders. Because the current version of the bill keeps the state-run stores open, the re-employment provisions contained in the first draft of the bill that were designed to assist displaced PLCB employees find new employment have been deleted in the amended bill.

With the Governor and many Republican legislators pushing for full privatization, further amendments or even reintroduction of some original proposals might be likely before a final version of the new law is ready for a vote. In any event, retail licensees large and small should be keeping a close eye as Pa. H.B. 11 moves through the law-making process. Whether legislators ultimately agree to proceed with the current public-private competition plan or something closer to full privatization, Pennsylvania’s retail sellers and its citizens seem poised for big changes.


Mark B. Conlan is a Director in the Gibbons Financial Restructuring & Creditors' Rights Department. Brett S.Theisen, an Associate in the Gibbons Financial Restructuring & Creditors' Rights Department, co-authored this post.
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Posted on January 4, 2012 by Shepard A. Federgreen

Lease Extension Notices - New York Appellate Division Ignores Lease Text in Name of Equity

New York’s Appellate Division, First Department, in 135 East 57th Street LLC v. Daffy's Inc. was faced with the following facts. A retail chain had occupied high profile space for about 15 years. The tenant had the right to renew by notice to the Landlord to be delivered by January 31, 2010, a year prior to lease expiration. For no reason other than a mistake by the tenant's controller, notice was not timely given. However an email and fax was sent (dated January 30, 2010) on February 4, 2010, purporting to exercise the option. The landlord on February 5, 2010, rejected the notice as being late, and accused the Tenant of back-dating the notice for its own purposes.

The trial court, for reasons which are not set forth in the appellate opinion, determined the tenant was entitled to equitable relief, and determined the notice exercising the renewal period, although not timely, was nonetheless effective.

The Appellate Division, reviewed the existing law of New York on honoring technically defective lease extension notices and summarized same, quoting Vitarelli v. Excel AutomotiveTech. Ctr., Inc., 

Equity will relieve a tenant from a failure to timely exercise an option in a lease to renew or purchase if  (1) the tenant in good faith made substantial improvements to the premises and would otherwise suffer a forfeiture, (2) the tenant's delay was the result of an excusable default, and (3) the landlord was not prejudiced by the delay.

The Court addressed these three tests in reverse order as follows:

1) Prejudice to Landlord - The Court seemingly took judicial notice of the fact the landlord was not prejudiced, which in all likelihood was true given the timing, i.e., tenant provided 11 months and 27 days notice rather than one year's notice of the extension, but since there was apparently no evidence on the issue, not necessarily so.

2) Delay in Notice was due to an "excusable default" - The Court, in one sentence and virtually without discussion, equates the tenant's Controller's "honest mistake" with "excusable default". If an honest mistake constitutes an excusable default one is forced to wonder what set of circumstances would not constitute excusable default.

3) Tenant, in good faith, made substantial improvements that would be forfeited - The Court acknowledged the tenant did not do this, i.e., this prong of the test was not met. Instead, the Court interpreted “good will” associated with 15 years at the location to be a valuable asset that would be forfeited in the absence of equitable intervention.

Then, notwithstanding the dubious thought process as to test two and the outright acknowledgment that test three was not met, but after noting the profitability of the store and the large number of employees who would lose their jobs, ruled the notice was effective.

This case seems to be a tremendous expansion of the existing law, and to stand for the proposition that the Court is free to look at all the facts and do whatever it thinks is right, given all the circumstances. Indeed, seemingly highlighting the lack of predictability, the Court quoted the Court of Appeals in JNA Realty, "By its nature, equitable relief must always depend on the facts of the particular case and not on hypotheticals."

Although the power of the court to “do equity” has a certain appeal (for no one is for unjust results), a system which allows a panel of judges, after the fact, and on a case-by-case basis, to impose their personal set of morals in lieu of the agreement reached between the parties is a system that lacks predictability and precision. And it is a system which is only equitable in the eyes of the party to whom relief is granted - I assure you it isn’t viewed as the least bit equitable by the party who sought to do nothing more than enforce the precise terms of the agreement between the parties.


Shepard A. Federgreen is a Director in the Gibbons Real Property & Environmental Department.
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Posted on December 2, 2011 by Gibbons P.C.

Gibbons to Exhibit at ICSC New York National Conference & Deal Making on Monday and Tuesday

The Gibbons Real Property & Environmental Department will once again exhibit at the International Council of Shopping Centers (ICSC) National Conference & Deal Making Idea Exchange at the Hilton New York on December 5-6.

The Department's booth will be in the same location as prior years, #490 in Americas Hall II. Stop by and meet with some of the Department's seven attorneys who will be attending. Show hours are Monday, December 5, from 9:00 am to 5:30 pm, and Tuesday, December 6, from 8:30 am to 4:00 pm.

We look forward to seeing you there!

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Posted on September 7, 2011 by Howard D. Geneslaw

ICSC Philadelphia Dealmaking is Upcoming - New Date Scheduled

The International Council of Shopping Centers (ICSC) annual PA/NJ/DE Idea Exchange is coming up soon. Although the show usually is held in mid-September, this year it has been pushed back to October 12-13. As in the past, the show will be held at the Pennsylvania Convention Center and will provide an opportunity for real estate professionals to network and focus on getting deals done.

Gibbons P.C. will once again exhibit at the show. We expect to have at least six attorneys from the firm’s Real Estate Development and Transactional Real Estate practice groups in attendance to meet with clients, prospective clients and consultants and discuss their permitting needs. We will be in Booth #1023. Please stop by and visit us.

Registration information is available on ICSC’s website.

* Image created by Matt Banks - freedigitalphotos.net.


Howard D. Geneslaw is a Director in the Gibbons Real Property & Environmental Department.

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Posted on July 28, 2011 by Gibbons P.C.

National Association of Women Lawyers Confers Outstanding Member Award on Nancy Lottinville

On Thursday, July 21, 2011, Nancy A. Lottinville, Esq., Counsel to Gibbons P.C.’s Newark based Real Property & Environmental Department was awarded the Virginia S. Mueller Outstanding Member Award by the National Association of Women Lawyers, the first national bar association for women established in 1899. Ms. Lottinville, along with six other attorneys chosen from NAWL’s nationwide membership, accepted the award at NAWL’s Annual Meeting held at the Waldorf Astoria Hotel in New York City. NAWL presents the Outstanding Member Award to NAWL members for exemplary contributions to NAWL. Ms. Lottinville’s contributions include several years of service on multiple committees including the 2011 Co-Chair of the Annual Meeting Logistics Committee, as well as Program Committee member for the 2010 New Jersey NAWL Night of Giving and the 2011 New Jersey Supreme Court Appellate Advocacy Program.

Ms. Lottinville is the Co-Chair of the Women’s Initiative Community Outreach Committee at Gibbons. Her practice focuses on real estate development and redevelopment, land use permitting and commercial real estate transactions for developers of shopping centers, retail stores, banks, franchisors and mixed commercial - residential developments, as well extensive land use due diligence investigations for regional and national investors in a variety of real estate development projects.

Others honored at NAWL’s Annual Meeting include: Brooksley Born, who received the Public Service Award; Susan Blount, who accepted the President’s Award on behalf of Prudential Financial Inc. Legal Department; Judge Harold Baer of the United States District Court for the Southern District of New York and Marc Firestone , General Counsel of Kraft Foods who each received the NAWL Lead by Example Award; and Michele Coleman Mayes who received the M. Ashley Dickerson Award for the promotion of diversity in the legal profession. NAWL’s most prestigious award, the Arabella Babb Mansfield Award - named for the first woman admitted to a state bar in the United States - was presented to Jamie Gorelick, one of the longest serving Deputy Attorney’s General of the United States, a former general counsel to the Departments of Defense and Energy, a former president of the Washington D.C. Bar and current Co-Chair of the ABA Commission on Legal Ethics.

Ms. Lottinville's colleague, Luis Diaz, Esq., a Director and Chief Diversity Officer at Gibbons, participated in an afternoon CLE program panel which focused on overcoming unconscious bias. Gibbons is also represented within NAWL by Kristin Sostowski, who is a Director in Gibbons Employment & Labor Law Department. Kristen was sworn in as a new member of NAWL’s Executive Board at the NAWL Annual Meeting. Christine Amalfe, Gibbons Employment & Labor Law Department Chair, is also a member of the Board of the NAWL Foundation.
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Posted on July 1, 2011 by Howard D. Geneslaw

One Month After RECON -- The Outlook for the Second Half of 2011

This week marks both the one-month mark since the International Council of Shopping Centers’ (ICSC) annual RECON conference, as well as the end of the first half of 2011. RECON attendance surpassed 30,000 attendees for the first time since 2008, but still remains substantially off attendance levels reached several years ago. Although there was a fair amount of activity at this year’s show, particularly in the retail area on the second floor of South Hall, impressions of the climate for getting deals done were mixed, much like the economic indicators which have been circulating in recent months. Nevertheless, cautious optimism seems to be a fairly common theme in the retail sector for the remainder of 2011, and somewhat more enthusiastic optimism for 2012 and beyond.

In many communities, agendas remain light at land use boards, so there is space available for new applications for development as the market improves. Meanwhile, we can look forward to the upcoming ICSC Idea Exchange in Philadelphia on October 11-13 (note that these dates are several weeks later than usual), and the National Conference and Dealmaking in New York on December 5-6. Gibbons will be exhibiting at both shows. Please stop by our booth and visit us.


Howard D. Geneslaw is a Director in the Real Property & Environmental Department.

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Posted on January 20, 2011 by Alfred R. Fuscaldo

Expansion of Philadelphia Minimum Wage and Benefit Standards Could Impact Retail and Restaurant Tenants

Under a newly enacted City of Philadelphia Ordinance, some tenants in properties developed with financial assistance by the City of Philadelphia may now be required to comply with a minimum wage requirement that is 150% of the federal minimum wage. Benefits provided to full-time employees of tenants may also be impacted.

City Ordinance (Bill No. 100756) was signed into law on January 5th by Mayor Michael Nutter, and will become effective on July 1, 2011.

Pursuant to Title 17-1300 of the City Code, certain employers are required to pay employees (as they are defined in Title 17) an hourly wage, excluding benefits, of at least 150% of the federal minimum wage, as well as provide certain minimum health care benefits for full-time employees. One category of employers that must provide the higher minimum wage and the health care benefits are "City financial aid recipients."

Prior to the newly enacted Ordinance, "City financial aid recipients" were defined as "All persons or entities that receive from the City direct assistance in the form of grants, loans, or loan guarantees, tax incentives, in-kind services, waivers of City fees, or real property in the amount of more than $100,000 in any twelve (12)-month period. This term shall not include those who enjoy an economic benefit as an incidental effect of City policies, regulations, ordinances, or charter provisions."

So, captured under that definition were people or entities, including landlords, that purchased and/or developed properties with financial assistance from the City.

Ordinance No. 100756 has expanded the definition of "City financial aid recipients" to include certain tenants of City financial aid recipients.

The definition of "City financial aid recipients" now includes "a person or entity who (a) leases property or equipment from a City financial aid recipient; (b) employs more than twenty-five" employees; (c) in the case of a not-for profit entity, leases property or equipment for consideration in excess of $100,000 a year; and (d) in the case of a for-profit entity, has annual gross receipts in excess of $1,000,000 a year" so long as "such property or equipment was acquired (in whole or in part) with the City's assistance or was otherwise the subject of the City's assistance and the person or entity receives an intended material benefit from the financial assistance, and such person or entity shall be subject to the provisions of the Chapter for the same compliance period as the City financial aid recipient from which they are leasing the property or equipment."

The impact of this new legislation will likely be most felt by larger retailers and restaurants which lease space from landlords who qualify as "City financial aid recipients". The tenant’s obligation to comply with these standards is concurrent with the time the landlord is subject to them. Compliance by "City financial aid recipients" is required for 5 years following the receipt of the aid.

A prudent tenant should consider inquiring whether its landlord is a “City financial aid recipient” under the Code.


Alfred R. Fuscaldo is a Director in the Gibbons Real Property & Environmental Department.
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Posted on December 17, 2010 by Howard D. Geneslaw

Gibbons Exhibits at New York ICSC Show Amid Upbeat Mood

For the seventh year in a row, the Gibbons Real Property & Environmental Department exhibited at the International Council of Shopping Centers' ("ICSC") National Conference and Deal Making Idea Exchange in America's Hall II at the Hilton New York earlier this month.

The buzz at the show was optimistic this year, similar to the upbeat mood at the September PA/NJ/DE Idea Exchange in Philadelphia, with over 6,000 attendees and 340 exhibitors "deal making" throughout the Hilton New York and the Sheraton New York Towers & Hotel. Along with the six Gibbons attorneys, the show was also attended by shopping center owners, developers, managers, marketing specialists, investors, lenders, retailers, and other professionals.

Gibbons will be exhibiting at both the Philadelphia and New York shows again next year - we look forward to seeing you there!


Howard D. Geneslaw is a Director in the Gibbons Real Property & Environmental Department.

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Posted on December 3, 2010 by Howard D. Geneslaw

Gibbons to Exhibit at ICSC New York National Conference & Deal Making

The Gibbons Real Property & Environmental Department will once again exhibit at the International Council of Shopping Centers (“ICSC”) National Conference & Deal Making Idea Exchange at the Hilton New York on December 6-7.

The Department’s booth will be in the same location as prior years, #490 in America’s Hall II. Stop by and meet with some of the Department’s six attorneys who will be attending. Show hours are Monday, December 6, from 9:00 am to 5:30 pm, and Tuesday, December 7, from 8:30 am to 4:00 pm.

In September, the Department exhibited at the ICSC’s PA/NJ/DE Idea Exchange on September 15-16, at the Pennsylvania Convention Center in Philadelphia. We reported that the attendance and mood had both improved over the year before. We are hopeful that the positive mood will continue.  See you in New York!


Howard D. Geneslaw is a Director in the Gibbons Real Property & Environmental Department.

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Posted on September 30, 2010 by Gibbons P.C.

Attendance and Outlook Improve at Philadelphia ICSC

Attendance was up and the mood was upbeat at the International Council of Shopping Centers (ICSC) PA/NJ/DE Idea Exchange on September 15-16 at the Pennsylvania Convention Center in Philadelphia. For the 7th consecutive year, Gibbons P.C. exhibited at the show. Five Gibbons lawyers, from the firm’s Philadelphia and Newark offices, attended.

Unlike the last two years, when attendance was lower and the mood was palpably negative, this year's show was better attended and there was a noticeable change in attitude as more deals and more opportunities seemed to be on the horizon. Attendance remained solid well into the afternoon. Howard D. Geneslaw, a Director in the Real Property & Environmental Department at Gibbons, said, “The atmosphere is much different this year, much more positive than it has been for several years, and many of those attending have more appointments this year and are making more progress on deals. This a positive sign in view of the continuing uncertainty we see in economic reports.”

The Philadelphia show is a precursor to the New York gathering, scheduled for December 6-7, 2010, and the positive mood bodes well for a successful New York show with better attendance and a more positive outlook. Gibbons will be exhibiting at the New York show in America's Hall II - come by and say hello.

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Posted on July 16, 2010 by Alfred R. Fuscaldo

Time-out: Pennsylvania Passes Permit Extension Act

Last week, Governor Rendell signed the Permit Extension Act ("Act") into law as part of the approval of the budget, breathing life into expired and expiring permits and the development projects they represent.

The Act, found at pages 99-110 of the budget bill, extends the expiration date of many governmental approvals, permits and agreements, including building permits and construction permits, relating to construction and development projects.

What Permits Does It Affect?

The Act applies to certain permits issued under more than thirty statutes, including:

The Act also applies to certain permits issued to condominiums, cooperatives and planned communities.

The Act Does Not Apply to All Permits

The Act does not apply to other statutes, including the:

The Act also does not apply to permits with expiration dates determined by federal law, or to administrative consent orders and enforcement actions for a permit subject to the extension period.

How Long is a Permit Extended?

Under the Act, a permit granted under an applicable statute and having an expiration date after December 31, 2008 may have its expiration date extended until July 1, 2013, regardless of whether the permit was issued before or after the extension period. The Act does not shorten the life of a permit with an expiration date after July 1, 2013.

How Can You Find Out If the Act Applies to Your Permit?

The permit holder can request verification, subject to a fee, from the issuing agency of the existence of a valid permit and its expiration date, but must identify the permit in question and its anticipated expiration date. The issuing agency must tell you in writing within 30 days of receiving your request:

  1. whether you have a permit;
  2. its expiration date; and
  3. stating any issues related to the validity of the permit.

Except in Philadelphia and Pittsburgh, the failure of the issuing agency to respond within 30 days will result in the "deemed affirmation of the existence of the [permit] and the expiration date set forth in the request."

In the City of Philadelphia, in order to exercise its right to extend the permit under the Act, the permit holder must provide the issuing agency with notice of its intent to extend the permit and pay the agency a fee equal to fifty percent of the original application fee, not to exceed $5000. Elsewhere, the issuing agency may charge a fee up to twenty five percent of the original application fee, but no more than $5000, to extend the Permit.

Permits granted pursuant to the MPC are protected from changes in a "zoning, subdivision or other governing ordinance or plan," such that those changes will not affect the permit holder’s right to begin or complete the activities authorized by the permit during the extension period. The extension period is further extended for the length of litigation, including appeals, concerning permits issued under the MPC that prevent the completion of the work authorized by the permit.

The Act brings Pennsylvania into line with New Jersey which enacted its own permit extension legislation in 2008. The Act gives needed flexibility and time to developers who may be facing financial challenges in the current economy. At a minimum, permit holders should consider verifying the viability of permits, and extending them as required, now so they will be in a position to proceed when market conditions warrant.


Alfred R. Fuscaldo is a Director in the Gibbons Real Property and Environmental Department.
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