Real Property & Environmental Law Alert Blog

UPDATE: The Deepwater Horizon Drilling Rig Accident Continues to Cause Ripples: Texas Supreme Court Holds That Defense Costs are Not Liabilities Under Insurance Policy

UPDATE: The Deepwater Horizon Drilling Rig Accident Continues to Cause Ripples: Texas Supreme Court Holds That Defense Costs are Not Liabilities Under Insurance Policy

UPDATE: The Supreme Court of Texas recently refused an application for rehearing and declined to revisit its January holding that defense costs are not liabilities under an energy insurance policy. That decision, in the matter captioned Anadarko Petroleum Corporation, et al. v. Houston Casualty Company, et al., stemmed from the April 20, 2010 Deepwater Horizon drilling-rig accident that has been called, “the largest accidental marine oil spill in U.S. history.” The Court held that Lloyd’s of London Underwriters (“Lloyd’s”) were liable to cover approximately $112 million as a result of policy language that the Court interpreted as distinguishing between “liability” and “expenses.” The case involved the Anadarko Petroleum Corporation and Anadarko E&P Company, L.P. (collectively, “Anadarko”) and a group of insurance underwriters led by the Houston Casualty Company (the “Underwriters”). Anadarko was a 25% minority interest holder in the Macondo Well that blew out in the Gulf of Mexico in April 2010. Anadarko reached a settlement agreement with BP under which Anadarko agreed to provide its 25% interest and to pay $4 billion to BP in exchange for a release and indemnity against all other liabilities arising out of the accident. Anadarko’s legal fees and defense expenses were not included...

NY High Court Voids Commercial Tenant’s Traditional Safety Net – Here’s How Landlords Can Take Advantage of This Ruling

NY High Court Voids Commercial Tenant’s Traditional Safety Net – Here’s How Landlords Can Take Advantage of This Ruling

Commercial tenants in New York have traditionally been able to secure a stay of summary dispossess proceedings brought against them and remain in occupancy pending the outcome of tenant-commenced litigation challenging the existence of a landlord-alleged default. Thanks to a recent landmark decision by New York’s highest court, this may no longer be the case if the lease contains the waiver language set forth below. When a landlord provides notice of an alleged default, tenants often seek a declaratory judgment as to the interpretation of the lease and whether a default exists, and also move for a Yellowstone injunction to toll any summary proceeding until the declaratory judgment action is completed. This effectively stays the summary dispossess proceedings. In 159 MP Corp., et al. v. Redbridge Bedford, LLC, the State of New York Court of Appeals addressed the enforceability of a commercial lease provision that prohibited the tenant from commencing a declaratory judgment action against the landlord with respect to any dispute regarding the lease. The Court rejected the tenant’s argument that the clause was void against public policy, finding the clause enforceable, based in large part on the sophistication of the parties and the “strong public policy favoring freedom...

Gibbons Advises Leading Car Rental Companies on $500 Million Project at Newark Airport — Industry’s First P3-Structured Consolidated Rent-A-Car Facility

Gibbons Advises Leading Car Rental Companies on $500 Million Project at Newark Airport — Industry’s First P3-Structured Consolidated Rent-A-Car Facility

Gibbons P.C. served as lead counsel to Avis Budget Group, The Hertz Corporation, Enterprise Holdings Inc., and Advantage Inc., operators of national rental car brands Budget, Alamo, Thrifty, Payless, Zipcar, and National, among others, in connection with the industry’s first public-private partnership (P3) financing structure for the development of a $500 million Consolidated Rent-A-Car facility as part of the redevelopment of Terminal A at Newark Liberty International Airport. Gibbons led the corporate and real estate negotiations on behalf of the national car companies in connection with their long-term concessionaire agreement and real estate leases. Such agreements provide the credit support for the $500 million P3 financial arrangements. Click here to view the full press release issued by Conrac Solutions.

Opportunity Zone Update – IRS Releases Second Set of Proposed Regulations

Opportunity Zone Update – IRS Releases Second Set of Proposed Regulations

On April 17, 2019, the Internal Revenue Service released the second set of Qualified Opportunity Zone (“QOZ”) proposed regulations (the “New Regulations”). The New Regulations address multiple issues relating to the structuring and operation of qualified opportunity zone funds (“QOFs”) and provide clarity on areas that include: Meeting the original use test for purchased tangible property Safe harbors for leased tangible property to qualify as QOZ business property Related party rules for leased tangible property and tangible personal property Investment vs. active business use of QOZ land Safe harbors to meet the 50% gross income test for the active conduct of a QOZ business Inclusion events for otherwise deferred capital gains Definitions for the term “substantially all” used in several statutory provisions Special elections when QOF partnerships and S corporations dispose of property after 10 years QOF reinvestment of the proceeds from the distribution, sale, or disposition of QOZ property Application of the 90% asset test to newly contributed QOF assets The New Regulations provide answers to many unresolved questions and present needed definitions where uncertainties were impeding investment into QOZs, particularly with respect to QOZ businesses. Our new article discusses many of the details. Peter J. Ulrich, a Director...

Gibbons Real Property Department Attorneys Represent Pharmaceutical Company in Cambridge Lease

Gibbons Real Property Department Attorneys Represent Pharmaceutical Company in Cambridge Lease

Gibbons attorneys Russell B. Bershad and Nicole E. Taplin, Directors in the Real Property Department, are representing Bayer Healthcare LLC in a long-term, large scale lease for laboratory and office space in a new building under construction by MIT in Kendall Square, in Cambridge, Massachusetts. The Boston Globe featured a story on the lease, which can be found here.

New York Appeals Court Decision Highlights the Risks of Not Filing Decisions and Not Holding Duly Noticed Public Hearings

New York Appeals Court Decision Highlights the Risks of Not Filing Decisions and Not Holding Duly Noticed Public Hearings

A recent decision by New York’s Appellate Division, Second Department, serves as a reminder of the importance of promptly filing administrative determinations, holding required duly noticed public hearings, and the consequences of failing to do so. In Corrales v. Zoning Board of Appeals of the Village of Dobbs Ferry, Livingston Development Group in November 2012 submitted an application for the development of twelve condominiums. The Building Department forwarded the application to the Planning Board, which conducted a public hearing after which it recommended approval subject to certain conditions. The Village Board of Trustees, which retained site plan approval authority, granted site plan approval conditioned on, among other things, the applicant obtaining approval from the Architectural and Historic Review Board (the “AHRB”). Thereafter, the applicant applied to the AHRB, which denied its application. The applicant appealed the denial to the Zoning Board of Appeals (“ZBA”). While that appeal was pending, neighbors – one of whom did not receive notice of the Planning Board’s earlier public hearing – asserted that the proposed condominium use was not permitted in the zoning district. The neighbors’ attorney also raised this issue at a subsequent meeting of the AHRB, during which the assistant building inspector gave...

Governor Murphy Signs Stormwater Utilities Bill Into Law

Governor Murphy Signs Stormwater Utilities Bill Into Law

On March 18, 2019, New Jersey Governor Phil Murphy signed legislation authorizing municipalities (and other public entities) to establish utilities for the creation and management of stormwater infrastructure. The legislation, S1073, also known as the Clean Stormwater and Flood Reduction Act (the “Act”), provides that a governing body of a county or municipality may create a stormwater utility “for the purposes of acquiring, constructing, improving, maintaining, and operating stormwater management systems.” The Act also allows municipalities and counties that have established sewerage authorities to request that the authority create a stormwater utility, so that the functions of the utility would be managed by the existing authority rather than the municipality(ies) or county directly. Perhaps most importantly, the Act authorizes stormwater utilities to “charge and collect reasonable fees and other charges” to recoup the costs incurred by the utility in performing stormwater management in the subject locality. Under the Act, charges may be assessed against the owner or occupant, or both, of any real property from which stormwater enters a stormwater management system. The Act also includes provisions allowing municipalities, etc. that establish stormwater utilities to issue bonds to fund stormwater management systems, and imposes reporting requirements on utilities and rulemaking...

NJ Appellate Division Case Highlights Importance of Thorough Due Diligence Regarding Properties Containing “Abandoned” Railroad Lines

NJ Appellate Division Case Highlights Importance of Thorough Due Diligence Regarding Properties Containing “Abandoned” Railroad Lines

The conveyance of property containing embankments or former railroad facilities may invoke complicated title issues that could lead to significant costs and delays for real estate purchasers seeking to develop the property if such issues are not adequately addressed prior to the acquisition. On January 23, 2019, the New Jersey Appellate Division issued an unpublished decision in 212 Marin Boulevard, LLC, et al. v. Chicago Title Insurance Company and Consolidated Rail Corporation, concerning a party’s alleged misrepresentation about whether the conveyed embankment property was subject to the Surface Transportation Board’s (“STB”) abandonment authority. The STB is the federal agency established to oversee rate and service disputes for railways, as well as railway restructuring transactions, including abandonment of rail lines. Presumptively, any abandonment of rail lines by an entity regulated by the STB requires STB approval, unless excepted under federal statute. The seller, Consolidated Rail Corporation (“Conrail”), represented to Chicago Title Insurance Company (“Chicago Title”) that STB abandonment was not required, and Chicago Title, in apparent reliance on this statement, issued policies for the conveyed parcels when the purchaser closed on the property. Even so, the Appellate Division rejected Chicago Title’s third party complaint against Conrail for negligent misrepresentation. The decision...

NJDEP Proposes to Reclassify 749 Miles of Waterways to Highly Protected Antidegradation Status in First Such Move Since 2008

NJDEP Proposes to Reclassify 749 Miles of Waterways to Highly Protected Antidegradation Status in First Such Move Since 2008

For the first time since 2008, the New Jersey Department of Environmental Protection (NJDEP) has proposed to amend its surface water quality standards to prohibit degradation of water quality in additional rivers and streams that did not previously enjoy such protection. The current proposal, which was released on March 4, would lift hundreds of miles of waterways to a more protected status as Category One waters. NJDEP’s water quality standards, found at N.J.A.C. 7:9B, have several components. The standards designate uses for all waters of the State, and prescribe water quality criteria (e.g., minimum levels of dissolved oxygen, and maximum levels of suspended solids and various toxics) necessary to allow for those uses. In addition, the standards establish three tiers of “antidegradation” designations. The highest tier consists of “outstanding natural resource waters,” so designated because of their unique ecological significance or because they are within the Pinelands, must be maintained in their natural state. Category One waters, occupying the second tier, are protected from any measurable change in their existing water quality. Water quality in Category Two waters, the third tier, may be lowered, but only with social and/or economic justification for the change. NJDEP’s proposal, which was first presented...

The Deepwater Horizon Drilling Rig Accident Continues to Cause Ripples: Texas Supreme Court Holds That Defense Costs are Not Liabilities Under Insurance Policy

The Deepwater Horizon Drilling Rig Accident Continues to Cause Ripples: Texas Supreme Court Holds That Defense Costs are Not Liabilities Under Insurance Policy

The Supreme Court of Texas recently issued a decision in which the community of insured parties and insurer parties alike will be interested. The case, Anadarko Petroleum Corporation, et al. v. Houston Casualty Company, et al., stems from the April 20, 2010 Deepwater Horizon drilling-rig accident that has been called, “the largest accidental marine oil spill in U.S. history.” The decision distinguishes between an insured’s “liability” and “expenses” under certain policy language to the consequent of $112 million. The case involved the Anadarko Petroleum Corporation and Anadarko E&P Company, L.P. (collectively, “Anadarko”) and a group of insurance underwriters led by the Houston Casualty Company (the “Underwriters”). Anadarko was a 25% minority interest holder in the Macondo Well that blew out in the Gulf of Mexico in April 2010. Anadarko reached a settlement agreement with BP under which Anadarko agreed to provide its 25% interest and to pay $4 billion to BP in exchange for a release and indemnity against all other liabilities arising out of the accident. Anadarko’s legal fees and defense expenses were not included in the settlement agreement, and Anadarko sought these fees and expenses from the Underwriters pursuant to its “energy package” insurance policy. The policy included...