Today, Palm Beach County joined the rest of the state, with the exception of Broward and Miami-Dade Counties, in Phase I of the plan to re-open the state.   That Phase I is set forth in Governor DeSantis’ Executive Order 20-112 which was issued on April 29, 2019 and went into effect in all counties, except for Palm Beach, Broward and Miami-Dade Counties, last Monday, April 4, 2020. On Friday, April 8, 2020, the governor announced that Palm Beach County, too, would begin Phase I.

To summarize, amongst the most pertinent portions of  Executive Order 20-112  are the following:

  • Restaurants may open to provide services on premises, limited to 25 percent of their occupancy capacity as long as proper social distancing  measures are in place
  • Retail stores, too, may open, provided that “they operate at no more than 25 percent of their building occupancy and abide by the safety guidelines issued by the CDC and OSHA”
  • Subject to restrictions imposed by local governments, museums and libraries can open at 25 percent occupancy capacity
  • Elective medical procedures may resume, subject to the conditions set forth in the Executive Order

Broward and Miami-Dade Counties remain the only two counties in Florida that have not begun Phase I of the re-opening plan described in Executive Order 20-112  although it does appear that discussions are ongoing for Broward County to also begin Phase I shortly.

In addition, on May 4, 2020, Florida Supreme Court Chief Justice Charles T. Canady issued Amendment #1 to Administrative Order 20-23.  Amendment #1 continues the suspension of civil and criminal jury trials and grand jury and jury selections proceedings through July 2, 2020 and actually expands the list of court proceedings that will be conducted remotely.

 


As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice.  For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.

Over the past two months, numerous state legislatures introduced bills targeted toward voiding the virus exclusion included in most business interruption insurance provisions in commercial property policies.  None of the bills have made significant advances, likely due to a combination of lobbying efforts by the insurance industry and the constitutional challenge to any law that would interfere with an existing contract.  The virus exclusion, however, is not the only impediment to achieving coverage under these insurance policies. In fact, there are many policies that either do not have a virus exclusion or do not contain a clear and unambiguous exclusion required for enforcement.

Insurance companies have been responding to their policy holders who have submitted claims for business income loss due to COVID-19 either by an outright denial of coverage or under a reservation of rights stressing that any claim for loss must have occurred due to “direct physical damage or loss to covered or dependent property.”  That phrase appears dozens of time throughout these policies and remarkably, in most policies is not even a defined term. Accordingly, when challenged, a court will be called upon to determine the meaning of the phrase.  Dozens of individual and class action cases have now been filed, all of which, will be challenging the meaning of that key policy term.  In each of those cases, policy holders will be relying on precedent that has held that direct physical loss does not require a physical alteration of insured property requiring repair, which the carriers contend, but can exist based upon the impact that the causation event (here the virus) had on rendering insured property unusable.  The Pennsylvania Senate introduced a bill that is intended to define that key phrase in favor of insureds leaving no room for judicial interpretation.

The Pennsylvania bill, S.B. 1127, a bipartisan piece of legislation, is different that the other bills that have been introduced because it does not seek to compel the insurance companies to pay claims nor does it attempt to alter or interfere with an existing contract.  Its focus is to adopt the reasonable interpretation of the phrase “direct physical damage” to include the presence of Covid-19. The bill proposes that, “If a person positively identified as having been infected with COVID-19 has been present in, or if the presence of the COVID-19 coronavirus has otherwise been detected in, a building, an office, a retail space, a structure, a plant, a commercial establishment or other area of business activity, that area of business activity shall be deemed to have experienced property damage. The bill also provides that the Governor’s  executive order closing all non-essential businesses constitutes an order of civil authority under a first party insurance policy and is to be deemed to be the direct result of physical damage at or in the vicinity of those businesses.

The bill also addresses the “loss of market exclusion” included in many policies – i.e. there is no coverage because the policyholder lost the market for his goods or services due to the pandemic. The bill provides that this exclusion, “may not be interpreted to apply to preclude coverage for COVID-19-related losses if one of the reasons for reduced customer demand for a policyholder’s good or services is the same COVID-19 pandemic that gives rise to the policyholder’s losses for which coverage is sought.

This proposed legislation, if enacted, could be a significant step in ultimately compelling insurance companies to honor claims for business income losses caused by the pandemic.  It is likely this bill will be a model for other states and that similar bills will be proposed to protect businesses harmed by the crisis.

 


As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice.  For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.

On May 5, 2020, the Small Business Administration (“SBA”) updated its Frequently Asked Questions (“FAQs”) regarding implementation of the Paycheck Protection Program (“PPP”), to specifically address a one-week extension of the repayment date for purposes of the safe harbor set forth in prior SBA guidance.

As we have discussed in previous alerts, in submitting a PPP application, borrowers must carefully review and certify in good faith that, among other things, “[c]urrent economic uncertainty makes [the] loan request necessary to support the ongoing operations of the Applicant.” Pursuant to the updated FAQs, borrowers who applied for a PPP loan prior to April 24, 2020 and who repay such loan in full by May 14, 2020 (extended from May 7, 2020), will be deemed by the SBA to have made the foregoing certification in good faith.

Per the FAQs, the SBA intends to issue additional guidance regarding the required certification by May 14, 2020.

We are continuing to monitor as additional rules, interpretations and guidance are released by the SBA in connection with the PPP. Our attorneys are available to answer any questions with respect to the PPP, including the safe harbor and required certification detailed above, as well as other aspects of the program and related state and federal relief measures.


 

As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice.  For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.

On April 29, 2020, Florida Governor Ron DeSantis issued two new executive orders with respect to COVID-19.   Executive Order 20-111 extends until May 4, 2020  Executive Order 20-91 which was Florida’s statewide, stay-at-home order.  That order was thereafter amended by Executive Order 20-92, the purpose of which was to ensure that local governments did not take actions that conflicted with Executive Order 20-91.  In addition, Executive Order 20-111 extends Executive Order 20-87, which had suspended vacation rental operations in Florida, until May 4, 2020, when it will be further extended by another executive order.

Governor also issued Executive Order 20-112 in an effort to begin the economic re-opening of the state.  It is described as “Phase 1: Safe. Smart. Step-by-Step. Plan for Florida’s Recovery.” Amongst other things it allows for the following:

  • Restaurants may open to provide services on premises, limited to 25 percent of their occupancy capacity as long as proper social distancing  measures are in place;
  • Retail stores, too, may open, provided that “they operate at no more than 25 percent of their building occupancy and abide by the safety guidelines issued by the CDC and OSHA”;
  • Subject to restrictions imposed by local governments, museums and libraries can open at 25 percent occupancy capacity;
  • Elective medical procedures may resume, subject to the conditions set forth in the Executive Order.

The permitted services under Executive Order 20-112 are not presently permitted in Broward, Palm Beach and Miami-Dade Counties.  As to those counties, Executive Order 20-112 provides that “allowances for services and activities from Sections 3 and 4 of this order will be considered in consultation with local leadership.”

 


As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice.  For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.

The Small Business Administration (“SBA”) has issued a supplemental Interim Final Rule (the “Rule”), along with additional Frequently Asked Questions issued in consultation with the Department of Treasury (released on Friday, April 24, 2020 (as further modified on Sunday, April 26, 2020)), each providing additional guidance with respect to the implementation and administration of the Paycheck Protection Program (“PPP”).

Below is a high-level summary of certain new questions and clarifications addressed by the Rule and related Frequently Asked Questions, specifically with respect to eligibility requirements and certifications:

  1. Clarifications Regarding Eligible Businesses
    • Hedge Funds and Private Equity. The Rule explicitly excludes hedge funds and private equity firms from eligibility under the PPP, as such businesses are primarily engaged in investment or speculation.
    • Portfolio Companies. The Rule clarifies that SBA affiliation rules apply to private equity-owned businesses in the same manner as any other business concern subject to outside ownership or control. The Rule reminds applicants that eligibility is contingent upon the businesses ability to make the required certification demonstrating need for a PPP loan due to economic uncertainty.
    • Government-Funded Hospitals. Any hospital that would otherwise be eligible to receive a PPP loan as a business concern or non-profit organization shall not be rendered ineligible due to ownership by a state or local government, so long as the hospital receives less than 50% of its funding from such sources (exclusive of Medicaid).
    • ESOP Participation. For purposes of the PPP, a business’s participation in an Employee Stock Ownership Plan (ESOP) does not create an affiliation between such business and the ESOP.
    • Bankruptcy. In the event that an applicant or any owner of such applicant is the debtor in a bankruptcy proceeding, either at the time it submits the application or at any time before the loan proceeds are disbursed, such applicant is ineligible to receive a PPP loan. If a bankruptcy proceeding is commenced after submission of a PPP application but prior to disbursement, the applicant is obligated to notify the lender and request cancellation of the application. Failure to do so will be deemed an unauthorized use of PPP funds.
  1. Employees for Purposes of Eligibility. Per the updated version of the Frequently Asked Questions issued by the SBA last week, for purposes of determining PPP loan eligibility specifically with respect to the 500-employee threshold, an applicant must include all individuals employed on a full-time, part-time, or other basis when calculating total employee headcount. Conversely, for purposes of loan forgiveness, the CARES Act uses a “full-time equivalent employee” standard to determine the extent to which a borrower’s forgiveness amount will be reduced in connection with COVID-related workforce reductions.
  2. Limited Safe Harbor Regarding Required Certification. As previously noted, the PPP Borrower Application Form requires applicants to certify that “[c]urrent economic uncertainty makes [this] loan request necessary to support the ongoing operations of the Applicant.” Any borrower that submitted an application prior to the issuance of this Rule, and repays such loan in full by May 7, 2020, will be deemed to have made the required certification in good faith.  This “safe harbor” is intended to ensure that borrowers promptly repay PPP loans that were obtained based on misunderstanding or misapplication of the required certification standard, taking into account updated guidance on such standard.

 


As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice.  For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.