On March 20 and 21, 2020, New York Governor Andrew M. Cuomo signed Executive Orders 202.8 and 202.9 as part of a series of executive orders attempting to stem the damage brought about by the coronavirus health crisis. Governor Cuomo’s recent executive orders are intended to immediately affect litigation and business operations—especially for financial services entities—in New York. Because New York is the center of the financial industry and many financial institutions are governed by New York law and New York regulators, Governor Cuomo’s recent Executive Orders will have broad implications for the financial industry.
Tolling of Time
First, E.O. 202.8 tolls for 30 days “any specific time limit[s] for the commencement, filing, or service of any legal action, notice, motion or other process or proceeding” under any New York State laws or court procedural rules. The 30-day tolling period begins on March 20, 2020, and continues until April 19, 2020. For businesses or individuals who anticipate the filing of a complaint involving cause(s) of action accruing under New York State law, this extends the statute of limitations by 30 days for those cause(s) of action. For parties already in the midst of litigation, this provision of E.O. 202.8 similarly pauses the time for proceedings or filing any motion, notice, or other pleading governed by court procedural rules or other state or local law.
The tolling provision in E.O. 202.8 applies to a wide variety of State laws and court rules, “including but not limited to the criminal procedure law, the family court act, the civil practice law and rules, the court of claims act, the surrogate’s court procedure act, and the uniform court acts, or by any other statute, local law, ordinance, order, rule or regulation, or part thereof.”
Second, to the extent N.Y. Business Corporation Law §§ 602(a) and 605(a) and (b) require that companies notice and hold shareholder meetings at a physical location, E.O. 202.8 suspends those meetings during the same 30-day period spanning March 20 to April 19.
Ban on Evictions
Third, E.O. 202.8 bars “enforcement of either an eviction of any tenant residential or commercial, or a foreclosure of any residential or commercial property for a period of ninety days.”
In-Person Workforce Reduction
Finally, E.O. 202.8 mandates that “[a]ll businesses and not-for profit entities in the state shall utilize to the maximum extent possible, any telecommuting or work from home procedures that they can safely utilize.” Furthermore, all non-essential employers must “reduce the in-person workforce at any work locations by 100% no later than March 22 at 8 p.m.” Essential businesses (as described in E.O. 202.6 and the “Guidance for Determining Whether a Business Enterprise is Subject to a Workforce Reduction Under Recent Executive Orders”) are not subject to this in-person workforce reduction, “but may operate at the level necessary to provide such service or function.” Any business violating these orders could be subject to prosecution by the State attorney general, an injunction and substantial fines of at least U$2,000 per violation under section 12 of the Public Health Laws. See N.SY. Pub. Health Law § 12. These remedies are in addition to any other existing causes of actions already available under New York law, see id., including possible criminal sanctions for violations deemed “wilful.” N.Y. Pub. Health Law § 12-B.
E.O. 209 focuses on ensuring the financial stability of the public during the coronavirus pandemic. Specifically, it sets forth important new mandates with respect to temporary financial hardship forbearance for consumers by banks, mortgage payments, and banking and credit card fees.
Financial Hardship Forbearance
First, E.O. 202.9 mandates that from March 21 to April 20, any banks, as defined by New York Banking Law, “subject to the jurisdiction of the Department [of Financial Services]” cannot refuse to grant a ninety-day “forbearance to any person or business who has a financial hardship as a result of the COVID-19 pandemic.” Governor Cuomo’s executive order accomplished this by labeling a bank’s denial of such a hardship forbearance an “unsafe and unsound business practice” under N.Y. Banking Law § 39(2). As a result, any bank that refuses to provide a hardship forbearance to a consumer impacted by the COVID-19 pandemic exposes itself to possible fines of $2,500 or more per violation and an injunctive order by the Superintendent of the Department of Financial Services (“Superintendent”). See N.Y. Banking Law § 44.
Mortgage Payment Forbearance
Second, E.O. 202.9 charges the Superintendent with ensuring that “any licensed or regulated entities provide . . . an opportunity for a forbearance of payments for a mortgage for any person or entity facing a financial hardship due to the COVID-19 pandemic.” This requires the Superintendent to “promulgate emergency regulations to require the application for forbearance to be made widely available for consumers.” E.O. 202.9 further mandates that “such application shall be granted in all reasonable and prudent circumstances solely for the period of such emergency.”
Forbearance of Banking and Credit Card Fees
Finally, E.O. 202.9 empowers the Superintendent “to promulgate emergency regulations to direct that, solely for the period of [the coronavirus] emergency, fees for the use of automated teller machines (ATMs), overdraft fees and credit card late fees, may be restricted or modified . . . .” In formulating such regulations, the Superintendent must take into account “the financial impact on the New York Consumer, the safety and soundness of the licensed or regulated entity, and any applicable federal requirements.”
Given the continued rise in the number of coronavirus cases in New York, legal practitioners and financial services organizations should continue to track future executive orders that may extend the duration of provisions in E.O. 202.8 and 202.9 and emergency regulations beyond April 19 or 20.