The Court of Appeals in Albany
The Court of Appeals in Albany ()

Attorneys who are not residents of New York must maintain a physical office in the state in order to practice law here, the state Court of Appeals ruled Tuesday.

The 6-0 court said the required “plain language” reading of Judiciary Law §470 can lead to no other conclusion than that the “statute requires nonresident attorneys to maintain a physical office in New York” if they wish to maintain a practice within the state.

The judges were asked to interpret the law by the U.S. Court of Appeals for the Second Circuit, which said it needed a reading of nonresident lawyer status under §470 before it decided whether the statute violates the Privileges and Immunities Clause of Article IV, §2 of the U.S. Constitution, as Northern District Judge Lawrence Kahn determined it did in Schoenefeld v. State of New York, 09-cv-504 (NYLJ, Sept. 9, 2011).

Writing for his court Tuesday, Chief Judge Jonathan Lippman traced the history of what became Judiciary Law §470 from its inception in 1862. He said it is has remained “virtually unchanged” since 1909.

Section 470 says a nonresident attorney who maintains an “office for the transaction of law business” within the state may practice “in the courts of record of this state.”

Lippman said the law does not allow a looser interpretation that the New York Attorney General’s Office asked the court to make—that any place a lawyer is allowed to receive service can be regarded as an “office for the transaction of law business” under the law.

“Defendants’ proffered interpretation … finds no support in the wording of the provision and would require us to take the impermissible step of rewriting the statute,” Lippman wrote in Schoenefeld v. State of New York, 39.

He said the court’s interpretation was also in keeping with the general reading of the nonresident lawyer office requirement made by Appellate Division panels in Matter of Lichtenstein v. Emerson, 251 AD2d 64 (1st Dept. 1998), Matter of Larsen, 182 AD2d 149 (2nd Dept. 1992), and other cases.

The underlying case involves a challenge by Princeton, N.J.-based attorney Ekaterina Schoenefeld that §470 violates the constitutional rights of nonresident lawyers to practice within New York state. The New Jersey resident, a solo practitioner specializing in civil litigation, was admitted to practice in New York state one year after getting her law degree from Rutgers University School of Law in 2005.

She said she became interested in practicing regularly in New York after attending a continuing legal education class in 2007 titled “Starting Your Own Practice” sponsored by the New York State Bar Association.

She filed her federal suit in 2008 challenging §470, arguing that since the statute does not require resident New York lawyers to maintain an office in order to practice law in the state, it discriminates against nonresident lawyers.

In the ruling seeking certification (NYLJ, April 9, 2014), Second Circuit Judge Peter Hall noted the inconsistency of what state law requires of resident attorneys versus nonresident attorneys. He said a resident attorney could “set up her ‘office’ on the kitchen table in her studio apartment” without running afoul of §470, while a nonresident attorney would appear to need an office to practice regularly here—an interpretation the state Court of Appeals affirmed Tuesday.

The Second Circuit asked the Court of Appeals in its certified question “what are the minimum requirements” to satisfy §470?

Judges Susan Phillips Read, Eugene Pigott Jr., Jenny Rivera, Sheila Abdus-Salaam and Eugene Fahey joined in Lippman’s ruling. Judge Leslie Stein took no part.

Schoenefeld appeared pro se. She did not return a call for comment Tuesday. Assistant Solicitor General Laura Etlinger argued for the state.

In an amicus brief before the Court of Appeals, a group of nonresident attorneys complained that §470 made them incur “substantial costs” by forcing them to maintain New York offices while they lived in other states.

“The office requirement is particularly unreasonable for the amici who live very close to the New York border and wish to practice in New York courts without §470′s discriminatory burdens,” the group said in a brief prepared by Meghan Boone of the Institute for Public Representation at Georgetown University Law Center.

The out-of-state lawyers were led by Michael Ansell, a partner at Ansell Grimm & Aaron in Ocean, New Jersey.

Oil and Gas Leases

In another ruling Tuesday, the court decided in Beardslee v. Inflection Energy, 44, that oil and natural gas leases property owners entered into with energy companies were not extended by the force majeure clause past the expiration dates provided for in the leases.

The energy companies argued that the state’s 2008 moratorium on the gas extraction drilling method known as hydraulic fracking was an intervening event that modified the habendum clauses in the leases.

But the court found that if the energy companies wanted the habendum clauses to be extended in that way, the leases could have been written specifically to reflect that an unforeseen event like the state’s moratorium would lengthen the lives of the leases.

Pigott wrote for the 7-0 court that its ruling is in keeping with the force majeure principles in energy leases as interpreted by courts in states where oil and gas drilling is more common than it is in New York such as Texas (citing Gulf Oil Corp. v. Southland Royalty Co., 496 SW2d 547 [Tex 1973]), and California (San Mateo Community Coll. Dist. v. Half Moon Bay Ltd. Partnership, 65 Cal App 4th 401 [Cal Ct. App 1998]).

The Court of Appeals’ ruling came in response to a certified question from the Second Circuit.

The Second Circuit is deciding an appeal of Beardslee v. Inflection Energy, 12-cv-00242, by Northern District Judge David Hurd, who found that force majeure was not in effect to delay expiration of the leases (NYLJ, Nov. 20, 2012).

The plaintiffs are about two dozen leaseholders who contend that Inflection and other energy companies were misreading their contracts as still being in force.

The Cuomo administration last year extended the ban on hydrofracking, first imposed under then-governor David Paterson, because of doubts about the potential of groundwater pollution and other environmental damage from the gas extraction process.

Thomas West of the West Firm in Albany represented the energy companies.

Peter Bouman, of counsel at Coughlin & Gerhart in Binghamton, argued for the leaseholders.