Matter of Petrick (Commr. of Labor) , 41 N.Y.S.3d 766 ( 2016 )

State of New York
Supreme Court, Appellate Division
Third Judicial Department
Decided and Entered: November 10, 2016 522250
________________________________
In the Matter of the Claim of
WILLIAM R. PETRICK,
Appellant.
MEMORANDUM AND ORDER
COMMISSIONER OF LABOR,
Respondent.
________________________________
Calendar Date: September 20, 2016
Before: McCarthy, J.P., Egan Jr., Clark, Mulvey and Aarons, JJ.
__________
William R. Petrick, New York City, appellant pro se.
Eric T. Schneiderman, Attorney General, New York City (Dawn
A. Foshee of counsel), for respondent.
__________
Appeal from a decision of the Unemployment Insurance Appeal
Board, filed February 27, 2015, which, among other things, ruled
that claimant was ineligible to receive unemployment insurance
benefits because he was not totally unemployed.
Claimant lost his job in February 2009 and filed original
claims for unemployment insurance benefits effective March 2,
2009 and May 2, 2011. Thereafter, he received regular
unemployment insurance benefits, emergency unemployment
compensation (hereinafter EUC) benefits (see Pub L 110-252, tit
IV § 4001 et seq., 122 US Stat 2323) and federal additional
compensation (hereinafter FAC) benefits (see 26 USC § 3304)
during the various time periods that he certified for benefits.
On August 16, 2012, the Department of Labor issued four initial
determinations that, among other things, found claimant
ineligible to receive benefits for certain time periods on the
basis that he was a principal of Reel One Pictures Inc. and was
not totally unemployed. Specifically, the first determination
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found claimant ineligible to receive benefits for the weeks
ending March 8, 2009 through September 6, 2009, charged him with
a recoverable overpayment of regular benefits in the amount of
$10,530 and FAC benefits in the amount of $650, and imposed a
forfeiture penalty of 212 days. The second determination found
claimant ineligible to receive benefits for the weeks ending
September 13, 2009 through September 12, 2010, charged him with a
recoverable overpayment of EUC benefits in the amount of $21,465
and FAC benefits in the amount of $1,325, and imposed a
forfeiture penalty of 208 days. The third determination found
claimant ineligible to receive benefits for the weeks ending
September 19, 2010 through October 31, 2010, charged him with a
recoverable overpayment of regular benefits in the amount of
$2,835 and FAC benefits in the amount of $175, and imposed a
forfeiture penalty of 56 days. The fourth determination found
claimant ineligible to receive benefits effective May 11, 2011
and until the reason for his ineligibility no longer existed,
charged him with a recoverable overpayment of regular benefits in
the amount of $810 and imposed a forfeiture penalty of 16 days.
On November 23, 2012, the Department issued a notice of
possible debt referral to claimant seeking to collect the
overpayment of benefits and giving him 30 days within which to
remit payment. On November 29, 2012, claimant's accountant
contested the notice and advised the Department that claimant
ceased any ownership interest in Reel One as of December 31,
2008. Claimant submitted a request for a hearing on May 20,
2014.
Following claimant's failure to appear at the hearing, the
Administrative Law Judge (hereinafter ALJ) issued a default
decision sustaining the initial determinations. Claimant's
subsequent application to reopen the default decision was granted
and, at the ensuing hearing, the Commissioner of Labor raised
timeliness objections to claimant's hearing request, but withdrew
the objection with respect to the third determination. The ALJ
sustained the timeliness objections with respect to the first,
second and fourth determinations and continued these
determinations in effect. The ALJ rendered a decision on the
merits with respect to the third determination and concluded that
claimant was ineligible to receive benefits during the time
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period at issue because he was not totally unemployed, was liable
for a recoverable overpayment and was subject to a forfeiture
penalty. The Unemployment Insurance Appeal Board affirmed this
decision and claimant now appeals.
Initially, Labor Law § 620 (1) (a) provides that a claimant
has 30 days from the date of mailing or personal delivery of an
initial determination to request a hearing unless he or she is
prevented from doing so by physical or mental incapacity (see
Matter of Rivera [Commissioner of Labor], 131 AD3d 746, 746
[2016], lv denied 26 NY3d 919 [2016]; Matter of Hill
[Commissioner of Labor], 113 AD3d 1015, 1015 [2014]). Claimant's
May 20, 2014 hearing request was clearly untimely as it was made
almost two years after the issuance of the August 16, 2012
initial determinations. Moreover, even assuming, without
deciding, that the November 29, 2012 letter from claimant's
accountant amounted to a request for a hearing, it was well
outside the 30-day statutory time period (see Matter of Preyer
[Dische–Commissioner of Labor], 121 AD3d 1216, 1216-1217 [2014],
lv dismissed 24 NY3d 1204 [2015], lv denied 25 NY3d 906 [2015]).
Accordingly, absent any showing that claimant was physically or
mentally incapacitated, the Board properly concluded that
claimant's request for a hearing was untimely with respect to the
first, second and fourth determinations.
Turning to the third determination, it found that claimant
lacked total unemployment for the weeks ending September 19, 2010
through October 31, 2010 because he was a principal of Reel One
and was furthering its business during this time period. We note
that whether a claimant is totally unemployed is a factual issue
for the Board to decide and its determination will be upheld if
supported by substantial evidence (see Matter of Romero
[Commissioner of Labor], 121 AD3d 1147, 148 [2014]; Matter of
Connell [Commissioner of Labor], 82 AD3d 1437, 1438 [2011]). It
is well settled that "[a] claimant who is a principal of an
ongoing corporation will not be considered totally unemployed if
he or she stands to benefit financially from its continued
operation, no matter how minimal the activities performed on its
behalf" (Matter of Bernstein [Commissioner of Labor], 67 AD3d
1287, 1287-1288 [2009]; see Matter of Ellison [Commissioner of
Labor], 57 AD3d 1194, 1194 [2008]).
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Here, there is no evidence that claimant performed any
activities, however trivial, on behalf of Reel One in 2010 during
the time period at issue. In addition, there is no evidence that
claimant's name appeared on any bank accounts or corporate
documents. Claimant testified that his wife created Reel One as
a nonprofit corporation in the 1990s before they were married and
that she was the sole shareholder. Although claimant and his
wife, who both had extensive journalism experience, were listed
as principals of Reel One on its website, claimant testified that
his wife provided this information for marketing purposes only
and that the website functioned as a type of advertisement.
There is no evidence that the website was actively used to
transact business. Although claimant acknowledged that their
accountant listed him as a 50% shareholder of the corporation on
certain prior tax returns, he indicated that this was an error,
that amended returns were filed in 2009 and that the 2010
schedule K-1 for the corporation, admitted into evidence at the
hearing, listed claimant's wife as the sole shareholder.
Significantly, the joint personal income tax returns of claimant
and his wife, containing their business tax deductions for the
2010 tax year, were not produced at the hearing.
In view of the foregoing, it is evident that, at least
during 2010, claimant did not have an ownership interest in Reel
One nor did he perform any activities on its behalf. In
addition, there is nothing to indicate that claimant stood to
benefit financially from Reel One's continued operation during
this time period. Therefore, we conclude that substantial
evidence does not support that part of the Board's decision
finding that claimant was ineligible to receive benefits because
he was not totally unemployed during the weeks ending September
19, 2010 through October 31, 2010 (see Matter of Salomone
[Commissioner of Labor], 34 AD3d 1037, 1038 [2006]; Matter of
Lewis [Commissioner of Labor], 290 AD2d 782, 783 [2002]).
Likewise, substantial evidence does not support that part of the
Board's decision imposing upon claimant a recoverable overpayment
and forfeiture penalty as a result thereof. Thus, the decision
must be modified accordingly.
McCarthy, J.P., Egan Jr., Clark, Mulvey and Aarons, JJ.,
concur.
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ORDERED that the decision is modified, without costs, by
reversing so much thereof as ruled that claimant was ineligible
to receive unemployment insurance benefits for the weeks ending
September 19, 2010 through October 31, 2010, charged him with a
recoverable overpayment of regular benefits in the amount of
$2,835 and federal additional compensation benefits in the amount
of $175, and imposed a forfeiture penalty of 56 days; matter
remitted to the Unemployment Insurance Appeal Board for further
proceedings not inconsistent with this Court's decision; and, as
so modified, affirmed.
ENTER:
Robert D. Mayberger
Clerk of the Court