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