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Current Developments in the Commercial Divisions of the
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Posted: November 28, 2014

Claims May be Amended to Conform to Proof Absent Prejudice to Opponent

On November 25, 2014, the Court of Appeals issued a decision in Kimso Apartments, LLC v Gandhi, 2014 NY Slip Op. 08219, holding that the trial court properly allowed the defendant to amend his counterclaims to conform to the proof at trial.

In Kimso Apartments, the plaintiffs brought an action to enforce a settlement agreement arising from a prior litigation. The defendant asserted counterclaims. At trial, the defendant offered evidence “regarding the Settlement Agreement and back payments allegedly owed to” him. Before the end of trial, the defendant “moved to conform the pleadings to the proof, seeking to assert a counterclaim for money currently owed him under the Settlement Agreement.” The trial court granted the motion. The Appellate Division reversed, holding that the trial court “should have denied” the defendant’s motion “as barred by the doctrine of laches based on his extensive delay in seeking leave to amend. It further concluded that the belated amendment” prejudiced the corporations by denying them the opportunity to present their defenses to the counterclaim.” The Court of Appeals reversed, explaining:

Under CPLR 3025, a party may amend a pleading at any time by leave of court, before or after judgment to conform the pleading to the evidence. A request to amend is determined in accordance with the general considerations applicable to such motion, including the statute’s direction that leave shall be freely given upon such terms as may be just. This favorable treatment applies even if the amendment substantially alters the theory of recovery.

This Court has in the past recognized that, absent prejudice, courts are free to permit amendment even after trial where no prejudice is shown, the amendment may be allowed during or even after trial. Prejudice is more than the mere exposure of the party to greater liability. Rather, there must be some indication that the party has been hindered in the preparation of the party’s case or has been prevented from taking some measure in support of [its] position. The burden of establishing prejudice is on the party opposing the amendment.

Applications to amend pleadings are within the sound discretion of the court, and that of the Appellate Division. Courts are given considerable latitude in exercising their discretion, which may be upset by us only for abuse as a matter of law. Nevertheless, we have found such an abuse of discretion where the Appellate Division reversed a trial court’s grant of an amendment and the record established that the opposing party suffered no operative prejudice as a result of the mere omission to plead a defense.

(Internal quotations and citations omitted) (emphasis added). The Court of Appeals went on to hold that “the Appellate Division abused its discretion because there was no prejudice to the corporations that supports denial of” the defendant’s “request to amend. The corporations’ action for declaratory judgment was based on its claim of a common law right of set off, which they asserted should be applied against the money they owed to” the defendant.

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