On March 9, 2018, Justice Scarpulla of the New York County Commercial Division issued a decision in Med-Mac Realty Co., Inc. v. Modell, 2018 NY Slip Op. 30409(U), denying a motion to amend an answer because of undue delay, explaining:
A motion seeking leave to amend a pleading pursuant to CPLR 3025(b) is generally freely granted absent prejudice or surprise resulting from the delay. Prejudice may be demonstrated where the amendment is sought after discovery has been completed. Prejudice may also exist where an amendment is sought after the parties have made substantial progress in litigating the matter.
The party seeking leave to amend is required to show that the proffered amendment is not palpably insufficient or clearly devoid of merit. However, where there has been an extended delay in moving to amend, the party seeking leave to amend must establish a reasonable excuse for the delay.
Here, Leslie seeks to amend her answer almost two and a half years after she filed the original answer, after two years of discovery, seven months after Med-Mac filed the second note of issue, and five months after Med-Mac moved for summary judgment. Clearly, Leslie waited an extensive, unexplained period before moving to amend.
With respect to the proposed statute of frauds defense, Leslie claims that her extensive delay is due to the fact that she only became aware of the statute of frauds defense when Med-Mac failed to submit a written loan agreement in support of its motion for summary judgment. However, this proffered excuse is belied by the record. First, Leslie was on notice that there was no written loan agreement as far back as 2011, when Mitchell wrote Leslie the letter stating that Med-Mac will consider making further loans provided that both past and future loans are acknowledged in writing by the trustees to whom these loans have been, or will be, made. Second, Med-Mac never plead the existence of a written agreement in its complaint, and its position regarding the loan agreement has been consistent throughout the litigation. All through the two years of discovery taken in this action, Leslie was never provided with a written loan document.
Indeed, Leslie was directly informed that the loan agreement was oral during discovery. On February 26, 2016, during Leslie’s deposition of Brustein, Brustein testified that there is no written loan agreement. On March 23, 2016, Leslie wrote a letter requesting permission to depose Mitchell Modell; soon after, I granted Leslie permission to take a deposition limited to the issue of the verbal agreement that Leslie referred to in her letter.
Even if Leslie first learned that the purported loan agreement was oral and not written at the February 26, 2016 deposition of Brustein, Leslie failed to proffer any excuse as to why she waited more than a year – during which time discovery was completed, two notes of issue were filed, and Med-Mac moved for summary judgment – in seeking leave to file an amended complaint to include statute of frauds as an affirmative defense. At bottom, Leslie’s proffered excuse for her delay in asserting the statute of frauds defense is meritless.
Leslie has offered no excuse at all for her extensive delay in seeking to add the statute of limitations/laches defenses, and therefore has not met her burden in support of her motion to add these defenses.
(Internal quotations and citations omitted).
In New York, the courts are very generous in allowing a party to amend its pleadings. However, as this decision shows, there are limits to this generosity. Contact Schlam Stone & Dolan partner John Lundin at firstname.lastname@example.org if you or a client have a question regarding whether it is too late to amend your claims or answer.
Click here to subscribe to this or another of Schlam Stone & Dolan’s blogs.