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Current Developments in the Commercial Divisions of the
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Posted: March 23, 2018

Prior Tenant Not Necessary Party to Action for Damages Arising From Later Tenant’s Tenancy

On March 20, 2018, the First Department issued a decision in Almah LLC v. AIG Empl. Servs., Inc., 2018 NY Slip Op. 01870, holding that a prior tenant was not a necessary party to an action for damages arising from a later tenancy, explaining:

Pursuant to section 7.1(a) of the lease, which is the basis for plaintiff’s take good care claim against defendant AIG, AIG may only be held liable for the cost of making good any injury, damage or breakage to the Building or the Premises done by Tenant. As such, AIG’s liability, if any, will be limited to any damage that it caused during its tenancy; it will not be liable for damage that Goldman Sachs may have caused during its earlier tenancy. This raises factual questions as to the respective liability of AIG and Goldman Sachs for the allegedly negligently installed and maintained electrical busways; these issues may be developed in discovery. Therefore, we find that complete relief can be accorded between plaintiff and AIG, without joining Goldman Sachs as a necessary party.

Under the circumstances, it cannot be said that Goldman Sachs will be inequitably affected by a judgment in this action, or that any outcome here will bind its rights or interests without it having had an opportunity to be heard.

(Internal quotations and citations omitted).

As this decision shows, there are rules regarding whether a lawsuit can go forward without all persons affected by the lawsuit (necessary parties) being included in it. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client face a situation where all parties affected by a lawsuit have not been joined in it.

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