Commercial Division Blog

Posted: May 8, 2018 / Categories Commercial, Statute of Limitations/Laches

Claim Against New Defendant Did Not Relate Back to Earlier Complaint; New Defendant Was Not Liable for Acts of Original Defendants

On May 3, 2018, the Third Department issued a decision in Belair Care Center, Inc. v. Cool Insuring Agency, Inc., 2018 NY Slip Op. 03196, holding that a proposed claim against a new defendant was time-barred because it did not relate back to earlier claims, explaining:

Plaintiffs' further contend that the proposed new causes of action against Hickey-Finn, Cool and Treiber are based on the same transactions and occurrences that were alleged in the original complaint in the HITNY action and, thus, relate back to that complaint. Hickey-Finn was named as a broker defendant in the first amended complaint, before any applicable statute of limitations would have rendered plaintiffs' proposed causes of action untimely. Where the issue is whether a claim may be interposed against a defendant who was named as a party before the statute of limitations expired, the query is limited to whether the earlier complaint gave notice of the transactions, occurrences, or series of transactions or occurrences, to be proved pursuant to the amended pleading.

. . .

Treiber was first named as a defendant in the third amended complaint. By stipulation, it was agreed that the causes of action asserted in the third amended complaint would be deemed to have been asserted on December 17, 2012, when the Seacrest action was commenced. Thus, the proposed new causes of action would be untimely unless, as plaintiffs argue, they relate back to the first amended complaint. The relation back doctrine permits a plaintiff to amend a complaint to add a defendant even though the statute of limitations has expired at the time of amendment so long as the plaintiff can demonstrate three things: (1) that the claims arose out of the same occurrence, (2) that the later-added defendant is united in interest with a previously named defendant, and (3) that the later-added defendant knew or should have known that, but for a mistake by plaintiff as to the later-added defendant's identity, the action would have also been brought against him or her.

Plaintiffs failed to establish the second prong of the relation back doctrine. Unity of interest requires a showing that the judgment will similarly affect the proposed defendant, and that the new and original defendants are vicariously liable for the acts of the other. The proposed amended complaint alleges that Treiber — like all brokers — engaged in a cooperative strategy with CRM to market the trust; however, it contains no allegations that there was a jural, or legal, relationship between Treiber and CRM that would make either vicariously liable for the acts of the other. Thus, Supreme Court properly denied plaintiffs leave to amend the complaint to assert a negligence cause of action against Treiber.

(Internal quotations and citations omitted).

It is not unusual for the statute of limitations to be an issue in complex commercial litigation. Contact Schlam Stone & Dolan partner John Lundin at if you or a client have questions regarding whether a claim is barred by the statute of limitations.