In Earn-Out Dispute, Court Allows Amendment to Add Good Faith, Successor, and Unjust Enrichment Claims, but Rejects Fraud Claims

Posted: June 5, 2026 / Written by: Samuel L. Butt, Thomas A. Kissane, Ian Weiss, Channing J. Turner / Categories Amendment, Good faith and Fair Dealing, Successor and Derivative Liability, Unjust Enrichment

In Earn-Out Dispute, Court Allows Amendment to Add Good Faith, Successor, and Unjust Enrichment Claims, but Rejects Fraud Claims

On April 15, 2026, Justice Andrea Masley of the New York County Commercial Division granted plaintiff leave to amend its complaint to assert a claim for breach of the implied contractual covenant of good faith and fair dealing, to add a new defendant as successor to an existing defendant, and to expand on its claims for unjust enrichment, while denying leave to seek rescission based on fraudulent inducement. The case is Triangle General Agency v. Amtrust Agriculture Insurance, Index No. 656839/2022.

At the time of plaintiff’s motion, the operative complaint was an amended complaint from 2022 (the “2022 Amended Complaint”). There, plaintiff Triangle General Agency, Inc. (“Triangle”) had, inter alia, sued Am Trust Agriculture Insurance Services, LLC and Pro AG Transition Services LLC (referred to by the Court together as “Agriculture”) and Producers AG Insurance Group Inc. (“PAIG”) for breach of contract, specific performance and an accounting; sued other defendants for tortious interference with contract; and sued PAIG and Pro AG Transition Services LLC for unjust enrichment. Slip op., p. 6. Those claims alleged that, as a result of failing to calculate the fee from customer transactions, defendants had underpaid the third of three Earn-out payments required by the Purchase Agreement under which Agriculture had acquired Triangle’s rights and assets.

After discovery assertedly revealed shortfalls in the first two Earn-out payments called for by the Purchase Agreement, Triangle sought leave to amend the 2022 Amended Complaint to add new claims under the Purchase Agreement and subsequent agreements, including a Letter Agreement amending the First Earn-out payment, against i) Agriculture, for recission based on fraudulent inducement involving the First Earn-Out payment; ii) against all defendants, relating to the shortfall in the Second Earn-Out payment; and iii) against all defendants, for breach of the covenant of good faith and fair dealing. Plaintiff’s motion also sought leave to add, as successor to Agriculture and/or assignee under the Purchase Agreement, defendant Pro AG Management (“PAM”), which provides services and operations for PAIG and had not been named in the 2022 Amended Complaint. Slip op., p. 2.

Justice Masley granted Triangle’s motion to add PAM as successor to Agriculture, noting “the absence of a legal argument to deny” it. Id., p. 10. She also allowed Triangle to add a claim for breach of the covenant of good faith and fair dealing, and to add PAM to its claims for tortious interference with contract, rejecting defendants’ argument “that Triangle fails to allege that Agriculture would not have breached the Agreement but for the conduct of defendants” and finding that “Triangle’s allegations support but for causation without using the words ‘but for.’” Slip op., p. 12.

The Court denied Triangle’s motion to add fraud claims involving the first and second Earn-out payments, explaining:

Triangle relies on email exchanges between the parties that show that Triangle requested information regarding the First and Second Earn-Out payments, thereby exercising its right under §1.5(c)(iii) of the Agreement. . . . However, these emails specifically pertain to the First Earn-Out Payment; there is no mention of the Second Earn-Out Payment in the emails. . . . Therefore, plaintiff’s motion to amend to add fraud involving the Second Earn-Out payment is denied . . ..

By signing the Letter Agreement, Triangle agreed to waive any claims regarding the First Earn-Out Payment. It cannot now circumvent it. Therefore, the motion to amend the first cause of action to allege fraud based on the First Earn-Out Payment is denied.

Slip op., pp. 7-8, 8-9.

However, the Court granted Triangle’s motion to assert claims for unjust enrichment against PAIG and PAM seeking amounts owed to Triangle as part of the Second and Third Earn-Out Payments, which it noted defendants did not address. Slip op., p. 12.

Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning amendment of pleadings, the duty of good faith and fair dealing, successor liability, or unjust enrichment.