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Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: January 18, 2019

Delay Not Fatal to Motion to Amend

On November 14, 2018, Justice Grays of the Queens County Commercial Division issued a decision in Energy Conservation Group, LLC v. Applied Underwriters, Inc., 2018 NY Slip Op. 33436(U), granting a motion to amend even though there was a delay in making the motion, explaining:

CPLR §3025(b) provides that leave to amend a pleading shall be freely given upon such terms as may be just. As a general rule, the amendment of a complaint will be permitted where there is no significant prejudice or surprise to the defendant. Prejudice in this context means that the nonmoving party has been hindered in the preparation of its case or has been prevented from taking some measure in support of its position.

In the case at bar, the amendment of the answer is warranted for several reasons. First, the Applied defendants’ extended delay in moving to amend their answer required them to offer a reasonable excuse for the delay, a requirement that they met by showing that they have been waiting for determinations to be made in other forums. While an earlier interposition of the counterclaims would have been much preferable, their excuse, coupled with other factors, is sufficiently, though barely, plausible. Second, tardiness does not bar the amendment of a pleading unless it resulted in significant prejudice to the other side. In the case at bar, the plaintiffs have been aware of the debts allegedly due to the Applied defendants for years, and the assertion of the counterclaims now should not take them by surprise, especially because of the reservation of rights in previous answers. Third, the claims asserted by the plaintiffs and the claims asserted by the Applied defendants share at least some issues in common, and judicial economy would be served by determining all of the claims in one action. In this complex dispute, the interest of judicial economy is the heaviest factor in allowing the amendment sought by the Applied defendants. Fourth, the assertion of the counterclaims should not unduly delay the trial of this action, since the parties have not concluded discovery, and the extensive discovery already conducted would be relevant tc the common issues raised by the parties. The plaintiffs did not persuade the court on this motion that sweeping additional discovery would be necessary. Moreover, in the case at bar, the need, if any, for additional discovery does not amount to prejudice sufficient to justify denial of an amendment. Fifth, a party seeking to amend his pleading has the burden of establishing that the proposed amendment has merit. But, the Court should not examine the merits or legal sufficiency of the proposed amendment beyond determining whether the amendment is palpably insufficient or patently devoid of merit on its face. The proposed counterclaims of the Applied defendants are not patently without merit.

(Internal quotations and citations omitted).

In New York, the courts are very generous in allowing a party to amend its pleadings. However, there are limits to this generosity. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have a question regarding whether it is too late to amend your claims or answer.

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