By Victor M. Metsch
‘A VIEW FROM THE BRIDGE’
If you are a civil litigator practicing in New York City, beware when you cross the RFK Bridge. Some significant “common” law dramatically changes about mid-way across the East River. The procedural law in the First Department (Manhattan and the Bronx) and the Second Department (Kings, Queens and Richmond) is remarkably different in several areas of routine daily practice.
A prime example is the ground rule with respect to a CPLR § 3025 (b) motion for leave to serve an amended pleading and the requirement of a so-called “affidavit of merit”.
THE EAST RIVER DIVIDE
The Civil Practice Law and Rules, on the one hand, and the Uniform Trial Court Rules, on the other, will be searched in vain for any reference to an “affidavit of merit”.
For many years, both the First and Second Departments nevertheless required an “affidavit of merit”, by a person having personal knowledge of the facts, to be submitted in support of a motion to amend a pleading. Since 2008, however, the rule in the Departments has been different, with the First Department generally requiring such an affidavit and the Second Department for the most part dispensing with such evidence.
THE RULE IN THE SECOND DEPARTMENT
In Lucido v. Mancuso, 49 A.D.3d 220, 851 N.Y.S.2d 238 (2d Dep’t 2008), in connection with a motion for leave to amend a pleading to add a cause of action alleging wrongful death in a personal injury suit, the Second Department exhaustively analyzed the requirements of proof in connection with a CPLR § 3025(b) motion.
Upon such examination, the Court concluded that “it is difficult to see why a species of evidentiary showing of merit – competent medical proof – is required when the motion is to add a cause of action alleging wrongful death”; and concluded that “there is no reason wrongful death causes of action should be treated differently from any other motion for leave to amend a pleading under CPLR3025(b)”.
In Aurora Loan Services LLC v. Thomas, 70 A.D.3d 986, 897 N.Y.S.2d 140 (2d Dep’t 2010), Supreme Court granted the defendant’s motion for leave to assert several new affirmative defenses. Citing Lucido, the Second Department affirmed and stated that: “Motions for leave to amend pleadings should be freely granted, absent prejudice or surprise directly resulting from the delay in seeking leave, unless the proposed amendment is palpably insufficient or patently devoid of merit. Since the documents upon which Thomas relied in making his motion were obtained from the plaintiff in discovery, there was also no showing of prejudice or surprise resulting directly from Thomas’s delay in seeking leave”.
In Kahan v. Spira 932 N.Y.S.2d 76, 2011 N.Y. Slip Op. 7611, (2d Dep’t 2011), the Court, citing Lucido, affirmed an order granting plaintiff’s motion for leave to serve an amended complaint to add a cause of action for wrongful death. In doing so, The Court noted that “the proposed pleading was neither ‘palpably insufficient nor patently devoid of merit’ “[;] and that “no assessment of the ultimate merit of the claim needed to be made on the plaintiff’s motion”.
Subsequent decisions in the Second Department appear to have expanded Lucido to apply to all motions for leave to amend.
In Jablonski v. Jakaitis, 85 A.D.3d 969, 926 N.Y.S.2d 137 (2d Dep’t 2011), the Court (by modification) granted a motion to amend a personal injury claim to add a cause of action under Section 205-e of the General Municipal Law. Once again citing Lucido, the Court reiterated the “palpably insufficient or patently devoid of merit” standard utilized in Kahan.
In Truebright Co. Ltd. v. Lester, 84 A.D.3d 1065, 922 N.Y.S.2d 815 (2d Dep’t 2011), a legal malpractice suit, the Court affirmed an Order granting the defendant leave to amend his answer to assert the affirmative defense of lack of legal capacity to sue. Citing Lucido, the Second Department stated that “the Supreme Court did not improvidently exercise its discretion when it, in effect, granted the defendant’s motion for leave to amend his answer, as the proposed amendment was neither palpably insufficient nor patently devoid of merit[.]”. Parenthetically, the Court noted that “[t]o the extent that the plaintiff’s ‘wish to test the merits of the proposed added…defense [they] may…move for summary judgment upon a proper showing[.]”
In Seidman v. Industrial Recycling Props. Inc., 83 A.D.3d 1040, 922 N.Y.S.2d 451 (2d Dep’t 2011), an action to foreclose a mortgage, the Second Department reiterated the “palpably insufficient/patently devoid of merit” standard. The Court found so much of a motion for leave to amend to assert a counterclaim for breach of contract and malicious prosecution had been correctly granted, and that the application was correctly denied to the extent it sought to assert a counterclaim alleging unjust enrichment (because there was a valid contract covering the same subject matter) and slander of title (because the filing of a notice of pendency does not give rise to such a cause of action).
In Young v. Estate of Young, 84 A.D.3d 1359, 924 N.Y.S.2d 279 (2d Dep’t 2011), the Second Department stated that: “A court hearing a motion for leave to amend will not examine the merits of the proposed amendment ‘unless the insufficiency or lack of merit is clear and free from doubt…In cases where the proposed amendment is palpably insufficient as a matter of law or is totally devoid of merit, leave should be denied’”.
In Stevens v. Winthrop South Nassau University Health System, Inc, 2011 N.Y. Slip Op. 08140, 932 N.Y.S.2d 514 (2d Dep’t 2011), the Second Department affirmed (on other grounds) the denial of a motion for leave to amend the complaint to add defendants in an action for medical malpractice and related claims. The Court went out of its way to note, citing Lucido, that “the Supreme Court erroneously faulted the plaintiff for failing to submit an affidavit of merit.”
In U.S. Bank National Association v. Sharif, 2011 N.Y. Slip Op. 7835, 933 N.Y.S.2d 297 (2d Dep’t 2011), Supreme Court denied a cross-motion for leave to amend an answer to assert an affirmative defense of lack of standing to sue. The Second Department, citing Aurora Loan and Lucido, reversed stating: “Motions for leave to amend pleadings should be freely granted, absent prejudice or surprise directly resulting from the delay in seeking leave, unless the proposed amendment is palpably insufficient or patently devoid of merit”.
Post-Lucido decisions in the Second Department, except in the case of unreasonable delay by the moving party or some other form of prejudice (see Aurora), do not advert to the need for an “affidavit of merit.”
In Navarette v. Alexiades, 50 A.D.3d 869, 855 N.Y.S.2d 260 (2d Dep’t 2008), decided two months after Lucido, the Second Department stated that: “[W]here there has been an unreasonable delay in seeking leave to amend, the plaintiff must establish a reasonable excuse for the delay, and submit an affidavit establishing the merit of the proposed amendment with respect to new theories of liabilty.” (ital. added)
Time to cross the RFK Bridge.
THE RULE IN THE FIRST DEPARTMENT
As demonstrated by the following cases, the First Department is much more willing to scrutinize the legal sufficiency of proposed amended claims.
In Nab-Tern Contractors v. City of New York, 123 A.D.2d 571, 507 N.Y.S.2d 146 (1st Dep’t 1986), the Court granted the plaintiff contractor’s cross-motion to amend its complaint to allege that the City’s delay caused the contractor to breach the construction contract. The First Department denied the cross-motion without prejudice to renewal at Special Term stating that: “Although leave to amend a pleading should be ‘freely’ granted…the motion must be supported by an affidavit of merits and evidentiary proof that could be considered upon a motion for summary judgment.”
In Non-Linear Trading Company Inc v. Braddis Associates Inc., 243 A.D.2d 107, 675 N.Y.S.2d 5 (1st Dep’t 1998), the First Department affirmed the denial of the plaintiff’s cross-motion for leave to file an amended complaint to assert a tort claim in place of a contract claim. Plaintiff submitted an affidavit is support of the cross-motion. The Court found “troubling … that the pleading is contradicted by the affidavit in support of the amendment.” In affirming the denial of the cross-motion, the Court enunciated three principles: first, “the granting of leave to amend ‘without passing upon the validity of the causes of action as amended…represents a procedure that is no longer tolerable”; second, “in order to conserve judicial resources, an examination of the underlying merits of the proposed causes of action is warranted”; and third, citing Nab-Tern, “a motion for leave to amend a pleading ‘must be supported by an affidavit of merits and evidentiary proof that could be considered upon a motion for summary judgment.’”
In Zaid Theatre Corp. v. Sona Realty Co., 18 A.D.3d 352, 797 N.Y.S. 2d 434 (1st Dep’t 2005), Supreme Court denied a tenant’s motion for leave to amend its complaint in regard to a dispute with its landlord over a roof repair. The First Department, citing Nab-Tern, reversed noting that “plaintiff’s application is amply supported by the requisite affidavit and accompanying documentation.”
In Schulte Roth & Zabel LLP v. Kassover, 28 A.D.3d 404, 812 N.Y.S.2d 874 (1st Dep’t 2006), Supreme Court denied the defendant’s motion, as executor, to amend his answer to assert a counterclaim for malpractice. The First Department affirmed, admonishing that: “Although the standard for amending a pleading is less exacting than in moving for summary judgment, there still must be an affidavit of merit or an offer of evidence similar to that supporting a summary judgment motion.”
In American Theatre for the Performing Arts Inc. v. Consolidated Credit Corporation, 45 A.D.3d 506, 846 N.Y.S.2d 60 (1st Dep’t 2007), Supreme Court denied plaintiff’s motion for renewal of an order denying a motion for leave to amend. The First Department, citing Nab-Tern, affirmed with the brief but emphatic admonition that : “A request to amend a pleading, regardless of the statutory imperative that it be freely granted…requires an examination of the underlying merit to determine if there is evidentiary proof that could be considered on a motion for summary judgment.”
In Spitzer v. Schussel, 48 A.D.3d 233, 850 N.Y.S2d 431 (1st Dep’t 2008), the First Department, again citing Nab-Tern, affirmed the denial of plaintiff’s motion to amend the complaint to assert two additional causes of action. The Court reiterated that “[t]o conserve judicial resources…examination of the underlying merit of the proposed amendment is mandated.” (ital. added) Upon such examination, the Court found that the proposed declaratory judgment cause of action was duplicative of the accounting claim in the original complaint, and the proposed cause of action for violation of Section 63 of the Executive Law lacked merit as a matter of law.
In Ito v. Suzuki, 57 A.D.3d 205, 869 N.Y.S. 2d 28 (1st Dep’t 2008), an action alleging fraudulent inducement to make a $1 million investment in a corporation and to sign an operating agreement, Supreme Court granted the defendants’ motion to dismiss various causes of action and denied the plaintiff’s subsequent motion for renewal and leave to amend. The First Department modified to the extent of granting leave to file an amended complaint. Citing both Non-Linear Trading and Zaid, the Court concluded that “the substance of the alleged wrongdoing is set forth in the affidavits of the plaintiff and her brother [and] the circumstances surrounding the proposed cause of action [for aiding and abetting a breach of fiduciary duty] are sufficiently stated to support amendment of the complaint.”
Two cases decided in 2011 demonstrate the state of the law in the First Department. In Pollak v. Moore, 85 A.D.3d 578, 926 N.Y.S.2d 434 (1st Dep’t 2011), the First Department affirmed an order denying the plaintiff’s motion to serve a second amended complaint because “plaintiff failed to annex a copy of a proposed second amended pleading to his motion papers, and he did not otherwise offer an affidavit of merit or any ‘new’ facts as would overcome the legal defects in his prior two complaints[.]”
And, in Mantilla v. Lutheran Medical Center, 934 N.Y.S.2d 311, 2011 N.Y. Slip Op. 09021 (1st Dep’t 2011), the First Department, citing Schulte Roth, affirmed the denial of the plaintiffs’ motion for leave to amend their complaint, finding that “[p]laintiffs did not meet their burden, as movants, to show the merit of their proposed new medical malpractice theory[.]”
‘BRIDGING’ OF THE GAP?
Is the difference between the First and Second Departments more apparent than real? It is easier to amend a pleading in the Second Department? Does the First Department’s recent decision in MBIA Insurance Corporation v. Greystone & Co. Inc., 74 A.D.3d 499, 901 N.Y.S.2d 522 (1st Dep’t 2010), and its progeny, show a legal convergence with the Second Department’s ruling in Lucido?
In MBIA, based upon information learned in the course of deposition testimony, Supreme Court granted the plaintiff’s motion to amend his complaint “to pierce the corporate veil and add Stephen Rosenberg as a party defendant.” The First Department affirmed, citing Lucido, for the proposition that, “[o]n a motion for leave to amend, plaintiff need not establish the merit of its proposed new allegations…but simply show that the proffered amendment is not palpably insufficient or clearly devoid of merit.” But, in MBIA, “the Court noted that “the proposed amendment was supported by a sufficient showing of merit through the submission of an affirmation by of counsel, along with a transcript of relevant deposition testimony.”
In Perrotti v. Becker, Glynn, Melamed & Muffy LLP, 82 A.D.3d 495, 918 N.Y.S.2d 423 (1st Dep’t 2011), Supreme Court granted the defendants’ motions to dismiss the complaint alleging an escrow agent’s violations of a stock pledge and escrow agreement; and denied the plaintiff’s cross-motion for leave to amend the complaint to assert claims based upon new allegations of fraudulent inducement. The First Department affirmed, citing MBIA, for the proposition that, “[o]n a motion for leave to amend a pleading, the movant ‘need not establish the merit of its proposed new allegations, but [must] simply show that the proffered amendment is not palpably insufficient or clearly devoid of merit [.]” But, in Gustavo Perrotti, the Court based its conclusion on the fact that “[t]he documentary evidence submitted by plaintiff on his cross motion is insufficient to support the proposed cause of action for fraudulent inducement.”
In Kocourek v. Booz Allen Hamilton Inc., 85 A.D.3d 502, 925 N.Y.S.2d 51 (1st Dep’t 2011), the plaintiff originally asserted a claim for the breach of an oral deferred compensation agreement; and the claim was dismissed. Based upon documents allegedly first disclosed during discovery while the motion to dismiss was pending, the plaintiff sought leave to amend the complaint to assert a claim for the breach of a written agreement. Supreme Court denied the motion. The First Department, citing MBIA, reversed finding that “the motion court should have granted plaintiff leave to amend”, because “[t]he breach of written contract claim is substantively identical to the breach of oral contract claim; only now there is documentation to support plaintiff’s allegations.”
In Anoun v. The City of New York, 85 A.D.3d 694, 926 N.Y.S.2d 98 (1st Dep’t 2011), Supreme Court granted the defendant’s motion to amend its answer to change from an admission of ownership of the location of the accident to a denial. The First Department affirmed, citing MBIA. The Court noted that “defendant’s submissions, which included an affidavit of the title examiner and appropriation maps showing that the property was the subject of a taking by the State, were sufficient to support the proposed amendment.”
In Steiner Sports Markeing Inc. v. Weinreb, 88 A.D.3d 482, 930 N.Y.S.2d 186 (1st Dep’t 2011), an action to enforce a covenant not to compete, Supreme Court dismissed the defendant’s counterclaims for tortious interference with prospective contractual relationships and intentional infliction of emotional distress without leave to replead. Citing MBIA, the First Department reversed “to the extent of granting defendant leave to replead the tortious interference counterclaim”, based upon “an undisputed fact [that] emerged after the filing of the counterclaim.”
In Castor Petroleum Ltd. v. Petroterminal de Panaman S.A., 2011 N.Y. Slip Op. 8684, 933 N.Y.S.2d 662 (1st Dep’t 2011), the First Department, citing MBIA, reversed Supreme Court’s denial of the plaintiff’s motion for leave to amend its complaint, “since the proposed amendment is not palpably insufficient or clearly devoid of merit” and “[t]he proposed amendment was premised upon the same facts, transactions or occurrences alleged in the [original] complaint.”
And, in Nussberg v. Tatintsian, 934 N.Y.S.2d 703, 2011 N.Y. Slip Op. 09205 (1st Dep’t 2011), the First Department, predictably citing MBIA,summarily reversed Supreme Court’s denial of the defendants’ motion for leave to amend its answer to assert new counterclaims because the proposed claims “do not plainly lack merit.”
A YEAR END REVIEW: A ‘BRIDGE OVER TROUBLED WATERS’?
Are we seeing a reconciliation of the law by the Second Department’s decision in Lucido and the First Department’s ruling in MBIA? If so, Supreme Court in the First Department does not appear to have recognized the convergence.
In Broadway 26 Waterview L.L.C. v. Bainton McCarthy & Siegel, L.L.C., 2011 WL 2533036, 2011 N.Y. Slip Op. 31659U (Sup. Ct., N.Y. Co. 2011), the Court denied the plaintiff’s motion for leave to add partners as defendants, individually, while granting the motion to increase the demand for damages. The Court, referring to the citation to Nab-Tern in Theatre for the Performing Arts,reiterated the rule that “[a] motion [for leave to amend] must be supported by an affidavit of merits and evidentiary proof that could be considered upon a motion for summary judgment.”
In Deer Consumer Products Inc. v. Little, 32 Misc.3d 1243(A), 2011 WL 4346674, 2011 N.Y. Slip Op. 51691(U)(Sup. Ct. N.Y. Co. 2011), an action for defamation, the Supreme Court granted a defendant’s motion to dismiss the complaint and denied the plaintiff’s application for leave to amend. In so doing, the Court, citing Zaid, reiterated that: “[A] motion for leave to amend a pleading must be supported by an affidavit of merits and evidentiary proof that could be considered upon a motion for summary judgment.”
And, inDon v. Singer, 33 Misc.3d 1226(A), 2011 WL 5964553, 2011 N.Y. Slip Op. 52127(U)(Sup. Ct. N.Y. Co. 2011), a suit for breach of contract, breach of fiduciary duty and related claims, the Court, citing both Zaid and MBIA, granted (in part) the plaintiffs’ motion for leave to amend the complaint to assert claims for breach of a non-circumvention agreement, tortious interference with business relations and unfair competition. The Court relied on two familiar propositions: first, that, “in order to conserve judicial resources, an examination of the underlying merits of the proposed causes of action is warranted;” and second, that “leave to amend will be granted as long as the proponent submits sufficient support to show that the proposed amendment is not ‘palpably insufficient or clearly devoid of merit’.” In granting the motion, the Supreme Court concluded that “the motion to amend is adequately supported by evidence, including affidavits from each of the plaintiffs, excerpts from depositions, and various documents produced in discovery.”
HEADING INTO ‘UNCHARTED WATERS’
As we start 2012, where does the law stand with respect to the requirement of an “affidavit of merit” in support of a CPLR 3025 (b) motion for leave to amend? The Second Department appears consistently to adhere to the “not palpably insufficient and not clearly devoid of merit” standard, requiring an “affidavit of merit” only where leave is sought to assert a new theory of liability or defense late in the case. On the other hand, the First Department post-MBIA may be evolving towards the same standard, while still requiring at least a modicum of affidavit-supported evidence or documentary proof in support of the proposed amended claim or defense.
Accordingly, counsel would be well-advised to “play it safe” by offering adequate evidentiary support in support of a proposed amendment, and to use such evidence as an opportunity to educate the Court as to the strength of the proposed claim. However, there is always a potential downside to offering a client’s affidavit, since the proffer, establishes a position under oath, educates an adversary and might ultimately be used as ammunition for cross-examination.
Victor M Metsch is a Senior Litigation/ADR Partner at Hartman & Craven LLP.