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INDEX NO. 607197/2022
NYSCEF DOC. NO. 171 RECEIVED NYSCEF: 12/21/2023
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NASSAU,
xxxxxx xxxxxx a/k/a xxxxxxxxxx xxxxxx,
individually and derivatively on behalf of Index No. 607197/2022
ROCKVILLE CORP.,
Hon. Sharon M.J. Gianelli
Plaintiff,
Mot. Seq. No. 008
-against-
xxxxxxx xxxxx, individually and as the executor
of the Estate of xxxx xxxxx, and as co-trustee of the
disclaimer Trust under Article “Fourth” of the Last
Will and Testament of xxxx xxxxx; MAKAN
DELRAHIM, as former co-trustee of the disclaimer
Trust under Article “Fourth” of the Last Will and
Testament of xxxx xxxxx; and BAHARAK
AMIRIAN as co-trustee of the disclaimer Trust under
the Last Will and Testament of xxxx xxxxx,
Defendants,
-and-
ROCKVILLE CORP.,
Nominal Defendant.
xxxxxxx xxxxx and ROCKVILLE CORP.,
Counterclaim-Plaintiffs,
-against-
xxxxxx xxxxxx and 172 BARGAIN LIQUORS,
Counterclaim-Defendants.
COUNTERCLAIM-PLAINTIFFS’ MEMORANDUM OF LAW IN SUPPORT OF
MOTION FOR LEAVE TO FILE AMENDED ANSWER WITH COUNTERCLAIMS
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KASOWITZ BENSON TORRES LLP
David E. Ross
Michael C. Pecorini
1633 Broadway
New York, New York 10019
(212) 506-1700
Attorneys for Defendants/Counterclaim-Plaintiffs
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TABLE OF CONTENTS
Page
BACKGROUND
ARGUMENT
A The Amended Counterclaim Would Not “Unfairly Prejudice” Or “Surprise”
Counterclaim-Defendant .............cccecscesseseseesseseeeseeeseee
The Amended Counterclaim Is Neither “Palpably Insufficient” Nor “Clearly Devoid of
Merit”
CONCLUSION
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TABLE OF AUTHORITIES
Page(s)
Cases
Atl. Mut. Ins. Co. v. Greater New York Mut. Ins. Co.,
271 A.D.2d 278 (1st Dep't 2000)
Bainbridge Three Realty Corp. v. Xue Ming Lin,
30 Misc. 3d 136(A), (Ist Dep’t 2011)
Bd. of Managers of 41 North Moore Street Condominium v. Violet Purchasing
Corp.,
No. 651803/2012, 2013 WL 582257 (Sup. Ct. N.Y. Cty. Feb. 08, 2013)
Beller v. William Penn Life Ins. Co. of New York,
8 A.D.3d 310 (2d Dep’t 2004)
Bulova Watch Co. v Celotex Corp.,
46 N.Y.2d 606 (1979)
Cortes v. Jing Jeng Hang,
143 A.D.3d 854 (2d Dep’t 2016)
Daniels v. Empire-Orr, Inc.,
151 A.D.2d 370 (1st Dep’t 1989)
Edwards v. 1234 Pac. Mgmt., LLC,
139 A.D.3d 658 (2d Dep’t 2016)
Faiella v. Tysens Park Apartments, LLC,
110 A.D.3d 1028 (2d Dep’t 2013)
Favia v. Harley-Davidson Motor Co.,
119 A.D.3d 836 (2d Dep’t 2014) 2, 3,5
Gandhi v. Filler,
15 Misc.3d 1124(A), (Sup. Ct. Nassau Cty. 2007)
Janssen v. Inc. Vill. of Rockville Ctr.,
59 A.D.3d 15 (2d Dep’t 2008)
Katz v. Bach Realty, Inc.,
192 A.D.2d 307 (1st Dep't 1993)
Loomis v. Civetta Corinno Constr. Cor]
54.N.Y.2d 18 (1981)
il
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Lucido v. Mancuso,
49 A.D.3d 220 (2d Dep’t 2008)
Maloney Carpentry, Inc. v. Budnik,
37 A.D.3d 558 (2d Dep’t 2007)
Moses v. Dunlop,
155 A.D.3d 466 (1st Dep’t 2017)
Ross Network, Inc. v. RSM McGladrey, Inc.,
No. 19475-05, 2006 WL 1160007 (Sup. Ct. Nassau Cty. May 1, 2006)
In re Rouson,
32 A.D.3d 956 (2d Dep’t 2006)
Simino v. St. Mary's Hosp. of Brooklyn,
107 A.D.2d 800 (2d Dep’t 1985)
Tucciarone v. Hamlet on Olde Oyster Bay Homeowners Ass'n, Inc.,
46 Misc. 3d 1226(A), (Sup. Ct. Nassau Cty. 2015)...
Other Authorities
CPLR 3025(b) 1,2,5
CPLR 3211(a)(7)
iii
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Counterclaim-Plaintiffs xxxxxxx xxxxx and Rockville Corp. (“Counterclaim-Plaintiffs”)
respectfully submit this memorandum of law in support of their motion for leave to file a first
amended answer with counterclaims, pursuant to CPLR 3025(b).! The proposed amendment seeks
to add a counterclaim for Counterclaim-Defendants’ breach of two commercial lease agreements
with Rockville Corp.”
BACKGROUND?
Counterclaim-Defendant xxxxxx commenced the instant action in June 2022 by filing a
summons and complaint and moving the Court for an ex parte temporary restraining order and
preliminary injunction, claiming, for the first time, that he is an 80% owner of Rockville and its
sole asset, the Property. After the Court granted xxxxxx’s application for a preliminary injunction
and denied Defendants’ cross-motion to dismiss the complaint, Counterclaim-Plaintiffs
subsequently answered, and asserted counterclaims on October 24, 2022. Dkt. No. 72. xxxxxx
and Bargain Liquors (“Counterclaim-Defendants”) filed their reply to the counterclaims on
November 14, 2022. Dkt. No. 80.
During discovery, Plaintiff produced for the first time two fully-executed commercial
leases — one dated January 3, 2006 and the other dated September 1, 2007. Both leases are signed
by xxxx xxxxx (on behalf of Rockville) and xxxxxx xxxxxx (on behalf of Bargain Liquors). Ross
Aff. Exs. B-C. The January 3, 2006 lease has an expiration date of December 2021. That lease
1 Also submitted herewith is the Affirmation of David E. Ross (“Ross Aff.”), dated December 21, 2023, and
the exhibits annexed thereto.
2 This motion will have no effect on Plaintiff's pending motion for partial summary judgment seeking
dismissal of certain counterclaims. Dkt. No. 85 (Mot. Seq. 004). The Court’s ruling on that motion will apply to
those counterclaims that are repeated in the proposed amended pleading, just as they apply to the current version of
the answer with counterclaims. The amendment Counterclaim-Defendants seek to file here adds a completely new
counterclaim not previously plead (Ross. Aff. Ex. A, Proposed Third Counterclaim) premised on certain information
Plaintiff produced in discovery.
3 Counterclaim-Plaintiffs respectfully refer the Court to the parties’ respective pleadings and Counterclaim-
Plaintiffs’ opposition to Counterclaim-Defendants’ motion for partial summary judgment (Dkt. No. 103) and
response to Counterclaim-Defendants’ Rule 19-a Statement of Material Facts (Dkt. No. 104) for a full recitation of
the disputed and undisputed facts pertaining to Counterclaim-Plaintiffs’ original counterclaims.
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has a rental rate of $15,000 per month, to be increased by 3% annually. Ross Aff. Ex. B. The
September 1, 2007 lease expires in August 2027. That lease has a rental rate of $20,000 per month,
to be increased each September by 5%. Ross Aff. Ex. C. The September 1, 2007 lease superseded
the January 3, 2006 lease. Bargain Liquors failed to pay rent under either lease.
Counterclaim-Plaintiffs now seek to amend their counterclaims to add a claim for breach
of the lease agreements due to Bargain Liquors’ continuing default in paying rent due thereunder.
ARGUMENT
Pursuant to CPLR 3025(b), “[a] party may amend his or her pleading, or supplement it by
setting forth additional or subsequent transactions or occurrences, at any time by leave of
court... Leave shall be freely given upon such terms as may be just.” “No evidentiary showing
of merit is required under CPLR 3025(b).” Favia v. Harley-Davidson Motor Co., 119 A.D.3d 836.
836 (2d Dep’t 2014) (citing Lucido v. Mancuso, 49 A.D.3d 220, 229 (2d Dep’t 2008)). Indeed,
“[a] party opposing leave to amend ‘must overcome a heavy presumption of validity in favor of
[permitting amendment].’” Cortes v. Jing Jeng Hang, 143 A.D.3d 854, 854-55 (2d Dep’t 2016)
(quoting McGhee v. Odell, 96 A.D.3d 449, 450 (1st Dep’t 2012)) (alteration in original); see also
Daniels v. Empire-Orr, Inc., 151 A.D.2d 370, 371 Uist Dep’t 1989) (“[t]he party opposing the
motion to amend . . . must overcome the presumption of validity in favor of the moving party, and
demonstrate that the facts alleged and relied upon in the moving papers are obviously not reliable
or are insufficient.”).
“Applications for leave to amend pleadings under CPLR 3025(b) should be freely granted
unless the proposed amendment (1) would unfairly prejudice or surprise the opposing party, or (2)
is palpably insufficient or patently devoid of merit.” Favia, 119 A.D.3d at 836 (collecting cases).
Neither condition is present here, and the motion for leave to add the new counterclaim should
therefore be granted.
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A The Amended Counterclaim Would Not “Unfairly Prejudice” Or “Surprise”
Counterclaim-Defendants
As an initial matter, Counterclaim-Defendants cannot claim any prejudice or surprise from
the proposed amendment. Counterclaim-Defendants must show that the proposed amendment
would prejudice them in some fashion other than simply having to defend against a new claim.
Indeed, as the New York Court of Appeals has long held, “[p]rejudice, of course, is not found in
the mere exposure of the defendant to greater liability.” Loomis v. Civetta Corinno Constr. Corp.,
54 N.Y.2d 18, 23 (1981). Counterclaim-Defendants cannot meet their burden here for a number
of reasons.
First, there is no valid claim of prejudice where, as here, the amendment is made prior to
the note of issue being filed and where the amendment is “predicated on information supplied . . .
during disclosure.” Favia, 119 A.D.3d at 837; Edwards v. 1234 Pac. Mgmt., LLC, 139 A.D.3d
658, 659 (2d Dep’t 2016) (leave to amend complaint was properly granted where “the plaintiff's
motion was made prior to the filing of the note of issue, and was predicated on information
obtained during discovery”); Simino v. St. Mary's Hosp. of Brooklyn, 107 A.D.2d 800, 801 (2d
Dep’t 1985) (granting leave to amend where “Plaintiffs' amendment was proposed early in the
discovery proceedings [and] . . . no depositions had been taken.”); see also Atl. Mut. Ins. Co. v.
Greater New York Mut. Ins. Co., 271 A.D.2d 278, 280 (1st Dep't 2000) (“[a]side from the mere
passage of time, no prejudice is discernible here. Virtually no discovery has been conducted, and
[plaintiff] does not profess surprise at the nature of the counterclaims”); accord Katz_v. Bach
Realty, Inc., 192 A.D.2d_ 307, 307 (ist Dep't 1993) (granting motion for leave to amend
counterclaims where such relief “will cause plaintiff no prejudice, the motion for leave to amend
having been made at an early stage of the action before any depositions were taken”). In any event,
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“TmlJere lateness, unless coupled with prejudice, does not bar an amendment.” In re Rouson, 32
A.D.3d 956, 958 (2d Dep’t 2006).
Here, this action is still in its early stages of discovery, no depositions have been taken, and
the proposed amendment is predicated on Plaintiff's production during discovery of executed
leases. Though movants had unsigned versions of those leases, movants were not aware until
receipt of the signed leases that same existed. As such, Counterclaim-Defendants cannot be
prejudiced or surprised by claims arising from those documents.
Second, Counterclaim-Defendants cannot claim prejudice or surprise where “the proposed
amendments arise out of the same facts as those underlying the action brought by the plaintiff.”
Maloney Carpentry, Inc. v. Budnik, 37 A.D.3d 558, 558 (2d Dep’t 2007); see also Janssen v. Inc.
Vill. of Rockville Ctr., 59 A.D.3d 15, 27 (2d Dep’t 2008) (“The defendants cannot legitimately
claim surprise or prejudice, where the proposed amendments were premised upon the same facts,
transactions or occurrences alleged in the original complaint.”). This action arises out of the
disputed ownership of Rockville and its sole asset, the Property. Plaintiff xxxxxx claims that he is,
and always has been, the 80% majority shareholder in Rockville, yet produced during discovery
fully executed leases between Rockville, signed by xxxx, and Bargain Liquors, signed by xxxxxx.
Among other things, these executed commercial leases cast doubt on xxxxxx’s claimed ownership
and raise the question of why a purported 80% majority shareholder would need a signed lease
with one of his other businesses and Defendants and Counterclaim-Plaintiffs should be entitled to
probe that very question in discovery.
B The Amended Counterclaim Is Neither “Palpably Insufficient’” Nor “Clearly
Devoid of Merit”
Just as Counterclaim-Defendants cannot demonstrate prejudice or surprise by the proposed
amendment, neither can they demonstrate, as they must, that the proposed amendment is “palpably
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insufficient” or “clearly devoid of merit.” Where, like here, a motion for leave to amend concerns
adding a new cause of action, the amendment is “palpably insufficient” only if “the new cause of
action would not withstand a motion to dismiss under CPLR 3211(a)(7).” Lucido, 49 A.D.3d at 225.
Here, the Amended Counterclaim clearly states a prima facie breach of contract claim:
xxxxxx produced a fully-executed lease agreements between Rockville, signed by xxxx, and
Bargain Liquors, signed by xxxxxx. Rockville has not been paid any rent under the executed leases
and thus Bargain Liquors is in breach of the lease agreement, and the breach is ongoing. Motions
to amend are routinely granted, as here, where the proposed amendment is meritorious on its face.
See Tucciarone v. Hamlet on Olde Oyster Bay Homeowners Ass'n, Inc., 46 Misc. 3d 1226(A), at
*2 (Sup. Ct. Nassau Cty. 2015) (“the Court cannot say as a matter of law that the proposed breach
of fiduciary cause of action is so lacking in merit . . . that the addition of this claim should not be
allowed even under the liberal pleading rules noted above.”); Gandhi_v. Filler, 15 Misc.3d
1124(A), at *1 (Sup. Ct. Nassau Cty. 2007) (“The proposed amended complaint states a cause of
action . . . and facially has merit. Thus, the motion to amend the complaint . . . must be granted.”’);
see also Bainbridge Three Realty Corp. v. Xue Ming Lin, 30 Misc. 3d 136(A), at *1 (1st Dep’t
2011) (granting leave to amend answer in commercial nonpayment summary proceeding).
Moreover, it is well-established that “‘a court shall not examine the legal sufficiency or merits of a
pleading unless such insufficiency or lack of merit is clear and free from doubt.” Faiella v. Tysens
Park Apartments, LLC, 110 A.D.3d 1028, 1029 (2d Dep’t 2013) (citing Lucido, 49 A.D.3d at 227);
see also Favia, 119 A.D.3d at 836 (“No evidentiary showing of merit is required under CPLR
3025(b).”).4
4 In addition, the proposed amendment is clearly timely. As the Court of Appeals has long recognized,
where, as here, a party is alleged to have a continuing obligation to make payments to his counter-party, accrual of
the statute of limitations applicable to a claim for breach of that continuing obligation is tolled. See Bulova Watch
Co. v Celotex Corp., 46 N.Y.2d 606, 611 (1979) (where one party is under a continuing obligation to perform, the
5
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As the proposed amendment states a cognizable claim for relief, the proposed amendment
is clearly proper, and the motion to amend to add the new counterclaim should be granted.
CONCLUSION
For the reasons set forth above, Counterclaim-Plaintiffs respectfully request that the Court
grant their motion and permit the filing of the amended answer with counterclaims.
Dated: New York, New York
December 21, 2023
KASOWITZ BENSON TORRES LLP
By: /s/ David E. Ross
David E. Ross
(dross
@ kasowitz.com)
Michael C. Pecorini
(mpecorini
@ kasowitz.com)
1633 Broadway
New York, New York 10019
212-506-1700
Counsel for Defendants/Counterclaim-Plaintiffs
statute of limitations “run[s] separately for the damages occasioned each time a breach of the obligation ...
occur[s]”); Moses v. Dunlop, 155 A.D.3d 466, 468 (1st Dep’t 2017) (denying motion to dismiss breach of contract
claim whet ‘contracts impose continuing obligations, each of which can be breached, triggering a new cause of
action with its own limitations period”); Beller v. William Penn Life Ins. Co. of New York, 8 A.D.3d 310, 314 (2d
Dep’t 2004) (“[P]laintiff's claim for damages accrued each time the defendant allegedly breached these [continuing]
obligations.”); Ross Network, Inc. v. RSM McGladrey, Inc., No. 19475-05, 2006 WL 1160007, at *2 (Sup. Ct.
Nassau Cty. May 1, 2006) (“Where a contract provides for continuing performance over a period of time, each
breach may begin the running of the statute anew such that accrual occurs continuously.”); Bd. of Managers of 4
North Moore Street Condominium v. Violet Purchasing Corp., No. 651803/2012, 2013 WL 582257, at *1 (Sup. Ct
-Y. Cty. Feb. 08, 2013) (“In the present case, the court finds that the breach of contract claim is not barred by the
statute of limitations because the defendants had a continuing obligation to sell all the units offered in the Offering
Plan and their continuing failure to sell these units is a continuing breach of the terms of the Offering Plan.”).
6
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INDEX NO. 607197/2022 NYSCEF DOC. NO. 171 RECEIVED NYSCEF: 12/21/2023 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NASSAU, xxxxxx xxxxxx a/k/a xxxxxxxxxx xxxxxx, individually and derivatively on behalf of Index No. 607197/2022 ROCKVILLE CORP., Hon. Sharon M.J. Gianelli Plaintiff, Mot. Seq. No. 008 -against- xxxxxxx xxxxx, individually and as the executor of the Estate of xxxx xxxxx, and as co-trustee of the disclaimer Trust under Article “Fourth” of the Last Will and Testament of xxxx xxxxx; MAKAN DELRAHIM, as former co-trustee of the disclaimer Trust under Article “Fourth” of the Last Will and Testament of xxxx xxxxx; and BAHARAK AMIRIAN as co-trustee of the disclaimer Trust under the Last Will and Testament of xxxx xxxxx, Defendants, -and- ROCKVILLE CORP., Nominal Defendant. xxxxxxx xxxxx and ROCKVILLE CORP., Counterclaim-Plaintiffs, -against- xxxxxx xxxxxx and 172 BARGAIN LIQUORS, Counterclaim-Defendants. COUNTERCLAIM-PLAINTIFFS’ MEMORANDUM OF LAW IN SUPPORT OF MOTION FOR LEAVE TO FILE AMENDED ANSWER WITH COUNTERCLAIMS 1 of 11 INDEX NO. 607197/2022 NYSCEF DOC. NO. 171 RECEIVED NYSCEF 12/21/2023 KASOWITZ BENSON TORRES LLP David E. Ross Michael C. Pecorini 1633 Broadway New York, New York 10019 (212) 506-1700 Attorneys for Defendants/Counterclaim-Plaintiffs 2 of 11 INDEX NO. 607197/2022 NYSCEF DOC. NO. 171 RECEIVED NYSCEF: 12/21/2023 TABLE OF CONTENTS Page BACKGROUND ARGUMENT A The Amended Counterclaim Would Not “Unfairly Prejudice” Or “Surprise” Counterclaim-Defendant .............cccecscesseseseesseseeeseeeseee The Amended Counterclaim Is Neither “Palpably Insufficient” Nor “Clearly Devoid of Merit” CONCLUSION 3 of 11 INDEX NO. 607197/2022 NYSCEF DOC. NO. 171 RECEIVED NYSCEF: 12/21/2023 TABLE OF AUTHORITIES Page(s) Cases Atl. Mut. Ins. Co. v. Greater New York Mut. Ins. Co., 271 A.D.2d 278 (1st Dep't 2000) Bainbridge Three Realty Corp. v. Xue Ming Lin, 30 Misc. 3d 136(A), (Ist Dep’t 2011) Bd. of Managers of 41 North Moore Street Condominium v. Violet Purchasing Corp., No. 651803/2012, 2013 WL 582257 (Sup. Ct. N.Y. Cty. Feb. 08, 2013) Beller v. William Penn Life Ins. Co. of New York, 8 A.D.3d 310 (2d Dep’t 2004) Bulova Watch Co. v Celotex Corp., 46 N.Y.2d 606 (1979) Cortes v. Jing Jeng Hang, 143 A.D.3d 854 (2d Dep’t 2016) Daniels v. Empire-Orr, Inc., 151 A.D.2d 370 (1st Dep’t 1989) Edwards v. 1234 Pac. Mgmt., LLC, 139 A.D.3d 658 (2d Dep’t 2016) Faiella v. Tysens Park Apartments, LLC, 110 A.D.3d 1028 (2d Dep’t 2013) Favia v. Harley-Davidson Motor Co., 119 A.D.3d 836 (2d Dep’t 2014) 2, 3,5 Gandhi v. Filler, 15 Misc.3d 1124(A), (Sup. Ct. Nassau Cty. 2007) Janssen v. Inc. Vill. of Rockville Ctr., 59 A.D.3d 15 (2d Dep’t 2008) Katz v. Bach Realty, Inc., 192 A.D.2d 307 (1st Dep't 1993) Loomis v. Civetta Corinno Constr. Cor] 54.N.Y.2d 18 (1981) il 4 of 11 INDEX NO. 607197/2022 NYSCEF DOC. NO. 171 RECEIVED NYSCEF: 12/21/2023 Lucido v. Mancuso, 49 A.D.3d 220 (2d Dep’t 2008) Maloney Carpentry, Inc. v. Budnik, 37 A.D.3d 558 (2d Dep’t 2007) Moses v. Dunlop, 155 A.D.3d 466 (1st Dep’t 2017) Ross Network, Inc. v. RSM McGladrey, Inc., No. 19475-05, 2006 WL 1160007 (Sup. Ct. Nassau Cty. May 1, 2006) In re Rouson, 32 A.D.3d 956 (2d Dep’t 2006) Simino v. St. Mary's Hosp. of Brooklyn, 107 A.D.2d 800 (2d Dep’t 1985) Tucciarone v. Hamlet on Olde Oyster Bay Homeowners Ass'n, Inc., 46 Misc. 3d 1226(A), (Sup. Ct. Nassau Cty. 2015)... Other Authorities CPLR 3025(b) 1,2,5 CPLR 3211(a)(7) iii 5 of 11 INDEX NO. 607197/2022 NYSCEF DOC. NO. 171 RECEIVED NYSCEF: 12/21/2023 Counterclaim-Plaintiffs xxxxxxx xxxxx and Rockville Corp. (“Counterclaim-Plaintiffs”) respectfully submit this memorandum of law in support of their motion for leave to file a first amended answer with counterclaims, pursuant to CPLR 3025(b).! The proposed amendment seeks to add a counterclaim for Counterclaim-Defendants’ breach of two commercial lease agreements with Rockville Corp.” BACKGROUND? Counterclaim-Defendant xxxxxx commenced the instant action in June 2022 by filing a summons and complaint and moving the Court for an ex parte temporary restraining order and preliminary injunction, claiming, for the first time, that he is an 80% owner of Rockville and its sole asset, the Property. After the Court granted xxxxxx’s application for a preliminary injunction and denied Defendants’ cross-motion to dismiss the complaint, Counterclaim-Plaintiffs subsequently answered, and asserted counterclaims on October 24, 2022. Dkt. No. 72. xxxxxx and Bargain Liquors (“Counterclaim-Defendants”) filed their reply to the counterclaims on November 14, 2022. Dkt. No. 80. During discovery, Plaintiff produced for the first time two fully-executed commercial leases — one dated January 3, 2006 and the other dated September 1, 2007. Both leases are signed by xxxx xxxxx (on behalf of Rockville) and xxxxxx xxxxxx (on behalf of Bargain Liquors). Ross Aff. Exs. B-C. The January 3, 2006 lease has an expiration date of December 2021. That lease 1 Also submitted herewith is the Affirmation of David E. Ross (“Ross Aff.”), dated December 21, 2023, and the exhibits annexed thereto. 2 This motion will have no effect on Plaintiff's pending motion for partial summary judgment seeking dismissal of certain counterclaims. Dkt. No. 85 (Mot. Seq. 004). The Court’s ruling on that motion will apply to those counterclaims that are repeated in the proposed amended pleading, just as they apply to the current version of the answer with counterclaims. The amendment Counterclaim-Defendants seek to file here adds a completely new counterclaim not previously plead (Ross. Aff. Ex. A, Proposed Third Counterclaim) premised on certain information Plaintiff produced in discovery. 3 Counterclaim-Plaintiffs respectfully refer the Court to the parties’ respective pleadings and Counterclaim- Plaintiffs’ opposition to Counterclaim-Defendants’ motion for partial summary judgment (Dkt. No. 103) and response to Counterclaim-Defendants’ Rule 19-a Statement of Material Facts (Dkt. No. 104) for a full recitation of the disputed and undisputed facts pertaining to Counterclaim-Plaintiffs’ original counterclaims. 6 of 11 INDEX NO. 607197/2022 NYSCEF DOC. NO. 171 RECEIVED NYSCEF: 12/21/2023 has a rental rate of $15,000 per month, to be increased by 3% annually. Ross Aff. Ex. B. The September 1, 2007 lease expires in August 2027. That lease has a rental rate of $20,000 per month, to be increased each September by 5%. Ross Aff. Ex. C. The September 1, 2007 lease superseded the January 3, 2006 lease. Bargain Liquors failed to pay rent under either lease. Counterclaim-Plaintiffs now seek to amend their counterclaims to add a claim for breach of the lease agreements due to Bargain Liquors’ continuing default in paying rent due thereunder. ARGUMENT Pursuant to CPLR 3025(b), “[a] party may amend his or her pleading, or supplement it by setting forth additional or subsequent transactions or occurrences, at any time by leave of court... Leave shall be freely given upon such terms as may be just.” “No evidentiary showing of merit is required under CPLR 3025(b).” Favia v. Harley-Davidson Motor Co., 119 A.D.3d 836. 836 (2d Dep’t 2014) (citing Lucido v. Mancuso, 49 A.D.3d 220, 229 (2d Dep’t 2008)). Indeed, “[a] party opposing leave to amend ‘must overcome a heavy presumption of validity in favor of [permitting amendment].’” Cortes v. Jing Jeng Hang, 143 A.D.3d 854, 854-55 (2d Dep’t 2016) (quoting McGhee v. Odell, 96 A.D.3d 449, 450 (1st Dep’t 2012)) (alteration in original); see also Daniels v. Empire-Orr, Inc., 151 A.D.2d 370, 371 Uist Dep’t 1989) (“[t]he party opposing the motion to amend . . . must overcome the presumption of validity in favor of the moving party, and demonstrate that the facts alleged and relied upon in the moving papers are obviously not reliable or are insufficient.”). “Applications for leave to amend pleadings under CPLR 3025(b) should be freely granted unless the proposed amendment (1) would unfairly prejudice or surprise the opposing party, or (2) is palpably insufficient or patently devoid of merit.” Favia, 119 A.D.3d at 836 (collecting cases). Neither condition is present here, and the motion for leave to add the new counterclaim should therefore be granted. 7 of 11 INDEX NO. 607197/2022 NYSCEF DOC. NO. 171 RECEIVED NYSCEF: 12/21/2023 A The Amended Counterclaim Would Not “Unfairly Prejudice” Or “Surprise” Counterclaim-Defendants As an initial matter, Counterclaim-Defendants cannot claim any prejudice or surprise from the proposed amendment. Counterclaim-Defendants must show that the proposed amendment would prejudice them in some fashion other than simply having to defend against a new claim. Indeed, as the New York Court of Appeals has long held, “[p]rejudice, of course, is not found in the mere exposure of the defendant to greater liability.” Loomis v. Civetta Corinno Constr. Corp., 54 N.Y.2d 18, 23 (1981). Counterclaim-Defendants cannot meet their burden here for a number of reasons. First, there is no valid claim of prejudice where, as here, the amendment is made prior to the note of issue being filed and where the amendment is “predicated on information supplied . . . during disclosure.” Favia, 119 A.D.3d at 837; Edwards v. 1234 Pac. Mgmt., LLC, 139 A.D.3d 658, 659 (2d Dep’t 2016) (leave to amend complaint was properly granted where “the plaintiff's motion was made prior to the filing of the note of issue, and was predicated on information obtained during discovery”); Simino v. St. Mary's Hosp. of Brooklyn, 107 A.D.2d 800, 801 (2d Dep’t 1985) (granting leave to amend where “Plaintiffs' amendment was proposed early in the discovery proceedings [and] . . . no depositions had been taken.”); see also Atl. Mut. Ins. Co. v. Greater New York Mut. Ins. Co., 271 A.D.2d 278, 280 (1st Dep't 2000) (“[a]side from the mere passage of time, no prejudice is discernible here. Virtually no discovery has been conducted, and [plaintiff] does not profess surprise at the nature of the counterclaims”); accord Katz_v. Bach Realty, Inc., 192 A.D.2d_ 307, 307 (ist Dep't 1993) (granting motion for leave to amend counterclaims where such relief “will cause plaintiff no prejudice, the motion for leave to amend having been made at an early stage of the action before any depositions were taken”). In any event, 8 of 11 INDEX NO. 607197/2022 NYSCEF DOC. NO. 171 RECEIVED NYSCEF: 12/21/2023 “TmlJere lateness, unless coupled with prejudice, does not bar an amendment.” In re Rouson, 32 A.D.3d 956, 958 (2d Dep’t 2006). Here, this action is still in its early stages of discovery, no depositions have been taken, and the proposed amendment is predicated on Plaintiff's production during discovery of executed leases. Though movants had unsigned versions of those leases, movants were not aware until receipt of the signed leases that same existed. As such, Counterclaim-Defendants cannot be prejudiced or surprised by claims arising from those documents. Second, Counterclaim-Defendants cannot claim prejudice or surprise where “the proposed amendments arise out of the same facts as those underlying the action brought by the plaintiff.” Maloney Carpentry, Inc. v. Budnik, 37 A.D.3d 558, 558 (2d Dep’t 2007); see also Janssen v. Inc. Vill. of Rockville Ctr., 59 A.D.3d 15, 27 (2d Dep’t 2008) (“The defendants cannot legitimately claim surprise or prejudice, where the proposed amendments were premised upon the same facts, transactions or occurrences alleged in the original complaint.”). This action arises out of the disputed ownership of Rockville and its sole asset, the Property. Plaintiff xxxxxx claims that he is, and always has been, the 80% majority shareholder in Rockville, yet produced during discovery fully executed leases between Rockville, signed by xxxx, and Bargain Liquors, signed by xxxxxx. Among other things, these executed commercial leases cast doubt on xxxxxx’s claimed ownership and raise the question of why a purported 80% majority shareholder would need a signed lease with one of his other businesses and Defendants and Counterclaim-Plaintiffs should be entitled to probe that very question in discovery. B The Amended Counterclaim Is Neither “Palpably Insufficient’” Nor “Clearly Devoid of Merit” Just as Counterclaim-Defendants cannot demonstrate prejudice or surprise by the proposed amendment, neither can they demonstrate, as they must, that the proposed amendment is “palpably 9 of 11 INDEX NO. 607197/2022 NYSCEF DOC. NO. 171 RECEIVED NYSCEF: 12/21/2023 insufficient” or “clearly devoid of merit.” Where, like here, a motion for leave to amend concerns adding a new cause of action, the amendment is “palpably insufficient” only if “the new cause of action would not withstand a motion to dismiss under CPLR 3211(a)(7).” Lucido, 49 A.D.3d at 225. Here, the Amended Counterclaim clearly states a prima facie breach of contract claim: xxxxxx produced a fully-executed lease agreements between Rockville, signed by xxxx, and Bargain Liquors, signed by xxxxxx. Rockville has not been paid any rent under the executed leases and thus Bargain Liquors is in breach of the lease agreement, and the breach is ongoing. Motions to amend are routinely granted, as here, where the proposed amendment is meritorious on its face. See Tucciarone v. Hamlet on Olde Oyster Bay Homeowners Ass'n, Inc., 46 Misc. 3d 1226(A), at *2 (Sup. Ct. Nassau Cty. 2015) (“the Court cannot say as a matter of law that the proposed breach of fiduciary cause of action is so lacking in merit . . . that the addition of this claim should not be allowed even under the liberal pleading rules noted above.”); Gandhi_v. Filler, 15 Misc.3d 1124(A), at *1 (Sup. Ct. Nassau Cty. 2007) (“The proposed amended complaint states a cause of action . . . and facially has merit. Thus, the motion to amend the complaint . . . must be granted.”’); see also Bainbridge Three Realty Corp. v. Xue Ming Lin, 30 Misc. 3d 136(A), at *1 (1st Dep’t 2011) (granting leave to amend answer in commercial nonpayment summary proceeding). Moreover, it is well-established that “‘a court shall not examine the legal sufficiency or merits of a pleading unless such insufficiency or lack of merit is clear and free from doubt.” Faiella v. Tysens Park Apartments, LLC, 110 A.D.3d 1028, 1029 (2d Dep’t 2013) (citing Lucido, 49 A.D.3d at 227); see also Favia, 119 A.D.3d at 836 (“No evidentiary showing of merit is required under CPLR 3025(b).”).4 4 In addition, the proposed amendment is clearly timely. As the Court of Appeals has long recognized, where, as here, a party is alleged to have a continuing obligation to make payments to his counter-party, accrual of the statute of limitations applicable to a claim for breach of that continuing obligation is tolled. See Bulova Watch Co. v Celotex Corp., 46 N.Y.2d 606, 611 (1979) (where one party is under a continuing obligation to perform, the 5 10 of 11 INDEX NO. 607197/2022 NYSCEF DOC. NO. 171 RECEIVED NYSCEF: 12/21/2023 As the proposed amendment states a cognizable claim for relief, the proposed amendment is clearly proper, and the motion to amend to add the new counterclaim should be granted. CONCLUSION For the reasons set forth above, Counterclaim-Plaintiffs respectfully request that the Court grant their motion and permit the filing of the amended answer with counterclaims. Dated: New York, New York December 21, 2023 KASOWITZ BENSON TORRES LLP By: /s/ David E. Ross David E. Ross (dross @ kasowitz.com) Michael C. Pecorini (mpecorini @ kasowitz.com) 1633 Broadway New York, New York 10019 212-506-1700 Counsel for Defendants/Counterclaim-Plaintiffs statute of limitations “run[s] separately for the damages occasioned each time a breach of the obligation ... occur[s]”); Moses v. Dunlop, 155 A.D.3d 466, 468 (1st Dep’t 2017) (denying motion to dismiss breach of contract claim whet ‘contracts impose continuing obligations, each of which can be breached, triggering a new cause of action with its own limitations period”); Beller v. William Penn Life Ins. Co. of New York, 8 A.D.3d 310, 314 (2d Dep’t 2004) (“[P]laintiff's claim for damages accrued each time the defendant allegedly breached these [continuing] obligations.”); Ross Network, Inc. v. RSM McGladrey, Inc., No. 19475-05, 2006 WL 1160007, at *2 (Sup. Ct. Nassau Cty. May 1, 2006) (“Where a contract provides for continuing performance over a period of time, each breach may begin the running of the statute anew such that accrual occurs continuously.”); Bd. of Managers of 4 North Moore Street Condominium v. Violet Purchasing Corp., No. 651803/2012, 2013 WL 582257, at *1 (Sup. Ct -Y. Cty. Feb. 08, 2013) (“In the present case, the court finds that the breach of contract claim is not barred by the statute of limitations because the defendants had a continuing obligation to sell all the units offered in the Offering Plan and their continuing failure to sell these units is a continuing breach of the terms of the Offering Plan.”). 6 11 of 11