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New York State Laws and Procedures for Adding Newly-Added Parties to an

February 16, 2022

New York

,

United States of America

Issue

When a plaintiff adds new parties as defendants to an action after the existing parties have completed discovery, what are the discovery obligations in respect of the claims against the new parties?

Conclusion

No New York Cases were identified that specifically set out discovery obligations in respect of the claims against parties that were added as defendants to an action after the existing parties had completed discovery. However, the following legislation, rules, and cases may be instructive as to the discovery process required when new parties are added.

CPLR § 3101 sets out the general rule that there shall be full disclosure of all matter material and necessary in the prosecution or defense of an action, regardless of the burden of proof, by parties to the action.

Per section 202.21 of PART 202. Uniform Civil Rules For The Supreme Court & The County Court, the certificate of readiness for trial requires the parties to confirm that any discovery proceedings known to be necessary have been completed. (PART 202. Uniform Civil Rules For The Supreme Court & The County Court)

In Cirino v. 15 E. 208th St. Realty Corp., a defendant was added to an action after the certificate of readiness was filed. The parties disputed whether the newly added defendant was entitled to conduct discovery. The New York Supreme Court, Bronx County stated that, as a newly added party, the defendant was entitled to conduct its own discovery even though the party was added to the action while the case was on the trial calendar. The Court also noted that the relation back doctrine, under which a defendant that is related to an original defendant may be added as a party after the statutory limitations period has expired, does not deprive a newly added party of its right to engage in discovery.

In Bashian & Farber, LLP v. Syms, the New York Supreme Court, Westchester County noted that an order of the Court had granted the plaintiff's motion to add defendant parties to the action. The plaintiffs filed a summons and amended complaint and the Court stated that the parties were to proceed with discovery respecting the newly-added party defendants.

In Brock v. Bua, the Appellate Division, Second Department noted that judicial economy is accomplished by the statute of limitations in part by preventing the interruption of the normal course of lawsuits by proceedings to add parties whose joinder will inevitably result in further delays for the purpose of discovery.

Law

No New York Cases were identified that specifically set out discovery obligations in respect of the claims against parties that were added as defendants to an action after the existing parties had completed discovery. However, the following legislation, rules, and cases may be instructive as to the discovery process required when new parties are added.

CPLR § 3101 sets out the general rule that there shall be full disclosure of all matter material and necessary in the prosecution or defense of an action, regardless of the burden of proof, by parties to the action:

(a) Generally. There shall be full disclosure of all matter material and necessary in the prosecution or defense of an action, regardless of the burden of proof, by:

(1) a party, or the officer, director, member, agent or employee of a party;

(2) a person who possessed a cause of action or defense asserted in the action;

[...]

Per section 202.21(a) of PART 202. Uniform Civil Rules For The Supreme Court & The County Court, no action or special proceeding shall be deemed ready for trial unless there is first filed a note of issue accompanied by a certificate of readiness, with proof of service on all parties entitled to notice, in the form prescribed by this section:

(a) General. No action or special proceeding shall be deemed ready for trial or inquest unless there is first filed a note of issue accompanied by a certificate of readiness, with proof of service on all parties entitled to notice, in the form prescribed by this section. Filing of a note of issue and certificate of readiness is not required for an application for court approval of the settlement of the claim of an infant, incompetent or conservatee. The note of issue shall include the County Clerk's index number; the name of the judge to whom the action is assigned; the name, office address and telephone number of each attorney who has appeared; the name, address and telephone number of any party who has appeared pro se; and the name of any insurance carrier acting on behalf of any party. Within 10 days after service, the original note of issue, and the certificate of readiness where required, with proof of service where service is required, shall be filed in duplicate with the County Clerk together with payment of the calendar fee prescribed by CPLR 8020 or a copy of an order permitting the party filing the note of issue to proceed as a poor person, and a duplicate original with proof of service shall be filed with the clerk of the trial court. The County Clerk shall forward one of the duplicate originals of the note of issue to the clerk of the trial court stamped "Fee Paid" or "Poor Person Order."

[...]

As provided in the form set out at section 202.21(b) of PART 202, the certificate of readiness requires the parties to confirm that any discovery proceedings known to be necessary have been completed.

In Cirino v. 15 E. 208th St. Realty Corp., 2018 NY Slip Op 30886(U) (N.Y. Sup. Ct. 2018), a defendant was added to an action after the certificate of readiness was filed. The parties disputed whether the newly added defendant was entitled to conduct discovery. The New York Supreme Court, Bronx County stated that, as a newly added party, the defendant was entitled to conduct its own discovery even though the party was added to the action while the case was on the trial calendar. The Court also noted that the relation back doctrine, under which a defendant that is related to an original defendant may be added as a party after the statutory limitations period has expired, does not deprive a newly added party of its right to engage in discovery (at 2-4):

This is an action to recover damages for personal injuries allegedly sustained by the plaintiff arising from a slip and fall accident that occurred on or about February 20, 2014. It is alleged that the plaintiff slipped and fell on snow and ice outside of the premises known as 15 East 208th Street, County of Bronx, City and State of New York. It is alleged that 15 East 208th Street owned the premises in question and MNS was the property manager.

The defendant MNS argues that the note of issue should be stricken since MNS was recently added as a defendant. The defendant MNS also argues that it should be allowed to move for summary judgment once it completes discovery.

The plaintiff opposes the motion arguing that MNS is not entitled to conduct any discovery since the defendants are united in interest. The plaintiff alleges 15 East 208th Street is the owner of the premises and MNS is the property manager. The plaintiff contends that the defendants should not be granted an extension of time to move for summary judgment.

Page 3

In addition, the plaintiff cross-moves for leave to amend the bill of particulars to include additional injuries that have not been plead, but the defendants were made aware of during the plaintiff's deposition. The defendants oppose the amendment arguing that a post-note of issue amendment would prejudice the defendants since discovery has not been exchanged as to the proposed, new injuries.

[...]

Page 4

It is undisputed that the plaintiff amended his complaint, on or about August 11, 2017, to add MNS as a party defendant, approximately 19 months after the note of issue and certificate of readiness was filed. MNS was a newly added party to the action and entitled to conduct its own discovery and move for summary judgment even though it was added to the action while the case was on the trial calendar. The plaintiff argues that the note of issue should not be stricken since MNS and 15 East 208th Street are parties united in interest and, as such, MNS has received all discovery to date.

The 'united in interest' term describes the relationship between two parties under the relation back doctrine. The relation back doctrine enables a plaintiff to correct a pleading error by adding either a new claim or a new party 'united in interest' with the original defendant after the statutory limitations period has expired (see Buran v Coupal, 87 NY2d 173 [1995]). The relation back doctrine, however, does not deprive a newly added party of its right to engage in discovery (see Jacobson v McNeil Consumer & Specialty Pharms., 68 AD3d 652 [1st Dept 2009]).

The defendants' order to show cause seeks to strike the note of issue upon the grounds that MNS is a newly added party and is entitled to engage in discovery. Whether or not the defendants are united in interest does not bar MNS' right to discovery or its right to move for summary judgment. In addition, a Court may exercise its discretion in granting further discovery where there are "unusual or unanticipated circumstances" to prevent "substantial prejudice" (22 NYCRR §202.21[d]; see Schroeder v IESI NY Corp., 24 AD3d 180 [1st Dept 2005]). Based on the record before the Court, and in order that no party is prejudiced, the note of issue must be stricken

In Bashian & Farber, LLP v. Syms, 2017 NY Slip Op 30599(U) (N.Y. Sup. Ct. 2017), the New York Supreme Court, Westchester County noted that an order of the Court had granted the plaintiff's motion to add defendant parties to the action. The plaintiffs filed a summons and amended complaint and the Court stated that the parties were to proceed with discovery respecting the newly-added defendants (at 3-4):

Lastly, plaintiffs contend that defendants failed to provide information pursuant to an October 4, 2016 demand (in the form of a subpoena duces tecum) for documentation which was to have been provided at a hearing before the Honorable Charles D. Wood, J.S.C., held on October 7, 2016. The information sought was information regarding defendants' Lewisboro, New York property, loan documents between defendants and Ruth Merns, and gift tax returns pertaining to gifts between defendants and Ruth Merns. Significantly, the recent Decision and Order of this Court (Wood, J.), dated December 16, 2016, inter alia, granted plaintiffs' motion to amend the complaint to add Ruth Merns and Michael D. Lynch as party defendants, and debtor

Page 4

and creditor causes of action for the alleged fraudulent sale of a Lewisboro property to Merns. Plaintiffs have since filed a summons and amended complaint and the parties will now proceed with discovery respecting plaintiffs' newly-added claims and the newly-added party defendants.

In Brock v. Bua, 83 A.D.2d 61, 443 N.Y.S.2d 407 (N.Y. App. Div. 1981), the Appellate Division, Second Department noted that judicial economy is accomplished by the statute of limitations in part by preventing the interruption of the normal course of lawsuits by proceedings to add parties whose joinder will inevitably result in further delays for the purpose of discovery (at 412):

In addition, the third prong of the foregoing test also involves the subsidiary purpose of the Statute of Limitations as one which puts stale claims to repose, thereby freeing a potential defendant from the fear that his involvement in events of the distant past may be the subject of litigation against him. This aspect of the Statute of Limitations reflects a social policy designed to give security and stability to human affairs and thereby to allow an individual or entity to plan for the future free from old claims and obligations. Thus, where such a potential defendant knows that other persons have been subjected to timely suit arising out of an incident in which his participation was manifest to the aggrieved party, he should quite justifiably be entitled to conclude that the failure to also bring suit against him within the period of limitation means that for whatever reason his trespasses have been forgiven by the plaintiff and that the matter has been laid to rest as far as he is concerned. Conversely, where such a potential defendant knows or should know that his involvement in the events in question was not clear to the plaintiff and that failure to bring suit against him as well was therefore the result of excusable mistake upon the plaintiff's part, that defendant cannot justifiably conclude that the plaintiff has, in fact, opted not to sue him. In such situations "policy of repose, designed to protect defendants, is * * * outweighed * * * the interests of justice require vindication of the plaintiff's rights" (Burnett v. New York Cent. R. R. Co., 380 U.S. 424, 428, 85 S.Ct. 1050, 1054, 13 L.Ed.2d 941). Finally, the third prong of the test promotes judicial economy by preventing the interruption of the normal course of lawsuits by proceedings to add parties who could have been present from the outset and whose joinder will inevitably result in further delays for the purpose of discovery, etc.

In Vivir of Li, Inc. v. Ehrenkranz, 2014 NY Slip Op 30785 (N.Y. Sup. Ct. 2014), the defendants/counterclaimants brought a motion seeking an order of the New York Supreme Court, Commercial Division permitting them to file and serve an amended counterclaim naming another party as a defendant. The counterclaim defendants argued against the motion on the basis that adding the proposed party would require additional discovery (at 2 and 4):

Defendants/Counterclaimants, John Ehrenkranz and Andra Ehrenkranz ("counterclaimants" or "Ehrenkranzs") move, by Notice of Motion, seeking an order of this Court, permitting the Ehrenkranzs to file and serve an amended counterclaim naming Dmitri Boylan as a

Page 2

Counterclaim/Defendant, on the Ehrenkranzs' breach of contract claim in which the Counterclaimants seek to pierce the corporate veil of Counterclaim Defendant, Opus Vivir. At this stage, following a jury trial, the corporate counterclaim Defendant has been found to have breached the parties' home construction contract and been found liable for contract damages in excess of $2.2 million. The Court is in the middle of the second stage of this action, in which the Ehrenkranzs are seeking to pierce the corporate veil of Opus Vivir, in order to hold Julian Boylan individually liable for the breach of contract.

[...]

Counterclaim Defendants' counsel submitted a reply to the supplemental memorandum stating that: 1) there is no new evidence gleaned from the QuickBooks files demonstrating Dmitri Boylan dictating that manner in which Opus Vivir's files were categorized; 2) there is no support as testified to by Julian Boylan's expert that the records are disingenuous; 3) the evidence shows that Julian Boylan himself aided in Opus Vivir meeting its cash needs both in loaning funds and in securing lines of credit; 4) that all monies were attributed to specific projects; 4) that the Ehrenkranz counsel have been in possession of corporate tax returns for years and there is no evidence of tax code violations set forth; and 5) that the final payments by MHR to Opus Vivir has been and will continue to demonstrate that the corporation was simply arranging to make its final payments before going out of business. Counsel for counterclaim Defendants also asserts that at this point, to add Dmitri Boylan as a party will require service, motions to dismiss, and possibly, if denied, more years of discovery.

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