On March 19, 2024, the Court of Appeals issued a decision in Favourite Ltd. v. Cico, 2024 NY Slip Op. 01496, holding that a court may allow amendment of a complaint that has been dismissed, even after the Appellate Division has affirmed the dismissal of the complaint, explaining:
This case concerns the proper scope of the trial court’s discretion to grant leave to amend a complaint under CPLR 3025 (b). The Appellate Division dismissed plaintiffs’ second amended complaint in its entirety for lack of standing, leaving only the defendants’ counterclaims pending in Supreme Court. Supreme Court then granted plaintiffs leave to file a third amended complaint to cure the standing issue, despite defendants’ objections that plaintiffs were instead required to file a new action. The Appellate Division sided with defendants, holding that Supreme Court had no discretion to grant leave to amend a complaint that the Appellate Division had dismissed. We now reverse.
CPLR 3025 (b) states that a party may amend his or her pleading at any time by leave of court, and that such leave shall be freely given. In accordance with this liberal policy, we have stated that a request for leave to amend should generally be granted absent prejudice or surprise to the opposing party. The grant or denial of a motion to amend is reviewed for abuse of discretion.
. . . [T]he Appellate Division holding rests on the more fundamental premise that when an appellate court has dismissed a complaint in its entirety, the trial court has no discretion to grant leave to amend that complaint under CPLR 3025 (b), even if the dismissal was without prejudice and not on the merits and the defect would be curable by amendment. In the Cicos’ view, the plaintiffs’ only option after the Appellate Division dismissal was to pursue their claims in a new action within six months under CPLR 205 (a). However, plaintiffs contend that under the circumstances of this case, the trial court also possessed discretion to grant their motion to amend in the original action under CPLR 3025 (b). We agree, and therefore reverse.
When an appellate court remits a case to the trial court, further proceedings in the trial court must be consistent with the appellate court remittitur. In some cases, the only action consistent with the appellate court mandate is for the trial court to terminate the action. For example, if a complaint were dismissed with prejudice by the appellate court, it would be inconsistent with that order for the trial court to entertain a CPLR 3025 (b) motion.
Here, however, the Appellate Division dismissal of the second amended complaint due to lack of standing or capacity was without prejudice. The order contemplated that the company could in theory, be revived, but simply stated that Sirio SRL had done so improperly. Therefore, there is nothing in the Appellate Division’s order or opinion that would prevent plaintiffs from pursuing their claims after curing the standing or capacity issue.
The question on appeal, then, is whether the Appellate Division’s decision required the plaintiffs to commence a separate action instead of seeking leave to file an amended complaint. Whatever the answer to that question might be in a case in which no action remained between the parties in Supreme Court, here the action remained pending in Supreme Court because of the Cicos’ counterclaims. Therefore, Supreme Court retained control over the parties and continued to adjudicate claims related to the same transactions that formed the subject-matter of the complaint. For that reason, the Appellate Division order also did not render the case final for purposes of appealability, as no appeal to the Court of Appeals may be taken from an order which leaves claims pending in the action between the same parties.
Because the original action remained pending in Supreme Court even after the complaint was dismissed, Supreme Court retained the power to grant leave to plaintiffs to file another amended complaint. The mere fact that a complaint is dismissed by an appellate court does not generally imply that the trial court lacks such power. Indeed, we have regularly contemplated the possibility that plaintiffs might replead claims at the trial court after they are dismissed by our court. There is nothing particularly novel about repleading a dismissed complaint in Supreme Court to cure a defect discovered on appeal.
Although the Cicos argue that such amendment is possible only when leave to amend is expressly granted by the appellate court, we decline to read silence by the appellate court so broadly. There is no requirement that the appellate court specify the effect of a dismissal. Under CPLR 5013, dismissal before the close of the proponent’s evidence is without prejudice unless the court specifies otherwise. Similarly here, although the appellate court may explicitly direct that leave to amend be granted, it is not required to do so in order to preserve the trial court’s discretion to grant such leave.
(Internal quotations and citations omitted).