New Claims Relate Back Because Original Complaint Described Transactions and Occurrences Upon Which New Causes of Action Were Based

On January 10, 2024, Justice Masley of the New York County Commercial Division issued a decision in Lazar v. Mor, 2024 NY Slip Op. 30128(U), holding that claims in an amended complaint related back to the original complaint because the original complaint described the transactions and occurrences upon which the new causes of action were based, explaining:

A claim in an amended pleading relates back to the original pleading if the original pleading gives notice of the transactions, occurrences to be proved pursuant to the amended pleading. The relation back doctrine enables a plaintiff to correct a pleading error – by adding either a new claim or a new party – after the statutory limitations period has expired. Where an amendment contains an untimely claim against a defendant who is already a party to the litigation, the relevant considerations are simply (1) whether the original complaint gave the defendant notice of the transactions or occurrences at issue and (2) whether there would be undue prejudice to the defendant if the amendment and relation back are permitted.

Here, to the extent that the breach of contract claims allege distributions to defendants made after July 13, 2016, that is, within six years of July 13, 2022, when the present motion to amend was filed, these claims are timely.

To the extent that plaintiffs allege distributions made prior to July 13, 2016, the breach of contract claims relate back to the amended complaint because the amended complaint placed defendants on notice of these transactions, namely, that defendants took distributions that exceeded the amounts to which they were entitled based on their capital contributions to Attena and Hem era. Specifically, in the fraud and breach of fiduciary duty claims alleged in the amended complaint, plaintiffs alleged that defendants caused plaintiffs to contribute nearly all the capital that Attena and Hemera needed to acquire certain properties by overstating the purchase prices, defendants made no or negligible capital contributions to Attena and Hemera, and, accordingly, all or almost all of defendants’ equity in Attena and Hemera and resulting profit distributions should have been allocated to plaintiffs. The new breach of contract claims are similarly predicated on defendants’ alleged insufficient capital contributions and excessive distributions. Further, defendants will suffer no undue prejudice if the amendment and relation back are permitted. Accordingly, the breach of contract claims relate back to the amended complaint filed on January 15, 2020. As all
of the alleged distributions to defendants occurred within six years of January 15, 2020, the breach of contract claims are timely.

Defendants’ argument that the amended complaint did not allege breach of the entities’ operating agreements is unavailing because the relevant inquiry is not whether defendant had notice of the claim, but whether the original pleading gives notice of the transactions or occurrences to be proved pursuant to the amended pleading.

(Internal quotations and citations omitted).

Stay informed!
Sign up for email alerts and notifications here.
Read more about our Complex Commercial Litigation practice.