As illustrated in Favourite Ltd. v. Cico, 171 NYS3d 67 (1st Dept 2022), New York trial courts lack discretion to grant leave to amend a complaint that has been dismissed by the Appellate Division without leave to replead.
In Favourite Ltd., the First Department dismissed plaintiffs’ second amended complaint for lack of standing to sue and remanded the matter to the trial court for entry of judgment. Id. at 72. After dismissal, plaintiffs purportedly remedied the deficiency for lack of proper standing and sought to revive the dismissed action by filing a motion for leave to file a third amended complaint. Id. at 70. The trial court granted the request, but the First Department—in a 3-2 split decision—reversed.
The First Department held that its dismissal of the complaint on appeal “presented a unique procedural scenario that deprived Supreme Court of discretion to grant leave to amend the second amended complaint.” Id. at 74. Because the First Department dismissed the claims outright, “there was no action pending when plaintiffs moved for leave to file the third amended complaint.” Id. The finality of that dismissal was not lessened by defendants’ failure to enter a judgment which, on these facts, the majority determined to be a mere formality:
Where an Appellate Division remits to the trial court below solely for the specified purpose of entering a final order, decree or judgment pursuant to the Appellate Division’s direction, the order is held to be final, and the remission in such a case is considered one for purely ‘ministerial’ action.
Id. at 75 (citations removed).
Finally, the majority concluded that the action was not preserved by defendants’ filing of counterclaims, since the second amended complaint was time-barred at the time the defendants asserted the counterclaims in their answer. Id. at 79-80. In that circumstance, the counterclaims could not stand on their own, the majority reasoned, but instead served only as a defense predicated on the primary cause of action. Id. at 79.
This case serves as an important reminder that the trial courts do not have discretion to act inconsistently with orders of the Appellate Division. And plaintiffs who suffer an unequivocal dismissal at the Appellate Division would do well to keep sight of the six-month saving period offered by CPLR 205(a).
If you have questions about an appeal, or further proceedings after an appeal, contact Michael Rakower or Travis Mock.Favourite Limited v Cico (NYSCEF)