Inspirit Dev. & Constr. LLC v GMF 157 LP

2024 NY Slip Op 33265(U)

September 16, 2024

Supreme Court, New York County

Docket Number: Index No. 652022/2020

Judge: Nancy M. Bannon

Cases posted with a "30000" identifier, i.e., 2013 NY Slip

Op 30001(U), are republished from various New York

State and local government sources, including the New

York State Unified Court System's eCourts Service.

This opinion is uncorrected and not selected for official

publication.
652022/2020 INSPIRIT DEVELOPMENT AND vs. GMF 157 LP

Motion No. 005

Page 1 of 5

The following e-filed documents, listed by NYSCEF document number (Motion 005) 190, 191, 192, 193, 

194, 195, 196, 197, 198, 199, 200, 201, 202, 203, 204, 205, 206, 207, 208, 209, 210, 211, 212, 213, 214, 

215, 216, 217, 218, 219, 220, 221, 222, 223

were read on this motion to/for AMEND CAPTION/PLEADINGS .

INTRODUCTION

In this breach of contract action, defendant GMF 157 LP (“GMF”) moves, pursuant to 

CPLR 3025(b), to amend its answer to add a trust fund diversion counterclaim against the 

plaintiff, Inspirit Development and Construction LLC (“IDC”), and IDC’s president/managing 

partner, Alex Chiesi. GMF’s separate trust fund diversion action against Chiesi and IDC was 

dismissed by this court (Joel Cohen, J.) on April 30, 2024. IDC opposes the motion. The motion 

is denied for the following reasons. 

BACKGROUND

In May 2017, GMF, as owner, and IDC, as contractor, signed an Agreement Between 

Owner and Contractor for a Residential or Small Commercial Project (the “Contract”) for the 

renovation of unit 64AB at 57 West 57th Street in Manhattan. Pursuant to the Contract, IDC 

would supervise the renovation of the property and hire subcontractors. GMF was to pay IDC on 

a “cost-plus” basis, meaning that IDC would charge GMF the costs of the subcontractors 

engaged by IDC, plus IDC’s markup. Payments to IDC, made for the improvement of real 

property, were to be held in trust pursuant to NY Lien Law § 70(2). In March 2020, GMF 

terminated IDC, claiming IDC was in breach of the Contract. 

SUPREME COURT OF THE STATE OF NEW YORK

NEW YORK COUNTY

PRESENT: HON. NANCY M. BANNON PART 61M

Justice 

---------------------------------------------------------------------------------X INDEX NO. 652022/2020

 MOTION DATE 06/14/2024

 MOTION SEQ. NO. 005

DECISION + ORDER ON 

MOTION

INSPIRIT DEVELOPMENT AND CONSTRUCTION LLC,

 Plaintiff, 

- v -

GMF 157 LP, POLIZZOTTO DEVELOPMENT, LLC,3RE 

PARTNERS, and GINO POLIZZOTTO,

 Defendants. 

---------------------------------------------------------------------------------X

FILED: NEW YORK COUNTY CLERK 09/17/2024 03:47 PM INDEX NO. 652022/2020

NYSCEF DOC. NO. 227 RECEIVED NYSCEF: 09/17/2024

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Motion No. 005

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IDC commenced the instant action on May 27, 2020, asserting causes of action against 

GMF for (1) breach of contract, (2) wrongful termination, (3) quantum meruit, and (4) unjust 

enrichment, as well as claims against defendants Polizzotto Development LLC, 3RE partners, 

and Gino Polizzotto (collectively, the “Polizzotto defendants”) for (5) negligence, and (6) tortious 

interference. GMF answered, asserting a counterclaim against IDC for breach of contract and 

interposing a third-party complaint against IDC’s sole member, Alex Chiesi, alleging a single 

cause of action against him for fraud. By Decision and Order dated January 25, 2021, the court 

(Ostrager, J. [Ret.]) dismissed IDC’s third, fourth, and fifth causes of action, and further 

dismissed GMF’s third-party complaint against Chiesi in its entirety. NYSCEF Doc. No. 41. In 

March 2022, the Appellate Division, First Department modified the court’s dismissal order to 

also dismiss IDC’s sixth cause of action, and otherwise affirmed. See Inspirit Dev. & Constr.,

LLC v GMF 157 LP, 203 AD3d 430 (1st Dept. 2022).

On February 28, 2023, IDC filed a Note of Issue and Certificate of Readiness. IDC 

thereafter moved for summary judgment on its two remaining causes of action against GMF for 

breach of contract and wrongful termination, and for dismissal of GMF’s sole counterclaim 

against it for breach of contract (MOT SEQ 004). By an order dated October 5, 2023, the court 

(Ostrager, J. [Ret.]) denied the motion in its entirety. 

The very same day, October 5, 2023, GMF commenced a separate action in this court

against IDC and Chiesi, under Index No. 654907/2023, alleging a single cause of action for Lien 

Law Art. 3-A trust fund diversion (the “Trust Fund Action”). By an order dated April 30, 2024, 

Judge Cohen granted the defendants’ motion to dismiss that action pursuant to CPLR 

3211(a)(4), prior action pending. However, the dismissal was not on the merits and was without 

prejudice to any arguments that may be raised in the present action which was already pending 

between substantially the same parties and concerned claims arising out of the same underlying 

set of transactions.

On May 14, 2024, GMF filed the instant motion to amend its answer, pursuant to CPLR 

3025, to add a trust fund diversion counterclaim against IDC and Chiesi. GMF transposes to its 

proposed amended answer the cause of action and supporting allegations asserted in its

dismissed complaint in the Trust Fund Action, alleging that IDC and Chiesi failed to maintain 

required books and records, failed to furnish GMF with information related to trust assets, and 

diverted trust funds meant to pay subcontractors, resulting in alleged damages to GMF of no 

less than $907,402.81.

FILED: NEW YORK COUNTY CLERK 09/17/2024 03:47 PM INDEX NO. 652022/2020

NYSCEF DOC. NO. 227 RECEIVED NYSCEF: 09/17/2024

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Notably, the only allegations included in the Trust Fund Action complaint but left out of 

GMF’s proposed amended answer highlight the fact that GMF was already aware of the 

essential facts underpinning its proposed trust fund diversion counterclaim four years ago when 

it answered the initial complaint in this action, and certainly no later than April 2021. Specifically, 

the allegations left out of GMF’s proposed amended answer assert that GMF became aware in 

late 2019 and early 2020 that IDC had not paid its subcontractors with the funds paid to it by 

GMF; that, following IDC’s termination in the spring of 2020, in order to obtain the continued 

performance of certain of IDC’s subcontractors, including Arista Air Conditioning Corp. (“Arista”), 

Continental Lighting Corp. (“Continental”), Nevco Contracting Inc. (“Nevco”) and PROFAC, Inc. 

(“PROFAC”), and to avoid the imposition of mechanic’s liens, GMF retained said subcontractors 

and directly paid amounts allegedly owed to them by IDC, by virtue of which GMF became 

subrogated to the rights of those subcontractors to recoup from IDC the subject amounts that 

should have been paid out of the trust; and that, on April 21, 2021, GMF, as subrogee, 

demanded a trust fund accounting from IDC. Compare NYSCEF Doc. No. 207 (Trust Fund 

Action Compl.), ¶¶ 9-28, with NYSCEF Doc. No. 218 (Proposed Am. Answer), ¶¶ 31-47.

DISCUSSION

Leave to amend a pleading should be freely granted absent evidence of substantial 

prejudice or surprise, or unless the proposed amendment is palpably insufficient or patently 

devoid of merit. See CPLR 3025(b); JPMorgan Chase Bank, N.A. v Low Cost Bearings NY, Inc., 

107 AD3d 643 (1st Dept. 2013); Cherebin v Empress Ambulance Serv., Inc., 43 AD3d 364, 365 

(1st Dept. 2007). A court must examine the merit of the proposed amendment in order to 

conserve judicial resources.” 360 West 11th LLC v ACG Credit Co. II, LLC, 90 AD3d 552, 553 

(1st Dept. 2011). “[W]here the amendment is sought after a long delay, and a statement of 

readiness has been filed, judicial discretion in allowing the amendment should be discreet, 

circumspect, prudent and cautious.” Cseh v New York City Tr. Auth., 240 AD2d 270, 272 (1st

Dept. 1997). To be sure, the mere “fact that a motion to amend is made after a Note of Issue 

does not of necessity call for its denial.” Jacobson v Croman, 107 AD3d 644, 645 (1st Dept. 

2013). Nonetheless, “where there has been an extended delay in moving to amend, the party 

seeking leave to amend must establish a reasonable excuse for the delay.” Oil Heat Inst. of

Long Island Ins. Tr. v RMTS Assocs., LLC, 4 AD3d 290, 293 (1st Dept. 2004) (internal quotation 

marks omitted). Conversely, the burden is on the party opposing the motion to establish 

substantial prejudice or surprise if leave to amend is granted. See Forty Cent. Park S., Inc. v

Anza, 130 AD3d 491 (1st Dept. 2015). In that regard, the opposing party may establish prejudice

FILED: NEW YORK COUNTY CLERK 09/17/2024 03:47 PM INDEX NO. 652022/2020

NYSCEF DOC. NO. 227 RECEIVED NYSCEF: 09/17/2024

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Motion No. 005

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by showing an unjustified delay and that it was hindered from seeking discovery on the newly

proposed claim. See e.g Endothelex, Inc. v Vasomedical, Inc., 202 AD3d 620 (1

st Dept. 2022);

Van Damme v Gelber, 111 AD3d 408 (1

st Dept. 2023).

Here, GMF did not file the instant motion to amend until May 14, 2024, four years after 

the instant action was commenced, almost fifteen (15) months after the Note of Issue was filed 

and more than seven (7) months after IDC’s summary judgment motion was denied. GMF does 

not establish any reasonable excuse for this delay. It contends that it did not obtain evidence 

that IDC was failing to use trust funds to pay subcontractors until the deposition of one such 

subcontractor, Janusz Gierlak, in January 2023. However, GMF itself states in its motion 

papers, as it did in the Trust Fund Action complaint, that, “[b]eginning in late 2019, and then in 

early 2020, it became apparent that IDC had not paid all of its subcontractors with the funds 

paid to it by GMF.” Indeed, GMF’s original Answer filed on August 18, 2020, expressly alleges 

the failure to pay subcontractors as a basis for its breach of contract counterclaim against IDC. 

Moreover, in April 2021, as alluded to in the Trust Fund Action complaint, GMF sought a 

trust fund accounting from IDC, serving it with a Demand for a Verified Statement Pursuant to 

Art. 3-A of the Lien Law, a copy of which is submitted by IDC in opposition to the present 

motion. The April 2021 Demand listed four trust beneficiaries—Arista, Continental, Nevco and 

PROFAC—and stated that the amount purportedly due and unpaid to these beneficiaries was 

$907,402.81 plus interest. These are the same four subcontractors alleged in the Trust Fund 

Action complaint, as well as in GMF’s present motion papers, to have been retained by GMF in 

the spring of 2020 and directly paid outstanding amounts owed to them by IDC, which amounts 

should have been paid out of the trust. And GMF’s present proposed amended pleading seeks 

exactly the same amount of damages—$907,402.81.

In short, IDC has shown that GMF was aware of the factual basis for its proposed trust 

fund diversion claim at the commencement of this action in May 2020, and certainly no later 

than April 2021, but nevertheless did not seek to amend its counterclaims for four years, until 

after the Note of Issue was filed and IDC’s summary judgment motion was decided. To allow the 

amendment at this juncture would prejudice both IDC and Chiesi, neither of whom had any 

opportunity to conduct discovery related to the proposed new claim. See Endothelix, Inc. v 

Vasomedical, Inc., supra, Van Damme v Gelber, supra. Indeed, Chiesi has not been a party to 

this action in his individual capacity since the dismissal of GMF’s third-party complaint against 

him in January 2021, which preceded the start of discovery herein.

FILED: NEW YORK COUNTY CLERK 09/17/2024 03:47 PM INDEX NO. 652022/2020

NYSCEF DOC. NO. 227 RECEIVED NYSCEF: 09/17/2024

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Motion No. 005

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CONCLUSION

Accordingly, upon the foregoing papers, it is 

ORDERED that the motion of defendant GMF 157 LP for leave to amend its answer and 

counterclaims pursuant to CPLR 3025(b) is denied; and it is further 

ORDERED that the Clerk shall mark the file accordingly. 

This Constitutes the Decision and Order of the court.

9/16/2024

$SI

G$

DATE

CHECK ONE: CASE DISPOSED X NON-FINAL DISPOSITION

X GRANTED DENIED GRANTED IN PART OTHER

APPLICATION: SETTLE ORDER SUBMIT ORDER

CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT REFERENCE

FILED: NEW YORK COUNTY CLERK 09/17/2024 03:47 PM INDEX NO. 652022/2020

NYSCEF DOC. NO. 227 RECEIVED NYSCEF: 09/17/2024

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N;:n~ 

HON. NANCY M. BANNON 

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