Source: http://kirschenbaumesq.com/article/penny-lane-owners-corp-v-conthur-development-co-1997-wl-563866-sdny-sep-10-1997-no-94-civ-0940-csh
Timestamp: 2019-04-19 22:33:25+00:00

Document:
Walter P. Walzer, Esq., Wiseman, Hoffmann & Walzer, New York, New York.
Arthur Jacoby, Esq., Herrick, Feinstein, New York, New York.
amendments are allowed, I will consider the theory." Opinion at 9.
party by virtue of allowance of the amendment, futility of amendment, etc.
Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222. (1962).
cannot withstand a motion to dismiss or otherwise fails to state a claim.
Kaster v. Modification Systems, Inc., 731 F.2d 1014, 1018 (2d Cir.1984).
*2 As Judge Haight indicated in his prior Opinion, the plaintiff's "affiliate"
is better left to a motion for summary judgment or for trial.
Housing Development Fund Co., 608 F.2d 28, 42-43 (2d Cir.1979)).
at which time the scheduling of further proceedings may be discussed.
PENNY LANE OWNERS, CORP., Plaintiff,v.CONTHUR DEVELOPMENT CO., LTD., Jacob I. Sopher, Automatic Industries, Inc.,Harold Thurman, Estate of Patrick Consavas, and Dacar Garage Corp., SopherFamily Partnership, L.P., Defendants.
Kevin L. Smith, Esq., Erika Munro, Esq., Stroock & Stroock & Lavan LLP, New York, New York.
Samuel Kirschenbaum, Esq., Martin Kleinman, Esq., Kirschenbaum & Kirschenbaum, Garden City, New York.
*1 This is an action under the Condominium and Cooperative Abuse Relief Act of 1980, 15 U.S.C. § 3601 et seq. (the "Abuse Relief Act"), in which Penny Lane Owners Corp. ("Penny Lane"), a cooperative housing association, seeks to terminate a "sweetheart" lease between the cooperative sponsor and the current lessee of the building's parking garage. Penny Lane now moves pursuant to Rule 15(a) of the Federal Rules of Civil Procedure for an order permitting amendment of the complaint to add an allegation that Jacob I. Sopher and J.I. Sopher & Co., Inc. were "affiliates" of the sponsor within the meaning of the Abuse Relief Act, 15 U.S.C. § 3607(a)(2). For the reasons that follow, the motion is granted.
In a Memorandum Opinion and Order dated April 23, 1997 (the "Opinion"), the Honorable Charles S. Haight, U.S.D.J., denied the defendants' motion to dismiss the complaint or for summary judgment and permitted Penny Lane to take certain limited discovery. Judge Haight noted that one of Penny Lane's theories was that Mr. Sopher was an "affiliate" of the Sponsor. Opinion at 9. However, he also observed that this theory did not appear in the amended complaint but was instead raised in opposition to the defendants' dispositive motion. Opinion at 9. Accordingly, Judge Haight stated that "Penny Lane could move under Rule 15(a) to further amend its complaint, and, given the liberality with which pleading amendments are allowed, I will consider the theory." Opinion at 9.
Penny Lane has now made the anticipated motion. While the other defendants have consented to the proposed amendments, defendants Jacob I. Sopher and the Sopher Family Partnership, L.P. (the "Sopher defendants") have opposed the motion.
Rule 15(a) provides that leave to amend "shall be freely given when justice so requires." Fed.R.Civ.P. 15(a); see Ronzani v. Sanofi S.A., 899 F.2d 195, 198 (2d Cir.1990). Thus, amendment will be granted [i]n the absence of any apparent or declared reason--such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc.
Here, the only argument raised by the Sopher defendants is that the proposed amendment would be futile. A motion to amend may be denied if the amendment cannot withstand a motion to dismiss or otherwise fails to state a claim. Azurite Corp. Ltd. v. Amster & Co., 52 F.3d 15, 19 (2d Cir.1995). However, on a Rule 15 motion, any inquiry into the merits of the claim is limited. To overcome objections of futility, the plaintiff must merely show that it has "at least colorable grounds for relief[.]" Ryder Energy Distribution Corp. v. Merill Lynch Commodities Inc., 748 F.2d 774, 783 (2d Cir.1984) (quotation omitted); Kaster v. Modification Systems, Inc., 731 F.2d 1014, 1018 (2d Cir.1984).
*2 As Judge Haight indicated in his prior Opinion, the plaintiff's "affiliate" theory states a claim. Nevertheless, the Sopher defendants argue that the deposition of Jacob I. Sopher demonstrates that that theory is unsupported by the facts. Their interpretation of Mr. Sopher's testimony, however, is not beyond dispute, and the plaintiff draws different inferences. In any event, [a] determination under Rule 15(a) that there is no merit to the newly asserted claim ... is not a summary judgment motion. When, as in this case, the argument against allowing the amended complaint is based on an assertion that the evidence will not support the allegations made, an evaluation of the merits is better left to a motion for summary judgment or for trial.
Arnold v. Spanierman, No. 94 Civ. 2501, 1994 WL 673642, at *1 (S.D.N.Y. Dec. 1, 1994) (citing S.S. Silberblatt, Inc. v. East Harlem Pilot Block-- Building 1 Housing Development Fund Co., 608 F.2d 28, 42-43 (2d Cir.1979)).
Accordingly, Penny Lane's motion to serve and file the Second Amended Complaint is granted. The limited discovery provided for in the Opinion has been completed. Counsel have a conference with Judge Haight on September 12, 1997, at which time the scheduling of further proceedings may be discussed.

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