Court Opinion

ID: 9951829
Source: CourtListenerOpinion
Date Created: 2024-03-19 13:08:33.210809+00
Date Added: 2024-06-11T14:42:52.931829
License: Public Domain

State of New York                                                        OPINION
Court of Appeals                                          This opinion is uncorrected and subject to revision
                                                            before publication in the New York Reports.

 No. 17
 Favourite Limited, et al.,
          Appellants,
       v.
 Benedetto Cico, et al.,
          Respondents,
 et al.,
          Defendant.

 Peter Jakab, for appellants.
 Sean M. Kemp, for respondents.

 WILSON, Chief Judge:

        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’
                                            -1-
                                             -2-                                      No. 17

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.

                                               I.

         Plaintiff Upper East Side Suites LLC (UESS) is a Delaware LLC formed in 2006 to

acquire a five-story building in Manhattan and rent the apartments within as short-term

accommodations.1 The remaining plaintiffs are investors in UESS. Defendants Carla and

Benedetto Cico were the sole managers of the company. The short-term accommodation

business was unsuccessful, and the property was eventually sold in a distress sale. The

Cicos used the proceeds as a down payment on a separate building, but ended up forfeiting

the down payment once that sale failed to close, leaving no money returnable to the

investors. The investors allege that the Cicos repeatedly lied to them about these operations

and that the purchase of the second building was never authorized or disclosed. After the

members removed the Cicos as managers of the company, plaintiffs commenced an action

in May 2016 for breach of the operating agreement, breach of fiduciary duty, and other

related claims.

1
    We take the facts here as pleaded in the complaint.
                                             -2-
                                          -3-                                     No. 17

      When the Cicos were removed as managers, and unbeknownst to plaintiffs,

Benedetto Cico resigned as the registered agent for UESS. Therefore, in November 2016

the Delaware Secretary of State cancelled the LLC’s certification of formation (see Del

Code Ann title 6, § 18-104 [d]).

      The original complaint was dismissed in February 2018 after UESS lost counsel and

failed to appear, but the plaintiffs were permitted to file an amended complaint. The

investors (but not UESS) timely filed an amended complaint, which Benedetto Cico moved

to dismiss, arguing among other things that a suit may not be brought on behalf of a

cancelled Delaware LLC. UESS member Sirio SRL then acquired a certificate of revival

for UESS, and the plaintiffs cross-moved to file a second amended complaint with both the

investors and UESS as plaintiffs. In an October 2018 order denying the motion to dismiss

and granting the cross-motion to file the second amended complaint, Supreme Court held

that because UESS had been revived, the Cicos’ arguments related to the inactivity of the

company were no longer relevant.2

      The Cicos appealed. During the pendency of the appeal, the Cicos filed

counterclaims against both UESS and the individual plaintiffs; the counterclaims were

based on alleged breaches of the operating agreement. The counterclaims remained

2
  The Cicos then moved to dismiss the second amended complaint, claiming that the action
was time-barred. Supreme Court denied the motion to dismiss and held that the action was
timely. The Cicos also appealed that order, but the appeal was rendered academic by the
Appellate Division ruling on the October 2018 order.

                                          -3-
                                           -4-                                      No. 17

pending in Supreme Court throughout the appeal of the October 2018 order granting the

motion to file the second amended complaint.

       In March 2020, the Appellate Division reversed that order and granted the Cicos’

motion to dismiss the complaint, holding that UESS had not been properly revived. The

court held that because there was no evidence that the company had authorized Sirio SRL

to act on its behalf, the certificate of revival obtained by Sirio was not valid, and UESS

therefore continued to lack standing or capacity.

       The Appellate Division’s decretal paragraph is as follows:

              Order…entered October 30, 2018, which, insofar as appealed
              from, denied defendants Benedetto Cico’s and Carla Cico’s
              motions to dismiss the amended complaint, and granted in part
              plaintiffs’ cross motion for leave to file a second amended
              complaint, unanimously reversed, on the law, without costs,
              the motions granted, and the cross motion denied. The Clerk is
              directed to enter judgment accordingly.

       When the case returned to Supreme Court, the plaintiffs informed the court that they

would again attempt to cure the revival issue by working with the Delaware Secretary of

State. Their efforts culminated in the filing of a new Certificate of Revival in December

2020, with evidence of a vote by membership authorizing the action. The plaintiffs then

moved pursuant to CPLR 3025 (b) to file a third amended complaint. The Cicos opposed,

arguing that amendment was improper after the Appellate Division had dismissed the

previous complaint in its entirety.

       Supreme Court granted the motion to amend. The Court reasoned that although

plaintiffs could have commenced a separate action under CPLR 205 (a) after the Appellate

Division dismissed their claims without prejudice, “it would make no sense, under the

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                                          -5-                                     No. 17

circumstances, for plaintiffs to have commenced another separate action…and then to have

moved to consolidate it with this one when this one has always remained active and

pending.” The Court also noted that the filing of a new action would have been timely on

the amendment date.3

      The Appellate Division reversed in a 3-2 decision. The majority held that its

dismissal of the second amended complaint left Supreme Court powerless to entertain a

motion to file another amended complaint, because no complaint remained pending to

amend. It also separately held that the amendment was time-barred. The dissent concluded

that although a complaint dismissed by the Appellate Division with prejudice may not be

amended, it is within the discretion of the court of instance to allow amendment of a

complaint dismissed without prejudice or not on the merits under certain circumstances.

The dissent also reasoned that there was no timeliness issue due to the COVID-19 tolling

provisions in Executive Order 202.8, which went into effect shortly after the prior

Appellate Division decision.

      The plaintiffs appealed as of right under CPLR 5601 (a).

                                           II.

      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

3
  In the same order, Supreme Court also granted an earlier motion by the plaintiffs to
dismiss the Cicos’ counterclaims. This portion of the order was affirmed by the Appellate
Division and is not at issue here.

                                          -5-
                                             -6-                                        No. 17

liberal policy, we have stated that a request for leave to amend should generally be granted

absent prejudice or surprise to the opposing party (see McCaskey, Davies and Assoc., Inc.

v New York City Health & Hosps. Corp., 59 NY2d 755, 757 [1983]; Kimso Apartments,

LLC v Gandhi, 24 NY3d 403, 411 [2014]). The grant or denial of a motion to amend is

reviewed for abuse of discretion (Kimso Apartments, 24 NY3d at 411).

       Here, the issue is not prejudice or surprise—the third amended complaint

maintained the same substantive claims the parties had been litigating for years, only

adding information related to UESS’s revival to ensure that the proper party to pursue those

claims was before the court. Rather, the 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).4 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.

4
 CPLR 205 (a), a saving statute, allows plaintiffs whose actions are terminated other than
on the merits to re-file even if the statute of limitations on the action has elapsed during the
course of litigation. It states that when a cause of action is terminated not on the merits, a
new action “upon the same transaction or occurrence” commenced within six months will
be timely so long as the original action was timely (CPLR 205 [a]).
                                             -6-
                                            -7-                                       No. 17

       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 (see Sayre v People, 128

NY 622, 622-623 [1891]; In re Sanford Fork & Tool Co., 160 US 247, 255 [1895]; see

also Litchfield Const. Co. v City of New York, 219 App Div 369, 370 [1st Dept 1927]

[“upon remittitur . . ., judgment must be entered in strict accordance therewith”]). 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 (see Landau v LaRossa, Mitchell

& Ross, 11 NY3d 8, 12-14 [2008]).5 The order contemplated that the company could “in

theory, be revived,” but simply stated that Sirio SRL had done so improperly. Therefore,

5
  Capacity “concerns a litigant's power to appear and bring its grievance before the court”
(Community Bd. 7 of Borough of Manhattan v Schaffer, 84 NY2d 148, 155 [1994]). By
contrast, standing concerns whether the litigant “has a sufficiently cognizable stake in the
outcome so as to ‘cast[ ] the dispute in a form traditionally capable of judicial resolution’
” (id. at 154, quoting Society of Plastics Indus. v. County of Suffolk, 77 NY2d 761, 772–
773 [1991]). A company generally has standing to assert claims on its own behalf, but if it
is defunct it may lack capacity to do so. Individual members of the company certainly have
capacity to appear in court, but their standing to assert claims on behalf to the company
may be questioned. Under New York law, dissolution of a corporation does not necessarily
preclude individual standing to assert derivative claims (see Business Corporation Law §
1006 (b); Independent Inv. Protective League v Time, Inc., 50 NY2d 259, 264 [1980]).

                                            -7-
                                             -8-                                     No. 17

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. 6

         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, 7 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 (see Burke v Crosson, 85 NY2d 10, 15-16 [1995]).

         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

6
 The dissent argues that because the dismissal was for lack of standing, it could not be
cured by amendment (dissenting op at 4-5). Assessing the legal effect of an action taken
by members of a cancelled LLC would require analysis of the distinction between standing
and capacity as well as relevant statutory and decisional law (e.g. Business Corporation
Law § 1006; Del Code Ann tit 6, § 18-1109 [c]; Independent Inv. Protective League, 50
NY2d at 264). Absent briefing and argument on these issues, we are not convinced that the
defect here was consequential or incurable.
7
    That question is not raised here and we express no opinion on it.

                                             -8-
                                             -9-                                      No. 17

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 (e.g. A.J. Temple Marble & Tile, Inc. v Union Carbide

Marble Care, Inc., 87 NY2d 574, 585 [1996]; Abrams v Donati, 66 NY2d 951, 953 [1985];

Sanders v Schiffer, 39 NY2d 727 [1976]). 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.

       The Cicos also advance a more technical argument—that where the entire complaint

has been dismissed, granting leave to amend is not possible because there is no complaint

remaining to amend. However, that position is at odds with the common practice of

dismissing complaints with leave to amend. 8 If, as the Cicos contend, a dismissed pleading

no longer exists and cannot be amended, dismissal with leave to amend would not be

8
  For example, the original complaint in this case was dismissed by the trial court with
leave to amend.

                                             -9-
                                            - 10 -                                    No. 17

possible. But appellate courts, not to mention trial courts, regularly dismiss complaints

with leave to amend—the action remains pending and the amendment may be granted,

notwithstanding the dismissal of the complaint (see Sanders, 39 NY2d at 729 [granting

such disposition]; Kelly v Overseas Inv'rs, Inc., 18 NY2d 622, 624 [1966] [same]). Because

this disposition is consistent with the CPLR, we cannot agree with the dissent’s analysis of

the language of CPLR 3025 (dissenting op at 6).9

       Our holding is consistent with the general discretion of the trial court to manage its

docket in the interest of judicial economy (see generally Landis v North Am. Co., 299 US

248, 254-255 [1936] [discussing “the power inherent in every court to control the

disposition of the causes on its docket with economy of time and effort for itself, for

counsel, and for litigants”]). As Supreme Court observed, there is no reason to require the

9
  Although we have no quarrel with the use of dictionaries as interpretive aids, the
definitions relied on by the dissent provide no aid here. The dissent asserts that no
amendment can be granted unless a complaint is “extant” (dissenting op at 7), but the only
support it cites for that proposition is Black’s Law Dictionary, which does not say “extant,”
but instead, as the very definitions quoted by the dissent say, requires only that the amended
complaint “replaces an earlier pleading” or “rectif[ies] or make[s] right.” The idea that
something that has ceased to exist cannot be replaced, rectified or made right is wholly
novel: lost, stolen or destroyed goods can be replaced, rectified or made right. So too it is
with legal doctrines or governments that cease to exist and later—sometimes centuries later
—are replaced, rectified or made right.

We also clarify that any dictionary definition stating that amendments must be limited to
“small changes” (dissenting op at 6) does not correctly state the law: amendments, even
those that add entirely new claims, facts, legal theories, causes of action or parties should
be granted freely so long as the adverse party is not prejudiced (see Kimso Apartments, 24
NY3d at 411 [liberal policy applies “even if the amendment substantially alters the theory
of recovery”]; Fahey v Ontario County, 44 NY2d 934 [1978] [allowing amendment to
advance a statute of limitations defense which was dispositive of the action]; Kelly, 18
NY2d at 624 [1966] [allowing amendment to advance an entirely new legal theory]).
                                            - 10 -
                                           - 11 -                                     No. 17

commencement of a new action, with the associated cost and inconvenience for both the

parties and court, where the court already has jurisdiction over the parties in a case on the

same subject-matter. Here, for example, commencing a new action would have required

Hague Convention service on parties in Italy at the time of a serious COVID-19 outbreak,

for no apparent benefit. The negative practical consequences of depriving trial courts of

their docket management powers further counsel against expounding additional

requirements from the simple fact that a complaint has been dismissed. 10 The dismissal of

the complaint by the Appellate Division did not deprive Supreme Court of its authority to

consider an amended complaint that purportedly cured the issue. 11

                                                III.

       The motion to amend was timely. “A claim asserted in an amended pleading is

deemed to have been interposed at the time the claims in the original pleading were

interposed, unless the original pleading does not give notice of the transactions,

occurrences, or series of transactions or occurrences, to be proved pursuant to the amended

pleading” (CPLR 203 [f]). The claims in the third amended complaint are the same as those

10
   The dissent observes that, had Supreme Court dismissed the counterclaims before
addressing the motion for leave to amend, “it would have lacked authority” to permit
amendment, which is “not what the CPLR intends” because the result would be “controlled
by administrative act rather than legal analysis or doctrine” (dissenting op at 10). But the
CPLR is a set of procedural rules, and Supreme Court has discretion as to the order in
which it addresses matters before it, which may have practical, procedural and even
substantive consequences for the parties.
11
  We have considered the arguments of the parties regarding entry of judgment. Given that
under the circumstances of this case entry of judgment is a ministerial act (see CPLR 5016
[c]), it is not relevant to our decision here.

                                           - 11 -
                                            - 12 -                                  No. 17

in the second amended complaint, which Supreme Court found to be timely—the only

difference between the complaints is the explanation of how the company was properly

revived. Therefore, the claims in the third amended complaint were timely asserted under

the standard for a motion to amend.

       The Appellate Division also considered whether the claims would have been timely

under CPLR 205 (a). Although CPLR 205 (a) is applicable only to new actions, we

understand the concern that a motion to amend which would not have been timely as a new

action under CPLR 205 (a) could be used to circumvent the six-month limit given by that

statute. Therefore, in a situation like the one presented here, the CPLR 205 (a) time limit

could serve as a guidepost to the issue of whether amendment would result in prejudice or

surprise. But to be clear, a trial court might grant leave to amend even after the CPLR 205

(a) time limit without abusing its discretion.

       In any case, the motion here was also made within the six-month time limit to bring

a new action under CPLR 205 (a). The Appellate Division order dismissing the complaint

was made on March 3, 2020. On March 20, 2020, Executive Order 202.8 was enacted and

tolled all filing periods until November 3, 2020. The clock then ran until the motion for

leave to amend was submitted on January 8, 2021 (see Perez v Paramount

Communications, Inc., 92 NY2d 749, 755 [1999]). Subtracting the tolling period, the

motion to amend was filed well within the six months provided by CPLR 205 (a).

                                             IV.

       Because the dismissal of the complaint was without prejudice and other claims in

the action remained pending, Supreme Court did not lack discretion to consider plaintiffs’

                                            - 12 -
                                          - 13 -                                  No. 17

motion to amend the complaint under CPLR 3025 (b). Accordingly, the order of the

Appellate Division insofar as appealed from should be reversed, with costs, and case

remitted to that Court for further proceedings in accordance with this opinion.

                                          - 13 -
RIVERA, J. (dissenting):

      Previously in this litigation, the Appellate Division dismissed the second amended

complaint in its entirety and held that the named company-plaintiff lacked standing and

capacity to sue. After that dismissal, the company had only one recourse: commence a new

                                          -1-
                                            -2-                                       No. 17

action under CPLR 205 (a) based on the same transaction or occurrence, if, within that

time, it acquired standing to sue. No new action was commenced and instead, plaintiff

investors in the company—co-plaintiffs in the dismissed action—sought leave to amend

the dismissed complaint because, according to plaintiffs, the company had, since dismissal,

acquired standing by filing for a Certificate of Revival and Certificate of Good Standing.

The majority here reaches the astonishing conclusion that Supreme Court had authority to

grant the motion, effectively circumventing both the Appellate Division’s mandate to

dismiss and the requirements of the CPLR. The majority’s decision is wrong for several

reasons. First, there was no lawful ground to grant leave to amend because the defect

previously identified by the Appellate Division—that the company had no legal existence

when the second amended complaint was filed—could not be cured retroactively. Second,

because the Appellate Division dismissed the complaint in its entirety, there was no

plaintiff’s pleading to amend under CPLR 3025 (b). I dissent.

                                           * * *

       Plaintiffs are investors in named company-plaintiff Upper East Side Sites LLC

(UESS or “the company”), organized under Delaware law. In 2016, plaintiffs jointly

commenced an action against two individuals who they claim mismanaged UESS. After

UESS defaulted on the action, Supreme Court granted leave for the then-remaining

plaintiffs to file an amended derivative complaint without UESS as a named party, which

they did. Thereafter, Supreme Court partially granted the plaintiffs’ motion to file a second

                                            -2-
                                            -3-                                          No. 17

amended complaint with UESS again as a named party on its two derivative claims, but

rejected a direct fraud claim by the plaintiff investors. On appeal from that order, the

Appellate Division in 2020 dismissed the second amended complaint in its entirety (181

AD3d 426 [1st Dept 2020]).

       The Appellate Division concluded that UESS had no capacity or standing to sue

because, at the time the second amended complaint was filed, Delaware had cancelled its

Certificate of Formation and the Certificate of Revival obtained by one of the plaintiff

investors was legally ineffective (id. at 426-427). The court further concluded that, under

the terms of the operating agreement, the plaintiff investors had no authority to act for

UESS. “Thus, the company may not sue as a direct plaintiff, and the members thereof may

not bring derivative claims on its behalf” (id. at 427). Accordingly, the court ordered that

“[s]ince plaintiffs lack standing or capacity, this action should be dismissed” (id.).

       Prior to the Appellate Division’s dismissal, defendants filed an amended answer

asserting two counterclaims for breach of the company operating agreement. After the

Appellate Division issued its order, plaintiffs moved to dismiss the counterclaims, and

while that motion was pending, moved in Supreme Court for leave to file a third amended

complaint, arguing that a month after the Appellate Division dismissal another Certificate

of Revival had been filed—now in accordance with Delaware law—and thus UESS was

properly revived and had capacity to sue. Supreme Court granted leave to file a third

amended complaint, opining that although a new action would be timely, “[i]t would make

no sense, under the circumstances for plaintiffs to have commenced another separate action

under a different index number and then to have moved to consolidate it with this one when

                                            -3-
                                             -4-                                       No. 17

this one has always remained active and pending” (2021 NY Slip Op 33636[U], 2021 WL

2396606 [Sup Ct, New York County 2021]). In the same order, Supreme Court dismissed

the counterclaims. Hence, the concerns animating Supreme Court’s decision to grant leave

to amend in order to avoid two actions and a motion to consolidate were illusory and

unfounded (id. at *2).

       On appeal from that order, the Appellate Division reasoned that because it dismissed

all of the claims for lack of standing before plaintiffs filed their motion to amend, “there

was no action pending when plaintiffs moved for leave to file the third amended complaint.

Thus, the trial court lacked any discretion or authority to grant plaintiffs such leave” (208

AD3d 99, 108 [1st Dept 2022]). Instead, “plaintiffs’ only remedy was to commence a new

action, which they failed to do” (id.).

       Although the majority reverses on the ground that the trial court had authority to

grant leave to amend, we need not address that issue at all because there was no legal basis

to grant plaintiffs’ motion in the first instance. Contrary to the plaintiffs’ assertion, they

did not cure the lack of standing in the underlying action. 1

       “[T]he decision whether to grant leave to amend a complaint is committed to the

sound discretion of the court” (Davis v South Nassau Comm. Hosp., 26 NY3d 563, 580

[2015]; CPLR 3025 [b]). Generally, “leave to amend a pleading should be freely granted

in the absence of prejudice to the nonmoving party where the amendment is not patently

lacking in merit” (id.). It is axiomatic that no purpose is served by granting a motion to

1
 For purposes of this appeal, I assume that UESS was revived effective December 11,
2020, the date the certificate of revival was filed with the Delaware Secretary of State.
                                             -4-
                                           -5-                                       No. 17

amend where the fatal defect in the pleading remains uncorrected. A trial court’s broad

discretionary authority does not extend to a meritless motion. Here, in support of their

motion to amend, plaintiffs claimed that they remedied the defect that was the basis for the

2020 Appellate Division dismissal when, after that dismissal, UESS properly filed a

Certificate of Correction of the Certificate of Revival and a Certificate of Revival of a

Delaware Limited Liability Company.2 But the Appellate Division’s conclusion that UESS

lacked standing and capacity to sue was related temporally to the only pleading before that

court—the second amended complaint. Unlike a pleading defect where a party fails to

assert an existing fact that would have established standing, the defect here was legal, not

factual, and related to the company’s prior status. The certificate issued after the 2020

dismissal could not retroactively provide UESS with standing to sue defendants; at most,

a newly-issued certificate could have revived UESS as of the effective date of the

certificate’s issuance and authorized UESS to sue in a future action. While a non-merits

dismissal does not always foreclose an amendment to cure a pleading defect, the nature of

the problem here—UESS’s unrevived status due to the certificate signatory’s lack of

authority to represent the company at the time the second amended complaint was filed—

could never be cured retroactively by obtaining a certificate after the Appellate Division’s

2
  Plaintiffs have not argued on this appeal that the Appellate Division erroneously
concluded its prior Certificate of Revival was ineffective. Therefore, I have no occasion to
consider the propriety of that decision.
                                           -5-
                                            -6-                                       No. 17

dismissal.3 Therefore, Supreme Court abused its discretion when it granted leave to amend

a complaint without merit and the Appellate Division should be affirmed.

       Putting aside the majority’s erroneous implicit holding that Supreme Court decided

that motion on a legally sound basis, the majority’s express reasons for concluding that

leave to amend was properly granted are based on a flawed interpretation of the CPLR and

a misreading of the Appellate Division’s mandate.

       Under CPLR 3025 (a), a party may amend their pleading at any time by leave of

court. However, in order to amend, there must actually be a pleading to amend, and it must

be the movant’s own pleading. Black’s Law Dictionary defines a pleading as “[a] formal

document in which a party to a legal proceeding (esp. a civil lawsuit) sets forth or responds

to allegations, claims, denials, or defenses” (Black’s Law Dictionary, 1394 [11th ed 2019]).

To “amend” means “to correct or make usu[ally] small changes to (something written or

spoken); to rectify or make right,” and an “amended complaint” means “a complaint that

modifies and replaces the original complaint by adding relevant matters that occurred

before or at the time the action began” (id. at 101, 1395; see also Merriam-Webster Online

Dictionary,   amend     [https://www.merriam-webster.com/dictionary/amend]         [defining

3
 The majority argues that “[a]ssessing the legal effect of an action taken by members of a
cancelled LLC would require analysis of the distinction between standing and capacity as
well as relevant statutory and decisional law,” and concludes that without briefing and
argument on those issues it cannot say the standing defect “was consequential or incurable”
(majority op at 8 n 6). The majority chooses to ignore that Supreme Court recognized, over
defendants’ objection, the “certificates of correction and revival” in its order granting
plaintiffs leave to amend. And if plaintiffs did not cure the defect there is simply no legal
basis to permit leave to amend. Thus, we are squarely presented with the question whether
plaintiffs could retroactively cure their lack of standing by post-dismissal action.
                                            -6-
                                             -7-                                        No. 17

“amend” as “to put right”]).4 Similarly, an “amended pleading” is a “pleading that replaces

an earlier pleading and that contains matters omitted from or not known at the time of the

earlier pleading” (id. at 1395). Thus, by definition, there must be an extant pleading capable

of amendment for an amendment to be effective. 5 Here, once the Appellate Division

dismissed the second amended complaint in its entirety, that pleading no longer had any

legal significance; it simply ceased to exist as the plaintiffs’ statement of the causes of

action against defendants. Put another way, when plaintiffs moved to file a third amended

complaint, there was no complaint to amend.

4
  The majority takes issue with my reference to Black’s Law Dictionary, but “dictionary
definitions have traditionally been regarded as useful guideposts in ascertaining the
meaning of a word or phrase” (Village of Chestnut Ridge v Howard, 92 NY2d 718, 723
[1999]). Indeed, it is a frequent and long-standing practice of members of the judiciary,
including those in the majority here, to use dictionaries—legal and otherwise—to interpret
the law (see e.g. Avella v City of New York, 29 NY3d 425, 435 [2017] [Wilson, J.];
Consolidated Restaurant Op., Inc. v Westport Ins. Co., 2024 NY Slip Op 00795, *3 [Ct
App Feb. 15, 2024] [Halligan, J.]; Anderson Commack Fire District, 39 NY3d 495, 504
[2023] [Cannataro, J.]; Nitkewicz v Lincoln Life Annuity Co., 40 NY3d 349, 355 [2023]
[Singas, J.]). The majority also takes issue with Black’s Law Dictionary’s reference to
“small changes” in one of its definitions of “amend” (majority op at 10 n 9), but
conveniently ignores the complete dictionary reference: “amend” also means “to rectify or
make right,” and an “amended complaint” “modifies and replaces the original complaint.”
There is no question that these definitions support an interpretation that an amended
pleading can “add entirely new claims, facts, legal theories, [or] causes of action or parties”
(id.). The definitions do not support the majority’s view that changes can be made to a
pleading that has been completely removed from the action by dismissal.
5
  The majority disagrees with this proposition because the word “extant” does not appear
in any of the relevant definitions (majority op at 10 n 9). But the only logical interpretation
of the cited definitions requires an extant pleading; if there is no pleading in existence, then
there can be nothing to “rectify or make right,” and nothing that the amended complaint
“modifies and replaces.”
                                             -7-
                                           -8-                                      No. 17

       The majority’s reversal here proceeds from two erroneous assumptions. First, that

because the Appellate Division’s “order contemplated that the company could ‘in theory,

be revived,’” but plaintiffs failed to effectively do so, the Appellate Division did not

foreclose an amendment (majority op at 7). This is a misreading of the Appellate Division’s

2020 order, which stated that UESS could have been revived but that it never was (181

AD3d at 427). That clear pronouncement settled once and for all UESS’s status at the time

the second amended complaint was filed. The Appellate Division’s order cannot

reasonably be understood, as the majority suggests, to have anticipated that UESS could,

by some future act, reach back years to a date when UESS did not exist as a legal entity

under the laws of Delaware and retroactively revive itself. Even if there were any

conceivable doubt on this point, the Appellate Division’s 2022 opinion and order, now

before us on this appeal, laid it to rest by characterizing its 2020 order as an “outright

dismissal of the claims,” which “was binding on the parties,” and observing that its

“dismissal presented a unique procedural scenario that deprived Supreme Court of

discretion to grant leave to amend the second amended complaint” (208 AD3d at 108)

Moreover, the court also reaffirmed its commitment to “the basic principle that an order of

the Appellate Division unconditionally dismissing a complaint is a clear and unequivocal

directive that the case is no longer active and pending” (id. at 110). Supreme Court could

not ignore that mandate by allowing plaintiffs to amend a dismissed complaint. 6

6
 The majority does not address plaintiffs’ principal argument that, under Rudiger v
Coleman (228 NY 225 [1920]), Supreme Court complied with the Appellate Division’s
mandate. Regardless, plaintiffs’ reliance was misplaced. Rudiger involved a land dispute
where ultimately this Court remitted to the trial court to enter judgment to direct
                                           -8-
                                            -9-                                       No. 17

       However, there was a path available to plaintiffs to pursue their claims. With the

new Certificate of Revival in hand, plaintiffs could have filed a new action pursuant to

CPLR 205 (a), which permits commencement of a new action based upon the same

transaction or occurrence or series of such within six months after the termination of an

action for a non-merits ground like lack of standing. Plaintiffs did not avail themselves of

that saving statute.7 Despite the majority’s decision today, CPLR 3025 (b) should not be

reconveyance of the property, reassignment of the subject contract and an accounting for
rents collected by the defendants (id. at 230). The defendants argued that it was impossible
to comply with the decree of reconveyance because during the pendency of the appeal, part
of the land had been condemned by New York City, and the defendants had taken certain
other actions on the land (id. at 231). Special Term entered a new interlocutory judgment
to adjust for the changed conditions, and this Court upheld that judgment as a proper
exercise of the lower court’s power to adapt the form and measure of relief to the exigencies
of new conditions (id. at 233). The adaptation was “not nullification, but enforcement”
(id.). Rudiger stands for the proposition that, upon a remittal from an appellate court, the
lower court may fashion an appropriate remedy to comply with the remittal order based on
changed circumstances of which the appellate court could not have been aware before
remittal. Here, the ground for the 2020 dismissal of the second amended complaint was an
ineffective attempt to revive UESS with a certificate obtained by someone lacking
authority to act for the company. The post-dismissal Certificate of Revival filing in
Delaware does not constitute a change in circumstances of which the Appellate Division
was unaware at the time, but rather a response to the defect it identified that could provide
standing in a future action.
7
  Any practical difficulties in filing that action were no greater than for any other litigant
during the same period. The majority points to the inconvenience that filing a new action
would pose to plaintiffs here, namely, that “a new action would have required Hague
Convention service on parties in Italy at the time of a serious COVID-19 outbreak”
(majority op at 11). But it was only one defendant, Carla Cico, whom the plaintiffs believed
was residing in Italy and plaintiffs make no assertion that they could not seek alternative
service. The other defendant, Benedetto Cico, resided in California, which, like New York,
had extended filing deadlines in response to the pandemic (see Blaine Corren, Judicial
Council Revises Emergency Rule on Statutes of Limitations in Civil Cases, California
Courts         Newsroom             [May          29,       2020],        available         at
                                            -9-
                                            - 10 -                                     No. 17

understood by practitioners as a convenient replacement for CPLR 205 (a). Indeed, reliance

upon CPLR 3025 (b) is a high-risk venture, as a court may deny leave to amend after the

deadline for a new action under CPLR 205 (a) has passed.

       The majority’s second erroneous assumption is that, because of defendants’

counterclaims, “the original action remained pending in Supreme Court even after the

complaint was dismissed” (majority op at 8). Though it does not say so expressly, the

logical conclusion of the majority’s holding is that revival of a complaint via leave to

amend is possible only in circumstances where counterclaims are pending before the trial

court at the time the plaintiff seeks leave to amend. The majority stops short of endorsing

the far more dubious proposition that a trial court has the power to revive a complaint where

there is no longer an action before it, all claims having been dismissed or dismissal affirmed

by an appellate court (majority op at 8 & n 7).

       In any event, this procedural “hook” fails to hold up because Supreme Court

disposed of the defendants’ counterclaims in the same judicial order in which it granted

plaintiffs’ motion for leave to amend. Under the majority’s view, if Supreme Court had

first signed a separate order dismissing the counterclaims, it would have lacked authority

to issue another order permitting amendment. That change in outcome, controlled by

administrative act rather than legal analysis or doctrine, is not what the CPLR intends. No

matter how the majority characterizes it, the procedural posture did not change the fact that

https://newsroom.courts.ca.gov/news/judicial-council-revises-emergency-rule-statutes-
limitations-civil-cases [accessed March 4, 2024]).

                                            - 10 -
                                            - 11 -                                     No. 17

there was no existing pleading interposed by the plaintiffs to be amended. The only

pleading in the action was the defendants’ amended answers which included the

counterclaims. Plaintiffs could have responded to the counterclaims, but they could not

have asserted a counterclaim in their reply to the counterclaims (1 West's McKinney's

Forms Civil Practice Law and Rules § 1:2 [2024] [“(I)f plaintiff has a counterclaim to one

of defendant’s counterclaims, plaintiff may not assert that counter-counterclaim in a reply.

Rather, plaintiff must amend the complaint”], citing CPLR 3011). Thus, no plaintiff

pleading was before the trial court.

       The majority doubles down, contending that “[t]here is nothing particularly novel

about repleading a dismissed complaint in Supreme Court to cure a defect discovered on

appeal” (majority op at 9). But this would be true if the defect can be cured by future action

and the appellate court does not dismiss the entire complaint. Neither of those

circumstances exist here.8

       The fact that the Appellate Division’s dismissal for lack of standing is not on the

merits and thus generally without prejudice is not in dispute, nor do either of these

unexceptional observations aid the majority. The dismissal had consequences for plaintiffs

8
  The majority’s citation to CPLR 5013 is curious and adds nothing to its analysis. That
section simply states that “[a] judgment dismissing a cause of action before the close of the
proponent’s evidence is not a dismissal on the merits unless it specifies otherwise, but a
judgment dismissing a cause of action after the close of the proponent’s evidence is a
dismissal on the merits unless it specifies otherwise.” There is no dispute that the dismissal
here was not on the merits or that a party could seek to amend a pleading before its
dismissal. Section 5013 does not stand for the proposition, as suggested by the majority,
that all dismissals are without prejudice unless the court says so expressly (majority op at
9).

                                            - 11 -
                                             - 12 -                                      No. 17

beyond a rejection of their legal argument, because the grounds for dismissal limited the

plaintiffs’ litigation strategy moving forward. The majority confuses a nonmerits dismissal

without prejudice to amend with the class of dismissal here, which was without prejudice

to file a new action (see NY Jur Judgments § 414 [“A judgment of dismissal that recites

that it is rendered without prejudice does not operate as a bar precluding the plaintiff from

maintaining another action upon the same cause of action”]). 9 Examples of the former

include cases, like those cited by the majority where the complaint fails to state a cause of

action due to some missing factual assertion (majority op at 9, citing A.J. Temple Marble

& Tile, Inc. v Union Carbide Marble Care, Inc., 87 NY2d 574, 585 [1996]; Sanders v

Schiffer, 39 NY2d 727 [1976]). In contrast, the Appellate Division’s dismissal on standing

grounds requires that the party’s status be corrected. If that correction has only future effect,

as here, the party cannot retroactively establish standing by amendment of a dismissed

complaint. A trial court’s power to manage its docket cannot supersede the commands of

an appellate court’s mandate and the CPLR.

       An affirmance here would not, as the majority claims, “depriv[e] trial courts of their

docket management power” (majority op at 11). They retain that power so long as they

9
  The “common practice of dismissing complaints with leave to amend” is of the majority’s
own making (see majority op at 9). It is also a mischaracterization of a court’s authority to
dismiss with leave to replead or to stay a proceeding so that a party may cure a
nonjurisdictional defect. With respect to the majority’s observation that the original
complaint in this litigation was dismissed with leave to amend, Supreme Court made clear
that the plaintiffs were granted leave to timely replead, and if they failed to do so, the court
would then issue an order dismissing the action with prejudice. That is not what occurred
here, because the Appellate Division dismissed the complaint for lack of standing, leaving
no recourse to replead but only to refile a new action.
                                             - 12 -
                                          - 13 -                                    No. 17

comply with appellate court mandates upon remittal and render orders in accordance with

the CPLR. Here, Supreme Court acknowledged that, as a legal matter, plaintiffs could

have filed a new action under CPLR 205 (a), but the court simply thought it better to avoid

that process and allow plaintiffs to amend. However, the Appellate Division mandate left

no discretion to the trial court and thus an amendment was not a legally viable option.

       The Appellate Division correctly held that Supreme Court had no authority to grant

plaintiffs’ motion. I would affirm.

Order insofar as appealed from reversed, with costs, and case remitted to the Appellate
Division, First Department, for further proceedings in accordance with the opinion herein.
Opinion by Chief Judge Wilson. Judges Singas, Cannataro and Halligan concur. Judge
Rivera dissents and votes to affirm in an opinion, in which Judges Garcia and Troutman
concur.

Decided March 19, 2024

                                          - 13 -