April 3, 2019

In Catnap, LLC v. Cammeby’s Management Company, LLC the Appellate Division, Second Department affirmed the lower court decision denying defendant’s motion for summary judgment and granting Plaintiff’s motion for leave to amend its complaint.

Plaintiff leased property from 19-20 Industry City Associates, LLC (“19-20 Industry City”), and Plaintiff in turn sublet the property to CHS Group, Inc. (“CHS Group”).  Plaintiff commenced an action against the defendant Cammeby’s Management Company, LLC, the defendant 19-20 Bush Terminal Owner, LP, as successor in interest to 19-20 Industry City, and another defendant. The complaint alleged, among other things, that defendants’ negligence, breach of lease, and breach of the implied covenant of good faith caused the Plaintiff to sustain damages to its property and improvements, forced Plaintiff to vacate the property, forced Plaintiff to lose the value of its leasehold, and prevented Plaintiff from using the property for its intended purpose, and otherwise caused Plaintiff to suffer damages to its business.

Defendants filed a motion for summary judgment on the ground that the plaintiff lacked standing to maintain the action. The plaintiff moved for leave to amend the complaint to add CHS Group as an additional plaintiff. The Supreme Court denied the defendants’ summary judgment motion and granted that branch of the plaintiff’s motion which was for leave to amend the complaint.

The Appellate Division, Second Department affirmed the lower court ruling, stating in relevant part that “The causes of action to recover damages allegedly sustained by the plaintiff also included damages in the form of the loss of the value of its leasehold, the loss of value of the leasehold for its intended business purposes, and the loss of business or profits, all allegedly caused by the defendants’ negligence, breach of lease, and breach of implied covenant of good faith. Those allegations were not addressed by the defendants in their motion. Therefore, the defendants failed to establish that the plaintiff lacked standing to maintain this action.

The Second Department further held as follows:

Here, the Supreme Court providently exercised its discretion in permitting the plaintiff to amend the complaint to add CHS Group as an additional plaintiff, since the amendment did not result in surprise or prejudice to the defendants who had prior knowledge of the claim and an opportunity to prepare a proper defense.

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