PECORA v. 10 (2022)

Order, Supreme Court, New York County (Margaret Chan, J.), entered on or about June 28, 2021, which, to the extent appealed from as limited by the briefs, granted plaintiffs’ motion for leave to amend the complaint, unanimously reversed, on the law and the facts, without costs, and the motion denied.

The court should not have granted plaintiffs’ motion for leave to amend their complaint.  Plaintiffs failed to establish a reasonable excuse for their delay in moving to amend the complaint, as there was an extended period between the date they became aware of the cause of action and the date of their motion (see Oil Heat Inst. of Long Is. Ins. Trust v. RMTS Assoc., 4 A.D.3d 290, 293, 772 N.Y.S.2d 313 [1st Dept. 2004];  Heller v. Louis Provenzano, Inc., 303 A.D.2d 20, 23, 756 N.Y.S.2d 26 [1st Dept. 2003]).  According to an affidavit from plaintiff Frank Pecora, he knew in 2008 that 41 West LLC, the entity on whose behalf he asserts derivative claims, planned to sell one of its buildings for around $14.8 million.  He further averred in his affidavit that in or around 2011, he learned that defendant Antonino Pecora had agreed to sell the building for around $10.2 million, rather than for the amount originally planned;  on April 8, 2011, the building was, in fact, sold for about $10.2 million.  Nonetheless, despite their awareness on April 8, 2011 that the building may have been undersold, plaintiffs did not move to amend until March 2021 – almost 10 years after the sale and almost seven years after the commencement of this action in 2014.

Contrary to plaintiffs’ contention, expert discovery was not necessary for them to become aware of their claim, as the experts merely calculated damages but did not determine liability.  Thus, plaintiffs’ delay is properly measured not from the close of expert discovery, but from the date of the sale (see Schwenger v. New York Univ., 168 A.D.3d 443, 444, 89 N.Y.S.3d 610 [1st Dept. 2019], lv denied 33 N.Y.3d 903, 2019 WL 1997578 [2019];  Oil Heat Inst. of Long Is. Ins. Trust, 4 A.D.3d at 293, 772 N.Y.S.2d 313).  Further, that a note of issue had been not filed in this action is of no moment, as we have required an excuse for shorter delays regardless of filing of a note of issue (see e.g. Matter of Spiegel v. Kempner, 145 A.D.3d 505, 506, 43 N.Y.S.3d 306 [1st Dept. 2016];  B.B.C.F.D., S.A. v. Bank Julius Baer & Co., Ltd., 62 A.D.3d 425, 425–426, 878 N.Y.S.2d 56 [1st Dept. 2009], lv dismissed 13 N.Y.3d 933, 895 N.Y.S.2d 309, 922 N.E.2d 897 [2010]).

Additionally, plaintiffs’ delay in moving to amend prejudiced defendants.  Documents belonging to the building purchaser were destroyed in 2018 – after this litigation began in 2014 – in keeping with the purchaser's seven-year document retention policy, and would have been available had plaintiffs interposed their proposed claim in 2014, when they commenced the action.  The delay has therefore hindered defendants in establishing defenses to the new claim (see Heller, 303 A.D.2d at 23, 756 N.Y.S.2d 26;  Chemicraft Corp. v. Honeywell Protection Servs., 161 A.D.2d 250, 251, 554 N.Y.S.2d 899 [1st Dept. 1990]).

Finally, the proposed amendment is palpably lacking in merit because the claim is time-barred (see Panasia Estate, Inc. v. Broche, 89 A.D.3d 498, 498, 932 N.Y.S.2d 340 [1st Dept. 2011]).  Even if a six-year statute of limitations applies (see Homapour v. Harounian, 182 A.D.3d 426, 427, 122 N.Y.S.3d 282 [1st Dept. 2020]), the deadline for commencing the claim would be April 7, 2017.  The amendment was first sought in 2021.  The claim did not relate back to the filing of the original complaint.  Although the original allegation against Antonino Pecora – that he stole money from the companies he owned jointly with Frank Pecora – included stealing monies that were realized from the sale of the property, there are no allegations that the property should have been sold for more money.  The original allegations did not put defendant on notice that he would later be sued for causing 41 West LLC to sell its property for less than it was worth (CPLR 203[f];  see Wright v. Emigrant Sav. Bank, 112 A.D.3d 401, 402, 976 N.Y.S.2d 47 [1st Dept. 2013]).  In any event, amendment and relation back would be improper because of the prejudice to defendants (see O'Halloran v. Metropolitan Transp. Auth., 154 A.D.3d 83, 87, 60 N.Y.S.3d 128 [1st Dept. 2017]).