Citibank v. Suthers
| Decision Date | 06 July 1979 |
| Citation | 418 N.Y.S.2d 679,68 A.D.2d 790 |
| Parties | CITIBANK (New York State), N.A., Plaintiff, v. Markley R. SUTHERS and Melinda J. Suthers, Appellants, Margaret C. Fisher, et al., Defendants, and Jonathan D. Estoff, Respondent. |
| Court | New York Supreme Court — Appellate Division |
Jaeckle, Fleischmann & Mugel, Buffalo, for appellants (David Calverley, Buffalo, of counsel).
Miserendino, Krull & Foley, Buffalo, for respondent (John Krull, Buffalo, of counsel).
Before CARDAMONE, J. P., and HANCOCK, SCHNEPP, DOERR and WITMER, JJ.
CARDAMONE, Justice Presiding:
Appellants on this appeal claim that Special Term abused its discretion when it refused to permit them to amend their counterclaim as of right and also denied them leave to amend the same pleading under subdivisions (a) and (b) respectively of CPLR 3025.
The pleading question arose from litigation instituted by Citibank (New York State), N.A. (Bank) against defendant-appellants, Markley and Melinda Suthers. It is alleged that between October, 1973 and February, 1974 the Bank advanced $85,000 to Coe-Fisher Lumber, Inc. The loan was guaranteed by the Suthers on October 26, 1973. Coe-Fisher defaulted on July 1, 1974 and later went bankrupt.
On October 25, 1977 the Bank brought suit against the Suthers to recover $26,009.67 on their guarantees. The Suthers' answer, served on December 15, 1977, included affirmative defenses against the Bank, cross-claims against other parties and a counterclaim against Dean H. Jewett, an officer of the Bank, and Jonathan A. Estoff, an attorney. The substance of appellants' counterclaim was that these two individuals as agents of the Bank fraudulently induced them to guarantee the loans. The Suthers contend that in July, 1973 they were negotiating with Coe-Fisher Lumber, Inc. to buy its real property and to lease it back to Coe-Fisher. In connection with this arrangement they were contemplating taking a mortgage loan from the Bank which was being arranged through Jewett, manager of the Bank's Main Street Office in Buffalo.
In paragraph # 29 of their counterclaim the Suthers allege: "Jewett informed the Suthers through their accountant that the Bank would grant them the loan if Estoff handled the legal work involved in the transaction, thereby inducing the Suthers to rely on Estoff's representation of both parties". The Suthers further claim that they consented to this arrangement and on October 26, 1973 Jewett and Estoff requested them to sign documents allegedly represented to them as "unimportant papers" which were the "first step" in obtaining the mortgage loan. It is the Suthers' contention that they first became aware of the fraud in April, 1975 when the Bank informed them that they were to be held liable on the guarantees. Asserting that they received no benefit from the guarantees, they demanded $50,000 in compensatory damages and $100,00 in punitive damages in their counterclaim.
On January 9, 1978 Estoff served a reply to this counterclaim and raised the statute of limitations as a defense. Meanwhile, upon request, the Suthers had granted plaintiff Bank and its employee, Jewett, until February 15, 1978 to respond to the same counterclaim. Jewett replied on that date. Nineteen days later, on March 6, 1978 the Suthers served an amended counterclaim upon Estoff. It is this amended counterclaim that the Suthers claim was made as of right under CPLR 3025(a). Estoff returned the amended pleading as untimely served. The Suthers then moved on April 13 to obtain leave of the Court to amend their counterclaim to include two additional causes of action against Estoff under CPLR 3025(b), the first in malpractice and the second for breach of contract. In the malpractice action the Suthers allege that they engaged Estoff as their attorney and that he negligently advised them to sign the guarantees and failed to explain the character of the documents. They further allege that up to March, 1975 Estoff promised them that he would attempt to correct the difficulty which arose from their signing of the guarantees and that until April, 1975 Estoff failed to take sufficient legal steps to consummate the purchase of the real property from Coe-Fisher.
The Suthers argue that they are entitled to amend their counterclaim as of right under CPLR 3025(a) because it was served within twenty days after they received the last reply although concededly it was a reply from Mr. Jewett to their previous pleadings. Estoff urges that the Suthers' pleading could not be amended as of right since it was not served within twenty days of his (Estoff's) reply which was served on January 9. Special Term agreed with Estoff and denied appellants' 3025(a) motion.
With respect to the 3025(b) motion for leave from the Court to amend the counterclaim, Special Term held that the matter alleged in the proposed amendment did not arise out of transactions set forth in the original counterclaim, but arose instead from an entirely new set of facts. It further held that the three-year statute of limitations applicable to malpractice actions had barred Suthers' claims for events that occurred on October 26, 1973, the date the Suthers signed the guarantees for the now bankrupt Coe-Fisher.
CPLR 3025(a) permits a party as of right to "amend his pleading once without leave of Court", provided that service, insofar as relevant to the facts here, is made "within twenty days after service of a pleading responding to it". A party may amend his pleading only once. No right exists to amend once for each opposing party. The difficulty arises in multi-party litigation. A promptly responding party does not want to be subject to an extension of time in which he did not participate and to which he did not consent. On the other hand, the pleader does not want to be forced to amend his pleading within twenty days after receipt of service of the first responsive pleading to it without an opportunity to view all responsive pleadings. The pleader who wants to amend hopes that any error, deficiency for oversight in his original pleading may be picked up all at one time in the only amendment as of right to which he is entitled.
At first blush it seems reasonable to deny plaintiff leave to amend as of right after receipt of a last response to plaintiff's pleading. It is arguably unfair to subject a promptly responding party to an extension of time, as here, in which he did not participate and to which he did not consent. Nonetheless, since at this early stage of the litigation am...
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