Opinion
20561/05.
Decided July 14, 2010.
Miller, Rosado Algios, LLP, Attorneys for Plaintiff.
Rosenberg Fortuna Laitman, LLP, Attorneys for Defendants.
RELIEF REQUESTED
The plaintiff, Gatlynn Holdings, Inc., (hereinafter referred to as Gatlynn"), moves for an order pursuant to CPLR § 3025(b) granting plaintiff leave to serve and file a Verified Amended and Supplemental Complaint. The defendants cross-move for an order pursuant to CPLR § 3212 granting the defendants summary judgment, canceling the Notice of Pendency, and awarding defendants reasonable attorneys fees. The defendants submit a Memorandum of Law in support of their cross-motion. The plaintiff submits a reply. The defendants submit a reply.
BACKGROUND
The plaintiff initiated this action for specific performance of a contract of sale dated June 29, 2005, and amendments thereto, whereby the plaintiff agreed to purchase from the defendants certain commercial premises located at 1-3-5-7 Sunrise Highway, Freeport, New York, for Six Hundred Sixty Thousand and 00/100 Dollars, ($660,000.00). Plaintiff submits that it made an initial down payment of Sixty-Five Thousand and 00/100 Dollars, ($65,000.00), and thereafter an additional down payment in the sum of Thirty-Five Thousand and 00/100 Dollars, ($35,000.00). The plaintiff's complaint seeks judgment declaring that the defendants failed to make time of essence to the contract, that the defendants tender title to the premises or hold the premises as a constructive trust, and that the defendants are in breach of subject contract. The plaintiffs now seek to amend the complaint to add causes of action seeking abatement of the purchase price and/or a return of plaintiff's deposit, in light of fire damage that occurred to the premises on May 15, 2009, and to add George Gavalas as a plaintiff, principal of Gatlynn.
DISCUSSION
Leave to serve an amended complaint is liberally granted, unless the proposed amendment creates prejudice or surprise. ( Ganci v. Suffolk County Police Dept., 285 AD2d 580; Leszczynski v. Kelly McGlynn, 281 AD2d 519; Corsale v. Pantry Pride Supermarket, 197 AD2d 659). The moving party must make some evidentiary showing that a proposed amendment has merit. ( Curran v. Auto Lab Serv. Ctr., 280 AD2d 636). The motion to amend will be granted "unless the insufficiency or lack of merit is clear and free from doubt." ( Noanjo Clothing v. L M Kids Fashion, 207 AD2d 436).
The Court of Appeals in Boslow Family Ltd. Partnership v. Glickenhouse Co. , 7 NY3d 664 , held that the defendant was estopped from raising as a defense plaintiff's claimed lack of capacity to sue. The Court stated that the defendant derived a benefit from the agreement and the services were not dependent on the nature of plaintiff's status as a limited partnership. ( Id.) If neither party to the lawsuit is aware that the corporate status has not been achieved, then corporation by estoppel may apply. ( Id.) The Second Department in Rubenstein v. Mayor , 41 AD3d 826 , held that the defendants were estopped to deny company's corporate status where they engaged in business dealings with plaintiffs during which they recognized company's corporate status. In Rubenstein, supra, it was undisputed that at the time the subject lease was executed, the plaintiff had not yet filed a Certificate of Incorporation with the Secretary of State, and thus was not in existence pursuant to Business Corporation Law § 403. ( Id.)
Upon the record herein, there is no dispute that Gatlynn's Certificate of Incorporation was not filed with the Secretary of State until on or about December 29, 2005, after the original contract of sale was entered into, and after the subsequent amendments were made thereto. Therefore, the defendants assert that Gatlynn lacked the capacity to enter into the subject contract of sale and may not seek specific performance as "a corporation that does not exist cannot enter into a contact". ( Black Car and Livery Insurance, Inc. v. H W Brokerage, Inc., 10 Misc 3d 1075(A); 183 Holding Corp. v. 183 Lorraine Street Associates, 251 AD2d 386).
However, the "corporation by estoppel" doctrine set forth by the Court of Appeals in Boslow Family Limited Partnership v. Glickenhaus Co., supra, provides that "one who has recognized the organization as a corporation in business dealings should not be allowed to quibble or raise immaterial issues on matters which do not concern him in the slightest degree or affect his substantial rights" ( Boslow Family Ltd. Partnership v. Glickenhaus Co., supra, at 668, 827 NYS2d 94, 860 NE2d 711, 7 NY3d 664). Additionally, the doctrine does not depend on the presence of the technical elements of equitable estoppel, such as misrepresentations and change of position in reliance thereon. ( Id.)
Here, as in Boslow, supra, the defendants do not deny that they derived a benefit from the agreement, and do not demonstrate, nor assert, that the agreement was dependent in any way on the nature of plaintiff's status as a corporation. The defendants retain a down payment of $65,000.00 — $100,000.00. The defendants submit that during the discovery phase in the above referenced matter, the defendants learned that plaintiff's corporation was not formed until December 29, 2005. Plaintiff's counsel maintains the late filing was inadvertent. In any event, plaintiff's status as a corporation was recognized by the defendants at the time the parties entered into the contract of sale, and subsequent amendments thereto. The defendants have not demonstrated how plaintiff's late filing has affected the defendants "in the slightest degree or affected their substantial rights".
CONCLUSION
In light of the foregoing, plaintiff's motion is granted, and the defendants' cross-motion for summary judgment is denied.
It is hereby,
ORDERED that the plaintiff's amended complaint in the form annexed to the motion papers as an exhibit shall be deemed served five (5) business days after service of a copy of this order with notice of entry, and it is hereby further
ORDERED that the parties shall appear before the undersigned for a conference on July 28, 2010 at 9:30 a.m. promptly.