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Although the President of a Corporation Was Also a Member of Defendant Limited Liability Company, the Corporation and Limited Liability Were Not Shown to Be “United in Interest” Such that the “Relation-Back” Doctrine Would Apply to Allow Adding the Corporation as a Defendant After the Statute of Limitations Had Run

The Second Department determined plaintiffs were not entitled to amend the complaint to add a party after the statute of limitations had passed pursuant to the “relation-back” doctrine. Although the president of the party to be added, Madjek, Inc., was a member of Madjek, LLC, (a named defendant), that relationship alone was not enough to demonstrate Madjek, LLC, and Madjek, Inc. were “united in interest” such that one would be vicariously liable for the acts of the other. The court explained the “relation-back” and “united in interest” criteria:

To establish the applicability of the relation-back doctrine, a plaintiff is required to prove that: (1) both claims arose out of the same conduct, transaction, or occurrence; (2) the new defendant is united in interest with the original defendant, and by reason of that relationship can be charged with notice of the commencement of the action such that it will not be prejudiced in maintaining its defense on the merits; and (3) the new defendant knew or should have known that, but for a mistake by the plaintiffs as to the identity of the proper parties, the action would have been brought against it as well (see CPLR 203[b] …). Once a defendant has demonstrated that the statute of limitations has expired, the burden is on the plaintiff to establish the applicability of the relation-back doctrine … .

While it is undisputed that the first prong of the test has been satisfied here, the plaintiffs failed to establish that the Madjek defendants are united in interest. Defendants are united in interest only when their interest “in the subject-matter [of the action] is such that [the defendants] stand or fall together and that judgment against one will similarly affect the other” … . Defendants are not united in interest if there is a possibility that the new party could have a different defense than the original party … . Here, the only fact that the plaintiffs established in support of their contention that the Madjek defendants were united in interest was that the president of Madjek, Inc., was a member of Madjek, LLC. This fact, standing alone, is insufficient to establish that the Madjek defendants are vicariously liable for the acts of each other and, thus, is insufficient to establish that the Madjek defendants are united in interest … . Montalvo v Madjek, Inc., 2015 NY Slip Op 06661, 2nd Dept 8-26-15

 

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