In a recent decision by Westchester Commercial Division Justice Linda S. Jamieson, the Court declined to permit a late-stage amendment to the complaint that sought to introduce new claims against an additional corporate defendant. The case serves as a noteworthy example of the court’s careful application of procedural principles and substantive corporate law doctrines—particularly regarding successor liability and the timing of amendments.

Background

Bardy v. Bonnem, Index No. 55909/2023, arises out of an alleged 2016 oral agreement between plaintiff Jack Bardy, a hospitality industry veteran, and defendant Joseph Bonnem, an investor looking to launch a drive-through coffee chain. Bardy claims that the agreement entitled him to an option to acquire a 25% ownership stake in Ready Coffee, LLC (“LLC”)—18% upon payment of $180,000 following the opening of the first location, and another 7% after three years, at a $5 million valuation.

The first store opened in 2019 and was successful. Bardy asserts that he attempted to exercise his option at that time, but Bonnem refused, denying the existence of any such agreement. Bardy did not commence the action until 2023.

Following discovery, Bardy moved to amend the complaint to add Ready Coffee, Inc. (“Inc.”) as a defendant, asserting a new cause of action styled as “De Facto Merger, Mere Continuation, and/or Successor Liability.” Bardy argued that Inc. is a continuation of the same business and should be held liable if he prevails on the merits.

The Court’s Analysis

The court denied the motion, citing both procedural and substantive grounds.

First, Justice Jamieson reaffirmed that claims such as de facto merger, mere continuation, and successor liability are not independent causes of action under New York law. Rather, they are theories of liability that must be tethered to a viable underlying claim. Citing Marcum LLP v. Fazio and Morris v. NYS Dep’t of Tax’n & Fin., the court emphasized that such theories cannot stand alone in a complaint.

Although Bardy attempted to frame the claim as one for declaratory judgment to circumvent this issue, the court found it premature. Under established Second Department precedent, declaratory relief is appropriate only when it will have a “direct and immediate effect” on the parties’ rights. Here, Bardy must first succeed in proving the existence and enforceability of the alleged oral agreement before any issue of successor liability becomes ripe.

Second, the court pointed to the lateness of the proposed amendment. The case is approaching trial-readiness, and the new claim would require extensive additional discovery—particularly into the corporate formation and structure of Inc., including its relationship to LLC. Justice Jamieson cited Brandsway Hosp., LLC v. Delshah Cap. LLC and Ness Techs. SARL v. Pactera Tech. Int’l Ltd. to underscore the prejudice and delay that would result from adding a wholly new defendant and legal theory so late in the litigation.

Conclusion

Justice Jamieson’s decision illustrates the Commercial Division’s balanced approach to late-stage amendments and successor liability theories. While the door remains open for Bardy to pursue claims against Ready Coffee, Inc. in a separate action—should he succeed at trial—this ruling ensures that litigation proceeds efficiently and within the bounds of established procedural rules.

Takeaway

For commercial litigators, the case is a reminder to carefully consider the timing and framing of successor liability claims and the procedural hurdles associated with amending pleadings after substantial discovery has taken place.

To learn more about new developments in the Westchester Commercial Division, please subscribe to the Westchester Commercial Division Blog.