Motion To Amend Largely Denied For Failure To Cure Deficiencies

On October 16, 2024, Justice Meilssa A. Crane denied a plaintiff’s motion to amend in substantial part, in a case brought by companies affiliated with the rapper 50 Cent seeking to recover for alleged misconduct by various Jim Beam liquor companies, their affiliates, or persons alleged to have participated in misconduct with them. The case is Sire Spirits, LLC v. Beam Suntory, Inc., Index No. 650799/2024.

Justice Crane held that plaintiff’s proposed amendment failed to cure the prior complaint’s deficiencies with respect to its fraud-related claims, which had led to a dismissal that was affirmed on appeal (see 227 A.D.3d 630 (1st Dep’t 2024)):

The Appellate Division, First Department, already affirmed that it is not sufficient to allege Gina [Caruso] knowingly assisted the other defendants in their alleged fraudulent activity solely due to her proximity to the business. Plaintiff’s new allegation that Gina communicated with [Mitchell] Green directly does not save plaintiff’s claim. It means nothing on its face and requires the court to infer her active participation based on nothing. Plaintiff’s proposed amendments are just as conclusory as they were before. Therefore, plaintiff’s proposed amendments are palpably insufficient as a matter of law.

Slip op., p. 2.

Leave to assert an unjust enrichment claim against the same defendant was denied because “[u]njust enrichment is not a catchall cause of action for when others fail.” Id.

Plaintiff’s attempt “to repackage barred lost profits damages by relabeling it ‘diminution of value’” failed because “[w]hatever plaintiff calls these damages, they are still based on the potential value the company could have realized” but for defendants’ alleged fraud, and “[o]ne cannot recover for potential lost earnings on a fraud theory.” Id., p. 3.

Addition of a “faithless servant” claim against defendant Michael Caruso was denied. Plaintiff had pleaded that Michael Caruso was an employee of defendants, not plaintiff; “plaintiff for years would have known Caruso had been its own employee;” and amendment would be prejudicial because discovery was about to close. Id.

Plaintiff could not amend to assert spoilage claims that had been resolved in an earlier arbitration, id., p. 4, but would be allowed to replead to assert “claims of new spoilage different from that which plaintiff asserted in the arbitration”, id., p. 5, as well as a faithless service claim against defendant Julious Grant, who did not oppose the application.

Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning fraud-related claims or amendment of pleadings.