New York Law Review

Tag: Failure to State a Cause of Action

  • McLearn v. Cowen & Co., 60 N.Y.2d 686 (1983): Raising Failure to State a Cause of Action

    McLearn v. Cowen & Co., 60 N.Y.2d 686 (1983)

    A motion to dismiss based on res judicata that is found to be without merit cannot be used as a basis for the court to consider dismissal for failure to state a cause of action, as this deprives the plaintiff of the opportunity to seek leave to replead.

    Summary

    This case addresses the procedural issue of raising a failure to state a cause of action defense. The Court of Appeals held that where a motion to dismiss is expressly based on res judicata and that motion is denied, the appellate division cannot then dismiss the case based on failure to state a cause of action. The Court reasoned that the plaintiff was prejudiced because they were not afforded an opportunity to replead, as required by CPLR 3211(e). However, the court clarified that the defense of failure to state a cause of action is not waived and can be raised in a different manner, outside of a CPLR 3211 motion.

    Facts

    The plaintiff, McLearn, initially filed a lawsuit in federal court including both federal and state law claims. The federal court dismissed the state law claim. Subsequently, McLearn pursued the state law claim in state court. The defendant, Cowen & Co. (later Merrill Lynch), moved to dismiss the state court action based on res judicata, arguing the federal court dismissal precluded the state claim.

    Procedural History

    The Supreme Court denied the defendant’s motion to dismiss. The Appellate Division reversed and granted the motion to dismiss, not only on res judicata grounds but also, sua sponte, on the ground that the complaint failed to state a cause of action. The Court of Appeals initially heard the case and then, after clarification from the federal court regarding its dismissal order, reheard the case. The Court of Appeals reversed the Appellate Division’s order, reinstating the Supreme Court’s denial of the motion to dismiss.

    Issue(s)

    1. Whether the Appellate Division erred in granting a motion to dismiss based on failure to state a cause of action when the original motion was based solely on res judicata.

    Holding

    1. Yes, because the plaintiff was not afforded the opportunity to seek leave to replead as prescribed by CPLR 3211(e), resulting in substantial prejudice.

    Court’s Reasoning

    The Court of Appeals reasoned that the defendant’s motion was explicitly based on res judicata. Because the motion was not predicated on a failure to state a cause of action, the plaintiff was never given the chance to seek leave to replead, a right afforded under CPLR 3211(e). This denial of opportunity constituted substantial prejudice to the plaintiff. The court emphasized that the defense of failure to state a cause of action is not waived and can be raised later in another form, outside of a CPLR 3211 motion, citing Rich v Lefkovits, 56 NY2d 276, 281-282.

    The Court stated, “Inasmuch as the motion to dismiss was not predicated on a claimed failure to state a cause of action plaintiff was never afforded an opportunity to seek leave to replead within the prescriptions of CPLR 3211 (subd [e]). Deprivation of that opportunity worked substantial prejudice to her. It was, therefore, error on the part of the Appellate Division to have granted the motion on the alternative ground.”

  • Foley v. D’Agostino, 21 A.D.2d 60 (1964): Granting Leave to Replead After Failure to State a Cause of Action

    Foley v. D’Agostino, 21 A.D.2d 60 (1964)

    A party may be granted leave to replead even after failing to request it in initial opposition papers, provided they can demonstrate evidentiary facts supporting a valid claim in a proposed amended complaint.

    Summary

    This case concerns the right to replead after a complaint has been dismissed for failing to state a cause of action. The Court of Appeals held that even though the appellants did not initially request leave to replead, they could still apply to the Special Term for such leave. This opportunity is contingent upon the appellants submitting a proposed amended complaint, accompanied by evidentiary facts, demonstrating a valid claim that would justify the granting of leave to replead. This decision balances the need for judicial efficiency with the principle that parties should have a fair opportunity to present their case if they possess sufficient evidence to support a valid claim.

    Facts

    The specific facts underlying the original complaint are not detailed in this brief memorandum opinion. However, the core issue stemmed from the dismissal of the appellants’ complaint for failure to state a cause of action and the cancellation of a related notice of pendency.

    Procedural History

    The Appellate Division affirmed the granting of motions to dismiss the complaint and cancel the notice of pendency. The appellants did not state a desire to plead again in their opposing papers. The Court of Appeals modified the Appellate Division’s order, affirming the dismissal but without prejudice to the appellants’ right to apply for leave to serve an amended complaint at Special Term.

    Issue(s)

    Whether a party, whose complaint has been dismissed for failing to state a cause of action and who did not initially request leave to replead, can subsequently apply for such leave by demonstrating evidentiary facts supporting a valid claim in a proposed amended complaint?

    Holding

    Yes, because even though the appellants did not initially request leave to replead, they should be afforded an opportunity to demonstrate their right to relief if there are evidentiary facts which would warrant recovery under the applicable principles of law.

    Court’s Reasoning

    The Court of Appeals acknowledged that the original complaint failed to state a cause of action. However, the court emphasized that if the appellants possessed evidentiary facts that could warrant recovery under relevant legal principles, they should have the opportunity to present those facts. The court allowed the appellants to apply to the Special Term for leave to serve an amended complaint. This application must include a copy of the proposed amended complaint and a disclosure of the evidentiary facts supporting the claims. The court explicitly referenced CPLR 3211, subd [e], indicating reliance on statutory authority governing motions to dismiss and the potential for amendment. The decision reflects a balance between adherence to procedural rules and ensuring fairness in litigation. Even though the appellants did not initially seek leave to replead, the court recognized the possibility that they could possess a valid claim supported by evidence that was not adequately presented in the original complaint. The court stated, “Nonetheless, if there are evidentiary facts which would warrant recovery under the applicable principles of law, appellants should be afforded an opportunity to demonstrate their right to relief.” This demonstrates the court’s intent to allow a party to pursue a potentially valid claim if they can provide sufficient evidentiary support, even if they initially failed to request leave to replead. The court’s decision underscores the importance of presenting concrete evidentiary facts to support legal claims and highlights the availability of procedural mechanisms to correct pleading deficiencies, provided that a party can demonstrate a reasonable basis for doing so.