Flag on the Play for Illegal Procedure: Necessary Parties and the Pitfalls of Nonjoinder
October 19, 2020
Failure to name a necessary party when challenging a land use determination may result in dismissal, and leave a challenger without further recourse. CPLR 1003 provides that the nonjoinder of a party who should be joined under CPLR 1001 (i.e. a person ought to be a party if he or she might be inequitably be affected by a judgment in the proceeding), is a ground for dismissal without prejudice. Although such dismissal is technically “without prejudice,” it may actually be prejudicial in practice; if the statute of limitations has lapsed when the petition is amended to join the missing party, then the petitioner’s challenge may be barred by the statute of limitations. The amended pleading might find refuge in the relation back doctrine, but a petitioner should not hope to rely on fixing this problem after the fact.
This month, in MMSI Props., LLC v City of Glens Falls, 2020 N.Y. Slip Op. 51193(U) [Sup Ct Warren County, Oct. 13, 2020], the Supreme Court, Warren County, dismissed a neighbor’s challenge to a planning board decision approving construction of a 29-unit apartment complex for chronically homeless individuals and families, those suffering from mental illness, and victims of domestic violence (“Project”), because the neighbor failed to name the owner of the subject property in its petition. The Court also rejected the petitioner’s attempt to rely upon the relation back doctrine to salvage its challenge.
Respondent Warren-Washington Association for Mental Health, Inc. (“WWAMH”), a not-for-profit corporation formed to improve the quality of life for those affected by mental illness and to promote the importance of mental health in the community, planned to construct the Project within the light industrial district of the City of Glens Falls (“Glens Falls”). The subject site is owned by respondent AMH Resources Corp. (“AMH”), which purchased the site in 2018 for WWAMH to utilize for the Project. WWAMH and AMH Resources share many of the same officers, directors and key personnel, and are represented by the same counsel.
In May 2019 WWAMH filed an application with the Glens Falls Planning Board (“Planning Board”) to construct the Project. On September 3, 2019, the Planning Board resolved to approve the Project. On October 2, 2019, the petitioner, a neighboring business owner (“Petitioner”), commenced this Article 78 proceeding to vacate the Planning Board’s approval of the Project. The Petitioner, however, failed to name AMH – the owner of the subject site.
The Challenge and Petitioner’s Amendment
WWAMH and other respondents answered and asserted several objections in point of law, including that the Court must dismiss the petition because Petitioner failed to name AMH as a necessary party (2020 NY Slip Op 50677[U] [Sup Ct Warren County, Jun. 8, 2020]). In response, Petitioner moved to amend its petition to include AMH as a respondent, and the respondents opposed arguing that the statute of limitations had lapsed so Petitioner could not amend. The Court granted Petitioner’s motion to amend the petition pursuant to CPLR 1001(b) – finding that the expiration of the statute of limitations does not deprive the Court of jurisdiction over a necessary party, and so the Court must order AMH summoned. Significantly, the Court also noted that the statute of limitations constituted a defense which AMH, once summoned, would be free to assert in its answer.
Objection in Point of Law to Dismiss for Nonjoinder, and Relation Back
Upon being joined, AMH asserted the statute of limitations defense and argued the petition must be dismissed because the statute of limitations expired before filing and service of the amended petition. Petitioner did not dispute the expiration of the limitations period, but sought to apply the relation back doctrine. The doctrine permits a petitioner to amend a petition to add a respondent beyond the limitations period if he or she can demonstrate: (i) the claims arose from the same occurrence; (ii) the added respondent is united-in-interest with a previously named respondent; and (iii) the added respondent knew or should have known that, but for a petitioner’s mistake as to the added respondent’s identity, the petition would have been brought against him or her.
The Court held that Petitioner satisfied the first two elements, but failed to satisfy the third: “There is no question that the claims arose out of the same occurrence, nor that [AMH] is united in interest with WWAMH. As such, petitioner has succeeded in demonstrating the first and second prongs.
[However,] [P]etitioner has failed to demonstrate that diligent efforts were made to ascertain [AMH] identity as owner of the property prior to expiration of the statute of limitations. Petitioner therefore has not satisfied third prong of the inquiry based upon its alleged mistake of identity in believing that WWAMH owned the property.”
Petitioner’s Failure to Satisfy the Relation Back Doctrine
Petitioner claimed that its failure to name AMH was due to an inadvertent omission because the site plan application named WWAMH as the owner of the Project site, and that due to WWAMH’s and AMH’s interconnectedness, AMH knew or should have known that – but for the inadvertent omission – AMH would have been named as a respondent. The Court agreed that AMH knew or should have known about its inclusion in the proceeding, but denied Petitioner the benefit of the relation back doctrine because its failure to include AMH was not inadvertent.
With respect to Petitioner’s purported omission, the Court noted: “Inasmuch as petitioner fails to offer any explanation for its inadvertent omission, the Court is left to surmise — based upon the content of its argument — that it believed WWAMH owned the property. This constitutes a mistake of identity, which is entitled to the benefit of the doctrine — provided the petitioner can demonstrate that diligent efforts were made to ascertain the unknown party’s identity prior to expiration of the statute of limitations.” The Court held the Petitioner failed to show it made diligent efforts to ascertain AMH’s identify.
First, although WWAMH’s application to the Planning Board left the “owner” space blank, indicating that the applicant is the owner, the application included a copy of the deed for the Project site. The deed clearly indicated AMH is the owner. Second, the application cover letter stated that the Project would be owned by AMH, and operated by WWAMH. Third, the pertinent meeting minutes show that discussions of the application before the Planning Board apprised all attendees of AMH’s existence and interest in the Project (even though WWAMH’s engineer erroneously described AMH as the applicant, and not the owner). Petitioner’s principal member and its counsel attended and participated in the meeting, offering remarks in opposition to the Project.
The Court held that “[u]nder the circumstances . . . [P]etitioner has failed to demonstrate that diligent efforts were made to ascertain [AMH’s] identity as owner of the property prior to expiration of the statute of limitations. Petitioner therefore has not satisfied third prong of the inquiry based upon its alleged mistake of identity in believing that WWAMH owned the property.” The Court also held that “[t]o the extent that [P]etitioner was perhaps aware that [AMH] owned the property and simply failed to name it as a respondent in the original petition — which is the more likely scenario given the record before the Court — this would constitute a mistake of law, which also fails to satisfy the third prong of the inquiry.”
Dismissal for Nonjoinder
Ultimately, the Court declined to permit Petitioner to rely upon the relation back doctrine, and held AMH was entitled to dismissal of the petition as against it as time-barred. Furthermore, because AMH was no longer a party, the entire proceeding must be dismissed for nonjoinder (i.e. failure to name a necessary party). To avoid this procedural pitfall and reach the merits of an Article 78 challenge, a petitioner must be sure to identify and name all necessary parties when commencing his or her proceeding.