This action arises from a contract to distribute music-recording royalties. On this motion, defendants, Bobby Ray Simmons and Bobby Ray Touring, Inc., seek leave to amend their answer under CPLR 3025 (b) to assert three counterclaims—two for breach of contract and one for unjust enrichment—and supporting allegations. The motion is granted.

CPLR 3025 (b) provides that on a motion for leave to amend, the moving party "need not establish the merit of its proposed new allegations, but [must] simply show that the proffered amendment is not palpably insufficient or clearly devoid of merit." (MBIA Ins. Corp. v Greystone & Co., Inc., 74 AD3d 499, 500 [1st Dept 2010] [internal citation omitted].) In addition, "[m]otions for leave to amend pleadings should be freely granted, absent prejudice or surprise resulting therefrom." (Id. at 499 [internal citation omitted].)

Plaintiffs and defendants dispute the merits of defendants' proposed counterclaims. Plaintiffs contend that the motion should be denied, because the proposed amendments are clearly without merit for two reasons: they (1) are time-barred and (2) fail to state a cause of action. This argument is unpersuasive.

A. Whether the Proposed Counterclaims Relate Back to the Initial Answer

In their proposed counterclaims, defendants allege that plaintiffs retained royalties arising from recordings Simmons produced in 2017 and onward, to which plaintiffs have no rights. Defendants also allege that plaintiffs failed to provide annual accountings to defendants on the royalties from those recordings. Plaintiffs contend that defendants' proposed counterclaims are barred by time, because they do not relate back to defendants' answer. (NYSCEF No. 33 at 3-4.) The court agrees with plaintiffs that the proposed counterclaims do not relate back.

A defendant may amend its answer to raise new timely counterclaims. Even new counterclaims that would be untimely at the time of the proposed amendment, though, will not be time-barred if they relate back for limitations purposes to the original answer. New (proposed) counterclaims relate back if the original answer provided "notice of the transactions, occurrences, or series of transactions or occurrences, to be proved pursuant to the amended pleading."^[FN1] (CPLR 203 [f]; see United States Fid. & Guar. Co. v Delmar Dev. Partners, LLC, 22 AD3d 1017, 1020-1021 [3d Dept 2005] [discussing when proposed amended counterclaims must satisfy the CPLR 203 [f] relation-back requirement].)

Defendants' counterclaims do not relate back to their original answer. In their original answer, defendants provide general denials and boilerplate affirmative defenses—none of which would "place plaintiff[s] on notice that [defendants] would claim that [plaintiffs'] conduct was harmful to [them] and would be at issue in this matter." (Rodriguez v Palange, 295 AD2d 155, 155 [1st Dept 2002].) For this reason, the timeliness of defendants' counterclaims is determined relative to the date on which defendants proposed them: February 5, 2025.

The parties do not dispute that the relevant limitations period for the proposed counterclaims [*2]is six years. (See CPLR 213.) Therefore, defendants' proposed counterclaims are indisputably timely to the extent that they accrued on or after February 5, 2019. The timeliness of those aspects of the proposed counterclaims that first accrued before February 5, 2019, is discussed further below.

B. Whether the Proposed Counterclaims are Timely under the Continuing-Wrong Doctrine

Defendants argue that the branches of their counterclaims that first accrued before February 5, 2019, are timely under the continuing-wrong doctrine. According to defendants, plaintiffs breached the parties' acquisition agreement by failing to account to defendants each year starting from March 2018, and by retaining profits from 2017 to the present. (NYSCEF No. 34 at 8.) The court agrees with defendants.

The continuing-wrong doctrine "is usually employed where there is a series of continuing wrongs and serves to toll the running of a period of limitations to the date of the commission of the last wrongful act." (Henry v Bank of Am., 147 AD3d 599, 601 [1st Dept 2017] [internal quotation marks omitted].) With respect to breach-of-contract claims, "the doctrine is applied to extend the statute of limitations when the contract imposes a continuing duty on the breaching party." (Id.) The continuing-wrong doctrine applies to unjust-enrichment claims, as well. (See Gibbons v Grondahl, 161 AD3d 590, 590-591 [1st Dept 2018].)

Here, defendants allege that plaintiffs had an ongoing duty to provide annual accounting to defendants and to remit payments on recordings created in 2017 or later. (See NYSCEF No. 32 at 8-17 [proposed amended answer].) The court therefore concludes that the branches of defendants' counterclaims preceding February 5, 2019, are timely under the continuing-wrong doctrine. (See Greenberg v Wiesel, 186 AD3d 1336, 1337 [2d Dept 2020] [holding that a claim that defendant "appropriated and withheld monies and assets meant for A & Z, constitutes a continuing wrong which accrues anew each time [defendant] receives such assets and monetary payments and withholds them from A & Z"].)

Defendants' proposed counterclaims are thus not devoid of merit as a timeliness matter.

Considering the sufficiency of the allegations supporting defendants' proposed counterclaims, the court concludes that the proposed counterclaims are not palpably insufficient or devoid of merit from that standpoint, either. Plaintiffs argue that defendants' proposed counterclaims are insufficiently pleaded, because they assertedly contain unsubstantiated allegations made "upon information and belief"; conflate which entities allegedly owed defendants' contractual obligations; and do not contain facts sufficient to support breach-of-contract and unjust-enrichment claims. (NYSCEF No. 33 at 2-3.) The court disagrees.

Defendants' counterclaims, as pleaded, are not devoid of merit. Although some of the allegations defendants make are "upon information and belief," the allegations are tied to contractual provisions in the acquisition agreement—which defendants provide. (Cf. Walsam 316 v 316 Bowery Realty Corp., 226 AD3d 628, 629 [1st Dept 2024] [holding counterclaim devoid of merit when defendant "failed to plead an underlying claim for the relief, but merely made a conclusory statement of the relief sought"].) The court also concludes that the allegations are clear enough to identify the individual entities defendants believe owe them contractual duties. Moreover, plaintiffs' [*3]challenge to the specificity and sufficiency of defendants' allegations is undermined by defendants' showing that they previously made numerous, but unsuccessful, attempts to obtain discovery from plaintiffs that might have shed more light on plaintiffs' actions. (See NYSCEF No. 29 at ¶ 14-15.)

The allegations supporting defendants' proposed amendments are not palpably insufficient or devoid of merit.^[FN2]

Accordingly, it is

ORDERED that defendants' motion for leave to amend their answer is granted; and upon defendants' service of notice of entry, the amended answer appearing at NYSCEF No. 32 is deemed defendants' operative pleading in the action; and it is further

ORDERED that plaintiffs have 15 days from the date of service of the notice of entry to serve and file a reply to defendants' counterclaims; and it is further

ORDERED that the parties appear for a telephonic preliminary conference on June 11, 2025.