Chandy Bounkhoun, Plaintiff,  v.  Steven E. Barnes, Esq. et al., Defendants. No. 15-CV-631A.
United States District Court, W.D. New York.  April 11, 2017 is a stunning new decision from the Western District of New York.  Magistrate Scott takes us from Medieval England to colonial times to look at the the criminal law underpinnings of Judiciary Law § 487.

“Here is what the Appellate Division said about how the predecessor in question operated to expand the concept of attorney deceit beyond the bounds of the common law:

The common law, as well the statute, relating to the offense of obtaining property by false pretenses, were adequate to the punishment of all such offenses, whether committed by lawyers or laymen. Moreover such an offense being punishable by imprisonment in a State prison, comes under the statutory definition of a felony. At common law, also, fraud and damage gave a civil action to the party injured. There was no occasion, therefore, for another statute to punish, or to give an action for the `deceit’ of lawyers, unless the Legislature intended that that class of persons should be liable for acts which would be insufficient to establish a crime or a cause of action against citizens generally. The statute is limited to a peculiar class of citizens, from whom the law exacts a reasonable degree of skill, and the utmost good faith in the conduct and management of the business intrusted to them. An attorney or counsellor who advises ignorant adult owners of land that they are not competent to convey it, and thereby induces them to employ him to institute a suit in partition, and incur the expense thereof, for the purpose of effecting a sale of the [land] gives them erroneous advice, and thereby misleads them to their injury, and if he is qualified to perform the functions of an attorney, he does it knowingly. To mislead the court or [a] party is to deceive it; and, if knowingly done, constitutes criminal deceit under the statute cited.

Looff, 14 Hun 588, 1878 N.Y. App. Div. LEXIS 1, at *4-5, aff’d, 97 N.Y. 478, 480 (1884). Bringing the principles from Looff back to Section 487, by way of NY Amalfitano, the meaning of “deceit” in the statute now can be understood. As used in Section 487, “deceit” by an attorney means misleading a court or a party by saying or doing anything that exploits the trust that courts and parties place in attorneys as officers of the legal system. Looff and NY Amalfitano addressed affirmative conduct, but there does not appear to be any reason to exclude the absence or omission of something said or done if the absence or omission would result in the same exploitation of trust. Including absences and omissions is important to plaintiff’s case here. Plaintiff’s allegations have an element of affirmative conduct with respect to some conduct at trial and the inducement to sign the high-low agreement. The weight of plaintiff’s allegations, however, lie in defendants’ omission of information from plaintiff to the insurer about the possibility of settling the case for $150,000; and in the omission of information from the insurer to plaintiff about a willingness to continue negotiations. If those omissions caused the same misleading and the same exploitation of trust as affirmative conduct then their status as omissions by itself should make no difference.

Looff also addresses another term in the operative language of Section 487: “intent.” Simply put, when attorneys exploit the trust that courts and parties place at them and wind up misleading those courts or parties, as long as the attorneys are licensed and in good standing— “qualified to perform the functions of an attorney”—the conduct is done knowingly. The treatment of “intent” that the New York Court of Appeals has endorsed by embracing Looff again demonstrates the desire to expand the reach of Section 487 beyond what might have been available under the common law to address deceitful conduct from attorneys.

The last term to assess from the operative language of Section 487 is “guilty.” The word appears twice in Section 487, once in Section 487(1) as a condition of determining “deceit”; and once at the end of Section 487, when a finding of deceit with the requisite intent—among other conditions not relevant to this case—authorizes a factfinder to pronounce a misdemeanor conviction. The Judiciary Law does not give the term “guilty” any definition peculiar to that statute or to Section 487 in particular. Four other sources of information offer some guidance instead. In ordinary parlance, people use the word “guilty” literally to mean criminal guilt, whether they have an exact burden of proof in mind or not; they also use the word more generally to mean that someone is confirmed to have committed some kind of transgression against someone else. The more general understanding of the word “guilty” is not persuasive here, considering the consequences to an attorney’s reputation that would follow from a finding of deceit and a misdemeanor conviction. Black’s Law Dictionary offers some guidance as well, defining “guilty” as either “having committed a crime; responsible for a crime” or “responsible for a civil wrong, such as a tort or breach of contract.” Guilty, Black’s Law Dictionary (10th ed. 2014). The former definition carries more weight in this circumstance because the direct consequence for guilt under Section 487 is a misdemeanor conviction. Appendix A shows that Section 487, in all substantive respects, has not changed at all since it rested in the Penal Law, adding to the Court’s sense that “guilty” there means what it usually means in criminal prosecutions. See also Neroni v. Becker, No. 3:12-CV-1226 GLS/DEP, 2014 WL 2532479, at *4 (N.D.N.Y. June 5, 2014) (“Furthermore, in addition to the fact that the plain language of § 487 criminalizes deceitful or fraudulent conduct by attorneys, New York state courts have consistently recognized that § 487 is rooted in criminal law. Accordingly, the state could have sought to commence criminal proceedings under § 487.”) (citations omitted). Finally, a strong source of guidance comes from the widespread convention in statutes and common law that guilt refers to criminal wrongdoing while “liable” or something similar refers to civil wrongdoing. See, e.g., Elonis v. United States, ___ U.S. ___, 135 S. Ct. 2001, 2011 (2015) (“Elonis’s conviction, however, was premised solely on how his posts would be understood by a reasonable person. Such a `reasonable person’ standard is a familiar feature of civil liability in tort law, but is inconsistent with the conventional requirement for criminal conduct—awareness of some wrongdoing.”) (citation omitted); Resnick v. Resnick, 722 F. Supp. 27, 37 (S.D.N.Y. 1989) (“New York law provides, however, that a defendant may be held liable for a [civil] conspiracy to do an unlawful thing, or to do a lawful thing in an unlawful manner.”) (citations omitted); N.Y. Gen. Bus. Law § 815 (using the phrase “shall be liable” when assessing civil penalties); N.Y. Envtl. Conserv. Law § 71-2729 (same); N.Y. Workers’ Comp. Law Appx. § 316.5 (same). The above guidance persuades the Court to conclude that, for purposes of Section 487, “guilty” refers to establishing misdemeanor criminal liability beyond a reasonable doubt. Section 487, at its core, then, is a criminal statute like its immediate predecessor—former Penal Law section 273—and like its ancestor statutes dating back centuries.[4] That the term “guilty” appears twice in the statute seems a little repetitive, but given that the statute operates to assess misdemeanors, the repetition simply is an explicit rendering of the principle in criminal law that every individual element of an offense must be established beyond a reasonable doubt. See, e.g., United States v. Viafara-Rodriguez, 729 F.2d 912, 913 (2d Cir. 1984)(citations omitted).”

“If the core of Section 487 operates as a criminal statute then what should the Court make of the civil clause attached at the very end? After pronouncing an attorney with the necessary elements guilty of a misdemeanor, Section 487 says that “in addition to the punishment prescribed therefor by the penal law, he forfeits to the party injured treble damages, to be recovered in a civil action” (emphasis added). “In addition to” suggests newer options that are layered or that open up alongside older, pre-existing ones. See, e.g., Medtronic, Inc. v. Lohr, 518 U.S. 470, 500 (1996) (finding that 21 U.S.C. § 360k(a) does not preempt common-law state tort claims because they are not state requirements for medical devices that are “different from, or in addition to” federal regulations); Leist v. Simplot, 638 F.2d 283, 313 (2d Cir. 1980) (holding that a private right of action under the Commodity Exchange Act was a new remedy in addition to older remedies); In re Roberts, 514 B.R. 358, 362 (Bankr. E.D.N.Y. 2014) (interpreting the definition of a bankruptcy estate in 11 U.S.C. § 1306(a) to add property “in addition to” property described in 11 U.S.C. § 541(a)(5)); Anemone v. Metro. Transp. Auth., 410 F. Supp. 2d 255, 269 (S.D.N.Y. 2006) (describing how the alteration of a plaintiff’s rights in “stigma plus” litigation—that is, the “plus”—”must be in addition to the stigmatizing statements”) (emphasis added). People who are wronged by a deceitful attorney thus have the option or pursuing criminal or civil redress, or both, but only after misdemeanor guilt is established. The plain language of the statute says that any civil penalty of treble damages comes on top of whatever the New York Penal Law authorizes as a punishment for misdemeanors. See Amalfitano v. Rosenberg (“SDNY Amalfitano“), 428 F. Supp. 2d 196, 210-11 (S.D.N.Y. 2006) (“The wording of the statute thus makes it clear that the civil remedy is in addition to the criminal sanction for the same conduct.”). If the statute does not allow a factfinder to reach criminal or civil remedies before first reaching a misdemeanor conviction then any civil remedies under Section 487 must require a misdemeanor conviction as a prerequisite. See Melcher v. Greenberg Traurig, LLP, 11 N.E.3d 174, 175 (N.Y. 2014) (“Judiciary Law § 487 exposes an attorney who is guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party to criminal (misdemeanor) liability and treble damages, to be recovered by the injured party in a civil action.”) (internal quotation and editorial marks omitted) (emphasis added). No particular criminal penalty would be required, just the conviction itself. The New York Court of Appeals in NY Amalfitano implicitly recognized the dependence of the civil penalty on the criminal conviction when it assessed the history of Section 487 and wrote that, in the late 19th century, “[t]he Legislature later codified this misdemeanor crime and the additional civil forfeiture remedy as section 148 of the Penal Code of 1881.” NY Amalfitano, 903 N.E.2d at 268 (emphasis added). Layering a civil penalty on top of a criminal conviction and penalty is not unheard of— federal asset forfeiture upon conviction is just one example—and is consistent with the idea that the New York Legislature considered attorney deceit especially repugnant.”

“Where does all of the above analysis leave plaintiff? Plaintiff has pled that defendants ignored her desire to settle her case, and walked away from ongoing negotiations without her knowledge. Plaintiff has pled further that defendants engineered a high-low agreement at trial that essentially gave their costs higher priority than her permanent loss of an eye. Whatever proof might emerge at discovery, the claim of legal malpractice in the amended complaint—Count IV, which defendants have not moved to dismiss—would appear to cover the full range of plaintiff’s allegations. The Court is not aware of any prosecution of defendants under Section 487, and plaintiff in any event has not pled nearly enough detail to show that defendants might have fulfilled all of the elements of Section 487 and might be guilty of a misdemeanor. Without fulfillment of the elements of a criminal offense under Section 487, and a resulting conviction, this case presents no criminal prerequisite that treble damages can be “in addition to.”

Under these circumstances, Count III of the amended complaint fails, and the Court thus recommends granting defendants’ motion with respect to Count III. Since Count III fails as a matter of law, the Court need not address plaintiff’s arguments about the need to obtain discovery.”