Now that Urias v. Buttafuoco, has been decided by the Court of Appeals would Gelwan v De Ratafia 2023 NY Slip Op 32953(U) August 25, 2023 Supreme Court, New York County
Docket Number: Index No. 654525/2016 Judge: David B. Cohen have been decided differently as to the Judiciary Law 487 claim?

In Urias, the Court of Appeals held ” Not only does the text of the provision suggest that a plenary action is available in all instances of attorney deceit, but section 487’s long lineage also confirms that conclusion. The cause of action was descended from the first Statute of Westminster adopted in England in 1275, incorporated in New York’s earliest common law, and first codified in this State in a 1787 statute that closely tracks the current provision (see Melcher v Greenberg Traurig, LLP, 23 NY3d 10, 14-15 [2014]; Amalfitano, 12 NY3d at 12). Its legislative history reflects a consistent view, taken over centuries, that attorney deceit in the course of litigation warrants substantial penalties—both criminal liability and treble damages. By comparison, CPLR 5015 offers a discretionary remedy that includes “restitution in like manner and subject to the same conditions as where a judgment is reversed or modified on appeal” (CPLR 5015 [d]). Such relief is markedly different from that authorized by section 487, and we decline to confine a plaintiff alleging attorney deceit to the sole option of proceeding under CPLR 5015.

We appreciate that it might be more efficient to require a plaintiff who either directly or effectively challenges a judgment to return to the court that issued it and seek vacatur under CPLR 5015, and we note that transfer of a plenary action to the court that handled the underlying proceedings may be desirable where consistent with the CPLR’s venue provisions. Nor do we take lightly the interest in preserving the finality of judgments. But the legislature has singled out the specific type of claim here—an allegation of attorney deceit on the court or a party—and determined that recovery of treble damages should be available in a civil action. We conclude that section 487 must be read to allow a plenary action for deceit, even where success on that claim might undermine a separate final judgment.”

In Gelwan, the court held:

“This action arises out of an incident which took place in 2011, the specific details of
which are not directly relevant to these motions. Plaintiffs Gelwan and Backer were retained by defendants De Ratafia and Ackroyd (De Ratafia parties) to represent them in a federal civil rights action in the Northern District of New York arising out of the incident (De Ratafia v Hyson, US Dist Ct, ND NY, 13 Civ 174, Mordue, J., 2014 [federal action]).
The retainer agreement is written on Backer’s letterhead, and provides that the De Ratafia parties have retained Backer’s firm, as well as Gelwan as “of counsel,” to commence and prosecute the federal lawsuit, and that they have agreed to pay a 40 percent contingency fee, which Backer would share equally with Gelwan (NYSCEF 18).”

“Judiciary Law § 487(1) provides that it is a misdemeanor for, and creates liability for
treble damages against, 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.”
As Gelwan was not a party in the federal action ( Gelmin v Quicke, 224 AD2d 481 [2d Dept 1996] [“party” refers to party in action]), and as the alleged misconduct occurred during the federal action and not here ( Chibcha Rest., Inc. v David A. Kaminsky & Assoc., P.C., 102 AD3d 544 [1st Dept 2013] [claim must be brought in action in which alleged misconduct occurred]), Gelwan does not state a claim for a violation of Judiciary
Law§ 487.”

Jones Law Firm, P.C. v J Synergy Green, Inc. 2024 NY Slip Op 31127(U) April 2, 2024
Supreme Court, New York County Docket Number: Index No. 653730/2023 Judge: Lyle E. Frank illustrates the principle that while there may be a Code of Professional Conduct violation, there must be a proximate connection with pecuniary damages to accompany and be cause by that violation.

“The underlying action arises out of allegations that defendant/third-party plaintiff failed to pay plaintiffs legal fees as required by its engagement agreement. The third-party action and counterclaims arise out of the plaintiffs relationship with third-party defendants PAM and David Treyster, in that defendants/third-party plaintiffs were caused to suffer damages based on the failure to disclose the relationship. It is undisputed that at the time the engagement agreement was signed by plaintiff and defendants, plaintiffs principal had a 100% ownership interest in PAM.”

“The Court finds that here, similar to the plaintiffs in Connaughton, the third-party
complaint and counterclaims fails to specify any compensable damages from PAM’ s alleged fraud. In opposition to P AMs motion the defendants/third-party plaintiffs contend that plaintiff and PAM are agents of one another and thus PAM is vicariously liable for the plaintiffs alleged fraudulent conduct. This argument however misses the mark and is also unsupported by specific factual allegations. The third-party complaint and counterclaims fail to allege a sufficient basis to pierce the corporate veil or any facts sufficient to support defendant/third-party plaintiffs’ contention that any alleged fraud caused any additional damages separate and apart from those incurred by the
alleged fraudulent conduct of plaintiff.”

” Here, the Court finds that allowing defendant/third-party plaintiffs amendment would be futile. The proposed amended complaint fails to cure the deficiencies cited above. Similarly, the Court agrees that because the third-party complaint fails to properly state a claim for an underlying tort there can be no conspiracy cause of action pursuant to Judiciary Law § 487 (Am. Preferred Prescription, Inc. v Health Mgt., 252 AD2d 414,416 [1st Dept 1998]).”

Legal malpractice claims frequently arise over real estate. in Mandour v Rafalsky
2024 NY Slip Op 31086(U) April 1, 2024 Supreme Court, New York County
Docket Number: Index No. 651819/2022 Judge: Andrea Masley there is the added (frequent) dispute between siblings with death and incompetency issues thrown in.

“Plaintiffs Nariman M. Mandour, as both beneficiary and trustee of Nariman’s
Trust, together with Martin Wm. Goldman and Harvey I. Krasner as trustees of
Nariman’s Trust, on behalf of Nariman’s Trust individually, and derivatively on behalf of
10/3 Realty Corp. (RC) initiated this action on April 22, 2022 to invalidate agreements
related to the 2014 development of 47 Third Avenue in New York City.”

“Nariman’s Trust (the Trust) was established under the last will and testament of
decedent Peter Stein (Peter) for the lifetime benefit of Mandour, his spouse. (NYSCEF
Doc No. [NYSCEF] 26, FAC ,i 1; see NYSCEF 27, Last Will and Testament at§ 1 [E]
[1].) Mandour, Goldman, and Krasner serve as trustees. (NYSCEF 26, FAC ,i
2.) During his lifetime, Peter owned 10 shares, or one-third of all shares, in nominal
defendant RC, a New York corporation, and served as its president. (Id. ,i,i 1, 14,
27.) Schlesinger, Peter’s uncle, owns 10 shares in RC. (Id. ,i,i 5, 28.) Peter’s brothers,
Fredrick and Richard each own 5 shares, or one-sixth of the shares in RC. (Id. ,i,i 6-7,
28.) In January 2019, Peter fell ill and he passed away on September 4, 2020. (Id. ,i,i
5, 27.) Peter’s shares in RC passed to the Trust under Peter’s will. (Id. ,i 1.)

Rafalsky is an attorney who, individually or through his law firm Wood, Rafalsky
& Wood LLP (WRW), has represented RC and/or TSFH. (Id. ,i,i 8-9.) Rafalsky owns
and/or operates TRRKY, a New York corporation. (Id. ,i 8.) Rafalsky served as RC’s
attorney on the Capital Contribution Agreement. (NYSCEF 28, Capital Contribution
Agreement ,i 11.6 [B].)”

“The Rafalsky defendants argue that the legal malpractice claim is time-barred. A
three-year statute of limitations governs a cause of action for legal malpractice (CPLR
214 [6]), which begins to “accrue when the malpractice is committed, not when the client learns of it.” (Palmeri v Willkie Farr & Gallagher LLP, 156 AD3d 564, 567 [1 st Dept
2017] [citations omitted].) Where the alleged malpractice claim is predicated upon the
attorney’s failure to disclose a conflict of interest, the claim accrues from that date. ( See
Kvetnaya v Tylo, 49 AD3d 608, 609 [2d Dept 2008].)
In this case, the predicate acts underlying the malpractice claim occurred prior to
May 21, 2003, when the Development Agreement was executed. Plaintiffs commenced
this action in April 2022. As discussed supra, plaintiffs have failed to raise an issue of
fact that the continuous representation doctrine tolled the limitations period. Thus, the
legal malpractice claim is dismissed as time-barred.”

Under CPLR 214-6, and according to the ensuing court decisions, any claim against an attorney, whether purely in contract, in fraud or for professional negligence is subject to a 3-year statute of limitations. This legislative fix took place after the Court of Appeals permitted a 6-year statute of limitations in contract claims. For architects, it is different, as seen in Apollo Elec., Inc. v Aman Devs. LLC 2023 NY Slip Op 33466(U) October 5, 2023 Supreme Court, New York County Docket Number: Index No. 155250/2019 Judge: Debra A. James.

” As for the first cause of action sounding in breach of contract against second third-party defendant AT Architects of the second third-party complaint, this court agrees with second third-party plaintiff that his allegations therein sound in breach of contract and not professional malpractice. As in Children’s Corner Learning Ctr v A Miranda Contr. Corp (64 AD3d 318, 324 [1 st Dept 2009]), “the damages sought [by second third party plaintiff at bar] are economic only.” Second third-party plaintiff does not seek, for example, “the cost to repair the

defects or the difference in value between a properly constructed structure and that which was in fact built”, which is the measure of damages for architectural malpractice
(Brushton-Moira Cent. School Dist. v Thomas Assoc., 91 NY2d 256, 262 [1998]). On that basis, second third party plaintiff is correct that the six-year statute of limitations for breach of contract (CPLR § 213) applies to such claim. As the second third party action was commenced on September 15, 2022, any claims against second third-party defendant that accrued before September 14, 2016, are untimely.”

It’s unusual to see a firm like Marcum LLP suing its attorneys. In this particular setting, the claim was rejected by the Appellate Division.

In Marcum LLP v L’Abbate, Balkan, Colavita & Contini, L.L.P. 2023 NY Slip Op 06443 [222 AD3d 486] December 14, 2023 Appellate Division, First Department the accounting firm claimed that its defense lawyers were negligent.

“Supreme Court correctly concluded that defendants, L’Abbate, Balkan, Colavita & Contini, L.L.P. (LBCC) and Marianne S. Conklin, who represented plaintiff in an underlying action alleging accounting malpractice, among other things, were entitled to dismissal of the complaint given that plaintiff failed to allege that defendants were negligent or that they proximately caused any damages (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007]; Fielding v Kupferman, 65 AD3d 437, 442 [1st Dept 2009]). Plaintiff alleged that in the underlying action, defendants’ supplemental discovery production, which included responsive documents that had been inadvertently withheld, such as declarations submitted in connection with a federal investigation into one of plaintiff’s clients, precipitated a coverage dispute with its insurers. That dispute led to plaintiff having to retain other coverage counsel and to ultimately contribute to the settlement in the underlying action.

Although plaintiff contends that the declarations were subject to grand jury secrecy rules, plaintiff did not allege that either of the employees who composed the declarations testified before a federal grand jury, or that the declarations were entered into evidence. Thus, the declarations were not subject to the general rule of grand jury secrecy because they were not “evidence actually presented to [the grand jury]” nor “anything that may tend to reveal what transpired before it” (see United States v Eastern Air Lines, Inc., 923 F2d 241, 244 [2d Cir 1991], citing Fed Rules Crim Pro rule 6 [e] [2]). Accordingly, plaintiff failed to allege that defendants’ conduct breached its duty of care.”

“Supreme Court also correctly dismissed that part of the legal malpractice claim seeking disgorgement of attorneys’ fees paid to LBCC, which is, essentially, a claim for monetary damages in connection with its legal malpractice claim (see Access Point Med., LLC v Mandell, 106 AD3d 40, 44 [1st Dept 2013]). Defendant was not discharged for cause, nor did it charge legal fees for any work associated with the motion practice ensuing from the supplemental disclosures (see Decolator, Cohen & DiPrisco v Lysaght, Lysaght & Kramer, 304 AD2d 86, 91 [1st Dept 2003]). Since the underlying legal malpractice claim is dismissed, the claim for disgorgement must be dismissed as well (see Cambridge Capital Real Estate Invs., LLC v Archstone Enter. LP, 137 AD3d 593, 596 [1st Dept 2016]).

Plaintiff did not establish that it incurred litigation expenses as a result of defendants’ conduct to minimize or correct defendants’ mistakes (see Rudolf, 8 NY3d at 443), and this portion of the complaint seeking additional damages also should have been dismissed. Plaintiff failed to specifically allege what attorneys’ fees, if any, it paid to co-counsel to remedy any alleged shortcomings by defendants in the wake of the supplementary disclosures and defendants’ motion to withdraw from the representation. Concur—Kapnick, J.P., Friedman, González, O’Neill Levy, JJ.”

Serafini Releasing LLC v Gray 2024 NY Slip Op 30863(U) March 13, 2024
Supreme Court, New York County Docket Number: Index No. 655579/2021
Judge: Melissa A. Crane is that rare New York legal malpractice case arising out of the making of a film. Here, Plaintiff has several scenarios at play against the attorney and, in the last reel, loses all.

“In this action, plaintiff Serafini Releasing, LLC (“plaintiff” or “Serafini”), a New Yark
based film production and distribution company, originally alleged that defendant Jonathan Gray (“Gray”), an attorney, and his law firm, defendant Gray Krauss Stratford Sandler Des Rochers, LLP (“Gray Krauss”), wrongfully stole its ownership interest in a film project entitled “16 Bars” (the “Film”) and gave it to another party, Gary Gumowitz (“Gumowitz”). Susanne Bohnet (“Bohnet”) is the chief operating officer and sole member of plaintiff. Plaintiff claimed that Gray was its attorney, that it relied on and trusted him, and was shocked to learn it “lost” its rights to the Film.

Plaintiffs theory of the case has been a moving target. During motion practice, plaintiff
abandoned its ownership claim. Plaintiff now claims that Gray began prioritizing the interests of Gumowitz, the Film’s investor and owner. Plaintiff claims Gray stripped plaintiff of the managerial rights that would have allowed it creative and managerial control over the completion and release of the Film. Plaintiff claims it had the right to complete the Film regardless of budget, and that Gumowitz and his company, 16 Bars Feature Film LLC, would be obligated to continue to finance the Film without limit or discretion until its completion.”

“In its first cause of action for breach of fiduciary duty, plaintiff alleges that “[i ]n their role as attorneys retained by Plaintiff, Defendants assumed the role of fiduciary to Plaintiff and owed fiduciary duties to Plaintiff’ (amended complaint,, 88). Plaintiff further alleges that defendants breached those duties by “drafting and directing Plaintiff to execute legal documents that stripped Plaintiff of the rights and authority over its own Film” (id.,, 94).

In its second cause of action for “negligent advice causing damage,” which sounds in
legal malpractice, plaintiff alleges that, “[b ]eginning in November 2018, Plaintiff consulted with Defendants Gray and Gray Krauss for the express purpose of engaging Defendant Gray to act as production counsel for the Film and protect Plaintiffs interests in connection with it.” Plaintiff further alleges these services included “Gray providing Plaintiff direction and advice on numerous legal questions and matters related to the production of the Film and Plaintiffs control over it” (id., ,r 102). Plaintiff further alleges that “[ d]uring that time, however, Defendants exercised intentional and repeated lack of due care in advising Plaintiff,” that included “advising Plaintiff to accept and/or sign documents that stripped it of its creative and business control over the Film” (id., ,r 1 04).
A cause of action to recover damages for negligence sounding in legal malpractice has
three elements: (1) that the defendant failed to exercise that degree of care, skill, and diligence commonly possessed and exercised by an ordinary member of the legal community, (2) that such negligence was the proximate cause of the actual damages plaintiff sustained, and (3) that, but for the defendant’s negligence, the plaintiff would have been successful in the underlying action (Leder v Spiegel, 9 NY3d 836, 837 [2007]; accord Century Prop. & Cas. Inc. Corp. v McManus & Richter, _ AD3d _, 2024 NY Slip Op 00799, * 5 [1 st Dept 2024]). To succeed on a motion for summary judgment dismissing the complaint in a legal malpractice action, the defendant must present evidence in admissible form establishing that the plaintiff is unable to prove at least one essential element of his or her cause of action alleging malpractice (Schoenberg v Dankberg, 2020 NY Slip Op 33133[U] [Sup Ct, NY County 2020]).

To establish causation, a plaintiff must demonstrate that, but for the attorney’s
negligence, she would have prevailed in the underlying matter, or would not have sustained any ascertainable damages ( Brooks v Lewin, 21 AD3d 731, 734 [ pt Dept 2005]). The failure to establish proximate cause mandates the dismissal of a legal malpractice action, regardless of the attorney’s negligence (id.; see e.g. Jarmuth v Wagner, 219 AD3d 1248, 1249 [l5t Dept 2023] [ dismissing malpractice claim “because plaintiff did not, and cannot, adequately plead that this advice and conduct was the proximate cause of damage suffered by the co-op,” as “(t)he complaint contains no nonconclusory allegations suggesting that the purported negligence by defendants was the ‘but for’ cause of the co-op sustaining actual damages”]). A plaintiffs speculation about loss resulting from an attorney’s alleged omission is insufficient to sustain a case of legal malpractice (Dempster v Liotti, 86 AD3d 169, 177 [2nd Dept 2011]; see e.g. Weis v Rheem, Bell & Freeman, LLP, 217 AD3d 538, 539 [1 st Dept 2023] [“Defendants were entitled to dismissal of the complaint given that plaintiffs failed to allege actual and ascertainable damages that were proximately caused by defendants’ alleged malpractice” as “the allegations of proximate causation depend on multiple speculative allegations”]).”

The now bankrupt defendant in a personal injury case is suing her insurance carrier and her defense attorney after they failed to settle the case once summary judgment had been awarded to the injured party in Pergament v Government Empls. Ins. Co. (“GEICO”) 2024 NY Slip Op 01568 Decided on March 20, 2024 Appellate Division, Second Department. The motion was mostly denied.

“The defendant Government Employees Insurance Company (“GEICO”) (hereinafter Geico) retained the defendants Picciano & Scahill, LLP, and Gilbert J. Hardy (hereinafter together the law firm defendants) to represent Melissa Gace Bryant, who was a defendant in a personal injury action (hereinafter the underlying action). The plaintiff, the trustee of Bryant’s bankruptcy estate, subsequently commenced this action against Geico and the law firm defendants. As against Geico, the complaint alleged three causes of action: (1) bad faith refusal to settle the underlying personal injury action for the subject policy limit after a motion for summary judgment on the issue of liability was granted in favor of the underlying injured plaintiff, (2) breach of the covenant of good faith and fair dealing, and (3) punitive damages. As against the law firm defendants, the complaint alleged a cause of action for legal malpractice. Geico and the law firm defendants separately moved [*2]pursuant to CPLR 3211(a) to dismiss the complaint insofar as asserted against each of them. The Supreme Court denied the motions. Geico and the law firm defendants separately appeal.”

“Here, with respect to the causes of action against Geico alleging bad faith refusal to settle the underlying personal injury action for the subject policy limit and breach of the covenant of good faith and fair dealing, the medical reports submitted by Geico in support of its motion do not constitute “documentary evidence within the intendment of CPLR 3211(a)(1)” (Jeffrey v Collins, 218 AD3d 451, 453), and Geico’s evidentiary submissions were “insufficient to utterly refute the plaintiff’s factual allegations” (Davis v Henry, 212 AD3d 597, 598). Further, after considering the evidentiary proof submitted by Geico, the Supreme Court properly determined that the plaintiff had causes of action against Geico alleging bad faith refusal to settle the underlying personal injury action for the subject policy limit and breach of the covenant of good faith and fair dealing (see East Ramapo Cent. Sch. Dist. v New York Schs. Ins. Reciprocal, 199 AD3d 881, 884; CBLPath, Inc. v Lexington Ins. Co., 73 AD3d 829, 830-832; Brennan v Mead, 73 AD2d 926, 927; cf. Little Princess Express Cab Corp. v American Tr. Ins. Co., 12 AD3d 266, 267). Accordingly, the court properly denied those branches of Geico’s motion which were pursuant to CPLR 3211(a)(1) and (7) to dismiss the causes of action alleging bad faith refusal to settle the underlying personal injury action for the subject policy limit and breach of the covenant of good faith and fair dealing.

The Supreme Court should have granted that branch of Geico’s motion which was pursuant to CPLR 3211(a)(7) to dismiss the cause of action for punitive damages against it because “no separate cause of action for punitive damages lies for pleading purposes” (Crown Fire Supply Co., Inc. v Cronin, 306 AD2d 430, 431; see Podesta v Assumable Homes Dev. II Corp., 137 AD3d 767, 770). However, the complaint, “although inartfully drafted,” (Leon v Martinez, 84 NY2d at 88), adequately alleges a demand for punitive damages based on the remaining causes of action asserted against Geico (see Rocanova v Equitable Life Assur. Socy. of U.S., 83 NY2d 603, 613; Perlbinder v Vigilant Ins. Co., 190 AD3d 985, 989; 25 Bay Terrace Assoc., L.P. v Public Serv. Mut. Ins. Co., 144 AD3d 665, 666-668; 2015 Freeman LLC v Seneca Specialty Ins. Co., 136 AD3d 531, 532).

Accepting the facts as alleged in the complaint as true, and according the plaintiff the benefit of every possible favorable inference (see Leon v Martinez, 84 NY2d at 87-88), the complaint sufficiently stated a cause of action alleging legal malpractice against the law firm defendants (see Shaya B. Pac., LLC v Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, 38 AD3d 34Young v Nationwide Mut. Ins. Co., 21 AD3d 1099). Accordingly, the Supreme Court properly denied that branch of the law firm defendants’ motion which was pursuant to CPLR 3211(a)(7) to dismiss the cause of action alleging legal malpractice against them.”

Sebco Dev., Inc. v Siegel & Reiner, LLP 2024 NY Slip Op 50292(U) Decided on March 20, 2024 Supreme Court, Bronx County Gomez, J. is the kind of legal malpractice case that comes up often enough to support the idea that real estate in NYC is a paramount, driving economic force, and that the extensive lawyering necessary results in many legal malpractice cases.

The case is fantastically fact-driven, and the decision is almost appellate in depth. It is impossible to summarize for a blog, but it is definitely worth reading completely for the definitions, the explanations and the discussion of the rules of legal malpractice, continuing representation and the effect of violation of the disciplinary rules.

“The instant action is for legal malpractice, breach of fiduciary duty, tortious interference [*2]with business relations, declaratory judgment, and replevin. The complaint, filed on May 26, 2023, alleges the following. Plaintiff SEBCO DEVELOPMENT, INC. (Sebco) is a not-for-profit organization which provides affordable housing and charitable services in the Bronx. Nonparty Salvatore Gigante (SG) is Sebco’s Chief Operating Officer and nonparty Latoya Allen (LA) is Sebco’s Vice President of Operations and Director of Management. The remaining plaintiffs (property owners), own affordable housing buildings in Bronx County and each is either Sebco’s direct affiliate or subsidiary. The property owners hold beneficial title to their buildings, which provide subsidized, affordable housing to low-income families and low-income senior citizens who reside therein. With respect to the property owners and their properties, Sebco sponsored and developed each of the affordable housing projects existing at the buildings owned by the property owners and Sebco provides oversight on all fiscal matters for the property owners. Defendant SIEGEL & REINER, LLP (SR) is a law firm at which defendant IRWIN SIEGEL (Siegel) is a partner. Siegel and SR previously provided both legal and accounting services for plaintiffs, essentially acting as outside general counsel. Specifically, Siegel previously, inter alia, advised plaintiffs on all corporate matters, ensuring plaintiffs’ compliance with corporate formalities, advising plaintiffs on all refinancing projects, and advising plaintiffs on all governmental regulatory matters to ensure that plaintiffs were in full compliance therewith. In addition to representing plaintiffs, defendants also represented other entities, including nonparties Building Management Associates, Inc. (BMA), Fox River Properties, Inc. (Fox), Sebco IV Associates, LP (Sebco IV), and Father Louis Gigante (FLG), and or his estate. FLG founded Sebco and BMA and upon his death, Siegel became the executor of FLG’s estate. In that capacity, Siegel controls BMA, has an interest in and also controls Fox, the latter being Sebco IV’s general partner, which Siegel also controls. Nonparty Luigino Gigante (GG) is FLG’s son, the beneficiary of FLG’s estate, and Siegel’s client. BMA is a not-for-profit property management agency, that, until February 25, 2023, managed the property owners’ buildings. Prior to BMA’s termination, Sebco and BMA had a close working relationship. They shared office space at premises owned by and leased from Fox and also shared staff. Prior to BMA’s termination, SG was BMA’s President. Although defendants counseled and represented BMA, Fox, and Sebco IV on a host of transactions and did so while simultaneously representing Sebco in those transactions, defendants never disclosed such dual representation. To the extent that with respect to the foregoing transactions, Sebco’s interests were divergent from BMA, Fox, FLG, and Sebco IV’s interest, the dual representation created a conflict of interest, obligating defendants to disclose the dual representation and to recommend that Sebco obtain independent counsel. The failure to advise plaintiffs of the foregoing conflicts of interest, including decisions made by Siegel after FLG’s death when Siegel was FLG’s attorney-in-fact, have caused plaintiffs damage. In April 2022, defendants were terminated and, after plaintiffs retained new counsel, it was discovered that defendants had failed to provide legal advice to plaintiffs, which as a result, meant that they had not complied with corporate and regulatory formalities. Specifically, Sebco’s documentation was inadequate, its corporate documents were never properly updated to reflect FLG’s death, and after Sebco was audited by the City of New York, the latter raised issues concerning transactions to which Sebco was a party. Significantly, transactions between Sebco, Sebco IV, and nonparty Crotona Belmont, continued to bear FLG’s signature even after he had resigned and ultimately died. Siegel never advised Sebco that FLG had to be omitted from these [*3]documents and, in fact, refused to remove him from the same. In 2018, Sebco began work as a sponsor and developer on a project whereby it sought to obtain refinancing in order to rehabilitate an affordable housing property owned by Sebco IV. Defendants acted as Sebco’s counsel in the foregoing endeavor for which Sebco expended significant labor and financial resources. Despite the obligation to provide Sebco with their undivided loyalty, defendants represented other entities and individuals in the foregoing transaction, including BMA, Fox, Sebco IV and FLG. To that end, since defendants failed to disclose the conflict of interest and Sebco was paying defendant for legal services that benefitted parties with interests adverse to Sebco, defendants violated New York Rules of Professional Conduct 1.7 and 18(f). Prior to defendants’ termination in April 2022, all parties were cooperatively working to accomplish the ultimate goal on the Sebco IV project. However, thereafter, in order to aid their other clients, defendants began to interfere with the completion of the project, by (1) asserting in 2018 that the refinancing sought by Sebco IV required the consent of Sebco IV’s limited partner, which advice was at variance to defendants’ advice to Sebco in 2015; and (2) asserting that Sebco would not be entitled to a developer fee, which meant that defendants, after a review of the budget for the project, knew that Sebco was involving itself in a financially detrimental project. But for defendants’ legal advice in 2015 and its failure to advise Sebco that it would earn no developer fee on the project, Sebco would have never undertaken the Sebco IV project. Additionally, defendants, inter alia, submitted documentation to the New York City Department of Housing Preservation and Development (HPD) seeking to establish an HDFC for Sebco IV, which would confer tax benefits to Sebco IV and none to Sebco. With respect to BMA’s termination, on January 9, 2023, GG and Siegel entered the space jointly occupied by Sebco and BMA. GG and Siegel were accompanied by armed guards. Siegel intimidated the employees at the premises and encouraged many of Sebco’s employees to resign and begin working for BMA. GG and Siegel attempted to break into SG’s office, gained entry, rummaged through SG’s desk, and took some of SG’s property. Siegel left notices at the office, indicating that SG was no longer BMA’s president and that GG was BMA’s new president. On January 10, 2023, GG and Siegel engaged in similar behavior and Siegel threatened Sebco’s employees. On January 10, 2023, Fox served a 10-day Notice to Quit upon Sebco, seeking to prematurely terminate its lease. Based on the foregoing, and because GG lacked the requisite knowledge to be defendant’s President, on January 11, 2023, the property owners decided to terminate their relationship with BMA and further determined that Sebco would assume the management of the property owners’ properties. Thereafter, on January 17, 2023, BMA and GG, at Siegel’s behest, denied plaintiffs the ability to access their own bank accounts. Between January 19 and February 8, 2023, based on GG and Siegel’s actions, many BMA employees resigned. On February 3, 2023, Sebco terminated their lease with Fox. Despite representing plaintiffs when the management agreements were executed, such that Siegel was aware that BMA’s termination was authorized thereunder, Siegel nevertheless interfered and obstructed Sebco’s assumption of the management of the property owners’ buildings. Such obstruction, which included the denial of access to plaintiffs’ own bank accounts, has caused financial damage to Sebco and the property owners. The foregoing obstruction by Siegel constitutes a breach of the fiduciary duty he then owed to plaintiffs. In addition to the foregoing, Siegel also breached his fiduciary duty to Sebco when at his behest, BMA sued SG and LA, solely to prevent plaintiffs from terminating their prior management [*4]agreements with BMA. Said lawsuit frivolously asserted that SG and LA interfered with BMA’s business relationships with the property owners and that SG and LA encouraged BMA’s employees to resign. While the law suit was ultimately discontinued, on March 13, 2023, Siegel sent a letter to nonparty St. Barnabus Housing Development Corporation (St. Barnabas), with whom Sebco had an ongoing beneficial relationship, wherein Siegel apprised St. Barnabas that he had requested that HPD and other agencies not allow any company in which SG had any interest to manage any property, apprised St. Barnabus that BMA had sued SG and LA, and shared links to newspaper reports which contained negative information about SG and LA. As a result, on April 24, 2023, in a telephone call between Sebco and United States Department of Housing and Urban Development (HUD), the latter indicted that the call was prompted by the dispute between Sebco and BMA about which HUD learned from GG and Siegel. HUD then indicated that it did not want Sebco to manage several properties. On May 15, 2023, Siegel sent Sebco a letter asking it to remove FLG’s name and likeness from Sebco’ website. Since Siegel had previously approved of Sebco’s use of FLG’s name and likeness on Sebco’s website, the letter taking a contrary position constitutes a breach by Siegel of his fiduciary duty to Sebco. After defendants were terminated, Sebco demanded that they return all files and documents relating to Sebco’s operations and corporate matters. Said files were the result of defendants’ decades-long representation of Sebco. Despite the request, defendants have refused to return the aforementioned files.”

Jumping to the conclusion:

“To the extent that plaintiffs aver that the continuous representation doctrine avails them, as discussed above, it would only avail them with respect to the Sebco IV project, since it is the only claim for legal malpractice which sufficiently pleads damages. However, plaintiffs’ counsel’s assertions are not a substitute for allegations in the complaint and are not tantamount to an affidavit to cure pleading defects in the complaint (Cron at 366 [In opposition to a motion to dismiss for failure to state a cause of action, a plaintiff may submit affidavits to remedy defects in the complaint, and if an affidavit is submitted for that purpose, it shall be given its most favorable intendment]). Here, contrary to counsel’s assertion, the malpractice arising from the Sebco IV project accrued in 2015, when it is alleged that Sebco was provided with incorrect legal advice, without which, it would not have undertaken the Sebco IV project. It is then alleged that sometime thereafter, the Sebco IV project failed and that damages resulted therefrom. Thus, the foregoing claim accrued in 2015 and at best the complaint asserts that defendants continued to provide legal advice to Sebco through 2018, when they changed their position. Thus, even if the instant claim accrued in 2018, by 2023, five years later, when this action was commenced, the statute of limitations had expired. For purposes of continuous representation, that defendants continued to advice plaintiffs on unrelated matters does not avail them.

With respect to the claim for tortious interference with business relations, Long Is. Thoracic Surgery, P.C. v Bldg. Serv. 32BJ Health Fund (215 AD3d 942 [2d Dept 2023]), does not avail plaintiffs. To be sure, as noted by this Court, at best, here, the complaint only sufficiently pleads the foregoing on alleged false statements made by defendants to HUD, which then resulted in the denial by HUD of plaintiffs’ request to manage some properties. As the Court noted, unlike the plaintiffs in Long Is. Thoracic Surgery, P.C., who in addition to asserting a claim for tortious interference with business relations also sufficiently pleaded a claim for defamation, here, the latter claim was neither pleaded nor claimed. Thus, contrary to plaintiffs’ assertion, unlike in Long Is. Thoracic Surgery, P.C., defendants’ conduct was not independently tortious so as to plead a cause of action for tortious interference with business relations. It is hereby

ORDERED that with the exception of the cause of action for replevin the complaint be dismissed. “

The Court of Appeals addresses Judiciary Law 487 questions infrequently, and each of its decisions tends to be broadly transformative. Urias v Daniel P. Buttafuoco & Assoc., PLLC 2024 NY Slip Op 01497 Decided on March 19, 2024 Court of Appeals Halligan, J. is no exception. It harmonizes and simplifies one of the major embellishments that have been woven into the statute over the years, and permits plenary actions for any Judiciary Law 487 claim going forward.

“Judiciary Law § 487 provides that “[a]n attorney or counselor[ ] . . . guilty of any deceit or collusion, . . . with intent to deceive the court or any party[,] . . . forfeits to the party injured treble damages, to be recovered in a civil action.” This appeal presents the question of whether a Judiciary Law § 487 claim may be brought in a plenary civil action where a plaintiff alleges that attorney deceit led to an adverse judgment or order. Given the unique concerns addressed by this statute, we hold that such a plenary action lies. We nevertheless affirm the Appellate Division’s order on alternative grounds.”

“”We begin with the question of whether Judiciary Law § 487 permits a plenary action. We thus turn to the “plain language of the statute” as “the clearest indicator of legislative intent” (Matter of T-Mobile Northeast, LLC v DeBellis, 32 NY3d 594, 607 [2018]). Section 487 provides that:

“An attorney or counselor who:

Is guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party; or,

Wilfully delays his client’s suit with a view to his own gain; or, wilfully receives any money or allowance for or on account of any money which he has not laid out, or becomes answerable for,

Is guilty of a misdemeanor, and 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.”

This provision is “the modern-day counterpart of a statute dating from the first decades after Magna Carta; its language virtually (and remarkably) unchanged from that of a law adopted by New York’s Legislature two years before the United States Constitution was ratified” (Amalfitano v Rosenberg, 12 NY3d 8, 14 [2009]). Recognizing that “[o]ur legal system depends on the integrity of attorneys who fulfill the role of officers of the court, furthering its truth-seeking function,” the statute creates a cause of action for attorney deceit that is distinct from common law fraud or legal malpractice (Bill Birds, Inc. v Stein Law Firm, P.C., 35 NY3d 173, 178 [2020]). Given the importance of safeguarding the integrity of the judicial system, section 487 allows for both criminal liability and a civil remedy in the form of treble damages (see id. at 179).

We recognize, of course, that common law has long shielded a final judgment from collateral attack in a subsequent action (see e.g. Smith v Lewis, 3 Johns. 157, 168 [NY Sup Ct 1808] [Kent, Ch. J., concurring]; Crouse v McVickar, 207 NY 213, 219 [1912]). Although subsequent actions have been permitted for fraud that is extrinsic to the underlying proceeding (see e.g. Mayor of City of New York v Brady, 115 NY 599, 617 [1889]; United States v Throckmorton, 98 US 61, 68 [1878]), or part of a “larger fraudulent scheme” (Newin Corp. v Hartford Acc. & Indem. Co., 37 NY2d 211, 217 [1975]), the interest in finality of judgments generally constrains a court’s authority to revisit a final judgment in a collateral action (see Crouse, 207 NY at 219). Such a challenge may instead be brought under CPLR 5015, which authorizes “[t]he court which rendered a judgment or order” to “relieve a party from it upon such terms as may be just . . . upon the ground of[,]” among others, “fraud, misrepresentation, or other misconduct of an adverse party” (CPLR 5015 [a] [3]).”

“We appreciate that it might be more efficient to require a plaintiff who either directly or effectively challenges a judgment to return to the court that issued it and seek vacatur under CPLR 5015, and we note that transfer of a plenary action to the court that handled the underlying proceedings may be desirable where consistent with the CPLR’s venue provisions. Nor do we take lightly the interest in preserving the finality of judgments. But the legislature has singled out the specific type of claim here—an allegation of attorney deceit on the court or a party—and determined that recovery of treble damages should be available in a civil action. We conclude that section 487 must be read to allow a plenary action for deceit, even where success on that claim might undermine a separate final judgment.”

Musial v Donohue 2024 NY Slip Op 01414 Decided on March 15, 2024 Appellate Division, Fourth Department is a law school example of the territorial effect of jurisdiction and due process. A Texas law firm prosecutes a Texas motor vehicle accident in Texas, and is not subject to a New York legal malpractice case for that work.

“Memorandum: Plaintiffs, who reside in New York, commenced this breach of contract and legal malpractice action against Texas attorney Russell Button, Esq., and his law firm, the Button Law Firm, PLLC (collectively, Button defendants), as well as New York attorneys David C. Donohue, Esq., Barry J. Donohue, Esq., and John F. Donohue, Esq., and their law firm, Donohue Law Offices (collectively, Donohue defendants). Plaintiffs allege that defendants failed to provide them with adequate legal representation with respect to claims arising from a motor vehicle accident that occurred in Texas. In appeal No. 1, plaintiffs appeal from an order that granted the Button defendants’ motion to dismiss the complaint against them for lack of personal jurisdiction. In appeal No. 2, plaintiffs appeal from an order that denied their motion seeking, inter alia, to strike the note of issue or obtain post-note of issue discovery.

With respect to appeal No. 1, we reject plaintiffs’ contention that the Button defendants are subject to long-arm jurisdiction in New York. Under CPLR 302 (a) (1), ” ‘a court may exercise personal jurisdiction over any non-domiciliary . . . who in person or through an agent . . . transacts any business within the state’ ” (People v Frisco Mktg. of NY LLC, 93 AD3d 1352, 1353 [4th Dept 2012]). “Jurisdiction can attach on the basis of one transaction, even if the defendant never enters the state, so long as the defendant’s activities here were purposeful and there is a substantial relationship between the transaction and the claim asserted” (Glazer v Socata, S.A.S., 170 AD3d 1685, 1686 [4th Dept 2019], lv denied 33 NY3d 911 [2019], quoting Fischbarg v Doucet, 9 NY3d 375, 380 [2007] [internal quotation marks omitted]). “Purposeful” activities are “those by which a defendant, through volitional acts, avails itself of the privilege of conducting activities within [New York], thus invoking the benefits and protections of its laws” (id., quoting Fischbarg, 9 NY3d at 380 [internal quotation marks omitted]; see generally Ehrenfeld v Bin Mahfouz, 9 NY3d 501, 508 [2007]). “As the party seeking to assert personal jurisdiction, the plaintiff bears the burden of proof on [that] issue” (Frisco Mktg. of NY LLC, 93 AD3d at 1353 [internal quotation marks omitted]).

Here, plaintiffs failed to show that the Button defendants purposefully availed themselves of the privilege of conducting activities in New York so as to subject them to long-arm jurisdiction pursuant to CPLR 302 (a) (1), inasmuch as the Button defendants “never entered [*2]New York, [were] solicited . . . to perform services outside of New York, . . . performed outside of New York such services as were performed, and [are] alleged [only] to have neglected to perform other services outside of New York” (Mayes v Leipziger, 674 F2d 178, 185 [2d Cir 1982]; see Bloomgarden v Lanza, 143 AD3d 850, 852 [2d Dept 2016]), and the documentary evidence belies the conclusory allegations of plaintiffs’ counsel that the Button defendants actively solicited referrals in New York (cfFischbarg, 9 NY3d at 377; see generally Eberhardt v G & J Contr., Inc., 188 AD3d 1653, 1654 [4th Dept 2020]; Peters v Peters, 101 AD3d 403, 403-404 [1st Dept 2012]). Even accepting as true the allegations set forth in the complaint and in the opposition to the motion to dismiss, and according plaintiffs the benefit of every favorable inference (see Bloomgarden, 143 AD3d at 851), we conclude that, although plaintiffs signed the Button defendants’ retainer agreement in New York and were in New York while on a telephone conference call with defendant Russell Button, who was in Texas at the time, this occurred during the course of the Button defendants’ performance of legal services in Texas and because plaintiffs were New York domiciliaries, not because the Button defendants were purposefully engaging in any business activities in New York (see id. at 852; cfState of New York v Vayu, Inc., 39 NY3d 330, 332-335 [2023]).

Plaintiffs also failed to make a prima facie showing of long-arm jurisdiction over the Button defendants pursuant to CPLR 302 (a) (3), inasmuch as plaintiffs’ alleged injuries did not occur within New York but, rather, in Texas, where the Button defendants’ alleged legal malpractice occurred (see Bloomgarden, 143 AD3d at 852; see generally Zeidan v Scott’s Dev. Co., 173 AD3d 1639, 1640 [4th Dept 2019]).”