As we started discussing yesterday, Melcher v Greenberg Traurig LLP 2015 NY Slip Op 30855(U) May 18, 2015 Supreme Court, New York County Docket Number: 650188/2007 Judge: O. Peter Sherwood is a historic case. In the Court of Appeals, it was determined that this deceit statute is not really a statute at all; it is part of the common law. There are a number of lesser issues that are addressed in this second visit to Supreme Court.
“This action was commenced on June 25, 2007, with a single cause of action pursuant to Judiciary Law Section 487, which provides: “[a]n attorney or counselor who: I. Is guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party … , 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.” Plaintiff James L. Melcher claims the defendants, Greenberg Traurig LLP (GT) and GT partner Leslie Corwin, deceived the court and the plaintiff in an earlier litigation. The defendants in this case represented defendants Apollo Medical Fund Management L.L.C. (Apollo) and Apollo principal Brandon Fradd in a suit brought by the plaintiff in 2003 (the Apollo Action).
The parties dispute whether Melcher may pursue this claim in a separate action, or is limited to bringing it in the underlying Apollo Action. Defendants argue that this action is barred by New York’s rule against claim splitting, citing Alliance Network LLC v Sidley Austin LLP, 43 Misc 3d 848 (Sup Ct, New York County 2014)(“The First Department has held that a party’s remedy for a violation of Section 487 stemming from an attorney’s actions in a litigation ‘lies exclusively in that lawsuit itself, … not a second plenary action”‘) quoting Yalkowsky v Century Apartments Assoc., 215 AD2d 214, 215 (1st Dept 1995). Melcher argues otherwise, relying on Amalfitano v Rosenberg, 12 NY3d 8 (2009) and Melcher v Greenberg Traurig, LLP, 23 NY3d 10, 15 (2014)(allowing this litigation to proceed and reversing the First Department decision granting a motion to dismiss on statute of limitations grounds).
In a similarly positioned case, Zimmerman v Kohn (Index No. 652826/2013, 2014 WL 1490936 [Sup Ct, NY County, April 11, 2014]), the court determined that the plaintiff in an underlying action could not subsequently bring an action based on Judiciary Law§ 487 against the underlying defendants’ counsel when the plaintiff had raised the deceit allegations in that action and settled the matter before the evidentiary hearing. The underlying action was brought in the United States District Court for the Eastern District of New York against Poly-Prep Day School for the alleged cover-up of sexual abuse of students by a coach (id. at 1 )(the Poly-Prep Action). During the course oflitigating the Poly-Prep Action, Zimmerman sought “sanctions for fraud committed on the Court” by the defendants’ counsel (id). Those issues were held in abeyance pending an evidentiary hearing (id.). The parties subsequently entered into a settlement agreement and stipulated to dismiss the action with prejudice (id.). In the Judiciary Law§ 487 claim Zimmerman subsequently brought in New York State Supreme Court, the court noted that”[ o ]nee a claim for violation of Judiciary Law [Section] 487 is raised in another action, the remedy lies exclusively in that lawsuit regardless of whether the attorneys are parties to the action” (id. at 2). Upon review, the Appellate Division First Department affirmed but not on grounds of estoppel as the Supreme Court had found. Instead, the Appellate Division concluded that plaintiff had suffered no damages and affirmed on that basis (see Zimmerman, 125 AD3d at 414). The Appellate Division did not address the issue of estoppel. Accordingly, there is no estoppel issue to be decided by this court. The claim has not been waived because Melcher specifically declined to release any claims against Corwin and GT in the Apollo Action settlement agreement (Reply Memo at 4, n 3; January 14, 2014 Settlement Agreement, Plaintiff’s Exhibit I 08).”