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 very (very) important case in the Judiciary Law § 487  world.  When the case went to the NY Court of Appeals, it led to the decision  that JL 487 arrives directly from the common law and not from statute, hence it has a 6 year statute of limitations.

Melcher is back in the news, as the underlying JL  487 litigation continues.  This week, summary judgment was denied, and the Court threw in a few interesting tidbits.

Must the 487 case be brought in the underlying case?

“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).”