Totally unexpected players in an attorney-fee-legal-malpractice case have led to a very interesting decision by Justice Kern that touches on a number of legal malpractice issues.  Today, we will discuss the Judiciary Law § 487 claim for file churning in Kagan Lubic Lepper Findelstein & Gold LLP v 325  Fifth Ave. Condominium 2015 NY Slip Op 31470(U)  August 6, 2015 Supreme Court, New York County  Docket Number: 151878/15   Judge: Cynthia S. Kern.

“Specifically, defendants’ answer alleges as follows. Defendants ~ired Kagan Lubic in October 2012 to represent them as general counsel and in an action again~! the sponsor of 325 Fifth and certain subcontractors arising from the defective design, constr~ction, sale, marketing ·! ‘ and management of the condominium building located at 325 Fifth Avenue, New York, New York (the “building”), which was allegedly plagued with defects from th~ outset. Defendants allege that Kagan Lubic failed to take even the most basic steps to secure remedies against those responsible for the defective design and construction of the Building and ihat for nearly two i I years, Kagan Lubic “churned the file” and generated enormous legal bills.through prolonged ‘ negotiations and other pre-litigation tactics that were time consuming, costly and entirely I ineffective, including, inter alia, (i) retaining duplicative, superfluous experts which caused I defendants to incur thousands of dollars in additional fees; (ii) engaging i~ futile settlement discussions for nearly eighteen months; (iii) generating enormous legal feFs by spending countless hours addressing inconsequential maintenance issues in the buiIµing which, in many ‘ instances, cost Jess to remediate than the time spent addressing them; (iv) :frustrating any progress I toward reaching a settlement with the sponsor with respect to the mainten~nce issues by delaying nearly four months before responding to the sponsor’s offer to remediate certain conditions; (v) routinely raising additional maintenance issues which resulted in further delay and costs; and (vi) allowing nearly two years to lapse without filing a complaint in the action. Defendants further allege that “[b]ut for Kagan Lubic’s dilatory tactics, the defects in the Building would have been remediated by now, and the impaired value of the Condominium units in ~he Building resulting from the design and construction defects and ongoing litigation would ha~e been restored.”

Additionally, plaintiffs motion for an Order pursuant to CPLR § 32 I I(a)(7) dismissing defendants’ second counterclaim for a violation of Judiciary Law§ 487 on the ground that it fails to state a claim is denied. Judiciary Law§ 487(2) provides, in pertinent part, that an attorney who “willfully delays his client’s suit with a view to his own gain” is guilty of a misdemeanor and may be liable in treble damages. Jn order to sustain a cause of action for.a violation of Judiciary Law§ 487(2), the pleading must allege specific facts demonstrating the attorney’s alleged delay for his own gain and may not merely allege bare legal conclusions. See Bernstein v. Oppenheim & Co., P. C., 160 A.D.2d 428 (I st Dept 1990); see also Fleyshman v. Suckle & Schlesinger. PLLC, 91A.D.3d591 (2d Dept 2012). Here, defendants’ answer sufficiently states a claim for a violation of Judiciary Law§ 487(2). The second counterclaim alleges that plaintiff, instead of diligef\tly and vigorously pursuing defendants’ legal claims against the sponsor and the subcontractors, engaged in selfserving dilatory tactics that were designed to impede settlement discussions and the timely resolution of the dispute “in order to generate enormous legal fees with a ;view to its own gain.” Specifically, defendants allege that they retained plaintiff in October 2012, after an action had been commenced by Summons with Notice in July 2012, and that from t~e outset of the I representation, plaintiff”failed to take even the most basic steps to resolve [defendants’] claims” and that “[i]nstead, for nearly two years, [plaintiff] simply churned the file and generated enormous legal bills through prolonged negotiations and other pre-litigation tactics that were time consuming, costly, and entirely ineffective,” such as requiring additional unnecessary expert investigations, delaying filing a complaint for almost two years, stalling all opportunities to settle the underlying matter and continuing to attempt to settle the matter despite the knowledge that settlement attempts were futile. As these allegations are sufficient to state a claim for a violation of Judiciary Law§ 487, plaintiffs motion to dismiss the second counterclaim is denied. ”