Sometimes it takes a federal court decision to clarify the current state of the law in a discrete area.

CANON U.S.A., INC., et al, Plaintiffs, v. DIVINIUM TECHNOLOGIES, INC., et al., Defendants. No. 15 Civ. 1804 (PAC). United States District Court, S.D. New York.February 21, 2017.

Judge Crotty neatly sets forth the application of Judiciary Law § 487, whether it may be brought against attorneys who “strongly advocate” and whether it may be brought in this lawsuit.

“New York Judiciary Law § 487 provides that an attorney who “[i]s 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 . . . forfeits to the party injured treble damages, to be recovered in a civil action.” A § 487 plaintiff “may recover the legal expenses incurred as a proximate result of a material misrepresentation in a prior action” “regardless of whether the attorney’s deceit was successful.” Melcher v. Greenberg Traurig LLP, 135 A.D.3d 547, 552 (N.Y. App. Div. 1st Dep’t 2016). While some New York courts have required “a chronic and extreme pattern” of legal delinquency by the defendant to maintain a § 487 action, “[t]hat requirement appears nowhere in the text of the statute.” Amalfitano v. Rosenberg, 533 F.3d 117, 123 (2d Cir. 2008). The Court therefore concludes that “[a] single act or decision, if sufficiently egregious and accompanied by an intent to deceive, is sufficient to support liability.” Amalfitano v. Rosenberg, 428 F. Supp. 2d 196, 207 (S.D.N.Y. 2006).”

“The Attorney Defendants make several unavailing arguments to attack the sufficiency of the proposed pleadings. First, the Attorney Defendants appear to take the position that an attorney does not have an intent to deceive if he is merely asserting arguments and points at the client’s request, to advance the client’s position. Opp’n at 6. The Court rejects this argument. An attorney that has knowingly and intentionally filed material misrepresentations with a court in order to induce the court to take an action that it would not otherwise take cannot stand behind vigorous advocacy as an excuse to avoid § 487 liability.

Second, the Attorney Defendants argue that Plaintiffs knew of Grimaldi and Hernandez’s involvement with EZ Docs. Opp’n at 6. This, however, is not relevant to the question of whether the Attorney Defendants intended to deceive the New York Supreme Court by filing papers with material misrepresentations.”

“he Attorney Defendants assert that Canon USA was required to bring its § 487 claim in the Termination Lawsuit and thus is precluded from raising it here. They are wrong. Because Canon USA does not seek to collaterally attack a prior adverse judgment or order, and because it seeks “to recover lost time value of money and the excess legal expenses incurred” in the prior action, Canon USA is permitted to bring “a separate action under the Judiciary Law.” Melcher, 135 A.D.3d at 554.

Nor is the claim precluded by res judicata. Under the doctrine of res judicata, “a final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action” when “the parties have had a full and fair opportunity to litigate the matter. Charmer v. Dep’t of Homeland Sec., 527 F.3d 275, 279 (2d Cir. 2008). Res judicata has no application here as the Termination Lawsuit was dismissed for failure to prosecute, and the dismissal order did not specify that dismissal was on the merits, see Exhibit D to the Declaration of Jonathan B. Bruno (Dkt. 92-4); N.Y. C.P.L.R. 3216(a); Hanrahan v. Riverhead Nursing Home, 592 F.3d 367, 369 (2d Cir. 2010).”