Betz v Blatt 2018 NY Slip Op 02445 and 2444 Decided on April 11, 2018 Appellate Division, Second Department and are two extensively explained and well-reasoned decisions in the otherwise barren trust and estates legal malpractice world, in which a Judiciary Law § 487 claim is upheld. One reason for the relative lack of cases is the requirement that only the executor has standing to raise losses to the estate. This precludes beneficiaries from successful litigation against an attorney.
Read the case for its discussion of JL § 487, aiding and abetting fraud and the obligations of the estate’s attorneys in reviewing accountings.
“Judiciary Law § 487 imposes civil and criminal liability on any attorney who “(1) [i]s guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party; or, (2) [w]ilfully delays his client’s suit with a view to his own gain” (Judiciary Law § 487; see Gumarova v Law Offs. of Paul A. Boronow, P.C., 129 AD3d 911). A cause of action alleging a violation of Judiciary Law § 487 must be pleaded with specificity (see Betz v Blatt, 116 AD3d at 817; Putnam County Temple & Jewish Ctr., Inc. v Rhinebeck Sav. Bank, 87 AD3d 1118, 1120).
Judiciary Law § 487 “focuses on the attorney’s intent to deceive, not the deceit’s success” (Amalfitano v Rosenberg, 12 NY3d 8, 14). Accordingly, although injury to the plaintiff is an essential element of a Judiciary Law § 487 cause of action seeking civil damages (see Klein v Rieff, 135 AD3d 910, 913; Gumarova v Law Offs. of Paul A. Boronow, P.C., 129 AD3d at 911), “recovery of treble damages under Judiciary Law § 487 does not depend upon the court’s belief in a material misrepresentation of fact in a complaint” (Amalfitano v Rosenberg, 12 NY3d at 15). A party’s legal expenses in defending the lawsuit may be treated as the proximate result of the misrepresentation (see id.).
The Supreme Court properly denied that branch of Pieragostini’s motion which was for summary judgment dismissing the cause of action alleging a violation of Judiciary Law § 487 [*3]insofar as asserted against him because he failed to establish his prima facie entitlement to judgment as a matter of law (see Mazel 315 W. 35th LLC v 315 W. 35th Assoc. LLC, 120 AD3d 1106, 1107). In his deposition testimony submitted in support of his motion for summary judgment, Pieragostini admitted that, in the underlying proceeding, he sought approval from the Surrogate’s Court of an accounting and an addendum based on information provided by the former executor, as well as his accountant and former attorney, which he did not independently verify. Accordingly, Pieragostini did not eliminate triable issues of fact as to whether he acted with an intent to deceive the court or the plaintiff (see Judiciary Law § 487; Mazel 315 W. 35 LLC v 315 W. 35th Assoc. LLC, 120 AD3d at 1107). Moreover, the plaintiff raised triable issues of fact by alleging that Pieragostini filed a blatantly deficient accounting which was inaccurate and incomplete, and that the addendum further delayed the administration of the estate, causing additional legal fees from the estate to Pieragostini, along with other financial injury to the plaintiff. Accordingly, the Supreme Court properly denied that branch of Pieragostini’s motion which was for summary judgment dismissing the cause of action alleging a violation of Judiciary Law § 487 insofar as asserted against him.”
“However, the Supreme Court erred in denying that branch of the Sirignano defendants’ motion which was for summary judgment dismissing the cause of action alleging that they aided and abetted fraud. The elements of a cause of action to recover damages for aiding and abetting fraud are (1) the existence of an underlying fraud, (2) knowledge of the fraud by the aider and abettor, and (3) substantial assistance by the aider and abettor in the achievement of the fraud (see Fox Paine & Co., LLC v Houston Cas. Co., 153 AD3d 678, 679; Swartz v Swartz, 145 AD3d 818, 824). “Substantial assistance requires an affirmative act on the defendant’s part” (Fox Paine & Co., LLC v Houston Cas. Co., 153 AD3d at 679 [internal quotation marks omitted]; see Smallberg v Raich Ende Malter & Co., LLP, 140 AD3d 942, 944). Mere inaction by an alleged aider or abettor constitutes substantial assistance only if the defendant owes a fiduciary duty directly to the plaintiff (see Smallberg v Raich Ende Malter & Co., LLP, 140 AD3d at 944).
The elements of an underlying fraud are (1) material representations that were false, (2) the actor knew the representations were false and made them with the intent to induce reliance by the plaintiff, (3) the plaintiff justifiably relied on the actor’s misrepresentations, and (4) the plaintiff was injured as a result of the misrepresentations (see Lee Dodge, Inc. v Sovereign Bank, N.A., 148 AD3d 1007, 1008; Cash v Titan Fin. Servs., Inc., 58 AD3d 785, 788).”