We are reviewing all of the JL 487 cases from 2015.  Today, we look at Barouh v Law Offs. of Jason L. Abelove  2015 NY Slip Op 06769 [131 AD3d 988]   September 16, 2015  Appellate Division, Second Department in which plaintiff hired attorney to file a shareholders’ derivative action against BEA.  That action settled.  BEA then hired the attorney to work for it.  Later, Plaintiff once again hired the attorney to bring shareholders’ derivative action 2 against BEA.  Attorney did not disclose his conflict to plaintiff.  BEA unsuccessfully moved to dismiss action 2 on the basis that the conflict “poisoned” the litigation.  Does a JL 487 claim succeed against the attorney?  The answer is No. Damages are too speculative, and “the statute only applies to wrongful conduct by an attorney in a pending proceeding in which the plaintiff was a party.”

“The Supreme Court properly granted that branch of the defendants’ motion which was to dismiss the fourth cause of action, which alleged a violation of Judiciary Law § 487. The complaint failed to adequately allege that the defendants’ allegedly deceitful conduct proximately caused the plaintiff’s damages, which consisted of her legal fees and expenses in defending against the BEA defendants’ motion to dismiss. The crux of the plaintiff’s contention is that the BEA defendants would not have chosen to move for dismissal in the Second Shareholder Action on the ground that the litigation was “poisoned” if Abelove had disclosed to the plaintiff that he previously represented BEA, and she, as a result, did not retain Abelove. The alleged damages, however, stem from the BEA defendants’ independent decision to move for dismissal. Thus, speculation is required to conclude that the BEA defendants would not have moved for dismissal if Abelove disclosed his representation of BEA to the plaintiff. Accordingly, the plaintiff’s allegation that Abelove’s deceitful conduct was the proximate cause of her incurring legal fees and expenses in defending against the BEA defendants’ motion to dismiss is speculative (see Mizuno v Barak, 113 AD3d 825, 827 [2014]; cf. Bua v Purcell & Ingrao, P.C., 99 AD3d 843, 848 [2012]).

As to the allegations in the complaint concerning Abelove’s alleged misconduct prior to the Second Shareholder Action, the complaint, too, failed to adequately allege damages that resulted from such alleged misconduct. Moreover, Judiciary Law § 487 does not apply to Abelove’s alleged misconduct prior to the Second Shareholder Action, as the statute only applies to wrongful conduct by an attorney in a pending proceeding in which the plaintiff was a party (see Judiciary Law § 487; Sun Graphics Corp. v Levy, Davis & Maher, LLP, 94 AD3d 669 [2012]; Mahler v Campagna, 60 AD3d 1009, 1012-1013 [2009]; Tawil v Wasser, 21 AD3d 948, 949 [2005]).”