In Warshaw Burstein, LLP v Colambda Tech., Inc. 2023 NY Slip Op 34435(U) December 14, 2023 Supreme Court, New York County Docket Number: Index No. 150283/2023
Judge: Louis L. Nock the legal malpractice and breach of fiduciary duty counterclaims were upheld on a CPLR 3211 motion. Claims of Judiciary Law 487 were not.

“Plaitiff law firm commenced this action seeking unpaid legal fees from its former client, defendant. Defendant brings six counterclaims, for breach of contract, legal malpractice, breach of fiduciary duty, violation of Judiciary Law § 487, fraud, and breach of the covenant of good faith and fair dealing. In summary, defendant alleges that it retained plaintiff to obtain approval for a reverse merger and ticker symbol change from the Financial Industry Regulatory Authority (“FINRA”). Plaintiff ultimately failed to garner FINRA approval. Defendant alleges that plaintiff advised it to undertake costly and unnecessary state level merger filings, failed to detect flaws in the underlying merger documents and disclosures that precluded FINRA approval, communicated with and employed a disbarred attorney in its representation of defendant, and disclosed privileged information regarding defendant to defendant’s business rivals. Plaintiff
now moves to dismiss all six counterclaims.”

“The counterclaim for violation of Judiciary Law § 487 must be dismissed. Violations of
the statute are only actionable if they take place during a pending judicial proceeding (US Suite LLC v Baratta, Baratta & Aidala LLP, 171 AD3d 551, 551 [1st Dept 2019]). Defendant does not allege any such proceeding. Moreover, none of the conduct defendants complain of took place within the State of New York, and the statute has no extraterritorial reach (Doscher v Manatt, 148 AD3d 523, 524 [1st Dept 2017] [“courts have held that the statute does not apply to conduct outside New York’s territorial borders or to administrative proceedings, observing that its purpose is to regulate the manner in which litigation is conducted before the courts of this State”]).

The fraud and breach of the duty of good faith and fair dealing counterclaims arise out of the same facts and seek the same damages as the legal malpractice and breach of fiduciary duty counterclaims, and must therefore be dismissed as duplicative (e.g. Ullmann-Schneider v Lacher & Lovell-Taylor, P.C., 121 AD3d 415, 416 [1st Dept 2014]; Soni v Pryor, 102 AD3d 856, 858 [2d Dept 2013]). In addition, the court notes that to the extent the fraud counterclaim alleges that plaintiff misrepresented its own qualifications, defendant fails to sufficiently allege misrepresentations of present fact (see Fairway Prime Estate Mgt., LLC v First Am. Intern. Bank, 99 AD3d 554, 557 [1st Dept 2012] [“if the promise concerned the performance of the contract itself, the fraud claim is subject to dismissal as duplicative of the claim for breach of contract”]; HSH Nordbank AG v UBS AG, 95 AD3d 185, 206 [1st Dept 2012] [dismissing fraud
claim based in part on alleged insincere promise regarding the manner of performance). Finally, defendant fails to plead with particularity any misrepresentation made by plaintiff, as defendant does not allege what was said, when it was said, and who it was said to (E1 Entertainment U.S. LP v. Real Talk Entertainment, Inc., 85 AD3d 561, 562 [1st Dept 2011]).”