Dual Diagnosis Treatment Ctr., Inc. v Yellowstone Capital W., LLC 2026 NY Slip Op 03292 May 27, 2026 Appellate Division, Second Department is one of the rare cases where Supreme Court grants a motion to dismiss a JL 487 claim and the Appellate Division reverses.

“ORDERED that the order is modified, on the law, by deleting the provision thereof granting those branches of the motion of the defendants Viceroy Capital Funding, Richmond Capital, Michelle D. Gregg, Robert Giardina, and Marcella G. Rabinovich which were pursuant to CPLR 3211(a) to dismiss the first, second, fourth, and fifth causes of action insofar as asserted against them, and substituting therefor a provision denying those branches of the motion; as so modified, the order is affirmed, without costs or disbursements.

The plaintiffs commenced this action to recover damages for abuse of process (fourth cause of action), violation of Judiciary Law § 487 (fifth cause of action), and violation of the Racketeer Influenced and Corrupt Organizations Act (RICO) (18 USC § 1961 et seq.) (sixth cause of action), for declaratory relief (first cause of action), an accounting (seventh cause of action), and the imposition of a constructive trust (third cause of action), and to vacate certain judgments by confession (second cause of action). The plaintiffs alleged, inter alia, that the defendants Viceroy Capital Funding (hereinafter VCF) and Richmond Capital (hereinafter RC) held themselves out as merchant cash advance (hereinafter MCA) businesses. The plaintiffs further alleged that the defendant Robert Giardina was the managing partner of VCF and RC, that the defendant Michelle D. Gregg was a principal and agent of VCF and RC, and that the defendant Marcella G. Rabinovich is an attorney who represented VCF and RC.

According to the complaint, the defendants acted in concert to “dupe” the plaintiffs “into an unconscionable series of transactions.” The plaintiffs entered into MCA agreements with VCF, among others, secured by affidavits of confession of judgment. Thereupon, Rabinovich allegedly filed judgments by confession based upon false statements made by Rabinovich and Gregg. VCF then allegedly directed a New York City Marshal to serve a restraining notice on the plaintiffs’ bank account, freezing their account, placing economic pressure on them, and causing them to execute a settlement agreement with VCF “under duress.””

“The Supreme Court also should have denied that branch of the VCF defendants’ motion which was pursuant to CPLR 3211(a) to dismiss the fifth cause of action, which was asserted only against Rabinovich. “Judiciary Law § 487 imposes civil liability on any attorney who is guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive . . . any party” (Garanin v Hiatt, 219 AD3d 958, 959 [alteration and internal quotation marks omitted]). Here, the complaint alleged that Rabinovich intentionally applied for judgments by confession with false supporting affidavits and acted upon those judgments by confession when the plaintiffs had not defaulted, falsely claimed that she no longer represented certain parties when the plaintiffs demanded an accounting, and knowingly colluded with the other defendants to commit “fraud on the Court” and to obtain funds from the plaintiffs that exceeded any amount lawfully owed. Thus, accepting the allegations in the complaint as true and according the plaintiffs the benefit of every possible favorable inference, the complaint adequately stated a cause of action against Rabinovich to recover damages for violation of Judiciary Law § 487 (see Garanin v Hiatt, 219 AD3d at 959).”