Estate cases sometimes run into the dead man’s statute, and even if not, there are unique difficulties in providing proofs of intent, which are sometimes very, very important.  In Steffan v Wilensky  
2017 NY Slip Op 03602  Decided on May 4, 2017  Appellate Division, First Department plaintiff can no longer prove that the bank account was a “convenience” and not a “joint” account.  Neither, says the Appellate Division, could the attorneys.

“In support of his legal malpractice claim, plaintiff failed to establish prima facie that his predecessor executor would have prevailed in a Surrogate’s Court proceeding against a bank but for defendant’s negligence in not bringing such a proceeding sooner (see LaRusso v Katz, 30 AD3d 240, 243 [1st Dept 2006]).

Banking Law § 675(b) states that the making of a deposit in the name of a depositor (in the instant action, the decedent, Anne McLaughlin Doris) and another person (Bridie McKiernan) “shall . . . be prima facie evidence . . . of the intention of both depositors . . . to create a joint tenancy and to vest title to such deposit . . . in such survivor.” As the evidence submitted with plaintiff’s opening motion papers (e.g., the transcript of defendant’s deposition) shows, the predecessor executor would have had difficulty adducing “clear and convincing evidence that the account was opened only as a matter of convenience” (Pinasco v Del Pilar Ara, 219 AD2d 540, 540 [1st Dept 1995]). His conversations with Doris, which tended to show that the account was a convenience account, could have been excluded pursuant to the Dead Man’s Statute (CPLR 4519), and he would have had to rely on defendant’s testimony about his telephone conversation with McKiernan, because McKiernan could not be located.

Because plaintiff failed to make a prima facie case, it is unnecessary to decide if defendant raised a triable issue of fact in opposition to plaintiff’s motion.

By his silence in his opposition brief, defendant concedes, as plaintiff argues, that the second, third, and sixth affirmative defenses should be dismissed.”

Courts often take claims of attorney mistakes short of the outright failure to start a case not so seriously.  Many the act, which plaintiff claims is a departure, is said to be a failing but permitted strategic decision.  Not so in Caso v Miranda Sambursky Sloane Sklarin Ver Veniotis LLP
2017 NY Slip Op 03607   Decided on May 4, 2017  Appellate Division, First Department.

Plaintiff was the victim of a hit-and-run and there was an eye-witness.  Here is what happened.

“In this legal malpractice action, plaintiff, the victim of a hit-and-run accident, alleges that defendants, who represented him in the underlying personal injury action, were negligent in failing to prepare and present the testimony of the sole eyewitness; that defendants’ negligence caused a verdict against him; and that he sustained actual damages. Specifically, plaintiff alleges that, prior to the eyewitness’s deposition testimony two years after the accident, defendants failed to refresh the eyewitness’s memory by showing him the police record of a phone call he made shortly after the accident, in which he described the hit-and-run vehicle as a green garbage truck with a flat front. The eyewitness then testified to the contrary at his deposition, stating that the garbage truck he remembered fleeing the scene had a round front, not a flat front. Plaintiff alleges that but for defendants’ negligence in handling the key witness in his case, he would have prevailed, as the driver operated a green garbage truck with a flat front, and the driver had already admitted to a route that would have placed him at the scene on the day and time of the accident. These allegations are sufficient to survive a CPLR 3211(a)(1) and (7) motion to dismiss, as nothing in the record conclusively establishes a defense as a matter of law (see Leon v Martinez, 84 NY2d 83, 87-88 [1994]) and plaintiff has adequately pleaded a claim for legal malpractice (see Global Bus. Inst. v Rivkin Radler LLP, 101 AD3d 651, 651 [1st Dept 2012]; see also Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007]).”

In legal malpractice cases it is presumed, generally conclusively, that an attorney is a fiduciary of the client.  That principle probably derives from the education and licensing of the attorney.  It can be true in many other relationships, as Milonakis v Haralampopoulos  2017 NY Slip Op   30863(U)  April 26, 2017  Supreme Court, New York County  Docket Number: 653928/14
Judge: Barry Ostrager shows us.

“Presently before the Court is a post-note of issue motion by defendants Lambrini Haralampopoulos (“Lambrini”), J.P. Morgan Securities LLC, and JP Morgan Chase Bank, N.A (collectively, “defendants”) for an order pursuant to CPLR § 3212, granting them summary judgment dis~issing all remaining claims against all defendants. Plaintiff Ioannis Milonakis (“Milonakis”) asserted ten causes of action in his Verified Complaint, most of which were dismissed on the record on January 7, 2016 in connection with the defendants’ pre-answer motion to dismiss (motion sequence. 001 ). The third cause of action sounding in breach of fiduciary duty survived, pending further development of the record through discovery, and is the sole focus of this summary judgment motion. The motion is denied for the following reasons. 1 Plaintiff started banking at a particular Chase Bank branch in Astoria, Queens in 2002 (see Milonakis Deposition dated June 1, 2016 at 33:15-20, 42:7-14)2. Defendant ~ambrini, a Chase employee at this particular branch, performed various banking services for plaintiff, such as cashing rent checks from Milonakis’s rental property (id.), and, being a native Greek speaker like plaintiff, Lambrini occasionally translated certain conversations with other bank representatives for plaintiff during the course of their 10-year business relationship at the branch (see Milonakis Dep. 36: 19-25, 40:3-4, 34, 45- 47). In 2002, shortly after plaintiff retired from his union job, Larribrini introduced plaintiff to a colleague at Chase to discuss the purchase of an annuity with plaintiff’s retirement funds of roughly $500,000 (Milonakis Dep. 35:15-36-21). Lambrini translated during that conversation (id.). Plaintiff purchased an annuity (“Annuity”) issued by Genworth Financial (“Genworth”) which was marketed by a Chase affiliate (see Weiss Aff., Exh. 39). Lambrini is a licensed insurance representative and holds Series 6 and Series 63 licenses with the ability to transmit insurance forms (Lambrini Dep. 70:24-71 :5). ”

“Plaintiff commenced this action in December 2014 alleging, inter alia, that Lambrini never explained the withdrawal form to him, or the consequences of the withdrawal and surrender of the Annuity, when Lambrini knew that plaintiff did not speak English. Plaintiff further alleged that he had relied on Lambrini’ s “investment advice” when Lambrini told plaintiff in June 2012 that “it was proper to transfer the annuity funds” to a new Chase account, allegedly as part of a scheme by Lambrini to earn commissions at the expense of Greek Chase customers in the community (Milonakis Aff. at 3). Plaintiff claims he had a special relationship with Lambrini that rises to the level of a fiduciary duty and that Lambrini breached her fiduciary duty to him. To establish a common law tort for breach of fiduciary duty, plaintiff must prove (1) the existence of a fiduciary relationship; (2) misconduct by the defendants; and (3) damages directly caused by the defendants’ misconduct. Pokoik v Pokoik, 115 AD3d 428, 429 (1st Dept 2014), citing Kurtzman v Bergstol, 40 AD3d 588, 590 (2d Dept 2007). A fiduciary relationship is “grounded in a higher level of trust than normally present in the marketplace between those involved in arm’s length business transactions.” Oddo Asset Management v Barclays Bank.PLC, 19 NY3d 584, 593 (2012), citingEBC I, Inc. v Goldman Sachs & Co., 5 NY3d 11, 19 (2005). The Court of Appeals has held that a fiduciary duty exists between two persons when one of them is under a duty to act for or to give advice for the benefit of another upon matters within the scope of the relationship. Roni LLC v Ar/a, 18 NY3d 846, 848 · (2011). Additionally, a fiduciary relationship may exist where one party reposes confidence in another and reasonably relies on the other’s superior expertise or knowledge. Id, quoting AG Capital Funding Partners, L.P. v State St. Bank & Trust Co., 11 NY3d 146, 158 (2008) (“A fiduciary relation exists when confidence is reposed on one side and there is resulting superiority and influence on the other”). Defendants cite cases such as Bennice v Lakeshore Sav. & Loan Assn., 254 AD2d 731 (4th Dept 1998) for the proposition that ordinarily there is no fiduciary relationship between a bank and a depositor. However, as that Court and others recognize, the conduct of the parties can create a “special relationship.” As the record shows, there are material issues of fact as to whether plaintiff and defendants, through Lambrini, had a sufficiently special relationship to support a claim for breach of fiduciary duty, and even assuming that a special relationship existed, there are material issues of fact as to what transpired between the parties in June 2012. Consequently, the motion for summary judgment must be denied.”

 

The statute of limitations is a fierce barrier to litigation.  Time ticks by in an excruciating but unstoppable parade.  Three years can go by in a flash.  The only toll to the statute (barring another inevitable, death) is continuous representation.  It applies in legal malpractice as well as in accounting malpractice.  In Reville v Melvin Ginsberg & Assoc.    2017 NY Slip Op 30821(U) April 20, 2017   Supreme Court,   New York County   Docket Number: 152167/2015   Judge: Joan M. Kenney we see a good explanation of its application in accounting or professional malpractice.

“CPLR 214 (6) imposes a three-year time limitation period in all professional malpractice actions, except those involving medical malpractice. In an accounting malpractice action, the limitations period is measured from the date the client receives the accountant’s advice and/or work product (Ackerman v Price Waterhouse, 84 NY2d 535, 541-543 [1994]). The statute may be tolled in accounting malpractice cases pursuant to the continuous representation doctrine (Zaref v Berk & Michaels, 192 AD2d 346 [1st Dept 1993]; Hall & Co. v Steiner & Mondore, 147 AD2d 225 [3d Dept 1989]). Facts supporting the application of the continuous representation doctrine must be proffered in connection with the “specific matter directly under dispute” and must assert more than merely “the continuation of a general professional relationship” (Zaref, 192 AD2d at 347-348). A negligence-based claim, absent fraud, accrues when the malpractice is committed, even though the injured party may be ignorant of the wrong or injury (Ackerman, 84 NY2d at 541). Plaintiffs action was not commenced until March 4, 2015, well past the three year limitations period. Consequently, plaintiffs malpractice claim is untimely unless the continuous representation doctrine serves to toll the three-year limitations period. ”

“Here, plaintiffs allegations do not establish a course of representation as to the particular problems relating to this transaction that gave rise to the malpractice claim. Furthermore, there is no written agreement between the parties. The invoices submitted by defendant appear to contemplate separate and discrete accounting services for each fiscal year, and once the defendant had performed the services for a particular year, no further work was undertaken (Vergari reply affirmation, exhibit GG). No corrective or remedial services were offered. As a result, there was no mutual understanding between the parties that MGA would provide Reville with any further representation in connection with this alleged unlawful transaction (see also, Apple Bank for Sav. v PricewaterhouseCoopers, LLP, 23 Misc 3d 1126 [A], 2009 NY Slip Op 50948 [U] [Sup Ct, NY County 2009], revd 70 AD3d 438 [l51 Dept 2010]). In Apple Bank, the Appellate Division, First Department, reversed the Supreme Court, which had found a question of fact about whether certain claims based on tax advice and the resulting tax returns are timely under the continuous representation doctrine. In its decision, the lower court had relied on Cuccolo v Lipsky, Goodkin & Co. (826 F Supp 763 [SD NY 1993]) for the proposition that determining whether a toll applies to a particular cause of action is generally a question of fact. However, the First Department, citing Williamson, supra, held that the continuous representation doctrine did not apply to toll the statute of limitations on a malpractice claim brought by a client against its accounting firm, where the accountant never had an express, mutual agreement to advise the client on the effect of a stock buy back after the original advice.”

In big financial transactions, big law firm 1 may often interact with big law firm 2 in the generation of loan documents, opinion letters and the such.  Their interaction, viz-a-viz the clients (on both sides) may yield significant risk the law firms.

Bloostein v Morrison Cohen LLP  2017 NY Slip Op 30833(U)  April 21, 2017  Supreme Court, New York County  Docket Number: 651242/2012  Judge: Anil C. Singh is an example.  We discussed this case last year, several times but now the third-party motion practice seems to have come to an end.

“Plaintiffs in the main action (the “plaintiff investors”) allegedly engaged Morrison Cohen as attorneys to represent them in connection with a reinvestment transaction (the “Transaction”) designed by former third-party defendant Stonebridge Capital (“Stonebridge”). The advice rendered by Morrison Cohen to the investors form the basis for the main action. In the Second Amended Third-Party Complaint (“Third-party Complaint”), Morrison Cohen alleges that Stonebridge retained two law firms to represent their interests in the Transaction, including Brown Rudnick. The terms of Stonebridge’s retention of Brown Rudnick are set forth in the March 16, 2006 Stone bridge/ Brown Rudnick engagement letter (“Engagement Letter”). The Third-party Complaint further alleges that Brown Rudnick was the primary drafter of the documents that comprised the Transaction (the “Transaction Documents”). In addition to drafting the Transaction Documents, Brown Rudnick is also alleged to have issued a tax opinion letter to the plaintiff investors (the “Opinion Letter”). ”

“On or about January 9, 2015, Morrison Cohen commenced the third-party action against Stonebridge and Brown Rudnick. The Third-party Complaint interposes three causes of action: (1) indemnification and contribution as against Stonebridge (“First Cause of Action~’) (2) indemnification and contribution as against Brown Rudnick arising from the Opinion Letter (“Second Cause of Action”); and (3) indemnification and contribution as against Brown Rudnick concerning the Transaction Documents (“Third Cause of Action”). Stonebridge and Brown Rudnick, by their respective counsel, filed motions to dismiss the Third-party Complaint. By Order dated July 11, 2016, this Court granted Stonebridge’s motion to dismiss. Brown Rudnick’s motion to dismiss was granted as to indemnification, and denied as to contribution. Brown Rudnick brings this motion pursuant to CPLR §2221 seeking clarification of the Order. Brown Rudnick states that the contribution claim brought against it by Morrison Cohen concerned both the Opinion Letter and the Transaction Documents. The Order denied dismissal of the claim for contribution as to the Opinion Letter but did not explicitly address the Transaction Documents. ”

“The Court of Appeals has held that an intended third-party beneficiary relationship will be found where the following elements are met: ( 1) the existence of a valid and binding contract between other parties, (2) that the contract was intended for the benefit of the third-party; and (3) that the benefit to the third-party is sufficiently immediate, rather than incidental, to indicate the assumption by the contracting parties of a duty to compensate the third-party if the benefit is lost.” State of California Public Employees’ Retirement System v. Shearman & Sterling, 95 N.Y.2d 427, 434-35 (2000). The Court of Appeals has adopted the reasoning of the Restatement (Second) of Contracts as to the determination of an intended beneficiary. Fourth Ocean Putnam Corp. v. Interstate Wrecking Co., Inc., 66 N.Y.2d 38, 44 (1985) (quoting the Restatement). The Restatement states that:

“a beneficiary of a promise is an intended beneficiary if recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and either (a) … 1 ; or (b) the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance.”

Restatement (Second) of Contracts§ 302 (1981).

Here, Morrison Cohen has not pied any facts to show that Brown Rudnick and Stonebridge intended their Engagement Letter to be for the benefit of the plaintiff investors. The Engagement Letter itself states that, “[Unless] we expressly agree to provide additional services, our engagement is to represent solely Stonebridge Funding, LLC in connection with the specific matter set forth above.” Morrison Cohen’s contention that the preceding sentence proves otherwise is unavailing. Thepreceding sentence provides that Brown Rudnick was willing to have discussions about the representation of a party other than Stonebridge but it does not suggest that the Engagement Letter covered a third-party. Moreover, the circumstances surrounding the Transaction and the drafting of the Transaction Documents do not support Morrison Cohen’s argument that the benefit to the plaintiff investors was sufficiently immediate, rather than incidental. The contracts between the parties in this action are a result of sophisticated parties making arms-length decisions. The plaintiff investors contracted with Morrison Cohen for legal services. Stonebridge contracted with Brown Rudnick for legal services. The plaintiff investors and Brown Rudnick did not contract and there is no indication that they intended to rely on each other’s performance. There is nothing in the Engagement Letter which suggests an intent to benefit the plaintiff investors. Therefore, Morrison Cohen has failed to plead that Brown Rudnick owed the plaintiff investors a duty in preparation of the Transaction Documents. ”

 

Widlitz v Douglas Elliman, LLC  Decided on April 19, 2017  Supreme Court, New York County
Bluth, J. is a quintessential New York City story.  Basically, Plaintiff buys into a newly constructed building, does so long prior to completion of the building,  asks and expects “city views” but gets a view of a brick wall.  Whose fault is it?  Hers, the real estate agents’ or the attorney’s?

“This case arises out of plaintiff’s purchase of an apartment located at 5 Franklin Place (also known as 317 Broadway) in New York, New York. Plaintiff stresses that despite her express wishes to purchase an apartment with city views, and repeated assurances from Elliman and Lee that the apartment would contain these views once completed, the north-facing apartment only had views of the brick wall of a nearby building.

The subject apartment building, called the Franklin Place Condominium, was under construction when plaintiff sought to purchase an apartment in August 2014. Plaintiff claims that her primary requirement was that her apartment have expansive city views. Plaintiff alleges that she retained defendant Elliman, a real estate brokerage firm, to assist her in finding a suitable apartment. Plaintiff insists that Elliman acted as both her, and the seller’s, real estate agent.

Plaintiff argues that because the Franklin Place Condominium was under construction, she relied on Elliman’s representations concerning a potential apartment. Plaintiff acknowledges that she went to the construction site on or about August 19, 2014, but was unable to identify the [*2]specific location of the apartment (12B) within the building or how tall each floor of the condo would be. Plaintiff insists that she had a conversation with an Elliman agent on August 20, 2014 where she noted that she was relying on representations about the subject apartment’s city views and that Elliman’s agent confirmed the apartment had city views. Plaintiff claims she was told to refer to a link on Elliman’s website showing the listing, which contained views from the apartment captured by a drone.

Plaintiff contends that she submitted an offer to purchase the apartment on or about August 21, 2014 and was told by an agent for Elliman to retain defendant Lee (an attorney) to help her conduct due diligence. Plaintiff subsequently retained defendant Lee, and she insists she told him she wanted city views. On September 11, 2014 plaintiff entered into an assignment agreement in which she was assigned the rights, title and interest of Hashem LLC for $1.39 million. Hashem had previously entered into a contract of sale with the sponsor (Broadway 371 LLC) to purchase Unit 12B for $1.1 million in June 2013. Plaintiff contends that the scheduled closing in the original contract of sale (between Hashem and 371 Broadway) was July 2015. Plaintiff insists that she was informed the closing would be delayed until fall 2015. Plaintiff argues that she wanted the right to rescind the contract and claims that defendant Lee failed to inform her that she may have had this right because the first residential unit closing did not occur until after July 1, 2015.”

“Here, plaintiff’s amended complaint states a cause of action for legal malpractice. Plaintiff alleges that she reiterated on numerous instances to Lee that she wanted an apartment with city views (see amended complaint ¶¶ 41, 42). Lee correctly observes that there are discrepancies between plaintiff’s interpretation of email communications between her and Lee that suggest that she was concerned with air rights. But plaintiff refers to verbal assurances from Lee that requires this case to proceed to the discovery stage on this cause of action (see id. ¶ 48).

Although Lee disputes plaintiff’s version of events, this Court is unable to dismiss the amended complaint at the motion to dismiss stage because the plaintiff is afforded every favorable inference.

With respect to the rescission issue, plaintiff has also stated a cause of action. Plaintiff points to an assignment and acceptance agreement (attached to a letter dated September 19, 2014), allegedly separate from the assignment agreement, which states that “Assignor hereby assigns, sets over and transfers to Assignee its interest of Assignor’s rights, title and interest in, to and under the Agreement” (id. exh C). This agreement is signed by Hashem, plaintiff and the sponsor. It does not specify that these rights were to transfer at the time of the closing.

The assignment agreement, dated September 11, 2014 states that Hashem (Assignor) would assign to plaintiff its rights, title and interest at the time of closing (see Lee affirmation exh E ¶ 2). The assignment agreement also notes that at the time of closing, Hashem and plaintiff were to execute and deliver an assignment and assumption agreement (id. ¶ 4). The parties do not explain why an assignment and assumption agreement was executed eight days after the assignment agreement (instead of at the closing) or why the assignment and assumption agreement does not specify that the rights are to transfer at the closing. The letter accompanying the assignment and assumption agreement states that “This letter shall confirm the Sponsor hereby grants its consent to allow Purchaser to assign its rights and obligations under the Purchase Agreement for the captioned Unit. Sponsor shall execute and deliver an assignment of the contract at closing” (amended complaint, exh C).

It is not the Court’s role, at the motion to dismiss stage, to sort through these apparently conflicting agreements. Discovery may clarify the timeline of events or substantiate Lee’s claim that plaintiff did not have the right to rescind at closing. But Lee did not explain the significance of the assignment and assumption agreement in his papers.”

 

In what appears to us to be a novel theory of law, Plaintiff in Olabopo v Scola   2017 NY Slip Op 30826(U)   April 21, 2017   Supreme Court,   New York County Docket Number: 157461/2016   Judge: Robert D. Kalish seems to be suing because Defendant attorneys did not take the case.  This is a different situation from (what frequently occurs in Med Mal cases) when the attorney takes the case on “investigation” and then spends 2+ years sitting on the case only to say, “no thanks.”  Here, there is no argument that the statute of limitations was compromised.

“The Plaintiff alleges in Paragraph 5 of his complaint that the Defendants “negligently and discriminatorily failed to prosecute a case 1 for the Plaintiff on account of his race, religion and perceived gender”. The Plaintiff further alleges in Paragraph 6 of his complaint that that based upon the Defendants’ failure to represent Plaintiff in the federal action that the Defendants are liable for “breach of fiduciary duty”, “legal malpractice”, and “violation of section 1981, NYC and NY State Hum an Rights Law”. However the Plaintiff fails to set forth in his complaint any facts to form a basis for his the claims as alleged in in paragraph 6. “”This presumably refers to a federal action brought by the Plaintiff pro se claiming police brutality and other claims, which is presumably presently pending in federal court. This is the basis of the underlying action, wherein the Plaintiff claims that the Defendants refused to represent him in the federal action. ”

“Upon review of the Plaintiff’s pleadings, the Court finds that the Plaintiff has failed to present any factual basis for any of the Plaintiffs claims. In particular, the Plaintiff has not presented any factual basis to show that an attorney client legal relationship existed between the Plaintiff and the Defendants. Further, there are no factual allegations indicating that the Defendants did anything other than refuse to represent the Plaintiff in his federal action. “

Litigation is difficult, and takes a long time.  When snap decisions are made, they often add to the difficulties, not resolve them. Liew v Jeffrey Samel & Partners  2017 NY Slip Op 03165
Decided on April 26, 2017  Appellate Division, Second Department is an example.  While the parties were muddling towards trial, a sudden dismissal threw the case into a tailspin.

“In December 2002, the plaintiff, Kimberly Liew, retained the defendant Jeffrey Samel & Partners (hereinafter the law firm) to represent her as the administrator of the estate of Vincent Liew, and individually, in connection with a medical malpractice action. In November 2010, she commenced this action as administrator and in her individual capacity against the law firm and the defendant Robert Spevack (hereinafter together the defendants), who, at all relevant times, was of counsel to the law firm and allegedly handled the medical malpractice matter. Issue was joined in early 2011. On April 6, 2012, although discovery had not yet been completed, the plaintiff filed a [*2]note of issue and certificate of readiness pursuant to a directive in a compliance conference order dated November 28, 2011. It is undisputed that on November 21, 2012, discovery was outstanding and the Supreme Court (Weinstein, J.) vacated the note of issue. In March 2013, in response to the law firm’s service of a 90-day demand pursuant to CPLR 3216, the plaintiff moved, inter alia, to compel the depositions of the defendants and to restore the matter to active status. On April 1, 2013, the motion was resolved by a so-ordered written stipulation which provided that the motion was withdrawn and that the defendants would appear for depositions on or before May 31, 2013. The court struck a proposed provision which would have restored the matter to active status and directed the filing of a note of issue on or before July 31, 2013. After the completion of discovery, the law firm moved for summary judgment dismissing the complaint insofar as asserted against it, and the plaintiff cross-moved for summary judgment on the issue of liability. In the order appealed from, the court, sua sponte, directed the dismissal of the action pursuant to CPLR 3404 as abandoned and thereupon denied, as academic, the motion and cross motion. The plaintiff appeals.

The Supreme Court erred in, sua sponte, directing the dismissal of the action pursuant to CPLR 3404 as abandoned. When the note of issue was vacated, the case reverted to its pre-note of issue status and CPLR 3404 did not apply (see Bank of N.Y. v Arden, 140 AD3d 1099, 1100; Paradiso v St. John’s Episcopal Hosp., 134 AD3d 1002, 1003; Montalvo v Mumpus Restorations, Inc., 110 AD3d 1045, 1046; Pucar v L.H. Charney Assoc., LLC, 79 AD3d 996, 997; Gorski v St. John’s Episcopal Hosp., 36 AD3d 757).”

 

Does a successfully pleaded Judiciary Law § 487 case require a conviction for a misdemeanor ?  A recent Magistrate’s report in the Western District of New York strikingly says so.  In Bounkhoun v. Barnes, the magistrate determined that no JL 487 case may lay without a misdemeanor conviction.

The First Department may not think the same way.  in  O’Neal v Muchnick Golieb & Golieb, P.C.  2017 NY Slip Op 03125  Decided on April 25, 2017  Appellate Division, First Department they found that Supreme Court had erred in dismissing the 487 claim.  No misdemeanor prosecution, conviction, or even a mention.

“Order, Supreme Court, New York County (Shlomo S. Hagler, J.), entered on or about February 17, 2016, which, to the extent appealed from as limited by the briefs, granted defendants’ motion pursuant to CPLR 3211 to dismiss the legal malpractice claims based on the assumption of a lease and the failure to oppose summary judgment in an underlying action, the breach of fiduciary duty claims, and the Judiciary Law § 487 claims, and denied plaintiff’s application for leave to amend the complaint to add the Good Service Company, Inc. as a nominal defendant, unanimously modified, on the law, to deny defendants’ motion as to the fiduciary duty and Judiciary Law § 487 claims and so much of the malpractice claim as arose in connection with the assignment of a lease, and to grant plaintiff’s application to amend, and otherwise affirmed, without costs.

The allegation that, while representing plaintiff in the assignment-of-lease negotiations, counsel secretly represented the counterparty so as to obtain favorable terms for the counterparty, which resulted in a lower-than-market price for the assignment, states a claim for legal malpractice (see Leggiadro, Ltd. v Winston & Strawn, LLP, 119 AD3d 442 [1st Dept 2014]).”

“The allegation that defendants advised plaintiff to transfer her assets, in violation of a court order about which they had not informed her, to draw the ire of creditors so that they would seek collection against her before pursuing her co-defendants is sufficient to state a claim under Judiciary Law § 487 (see generally Kurman v Schnapp, 73 AD3d 435 [1st Dept 2010]).”

 

Last week we reported a cataclysmic event in Judiciary Law 487.  It was Magistrate Scott’s report and recommendation  in Bounkhoun v. Barnes, 15-cv-631A. District Judge Richard Arcara is presiding over the case.  He wrote:  “Where does all of the above analysis leave plaintiff? Plaintiff has pled that defendants ignored her desire to settle her case, and walked away from ongoing negotiations without her knowledge. Plaintiff has pled further that defendants engineered a high-low agreement at trial that essentially gave their costs higher priority than her permanent loss of an eye. Whatever proof might emerge at discovery, the claim of legal malpractice in the amended complaint—Count IV, which defendants have not moved to dismiss—would appear to cover the full range of plaintiff’s allegations. The Court is not aware of any prosecution of defendants under Section 487, and plaintiff in any event has not pled nearly enough detail to show that defendants might have fulfilled all of the elements of Section 487 and might be guilty of a misdemeanor. Without fulfillment of the elements of a criminal offense under Section 487, and a resulting conviction, this case presents no criminal prerequisite that treble damages can be “in addition to.”

Under these circumstances, Count III of the amended complaint fails, and the Court thus recommends granting defendants’ motion with respect to Count III. Since Count III fails as a matter of law, the Court need not address plaintiff’s arguments about the need to obtain discovery.”

But, does the case law support such a radical position?  We wonder, and took a quick look at some of the older cases.  Take, for example  Specialized Industrial Services Corp. v Carter, 2008 NY Slip Op 32079(U)   July 23, 2008   Supreme Court,   Suffolk County   Docket Number: 0016955/2007   Judge: John J.J. Jones.

Sure, it’s a lower court decision, but take a look at this language:

“Section 487 of the Judiciary Law, entitled “Misconduct by attorneys,” provides in pertinent part: “An attorney or counselor who: 1. Is 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 in addition to the punishment prescribed therefore by the penal law, he forfeits to the party injured treble damages, to be recovered in a civil action.” A criminal conviction is not a condition precedent to bringing a civil action pursuant to Judiciary Law $487 but the plaintiff must allege and prove that the attorney engaged in a “chronic, extreme pattern of legal delinquency” (Schindler v Issler & Schrage, P. C., 262 AD2d 226,228,262 NYS2d 361,362 [lst Dept 19991, lv dismissed 94 NY2d 791, 700 NYS2d 422 [1999], rearg denied 94 NY2d 859,704 NYS2d 534 [1999] [quoting Wiggin v Gordon, 115 Misc 2d 1071,1077,455 NYS2d 205 (Civ Ct, Queens County 1982)).  Here, after a review within the four corners of the complaint, the amended complaint and the supporting affidavits, the court finds ample support for the allegation that Carter was engaged in a larger fraudulent scheme than merely the attempt to procure a single judgment in a single case, that is; an “extreme pattern of legal delinquency” (id.). The plaintiff has sufficiently alleged, to withstand a motion to dismiss pursuant to CPLR 321 l(a)(7) for failure to state a cause of action, that Carter engaged in such a pattern of legal delinquency which included knowingly engaging in acts of deceit or collusion with the intent to deceive the court or a party (see Judiciary Law $487). Accordingly, that part of the defendant Carter’s motion which seeks dismissal of the cause of action for violations of Judiciary Law $487 for failure to state a cause of action is denied.

We’ll revisit this issue again in the coming days.  We’ll report if the Magistrate’s report is approved by the District Judge.