Kagan Lubic Lepper Findelstein & Gold LLP v 325 Fifth Ave. Condominium  2015 NY Slip Op 31470(U) August 6, 2015   Supreme Court, New York County  Docket Number: 151878/15  Judge: Cynthia S. Kern is an example which will likely be cited in this years Legal Malpractice continuing legal education seminars as a reason not to sue clients over fees.  Fee suits invite legal malpractice counterclaims.  This one survived motions to dismiss.

“Specifically, defendants’ answer alleges as follows. Defendants hired Kagan Lubic in October 2012 to represent them as general counsel and in an action against the sponsor of 325 Fifth and certain subcontractors arising from the defective design, constr~ction, sale, marketing ·! ‘ and management of the condominium building located at 325 Fifth Avenue, New York, New York (the “building”), which was allegedly plagued with defects from th~ outset. Defendants allege that Kagan Lubic failed to take even the most basic steps to secure remedies against those responsible for the defective design and construction of the Building and that for nearly two  years, Kagan Lubic “churned the file” and generated enormous legal bills.through prolonged  negotiations and other pre-litigation tactics that were time consuming, costly and entirely ineffective, including, inter alia, (i) retaining duplicative, superfluous experts which caused defendants to incur thousands of dollars in additional fees; (ii) engaging in futile settlement discussions for nearly eighteen months; (iii) generating enormous legal fees by spending countless hours addressing inconsequential maintenance issues in the building which, in many instances, cost less to remediate than the time spent addressing them; (iv):frustrating any progress  toward reaching a settlement with the sponsor with respect to the maintenance issues by delaying nearly four months before responding to the sponsor’s offer to remediate certain conditions; (v) routinely raising additional maintenance issues which resulted in further delay and costs; and (vi) allowing nearly two years to lapse without filing a complaint in the action. Defendants further allege that “[b]ut for Kagan Lubic’s dilatory tactics, the defects in the Building would have been remediated by now, and the impaired value of the Condominium units in the Building resulting from the design and construction defects and ongoing litigation would have been restored.”

“In the instant action, defendants’ answer sufficiently states a claim for legal malpractice. The first counterclaim alleges that plaintiff committed legal malpractice.by failing to exercise the skill and ability reasonably to be expected from a duly licensed attorney and/or law firm engaged in the practice of law within the State of New York by, among other things, engaging in self serving dilatory tactics that were ineffective and designed to impede settlement discussions and timely resolution of the dispute in order to generate enormous legal fees and that as a result of said breach, defendants have been damaged. Specifically, defendants’ answer alleges that plaintiff negligently delayed the resolution of their claims against the sponsor and subcontractors only to increase their legal fees and that as a result, defendants have sustained damages, including, but not limited to, enormous legal fees and increased costs to investigate and address the defective conditions throughout the building, which include expert fees and rental fees for safety bridges and construction equipment. Additionally, defendants allege that as a direct result of plaintiffs willful delay of the underlying claims, the building’s defects have yet to be remediated and that the building’s value and defendants’ access to credit financing has been impaired. It is well-settled that allegations that an attorney unreasonably delayed the resolution of his client’s claims are grounds for malpractice sufficient to defeat a motion to dismiss. See Lappin v. Greenberg, 34 A.D.3d 277, 280 (1st Dept 2006)(“the complaint sufficiently asserts that defendants inordinate delay … resulted in a loss of principal attributable to defendants’ lack of professional diligence”); see also VDR Realty Corp. v. Mintz, 167 A.D.2d 986, 986-87 (4th Dept 1990)(“[factual allegations of the complaint to the effect that defendant attorney unreasonably delayed the prosecution of a landlord-tenant holdover proceeding and engaged in dilatory tactics, thereby increasing the attorney’s fee and causing other consequential damages, state a cause of action for legal malpractice.”) ”

“Here, defendants’ answer sufficiently states a claim for a violation of Judiciary Law§ 487(2). The second counterclaim alleges that plaintiff, instead of diligently and vigorously pursuing defendants’ legal claims against the sponsor and the subcontractors, engaged in selfserving dilatory tactics that were designed to impede settlement discussions and the timely resolution of the dispute “in order to generate enormous legal fees with a ;view to its own gain.” Specifically, defendants allege that they retained plaintiff in October 2012, after an action had been commenced by Summons with Notice in July 2012, and that from the outset of the representation, plaintiff”failed to take even the most basic steps to resolve [defendants’] claims” and that “[i]nstead, for nearly two years, [plaintiff] simply churned the file and generated enormous legal bills through prolonged negotiations and other pre-litigation tactics that were time consuming, costly, and entirely ineffective,” such as requiring additional unnecessary expert investigations, delaying filing a complaint for almost two years, stalling all opportunities to settle the underlying matter and continuing to attempt to settle the matter despite the knowledge that settlement attempts were futile. As these allegations are sufficient to state a claim for a violation of Judiciary Law§ 487, plaintiffs motion to dismiss the second counterclaim is denied. ”

 

Mamoon v Dot Net Inc.  2016 NY Slip Op 00600  Decided on January 28, 2016  Appellate Division, First Department  is a casually written yet decisive decision from the Appellate Division, which basically keeps the legal malpractice cause of action and jettisons everything else as inappropriate (civil conspiracy) or  duplicitive.  Note the short sentence about the need for verification and “red herrings.”

“Mr. Moss submitted an affirmation, denying that the Moss defendants ever said they [*2]would act as plaintiff’s attorney. However, an affidavit — let alone an affirmation [FN1] — is not documentary evidence (see e.g. Flowers v 73rd Townhouse LLC, 99 AD3d 431 [1st Dept 2012]).

The fact that the Moss defendants represented Mridha does not preclude the possibility that they also represented plaintiff (see Talansky v Schulman, 2 AD3d 355, 359 [1st Dept 2003]; see also Leon,84 NY2d at 86-87, 90).

The October 2011 letter that plaintiff sent the Moss defendants did not utterly refute her “factual allegations, conclusively establishing a defense as a matter of law” (Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326 [2002]). First, the fact that there was a meeting in April 2011 does not preclude the possibility that there was another meeting in May 2011. Second, plaintiff may simply have misremembered the date; she said in her affidavit, “on or about May 1, 2011″(emphasis added). Her confusion is understandable because she executed documents on April 11, 2011 which became effective on May 1, 2011. Moreover, she stated that her understanding of English is limited.

“In order to state a cause of action for legal malpractice, the complaint must set forth three elements: the negligence of the attorney; that the negligence was the proximate cause of the loss sustained; and actual damages” (Leder v Spiegel, 31 AD3d 266, 267 [1st Dept 2006], affd 9 NY3d 836 [2007], cert denied 552 US 1257 [2008]). If one considers the allegations in the claims for breach of fiduciary duty and negligence (as opposed to just the conclusory allegations in the malpractice claim), the complaint satisfies the requirements of Leder. Contrary to the Moss defendants’ claim, the documentary evidence does not show that plaintiff was paid in full for her Dot Net shares and therefore sustained no damages.

Unless a plaintiff alleges that an attorney defendant “breached a promise to achieve a specific result” (Sage Realty Corp. v Proskauer Rose, 251 AD2d 35, 39 [1st Dept 1998]), a claim for breach of contract is “insufficient” (id.) and duplicative of the malpractice claim (id. at 38-39). Plaintiff does not allege that the Moss defendants breached a promise to achieve a specific result. Hence, her contract claim should have been dismissed as against those defendants.

Plaintiff’s claims for breach of fiduciary duty and fraud are also duplicative of her malpractice claim (see e.g. Weil, Gotshal & Manges, LLP v Fashion Boutique of Short Hills, Inc., 10 AD3d 267, 271 [1st Dept 2004]; Sage Realty, 251 AD2d at 39).

“[C]ivil conspiracy is not recognized as an independent tort in this State” (Shared Communications Servs. of ESR, Inc. v Goldman Sachs & Co., 23 AD3d 162, 163 [1st Dept 2005]). Therefore, that claim should have been dismissed.

It is true that “in considering a motion to dismiss brought pursuant to CPLR 3211(a)(7), the court must presume the facts pleaded to be true and must accord them every favorable inference” (Leder,31 AD3d at 267). However, “factual allegations … that consist of bare legal conclusions, or that are inherently incredible …, are not entitled to such consideration (id.). Plaintiff makes only conclusory, incredible allegations that the Moss defendants converted her money and were unjustly enriched. Rather, the factual allegations of the complaint and the documentary evidence show that Mridha owed plaintiff $75,000 for her Dot Net shares and was unjustly enriched because he did not pay her for them.”

 

Klein v Rieff  2016 NY Slip Op 00482  Decided on January 27, 2016  Appellate Division, Second Department is a fascinating story, and could well serve as a bar exam all by itself.  It deals with the owners of nursing homes and the fallout from their breakup.  The gist of the story is the loser in the breakup suddenly says that she did not sign the operating agreements, and that the signature is a forgery.  Then, after trips to the Appellate Division, one of the attorneys suddenly admits that his affirmation was a “misstatements.”  “Defendant Rieff reversed his original position that Persuad did not sign the operating agreement” and so he wrote to Justice Schack with a copy to the AD that he wanted to “correct certain misstatements contained in an affirmation which [he] signed on April 20, 2009…”

So when all of the attorneys used this affirmation, was it a violation of Judiciary Law §487 and legal malpractice?  No, only Rieff remains in the case.

“ORDERED that the order dated December 5, 2013, is modified, on the law, by deleting the provisions thereof granting those branches of the motion of the defendant Samuel E. Rieff which were for summary judgment dismissing the causes of action alleging legal malpractice, fraudulent misrepresentation, and a violation of Judiciary Law § 487 insofar as asserted against him, and substituting therefor provisions denying those branches of the motion; as so modified, the order is affirmed insofar as appealed from;”

“The Supreme Court properly granted those branches of the separate motions by Levy, the Naparty defendants, the Hankin defendants, and Preziosi which were pursuant to CPLR 3211(a)(7) to dismiss the causes of action alleging a violation of Judiciary Law § 487 insofar as asserted against each of them, as the plaintiff failed to allege sufficient facts to establish that these defendants intended to deceive the court (see Shaffer v Gilberg, 125 AD3d 632, 636;Schiller v Bender, Burrows & Rosenthal, LLP, 116 AD3d 756, 759; Seldon v Lewis Brisbois Bisgaard & Smith LLP, 116 AD3d 490, 491; Curry v Dollard, 52 AD3d 642, 644; Michalic v Klat, 128 AD2d 505, 506).”

“However, the Supreme Court erred in granting those branches of Rieff’s motion which were for summary judgment dismissing the causes of action alleging legal malpractice, fraudulent misrepresentation, and a violation of Judiciary Law § 487 insofar as asserted against him. Rieff contends that he is entitled to summary judgment because the plaintiff did not suffer any [*3]damages as the result of any alleged fraud that he committed by making knowing, material misstatements for submission to the court. Contrary to Rieff’s contention, he failed to establish, prima facie, that the plaintiff was unable to demonstrate damages proximately caused by his alleged conduct (see Bey v Flushing Hosp. Med. Ctr., 95 AD3d 1152, 1153).”

 

 

 

The Supreme Court Decision  is itself a real mess.

Legal malpractice litigation is unique, and has a set of principles and doctrines that are applicable only when suing an attorney.  Janker v Silver, Forrester & Lesser, P.C.  2016 NY Slip Op 00481  Decided on January 27, 2016  Appellate Division, Second Department is a primer for review.

“The plaintiff’s former husband commenced an action for a divorce and ancillary relief against her, and the plaintiff retained the appellants to represent her in that action. Prior to trial, the plaintiff and her former husband entered into a stipulation of settlement on the record in open court, which ended that case. Approximately two years later, the plaintiff commenced this action to recover damages for, among other things, legal malpractice. The plaintiff alleged, inter alia, that the appellants failed to ascertain the full extent of her former husband’s assets and failed to adequately explain the stipulation of settlement to her. The appellants moved pursuant to CPLR 3211(a) to dismiss the complaint insofar as asserted against them. The Supreme Court, among other things, denied the appellants’ motion. We reverse insofar as appealed from.”

“”To state a cause of action to recover damages for legal malpractice, a plaintiff must allege: (1) that the attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession; and (2) that the attorney’s breach of the duty proximately caused the plaintiff actual and ascertainable damages” (Dempster v Liotti, 86 AD3d 169, 176 [internal quotation marks omitted]; see Nomura Asset Capital Corp. v Cadwalader, Wickersham & Taft LLP, 26 NY3d 40; Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 441). “To establish causation, a plaintiff must show that he or she would have prevailed in the underlying action or would not have incurred any damages but for the lawyer’s negligence” (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d at 442; see Keness v Feldman, Kramer & Monaco, P.C., 105 AD3d 812, 813). “A claim for legal malpractice is viable, despite settlement of the underlying action, if it is alleged that settlement of the action was effectively compelled by the mistakes of counsel” (Bernstein v Oppenheim & Co., 160 AD2d 428, 430; see Leiner v Hauser, 120 AD3d 1310, 1311; Keness v Feldman, Kramer & Monaco, P.C., 105 AD3d at 813; Tortura v Sullivan Papain Block McGrath & Cannavo, P.C., 21 AD3d 1082, 1083). “[A] plaintiff must plead and prove actual, ascertainable damages as a result of an attorney’s negligence” (Dempster v Liotti, 86 AD3d at 177). “Conclusory allegations of damages or injuries predicated on speculation cannot suffice for a malpractice action, and dismissal is warranted where the allegations in the complaint are merely conclusory and speculative” (Bua v Purcell & Ingrao, P.C., 99 AD3d 843, 848 [citations omitted]; see Dempster v Liotti, 86 AD3d at 177;Hashmi v Messiha, 65 AD3d 1193, 1195; Riback v Margulis, 43 AD3d 1023, 1023).”

“Here, to the extent that the complaint asserted that the appellants were negligent in failing to ascertain the full extent of the assets of the plaintiff’s former husband, it failed to sufficiently allege that the stipulation of settlement entered into was effectively compelled by the mistakes of counsel, since the plaintiff acknowledged that she elected to enter into the settlement agreement even though she was aware that her former husband had not fully disclosed his assets (see AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 435-436; Keness v Feldman, Kramer & Monaco, P.C., 105 AD3d at 813;Tortura v Sullivan Papain Block McGrath & Cannavo, P.C., 21 AD3d at 1083). Furthermore, the complaint failed to adequately plead specific factual allegations showing that, but for the appellants’ alleged negligence, the plaintiff would have obtained a more favorable outcome in the underlying action (see Leiner v Hauser, 120 AD3d at 1311; Schiller v Bender, Burrows & Rosenthal, LLP, 116 AD3d 756, 758; Keness v Feldman, Kramer & Monaco, P.C., 105 AD3d at 813; Tortura v Sullivan Papain Block McGrath & Cannavo, P.C., 21 AD3d at 1083). The allegation that, but for the appellants’ alleged negligence, the plaintiff would have received a more favorable settlement offer from her former husband is conclusory and speculative (see Bua v Purcell & Ingrao, P.C., 99 AD3d at 847-848;Holschauer v Fisher, 5 AD3d 553, 554; Giambrone v Bank of N.Y., 253 AD2d 786, 787). In addition, to the extent that the complaint alleged that the plaintiff was not advised about certain aspects of the stipulation of settlement pertaining to the marital residence, the transcript of the court proceedings submitted by the appellants, wherein the attorneys set forth the terms of the stipulation, utterly refuted those factual allegations (see generally Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d at 326; Schiller v Bender, Burrows & Rosenthal, LLP, 116 AD3d at 758; Pacella v Whiteman Osterman & Hanna,14 AD3d 545, 545-546). Accordingly, the Supreme Court should have granted the appellants’ motion pursuant to CPLR 3211(a) to dismiss the complaint insofar as asserted against them.”

 

Bad cases make bad law is a mantra in the world of litigating attorneys.  An otherwise vibrant doctrine may be undermined by decisions arising from less than optimal cases.  One such example is a textbook example of why JL 487 claims are “disfavored” and applied so stringently.

Hersh v Weg  2015 NY Slip Op 30698(U)  April 27, 2015  Supreme Court, New York County  Docket Number: 104360/2011  Judge: Jeffrey K. Oing is the case any judge might point to to show that if JL 487 and Legal Malpractice claims were permitted willy-nilly, then after each litigation there would be a round of legal malpractice litigation.

In this case it’s son v. parents, and afterwards son v. lawyers.  “These claims arise out of an intra-family dispute essentially pitting plaintiff son against his mother. The Appellate Division, First Department reversed this Court’s decision and order, and dismissed plaintiff son’s complaint against defendants, Betty Weg, Arnold Weg, S&G Hotel Corp., and plaintiff’s sisters, Brenda and Nancy Hersh (Hersh v Weg, 105 AD3d 539 [1st Dept 2013]). Thereafter, the County Clerk entered judgment dismissing plaintiff’s complaint on June 24, 2013 (NYSCEF Doc. No. 166). I tried defendants’ counterclaims against plaintiff before a jury. The only principal to testify on behalf of defendants was plaintiff’s 82-year old mother, Esther Rachel Hersh. At the close of defendants’ presentation of their evidence on the counterclaims, plaintiff moved to dismiss the counterclaims. After hearing arguments, I granted the motion to dismiss: ”

“Evidently, this dismissal did not end the family dispute. Plaintiff son now seeks to add defendants’ counsel as defendants in this action so as to assert against them a Judiciary Law § 487 claim. Plaintiff also seeks the imposition of sanctions against defendant S&G for maintaining allegedly frivolous counterclaims against him. ”

“Plaintiff’s motion to amend the complaint is denied. The County Clerk entered judgment dismissing the complaint on June 24, 2013. As such, any subsequent papers and proceedings are deemed a nullity given that the action is no longer pending (Floyd v Salamon Bros., 249 AD2d 139, 140 [1st Dept 1998]). In any event, the proposed amendment seeking to interpose a section 487 claim against defendants’ counsel is palpably insufficient. Section 487 provides, in relevant part: An Attorney or counselor who: 1. Is guilty of any deceit or collusion, or consents to any deceit or collusion, intent to deceive the court or any party … Is guilty of a misdemeanor, and in addition to the punishment prescribed therefor by the penal law, he forfeits to the party injured treble damages, to be resolved in a civil action. Notwithstanding the proposed allegations in the amended complaint, the record is clear — nowhere was there ever an assertion or charge made by plaintiff or his counsel that defendants’ counsel was deceiving or colluding to deceive this Court or plaintiff. Indeed, at no time during argument of the dismissal motion, with the proposed allegations at hand, did plaintiff’s counsel remotely suggest that there was collusion or deception present. Rather, I based my decision and order dismissing the counterclaims on the fact that defendants failed to establish prima facie their counterclaims. I did not ascribe any findings to defendants’ failure to call Betty Weg as a trial witness. Nor was there any factual basis for me to do so. In the end, whether to call her or not was a trial strategy decision to be made by defendants’ counsel. Plaintiff’s motion for sanctions defendant S&G based on its allegedly frivolous conduct in prosecuting the counterclaims is denied. The record does not support such application. Defendants’ cross-motion is denied without prejudice. “

Judiciary Law 487 claims are difficult.  They are disfavored, as our discussions over the past three weeks has shown.  Appellate Courts appear (but do not explicitly state) to require a higher standard of proof, and have used the word “clear” in their descriptions of the standard of JL 487 proofs, bringing to mind a “clear and convincing” standard rather than a “preponderance of the evidence” standard.  In any event, proof of a JL 487 claim is even more difficult in a bankruptcy setting as Hahn v Dewey & Leboeuf Liquidation Trust  2015 NY Slip Op 31481(U)  August 3, 2015
Supreme Court, New York County  Docket Number: 650817/2014  Judge: Eileen Bransten shows.

“In addition, the proposed attorney misconduct claim is not legally cognizable. Pursuant to Judiciary Law § 487, an attorney who “[i]s guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party … [i]s guilty of a misdemeanor, and … forfeits to the party injured treble damages, to be recovered in a civil action.” 11 [S]ection 487 is not a codification of a common-law cause of action for fraud. Rather, section 487 is a unique statute of ancient origin in the criminal law of England. The operative language at issue – ‘guilty of any deceit’ – focuses on the attorney’s intent to deceive, not the deceit’s success.” Amalfitano v. Rosenberg, 12 N.Y.3d 8, 14 (2009). In the proposed attorney misconduct claim, plaintiffs allege that they did not discover, nor could they have discovered, the alleged fraud until they read Confidence Games in 2014. Plaintiffs contend that the information in the book leads them to believe that evidence exists regarding LeBoeuf, Sidley, and Proskauer’s commission of actual fraud with regard to the tax shelter advice each rendered to plaintiffs in the early 2000’s. Plaintiffs further maintain that the defendant law firms knowingly and fraudulently concealed the existence of a conflict of interest between their interests and plaintiffs’ interests, in breach of their respective fiduciary duties owed plaintiffs, in order to receive additional exorbitant legal fees from plaintiffs. Plaintiffs contend that these defendants rendered improper legal advice regarding the plaintiffs’ eligibility for the safe harbor protection afforded by IRC § 6707, because they knew that, by the time that their legal malpractice and fraud were discovered, the relevant statute of limitations would have passed and that, therefore, they would be safe from legal action. As discussed at length above, in Confidence Games, the authors analyze the tax shelters of the late 1990s and early 2000s and do not specifically reference the NPL Program or any tax advice rendered by LeBoeuf, Sidley, or Proskauer with respect to that tax strategy. The information in Confidence Games does not constitute new evidence. Plaintiffs’ duty to inquire further was triggered by the IRS investigation into the NPL Program, and the lawsuits filed against plaintiffs NPL Program investors. The claim is also without merit because it is not properly brought in this action. Section 487 of the Judiciary Law applies only where the alleged deceit forming the basis of the claim occurs during the course of a pending judicial proceeding. See, e.g., Meimeteas v. Carter Ledyard & Milburn LLP, 105 A.D.3d 643, 643 (1st Dep1 t 2013); Costa/as v. Amalfitano, 305 A.D.2d 202, 203-204 (1st Dep’t 2003). Here, the alleged misconduct occurred well before commencement of this litigation. Finally, the attorney misconduct claim is time-barred. An attorney misconduct claim is subject to a six-year limitations period. See Melcher v. Greenberg Traurig, LLP, 23 N.Y.3d 10, 15 (2014); CPLR § 213(1). The last act or omission of attorney misconduct by any of the movants alleged by plaintiffs occurred in 2003, more than ten years prior to commencement of this action. “

All too often, the Appellate Division affirms Supreme Court’s dismissal of a claim with a blanket statement of black-letter law.  These dismissals, understandable under the unrelenting numbers of cases before the Second Department (for example) fail to inform litigants of what is a proper quanta of factual allegations and those which will fail the test.  Once and a while a one-paragraph explanation of what was/wasn’t there would be helpful to the bar, and perhaps to the bench as well.

Gumarova v Law Offs. of Paul A. Boronow, P.C.  2015 NY Slip Op 05155 [129 AD3d 911]  June 17, 2015  Appellate Division, Second   Department is such an example.  What was pled and what was not pled remain a mystery.  “On a motion pursuant to CPLR 3211 (a) (7) to dismiss a complaint for failure to state a cause of action, the court must accept the facts alleged in the pleading as true, accord the plaintiff the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory (see Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326 [2002]; Leon v Martinez, 84 NY2d 83, 87 [1994]).

Judiciary Law § 487 provides that an attorney who “[i]s 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 “forfeits to the party injured treble damages, to be recovered in a civil action.” “Since Judiciary Law § 487 authorizes an award of damages only to ‘the party injured,’ an injury to the plaintiff resulting from the alleged deceitful conduct of the defendant attorney is an essential element of a cause of action based on a violation of that statute” (Rozen v Russ & Russ, P.C., 76 AD3d 965, 968 [2010]).

Here, the Supreme Court properly granted that branch of the defendants’ motion which was pursuant to CPLR 3211 (a) (7) to dismiss the cause of action alleging a violation of Judiciary Law § 487. The cause of action alleging a violation of Judiciary Law § 487 fails to sufficiently allege that the plaintiff suffered an injury proximately caused by any alleged deceit or collusion on the part of the defendants, and no such injury can reasonably be inferred from the allegations in the complaint (see Bohn v 176 W. 87th St. Owners Corp., 106 AD3d 598, 600 [2013]; Rozen v Russ & Russ, P.C., 76 AD3d at 968). Chambers, J.P., Hall, Cohen and Miller, JJ., concur.”

Two items caught our notice this morning, and though unrelated, sound a similar theme.  Fraud on the Court in one and feigned issues of fact in the other compliment the idea of how the truth divining process happens in litigation. Somehow, even creakily, the process of cross-examination and discovery seem to work.

In Scheuer v. General Motors, this morning’s New York Law Journal, in an article by Mark Hamblett reports that Judge Furman basically called a halt to the case to look at whether Mr. & Mrs. Scheuer had committed  “fraud on the court and on the jury” in possibly misrepresenting their injuries and the financial consequences of those injuries by having “altered or fabricated a $ 441,431 check stub from the federal government’s retirement account” and fooling around with text messages.  Things, as one might guess, are not going well for plaintiff in this case.

Not as bad for plaintiff in Law Off. of Zachary R. Greenhill, P.C. v Liberty Ins. Underwriters, Inc.  2016 NY Slip Op 30078(U)  January 7, 2016  Supreme Court, New York County  Docket Number: 650414/2014  Judge: Charles E. Ramos, the case nevertheless hit a brick wall, where the judge found that: “At issue is whether there is a triable dispute regarding Mr. Greenhill’s status as an officer, partner, and/or manager of Dwight China. In the Underlying Action, Mr. Greenhill plainly admitted in his pleadings and sworn testimony to being President of Dwight China (Affirmation of Kevin Mattessich [“Mattessich affu], Ex. A, ~21; Mattessich aff, Ex. E, ~41). Greenhill’s statements to the contrary in the affidavits filed in this action are merely attempts to create a feigned issue of fact. Moreover, Mr. Greenhill himself produced documents in the Underlying Action that he had signed in his capacity as President of Dwight China (Mattessich aff, Ex. E, ¶41).

The judge went on to say: “Greenhill is attempting to feign an issue of fact regarding the Greenhills’ equity interest in Dwight China by contradicting prior admissions in the Underlying Action. These prior admissions, proffered through affidavit testimony, constitute findings of fact. Mr. Greenhill’s own admissions in the Underlying Action, and not his most recent affidavits, are undisputed facts for purposes of this §3212 motion (see Harty, 294 AD2d at 298; Rubin, 305 NY at 306).”

Reem Contr. v Altschul & Altschul  2016 NY Slip Op 30059(U)  January 12, 2016  Supreme Court, New York County  Docket Number: 104202/2011  Judge: Kelly O’Neill Levy  is an example of the odd situation in which a legal malpractice case is a catalog of procedural errors.  Defendants do not answer, then obtain an extension and then do not answer a second time.  Litigants die, but their estates are not substituted.  Unsigned affidavits are submitted.  Out-of-state (NJ) forms are submitted which are alien to NY practice.  Whatever…Justice Levy straightens it all out.

“Plaintiffs commenced this action for legal malpractice alleging that the Defendants inadequately and incompetently represented them in a prior ERISA action before the District Court for the Southern District of New York (the “ERISA Matter”). [* 1] On April 7, 2011 Plaintiff filed a summons and verified complaint and on April 21, 2011, personally served Defendants’ law firm. Defendants failed to file their answer within the thirty days required by CPLR 3012( c ). The Plaintiff then consented to Defendants serving a late answer, which defendants failed to do. Thereafter, on December 22, 20 I 1, Plaintiffs filed their first motion for default judgment. Defendants cross-moved to dismiss Plaintiffs’ legal malpractice claim for improper service of process. On May 30, 2012, the court (Singh, J.) denied Defendants’ motion to dismiss after finding service proper. The court further denied Plaintiffs’ first motion for default judgment finding that the allegations in the complaint taken with the verification in the petition were insufficient to make out a claim for malpractice. Defendants subsequently appealed the denial of the motion to dismiss. On May 20, 2014, the Appellate Division, First Department unanimously affirmed the trial court’s decision, finding that Defendants were properly served on April 21, 2011. On January 3~, 2015, Plaintiffs filed a second motion for default judgment. Shortly thereafter, Defendants filed their answer and cross-motion and requested discovery. Plaintiffs filed several additional motions. Each is discussed below. ”

“”To establish a prima facie case of legal malpractice, plaintiffs must establish that they would have been successful in the underlying action.” Abramovich v. Harris, 227 A.D.2d 1000, 1000 (4th Dep’t 1996). In support of their motion, Plaintiffs submit the report of Stanley A. Epstein, Esq. dated January 21, 2015, who in an unsigned letter, opined that in their representation of the plaintiffs in the ERISA action, the defendants failed to exercise the ordinary reasonable skill and knowledge required by counsel in such matters and that but for defendants’ negligence, the plaintiffs would not have been held liable. Here, the expert report submitted was not in the form of an affidavit and an affidavit of Mr. Epstein with certification of merit were submitted for the first time only in plaintiffs’ reply brief. ”

“That determination is the law of the case, see G!ytTWill Investments, N. V v. Shearson Lehman Hutton, 216 A.D.2d 78, 79 (I st Dep’t 1995), and without any additional support from plaintiffs in admissible form submitted in a timely manner, the court denies the motion for default judgment. See Courtney v. Port Authority of NY and NJ, 34 A.D.3d 716, 718 (2d Dep’t 2006)(motion court properly exercised its discretion in declining to consider an untimely expert affidavit submitted after an identical expert affirmation had already been submitted), Ho v. Brackley, 69 A.D.3d 533, 534 (I st Dep’t 20 I O)(motion court properly declined to consider sur-reply affirmation of legal expert). Defendants cross-move for dismissal of the action, asserting, among other things, that there is a conflict of interest between plaintiffs Reem Contracting and Plaintiff Szapiro and Plaintiff Reem Plumbing and Plaintiff Steven Stein and that Plaintiffs failed to substitute the Estate of Steven Stein following the death of Mr. Stein. They further move for a traverse hearing. The court finds dismissal inappropriate and denies the cross-motion in its entirety. Defendants have failed to establish a conflict of interest that would disqualify plaintiffs’ counsel, Mandelbaum Salsburg, from representing the Reem plaintiffs. See generally Abselet v. Satra Realty, 85 A.D.3d 1406, 1407 (3d Dep’t 2011). Furthermore, as set forth more fully below, defendants have not shown that plaintiffs’ delay in moving to substitute for Steven Stein prejudiced them as they had not yet answered at the time of Mr. Stein’s death. The portion of the cross-motion seeking a traverse hearing is denied. In its Order dated May 20, 2014, the First Department affirmed Justice Singh ‘s decision and order and found defendants’ denial of proper service unavailing. As that determination is binding on this court, the court denies Defendants’ request for a traverse hearing . ”

“Finally, Plaintiffs seek a protective order, pursuant to CPLR 3103(a), to prevent them from being compelled to respond to Defendants’ interrogatories and document requests filed on February 12, 2015, limiting the number of interrogatories to 25, and finding that the deposition of plaintiff Jona Szapiro should not be taken at all or relieving Mr. Szapiro from providing all documents related to plaintiffs’ claims. Pursuant to Local Rule I 0, “prior to making a discovery motion, counsel shall consult one another in a good faith effort to resolve any discovery disputes (see Uniform Rule 202.7).”2 Plaintiffs concede here that they have not submitted an affidavit describing a good faith effort { to resolve the dispute, arguing that such an affirmation is not applicable due to defendants’ untimely request for discovery. The court finds that reason unavailing. In light of plaintiffs’ failure to show that a good faith effort was made and the omission of the objectionable interrogatories and document requests as an exhibit to the motion, the court denies the motion. See Cerreta v. N..! Trans. Corp., 251 A.D.2d 190, 191 (I st Dep’t 1998). The court has considered the remainder of the arguments in the aforementioned motions and finds them to be without merit.”

There have been lingering questions about procedural aspects of Judiciary Law 487 that have never been completely explained.  One earlier question, answered in 2014 was the length of the statute of limitations, 3 years or 6 years. That question was answered by the Court of Appeals  and is 6 years.

Melcher v Greenberg Traurig LLP  2016 NY Slip Op 00274  Decided on January 19, 2016
Appellate Division, First Department in its various “iterations” has been a fountainhead of rules in Judiciary Law §487 law.  Today, on remand after the Court of Appeals, and after motion practice in the Supreme Court, the First Department explains when a 487 claim has to be made in the underlying case and when it may be brought in a plenary action.

“Turning now to defendants’ Judiciary Law § 487 argument, we find that under the circumstances presented, it was proper for Melcher to assert a Judiciary Law § 487 claim in a separate action, rather than seeking leave to assert a claim against the attorney defendants in the Apollo action.

Judiciary Law § 487(1) provides, among other things, that an attorney who is “guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party . . . forfeits to the party injured treble damages, to be recovered in a civil action.” A plaintiff may bring an action to recover damages for attorney deceit regardless of whether the attorney’s deceit was successful (Amalfitano v Rosenberg, 12 NY3d 8 [2009]). Further, the plaintiff in a section 487 case may recover the legal expenses incurred as a proximate result of a material misrepresentation in a prior action (see Pomerance v McGrath, 124 AD3d 481, 485 [1st Dept 2015], lv dismissed 25 NY3d 1038 [2015]).

First of all, we do not credit defendants’ argument that because Melcher raised the same claims in his motions in the Apollo action, he is now precluded from asserting a section 487 claim in this action — that is, that Melcher is improperly engaging in “claim splitting.” A party invoking the narrow doctrine against splitting a cause of action must show that the challenged claim raised in the second action is based upon the same liability in the prior action, and that the claim was ascertainable when the prior action was commenced (see Murray, Hollander, Sullivan & Bass v HEM Research, 111 AD2d 63, 66 [1st Dept 1985]; Solow v Avon Prods., 56 AD2d 785 [1st Dept 1977], affd 44 NY2d 711 [1978]). However, if the liabilities or claims alleged in the two actions arise from different sources, instruments, or agreements, the claim splitting doctrine does not apply (see Murray, Hollander, Sullivan & Bass, 111 AD2d at 66-67; see also 1050 Tenants Corp. v Lapidus, 118 AD3d 560, 560-561 [1st Dept 2014]).

Here, Melcher alleged in the Apollo action that Apollo Management and Fradd breached a contract and engaged in fraud by preventing him from receiving partnership profits. The basis for Melcher’s attorney deceit claim against GT and Corwin did not arise until after Fradd had burned the amendment, while the Apollo action was pending. Therefore, the claims asserted against Fradd and Apollo Management in the Apollo action did not arise from the same nucleus of facts as the section 487 claim in this action. On the contrary, the remedy sought against the defendant attorneys in this case is entirely distinct from the remedy sought against their former clients in the Apollo action. Indeed, the Judiciary Law claim did not even exist when plaintiff commenced the Apollo action (see 1050 Tenants, 118 AD3d at 560-561). Accordingly, plaintiff is not claim splitting when he brings section 487 claims against GT and Corwin in this action.

Nor is plaintiff collaterally estopped from litigating the issue of the alleged deceit in this [*4]action, as that issue was never fully litigated and decided in the Apollo action (see Kaufman v Eli Lilly & Co., 65 NY2d 449, 455-456 [1985]; Americorp Fin., L.L.C. v Venkany, Inc., 102 AD3d 516, 516 [1st Dept 2013]). To be sure, Melcher made a motion to strike defendants’ pleadings in the Apollo action on the basis that the disputed amendment was a fabrication (see Melcher v Apollo Med. Fund Mgt. L.L.C., 52 AD3d 244, 245 [1st Dept 2008]). However, a motion is not a cause of action, but rather, is a request for relief; the complaint in the Apollo action never contained a cause of action alleging that the defendants had relied on a fabricated document (see Melcher, 105 AD3d at 19). Moreover, this Court explicitly found on the postverdict appeal that plaintiff’s “allegations of fraud and deceit remain[ed] unaddressed” because the defendants had decided not to rely on the allegedly fabricated document (id. at 25). The matter was therefore remitted for an evidentiary hearing on those issues. But before the hearing could take place, Melcher reached a settlement with Fradd, specifically excluding the pending Judiciary Law § 487 claim against defendants here.

Similarly, it is true that Melcher, in the Apollo action, moved to disqualify GT and Corwin for their alleged fraud on the court. Nonetheless, Melcher never amended his complaint in that action to include “fraud on the court” claims predicated upon section 487. Defendants also never sought to consolidate this action with the Apollo action while they were both pending, even though they were before the same judge. Under these circumstances, defendants cannot advance a credible argument that the matter has already been fully litigated and decided.

Finally, defendants argue that according to our case law, a Judiciary Law § 487 claim brought in a separate action must be dismissed because a plaintiff’s remedy lies exclusively in the underlying lawsuit itself. Hence, defendants argue, Melcher should have moved under CPLR 5015 to vacate the civil judgment in the Apollo action on the ground of fraud, rather than beginning a second plenary action collaterally attacking the judgment in the Apollo action.

We reject this argument. In contrast to the situations in the cases on which defendants rely, Melcher does not, in fact, seek by this action to collaterally attack any prior adverse judgment or order on the ground that it was procured by fraud; if that were the case, the appropriate remedy generally would be to seek vacatur under CPLR 5015 (see e.g. Yalkowsky v Century Apts. Assoc., 215 AD2d 214, 215 [1st Dept 1995] [plaintiff alleged that the defendant’s attorney in a Civil Court proceeding had made a misrepresentation to the Civil Court, resulting in dismissal of the plaintiff’s constructive eviction claim]; see also Melnitzky v Owen, 19 AD3d 201 [1st Dept 2005] [section 487 claim properly dismissed where the plaintiff claimed that the defendant deceived Civil Court, which was hearing his malicious prosecution claim, by concealing rulings by Supreme Court]). Instead, plaintiff here seeks to recover lost time value of money and the excess legal expenses incurred in the Apollo action as a proximate result of defendants’ alleged deceit; this course of action is permissible in a separate action under the Judiciary Law (Amalfitano, 12 NY3d at 15).

The language of section 487 supports this conclusion, because that section does not require that the claim be asserted in the same action in which the violation occurred. Rather, the section simply provides that an attorney who has practiced a deception will be liable for treble damages “to be recovered in a civil action” (see Four Star Stage Light. v Merrick, 56 AD2d 767, 768 [1st Dept 1977] [holding that a section 487 claim brought in a second action should survive a motion to dismiss because it was adequately pleaded]; see also Pomerance v McGrath, 124 AD3d at 485 [finding that “it was not improper for plaintiff to bring a Judiciary Law § 487 claim in this action even though it is based on alleged deceit in a prior action,” but denying leave to add this claim on other grounds]; Armstrong v Blank Rome LLP, 126 AD3d 427 [1st Dept 2015] [section 487 claim brought in a second action alleging an undisclosed conflict of interest for an attorney who represented a litigant in divorce proceedings was adequately pleaded and should survive a motion to dismiss]). In fact, a court may not grant a motion for leave to amend a complaint to add a section 487 claim in the action in which the violation occurs, particularly if adding that claim would “require the disqualification of counsel and prejudice [the defendant’s] right to be represented by attorneys of its choice” (360 W. 11th LLC v ACG Credit Co. II, LLC, 90 AD3d 552, 554 [1st Dept 2011]). Those very concerns would, in fact, have been present in this case.

Our decision in Zimmerman v Kohn (125 AD3d 413 [1st Dept 2015], lv denied 25 NY3d 907 [2015]) does not compel a different result. In that case, the IAS court dismissed the section 487 claim on the basis that the plaintiffs’ remedy for a violation of that section lay exclusively in the underlying federal action, not in a separate plenary action (Zimmerman v Kohn, 2014 WL 1490936, *2-3 [Sup Ct, NY County, April 11, 2014, No. 652826113]). However, on appeal, this Court did not address that issue at all. Instead, we held only that dismissal of the section 487 claim was warranted because the plaintiffs, after settling the prior action, paid their counsel based on a contingency fee arrangement, and therefore could not show that the defendants’ misrepresentations proximately caused them any injury (Zimmerman, 125 AD3d at 414).”