By Victor M. Metsch
THE LEGAL FRAMEWORK
Recently reported cases reveal a current surge of claims against attorneys for violation of Judiciary Law § 487.
Judiciary Law § 487 provides that:
“[a]n attorney or counselor 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 in addition to the punishment prescribed therefor by the penal law, he forfeits to the party injured treble damages, to be recovered in a civil action.”
In Amalfitano v. Rosenberg, 12 N.Y.3d 8, 903 874 N.Y.S.2d 868 (2009), the Court of Appeals was asked to answer the following certified question from the Second Circuit: “Can a successful lawsuit for treble damages brought under N.Y. Jud. Law § 487 be based on an attempted but unsuccessful deceit?”
In answering the question, the Court of Appeals reviewed the antecedents of Section 487 and concluded that:
“The operative language at issue – guilty of any deceit – focuses on the attorney’s intent to deceive, not the deceit’s success…Further, to limit forfeiture under section 487 to successful deceits would run counter to the statute’s evident intent to enforce an attorney’s special obligation to protect the integrity of the courts and foster their truth-seeking function.”
APPELLATE DECISIONS POST-AMALFITANO
The Decision of the Court of Appeals in Amalfitano, which generated many reports in the legal press, appears to have raised the Bar’s consciousness of the existence, applicability and tactical utility of Judiciary Law § 487. A few examples of appellate cases during the last several years illustrate the trend.
In 360 West 11th LLC v. ACG Credit Company II, LLC, 935 N.Y.S.2d 289 (1st Dept. 2011), the First Department affirmed Supreme Court’s denial of a motion for leave to amend the complaint. The proposed Judiciary Law § 487 claim “was properly denied…because [that claim] boils down to nothing more than a fee dispute that can be resolved upon the disposition of [the] counterclaim”.
In Art Capital Group, LLC v. Neuhas, 70 A.D.3d 605, 896 N.Y.S.2d 35 (1st Dept. 2010), the First Department reversed the decision of Supreme Court and dismissed a Judiciary Law § 487 claim. The Court found that the suggestions of fraud and collusion in the proposed amended pleading “falls short of an allegation that defendant tortiously acted outside the scope of her role as an attorney” stating that: “[t]he ‘advice of counsel with respect to a client’s course of conduct, even if pleaded as ‘condonation,’ does not thereby and without more metamorphose into a cause of action by a third party against that counsel’.”
InNeroni v. Committee on Professional Standards, 86 A.D.3d 710, 926 N.Y.S.2d 744 (3d Dept. 2011), the First Department disbarred an attorney based, among other things, upon a decision in a prior action that the lawyer had violated Judiciary Law § 487 through a course of conduct set forth in causes of action alleging fraud, collusion and violation of that statute. “Specifically, respondent devised a plan with his client that would circumvent, in part, the intended purpose of a judgment of Supreme Court that respondent had participated in constructing. Respondent then ‘prepared the documents he had advised would successfully accomplish the nefarious goal’.”
In Rozen v. Russ & Russ, P.C., 76 A.D.3d 965, 908 N.Y.S.2d 217 (2d Dept. 2010), the Second Department affirmed Supreme Court’s dismissal of a cause of action alleging violation of Judiciary Law § 487 based on the allegation that the attorneys “deceitfully concealed from the [c]ourts and from plaintiff [for a period of 18 months] the transfer of the interest of the mortgaged property[.]”. Noting that “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 [Section 487]”, the Second Department sustained dismissal of the claim in finding that “the complaint contains no allegation supporting the proposition that such harm was attributable to the Russ attorneys; failure to disclose the transfer of rights for a period of 18 months. Thus, the first cause of action failed to set forth allegations for which damages proximately caused by the attorney defendant’s alleged deceitful conduct might be reasonably inferred”.
In Giano v. Ioannou, 78 A.D.3d 768, 911 N.Y.S.2d 398 (2d Dept. 2010), “[t]he plaintiff became dissatisfied with the defendant’s handling of the cases referred to him and brought an action against him alleging, inter alia, breach of contract. The plaintiff sought 100%, rather than 50%, of the fees, and treble damages for violation of Judiciary Law § 487”. Supreme Court granted the plaintiff’s motion to strike the defendant’s answer “[a]s a consequence of the defendant’s repeated failure to comply with discovery orders”, and awarded the plaintiff compensatory and trebled damages under Judiciary Law § 487, “based upon evidence that the defendant had charged the clients for undocumented costs in the cases referred to him”.
While the Second Department sustained the award of compensatory damages, in Giano, the Court overruled the award “of damages pursuant to the Judiciary Law, noting that: “The purpose of this section is to protect clients against attorney overreaching and it does not apply in routine fee disputes between attorneys, as here[.]”.
In Gelmin v. Quicke, 224 A.D.2d 481, 638 N.Y.S.2d 132 (2d Dept. 1996), plaintiffs asserted a claim pursuant to Judiciary Law § 487 and Supreme Court dismissed. The Second Department affirmed, citing the Court of Appeals decision in Looff v. Lawton, as follows:
“The question then arises whether the section under consideration [refers to the giving of incorrect advice which results in injury and expense to the client]…or does it mean deceit and collusion practiced by [an] attorney in a suit actually pending in court, with the intent to deceive the court or the party? The latter interpretation would seem to be more consistent with the language employed and the general object of the section in question, and other sections contained in the same article of the statutes. The words used relate to a case where [an] attorney intends to deceive the court or his client by collusion with his opponent, or by some improper practice. They do not, we think, include a transaction antecedent to the commencement of the action, as the court could have no connection [to] any such proceeding. The ‘party’ referred to is clearly a party to an action pending in a court in reference to which the deceit is practiced, and not a person outside, not connected with the [action] at the time or with the court…In the case at bar, the advice given by the defendant, which is complained of, preceded the action subsequently brought, and at [the same] time there was no court or party to be deceived within the meaning of the statute. It is obvious that a plain and intelligent distinction exists between an action of an attorney in reference to a suit pending in court, and a proceeding out of court”[.] (Looff v. Lawton, 97 NY 478, 482).”
In Werner v. Katal Country Club, 234 A.D.2d 659, 650 N.Y.S.2d 866 (3d Dept. 1996), Supreme Court denied a motion to dismiss a claim pursuant to Judiciary Law §487. The Third Department reversed because “the only relevant acts are Karp’s alleged withholding of a document from discovery and testifying falsely at a pretrial deposition. While we agree with plaintiff that such acts could provide the foundation for an action underJudiciary Law § 487, (1), Karp’s deceit must have caused plaintiff damage. We are constrained to conclude that Supreme Court should have dismissed this cause of action due to plaintiff’s failure to establish a nexus between Karp’s acts and [plaintiff’s] damages.
In People v. Canale, 240 A.D.2d 839, 658 N.Y.S.2d 715 (3d Dept. 1997), the Third Department affirmed dismissal of a indictment of an attorney in violation of Judiciary Law § 487. In so doing, the Court stated:
“Count three of the indictment charges defendant with violating Judiciary Law § 487, which states in pertinent part 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 a party, is guilty of a misdemeanor. In addition to its penal provisions, this statute also authorizes a civil action or treble damages. Although there is a dearth of criminal cases brought under Judiciary Law § 487, numerous actions have been commenced under this statute seeking money damages. In these civil actions, courts have generally held that this section is limited to actions by an attorney acting in his or her capacity as an attorney and that the mere fact that a wrongdoer is an attorney is insufficient to impose liability…Since a statute should be construed as a whole and all portions should be read together to determine its fair meaning…we are persuaded that criminal actions brought against an attorney under Judiciary Law § 487 should be limited to situations where an attorney was acting as an advocate representing a client and not as a witness. Therefore, since defendant was not acting as an attorney in his transactions with Dalton, we find that County Court properly dismissed count three of the indictment”.
In Hansen v. Caffry, 280 A.D.2d 704, 720 N.Y.S.2d 258 (3d Dept. 2001), plaintiffs commenced an action alleging: “first, that defendant represented them in a grossly negligent manner when he prepared deeds conveying more road frontage than plaintiffs had intended and, second, that defendant acted deceitfully in violation ofJudiciary Law § 487”.
Supreme Court granted defendant’s motion for summary judgment dismissing the complaint. The Third Department affirmed in Hansen holding that:
“Nor is there merit to plaintiffs’ contention that Supreme Court erred in dismissing their Judiciary Law § 487 cause of action. Judiciary Law § 487 allows an injured party to recover treble damages from the attorney if he or she “[i]s guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court of any party” (Judiciary Law § 487). Notably, alleged deceit that is not directed at a court must occur in the course of ‘a pending judicial proceeding’…Obviously, defendant’s preparation of deeds in connection with a real estate transaction, conduct that is not directed at a court or performed in the course of a pending judicial proceeding, falls outside the purview of Judiciary Law § 487. Even if this were not so, the record is devoid of evidence of any deceptive practice or other misconduct on defendant’s part, and there is no question that plaintiffs voluntarily closed title to the property with full knowledge of all relevant facts.
In Scarborough v. Napoli, Kaiser & Bern, LLP 63 A.D.3d 1531, 880 N.Y.S.2d 800 (4th Dept. 2009), plaintiff asserted a claim, among others, alleging a violation of Judiciary Law § 487. Supreme Court granted a motion to dismiss the amended complaint. The Fourth Department reversed. With respect to the Judiciary Law claim, the Court stated:
“Contrary to the further contention of defendants, the court properly determined that none of the defendants is entitled to summary judgment dismissing the Judiciary Law § 487 cause of action. That statute provides in relevant part 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…[i]s guilty of a misdemeanor, and…he [or she] forfeits to the party injured treble damages, to be recovered in a civil action.’ ‘A violation of Judiciary Law § 487 may be established ‘either by the defendant’s alleged deceit or by an alleged chronic, extreme pattern of legal delinquency by the defendant’…documents submitted by defendants in support of their motion establish that some of the attorneys at defendant law firm engaged in intentional deceit, and thus by their own submissions defendants defeated their entitlement to summary judgment dismissing that cause of action.”
And, in Barrows v. Alexander, 78 A.D.3d 1693, 912 N.Y.S.2d 831 (4th Dept. 2010), Supreme Court denied plaintiff’s motion for leave to amend the complaint to assert a cause of action under Judiciary Law § 487. The Fourth Department affirmed holding that:
“We conclude that the court properly denied the motion inasmuch as the proposed amendment is patently lacking in merit. Judiciary Law § 487 applies only ‘to an attorney acting in his or her capacity as an attorney, not to a party who is represented by counsel and who, incidentally, is an attorney’ and here defendant was not acting in his capacity as an attorney in the context of this legal malpractice action[.]”
RECENT DECISIONS BY TRIAL COURTS
Our trial courts have been even less enthusiastic—and more skeptical — about Judiciary Law § 487 claims, with most being summarily dismissed upon motion. Some recent examples follow:
In Mcgivney v. Sobel, Ross, Fliegel & Suss, LLP, 2011 NY Slip Op 33523U (Sup. Ct. N.Y. Co. 11/28/11), (Billings, J.) the plaintiff was injured when a chair collapsed. Defendants were retained to sue the chair’s manufacturer and installed, but failed to so. The Court nevertheless dismisses a Section 487 claim even though plaintiffs alleged conduct “specifically and extensively enough to establish pervasive delinquency and the requisite deceit[.]” because ‘[p]lainitffs nevertheless fail[ed] to allege that defendants’ deceit, distinct from their professional negligence, caused and adverse result in their litigation.. and damages specifically flowing from the violation[.]”
In Bender Burrows & Rosentahl, LLP v. Simon, 2011 NY Slip Op. 32923U (Sup. Ct. N.Y. Co. 11/4/11), the Court (James, J.), dismissed a Section 487 claim because “this counterclaim, which conclusory alleges a violation of Judiciary Law __ 487, fails to state a cause of action.” The Court noted that, the statue permits recovery “only where there is a chronic and extreme pattern of delinquency[.]”
In Albano v.Dersovitz, 2011 NY Slip Op 52320U (Sup. Ct. Nassau Co. 12/12/11), the Court (Warshawsky, J.) granted a motion to dismiss a Section 487 claim that was “wholly lacking in details as to what documents were altered, forged or false, or in what manner the claims against Bernstein were fraudulent”, finding that there was no evidence that the subject deeds were fabricated.
In Pollan v. Attie, 32 Misc.3d 1214A (Sup. Ct. Nassau Co. 7/11/2011), the Court (Marber, J.) granted a motion to dismiss a Section 487 claim that alleging that “[d]efendant is guilty of deceit or collusion, or consented to deceit or collusion, with the intent to deceive the plaintiff.[.]” The Court noted that “other than re-alleging the factual allegations set forth in connect to the other four causes of action contained in the complaint, the Plaintiff merely reiterates the statutory language in Judiciary Law § 487(1), and that, “even if accepted as true, [those allegations] are in the nature of professional negligence{.]”
In Morris v. Rochdale Village, Inc., 2011 NY Slip Op 33315U (Sup. Ct. Queens Co. 7/11/11), the Court (Elliot, J.) granted a motion to dismiss a Section 487 claim because “[t]he allegations do not specify what the frivolous and malicious action was [and p]laintiff also failed to allege the requisite pecuniary damages required[for such a claim].”
In Hubshman v. 1010 Tenants Corp, 2011 NY Slip Op 32768U (Sup. Ct. N.Y. Co. 10/24/11), the Court (Gische, J.), dismissed a Section 487 claim finding that “Hubshman has failed to state a cause of action against the Herrick defendants” under the Judiciary Law on the ground that “[s]imply asserting ‘unfounded allegations in a pleading, even if made for an improper purpose, does not provide a basis for liability under [that section of the law]’[.]”
But cf.: In Luden v. Nieroda, 2011 NY Slip Op 33537U (Sup. Ct. Nassau Co. 12/29/11), the Court (Destafano, J.) sustained a Judiciary § 487 claim finding that “the factual allegations in the complaint, including the allegation that [the attorney] Defendants listed themselves as creditors in the bankruptcy when, in fact no money was owed to them, sufficiently please[d] a cause of action for violation [of the statute].”
In Cooke-Zwiebach v.Oziel, 33 Misc.3d 1232A (Sup. Ct. N.Y. Co. 12/2/11), the Court (Rakower, J.), dismissed all Judiciary Law § 487 claims with the exception of a cause of action based upon a claim that, in his capacity as an attorney in a pending action, Vogel misrepresented that he was acting as the lawyer for a party named Seavy without Seavy’s knowledge or consent.
LESSONS LEARNED
Judiciary Law § 487 is not a panacea for complaints about lawyer (mis)conduct. And Section 487 is not available as a vehicle to resolve fee disputes or malpractice claims.
Instead, a Section 487 claim is viable only when an attorney, acting in such capacity in a lawsuit, is chargeable with intentional collusion or deceit in the action in which s/he appeared as counsel.
Invocation of Section 487 for tactical, retaliatory or diversionary reasons is, in all likelihood, doomed to failure.
(Victor M Metsch is a Senior Litigation/ADR Partner at Hartman & Craven LLP.)