Cyber Liability - To Cloud or Not to Cloud: How Do Lawyers Decide What Cloud Based System is Right
USI Affinity Announces Availability of Enhanced Lawyers’ Professional Liability Insurance

Judiciary Law § 487 Claims in 2018 are on the Rise, and Why It Should Matter to You and Your Firm (Treble Damages)*

Shutterstock_426276217Over the past ten years, it has become easier for legal malpractice plaintiffs to seek punitive damages against their attorney(s) via New York’s Judiciary Law § 487. As forecasted in August 20171, and as evidenced in the Second Department’s recent Betz v. Blatt decision issued in April 2018, the threshold for advancing a cause of action for a Judiciary Law § 487 claim beyond a motion to dismiss – and seek treble damages – is easier for a Plaintiff than ever before.

Betz v. Blatt2

Betz v. Blatt arose from the alleged mismanagement of the estate of the late Carmelo Carbone (“decedent”), who passed away in 2004. The decedent’s brother, Mike Carbone (“Carbone”), allegedly mismanaged and gutted the assets of the estate over a seven year period; valued at $2 million at the time of the decedent’s death in 2004, the estate was valued at approximately $110,000 as of April 13, 2011. The primary beneficiaries of the estate were the decedent’s two daughters – Kristin Carbone-Lopez and Debra Betz, the latter whom has advanced the lawsuit against Carbone, as the administratix of the decedent’s estate. Defendant Arnold Blatt, the decedent’s attorney for “several decades,” represented the estate from August 15, 2004 until the summer of 2006, when he was fired. Anthony Pieragostini (“Attorney Pieragostini”) was retained to represent the estate for only a six month period, from February 18, 2009 to July 24, 2009. Attorney Pieragostini was replaced by the law firm of Enea, Scanlan & Sirignano, LLP and member George Sirignano (“Sirignano Defendants”) in November 2009.


Attorney Pieragostini’s short involvement in the case involved one seminal filing – Attorney Pieragostini submitted an accounting of the subject estate’s assets for the period of May 14, 2004 to May 9, 2007. The accounting was rejected by Surrogate Judge Anthony Scarpino as “fraudulent and inaccurate.” Attorney Pieragostini later submitted an amended accounting, which was accepted by the Surrogate Court - Attorney Pieragostini was replaced thereafter.


Among other causes of action brought against Attorney Pieragostini, and the other defendants, including legal malpractice, Plaintiff brought about a cause of action for Judiciary Law § 487. In a decision dated August 4, 2012, Westchester County Supreme Court Justice Mary H. Smith dismissed the Plaintiff’s Judiciary Law § 487 claims against all of the attorney defendants, including Attorney Pieragostini, and reasoned that “complaint fails to allege as against each of these defendants fraud or deceit allegations sufficient to state a cause of action under section 487.” See Betz v Blatt, 2012 N.Y. Misc. LEXIS 6560.


Decision Permitting Judiciary Law § 487 Claims


In an order dated December 4, 2014, the Supreme Court granted the Plaintiff’s motion renew, and, upon renewal, vacate the portions of the August 2012 decision relating to Plaintiff’s Judiciary Law § 487 claims against all of the defendant attorneys, among other fraud-based causes of action. The Second Department’s recent decision affirmed the Supreme Court’s finding, and allowed the Plaintiff to re-plead Judiciary Law § 487 causes of action against all of the attorney defendants, including Attorney Pieragostini.
On April 11, 2018, The Second Department reasoned that the Plaintiff has pled facts “sufficient to demonstrate, if proven, that Pieragostini affirmatively ignored or concealed Carbone's misdeeds or the inaccuracies in the information Carbone provided.” Betz v. Blatt, 2018 NY Slip Op 02444 (2d. Dept. 2018). The Court also allowed the Plaintiff to maintain Judiciary Law § 487 causes of action against the other attorney defendants, too. Notably, the Court allowed the Plaintiff to maintain the Judiciary Law § 487 cause of action against the Sirignano Defendants because they may have been aware of the false information Carbone provided to the court, and continued to misrepresent the financial status and advocate for the fraudulent filing filed by Attorney Pieragostini – in other words, the Sirignano Defendants could face Judiciary Law § 487 exposure for advocating the work of prior counsel.


As set forth in the 2009 landmark Court of Appeals Amalfitano decision, in order to maintain a Judiciary Law § 487 cause of action, the pleading party need only make a showing that the attorney tried to deceive the court or an adversary – even if that attempt fails. Even though Attorney Pieragostini later submitted an amended accounting, which was approved by the court, the representations made within the original accounting could lead to the imposition of treble damages against Attorney Pieragostini. In order to maintain a Judiciary Law § 487 cause of action past a motion to dismiss, the Plaintiff was only required to show that Attorney Pieragostini may have tried to deceive the court – by submitting erroneous accounting papers, it seems fairly clear that the Plaintiff met this standard, even if Attorney Pieragostini had no idea of the fraud contained therein.

Practice Tips


Attorneys should be careful about solely relying on the information provided by their clients. Although it is fundamentally an attorney’s responsibility to be an advocate for the client, one cannot always take the information provided by one’s client at face value, without one’s own investigation. Remember that your name will be on the documentation reviewed by the court – and the attorney, too, can be accused of fraudulent activity by simply submitting documentation to a Court, like a surrogate’s court. Be extremely cautious when submitting documentation, be it accounting paperwork, or even an affidavit, and if possible always independently verify the claims made therein.


Often times, and especially at smaller firms or with solo practitioners, lawyers are required to wear many hats. Lawyers are not accountants – consider hiring a third party to evaluate the credibility of a client’s accounting spreadsheet, especially if one has an inkling of some sort of unsavory behavior. While it might seem unnecessary and expensive in the moment, it certainly beats litigating a Judiciary Law § 487 claim and the resulting treble damages that follow a successful claim.


As Plaintiffs find more success advancing Judiciary Law § 487 claims against attorneys, attorneys, in turn, must adjust their practice – lawyers must be more meticulous now, than ever before, in making representations to the court.

 

This article was prepared by Andrew Jones and Daniel Butler of the New York City-based law firm of Furman Kornfeld & Brennan LLP. Andrew and Dan work as part of a team of 15 lawyers and paralegals devoted to the defense of attorneys and other professionals in malpractice and disciplinary matters. For more information about the above topic or the authors, please visit: www.fkblaw.com.

We trust that the above article was useful and thought provoking; however, please note that it is intended a general guide and opinion only, not a complete analysis of the issues addressed, and readers should always seek specific legal guidance on particular matters.

For more information on LPL coverage generally and how conflict checking and client selection can affect the exposure of your firm to malpractice claims, contact USI Affinity today.

 

1) http://insurancefocus.usiaffinity.com/2017/09/fraud-on-the-court-and-the-threat-of-treble-damages-the-rise-of-judiciary-law-487-claims-against-att.html

2) Betz v Blatt, 2012 N.Y. Misc. LEXIS 6560 (Sup. Ct. Westchester Co. 2012).

Comments

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Working...
Your comment could not be posted. Error type:
Your comment has been saved. Comments are moderated and will not appear until approved by the author. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.

Working...

Post a comment

Comments are moderated, and will not appear until the author has approved them.

Your Information

(Name and email address are required. Email address will not be displayed with the comment.)