Highest Court in New York Issues Rare Decision on Judiciary Law §487 Governing Allegations of Deception Against Attorneys
04/20/2020
The New York Court of Appeals recently issued a favorable decision affirming the dismissal of a Judiciary Law §487 claim in the case Bill Birds, Inc. v. Stein Law Firm, P.C., _ N.Y.3d __, 2020 N.Y. Slip. Op. 02125 (March 31, 2020).
Under Judiciary Law § 487 (1), 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 may be liable to the injured party for treble damages in a civil action. The Court of Appeals’ decision finds that a Judiciary Law § 487 claim lies only if misrepresentations are made in the course of litigation, as opposed to before litigation is commenced.
The issue presented was whether the Appellate Division, Second Department erred in dismissing the plaintiffs’ Judiciary Law § 487 (1) claim against their former attorneys who allegedly induced them to bring a meritless lawsuit in order to collect a legal fee. Defendants, attorney Mitchell Stein and Stein Law P.C., represented plaintiffs Bill Birds, Inc., an automobile parts manufacturer, in a trademark dispute against General Motors (GM). After the underlying action was dismissed, plaintiffs commenced a Judiciary Law § 487 action alleging that defendants engaged in willful deceit by pursuing a meritless action solely to generate fees. Plaintiffs further alleged that defendants concealed the dismissal of the underlying action for several months and subsequently lied about the reason for the delay.
Defendants moved for summary judgment on the bases that: (1) the Judiciary Law § 487 claim must be dismissed because plaintiffs failed to allege any misrepresentations made in the context of ongoing litigation; and (2) the statutory treble damages recovery requires proof of a chronic, extreme pattern of legal delinquency. Plaintiffs opposed the motion and submitted an expert affidavit from an attorney who averred that defendants’ legal advice regarding GM’s rights to trademarks was incorrect and that defendants induced plaintiffs into litigation under “false pretenses.” The Supreme Court, Queens County (J. Dufficy) denied defendants’ motion for summary judgment with respect to the section 487 claim, concluding that plaintiffs’ expert affidavit raised triable issues of fact. The Second Department reversed and dismissed the complaint in its entirety, reasoning that plaintiffs failed to allege that defendants intended to deceive the court or any party, as required by the statute.
In her opinion affirming the dismissal of the Judiciary Law §487(1) claim, Chief Justice DiFiore held a Judiciary Law § 487 claim applies only if the alleged misrepresentations are made in the course of litigation. The Court explained that the purpose of the statute is to safeguard an attorney's special obligation of honesty and fair dealing in the course of litigation, reasoning that the language of the statute is aimed at a “particular type of deceit or collusion—done by an attorney with the intent to mislead the court or a party.” Thus, the Court held that the plaintiffs’ allegation that defendants induced them to file a meritless lawsuit based on misleading legal advice preceding commencement of the lawsuit was insufficient to state a viable claim. The Court similarly held that defendants’ alleged delay in informing plaintiffs about the underlying dismissal fell outside the scope of Judiciary Law § 487(1) because it occurred after the litigation had ended.
The Court also clarified that Judiciary Law § 487 does not encompass the filing of a pleading or brief containing non-meritorious legal arguments, noting that lawyers are permitted to zealously advocate on behalf of their clients.
In an extensive dissenting opinion, Justice Jenny Rivera reasoned that the plaintiffs had stated a viable Judiciary Law §487 cause of action for post-filing misconduct because there were triable factual issues regarding whether defendants intended to deceive the court and plaintiffs by knowingly filing and defending a frivolous lawsuit.
Lastly, we note that the Court of Appeals did not address the defendants’ argument that plaintiffs failed to establish “a chronic or extreme pattern of legal delinquency” in order to set forth a Judiciary Law §487(1) claim, leaving a differing standard on whether this is a requirement in the Appellate Divisions. For example, the First Department has held that such conduct is a predicate for Judiciary Law § 487 liability, see Freeman v. Brecher, 155 A.D.3d 453, 454 (1st Dept. 2017) while the Second Department has eliminated the “chronic, extreme pattern of delinquency” predicate for liability. See Dupree v. Voorhees, 102 A.D.3d 912, 913 (2d Dept. 2013).
If you have any questions or need any further information regarding the foregoing, or legal malpractice cases generally, please do not hesitate to contact us. See the full Decision here.
This article was prepared by Aaron Barham of the New York City-based law firm of Furman Kornfeld & Brennan LLP. Aaron is part of a team of 36 lawyers and paralegals devoted to the defense of attorneys and other professionals in malpractice and disciplinary matters, as well as the defense of construction and personal-injury accidents. For more information about the above topic or author, please visit: www.fkblaw.com
We trust that the article was useful and thought-provoking; however, please note that it is intended as 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.
This material is for informational purposes only. It is not intended to be exhaustive nor should any discussions or opinions be constructed as legal advice. The insurance policy language will determine the actual coverage afforded to an insured. Contact USI Affinity for any insurance questions you may have regarding your particular situation. USI Affinity is not responsible for the content of the information provided or for the consequences of any legal actions taken on the basis of the information provided.
Comments