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Split Panel Dismisses Deception Claim Against Firm, PartnerA suit accusing Leslie Corwin, a partner at Greenberg Traurig, and the firm of deceiving a Manhattan court in a lawsuit over a hedge fund member's compensation has been dismissed by a state appeals panel, which held that the suit was time-barred.
New York Law Journal2013-01-18 12:00:00 AM
Editors' Note: This article has been updated to reflect a Correction.
A suit accusing Leslie Corwin, a partner at Greenberg Traurig and the firm, of deceiving a Manhattan court in a lawsuit over a hedge fund member's compensation has been dismissed by a state appeals panel, which held that the suit was time-barred.
In reversing the lower court, a 3-2 Appellate Division, First Department, panel held that the alleged injury had accrued from the first sign of deception, more than three years before the case was filed, and that subsequent alleged deceptions were not grounds for extending the statute of limitations.
James Melcher, the plaintiff in Melcher v. Greenberg Traurig, 2013 NY Slip Op 00256, is a former member of hedge fund Apollo Medical Fund Management. In 2003, he sued Apollo and its principal, Brandon Fradd, seeking a share of the fund's profits that he claimed he was owed. Corwin represented Apollo and Fradd.
Fradd countered that the suit should be dismissed because of a 1998 amendment to Melcher's membership agreement that had reduced his share of the profits.
In 2004, Melcher asked Fradd and Apollo to produce the document. Fradd claimed that he could not produce the document because he had burned it while making tea. Fradd did produce a badly burned document purporting to be the amendment. Melcher asked a forensic expert to analyze it to see if it was a back-dated forgery, but the expert said it was too damaged to analyze.
Fradd and Apollo ultimately withdrew their claim that there had been an amendment. The case went to trial in 2009, and Melcher won a verdict of about $500,000. He is now appealing that verdict in the First Department, seeking a larger award.
In 2007, Melcher sued Corwin and Greenberg Traurig, alleging that they tried to help Fradd deceive the court.
According to the suit, Corwin failed to tell Melcher and his counsel at a 2004 meeting that Fradd claimed to have burned the document, saying only that they were holding it in escrow.
They also claimed that Corwin had said that he verified the authenticity of the amendment with Jack Governale, now an attorney at Katten Muchin Rosenman, who drafted the amendment in 1998. In 2005, however, Governale was deposed and testified that he knew nothing of the amendment, according to the suit.
Corwin said that another attorney who supposedly had knowledge of the amendment, James Beckwith, "resisted" Corwin's efforts to contact him, but in 2007 Beckwith was deposed and testified that he had told Fradd he was willing to talk to Corwin.
In short, Melcher alleges that Corwin and Greenberg Traurig "falsely and misleadingly represented to the Supreme Court that they were holding the originals in escrow with intent to deceive, to prevent the Supreme Court and plaintiff from ever discovering that the amendment had been burned under highly suspicious circumstances, that the files of the law firm that supposedly drafted it contained no evidence that it ever existed, and that the lawyers who supposedly drafted it had no knowledge of it."
Melcher alleges that Corwin and his firm violated Judiciary Law §487, which provides for treble damages to a party injured by deceit or collusion by an attorney.
Corwin and the firm moved to dismiss the case as time-barred, arguing that the alleged injury had accrued in March 2004, when Melcher learned that Corwin had failed to disclose Fradd's claim that the amendment had been burned. The suit was filed more than three years after that, putting it outside the statute of limitations.
Manhattan Supreme Court Justice Shirley Kornreich (See Profile) agreed that the injury first accrued in March 2004. However, she denied the motion to dismiss, finding that Corwin and his firm were equitably estopped from asserting the statute of limitations because they allegedly continued to deceive Melcher about Governale and Beckwith.
The First Department majority reversed and ruled that the case should be dismissed.
"The accrual date was not extended here because, as noted above, plaintiff was aware of the basic facts relative to defendants' alleged deceit more than three years before this action was commenced," a majority of Presiding Justice Luis Gonzalez (See Profile) and Justices David Saxe (See Profile) and Leland DeGrasse (See Profile) wrote in an unsigned opinion.
The majority also said that equitable estoppel did not apply "because plaintiff has not met the fundamental requirement of establishing that subsequent and specific actions by defendants somehow kept him from timely bringing suit."
Justice Nelson Roman (See Profile) dissented, joined by Justice Helen Freedman (See Profile). Roman said the injury did not accrue until 2005, because the plaintiffs were not aware of all the facts needed to support their claim until that time.
"According to the complaint…plaintiff did not become aware that Corwin's assertions were false until December 7, 2005 when Governale was deposed and testified that he knew nothing about the amendment at issue and that his files contained no indication of any such amendment," Roman wrote. "Therefore, it was not until this date, when all the facts necessary to a cause of action pursuant to Judiciary Law §487 were known that plaintiff's cause of action accrued. Specifically, it was on that date that the realization that plaintiff had been deceived by Corwin occurred."
Furthermore, Roman said, the injury could not have accrued in March 2004 because Corwin's failure to tell Melcher that Fradd claimed to have burned the letter was not enough to support a claim under Judiciary Law § 487. Corwin, he said, had no duty at that time to reveal that the letter had been burned.
"With a two-judge dissent, we can appeal to the Court of Appeals as of right, and we are definitely going there," Jeffrey Jannuzzo, counsel for the plaintiffs, said in an email. "We believe the court erred in not applying the six-year statute, because the wrong of attorney-deceit originates at English common law, and is not a new liability. If the case is reinstated, the majority's holding that Corwin committed actionable deceit under Sec. 487 will be devastating."
Simpson Thacher & Bartlett partner Roy Reardon, who represents Greenberg Traurig and Corwin, said he agreed with the decision and was confident that should there be an appeal, the majority decision would be affirmed.
@|Brendan Pierson can be contacted at email@example.com.