In a 10-year long case, a Manhattan judge has gutted the potential damages that can be claimed by a former hedge fund manager who is suing Greenberg Traurig and former partner Leslie Corwin for attorney deceit.
James Melcher was seeking about $16.5 million in damages from a Section 487 attorney deceit claim against Greenberg and Corwin. As a result of the ruling by Manhattan Supreme Court Justice O. Peter Sherwood, the total amount of claimed damages, although unclear, would be a fraction of the initial proposed damages.
Melcher’s lawyer, Jeffrey Jannuzzo, is now asking to stay the trial, which was scheduled to begin Nov. 27, pending an appeal to the Appellate Division on the issue of damages or a motion for reargument.
That would be at least the third time the Appellate Division, First Department, has seen the case. Greenberg Traurig appealed twice before to the First Department.
In the underlying case, Melcher claimed that as a former member of the Apollo Medical Fund Management hedge fund, he was entitled to profits that were withheld from him. He sued Apollo and its principal, Brandon Fradd, in 2003 seeking those profits.
In January 2004, Melcher said Corwin, who represented Apollo and Fradd, informed him of the 1998 agreement he claimed limited profits Melcher could realize from the hedge fund.
Melcher asked to see the document, and said he was prepared to use forensic testing to verify if it did, in fact, date to 1998.
But he said Corwin told him that Fradd burned the two-page document while making tea.
In 2007, Melcher sued Greenberg Traurig and Corwin alleging attorney deceit under Section 487, contending they tried to help Fradd deceive the court about the document’s authenticity and the circumstances of its damage.
In seeking damages against Greenberg, Melcher sought to offer what he might have been able to collect in the Apollo action had he been able to obtain a judgment during the time that Apollo Medical Fund was in better financial health versus the approximately $5 million he obtained in settlement years later, according to court documents.
But Sherwood, in a decision issued last week, said that is “entirely speculative.”
“The Apollo action[,] which was commenced in 2003, involved issues other than those involving the alleged deceits, as the tortured history of that case shows,” Sherwood said. After the jury rendered its verdict in the Apollo action in May 2009, “the case dragged on for many more years while issues separate and apart from the alleged deceits were litigated,” the judge added.
The judge said Melcher cannot show that Greenberg’s alleged deceits were “the proximate cause of any injury, except perhaps ‘excess legal expenses’ incurred in the Apollo action,” Sherwood said.
Melcher also cannot recover for fees earned before Feb. 17, 2004, because the basis for Melcher’s attorney deceit claim did not arise until after Fradd had burned the amendment, while the Apollo action was pending, the judge ruled.
Sherwood limited the expert testimony that the parties sought to present to the jury.
Sherwood denied Melcher’s request for expert testimony from Patrick M. Connors, a professor at Albany Law School, and Greenberg’s proposed expert testimony from Roy Simon, of Maurice A. Deane School of Law at Hofstra University, ruling that the issues in the case are legal questions reserved to the court. Sherwood allowed the parties the chance to revise their testimony so that it does not invade the provenance of the court and can be shortened to reflect the limited roles.
“The jury is being called upon to determine whether Leslie Corwin, an attorney, engaged in deceit or colluded with an intent to deceive the court or a party. The jury is not being asked to resolve whether or not he violated the Code of Professional Responsibility,” Sherwood said.
Sherwood also denied the approach of the defense’s proposed expert on legal fees, Beth Kaufman, managing partner at Schoeman Updike Kaufman & Gerber.
Jannuzzo is scheduled to argue Monday, Aug. 28, to stay the case, pending an appeal to the First Department or a decision on a reconsideration motion.
In an oral argument appearance in July that initially outlined Sherwood’s damages ruling, Jannuzzo protested the limitations. He told Sherwood that he “basically dismissed Mr. Melcher’s case.”
“You cut it from a $16 million case to I don’t know what,” Jannuzzo said. “You have taken $4.5 million off the table for the settlement difference damages, and you have taken the bulk of the legal fees.”
Sherwood told him, “The case is not as grand as you have alleged it, sir. That doesn’t mean that the case is being dismissed.”
In a statement, Jannuzzo, taking issue with the damages calculation, said his client didn’t seek damages prior to Feb. 17, 2004, and his legal fee damage claims actually start on that date.
Simpson Thacher & Bartlett partner Thomas Rice, who represents Greenberg Traurig and Corwin, now a Blank Rome partner, declined to comment.