To suggest that the Second Circuit send a certified question to the New York Court of Appeals rushes things a little, but only a little. Bounkhoun v. Barnes, a decision issued in April 2018 by the U.S. District Court for the Western District of New York, has not (yet) reached the Second Circuit. It would have gone to the federal appellate court for sure if its author, Judge Richard Arcara, had accepted a controversial notion from the Magistrate Judge who first heard Bounkhoun.
The Report and Recommendation in Bounkhoun suggested that a criminal conviction be necessary for civil redress under the statute. Judge Arcara, disagreeing, declined to grant a motion to dismiss by the defendants, partners in the now divided Cellino & Barnes. (See Scott Flaherty, “Cellino & Barnes Appear Headed for ‘Divorce,’“ N.Y.L.J. (May 11, 2017)). Bounkhoun is now perfectly suited to the unique technology of a certified question.
Our suggestion runs 20 words. Which elements not expressly provisioned in Judiciary Law §487, if any, are necessary for a successful claim of treble damages?
Magistrate Judge Hugh B. Scott came up with one possible additional element when he recommended that a §487 defendant must have been convicted of the misdemeanor provisioned in the statute. “[T]he Court of Appeals has not interpreted §487 this way,” Judge Arcara replied. Confident that New York law imposes no such condition on §487 plaintiffs, Arcara nevertheless went on to say that he was unsure about another possible extrinsic element, “the stricter ‘chronic and extreme pattern of legal delinquency’ standard.” Bounkhoun v. Barnes, 2018 U.S. Dist. LEXIS 64580 (April 17, 2018) (W.D.N.Y.) at 13-16.
A certified question would do a lot of good here. New York judges have for decades been repeating demands not found expressly in this statute. The Court of Appeals, disinclined to hear §487 appeals, has not said yea or nay to these proposed inclusions, leaving both federal and state courts in the dark. Reminiscent of the deft answers it gave in response to a pair of certified questions about §487 in Amalfitano v. Rosenberg, 903 N.E.2d 265 (N.Y. 2009), New York’s highest court could clear away layers of judge-written brush.
N.Y. Federal Trial Courts: “Help! What Are the §487 Elements?”
A decade ago the Second Circuit expressed for the first time a §487 puzzlement. “It would appear that some courts in New York have imposed an additional prerequisite to recovery,” wrote Judge Robert D. Sack, that “appears nowhere in the text of the statute …” Amalfitano v. Rosenberg, 533 F.3d 117, 123 (2d Cir. 2008). This requirement, which one of us has traced to assertions made by the First Department (see Anita Bernstein, “First Department Rolls Its Own Criteria for a Judiciary Law §487 Claim,” N.Y.L.J. (Dec. 8, 2016)), is what Judge Arcara called “the stricter ‘chronic and extreme pattern of legal delinquency.’” Must plaintiffs demonstrate chronic and extreme misconduct to recover treble damages?
The First Department often says yes, and other courts have agreed. But no New York judge, state or federal, has explained where this requirement comes from. Struggling with a variant on the problem, Judge Arcara wrote in Bounkhoun that he was unsure whether a single incident of deceit would suffice without this additional element. He concluded that when chronic and extreme delinquency is present, that legal question becomes moot. Bounkhoun v. Barnes, 2018 U.S. Dist. LEXIS 64580 (W.D.N.Y.) at *14-15.
One adventurous Southern District decision, expressing approval of an “egregious or extreme” requirement, dismissed a plaintiff’s claim for failing to state this element. Ray v. Watnick, 182 F. Supp. 3d 23, 32 (S.D.N.Y. 2016). The Second Circuit rejected this reading of §487—and dismissed anyway on the ground that Ames Ray had failed to state deceitful intent. 688 F. App’x 42 (2d Cir. 2017). Evincing similar confusion, the Eastern District declined to rule on whether “extreme” and “egregious” were necessary but found them satisfied anyway, and therefore held a defendant liable under §487. Scott v. E. Hope Greenberg, 2017 U.S. Dist. LEXIS 50822, at *15 (E.D.N.Y. March 31, 2017).
For another reason to conclude that New York federal district courts need §487 help, see Tacopina v. Kerik, 2016 U.S. Dist. LEXIS 44212, at *18 (S.D.N.Y. March 31, 2016) and In re Swift, 2016 Bankr. LEXIS 262 at *18-19 (Bankr. E.D.N.Y. Jan. 28, 2016) (quoting O’Callaghan v. Sifre, 537 F. Supp. 2d 594, 596 (S.D.N.Y. 2008)): “New York courts limit the application of §487 to claims that the delinquent attorney has intentionally ‘engaged in a chronic, extreme pattern of legal delinquency”). Most §487 decisions that New York courts have published actually state no such thing—and, as just noted, the Second Circuit’s 2008 Amalfitano decision expressed skepticism about this supposed requirement.
Elements Absent in the Statute That Judges Have Imposed on §487 Plaintiffs
Substantive: Variations on “chronic and extreme.” New York case law does not limit its add-ons to a simple insistence that the plaintiff show chronic and extreme misconduct. Judges confound litigants by presenting this requirement differently in different decisions. For example, in Ulrich v. Hausfeld, 269 A.D. 2d 526 (2d Dep’t 2000), this element was indispensable; a plaintiff without it will have his claim dismissed. Id. at 527. Savitt v. Greenberg Traurig, 126 A.D. 3d 506, 507 (1st Dep’t 2015), however, says that an allegation of either “a chronic and extreme pattern of legal delinquency” or “egregious conduct” will suffice.
In another 2015 decision, the First Department went with the Second Department’s choice in Ulrich and said that only the latter requirement would do. Pomerance v. McGrath, 124 A.D. 3d 481, 481 (1st Dep’t 2015). Freeman v. Brecher, 155 A.D. 3d 453, 454 (1st Dep’t 2017) and Chowaiki & Co. Fine Art Ltd. v. Lacher, 115 A.D. 3d 600 (1st Dep’t 2014) phrase the requirement as “a chronic and/or extreme pattern of legal delinquency,” suggesting that either chronic or extreme delinquency will suffice; most decisions that impose the requirement insist on both adjectives.
Substantive: Intent to deceive—an alternative to “chronic and extreme”? In Bounkhoun, the case with which we started, Judge Arcara wondered about this issue. New York courts have characterized “chronic and extreme” as giving away too much to plaintiffs and demanded an “intent to deceive” … which has the virtue of echoing actual language present in the statute, but Judiciary Law §487 does not spell out what a plaintiff has to show to survive a dismissal motion on this point.
Bill Birds v. Stein Law Firm, P.C., 164 A.D. 3d 635 (2d Dep’t 2018), a decision that rejected the “chronic and extreme” route to redress, concluded that the plaintiff had not alleged “sufficient facts” on intentional deceit and dismissed the action. Id. at 637. Dupree v. Voorhees, 102 A.D. 3d 912, 913 (2d Dep’t 2013), agrees with Bill Birds on the indispensability of “intent to deceive.” Other decisions disagree, reading the two elements as alternatives. Herschman v. Kern, Augustine, Conroy & Schoppman, 113 A.D. 3d 520 (1st Dep’t 2014); Duszynski v. Allstate Insurance Co., 107 A.D. 3d 1448, 1449-50 (4th Dep’t 2013); Rock City Sound v. Bashian & Farber, 74 A.D. 3d 1168, 1178 (2d Dep’t 2013).
Substantive: Egregious. Two §487 cases from the First Department, Facebook v. DLA Piper (US), 134 A.D. 3d 610, 615 (1st Dep’t 2015) and Savitt v. Greenberg Traurig, 126 A.D. 3d 506 (1st Dep’t 2015), provisioned “egregious” as an alternative to “chronic and extreme.” Whereas these decisions use “egregious” as a generic criterion, two others, Mazel 2135 W. 35th v. 315 W. 35th Associates, 120 A.D. 3d 1106, 1107 (1st Dep’t 2014) and Strumwasser v. Zeiderman, 102 A.D. 3d 630, 631 (1st Dep’t 2013), apply “egregious” to attorney deceit. This §487 criterion flourishes mostly in the First Department, but the Fourth has also insisted on it. Englert v. Schaffer, 61 A.D. 3d 1362, 1364 (4th Dep’t 2009).
Procedural: Lately the First Department has been saying that fraud actionable under §487 must have occurred before a court within the state of New York. See Doscher v. Manatt, Phelps & Phillips, 148 A.D.3d 523, 524 (1st Dep’t 2017). Thus a deceptive backdating of a retainer agreement—brazen misconduct by any standard—could not be heard in a New York court, having taken place in Delaware. See Shawe v. Elting, 161 A.D.3d 585, 588 (1st Dep’t 2018).
Breaking more dramatically with statutory language, courts also have dismissed attorney-deceit §487 claims with a statement that plaintiffs should have sought redress in the action where the deceit occurred. Chibcha Rest. v. David A. Kaminsky & Assocs., P.C., 102 A.D.3d 544, 545 (1st Dep’t 2013); Alliance Network v. Sidley Austin, 43 Misc. 3d 848, 858 (N.Y. Sup. 2014). This judge-made demand limits the reach of §487 relief.
New York courts may have reached past the law to add barriers to claims under Judiciary Law §487. Asked and answered, a certified question would put advocates on clearer notice of what the law requires. Bounkhoun v. Barnes would make an especially good vehicle, but almost any §487 action in the federal courts will do. Meanwhile, opacity and confusion bring their own barriers, at odds with the crisp language of the statute.
Anita Bernstein is the Anita and Stuart Subotnick Professor of Law at Brooklyn Law School. John Crain is a student at Brooklyn Law.