Legal concepts change by evolution and revolution. Evolution is the most familiar process in legal scholarship. A principle or a statute is analyzed, then re-interpreted in the light of newer or novel events. The basic principles remain in effect. An example of evolutionary change is seen in the process by which intangible computer files have come to be subjected to conversion analysis. Shmueli v. NRT N.Y. Inc., 68 AD3d 479 (2009). Another example is the gradual acceptance of e-mails in contract and communications law.
Revolutionary change is different and sudden. One example is the emergence of Judiciary Law §487 from its centuries long slumber. After a recent decision by the Court of Appeals on this ancient statute, the world of legal malpractice has been stood on its head. What was formerly an ill-known extreme fringe theory of law has burst into prominence and scholarly acceptance. Although the statute is more than 700 years old, it today stands in the mainstream.
Judiciary Law §487 is a unique statute which combines criminal and civil liability for attorneys with a rich and long history. The New York Court of Appeals recently described it as descending from the first Statute of Westminster, which was adopted by the Parliament summoned by King Edward I of England in 1275. The present section was enacted in 1965, but derived from the former Penal Law [of 1909] §273. Modern cases based upon this concept go as far back as Looff v. Lawton, 97 NY 478 .
The statute reads:
Misconduct by Attorneys
An attorney or counselor who:
1. Is guilty of any deceit of collusion, or consents to any deceit or collusion, with intent to deceive the court or any party, or,
2. Wilfully delays his client’s suit with a view to his own gain, or wilfully receives any money or allowance for or on account of any money he has not laid out, or becomes answerable for,
3. Is guilty of a misdemeanor, and in addition to the punishment prescribed therefor by the penal law, he forfeits to the party injured treble damages, to be recovered in a civil action.
There are four elements to the statute. The first requirement is deceit. The actions complained of must transcend mere negligence or mis-advice.
The second requirement is that the deceit be directed at the court or a party. When a complaint rests on this section, the deceit must have taken place during an ongoing litigation, although there is a suggestion that it may be sufficient if there is a probable future litigation which will ensue.
The alternative third requirement is a “chronic” pattern or “extreme” deceptive practice, in the situation where there is no deceit directed at the court. This pattern must, as one suspects, be significant, long, and very demonstrable.
The fourth requirement is that damages flow from the deceit or deceptive practice. In the absence of such proximate cause, or alternatively, in the absence of compensable underlying damages, there can be no recovery.
The statute is subject to a three-year statute of limitations. Kuske v. Gellert & Cutler, P.C., 247 AD2d 448 [2d Dept.1998]; Jorgensen v. Silverman, 224 AD2d 665 [2d Dept.1996].
Amalfitano v. Rosenberg, 12 NY3d (2009), was decided in February 2009. This decision traced the 735-year history of what may be the oldest continuous statute in Anglo-American history. There, the Court of Appeals held that recovery of treble damages under Judiciary Law §487 does not depend upon the court’s belief in a material misrepresentation of fact in a complaint. When a party commences an action grounded in a material misrepresentation of fact, the opposing party is obligated to defend or default and necessarily incurs legal expenses. Because, in such a case, the lawsuit could not have gone forward in the absence of the material misrepresentation, that party’s legal expenses in defending the lawsuit may be treated as the proximate result of the misrepresentation.
Amalfitano has fed a bloom of new actions and current decisions based upon it, and the actual number of Judiciary Law §487 cases has grown significantly. One reason for this is the newly emphasized difference between legal malpractice and claims under Judiciary Law §487. “A violation of Judiciary Law §487 requires an intent to deceive, whereas a legal malpractice claim is based upon negligent conduct.” Moormann v. Hoerger, 65 AD3d 1106 (2d Dept. 2009) In Moormann, the legal malpractice was dismissed, but the Judiciary Law §487 claim remained.
Another example of the sudden turnaround is Dupree v. Voorhees, 68 AD3d 807 (2d Dept. 2009). A singularly restricting principle of legal malpractice is the concept that almost all claims by a person against an attorney for issues which arise from the attorney’s professional activity are at base legal malpractice. In legal malpractice there is a requirement of privity between plaintiff and the target attorney defendant. “Before a party may recover in tort for a pecuniary loss sustained as a result of another’s negligent misrepresentations there must be a showing of either actual privity of contract between the parties, or a relationship so close as to approach that of privity.” Prudential Ins. Co. v. Dewey Ballantine, Bushby, Palmer & Wood, 80 NY2d 377 (1992).
If an opinion letter or statement is relied upon, the evidence must demonstrate an awareness by the maker that the statement is to be used for a particular purpose, as well as reliance, and a linking between the relying party and the statement. Cal. Pub. Emplees. Ret. Sys. v. Shearman & Sterling, 95 NY2d 427 (2000). As almost all claims against attorneys must be pled in legal malpractice, which requires privity, many claims cannot be prosecuted.
Dupree was a case arising from an underlying matrimonial action. Kristin Dupree sued her husband’s attorney and the attorney’s partner with whom she had no privity. She alleged that her opponent’s attorney made misrepresentations in applying for a receivership order in the matrimonial action. She alleged that the attorney intended to deceive the court, and that the partner was vicariously liable. Initially, Supreme Court dismissed the 487 claims, but then granted leave to renew, and reversed its own decision after Amalfitano. Not only were the 487 claims reinstated against the attorney, but the Appellate Division similarly reinstated them against the partner.
In a different Second Department decision of the same week, Judiciary Law §487 claims were upheld against another opponent’s attorney. Specialized Industrial Services Corp. v. Carter, 68 AD3d 750 (2d Dept. 2009), held that plaintiff sufficiently stated a cause of action under the statute for alleged intentional deceit during the course of the underlying action. The Third Department decided Mokay v. Mokay, 67 AD3d 1210 (3d Dept. 2009), several days earlier.
This case involved a will and the devise of real property to decedent’s children. Instead of the irrevocable will providing for decedent’s five children to receive his estate, the father later consulted with an attorney to try to circumvent the transfer. Decedent and his “long time paramour” took the attorney’s suggestion on a plan to avoid the transfer. When decedent died, the children sued the “paramour” as well as the attorney since the property was not devised. Supreme Court granted summary judgment to the children for fraud and on a violation of Judiciary Law §487. The attorney argued that his behavior was “covered by advisor’s immunity” and was therefore not actionable, seemingly referring to a principle of “strategic judgment.” The principle of strategic judgment states that an attorney may not be held liable in legal malpractice for “an attorney’s selection of one among several reasonable strategic options.” Rosner v. Paley, 65 NY2d 736 (1985). The Appellate Division held that the defense was not applicable, and affirmed.
Coccia v. Liotti, 2010 NY Slip Op 917 (2d Dept. 2010), is a case in which the target attorney allegedly advised client to settle her matrimonial case on too little information, without asking for attorney’s fees from her husband, to ignore evidence adduced by her forensic accountant on the actual amount of her husband’s income, then failed to pursue an appeal, and willfully delayed the trial of the matter for his own gain. Summary judgment was denied to the attorney in the attempt to dismiss the 487 claims. The Fourth Department decided Scarborough v. Napoli, Kaiser & Bern LLP, 63 AD3d 1531 (4th Dept. 2009). Again, a cause of action based on 487 was upheld. In the underlying case, a medical malpractice action was dismissed when defendants failed to file a timely note of issue. The documents submitted by plaintiff demonstrated that some of the attorneys [associates included] “engaged in intentional deceit.”
After dismissal of the underlying medical malpractice case, target attorney-defendants asked plaintiff to sign a stipulation of discontinuance, while the action had in fact already been dismissed. The attorneys told plaintiff that he could not prevail in the underlying action but was never informed that the action had already been dismissed as a result of defendants’ failure to file a timely note of issue. Plaintiff was subsequently informed by a member of defendants’ firm that there had been deceit. The Fourth Department permitted the 487 claims to proceed.
We see that a more widespread application of Judiciary Law §487 may be the trend, but not all actions can be pursued. When the 487 claim is predicated on an alleged fraud on the court which has already been rejected by the court [as in a failed motion to vacate the judgment of dismissal], res judicata will bar the 487 claim. Jericho Group Ltd. v. Midtown Dev. LP, 67 AD3d 431 (1st Dept. 2009). Even with demonstrated good 487 claims, plaintiffs may lose the capacity to sue because of a bankruptcy filing. Izko Sportswear Co. v. Flaum, 63 AD3d 687 (2d Dept. 2009). The conduct must be egregious enough to support the cause of action. It will be dismissed if not serious enough. Englert v. Schaffer, 61 AD3d 1362 (4th Dept. 2009) As an example, failure to file an appeal was insufficient. McCluskey v. Gabor, 61 AD3d 646 (2d Dept. 2009). One decision in the Second Department finds that the conduct must be by an attorney in an action that is actually pending. Mahler v. Campagna, 60 AD3d 1009 (2d Dept. 2009).
The trend of these cases is to recognize Judiciary Law §487 as mainstream, and no longer a fluke or an unseemly cause of action. In the past, it appeared that Supreme Court and Appellate Division viewed Judiciary Law §487 cases as disfavored, ungainly, and the least important of any causes of action arising from the attorney-client relationship. Prior to Amalfitano, the hierarchy was legal malpractice in tort, legal malpractice in contract, fraud, breach of fiduciary duty and trailing all, Judiciary Law §487. This trend has reversed. Both Judiciary law and breach of fiduciary duty causes of action have newfound recognition and acceptance.
We expect an exponential increase in the number of Judiciary Law §487 law filings and decisions, post-Amalfitano. We expect to see decisions that start to explore the outer limits of 487 coverage, and the extent to which attorney deceit will be pursued. We expect, of course, to see more of these cases in the Appellate Divisions, which will form a feedback loop to practitioners further accelerating the use of this ancient statute.
Andrew Lavoott Bluestone is a sole practitioner specializing in legal malpractice litigation in Manhattan.