It is rare that one of New York's Courts of Appeal considers the substance of Judiciary Law Section 487. The N.Y. Court of Appeals has only mentioned this law 10 times. Of these, only three were substantive decisions. The Second U.S. Circuit Court of Appeals in New York has considered the application of Judiciary Law Section 487 many times, but rarely its substance. Nevertheless, a recent case in the Western District of New York has the potential to reach both of the Courts of Appeal by different routes. The two routes to the two Courts of Appeal are complex. Under New York Court of Appeals jurisprudence, there are appeals of right and appeals by leave. There are also certified questions. One generalized reason for a grant of leave to appeal to the N.Y. Court of Appeals is inconsistency between or within the Appellate Divisions. In Judiciary Law Section 487, there is a major difference in the standard between the First Department and the other three departments. The First Department adds a unique element not found elsewhere. An appeal to the Second Circuit Court of Appeals may be the consequence of a recent magistrate's report and the later decision of the Western District of New York rejecting the recommended determination in Bounkhoun v. Barnes and Cellino & Barnes, Case No. 15-cv-631A. Along with the stunning magistrate's report, two other pillars of the Judiciary Law Section 487 world would have fallen. However, the district court judge rejected the magistrate judge's reasoning. |

The First Route

Truth and deceit are the two poles of human interaction. This is nowhere more revealed than in the client- or patient-professional relationship. Humans willingly put their lives and fates in the hands of learned doctors and lawyers and suspend their normal distrust. So many times the work is good, often lifesaving. Sometimes, not. Professionals have the superior knowledge upon which the public depends. Surgery, finances and trials all depend on learning, experience and some degree of talent. Dependence on superior knowledge is the basis of the fiduciary relationship. Clients and patients are in trouble or ill and need professional expertise. They surrender themselves to the experts, who thereby have a special relationship with their clients or patients. In this relationship, surrender requires and implies great trust and confidence. That faith is overwhelmingly rewarded most of the time. To support this relationship, attorneys' superior knowledge of law and situational detail leads to the fiduciary requirement of greater loyalty by the attorney to the client than one finds in the marketplace. Failure to honor that loyalty can allow the attorney to take advantage of the client. Attorneys and other fiduciaries are held to a higher standard, and sadly, they sometimes fail and sometimes require restraint. In the case of attorneys, Judiciary Law Section 487 has existed in some form from medieval times to regulate attorney conduct. It defines acts intended to deceive the court or any party as a misdemeanor and sets treble damages as a penalty. It specifically deals with attorney deceit, not good-faith mistakes. This stuff is elementary and ancient. JL Section487 is not a statute; it's the common law. It first arose in England just years after the Magna Carta (1215). The common-law principle against attorney deceit arose in 1275, was imported into New York and remains in effect today. It became part of New York's common law as part of the “Colonial-era incorporation or 'reception' of English law into New York law.” The law of England and the statutes which were accepted by New York in 1787 became the common law of New York. At issue in this year's iteration are whether draconian requirements proposed in Bounkhoun should be in place. In a proceeding referred to Magistrate Scott for discovery and motion practice, he recommended to Judge Arcana that an otherwise appropriate JL Section 487 should be dismissed because no criminal conviction of the attorney had been obtained, nor had all elements of a criminal infraction by the attorney been shown. Put mildly, this was novel. To that day, no court had interpreted JL Section 487 to require such a precondition. The magistrate recognized that his was a new interpretation, and distinguished cases such as Schindler v. Issler & Schrage, 262 AD2d 226,228 (1 st Dept, 1999) and Wiggin v. Gordon, 115 Misc 2d 1071(Civ.Ct. Queens, 1982) which held that “a criminal conviction is not a condition precedent to a civil action,” under JL § 487. Magistrate Scott wrote: “The Court is not aware of any prosecution of defendants under Section 487, and plaintiff in any event has not pled nearly enough detail to show that defendants might have fulfilled all of the elements of Section 487 and might be guilty of a misdemeanor. Without fulfillment of the elements of a criminal offense under Section 487, and a resulting conviction, this case presents no criminal prerequisite that treble damages can be 'in addition to.'” Put another way, the report “requires that an attorney be convicted of violating Section 487 before the attorney's client may seek treble damages.” Judge Arcana reviewed the report and tried to determine how the New York Court of Appeals would resolve this uncertainty or ambiguity in New York law. He recognized that the New York Court of Appeals has not addressed the issue identified by the report. In the absence of Court of Appeals decisions, he relied on Appellate Division cases in the First Department to reach the conclusion that current case law was insufficient to “quietly upend a half-century's worth of lower court decisions interpreting Section 487.” He rejected the magistrate's report. The New York Court of Appeals held in Amalfitano that recovery under Judiciary Law Section 487 does not depend on the court actually being deceived. A violation of Judiciary Law § 487 occurs when there is an intent to deceive. An attempted deceit is sufficient; a completed deception is not necessary to trigger a successful Judiciary Law Section 487 case. In 2014 Melcher v. Greenberg Traurig, 23 NY3d 10, (2014) upset all previous thinking about Judiciary Law Section 487. It reversed the Appellate Division, First Department's holding that Judiciary Law Section 487 is “purely statutory in nature and therefore subject to a three-year statute of limitations.” No longer was the three years from deceit or two years from the reasonable discovery of the deceit the applicable period of limitations under CPLR 214(2) the correct period. Now, Judiciary Law Section 487 is ensconced as part of the common law, and subject to a six-year statute of limitations under CPLR 213(1). Confounding all this is the undeniable wrinkle that the First Department adds a unique, inconsistent additional prerequisite to recovery under Section 487, “that the plaintiff…show a 'chronic and extreme pattern' of legal delinquency by the defendant.” Amalfitano v. Rosenberg, 533 F.3d 117,123 (2d Cir. 2008). The Second Circuit recognized that the “requirement appears nowhere in the text of the statute…and other courts have found attorneys liable under the statute for a single intentionally deceitful or collusive act.” Id. Melcher ended with a whimper rather than a bang. Melcher v. Greenberg Traurig LLP, has been up and down from the Appellate Division more than once. It was heard there in 2006 and in 2008, 2011 and in 2016. It recently returned to the First Department again on appeal from Supreme Court's denial of summary judgment to defendants. In 2016, the Appellate Division forcefully and clearly held that it can be proper to “assert a Judiciary Law Section 487 claim in separate action rather than seeking leave to assert a claim against the attorney defendants [in the underlying] action” Id. Furthermore, even if deceit is raised in the underlying action it does not preclude the later JL Section 487 case. The Melcher claim arose from the extraordinary handling of a paper document around which the entire case turned. A 1998 amendment to a law firm partnership agreement changed the formula for dividing profits. Melcher denied that the amendment even existed when his partner claimed it did. When the time came to examine it forensically, it was reported to be accidently burned in a kitchen fire while preparing tea. The signature page was partially burned in a purported kitchen accident. After trial, the First Department directed that a hearing be held on Melcher's claim that Brandon Fradd had “fabricated, backdated and intentionally burned” the paper amendment. It was asserted that the law firm deceitfully relied on the paper amendment and argued its veracity. After its long litigation history, Melcher seemed destined for trial. Not so. Years of litigation later, Justice Sherwood in Supreme Court, New York County rendered a devastating blow to plaintiff in Melcher v. Greenberg Traurig LLP , 2017 NY Slip Op 31727, finding that Melcher cannot recover for lost damages from the underlying action due to deceit nor show that attorney deceit was the proximate cause of a decision to accept less in settlement. Only a thin slice of subsequent attorney fees might still be collectible. Judge Sherwood ruled out expert testimony on the “contours of a lawyer's ethical obligations to disclosure are issues of law and jury instruction on the applicable law are within the province of the court exclusively.” He precluded the potential expert testimony of Patrick Conner and Roy Simon, saying that expert testimony on whether an “attorney has an obligation to speak are legal questions reserved to the court. Expert testimony is neither helpful nor permitted.” Id. Damage testimony was deemed to be entirely “speculative.” “Plaintiff cannot show that defendant's alleged deceits were the proximate cause of any injury, except perhaps `excess legal expenses' incurred in the Apollo action.” Id. Proofs of the connection between deceit and damages have always been difficult. Courts permit application of the statute but set a very high standard. The First Department has written that relief “is not lightly given.” Facebook, Inc. v. DLA Piper LLP , 134 AD3d 610,615 (1s Dept, 2015). The other departments permit a lower standard where recognize that a single egregious incident is sufficient. Trepel v. Dippold, 2005 US Dist Lexis 8541; 2005 WL 1107010 (S.D.N.Y. 2005) cites multiple examples. To succeed on a cause of action to recover damages under Judiciary Law Section 487, the plaintiff must demonstrate that he or she "suffered … damages which were proximately caused by the deceit allegedly perpetrated on him [or her] or on the court" O'Connor v Dime Sav. Bank of N.Y. , 265 AD2d 313, 314; see Manna v Ades , 237 AD2d 264, 265; Di Prima v Di Prima , 111 AD2d 901, 902). The evidence adduced at trial also supports the trial court's conclusion that the plaintiff failed to establish that she suffered pecuniary damages as a result of the alleged deceit. Therefore, we decline to disturb the trial court's determination.” Dupree v. Voorhees, 153 AD3d 601,602. (2d Dept 2013). |

The Second Route

Bounkhoun Amalfitano. Andrew Lavoott Bluestone is an attorney located in Manhattan, N.Y., specializing in legal malpractice litigation. He is board certified in legal malpractice by the American Board of Professional Liability Attorneys, is an adjunct law professor and author of the New York Attorney Malpractice Blog, at blog.bluestonelawfirm.com.