Is An Attorney’s Misdemeanor Conviction A Prerequisite To New York Judiciary Law § 487 Claims?

June 2, 2017 | Jonathan B. Bruno | Anna Mandel | Professional Liability

United States Magistrate Judge Hugh B. Scott of the United States District Court for the Western District of New York recently held, in a report and recommendation, that a plaintiff must plead that an attorney has been convicted of a misdemeanor before she can state a claim for the recovery of treble damages pursuant to New York Judiciary Law § 487.

In Chandy Bounkhoun v. Steven E. Barnes, Esq. Ross M. Cellino, Esq., Christopher D’Amato, Esq., and Cellino & Barnes, P.C., the plaintiff alleged that her attorneys, Cellino & Barnes, P.C., failed to communicate her $150,000 settlement proposal to the underlying defendant’s insurance carrier in her underlying personal injury action.  Instead, and without telling her, she claims that Cellino & Barnes, P.C. communicated a $1 million settlement proposal to the carrier, which was rejected.  She further alleged that Cellino & Barnes, P.C. chose to try the underlying action, against her wishes, for its own benefit pursuant to a high-low agreement in order to obtain their attorneys’ fees.  The jury in the underlying action returned a defense verdict, and plaintiff received her guaranteed payout of $25,000, less costs, fees, and liens, which left her with approximately $7,000.

Defendants moved to dismiss the subsequent legal malpractice, fraud, conversion, and Judiciary Law § 487 action.  In her complaint, plaintiff did not allege that Cellino & Barnes, P.C., or any of its attorneys, had been convicted of a Judiciary Law § 487 misdemeanor, or any of the elements necessary to establish criminal guilt for a Judiciary Law § 487 misdemeanor under the New York Penal Law.

Judiciary Law § 487 provides that an attorney or counselor who:

  1. is guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party; or
  2. willfully delays his client’s suit with a view to his own gain; or willfully receives any money or allowance for or on account of any money which he has not laid out, or becomes answerable for; or
  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.

Judge Scott analyzed the history of Judiciary Law § 487 stemming from the Penal Code of 1881 and Penal Law of 1909.  He concluded that § 487 goes “beyond what might have been available under the common law to address deceitful conduct from attorneys.”  He found that § 487’s phrase “in addition to,” after pronouncing the attorney with the necessary elements guilty of a misdemeanor, “suggests newer options that are layered or that open up alongside older, pre-existing ones that are on top of’ whatever the New York Penal Law authorizes as a punishment for misdemeanors.”  Thus, “people who are wronged by a deceitful attorney have the option of pursuing criminal or civil redress, or both, but only after misdemeanor guilt is established.”  In other words, if § 487 “does not allow a factfinder to reach criminal or civil remedies before first reaching a misdemeanor conviction then any civil remedies under § 487 must require a misdemeanor conviction as a prerequisite.”  Judge Scott noted that no particular criminal penalty is required, just the conviction itself.

Judge Scott also commented on several New York Appellate Division cases interpreting Judiciary Law § 487.  Regarding the requirement that an attorney’s conduct be a “chronic, extreme pattern of legal delinquency,” he remarked that he “has no idea whence the additional requirement came” and that it “appears nowhere in the text of the statute.”  He interpreted the requirement “as a grudging half-acknowledgment of the criminal prerequisite.”

As applied to Chandy Bounkhoun, Judge Scott concluded that since the plaintiff did not fulfill the “elements of a criminal offense under § 487, and a resulting conviction” the case presented “no criminal prerequisite that treble damages can be ‘in addition to.’”  He therefore recommended that defendants’ motion to dismiss plaintiff’s Judiciary Law § 487 claim be granted.

Plaintiff objected to the report and recommendation, and defendants opposed, arguing, among other things, that the plain, unambiguous language of Judiciary Law § 487 supports Judge Scott’s interpretation.

New York-based attorneys and their insurers faced with Judiciary Law § 487 claims should be aware of Judge Scott’s interpretation of Judiciary Law § 487 in Chandy Bounkhoun that “without fulfillment of the elements of a criminal offense under Section 487, and a resulting conviction,” there is “no criminal prerequisite,” and the plaintiff fails to state a Section 487 claim.  Such an interpretation establishes a high burden on plaintiffs to plead criminal guilt before they may avail themselves of civil treble damages under Judiciary Law § 487.  Judge Scott’s report and recommendation is pending adoption or rejection, in whole or in part, by the District Court judge.  We will continue to monitor this case to see if Judge Scott’s reasoning is adopted.

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