U.S. District Court: Judiciary Law Claim Permissible without Criminal Conviction

May 7, 2018 | Jonathan B. Bruno | Deborah M. Isaacson | Professional Liability

The United States District Court, Western District of New York recently held that the plaintiff alleged sufficient facts to state a claim pursuant to Judiciary Law § 487, and the fact that there was no criminal conviction of the defendant lawyers for violating the statute did not prevent plaintiff from proceeding with her claim.

In Chandy Bounkhoun v. Steven E. Barnes, Esq., et al., United States District Court, Western District of New York, Civil Action Number 15-cv-631, the plaintiff sued her lawyers regarding their representation of her in a personal injury action.  The plaintiff alleges that the defendant lawyers failed to communicate her $150,000 settlement proposal to the underlying defendant’s insurance carrier in her personal injury action and instead conveyed a $1 million settlement proposal to the carrier, which was rejected.  Plaintiff claims that the defendants chose to proceed to trial against her wishes, and for their own benefit, pursuant to a high-low agreement, in order to obtain their attorneys’ fees.  The jury found for the defendant in the personal injury action, and plaintiff received her guaranteed payout of $25,000 pursuant to the high-low agreement, less costs, fees and liens, leaving her with approximately $7,000.

The defendants moved to dismiss the plaintiff’s claim for violation of Judiciary Law § 487.  The Magistrate Judge filed a Report and Recommendation, in which he recommended, inter alia, that the defendants’ motion to dismiss the Judiciary Law § 487 claim be granted on the grounds that the defendants had not been convicted of a misdemeanor, which he determined to be a requirement in order to seek treble damages pursuant to a Judiciary Law § 487 claim.  The plaintiff objected to the recommendation, and on review, the District Judge determined, inter alia, that a misdemeanor conviction for a violation of Judiciary Law § 487 is not required to pursue a Judiciary Law § 487 civil claim.  The District Judge went on to determine that plaintiff had pled sufficient facts to withstand dismissal of her Judiciary Law § 487 claim.

In reaching its determination, the court relied upon New York state appellate and trial court decisions on the issue, which have held that a criminal conviction is not a condition precedent to a civil action pursuant to Judiciary Law § 487.  The court went on to state that it had not found any persuasive evidence that the New York Court of Appeals would interpret the statutory provision any differently than the appellate and trial courts have, and in a way that would effectively read any civil remedy out of the statute.

The court also determined that, whether or not the “chronic and extreme pattern” of legal delinquency standard is correct, the plaintiff stated a claim for a violation of Judiciary Law § 487.  Accepting all of the factual allegations as true, the court held that the plaintiff plausibly alleged a chronic and extreme pattern of legal delinquency by which the defendants took a number of steps to increase their chances of a high fee recovery rather than to settle the case at an amount that the plaintiff requested.

The Bounkhon decision is consistent with the manner in which New York state courts have been interpreting Judiciary Law § 487 and associated civil claims.  While the Report and Recommendation, if adopted, would have made it extremely difficult for a plaintiff to pursue a civil remedy against an attorney pursuant to Judiciary Law § 487, the court’s decision declining to do so maintains the “status quo” as to these claims.  The court did not weigh in on which standard – a chronic and extreme pattern of legal delinquency versus a single intentionally deceitful or collusive act – was correct, as it was not necessary based on the factual allegations in this case.  It is possible that this issue will ultimately be addressed by the New York Court of Appeals.

For more information about the court’s decision, please contact Jonathan Bruno or Deborah Isaacson.

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