Limitations in Attorney-Deceit Cases

Melcher v Greenberg Traurig, LLP,

23 N.Y.3d 10, 988 N.Y.S.2d 101 [2014]

The Court of Appeals here revisits the ancient history behind the attorney-deceit statute, Judiciary Law § 487, to determine the applicable statute of limitations for claims arising under it. Since that statute imposes treble damages for claims arising out of attorney deceit, one might consider that such claims are to recover on a liability or penalty created or imposed by statute, and hence subject to the three-year limitations period of CPLR 214 (2).

The Court held, however, that the cause arises from New York common law and therefore falls within the six-year catch-all limitations period of CPLR 213 (1). This action, commenced more than three years after the allegedly deceitful acts, but less than six years, was therefore held to be timely.

There is an important caveat for claims asserted as part of legal malpractice actions, which I will discuss at the end.

As set forth in the Appellate Division opinion (the Court of Appeals decision gives none of the underlying facts) the defendants made false and misleading statements concerning the whereabouts of crucial documents both to the plaintiffs and the court in an underlying action involving membership shares of profits in Apollo Medical Fund Management LLC.

In Amalfitano v. Rosenberg, the Court of Appeals examined the history of Judiciary Law § 487 to consider whether the deceit had to be successful for the claim to lie. The Court traced the attorney-deceit statute back to its origins in the 1275 First Statute of Westminster. The statute has thus existed since the era of Magna Carta. The original provided for imprisonment for a year and a day for any “serjeant or pleader” who may “do any manner of deceit or collusion in the King’s Court.” Our Legislature, in 1787, adopted a law which stated

“if any counsellor, attorney, solicitor, pleader, advocate, proctor, or other, do any manner of deceit or collusion, in any court of justice, or consent unto it in deceit of the court, or to beguile the court or the party, and thereof be convicted, he shall be punished by fine and imprisonment and shall moreover pay to the party grieved, treble damages, and costs of suit.”

The similarity of language is obvious, and the principal difference is the addition of the liability to treble damages. Essentially similar language was carried over to the Revised Statutes of 1836, the Penal Code of 1881, the Code of Civil Procedure, the Penal Code of 1909, and entered the Judiciary Law as § 487 when the present Penal Law was enacted in 1965. The Court remarked on the fact that the law has been thus essentially unchanged for over seven centuries, entering our law before the adoption of the Constitution.

The law is not related to the common-law claim for fraud, it is “a unique statute of ancient origin in the criminal law of England.” Therefore, the Court concluded in Amalfitano that the cause of action was not related to fraud, and that therefore the fact that the defendants there had not succeeded in deceiving the court did not rule out a claim under Judiciary Law § 487. Relying on that decision, the Appellate Division here held that the claim was one for a liability or penalty created by statute, and that the three-year period of CPLR 214 (2) applied.

The Court of Appeals disagreed, and again searched legal history, this time of colonial New-York. In colonial times, the common law of the mother country, as well as its statute law, both became part of the common law of the colony, and not its common and statute law. The statute law of the mother country became part of the law of the colony by common consent, and not by legislative enactment, and thus became common law. Since the statute law of the mother country included the claim for attorney deceit, it existed here at common law before its codification into statute in 1787. While the 1787 enactment added the award of treble damages, it did not create the claim. A statute which merely adds an additional remedy to an existing cause of action does not create a new cause so as to bring it within CPLR 214 (2).
Therefore, the catch-all six-year limitations period applies, and the claim is deemed timely interposed.

I mentioned a caveat for legal malpractice cases. The claim asserted here was a pure attorney-deceit claim, and dealt with misstatements made by the attorneys in an adversary relationship with the plaintiff. Where the attorney deceit occurs in the course of an attorney-client relationship, and the claim is part of a legal malpractice complaint, CPLR 214 (6) applies, making the limitations period three years. This happened in Farage v Eisenberg, which I discussed on January 22.