Articles

Melcher v. Greenberg Traurig, LLP, et al. 2014 N.Y. LEXIS 581; 2014 NY Slip Op 2213

In a recent decision, Melcher v. Greenberg Traurig, LLP, the New York Court of Appeals held, in distinguishing its own prior decision, as well as a number of cases in both the trial and appellate courts, that attorney deceit claims arising under Judiciary Law § 487 are subject to a six-year statute of limitations. Judiciary Law § 487 sets forth that it is a criminal misdemeanor, and allows for civil treble damages, against attorneys who are “guilty of any deceit or collusion, or consentto any deceit or collusion, with intent to deceive the court or any party.” Reversing the Appellate Division, First Department, the Court of Appeals unanimously held that the six-year statute of limitations under CPLR § 213(1), rather than the three-year statute of limitations under CPLR § 214(2), governs Judiciary Law § 487 claims.

At issue in this case was whether a cause of action for attorney deceit was created by statute, namely, Judiciary Law § 487 and its predecessors, such that CPLR § 214(2) is applicable, or under common law. CPLR § 214(2) imposes a three-year statute of limitations on those actions “to recover upon a liability, penalty or forfeiture created or imposed by statute.” In contrast, CPLR § 213(1) imposes a six-year statute of limitations on those residual actions “for which no limitation is specifically prescribed by law.” 

The Appellate Division, First Department had held that a “cause of action under Judiciary Law § 487 is purely statutory in nature and therefore subject to the three-year statute of limitations.” In so doing, the First Department relied on a prior Court of Appeals decision, Amalfitano v. Rosenberg, which held that Judiciary Law § 487 was not based on common-law fraud, but rather on English statutory law dating back to 1275.

In a surprising reversal, the Court of Appeals rejected the First Department’s rationale and held that the enactment of Judiciary Law § 487 did not create the cause of action for attorney deceit, but rather enhanced the penalties arising therefrom. The Court of Appeals cited to cases supporting its position and asserted that the statute merely “enlarges the common-law scheme of liability or grants additional remedies is insufficient to bring it within CPLR § 214(2).” Further, the Court of Appeals found that while a cause of action under Judiciary Law § 487 originated in the English Statute of Westminster, the fact that it is traceable to a statute does not necessarily make the action one in which one recovers a penalty imposed by a statute. Because the claim was deemed to arise under New York common law, not a statute, the Court applied the catch-all six-year statute of limitations period. 

This ruling will allow disgruntled clients and adversaries to sue lawyers for claims sounding in deceit and collusion. It is also a boon for plaintiffs with the applicability of a six-year statute of limitations, which is significantly longer than the three years allowed to bring a legal malpractice claim in New York. See CPLR § 214(6). Accordingly, this holding leaves attorneys considerably more vulnerable to suit, and to the harsh remedies allowed by this statute, which include the imposition of treble damages in a civil suit as well as potential criminal penalties against an attorney. We anticipate that the Court’s refusal to adopt the shorter limitations period will result in an increase in claims against New York attorneys sounding in fraud, deceit and collusion, along with a substantial increase in potential exposure arising from the prospect of treble damages.

Related Practices


Related Attorneys

Find an Attorney

Each of the firm's offices include partners, associates and a professional staff dedicated to meeting the challenge of providing the firm's clients with extraordinary service.