Opinion
0016955/2007.
July 23, 2008.
LAREDDOLA, LESTER ASSOCIATES, LLP, Garden City, New York, Attorney for Plaintiff.
L'ABBATE, BALKAN, COLAVITA CONTINI, LLP, Garden City, New York, Attorney for Defendants.
Upon the following papers numbered 1 to 71 read on this motion and cross motion: Notice of Motion and supporting papers 1-17; Notice of Cross Motion/Opposition and supporting papers 18-53; Affirmation in Reply/Opposition and supporting papers 54 — 66; Sur-Reply/Reply Affirmation 67 — 71; it is,
ORDERED that this motion (001) by the defendant for an order dismissing the complaint in its entirety pursuant to CPLR 3211(a)(1) and (7) and for the imposition of sanctions pursuant to 22 NYCRR 130-1.1 is decided as follows:
1) That part of the defendant's application to dismiss the complaint is denied as to the first cause of action alleging a violation of Judiciary Law § 487;
2) that part of the defendant's application to dismiss the complaint is granted as to the remaining causes of action (second and third; claiming fraud and misrepresentation); and,
3) that part of the defendant's application seeking sanctions pursuant to 22 NYCRR 130-1.1 is denied; and it is furtherORDERED that this cross motion (002) by the plaintiff is decided as follows:
1) That part of the plaintiff's cross motion requesting the assignment of this action to the Honorable Joseph Farneti is granted and this action shall be assigned after the preliminary conference to the Honorable Joseph Farneti, to whom a related case is assigned (Index No. 5511/07), without prejudice to further challenge of said assignment before the justice assigned;
2) that part of the plaintiff's cross motion seeking leave to file an amended complaint is not addressed as the plaintiff's amendment of the complaint was as of right pursuant to CPLR 3025(a); said amended verified complaint, however, is dismissed as to the second and third causes of action leaving only the first cause of action which is for violations of Judiciary Law § 487;
3) the amended verified complaint, as amended consistent with this decision and order, shall be served upon the defendant in accordance with CPLR 2103(b)(1), (2) or (3) within 30 days of the entry of this decision and order with the Clerk of the Court; and,
4) that part of the cross motion seeking the alternate relief of leave to replead in the event that the complaint is dismissed is denied as moot; and it is furtherORDERED that the parties are directed to appear for the preliminary conference already scheduled for July 23, 2008 at the Supreme Court, DCM Part, Room A362, One Court Street, Riverhead, New York at 10:00 a.m.
This is an action brought by a corporation, Specialized Industrial Services Corp. (hereinafter SISC) against an attorney, Benjamin E. Carter (hereinafter Carter), for violations of Judiciary Law § 487, fraud and misrepresentation. This action arises from a prior action against SISC brought by Dave Sandel, Inc. — a corporation represented by Carter — in which a default judgment was entered against SISC after an inquest as to damages (Index No. 16537/04).
SISC now claims that Carter knowingly introduced fraudulent documents at the inquest and that this was not merely in the context of that action but was part of a larger fraudulent scheme ( see Judiciary Law § 487) encompassing other law suits which, it claims, were patently without merit against other corporations and individuals through the use of fabricated evidence as well as the suborning of perjury with the intent to create and/or inflate damages.
Carter argues that there is no showing of a larger fraudulent scheme and, in addition, as to the separate fraud and misrepresentation claims, there are no allegations of reliance by SISC upon Carter's acts for said alleged fraud and misrepresentation and, thus, SISC failed to state such causes of action as a matter of law.
In general, in considering a motion to dismiss pursuant to CPLR 3211(a)(7), the court's role is limited to "determining whether a cause of action is stated within the four corners of the complaint, and not whether there is evidentiary support for the complaint [citations omitted]" ( Frank v Daimler Chrysler Corp., 292 AD2d 118, 121, 741 NYS2d 9, 12 [1st Dept 2002], lv denied 99 NY2d 502, 752 NYS2d 589). In addition, the pleading "is to be afforded a liberal construction (CPLR 3026), and the court should accept as true the facts alleged in the complaint, accord the plaintiff the benefit of every possible inference, and only determine whether the facts, as alleged, fit within any cognizable legal theory [citations omitted]" ( Id., at 120-121, 12).
The court shall also consider allegations as true in any affidavits in support of the complaint and in opposition to a motion to dismiss pursuant to CPLR 3211(a)(7) to the limited extent that such affidavits remedy defects in the complaint but not for further evidentiary support of otherwise properly pleaded claims ( see Nonnnon v City of New York, 9 NY3d 825, 827, 842 NYS2d 756; Rovello v Orofino Realty Co., 40 NY2d 633, 635-636, 389 NYS2d 314, 315)
In support of this motion, the defendant argues that this action is merely a collateral attack on the default judgment in Dave Sandel, Inc. v SISC and since the only remedy for such an attack is by way of a motion to vacate — which was made, granted and reversed on appeal ( see Dave Sandel, Inc. v Specialized Industrial Services Corp., 35 AD3d 790, 826 NYS2d 735 [2d Dept 2006]) — this action must be dismissed. The defendant also argues that there is no support for a larger fraudulent scheme and in the absence of such support, a cause of action pursuant to Judiciary Law § 487 does not lie. As to the respective causes of action for fraud and misrepresentation, a necessary element for each is reliance by the plaintiff upon such actions by the defendant ( see Ozelkan v Tyree Bros. Envtl. Servs., Inc., 29 AD3d 877, 815 NYS2d 265 [2d Dept 2004][fraud]; Fresh Direct, LLC v Blue Martini Software, Inc., 7 AD3d 487, 776 NYS2d 301 [2d Dept 2004][misrepresentation]). In this action, the defendant contends that there are no sufficient allegations to show any such reliance by the plaintiff.
Carter raises res judicata and collateral estoppel arguments based upon this prior appellate division decision but the issue regarding a larger fraudulent scheme — as opposed to a limited fraudulent scope pertaining to a single case — has not been litigated and, thus, these arguments are inapplicable here.
In opposition, SISC contends that the original and amended complaint as well as its affidavits submitted on this motion and cross motion contain sufficient allegations to support the claim that the fraudulent acts allegedly committed by Carter were not limited to that underlying action but were part of a larger fraudulent scheme involving other corporations and individuals. The basis premise alleged by SISC is that Dave Sandel, Inc. — a corporation engaged in providing construction equipment and related services to construction jobs — and Dave Sandel individually had business relationships with SISC and other corporations and individuals which involved barter agreements in which the value of services bartered for were credited against each other with certain net balances left over.
After fall-outs with these particular corporations and individuals, SISC alleges that Dave Sandel, Inc. and Dave Sandel, with the knowledge, participation and cooperation of Carter, brought law suits against these corporations and individuals which failed to reflect the barter agreements and, instead, created documents including replacement invoices for the gross charges without the bartered set-offs. Indeed, in support of this claim, SISC provides allegations as well as affidavits with specifics as to the cases, corporations and individuals as well as the particulars as to the deceitful or collusive conduct. This, according to SISC, shows the larger fraudulent scheme which supports a claim for violations of Judiciary Law § 487.
Section 487 of the Judiciary Law, entitled "Misconduct by attorneys," provides in pertinent part:
"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;
* * *
Is guilty of a misdemeanor, and in addition to the punishment prescribed therefore by the penal law, he forfeits to the party injured treble damages, to be recovered in a civil action."
A criminal conviction is not a condition precedent to bringing a civil action pursuant to Judiciary Law § 487 but the plaintiff must allege and prove that the attorney engaged in a "chronic, extreme pattern of legal delinquency" ( Schindler v Issler Schrage, P.C., 262 AD2d 226, 228, 262 NYS2d 361, 362 [1st Dept 1999], lv dismissed 94 NY2d 791, 700 NYS2d 422, rearg denied 94 NY2d 859, 704 NYS2d 534 [quoting Wiggin v Gordon, 115 Misc 2d 1071, 1077, 455 NYS2d 205 (Civ Ct, Queens County 1982)]).
Here, after a review within the four corners of the complaint, the amended complaint and the supporting affidavits, the court finds ample support for the allegation that Carter was engaged in a larger fraudulent scheme than merely the attempt to procure a single judgment in a single case, that is; an "extreme pattern of legal delinquency" ( id.). The plaintiff has sufficiently alleged, to withstand a motion to dismiss pursuant to CPLR 3211(a)(7) for failure to state a cause of action, that Carter engaged in such a pattern of legal delinquency which included knowingly engaging in acts of deceit or collusion with the intent to deceive the court or a party ( see Judiciary Law § 487). Accordingly, that part of the defendant Carter's motion which seeks dismissal of the cause of action for violations of Judiciary Law § 487 for failure to state a cause of action is denied.
As to the separate claims of fraud and misrepresentation, a necessary element to plead either claim is that the plaintiff relied upon said fraud or misrepresentation ( see Ozelkan v Tyree Bros. Envtl. Servs., Inc., 29 AD3d 877, 815 NYS2d 265 [2d Dept 2004][fraud]; Fresh Direct, LLC v Blue Martini Software, Inc., 7 AD3d 487, 776 NYS2d 301 [2d Dept 2004] [misrepresentation]). Here, while the court may have allegedly been deceived, there is no showing in the pleadings or supporting affidavits of any such reliance on the part of SISC. Accordingly, the claims for fraud and misrepresentation in the original and amended complaints are dismissed.
Lastly, since there is merit to the stated cause of action premised upon alleged violations of Judiciary Law § 487, the request for sanctions pursuant to 22 NYCRR 130-1.1 is denied.
Turning now to SISC's cross motion, Carter's opposition is only to the extent that the cross motion seeks a "reassignment" of the case to the Honorable Justice Joseph Farneti and insofar as it seeks leave to replead in the event the complaint is dismissed.
Since the complaint is not being dismissed in its entirety, the application for leave to replead is denied as moot. As to the "reassignment," this action has not been assigned to any IAS justice as yet and such an assignment will abide the holding of the preliminary conference in the DCM-J Part of the Supreme Court. Once the preliminary conference is held, however, this case will be assigned to Justice Farneti as the guidelines for a "related case" apply to it. Such an assignment, however, is without prejudice to any party seeking a reassignment to another IAS part upon application to the justice assigned at the time of such an application.
In conclusion, this action shall continue by way of an amended verified complaint containing the single cause of action for violations of Judiciary Law § 487 and the action shall be assigned, without prejudice, as a related case to Justice Farneti following the completion of the preliminary conference.
This decision constitutes the order of the court.