James L. Melcher, Appellant,v.Greenberg Traurig, LLP, et al., Respondents.BriefN.Y.February 13, 2014To Be Argued By: JAMES T. POTTER Time Requested: 20 Minutes APL-2013-00043 New York County Clerk’s Index No. 650188/2007 Court of Appeals STATE OF NEW YORK JAMES L. MELCHER, Plaintiff-Appellant, —against— GREENBERG TRAURIG, LLP and LESLIE D. CORWIN, Defendants-Respondents. REPLY BRIEF FOR PLAINTIFF-APPELLANT d JAMES T. POTTER HINMAN STRAUB PC 121 State Street Albany, New York 12207 Telephone: (518) 436-0751 Facsimile: (518) 436-4751 JEFFREY A. JANNUZZO 10 East 40th Street, 35th Floor New York, New York 10016-0301 Telephone: (212) 932-8524 Facsimile: (212) 932-1165 Attorneys for Plaintiff-Appellant Date Completed: September 13, 2013 i TABLE OF CONTENTS TABLE OF AUTHORITIES ................................................................................... iii PRELIMINARY STATEMENT ...............................................................................1 ARGUMENT .............................................................................................................4 I. THE THREE-YEAR LIMITATIONS PERIOD OF CPLR 214(2) DOES NOT APPLY TO JUDICIARY LAW § 487 CLAIMS .............................................4 A. Because Liability for Attorney Deceit Existed at English Common Law, the Three-Year Limitations Period of CPLR 214(2) Does Not Apply to Judiciary Law § 487 Claims.......................7 1. Liability for Attorney Deceit Existed at English Common Law Before It Was Codified by Statute......................................7 2. Plaintiff’s Position Is Completely Consistent with This Court’s Amalfitano Decision.......................................................9 3. Defendants’ Arguments Concerning Criminal Liability Are Irrelevant and Wrong .........................................................11 4. Defendants’ Claim that Liability for Attorney Deceit Required a Showing of Reliance at English Common Law Is Wrong............................................................................12 B. Because Liability for Attorney Deceit Existed at New York Common Law Before It Was Codified by Any New York Statute, CPLR 214(2) Does Not Apply Here ......................................17 II. DEFENDANTS ARE ESTOPPED FROM ASSERTING THEIR STATUTE-OF- LIMITATIONS DEFENSE .................................................................................19 A. The Facts Alleged in the Complaint Must Be Taken as True.............20 B. Defendants’ Fundamental Act of Deceit Was Not Concealing the Document’s Burning But Concealing that the Document Was Fabricated ....................................................................................22 C. Corwin Used Intimidation and Threats of Sanctions to Prevent Plaintiff from Bringing This Judiciary Law § 487 Claim...................27 ii D. At the Very Least, There are Questions of Fact that Require a Reversal ...............................................................................................34 III. EVEN UNDER A THREE-YEAR LIMITATIONS PERIOD, THE COURT SHOULD DEEM PLAINTIFF’S CLAIM TIMELY BY APPLYING A DISCOVERY ACCRUAL TO JUDICIARY LAW § 487 CLAIMS..........................35 A. A Discovery Accrual Would Further the Policy Behind Judiciary Law § 487 ............................................................................35 B. The Appellate Division Recognized the Usefulness of a Discovery Rule for Judiciary Law § 487 Claims................................36 C. Plaintiff Discovered the Crucial Facts Underlying the Present Claim Less Than Three Years Before He Filed Suit ..........................38 D. At the Very Least There Are Questions of Fact Regarding the Accrual of Plaintiff’s Claim ................................................................39 IV. A RETROACTIVE SHORTENING OF THE LIMITATIONS PERIOD FOR PLAINTIFF’S JUDICIARY LAW § 487 CLAIM WOULD VIOLATE PLAINTIFF’S DUE-PROCESS RIGHTS.............................................................40 A. This Court Can Review the Due-Process Issue ..................................40 B. Adopting a Three-Year Limitations Period for Judiciary Law § 487 Claims Would Retroactively Shorten the Statute of Limitations for Such Claims ...............................................................41 CONCLUSION........................................................................................................44 iii TABLE OF AUTHORITIES Page(s) CASES 317 W. 187 Assocs. v. Dannenberg, 159 A.D.2d 245 (1st Dep’t 1990) .......................................................................23 Aetna Life & Cas. Co. v. Nelson, 67 N.Y.2d 169 (1986) ...........................................................................................5 Amalfitano v. Rosenberg, 12 N.Y.3d 8 (2009) ......................................................................................passim Anwar v. Fairfield Greenwich Ltd., 728 F. Supp. 2d 354 (S.D.N.Y. 2010) ...............................................................16 Augstein v. Levey, 3 A.D.2d 595 (1st Dep’t 1957) ..........................................................................26 Banca Commerciale Italiana v. Northern Trust Int’l Banking Corp., 160 F.3d 90 (2d Cir. 1998) ...................................................................................6 Beers v. Hotchkiss, 256 N.Y. 41 (1931) .......................................................................................17, 18 Bogardus v. Trinity Church, 4 Paige Ch. 178 (1833) ................................................................................ 17, 18 Brothers v. Florence, 95 N.Y.2d 290 (2000) ...................................................................................41, 43 Clowes v. Pulver, 258 A.D.2d 50 (3d Dep’t 1999)..........................................................................43 Corsello v. Verizon New York, Inc., 18 N.Y.3d 777 (2012) ................................................................................... 32-33 Flanagan v. Mount Eden General Hospital. 24 N.Y.2d 427 (1969) .........................................................................................36 Gaidon v. Guardian Life Insurance Co. of America, 96 N.Y.2d 201 (2001) ..................................................................................passim TABLE OF AUTHORITIES (continued) Page(s) iv Guardian Life Ins. Co. v. Handel, 190 A.D.2d 57 (1st Dep’t 1993) .........................................................................41 Hartnett v. New York City Transit Authority, 86 N.Y.2d 438 (1995) ..................................................................................passim Harvey v. Metro. Life Ins. Co., 34 A.D.3d 364 (1st Dep’t 2006) .........................................................................32 Jorgensen v. Silverman, 224 A.D.2d 665 (2d Dep’t 1996)........................................................................42 Lawrence v. Miller, 11 N.Y.3d 588 (2008) ....................................................................... 20-21, 22, 39 Looff v. Lawton, 14 Hun 588 (2d Dep’t 1878)...............................................................................10 Melcher v. Apollo Med. Fund Mgmt., L.L.C., 25 A.D.3d 482 (1st Dep’t 2006) .........................................................................23 Motor Vehicle Accident Indemnification Corp. v. Aetna Cas. & Surety Co., 89 N.Y.2d 214 (1996) ...........................................................................................6 New York City Transit Auth. v. Morris J. Eisen, P.C., 203 A.D.2d 146 (1st Dep’t 1994) .......................................................................41 Nussenzweig v. diCorcia, 9 N.Y.3d 184 (2007) ...........................................................................................43 Orr v. Kinderhill Corp., 991 F.2d 31 (2d Cir. 1993) ............................................................................... 6-7 Russell v. Société Anonyme, 242 A.D. 801 (2d Dep’t 1934), aff’d on other grounds, 268 N.Y. 173 (1935) .................................................................................... 17-18 In re Seventh Judicial Dist. Asbestos Litig., 4 Misc. 3d 457 (N.Y. Sup. Ct. 2004)..................................................................25 TABLE OF AUTHORITIES (continued) Page(s) v Simcuski v. Saeli, 44 N.Y.2d 442 (1978) .............................................................................21, 32, 33 State v. 7040 Colonial Rd. Assocs. Co., 176 Misc. 2d 367 (N.Y. Sup. Ct. 1998)..............................................................32 State v. Bronxville Glen I Assocs., 181 A.D.2d 516 (1st Dep’t 1992) .......................................................................16 State v. Cortelle Corp., 38 N.Y.2d 83 (1975) .........................................................................................5, 6 Van Rensselaer v. Hays, 19 N.Y. 68 (1859) ......................................................................................... 18-19 Vigliotti v. North Shore Univ. Hosp., 24 A.D.3d 752 (2d Dep’t 2005)..........................................................................34 Yatter v. William Morris Agency, 256 A.D.2d 260 (1st Dep’t 1998) .......................................................................39 STATUTES Business Corporation Law § 1101(a)(2) ...................................................................6 CPLR 213(1) .....................................................................................................passim CPLR 214(2) .....................................................................................................passim DR 7-102 (Former) ..................................................................................................24 Executive Law § 63(12).............................................................................................6 General Business Law, article 23-A ........................................................................16 General Business Law § 349....................................................................................32 General Business Law § 352-c(1)............................................................................32 General Municipal Law § 51 ...................................................................................43 Judiciary Law § 487..........................................................................................passim TABLE OF AUTHORITIES (continued) Page(s) vi L. 1786, ch. 35 .........................................................................................................18 L. 1787, ch. 35 .........................................................................................................18 OTHER AUTHORITIES 22 N.Y.C.R.R. §§ 130-1.1-a(b)................................................................................25 22 N.Y.C.R.R. §§ 130-1.1(c) ...................................................................................25 22 N.Y.C.R.R. § 1200.33.........................................................................................24 AMERICAN HERITAGE DICTIONARY OF THE ENGLISH LANGUAGE (5th Ed. 2011) .....................................................................................................12 JONES, BLACKSTONE’S COMMENTARIES ON THE LAWS OF ENGLAND (1916)..................................................................................................8, 12, 13, 14 2 POLLOCK & MAITLAND, THE HISTORY OF ENGLISH LAW (2nd Ed. 1898) ....................................................................................8, 12, 14, 15 SIR EDWARD COKE, SECOND INSTITUTES ON THE LAWS OF ENGLAND ................... 7-8 The Discovery Provisions of Article Two of the CPLR and Other Problems With the Statute of Limitations, TENTH ANNUAL REPORT OF THE NEW YORK JUDICIAL CONFERENCE, 1965.............................................................. 35-36 W. PAGE KEETON ET AL., PROSSER AND KEETON ON THE LAW OF TORTS, § 105, at 727-28 (5th Ed. 1984).............................................................................13 PRELIMINARY STATEMENT This appeal concerns the timeliness of a claim under Judiciary Law § 487 that a lawyer deceived the court by misrepresenting the genuineness of a forged contract amendment. Under the First Department majority’s approach – as advocated by Defendants – a lawyer must commence an action against opposing counsel based on the mere possibility of attorney deceit on the court. This is not sound policy. On this appeal, Defendants fail to address many of Plaintiff’s main arguments as to why the Appellate Division majority erred and why his Judiciary Law § 487 claim should be allowed to proceed. First, in response to Plaintiff’s argument that a six-year limitations period applies to Judiciary Law § 487 claims, Defendants fail to even mention the scholarly authority establishing that liability for attorney deceit originally existed at common law – COKE and POLLOCK & MAITLAND – or the case law showing that CPLR 214(2) cannot be applied to such common-law liabilities – Cortelle, Hartnett, and Gaidon. Those authorities never appear in Defendants’ brief. Similarly, Defendants attempt to summarily dismiss Plaintiff’s legal authority showing that English statutes were absorbed into New York’s common law without ever citing, let alone distinguishing, the relevant decisions – Bogardus, Beers, and Russell. Instead, Defendants contend that this Court decided the 2 statute-of-limitations question in Amalfitano and that Plaintiff is seeking to overrule that decision. That is plainly wrong. Amalfitano did not even address what statute of limitations applies to Judiciary Law § 487, and it remains a question of first impression for this Court. Second, Defendants maintain that the doctrine of equitable estoppel should not prevent them from asserting a statute-of-limitations defense. However, they never address Plaintiff’s principal arguments. Defendants never explain how or when they contend Plaintiff could have known that Defendant Corwin, an established member of the bar, had knowingly filed a fabricated document in support of a motion to dismiss. At the time of that motion, the only evidence available was Corwin’s short-lived omission regarding the document’s scorched condition. This evidence was countered by Corwin’s client’s sworn insistence upon the document’s authenticity. Defendants also fail to answer the key question of how Plaintiff could accuse Corwin in good faith of attorney deceit, when Corwin personally swore to two courts that the document was bona fide and would soon be authenticated by a witness. Corwin even demanded that the court sanction Plaintiff’s counsel for suggesting that he had relied on false evidence, a tactic that made it virtually impossible for Plaintiff to assert a Judiciary Law § 487 claim. 3 Defendant Corwin’s own sworn statements as to the document’s authenticity and his attacks on Plaintiff’s counsel prevented Plaintiff from bringing suit until he could uncover that Corwin’s sworn representations to the court were untrue. Because Defendant Corwin himself erected the roadblocks that delayed Plaintiff’s claim to redress Corwin’s shocking conduct, this is a textbook case in which to apply equitable estoppel. In addition, Defendants mistakenly argue that this Court should defer to the “findings of fact below” even though this appeal arises on a motion to dismiss. There are no findings of fact below, nor could there have been. The narrow issue presented here is whether Plaintiff’s Complaint sufficiently alleges facts that justify the application of equitable estoppel. Plaintiff’s Complaint does so in abundance, justifying an estoppel as a matter of law. If there is any factual question as to whether Plaintiff’s delay in suing was excusable, that is a question that can only be answered by a jury at trial. Plaintiff’s Complaint raises very grave questions of attorney integrity and truthfulness toward the courts of this State. Yet Defendants would have Plaintiff’s claim for egregious attorney deceit thrown out of court because Plaintiff did not leap on mere surmise or conjecture to sue a prominent member of the Bar for unethical and illegal conduct. Moreover, once he had gathered the necessary proof, Plaintiff filed his claim two weeks later, well within the six-year statute of 4 limitations that controlled in the Appellate Division, First Department, where the case was pending. Defendants should not be permitted to escape judicial scrutiny of their unscrupulous conduct on such baseless grounds. Plaintiff’s unrefuted showing that liability for attorney deceit existed at common law, and is thus governed by a six- year statute of limitations, requires a reversal here. At the very least, in light of the policies recognized by this Court in Amalfitano, the limitations period should be tolled until either the plaintiff discovered the attorney’s deceit or the defendant stopped obstructing the plaintiff from bringing suit. By any measure, Plaintiff’s claim is timely. The decision of the Appellate Division majority should therefore be reversed, and Plaintiff’s Judiciary Law § 487 claim should be reinstated. ARGUMENT I. THE THREE-YEAR LIMITATIONS PERIOD OF CPLR 214(2) DOES NOT APPLY TO JUDICIARY LAW § 487 CLAIMS This appeal presents the question of first impression of which statute of limitations applies to Plaintiff’s Judiciary Law § 487 claim. The answer to this question turns on whether liability under Judiciary Law § 487 is a “liability created by statute” within the meaning of CPLR 214(2). This Court has consistently explained that CPLR 214(2) does not apply to liabilities that existed at common law and were later codified by statute: 5 In State v. Cortelle Corp., this Court held that CPLR 214(2) only applies “to actions for wrongs not recognized in the common or decisional law,” regardless of whether a statute has changed the remedies available for the relevant wrong. 38 N.Y.2d 83, 86 & 88 (1975) (emphasis added). In Hartnett v. New York City Transit Authority, the Court explained that “[a] proper test of whether a particular liability is one that was created by statute is to determine whether the liability is a governmental statutory denouncement of a human action heretofore undenounced.” 86 N.Y.2d 438, 444 (1995) (emphasis added) (internal quotation marks omitted). In Gaidon v. Guardian Life Insurance Co. of America, the Court reaffirmed that “CPLR 214(2) does not apply to liabilities existing at common law which have been recognized or implemented by statute.” 96 N.Y.2d 201, 208 (2001) (internal quotation marks omitted). In dismissing Plaintiff’s Judiciary Law § 487 claim, the Appellate Division failed to address any of this authority, and simply concluded without any analysis that “[a] cause of action under Judiciary Law § 487 is purely statutory in nature and therefore subject to the three-year statute of limitations.” R-xiv. On this appeal, Defendants adopt a similar approach of simply ignoring this controlling authority. Defendants never address Cortelle, Hartnett, or Gaidon and, by their silence, apparently concede that these cases control. In fact, the cases that Defendants do cite all acknowledge Plaintiff’s central point: that CPLR 214(2) “does not apply to liabilities existing at common law which have been recognized or implemented by statute.” Aetna Life & Cas. Co. v. Nelson, 67 6 N.Y.2d 169, 174 (1986) (citing, inter alia, Cortelle, 38 N.Y.2d 83) (Defts’ Br. at 21-22); Motor Vehicle Accident Indemnification Corp. v. Aetna Cas. & Surety Co., 89 N.Y.2d 214, 220-21 (1996) (CPLR 214(2) does not apply to “claims which, although provided for in a statute, merely codify or implement an existing common-law liability”) (Defts’ Br. at 21); Banca Commerciale Italiana v. Northern Trust Int’l Banking Corp., 160 F.3d 90, 94 (2d Cir. 1998) (CPLR 214(2) “does not apply to liabilities existing at common law which have been recognized by statute”) (Defts’ Br. at 22). As shown below and in Plaintiff’s opening brief, liability for attorney deceit existed at English common law before it was codified in the First Statute of Westminster. Then, when liability for attorney deceit was imported into New York, it became part of New York’s common law. It was only after becoming part of New York common law that liability for attorney deceit was codified by statute. For both those reasons, the three-year limitations period of CPLR 214(2) simply does not apply to Judiciary Law § 487 claims. Because no other provision of law establishes a statute of limitations for Judiciary Law § 487 claims, the Court must apply CPLR 213(1)’s residual statute of limitations, which applies to actions “for which no limitation is specifically prescribed by law.” See Cortelle, 38 N.Y.2d at 89 (applying CPLR 213(1)’s “residual” statute of limitations to claims under Business Corporation Law § 1101(a)(2) and Executive Law § 63(12) 7 after deeming CPLR 214(2) inapplicable to those claims); Orr v. Kinderhill Corp., 991 F.2d 31, 34-35 (2d Cir. 1993) (applying Cortelle to claims under Debtor Creditor Law 273-a, and holding that CPLR 213(1) governs). Under this six-year statute of limitations of CPLR 213(1), Plaintiff’s claim should be reinstated. A. Because Liability for Attorney Deceit Existed at English Common Law, the Three-Year Limitations Period of CPLR 214(2) Does Not Apply to Judiciary Law § 487 Claims 1. Liability for Attorney Deceit Existed at English Common Law Before It Was Codified by Statute Put simply, the three-year limitations period of CPLR 214(2) does not apply to Judiciary Law § 487 claims because liability for attorney deceit existed under English common law before it was ever codified in any statute. As this Court explained in Amalfitano v. Rosenberg, liability for attorney deceit goes as far back as the year 1275 to England’s First Statute of Westminster. See 12 N.Y.3d 8, 12 (2009). Beyond that, according to every available authority, liability for attorney deceit existed at English common law before the passage of the First Statute of Westminster. In Amalfitano, this Court traced the history of liability for attorney deceit back to its initial statutory codification in England through the First Statute of Westminster. But this liability existed even earlier: Sir Edward Coke explained that “deceit of the kings courts” was “against the common law,” and the First Statute of Westminster was thus “made in affirmance of the common law; only it 8 added a greater punishment.” SIR EDWARD COKE, SECOND INSTITUTES ON THE LAWS OF ENGLAND, Ch. 29, pp. 212-13, Appellant’s Compendium of Other Authorities (“C-”) at 17-18 (emphasis added).1 Pollock and Maitland similarly described the writ of “deceptio curiae” – deceit of the court – that existed during the reign of King John from 1199 to 1216. See 2 POLLOCK & MAITLAND, THE HISTORY OF ENGLISH LAW (2nd Ed. 1898), p. 535, C-116. And the Jones BLACKSTONE’S COMMENTARIES ON THE LAWS OF ENGLAND observed that “deception of the court” was “[t]he first form of deceit which was recognized by the common law as a ground of legal liability.” JONES, BLACKSTONE’S COMMENTARIES ON THE LAWS OF ENGLAND (1916), Vol. II, pp. 1732-33 & n.30, C- 176-77 (emphasis added). All of the available evidence thus confirms that deceit of the court was an actionable wrong at English common law, well before the passage of any statute regarding such conduct. Indeed, the evidence from Coke as well as Pollock and Maitland is so overwhelming that Defendants, having no answer for those authoritative sources, choose to ignore them entirely. These sources demonstrate that the New York statute on attorney deceit was not “a governmental statutory 1 While preparing this reply brief, Plaintiff’s counsel noticed a citation error in our opening brief. The phrase “acts of deceit upon the court were a violation of the common law” (Opening Br. at 30) was meant to summarize Coke’s account, but was inadvertently placed inside quotation marks. Plaintiff’s counsel apologize for this oversight, but note that the phrase is an accurate summary of Coke’s account. 9 denouncement of a human action heretofore undenounced.” Hartnett, 86 N.Y.2d at 444 (internal quotation marks omitted). Because the origins of liability for attorney deceit were at common law, it is a liability “existing at common law which ha[s] been recognized or implemented by statute,” and the three-year limitations period of CPLR 214(2) does not apply. Gaidon, 96 N.Y.2d at 208 (internal quotation marks omitted). 2. Plaintiff’s Position Is Completely Consistent with This Court’s Amalfitano Decision To avoid this clear conclusion, Defendants attempt to muddy the issue by claiming that Plaintiff is asking the Court to overturn its decision in Amalfitano v. Rosenberg. See Defts’ Br. at 20 & 23. Nothing could be further from the truth. This Court’s decision in Amalfitano was completely correct – as far as it went. In that case, the Court merely considered whether an attempted but unsuccessful deceit could create liability under Judiciary Law § 487. The Court did not consider which limitations period applies to Judiciary Law § 487 claims. That is a question of first impression presented by this appeal. While addressing the narrow issue before it, the Amalfitano Court did observe that Judiciary Law § 487 “does not derive from common-law fraud,” but “[i]nstead descends from the first Statute of Westminster.” 12 N.Y.3d at 12 (internal quotation marks omitted). That point was entirely correct, and Plaintiff 10 completely agrees with it. In fact, Plaintiff fully embraced that point in the amicus brief he filed in Amalfitano. (R. 256).2 But that point has nothing to do with the current question: that is, whether, even before the enactment of the First Statute of Westminster, English common law prohibited attorney deceit. The present case requires the Court to delve even deeper into the past, where the scholarly evidence irrefutably establishes that liability for attorney deceit existed at English common law long before the passage of the First Statute of Westminster. Defendants cite Amalfitano’s discussion of Looff v. Lawton, 14 Hun 588, 589 (2d Dep’t 1878), in claiming that “liability against attorneys under Judiciary Law § 487 only exists as a result of the statute.” Defts’ Br. at 24-25. This is a distortion of both Amalfitano and Looff. Those decisions addressed the definition of attorney deceit under New York statutes and in no way discussed 2 Pointing to a couple of isolated phrases taken out of context, Defendants claim Plaintiff’s current position conflicts with the position he took as an amicus in Amalfitano and in an affirmation regarding a stay of discovery. Defts’ Br. at 28. But Plaintiff’s amicus brief in Amalfitano, like the Court’s decision in that case, focused on distinguishing liability under Judiciary Law § 487 from liability for common-law fraud. R-256. Moreover, Plaintiff’s affirmation, filed in support of a motion to lift a discovery stay in this matter, made a passing comment about the origins of Judiciary Law § 487 while stating that CPLR 213(1)’s six-year statute of limitations should apply here. R-260. Plaintiff’s counsel made that remark in support of a motion that did not involve the merits of the statute-of-limitations defense, and before conducting extensive legal research on the common-law origins of liability for attorney deceit. Such offhand remarks on unrelated motions cannot provide a basis for deciding a case of first impression in this Court. 11 whether liability for attorney deceit existed at English common law, prior to the enactment of the First Statute of Westminster. In short, this Court’s Amalfitano decision is perfectly consistent with Plaintiff’s position that the cause of action for attorney deceit embodied in Judiciary Law § 487 – and the First Statute of Westminster before it – actually has its origins in the common law. Such a claim should therefore be governed by the six-year statute of limitations of CPLR 213(1). 3. Defendants’ Arguments Concerning Criminal Liability Are Irrelevant and Wrong Defendants also try to avoid this conclusion by contending that “[t]here is nothing in any of the sources cited by Melcher indicating any criminal liability for attempted deceit existed regardless of whether the deceit was actually successful.” Defts’ Br. at 26-27 (emphasis in original). This statement is pure distraction. First, the distinction that Defendants try to make between criminal and civil liability is completely erroneous. As this Court explained in Hartnett, the crucial question for the purposes of CPLR 214(2) is whether the relevant liability is the product of “a governmental statutory denouncement of a human action heretofore undenounced.” Hartnett, 86 N.Y.2d at 444 (internal quotation marks omitted). Thus, regardless of whether liability for attorney deceit was categorized 12 as a criminal or civil wrong at English common law, such liability served to “denounce” the conduct of attorney deceit. Second, Defendants’ argument is plainly wrong because, at English common law, attorney deceit created both civil and criminal liability. According to Pollock and Maitland, the writ of deceptio curiae – i.e., deceit of the court – required the defendant “to answer, not only the private person whom he has defrauded, but also and in the first instance the king; [the defendant] is charged with having in some fashion or another ‘seduced’ or deceived the court.” POLLOCK & MAITLAND, p. 535, C-116. Pollock and Maitland went on to explain that, because of the punitive nature of the rule against attorney deceit, an attorney who committed such deceit “should be sent to gaol.”3 Id. The Jones BLACKSTONE’S COMMENTARIES ON THE LAWS OF ENGLAND confirms that an attorney who committed deceit “had to pay a fine to the king as well as damages to the [adversary].” JONES, pp. 1732-33, n.30, C-176-77. It is thus abundantly clear that attorney deceit resulted in both criminal and civil liability at English common law. 4. Defendants’ Claim that Liability for Attorney Deceit Required a Showing of Reliance at English Common Law Is Wrong Finally, Defendants argue that Judiciary Law § 487 does not descend from the English common-law wrong of attorney deceit because it does not require 3 “Gaol” is a variant English spelling of “jail.” See AMERICAN HERITAGE DICTIONARY OF THE ENGLISH LANGUAGE (5th Ed. 2011) at 722. 13 a showing of reliance, whereas reliance was required to state a claim for attorney deceit under English common law. See Defts’ Br. at 26-27. This, too, is simply incorrect. To support this contention, Defendants point primarily to an out-of- context citation to the Jones BLACKSTONE’S COMMENTARIES ON THE LAWS OF ENGLAND, which states that “[t]he first form of deceit which was recognized by the common law as a ground of legal liability was that which embodied a deception of the court.” JONES, pp. 1732-33, n.30, C-176-77. It was only later, after the enactment of the Second Statute of Westminster in 1285, that “under the influence of that statute, the action of deceit . . . began to be used for many other purposes than that of recovering damages for deceitful practices in court proceedings.” Id. This action of deceit was eventually “merged in or superseded by” an action that “became the general common-law remedy for fraudulent acts of any kind, which result in actual damage.” Id.4 Contrary to Defendants’ assertion, this account in no way shows that liability for attorney deceit at English common law required a showing of reliance. Rather, it suggests, if anything, that various crucial events in the development of common-law fraud – such as the enactment of the Second Statute of Westminster 4 Defendants also point to W. PAGE KEETON ET AL., PROSSER AND KEETON ON THE LAW OF TORTS, § 105, at 727-28 (5th ed. 1984) for a similar account. That account is not meaningfully different from the account recited in the Jones BLACKSTONE’S COMMENTARIES ON THE LAWS OF ENGLAND. 14 and various changes in writs – occurred long after liability for attorney deceit was recognized at English common law. Defendants cannot superimpose those later developments onto the original liability for attorney deceit. That neither Judiciary Law § 487 nor the ancient English common- law liability for attorney deceit require a showing of reliance is further confirmed by the policies underlying the two claims, which are identical. In Amalfitano, this Court reasoned that punishing attempted but unsuccessful deceits under Judiciary Law § 487 was consistent with that statute’s aim of punishing an attorney’s wrongful intent. See 12 N.Y.3d at 12-14. Similarly, the rule against attorney deceit at English common law was also punitive, and could lead to imprisonment or fines for violators. See POLLOCK & MAITLAND, p. 535, C-116. Jones notes that under the common law, deception on the court was viewed as a wrong against the king as well as the individual who happened to be damaged, and that the wrongdoer could be made to pay a fine to the king. JONES, pp. 1732-33, n.30, C- 176-77. The rationale behind the English common-law rule thus supports liability for attempted but unsuccessful deceits, and illustrates that reliance was not an element of the ancient wrong of attorney deceit. Defendants’ argument that common-law attorney deceit was merely an early version of common-law fraud is not supported by any authority. As Pollock and Maitland explained, English common law recognized “deceptio 15 curiae” – i.e., deceit of the court – as a basis for liability long before any general “fraud”-like cause of action became a basis for liability. POLLOCK & MAITLAND at 535, C-116. Because English common law imposed liability specifically for deceit on a court, and because that liability predated any kind of general “fraud” liability containing a reliance requirement, there is no reason to assume that the substantive elements of general “fraud” liability relate back to liability for deceit on a court. No matter how many ways they try, Defendants cannot avoid the conclusion that Judiciary Law § 487 is the modern analogue of liability for attorney deceit under English common law. This Court explained in Amalfitano that Judiciary Law § 487 is descended from the First Statute of Westminster. See 12 N.Y.3d at 12. Coke explained that, in turn, the First Statute of Westminster codified common-law liability for attorney deceit, as it was “made in affirmance of the common law.” COKE, pp. 212-13, C-17-18. Judiciary Law § 487 can thus be traced back to English common law before the First Statute of Westminster, and as such, it is a liability “existing at common law which ha[s] been recognized or implemented by statute.” Gaidon v. Guardian Life Ins. Co., 96 N.Y.2d at 208. Even if Defendants could succeed in showing a meaningful difference between the elements of liability for attorney deceit at English common law and those imposed under Judiciary Law § 487, it is far from clear that such a difference would mean that liability under Judiciary Law § 487 is “liability created by statute” 16 for the purposes of CPLR 214(2). The Martin Act (General Business Law, article 23-A), like Judiciary Law § 487, addresses deceitful conduct but does not contain any reliance requirement. See Anwar v. Fairfield Greenwich Ltd., 728 F. Supp. 2d 354, 359 (S.D.N.Y. 2010) (explaining that the Martin Act was amended in 1955 specifically to remove the reliance requirement). Despite this difference between the Martin Act and common-law fraud, the Appellate Division has held that Martin Act liability is not a “liability created by statute” because, even though the Martin Act had expanded on common-law liability for investor fraud, it had not “created a liability nonexistent at common law.” State v. Bronxville Glen I Assocs., 181 A.D.2d 516 (1st Dep’t 1992). The same logic applies here: regardless of the exact elements of attorney deceit under English common law as opposed to attorney deceit under Judiciary Law § 487, the two forms of liability are so similar that Judiciary Law § 487 cannot be deemed “a governmental statutory denouncement of a human action heretofore undenounced.” Hartnett, 86 N.Y.2d at 444 (internal quotation marks omitted). In sum, the three-year limitations period in CPLR 214(2) does not apply, and Plaintiff’s claim under Judiciary law § 487 is governed by the residual six-year limitations period of CPLR 213(1). For this reason, the decision of the Appellate Division should be reversed and Plaintiff’s claim reinstated. 17 B. Because Liability for Attorney Deceit Existed at New York Common Law Before It Was Codified by Any New York Statute, CPLR 214(2) Does Not Apply Here There is a second reason why CPLR 214(2) does not apply to Plaintiff’s Judiciary Law § 487 claim: even apart from its origins at English common law, liability for attorney deceit in New York existed as part of New York’s common law before any New York statute codified it. As Bogardus and Beers explained, statutory and common law of England were received as the common law of New York. Defendants appear to contend that the New York “origins” of the liability were statutory, since the liability was statutorily codified in England at the time of its adoption in New York. See Defts.’ Br. at 25. To support this assertion, Defendants quote selectively from the reception clause of the New York Constitution, but completely fail to cite any of the controlling case law construing the meaning of that clause. In fact, decisional law makes clear that, when an English statute was received into the law of the Royal Colony of New York, it was received as part of New York’s common law. See Opening Br. at 35-36 (quoting Bogardus v. Trinity Church, 4 Paige Ch. 178, 198 (1833) (“The statute law of the mother country . . . became a part of the common law of this Province.”); citing Beers v. Hotchkiss, 256 N.Y. 41, 54 (1931); citing Russell v. Société Anonyme, 242 A.D. 801, 802 (2d 18 Dep’t 1934) (explaining that an English statute “became part of the common law of this State and of the colony”), aff’d on other grounds, 268 N.Y. 173 (1935)). Defendants do not even cite – much less try to distinguish – any of these decisions. Instead, Defendants simply assert that “Melcher does not cite any New York case that ever relied on the reception clause to decline to apply CPLR 214(2) to a liability that originated by statute.” Defts’ Br. at 26. This response in no way addresses the decisions in Bogardus, Beers, and Russell. Furthermore, Defendants completely fail to cite any cases holding that CPLR 214(2) applies to a liability created by a pre-Colonial English statute. See Defts’ Br. at 26. Defendants also completely ignore the legislative history behind the first New York statute to address attorney deceit, which shows that the first such New York statute was enacted as part of the Jones and Varick response to the Legislature’s 1786 command to compile and codify previously existing New York law. See L. 1786, ch. 35 (Appellant’s Reply Compendium at 5).5 That legislative history confirms that liability for attorney deceit was simply codified in 1787 from pre-existing New York law. See Van Rensselaer v. Hays, 19 N.Y. 68, 74-75 5 In 1787, pursuant to the prior year’s Legislative command to present a recodification, Jones introduced the predecessor to Judiciary Law § 487, i.e., L. 1787, ch. 35. See Opening Brief at 37. The legislative history clearly states: “Mr. Jones, pursuant to the Law for revising and digesting the Laws of this State, laid before the House the following bills, viz. A bill entitled An Act concerning Counsellors, Attornies, Solicitors, Advocates, and Prosecutors of the Several Courts in this State.” Reply Compendium at 5 (italics in original). That Bill contained the ancestor statute of Judiciary Law § 487, L. 1787 ch. 35. See C-26. 19 (1859) (explaining that the Jones and Varick compilation simply codified “certain enactments which it was conceived had the force of law in the Colony”). The legislative history and the case-law describing the Jones and Varick compilation thus conclusively demonstrate that liability in New York for attorney deceit pre- existed the 1787 codification. Accordingly, even though liability for attorney deceit had been codified by statute in England at the time of its reception into New York, it was received into New York as common law before it was ever codified in New York. As such, liability for attorney deceit is a liability “existing at common law which ha[s] been recognized or implemented by statute,” and the three-year limitations period of CPLR 214(2) does not apply to it. Gaidon, 96 N.Y.2d at 208. II. DEFENDANTS ARE ESTOPPED FROM ASSERTING THEIR STATUTE-OF- LIMITATIONS DEFENSE Even if the Court were to rule that a three-year limitations period applies to Judiciary Law § 487 claims, Defendants should be equitably estopped from asserting a statute of limitations defense here, as they should not be allowed to take advantage of their own wrong. Simply put, after knowingly submitting a fabricated contract amendment in support of their client’s motion to dismiss, Defendants undertook a prolonged cover-up scheme to prevent Plaintiff from discovering their deceit. They then demanded sanctions against Plaintiff and his counsel when they questioned Defendant Corwin’s veracity. Because Defendants’ 20 cover-up and threats of sanctions prevented Plaintiff from filing his claim earlier, Defendants should be estopped from asserting a statute of limitations defense and Plaintiff’s claim should be reinstated. Defendants attempt to avoid this clear conclusion in a number of ways: first, by obscuring the procedural posture of this case; second, by focusing on the wrong act of deceit as the basis of Plaintiff’s claim; and third, by trying to downplay Defendant Corwin’s threats and intimidation. None of these arguments has merit. The simple fact is that Corwin’s delaying tactics and intimidation worked, and prevented Plaintiff from filing his Judiciary Law § 487 claim until he could uncover that Corwin had knowingly moved to dismiss Plaintiff’s complaint in the underlying case (the “Apollo Action”) based on a fabricated contract amendment. A. The Facts Alleged in the Complaint Must Be Taken as True Defendants argue that the Appellate Division’s decision must stand because this Court supposedly needs to defer to the “findings of fact” made by the Appellate Division below. Defts’ Br. at 29-30 & 32. However, this is an appeal from a motion to dismiss, and no findings of fact have ever been made. Instead, on a motion to dismiss, the factual allegations in the complaint must be accepted as true. As this Court has explained: “On a motion to dismiss a petition we, of course, must accept the facts alleged in the petition as true, petitioner 21 must be afforded every possible favorable inference, and we must determine whether the facts alleged by petitioner fit within any cognizable legal theory.” Lawrence v. Miller, 11 N.Y.3d 588, 595 (2008). The same rule applies to a motion to dismiss involving an equitable estoppel defense. See Simcuski v. Saeli, 44 N.Y.2d 442, 446-47 (1978) (accepting the complaint’s allegations before applying equitable estoppel to preclude a statute-of-limitations defense). The question for this Court is thus limited to whether any construction of the Complaint’s allegations supports the application of equitable estoppel; if it does, then Defendants’ motion to dismiss must be denied. Here, as the Complaint alleges, Defendant Corwin knowingly moved to dismiss Plaintiff’s complaint in the Apollo Action on the basis of a contract amendment that he knew to be a back-dated fabrication (R-52-53, 60, 64-65 at ¶¶ 12, 14, 18, 41, 55-57), represented falsely that he had personally confirmed the authenticity of the document (R-54-55 at ¶¶ 22-26), knowingly submitted affidavits of his client providing false evidence of authenticity (R-66-67, 74 at ¶¶ 62-65, 90- 91), and took a series of steps over years of contentious litigation designed to thwart Plaintiff’s efforts to uncover and confirm that the document was a fabrication (R-55, 61-63, 76, 77, 78-80 at ¶¶ 25-27, 45-50, 96, 100-102, 106-17). As a result of these efforts, Plaintiff was unable to discover that Defendant Corwin knew from the beginning that the document he submitted to the court was a 22 fabrication. This Court must afford Plaintiff “every possible favorable inference” regarding these allegations. Lawrence, 11 N.Y. 3d at 595. Applying this standard requires a reversal of the order on appeal. B. Defendants’ Fundamental Act of Deceit Was Not Concealing the Document’s Burning But Concealing that the Document Was Fabricated Next, Defendants argue that Plaintiff “knew the basic facts concerning the alleged deceit by the GT Defendants over three years before he commenced this action.” Defts.’ Br. at 32. This misses the mark. The facts Defendants point to all concern only Corwin’s concealment of the scorching of the purported contract amendment – not his concealment that the document was a back-dated fabrication. The fundamental deception that prolonged the Apollo Action for so many years was Defendants’ knowing submission to the motion court of a back- dated and fraudulent contract amendment. The Complaint clearly alleges that Defendant Corwin knew that this document was fabricated. (R-52-53, 60, 64-65 at ¶¶ 12, 14, 18, 41, 55-57). Corwin’s failure to disclose to the Court that his client claimed to have accidentally scorched the original document may have raised ethical concerns under the Code of Professional Responsibility. (See R. xv-xvi). However, whether or not Corwin was forthright about the document’s condition at 23 that time, the document still might have been genuine, particularly given the evidence that Corwin had put forth swearing that it was authentic. The motion court in the Apollo Action appears to have come to this very conclusion, or else it would have dismissed Fradd’s defense as soon as the burnt condition of the document was revealed. As it was, the document’s condition was revealed on March 18, 2004, just weeks after Corwin filed the motion to dismiss on February 7, 2004. The motion court in the Apollo Action ordered discovery into the burning, but took no action regarding Corwin’s conduct. Nor did the First Department on the ensuing appeal. Melcher v. Apollo Med. Fund Mgmt., L.L.C., 25 A.D.3d 482 (1st Dep’t 2006). Those two courts likely failed to take action regarding the scorching because of Corwin’s repeated sworn filings representing that the document was genuine and would be proven so, despite the scorching. R-65-66 at ¶¶ 59-62; R-74 at ¶ 90; R-77 at ¶ 100, NYCC 3-1 at 64 ¶ 23; R-78 at ¶ 106, NYCC 3-1 at 70-71 ¶¶ 24-25. In contrast, under no circumstances could the Apollo Action have continued if Corwin had revealed that the document that he and his clients were relying on was a back-dated fabrication. See 317 W. 187 Assocs. v. Dannenberg, 159 A.D.2d 245 (1st Dep’t 1990) (striking answer for submission of fabricated contract amendment). Corwin’s insistence that the document was genuine and would be proven so forestalled both Plaintiff’s motion to strike the pleadings in the 24 Apollo Action and any Judiciary Law § 487 action against Corwin. The authenticity of the contract amendment was thus “crucial” to the case – yet Corwin concealed from Plaintiff and the court that it was a concoction. Defendants never explain how and when Plaintiff could have known in 2004 that Defendant Corwin knew that the document he provided to the Court on the motion to dismiss was a fabrication. Defendants’ view appears to be that “where there’s smoke, there’s fire” – that is, that because Corwin had briefly concealed that the original document had been scorched, Plaintiff should have also immediately assumed that the document had been fabricated and that Corwin was knowingly relying on doctored evidence to support his motion to dismiss. But Plaintiff had every reason not to jump to that conclusion. First, by filing the motion to dismiss, Corwin represented to the Court and the parties that he believed the purported contract amendment to be genuine. At the time, DR 7-102(A)(4) expressly provided that “a lawyer shall not . . . knowingly use . . . false evidence,” and DR 7-102(B)(2) required a lawyer, upon discovering that a client had committed fraud on a tribunal, to “call upon the client to rectify” the fraud and then to notify the tribunal of the fraud if necessary. See former 22 N.Y.C.R.R. § 1200.33. Moreover, under applicable court rules, by filing the motion to dismiss and subsequent affirmations attesting to the amendment’s genuineness, Corwin was certifying “to the best of [his] knowledge, information 25 and belief, formed after an inquiry reasonable under the circumstances” that his representations about the document did not make “material factual statements that are false.” 22 N.Y.C.R.R. §§ 130-1.1(c), 130-1.1-a(b); see also In re Seventh Judicial Dist. Asbestos Litig., 4 Misc. 3d 457, 462 at n.4 (N.Y. Sup. Ct. 2004). Corwin was an established member of the bar and of the First Department’s Character and Fitness Committee. Plaintiff thus had no reason to jump to the conclusion that such a prominent lawyer would knowingly make false statements that would violate his ethical duties and would commit misconduct that, under Judiciary Law § 487, could be punished as a Class A misdemeanor. Second, after Plaintiff raised concerns that Fradd had fabricated the document,6 Corwin submitted affidavits from Fradd on March 12, 2004 and May 19, 2004 representing that there was a lawyer, i.e., James Beckwith, who could authenticate the purported contract amendment, but that Beckwith was unavailable. R-65-66 at ¶¶ 59-62; R-74 at ¶ 90. In the face of Corwin’s multiple representations that he had evidence and a witness that would prove the document authentic, Plaintiff had strong reasons not to sue Corwin for deceit until that evidence became available and the witness was deposed. 6 Plaintiff of course had suspicions that Fradd had fabricated the contract amendment, but had no reason to suspect at that time that Corwin knew the amendment to be a fabrication. 26 Third, the Apollo Action motion court was made aware that Corwin had not been candid about the document’s scorching, but took no action to sanction him or to refer him for attorney discipline. Nor did the First Department on appeal. The decision of the majority below sets a dangerous precedent by holding that Defendant Corwin’s failure to disclose the amendment’s burnt condition alone provided Plaintiff a good-faith basis to believe that Corwin knew the document was fabricated. Such a precedent would require lawyers to file Judiciary Law § 487 claims based on surmise and conjecture about opposing counsels’ knowledge concerning questionable documents their clients swear to be authentic, or risk waiving their clients’ rights through operation of the statute of limitations. Given the gravity of allegations of lawyer deceit, and given the interest in avoiding needless litigation, the Court should not adopt a rule that creates such perverse incentives. It was not until the Beckwith deposition on June 11, 2007 that Plaintiff had enough information to disregard the assertions that the document could be authenticated and to charge, in good faith, Defendant Corwin with deceit under Judiciary Law § 487.7 Plaintiff brought the present suit just two weeks later. 7 At page 36 of their brief, Defendants complain that Plaintiff’s opening brief does not cite Augstein v. Levey, a 1957 First Department decision which declines to apply equitable estoppel “where it appears the basic facts were known to the claimant.” 3 A.D.2d 595, 598 (1st Dep’t 1957). But in the present case, the “basic fact” that Corwin knowingly submitted a fabricated document was not known to Plaintiff until years after that deceit because of Corwin’s cover-up. 27 C. Corwin Used Intimidation and Threats of Sanctions to Prevent Plaintiff from Bringing This Judiciary Law § 487 Claim After Plaintiff’s counsel learned at the deposition of Jack Governale on December 7, 2005 that Governale’s records contained no evidence of the contract amendment, Plaintiff moved to obtain evidence of the communications between Defendant Corwin and his client. See R-76 at ¶ 98. Corwin responded with aggressive steps designed to conceal his wrongdoing. He lied under oath repeatedly about the availability of Beckwith, whom he claimed would confirm that the document was genuine; he stayed the Beckwith deposition to create further delay; and he vitriolically demanded sanctions against Plaintiff’s counsel for daring to question his integrity. Specifically: ● On December 28, 2005, Corwin filed his own affidavit in which he personally swore that the lawyer who could authenticate the document, i.e., Beckwith, remained unavailable and “has resisted all prior attempts to” talk to Defendants. R-77 at ¶ 100, NYCC 3-1 at 64, ¶ 23 (emphasis added). ● In the same affidavit, Corwin demanded that the motion court sanction Plaintiff’s counsel for making “unfounded allegations” concerning his integrity. Corwin called Plaintiff’s allegations “unfounded and scurrilous,” and complained “I have been practicing law for over 30 years and my integrity as an attorney has never been questioned.” R-76-77 at ¶ 99, NYCC 3-1 at 60- 61, ¶¶ 2-4 & 66 at ¶ 28 (emphasis added). ● On January 13, 2006, Corwin submitted another personal affidavit, this time to the First Department, purporting to explain why the amendment was missing from Governale’s files; Corwin again claimed that Beckwith could authenticate 28 the amendment but was resisting efforts to contact him. R-78 at ¶ 106, NYCC 3-1 at 70-71, ¶¶ 24-25. ● On January 23, 2006, after Plaintiff had moved to strike Fradd’s answer, Corwin convinced Plaintiff to withdraw that motion by representing that Beckwith had agreed to appear for a deposition in the near future. R-79 at ¶¶ 109-10, NYCC 3-2 at 136-37. But soon after Plaintiff withdrew his motion to strike, Corwin obtained a discovery stay which prevented the Beckwith deposition from happening for over a year. R-79-80 at ¶¶ 112-15, NYCC 3-2 at 155. Corwin’s sworn statements and threats of sanctions had their intended effect: they blocked Plaintiff from suing him under Judiciary Law § 487. Until Plaintiff had the evidence to refute Corwin’s sworn representations and serious threats, Plaintiff lacked a good-faith basis for accusing Corwin of attorney deceit. As a result, instead of prematurely filing a complaint against Corwin based on surmise and conjecture, Plaintiff attempted to obtain the evidence that Corwin claimed would authenticate the document. In January 2006, Plaintiff obtained the billing records from Governale’s former law firm, and discovered that they contained no record that Governale or anyone at his firm had drafted the amendment. R-77-78 at ¶¶ 103-04, NYCC 3-2 at 112-18. Further, when Beckwith finally testified on June 11, 2007, he confirmed that he did not prepare any such documents for Apollo, and that he had actually been in contact with Corwin in February 2004, before the motion to dismiss was filed. R-68-70 at ¶¶ 70-71; R-67 at ¶ 67, NYCC 3-1 at 74. 29 With Beckwith’s testimony, Plaintiff’s counsel had caught Corwin in the lie, and he no longer had to fear Corwin’s threats of sanctions. Plaintiff’s counsel filed the present case on June 25, 2007, just two weeks later. Defendants argue that Corwin’s threats and false promises should be ignored. First, Defendants contend that Plaintiff failed to plead that he conducted due diligence into Corwin’s sworn statements that prevented Plaintiff from suing earlier. Defts.’ Br. at 34. This is simply untrue. The Complaint is full of detailed descriptions of Plaintiff’s efforts to investigate Corwin’s representations and determine the authenticity of the document. Plaintiff’s due diligence included deposing Governale about the authenticity of the document, subpoenaing the billing records from Governale’s former law firm, and pressing for Beckwith’s deposition. See Opening Br. at 17-22 and citations to Complaint therein. Defendants’ additional claim that Plaintiff failed to make any efforts to interview Beckwith is similarly false. Defts.’ Br. at 34. Shortly after the Governale deposition, Plaintiff’s counsel tracked Beckwith down and spoke to him by telephone. In that conversation, Beckwith stated that he had never heard of Corwin, and had no recollection of anyone ever contacting him about this case – despite Corwin’s repeated sworn statements that he had attempted to contact Beckwith for several years, but that Beckwith had “resisted” speaking to him. See NYCC 3-2 at 133, ¶¶ 42-45. Plaintiff relied on that hearsay information to support 30 his January 17, 2006 motion to strike Fradd’s pleadings. NYCC 3-2 at 120-21. However, until the 2007 Beckwith deposition, Plaintiff was unable to confirm that Corwin actually did speak with Beckwith in 2004, and that Beckwith had never drafted a contract amendment. R-67-71 at ¶¶ 68-76. Second, Defendants claim that Plaintiff’s argument is “completely contradicted” by the fact that it was Corwin who sought to depose Beckwith. Defts.’ Br. at 33-34. But Plaintiff’s Complaint clearly alleges that Corwin only pursued Beckwith’s deposition as a sham to maintain the appearance that the contract amendment was authentic and that Beckwith could verify its authenticity. R-79 at ¶¶ 109-10, NYCC 3-2 at 136-37. However, Corwin abruptly turned an about-face and obtained a stay of the deposition on pretextual grounds. R-79-80 at ¶¶ 112-15. The pretext advanced by Corwin was that a stay was required because he needed document discovery from Plaintiff’s former law firm before the deposition of Beckwith – even though Beckwith was Fradd’s former lawyer. R- 79-80 at ¶¶ 113-15. Unfortunately, the motion court granted Corwin’s request for a stay, and Beckwith’s deposition was delayed for over a year until June 2007. Third, Defendants argue that “Melcher does not even attempt to explain how the ‘threats of sanctions’ precluded him from timely commencing this action.” Defts’ Br. at 34-35. The response to this argument is self-evident: a demand for sanctions made by a well-established lawyer from a prominent firm 31 who was a member of the Character Committee could not just be ignored. If Plaintiff had filed this action right after the Governale deposition, and Beckwith had then authenticated the document, Plaintiff’s counsel would likely have suffered career-ending sanctions for falsely accusing a prominent lawyer of deceiving the court. Corwin’s threats of sanctions thus succeeded: while Plaintiff’s counsel continued to seek the deposition of Beckwith, he did not file a Judiciary Law § 487 claim until Beckwith had given his testimony. Fourth, Defendants contend that Plaintiff’s pleading is inadequate because the cover-up it alleges is all “part and parcel” of the acts giving rise to Plaintiff’s Judiciary Law § 487 claim, and that Plaintiff fails to allege “separate and distinct” acts that prevented him from bringing suit. Defts.’ Br. at 37. This is wrong. Defendants try to blur together Corwin’s actionable deceit with his subsequent cover-up, since they all involve Corwin saying things that are untruthful. Were this a different type of case, such blurring of the facts would be impossible. For instance, in a medical malpractice case, there can be no confusion that the botched surgery is the actionable wrong, and any false assurances by the doctor after-the-fact are part of the cover-up. Here, the actionable deceit is Corwin’s motion to dismiss based on the bogus document, and his later statements were part of a concerted effort to cover up that deceit. Defendants are not entitled to escape liability by collapsing Corwin’s cover-up statements with his original 32 actionable misstatement to the court just because all of those actions can be lumped into the same bucket of “False Statements by Corwin.”8 The present case is not one where, as recently described by this Court in Corsello v. Verizon New York, Inc., “the alleged concealment consisted of nothing but defendants’ failure to disclose the wrongs they had committed.” 18 N.Y.3d 777, 789 (2012). Rather, this case is closely akin to the Simcuski decision discussed in Corsello, in which “the defendant doctor committed malpractice and then falsely told the plaintiff that her resulting physical problems were transient and would disappear.” 18 N.Y.3d at 789 (internal quotation marks omitted). Corwin affirmatively prevented Plaintiff from filing suit through a campaign of misstatements, stall tactics, and threats of sanctions, all of which are fully detailed in the Complaint. Fifth, it is no impediment to Plaintiff’s claim that his Complaint details both Corwin’s original deception and the acts he undertook to prevent Plaintiff from suing. This Court recently confirmed this point in Corsello, ruling 8 Even assuming Defendants were somehow correct that their cover-up acts were also part of the deceit, Plaintiff’s claim would still be timely as several of those actions took place well within three years of this case being filed. See State v. 7040 Colonial Rd. Assocs. Co., 176 Misc. 2d 367, 374 (N.Y. Sup. Ct. 1998) (holding that “each time the [defendant] allegedly engaged in one of the ‘acts or practices’ proscribed by General Business Law § 352-c(1) a new cause of action accrued, even if the new act or practice simply repeated the misrepresentations or omissions made previously’”); see also Harvey v. Metro. Life Ins. Co., 34 A.D.3d 364 (1st Dep’t 2006) (finding that a claim for deceptive practices under General Business Law § 349 “is deemed to have accrued on the date of the last wrongful act” (internal quotation marks omitted)). To rule otherwise would allow a lawyer to repeatedly lie to the court with impunity so long as his first lie pre-dated the limitations period. This cannot be the law. 33 that equitable estoppel applied to cases where “the complaints alleged both the tort that was the basis of the action and later acts of deception by which the defendants concealed their wrongdoing.” 18 N.Y.3d at 789. Finally, Defendants suggest that after the Governale deposition, Plaintiff should have immediately filed his Judiciary Law § 487 action. See Defts.’ Br. at 35 n.12. But the Governale deposition was not the end of the story. Following that deposition, once Plaintiff moved to strike Fradd’s pleadings, Corwin upped the ante by submitting sworn affidavits to two courts, in which he vouched for the document’s authenticity, promised that Beckwith could authenticate it, and demanded sanctions against Plaintiff’s counsel for daring to impugn his character. Once Corwin had personally sworn that there was evidence proving the document genuine, Plaintiff could not sue Corwin for deceit without first obtaining that evidence without risking severe penalties if Corwin’s assertions had proven true. In sum, the Complaint clearly alleges facts establishing equitable estoppel. “The doctrine of equitable estoppel is designed to prevent a defendant who improperly delays the filing of legal proceedings from “reap[ing] the benefits of his own misconduct.” Simcuski, 44 N.Y.2d at 454. Here, Defendants are arguing for dismissal on timeliness grounds after having delayed this suit by making multiple misrepresentations to courts to conceal their deceit and by 34 threatening Plaintiff’s counsel with sanctions. This is exactly the kind of conduct that the doctrine of equitable estoppel was designed to address. Defendants cannot take advantage of Defendant Corwin’s own wrongs. Accordingly, Defendants should be estopped as a matter of law from asserting their statute of limitations defense, and Plaintiff’s Judiciary Law § 487 claim should be allowed to proceed. D. At the Very Least, There are Questions of Fact that Require a Reversal The issue of equitable estoppel generally raises questions of fact that should not be decided at the motion-to-dismiss stage. Vigliotti v. North Shore Univ. Hosp., 24 A.D.3d 752, 755 (2d Dep’t 2005) (“Whether or not an estoppel should be found is a question of fact.”). Here, there are numerous fact issues surrounding the estoppel defense that preclude a dismissal of the case at this early juncture. For example, if there is any question as to when Plaintiff’s counsel should have realized that Corwin knew the contract amendment was a fabrication when he filed it on the dismissal motion, that question should be considered by a jury at trial. Or, if there is any question as to the reasonableness of Plaintiff’s counsel’s reaction to Corwin’s threats of sanctions, that is also a question for the jury. Thus, at the very least, the presence of fact issues requires a reversal of the order on appeal. 35 III. EVEN UNDER A THREE-YEAR LIMITATIONS PERIOD, THE COURT SHOULD DEEM PLAINTIFF’S CLAIM TIMELY BY APPLYING A DISCOVERY ACCRUAL TO JUDICIARY LAW § 487 CLAIMS A. A Discovery Accrual Would Further the Policy Behind Judiciary Law § 487 As this Court explained in Amalfitano, the “evident intent” of Judiciary Law § 487 is “to enforce an attorney’s special obligation to protect the integrity of the courts and foster their truth-seeking function.” 12 N.Y.3d at 14. Defendants’ current position on accrual, however, would eviscerate the statute by allowing attorney deceit to go unpunished whenever the perpetrating attorney succeeds in hiding the deceit for three years. As Defendants do not dispute, both the majority and the dissent in the Appellate Division adopted a discovery accrual for Judiciary Law § 487 claims, implicitly recognizing that such an accrual prevents the successful perpetration of such frauds on the court. R. xiv, xxii. While Judiciary Law § 487 claims differ from fraud claims in certain respects,9 both types of claims consistently involve a defendant who told a lie and tried to evade detection. This basic fact counsels strongly in favor of a discovery rule. As the Tenth Annual Report of the New York Judicial Conference noted, It is at once evident that the shelter [of a rule other than a discovery rule] would constantly be sought by defendants guilty of fraud, who, by continuing the fraud, might 9 As discussed supra at Point I, Plaintiff in no way disagrees with the holding of Amalfitano that a Judiciary Law § 487 claim is not derived from common-law fraud, and thus, unlike a fraud claim, can be based on unsuccessful deceits. 36 prevent the plaintiff from ever learning of the wrong. Hence, it has long been declared by statute that actions involving fraud should be an exception to the rule. Similarly, certain other wrongs, not likely to be discovered immediately, have been accorded the protection of a rule suspending the statute of limitations until discovery of the wrong. McLaughlin, The Discovery Provisions of Article Two of the CPLR and Other Problems With the Statute of Limitations, TENTH ANNUAL REPORT OF THE NEW YORK JUDICIAL CONFERENCE, 1965, p. 98. This compelling logic applies squarely to cases of attorney deceit. Because of defendants’ inherent incentive to hide their deceit, applying any rule other than a discovery rule for Judiciary Law § 487 claims would unduly frustrate the purpose of punishing attorneys who deceive courts. Defendants pretend that such policy considerations cannot justify the judicial adoption of a discovery accrual (Defts’ Br. at 42-43 & n.16), but the fact of the matter is that the Court did just that in Flanagan v. Mount Eden General Hospital. 24 N.Y.2d 427, 432 (1969); see Opening Br. at 50. B. The Appellate Division Recognized the Usefulness of a Discovery Rule for Judiciary Law § 487 Claims The Appellate Division apparently embraced this thinking, as both the majority and dissent applied some form of discovery rule to this case. See R-xiv & R-xix. 37 Defendants acknowledge this fact, but claim it was somehow just a mistake. Defts’ Br. at 41-42. What Defendants fail to mention is that their own brief to the Appellate Division, instead of advocating against application of a discovery accrual, argued that Plaintiff’s claim accrued in Spring 2004 because “all of the facts necessary to the cause of action ha[d] occurred” by that time, and “Melcher’s and his counsel’s . . . knowledge of them clearly was enough to enable Melcher to allege his deceit claim against the GT Defendants.” Defts’ Br. at App. Div. at 25-27 (C. 210-12) (internal quotation marks omitted) (emphasis added). Defendants further argued that “all that is needed to commence the running of the statute is knowledge of facts sufficient to suggest to a person of ordinary intelligence the probability that he has been defrauded.” Defts’ Br. to App. Div. at 27-28 (C. 212-13) (internal quotation marks omitted) (emphasis added). Of course, Defendants are incorrect on the facts; as shown in Point II above, neither Plaintiff nor his counsel actually knew in the Spring of 2004 that Corwin knew the amendment to be fabricated.10 But the emphasis that Defendants placed on the importance of Plaintiff’s knowing of the deceit highlights the appropriateness of a discovery rule here. 10 Indeed, it is completely inaccurate for Defendants to suggest that “Melcher actually asserted allegations of intentional deceit by May 11, 2004.” Defts’ Br. at 46. As discussed in Point II above, Melcher in no way alleged that Corwin had knowingly submitted a fabricated document in support of the motion to dismiss because Melcher had no basis to make such an allegation. 38 C. Plaintiff Discovered the Crucial Facts Underlying the Present Claim Less Than Three Years Before He Filed Suit Plaintiff’s Complaint clearly can – and indeed must – be read to allege that he did not discover until June 2007 that Corwin had actually known the claimed amendment to be fabricated when he filed the motion to dismiss. As a result, Plaintiff’s claim is timely under a discovery-accrual rule. As explained in Point II.B above, it was only when Plaintiff was able to depose James Beckwith that he knew that, contrary to Corwin’s representations, there were no witnesses who could authenticate the document. Beckwith testified that he had not prepared any documents for this client during the applicable time period. R-71 at ¶ 76. He further testified that he had a conference call with Corwin and an associate in February 2004 on this very subject. R-67-70 at ¶¶ 67-71. It was at the Beckwith deposition that Plaintiff learned that Corwin had heard from all relevant witnesses about the document prior to filing his motion to dismiss, and that they had told him facts showing that the document was a fake. In sum, because Plaintiff discovered the deceit underlying this claim less than three years before filing his Complaint, the claim is timely and should be reinstated. 39 D. At the Very Least There Are Questions of Fact Regarding the Accrual of Plaintiff’s Claim Just as they did with the issue of equitable estoppel, Defendants seek to avoid the merits of the issue of discovery accrual by arguing that it somehow involves questions of fact beyond this Court’s powers of review, and that this Court must rely on the Appellate Division’s findings on these “questions of fact.” See Defts’ Br. at 40-41. But as explained in Point II.D above, courts simply cannot make factual findings or resolve questions of fact on a motion to dismiss. Instead, motion courts must accept as true the facts alleged in the complaint, “afford[]every possible favorable inference” to the plaintiff, and make the legal determination of “whether the facts alleged by petitioner fit within any cognizable legal theory.” Lawrence, 11 N.Y.3d at 595. Applying this controlling standard, there are at the very least questions of fact about when Plaintiff knew enough to file a claim of attorney deceit. Indeed, the issue of accrual under a discovery rule is routinely deemed a question of fact because it turns on the plaintiff’s knowledge – a quintessentially factual issue. See, e.g., Yatter v. William Morris Agency, 256 A.D.2d 260, 261 (1st Dep’t 1998) (rejecting a motion to dismiss based on the statute of limitations because of “a question of fact as to plaintiff’s knowledge” of the defendant’s misconduct). For this reason too, the order appealed from must be reversed. 40 IV. A RETROACTIVE SHORTENING OF THE LIMITATIONS PERIOD FOR PLAINTIFF’S JUDICIARY LAW § 487 CLAIM WOULD VIOLATE PLAINTIFF’S DUE-PROCESS RIGHTS Finally, should this Court, notwithstanding all the reasons why Plaintiff’s claim is timely, opt to apply a three-year limitations period to Judiciary Law § 487 claims, Plaintiff respectfully requests that it be applied only prospectively. Retroactively applying a three-year limitations period to Plaintiff’s claim would violate his due-process rights. A. This Court Can Review the Due-Process Issue Defendants attack Plaintiff’s straightforward due-process argument in a variety of ways, including by claiming that it is not properly preserved. See Defts’ Br. at 48-49. However, this Court has ample power to review Plaintiff’s claim. Plaintiff’s brief in the Commercial Division thoroughly explained why controlling First Department case-law had established a six-year statute of limitations for such claims at the time the case was filed. Pl. Br. to Sup. Ct. at 4 (Respondents’ Compendium at 24). The very first section in Plaintiff’s brief to the Appellate Division stressed that a retroactive shortening of the statute of limitations for this claim would “violate due process.” Pl. Br. to App. Div. at 9 (C- 238). And it should be remembered that Plaintiff prevailed on his timeliness argument before the motion court, so this point was properly raised in the Appellate Division as an alternative ground for affirmance. 41 B. Adopting a Three-Year Limitations Period for Judiciary Law § 487 Claims Would Retroactively Shorten the Statute of Limitations for Such Claims Applying a three-year statute of limitations retroactively to Plaintiff’s Judiciary Law § 487 claim would violate his right to due process because it would dismiss an action that was indisputably timely when it was filed. See Defts’ Br. at 49. The First Department had firmly held that the six-year statute applied. Guardian Life Ins. Co. v. Handel, 190 A.D.2d 57, 62-63 (1st Dep’t 1993); New York City Transit Auth. v. Morris J. Eisen, P.C., 203 A.D.2d 146 (1st Dep’t 1994). This Court has previously recognized the need to ensure that plaintiffs who are blind-sided in this way still have access to justice. In Brothers v. Florence, this Court explained in the context of a legislative shortening of a statute of limitations that “Due Process requires that potential litigants be afforded a reasonable time for the commencement of an action before the bar takes effect.” 95 N.Y.2d 290, 300 (2000) (internal quotation marks omitted). If this rule applies to a legislative shortening of a statute of limitations, it must also apply to a judicial shortening of a statute of limitations, particularly since courts, unlike legislatures, are normally bound by the principle of stare decisis. Defendants advance a grab-bag of faulty arguments in an attempt to deflect attention from the injustice that Plaintiff would suffer. First, Defendants profess that because of a supposed split in authority between the First and Second 42 Departments, Plaintiff should have ignored the controlling First Department precedent. See Defts’ Br. at 49-50. But it is not at all clear that there actually was such a “split” in authority. The Second Department case cited by Defendants, Jorgensen v. Silverman, involved a claim for attorney deceit and legal malpractice against the plaintiff’s own former lawyer, and the Second Department opted to apply the three-year legal-malpractice statute of limitations to both claims. 224 A.D.2d 665, 665-66 (2d Dep’t 1996). The reasoning in that case is thus completely inapplicable here, since Plaintiff is suing opposing counsel for deceit. In any event, it is absurd for Defendants to insist that Plaintiff’s counsel should have been guided by off-point Second Department precedent rather than controlling First Department precedent. Next, Defendants pretend that this Court’s Amalfitano decision resolved this supposed split in authority, even though – as discussed in Point I.A.2 above – the Amalfitano decision had nothing to do with statutes of limitation. Defts’ Br. at 50. Defendants then mischaracterize Plaintiff’s argument, by claiming that Plaintiff is asking this Court “to apply Amalfitano prospectively only.” Defts’ Br. at 50. But this position is misguided, as Amalfitano does not address statutes of limitation at all. It is the present appeal that will require the Court to decide the proper statute of limitations for Judiciary Law § 487 claims. A decision by this Court to 43 retroactively shorten Plaintiff’s limitations period from six years to three years would unfairly deprive Plaintiff of access to the courts. Brothers v. Florence, 95 N.Y.2d at 300. In an attempt to alleviate concerns about the unfairness of retroactivity, Defendants claim that appellate courts routinely issue such rulings. The two cases they cite, however, did no such thing. In Nussenzweig v. diCorcia (cited at Defts’ Br. at 50), this Court applied the statute of limitations that had long been applied in the Appellate Division, First Department – the same department where the suit had been filed. See 9 N.Y.3d 184 (2007). There were thus no grounds to claim any unfair surprise. In Clowes v. Pulver, the Third Department was considering for the first time the statute of limitations for claims under General Municipal Law § 51. 258 A.D.2d 50, 55 (3d Dep’t 1999). But because the Third Department had not previously ruled on the issue, the plaintiff in Clowes could not have relied on any Third Department precedent in deciding when to bring her claim. See 258 A.D.2d at 55. Here, it is undeniable that imposing a three-year statute of limitations to claims under Judiciary Law § 487 would shorten the limitations period that had, until this case, controlled in the First Department. Defendants also claim that applying a three-year limitations period would not create a “new principle of law” because it would simply construe an existing statute. See Defts’ Br. at 51-52. But the fact of the matter remains that, at 44 the time Plaintiff filed this suit, controlling case-law called for a six-year limitations period. When he filed suit, Plaintiff had no way of knowing that the First Department would later reverse course by misinterpreting Amalfitano, which itself came down two years after the suit’s filing. A decision dismissing Plaintiff’s claim now would unfairly deprive Plaintiff of an opportunity to seek compensation for the losses he has incurred as a result of Defendants’ deceit. Perhaps even more importantly, it would immunize from liability an attorney who, as alleged in the Complaint, has committed unconscionable misconduct for which he should be held accountable. This Court should prevent those injustices by recognizing that Plaintiff’s right to due process entitles him to the opportunity to pursue his claim. CONCLUSION For all the foregoing reasons, Plaintiff respectfully requests that this Court reverse the First Department’s decision and order granting Defendants’ motion to dismiss and remand this case to Supreme Court for further proceedings. 45 Albany, New York Dated: September 13, 2013 Respectfully submitted, HINMAN STRAUB PC Counsel for Plaintiff-Appellant James L. Melcher By: James T. Potter 121 State Street Albany New York 12207 (518) 436-0751 jpotter@hinmanstraub.com -and- JEFFREY A. JANNUZZO, ESQ. 10 East 40th Street, 35th Floor New York, New York 10016-0301 (212) 932-8524 jeff@jannuzzo.com /s/ James T. Potter
