N.Y. High Court: Lawyer Subject to Treble Damages for Attempt to Deceive Court
Joel Stashenko/New York Law Journal
February 17, 2009

Tracing the legal principles behind a New York statute on lawyer deceit to a law adopted by the English Parliament in 1275, the state Court of Appeals has determined that an attorney can be subject to treble damages in New York for an unsuccessful attempt to deceive a court.
The attorney deception issue came to the court in the form of two certified questions from the 2nd U.S. Circuit Court of Appeals.

Three judges on the federal panel asked for guidance after reviewing what they said were conflicting state court interpretations of whether state Judiciary Law §487 allows for treble damages when an attorney is "guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party."

The U.S. Court of Appeals' judges said they were uncertain whether the statute applies when an attorney tries, but fails, to deceive the court. A second certified question posed was whether the cost of litigation instituted by a complaint containing a material misrepresentation of fact should be treated as the proximate result of the misrepresentation if the court was not fooled by the deception.
Attorney Armand Rosenberg argued in Amalfitano v. Rosenberg, 3, that forfeiture under Judiciary Law §487 is analogous to a tort claim for fraud. As such, he contended that the state Court of Appeals has held that a plaintiff must be "deceived and damaged" as the result of an attorney's falsehood, citing Channel Master Corp. v. Aluminum Ltd. Sales, 4 NY2d 403 (1958).
The Court of Appeals ruled, however, that Judiciary Law §487 does not derive from common law fraud but from more venerable sources.

Judge Susan Phillips Read, writing for a 6-0 Court, determined that the law that evolved as §487 can be traced back to the first Statute of Westminster, adopted by the Parliament that was called by King Edward I in 1275.

That statute set penalties of imprisonment for a year and a day and a lifetime ban from court for pleaders engaging in "any manner of Deceit or Collusion in the King's Court" or efforts to "beguile the Court" or parties to its proceedings.

Read wrote that the fledgling New York Legislature adopted a statute with "strikingly similar" wording in 1787 and that laws like it have stayed on the books since. The Legislature added the penalty of a misdemeanor to deceiving the courts in 1836 and, in 1881, prescribed the forfeiture of treble damages to attorneys for deceiving the court.

The statute was transferred from Penal Law to Judiciary Law and numbered §487 in 1965.
"There it remains today, the modern-day counterpart of a statute dating from the first decades after Magna Carta; its language virtually (and remarkably) unchanged from that of a law adopted by New York's Legislature two years before the United States Constitution was ratified," Read wrote for the Court of Appeals.

Analyzing the law that way indicates that §487 is a "unique statute of ancient origin" and not a codification of common law fraud, the court determined. "The operative language at issue, 'guilty of any deceit,' focuses on the attorney's intent to deceive, not the deceit's success," Read wrote.

Indeed, she continued, to limit forfeiture of treble damages under §487 to only successful deceits would "run counter to the statute's evident intent to enforce an attorney's special obligation to protect the integrity of the courts and foster their truth-seeking function."
In light of the court's finding that deceits need not be successful to fall under the forfeiture ambit of §487, Read, answering the second certified question, wrote that recovery of treble damages does not depend on whether a court accepted a material misrepresentation of fact in a complaint as true or whether it was able to see through the deception.

Rosenberg is contesting before the 2nd Circuit a determination by Southern District of New York Judge Naomi Reice Buchwald that he had engaged in a "persistent pattern of unethical behavior" in his representation of a man who was accused by the clients' two brothers of squandering the family's real estate holdings.

Buchwald assessed damages of $89,415 against Rosenberg, and then trebled them to a total of $268,245. 2nd Circuit Judge Robert Sack wrote the ruling that sent the matter to the state court for a clarification of state law. 2nd Circuit judges John Walker and Guido Calabresi joined Sack's ruling.

Among Rosenberg's actions faulted by Buchwald was his preparation of an affidavit executed by his client, Peter Costalas, in state court in which Costalas acknowledged that a 1993 agreement negotiated by Rosenberg to purportedly settle the Costalas' brothers' real estate disputes was a sham to avoid creditors and was "never intended and did not have real effect."

Filings in subsequent litigation in state court also contained tax returns erroneously listing Peter Costalas as a partner in family partnerships after 1993, according to the 2nd Circuit.

According to previous rulings, Supreme Court Justice Ira Gammerman ruled against Peter Costalas throughout the case and apparently was not taken in by any alleged deception by Rosenberg.
Rosenberg was sued in federal court for deceiving the courts by Peter Costalas's niece, Vivia Amalfitano, and her husband Gerard Amalfitano. At one point in the Costalas family litigation, Peter Costalas had sued the Amalfitanos, contending that they had defrauded the family in connection with the sale of a building in Manhattan. The suit was ultimately dismissed in state court.

Rosenberg's attorney, William J. Davis of Scheichet & Davis, said his client posted the damages ordered by Buchwald and now will presumably lose them when the case goes back to the 2nd Circuit.
Davis said he tried to give the Court of Appeals an alternative to the one dating back to the Middle Ages for how to interpret violations under Judiciary Law §478.

"I can understand them having done this. But, on the other hand, it is somewhat unfair to my client because this is the first instance of a 487 case in which a violation was found without their having been an actual deception of the court or the other side," Davis said.

Buchwald also forwarded the Rosenberg matter to the Committee on Grievances of the Southern District and to the Appellate Division, 1st Department's Disciplinary Committee. Davis said both matters were on hold and he assumed they would now go forward once the 2nd Circuit finally rules.

The Amalfitanos' attorney, Richard E. Hahn of Liorca & Hahn, did not return a call seeking comment.
Judges Carmen Beauchamp Ciparick, Victoria A. Graffeo, Robert S. Smith, Eugene F. Pigott Jr. and Theodore T. Jones Jr. joined in Read's ruling.