On April 13, 2022, the Second Department issued a decision in Joseph v. Fensterman, 2022 NY Slip Op. 02398, holding that allegations that counsel made false representations to disrupt settlement discussions was sufficient to state a Judiciary Law 487 claim, explaining:
The Supreme Court should have denied that branch of the defendants’ motion which was to dismiss the first cause of action in the amended complaint, which sought to recover damages for violations of Judiciary Law § 487 related to the defendants’ representation of the plaintiffs in a litigation concerning the sale of the plaintiffs’ interests in three skilled nursing facilities known as New Franklin, Fort Tyron, and Split Rock (hereinafter the New Franklin litigation). An attorney is liable under Judiciary Law § 487(1) if he or she is guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party, and under Judiciary Law § 487(2) if he or she willfully delays his or her client’s suit with a view to his or her own gain. Allegations regarding an act of deceit must be stated with particularity.
Here, the first cause of action adequately pleaded a claim to recover damages for violations of Judiciary Law § 487, as it alleged that the defendants Abrams, Fensterman, Fensterman, Eisman, Formato, Ferrara & Wolf, LLP (hereinafter the law firm), Howard Fensterman, and Sarah C. Lichtenstein intentionally interfered with the settlement of the New Franklin litigation, causing years of additional litigation, in order to generate legal fees in the amount of $1.7 million, which amount the plaintiffs alleged was paid from the proceeds of the sale of the skilled nursing facilities. The plaintiffs alleged that they were entitled to a portion of those proceeds. The amended complaint also alleged that Howard Fensterman made false statements to the plaintiffs, and filed a motion without the plaintiffs’ knowledge or consent. The Supreme Court’s determination that Howard Fensterman’s conduct during the settlement of the New Franklin litigation was simply a product of his conflict of interest in representing both buyers and sellers in the New Franklin and Fort Tyron transactions is a premature factual finding inappropriate at this stage of the litigation.
(Internal quotations and citations omitted).