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Claim for NY Attorney's Fraud Dismissed as Time Barred


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1/1/2016
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In a case that seems destined to go to New York's highest court the Court of Appeals a split panel of the appellate division held that a plaintiff's claim for damages resulting from the fraud perpetrated by the attorney representing his adversary was time barred (two dissenting judges held that the claim was timely brought). This case, Melcher v. Greenberg Traurig, was brought pursuant to New York's Judiciary Law  487, which provides for an award of treble damages to an injured party where 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 " Reading the dissent, it is clear (at least to me) that these judges wanted to find a way to keep this claim alive, simply because it seems so wrong to allow this case to be dismissed on a mere technicality rather than on the merits. According to the plaintiff's complaint, the defendant law firm knew that their client had apparently incinerated the purported document upon which their clients' motion to dismiss the complaint in the first action was based, yet represented to the Court that they still possessed the original document. They took this further, misleading an ink chemistry expert to opine on a photocopy rather than the original. In reversing the trial court and dismissing the action, however, the majority held as follows: "A new cause of action for fraud does not accrue each time a plaintiff discovers new elements of fraud in a transaction or new evidence to prove such fraud. Where there is knowledge of facts sufficient to suggest to a person of ordinary intelligence the probability that he [or she] has been defrauded, a duty of inquiry arises, and may thus start the running of the statute" (Augstein v Levey, 3 AD2d 595, 599 [1st Dept 1957], affd 4 NY2d 791 [1958] [internal quotation marks and citation omitted]).



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