Lacher v. Engel

33 A.D.3d 10, 817 N.Y.S.2d 37
CourtAppellate Division of the Supreme Court of the State of New York
DecidedJune 20, 2006
StatusPublished
Cited by51 cases

This text of 33 A.D.3d 10 (Lacher v. Engel) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lacher v. Engel, 33 A.D.3d 10, 817 N.Y.S.2d 37 (N.Y. Ct. App. 2006).

Opinion

OPINION OF THE COURT

Catterson, J.

In this defamation action, both plaintiff and defendant are attorneys. Plaintiff alleges that defendant filed a sham complaint on behalf of plaintiffs former client solely for the purpose of allowing defendant to defame plaintiff while claiming the benefit of privilege. Defendant now appeals from an order which denied in part his motion for summary judgment dismissing the complaint.

The plaintiff in this action is attorney Michael Lachen The defendant is attorney Thomas Engel. For approximately 18 months, starting in early 2002, plaintiff and his firm, Lacher & Lovell-Taylor, PC., represented Parametric Capital Manage[12]*12ment, LLC, Diversified Capital Management Ltd.1 and Erik Postnieks (hereinafter referred to collectively as Parametric) in an arbitration proceeding pending before the American Arbitration Association.

It is undisputed that at the beginning of June 2003, in the middle of the arbitration proceeding, Lacher withdrew as counsel. He cited “irreconcilable ethical considerations” as well as a breach of the retainer agreement. By this time, Lacher had billed approximately three million dollars in fees, and had been paid at least two million dollars for his legal services. Parametric then retained Thomas Engel to represent them in the arbitration.

Prior to the completion of the arbitration proceeding, Parametric, through its counsel Engel, filed a complaint seeking damages against Lacher. Parametric claimed that Lacher had engaged in fraudulent billing practices and that he had misrepresented the skill and expertise of his law firm to represent Parametric in the arbitration. Specifically, the complaint alleged deceit and collusion under Judiciary Law § 487; fraud; legal malpractice; breach of implied contract; breach of fiduciary duty; unjust enrichment; and it sought rescission. Lacher cross-moved to dismiss the amended complaint pursuant to CPLR 3211 for failure to state a cause of action. The motion court granted Lacher’s motion to dismiss but granted plaintiff leave to replead the legal malpractice and the breach of fiduciary duty causes of action when these claims became ripe upon completion of the arbitration proceeding. This Court affirmed. (Parametric Capital Mgt., LLC v Lacher, 15 AD3d 301 [2005].)

In the meantime, Lacher brought this action for defamation against attorney Engel. The complaint alleges Engel made defamatory statements on three different occasions: first, in the above-described complaint (hereinafter referred to as the malpractice action); second, in the course of the arbitration proceeding; and third, in an article in the New York Law Journal (hereinafter referred to as NYLJ) titled “Malpractice Suit Claims Attorney Padded Bills.”

Engel moved to dismiss the complaint for failure to state a cause of action. He asserted that the statements were all privileged, either at common law or under Civil Rights Law [13]*13§ 74. Lacher argued that the privilege did not apply to these statements on the grounds that the entire malpractice action was a sham, designed to allow Engel to defame him while claiming the benefit of privilege.

Supreme Court denied Engel’s motion in part, and held that Lacher could continue with the defamation suit on the basis of certain statements made in the malpractice action, the arbitration and to the NYLJ. Specifically, the court referred to the following statements: in the malpractice action, the statement that Lacher and his firm “used [the retainer] provision as a club with which to extort immediate payments” and the statement that Lacher “defrauded” the clients; in the arbitration proceeding, epithets used by Engel describing Lacher as a “thief,” a “liar” and a “pathological character”; and lastly, a statement made by Engel to the NYLJ that the clients were “very poorly served by a member of [the legal] profession to whom duty came well after other aims and interests.” Engel appealed.2

For the reasons set forth below, we modify to the extent of granting defendant’s motion for summary judgment in its entirety, dismissing the complaint against the defendant.

It is well established that a statement made in the course of legal proceedings is absolutely privileged if it is at all pertinent to the litigation. (Youmans v Smith, 153 NY 214, 219 [1897].) In this seminal case, the Court made clear that the rule rests on the policy that counsel should be able to “speak with that free and open mind which the administration of justice demands” without the constant fear of libel suits. (Id. at 223.)

It is true, as Lacher asserts, that this absolute privilege may be “lost if abused.” (Halperin v Salvan, 117 AD2d 544, 548 [1st Dept 1986].) More specifically, this Court held that the privilege is limited to statements which are not only pertinent to the subject matter of the lawsuit but are made “in good faith and without malice.” (Id., citing Moore v Manufacturers’ Natl. Bank of Troy, 123 NY 420, 426 [1890].)

Lacher contends that where, as here, the statements were made maliciously, and the action was a mere sham for the purposes of cloaking defamatory statements, the privilege is inapplicable. However, his allegations are conclusory and contradicted by the facts.

[14]*14In Halperin, this Court found that the allegation of malicious intent was “arguably substantiated” by the fact that the plaintiffs had not moved forward with the lawsuit, and because of the inflammatory language describing the purported class in the caption. (Id. at 547.)3

In the underlying action, Parametric pursued its lawsuit vigorously when Lacher initially moved to dismiss. Moreover, in December 2005, while the appeal of this defamation action was being perfected, the court granted Parametric’s motion for leave to file and serve a second amended complaint in the malpractice action. The motion court granted leave for Parametric to re-plead the original breach of fiduciary duty and legal malpractice causes of action as well as add a breach of contract claim. As such, this is not a case where plaintiff failed to move forward, or where any court before which plaintiff and defendant have appeared has suggested, even remotely, that the underlying action is a sham or was brought solely for defendant’s malicious motive.

In light of the foregoing, Lacher’s assertion that the privilege is limited because the complaint was dismissed for failure to state a claim is obviously without merit. It need be addressed only to make clear that even had the complaint been dismissed, the limitation urged by Lacher would substantially contravene the policy that underlies the privilege. If the privilege existed only in cases that were ultimately sustained, none of the persons whose candor is protected by the rule—parties, counsel or witnesses—would feel free to express themselves. They would, in any case of alleged wrongdoing, face a penalty potentially more severe than sanctions or the imposition of fees.

The proper inquiry is whether the statements sustained as defamatory by the motion court “may possibly be pertinent” to the malpractice litigation. (People ex rel. Bensky v Warden of City Prison, 258 NY 55, 59 [1932].) As this Court has noted, the privilege “embraces anything that may possibly be pertinent or which has enough appearance of connection with the case.” (Seltzer v Fields, 20 AD2d 60, 63 [1963], affd

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Cite This Page — Counsel Stack

Bluebook (online)
33 A.D.3d 10, 817 N.Y.S.2d 37, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lacher-v-engel-nyappdiv-2006.