| 360 W. 11th LLC v ACG Credit Co. II, LLC |
| 2011 NY Slip Op 09191 [90 AD3d 552] |
| Dcmbr 20, 2011 |
| Appellate Division, First Department |
| 360 West 11th LLC et al., Appellants, v ACG CreditCompany II, LLC, Respondent. (And Other Actions.) |
—[*1] Wollmuth Maher & Deutsch LLP, New York (William F. Dahill of counsel), forrespondent.
Order, Supreme Court, New York County (Eileen Bransten, J.), entered August 4, 2010,which denied plaintiffs' motion for leave to amend the complaint, unanimously affirmed, withcosts.
This action arises out of a mortgage-secured loan from defendant, ACG Credit Company II,LLC, and third-party plaintiff, ACG Finance Company, LLC (collectively ACG), to plaintiffs.Plaintiffs' dispute with ACG stems from the latter's declaration of events of default under theunderlying loan agreement. By the instant motion, plaintiffs sought leave to amend the complaintso as to add causes of action against ACG's former attorney and current attorneys under JudiciaryLaw § 487 and two other causes of action based upon Uniform Rules for Trial Courts (22NYCRR) § 130-1.1. The targets of the proposed Judiciary Law claims are Daniel Bildner,Esq., Martin West, Esq., William Dahill, Esq. and the firm of Wollmuth, Maher & Deutsch, LLP(WMD).
Leave to amend pleadings is freely given absent prejudice or surprise (see CPLR3025 [b]; Cherebin v EmpressAmbulance Serv., Inc., 43 AD3d 364, 365 [2007]). Nevertheless, a court must examinethe merit of the proposed amendment in order to conserve judicial resources (see Zaid Theatre Corp. v Sona RealtyCo., 18 AD3d 352, 354-355 [2005]). Judiciary Law § 487 provides for therecovery of treble damages from a lawyer who is "guilty of any deceit or collusion, or consents toany deceit or collusion, with intent to deceive the court or any party." Bildner was a shareholderof the law firm that previously represented ACG. The proposed amended complaint contains anallegation that Bildner gave false testimony with respect to services rendered by his firm insupport of ACG's still pending counterclaim for attorneys' fees related to the administration andenforcement of the loan agreement. The proposed seventh cause of action sets forth an assertionthat plaintiffs "now know these claims were false, as much of the attorney time in question wasspent on matters wholly unrelated to plaintiffs' loans." Leave to amend was properly denied withrespect to this claim because it boils down to nothing more than a fee dispute that can be resolvedupon the disposition of ACG's counterclaim.[*2]
The proposed eighth cause of action contains anallegation that WMD, West and Dahill, who now represent ACG, withheld pertinent informationfrom the court with the intent to deceive. The addition of this claim would be prejudicial becauseit is likely that WMD, West and Dahill would be called as witnesses if the claim is allowed toproceed. Subject to exceptions that do not apply here, "[a] lawyer shall not act as advocate beforea tribunal in an matter in which the lawyer is likely to be a witness on a significant issue of fact"(Rules of Professional Conduct [22 NYCRR 1200.0] rule 3.7 [a]). Therefore, the addition of theproposed eighth cause of action would require the disqualification of counsel and prejudiceACG's right to be represented by attorneys of its choice (see S & S Hotel Ventures Ltd.Partnership v 777 S. H. Corp., 69 NY2d 437, 443 [1987]). The motion was properly deniedwith respect to the proposed ninth and tenth causes of action because no independent cause ofaction for sanctions under section 130-1.1 exists (Calabro & Assoc., P.C. v Katz, 26 Misc3d 137[A], 2010 NY Slip Op 50192[U] [App Term, 1st Dept 2010]). Concur—Renwick,J.P., DeGrasse, Abdus-Salaam and RomÁn, JJ. [Prior Case History: 2010 NY Slip Op32123(U).]