Preview
FILED: SUFFOLK COUNTY CLERK 04/11/2023 02:02 PM INDEX NO. 206004/2022
NYSCEF DOC. NO. 45 RECEIVED NYSCEF: 04/11/2023
Canon U.S.A., Inc. v. Divinium Technologies, Inc., Not Reported in Fed. Supp. (2017)
2017 WL 696693
Appx. 2
KeyCite Yellow Flag - Negative Treatment
Distinguished by In re Fierro, Bankr.E.D.N.Y., March 31, 2020 BACKGROUND
2017 WL 696693
Only the Westlaw citation is currently available. The Court summarizes here the relevant factual
United States District Court, S.D. New York. allegations from Plaintiffs’ Proposed Amended
Complaint, which the Court accepts as true for purposes
CANON U.S.A., INC., et al., Plaintiffs, of this motion for leave to amend. See Henneberry v.
Sumitomo Corp. of America, 415 F. Supp. 2d 423, 432-33
v. (S.D.N.Y. 2006). Defendants Divinium Technologies
DIVINIUM TECHNOLOGIES, INC., et (formerly known as EZ Docs, Inc. (“EZ Docs”)), Anthony
al., Defendants. Grimaldi, Steven Hernandez, Catherine Mattiucci, and
Leonard Harac (together, the “EZ Docs Defendants”)
15 Civ. 1804 (PAC) defrauded Canon USA to obtain an authorized Canon
| business equipment dealership. Proposed Am. Compl.
Signed 02/21/2017 (Dkt. 89-1) ¶¶ 1-2. The scheme arose in 2008, after Canon
USA refused authorization for Empire Technology
(“Empire”) to acquire an authorized Canon retail
Attorneys and Law Firms dealership. Id. ¶¶ 45–47. Grimaldi and Hernandez were
Empire’s principals, and Canon USA rejected Empire’s
Elizabeth Rozon Baksh, Richard Howard Silberberg, attempted acquisition due, in part, to Grimaldi and
Robert Gregory Manson, Dorsey & Whitney LLP, Dai Hernandez’s prior arrests in connection with a fraud
Wai Chin Feman, Satterlee Stephens Burke & Burke LLP, scheme involving business equipment leases. Id. ¶ 46.
New York, NY, Robert G. Manson, for Plaintiffs.
Grimaldi, Hernandez, and Harac realized that to obtain a
James A. Kridel, Law Office of James A. Kridel, Jr. &
dealership, they had to conceal Grimaldi and Hernandez’s
Associates, Jonathan B. Bruno, Deborah M. Isaacson,
involvement. Id. ¶ 48. They agreed with Grimaldi’s sister,
Rivkin Radler, LLP, New York, NY, Charles Xavier
Mattiucci, to create a new corporation, EZ Docs, to
Gormally, David J. Klein, Brach Eichler, L.L.C.,
pursue acquisition of the dealership. See id. ¶ 49. EZ Docs
Roseland, NJ, for Defendants.
was set up to have Mattiucci as President and nominal
shareholder. Id. But in reality, Grimaldi and Hernandez
were to split ownership and primarily perform the actual
management of EZ Docs, with Harac’s and Mattiucci’s
assistance and participation. See id. Grimaldi, Hernandez,
and Mattiucci then retained Freireich to help provide legal
services with respect to EZ Docs. Id. ¶ 53. At the time,
Freireich worked for non-party Poe & Freireich, but
OPINION & ORDER moved to Brach Eichler in March 2010. Id. ¶¶ 53, 63.
Canon USA approved EZ Docs’ acquisition of the
dealership in November 2008, as well as another
HONORABLE PAUL A. CROTTY, United States dealership in February 2010. Id. ¶¶ 52, 63.
District Judge:
After acquiring the dealerships, the EZ Docs Defendants
*1 Plaintiffs Canon U.S.A., Inc. (“Canon USA”) and engaged in a series of improper and illegal activity. See
Canon Financial Services, Inc. allege that Jay J. Freireich, generally id. § IV.F. Because of her status as owner and
and his law firm, Brach Eichler LLC (“Brach Eichler,” principal of EZ Docs, Mattiucci grew concerned about her
and together with Freireich, the “Attorney Defendants”), potential personal liability in connection with this activity.
aided and abetted a fraud perpetrated by their former See id. ¶ 161. Consequently, Mattiucci, Grimaldi, and
clients. Plaintiffs now move for leave to amend their Hernandez asked Freireich to draft a “Nominee
complaint to add a claim against the Attorney Defendants Declaration.” Id. Freireich addressed this request in a June
for violation of New York Judiciary Law § 487. The 2011 letter to Mattiucci, Grimaldi, and Hernandez,
Court grants the motion. wherein Freireich described Grimaldi and Hernandez as
the “de facto shareholders, officers and directors” of EZ
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Canon U.S.A., Inc. v. Divinium Technologies, Inc., Not Reported in Fed. Supp. (2017)
2017 WL 696693
Docs. Id. Thereafter, Freireich prepared the Nominee for good reason, including futility, bad faith, undue delay,
Declaration, dated October 5, 2011 and executed by or undue prejudice to the opposing party.” McCarthy v.
Mattiucci, Grimaldi, and Hernandez. Id. The Nominee Dun & Bradstreet Corp., 482 F.3d 184, 200 (2d Cir.
Declaration provided, among other things, that at the time 2007). “An amendment to a pleading is futile if the
EZ Docs was formed, it was intended that Grimaldi and proposed claim could not withstand a motion to dismiss
Hernandez would hold 100% of EZ Docs’ stock, and that pursuant to Fed. R. Civ. P. 12(b)(6).” Lucente v. Int’l Bus.
Mattiucci was holding the shares of EZ Docs “for the Machs. Corp., 310 F.3d 243, 258 (2d Cir. 2002).
benefit of and as nominee for” Grimaldi and Hernandez.
Id. It also provided that Mattiucci, Grimaldi, and
Hernandez understood “that Canon was and is unwilling
to permit [Grimaldi and Hernandez] to have an ownership
interest in a Canon licensed dealership.” Id.
II. Application
*2 By the fall of 2011, Canon USA began considering The Attorney Defendants contend that Plaintiffs’
terminating EZ Docs’ dealership due, among other things, proposed amendment would be futile. However, they
to learning of Grimaldi and Hernandez’s involvement concede—and the Court agrees—that there is no bad faith
with EZ Docs. See id. ¶ 160. On October 25, 2011, Canon or undue delay on the part of Plaintiffs, or undue
USA notified EZ Docs that EZ Docs’ authorized Canon prejudice to the Attorney Defendants. See Opp’n (Dkt.
retail dealer agreement was terminated, effective 93) at 13.
immediately. Id. ¶ 162.
On November 1, 2011, EZ Docs, represented by Freireich
and Brach Eichler, sued Canon USA in New York State
Supreme Court to seek reinstatement of the dealership
A. Amendment Would Not Be Futile
(the “Termination Lawsuit”). Id. ¶ 163. Freireich and
New York Judiciary Law § 487 provides that an attorney
Brach Eichler also filed an application for a temporary
who “[i]s guilty of any deceit or collusion, or consents to
restraining order (“TRO”), together with an affidavit from
any deceit or collusion, with intent to deceive the court or
Mattiucci that contained such statements as “[n]o other
any party ... is guilty of a misdemeanor, and ... forfeits to
person has ever held any equity interest in [EZ Docs].” Id.
the party injured treble damages, to be recovered in a civil
¶¶ 164-165. On November 4, 2011, Justice Melvin L.
action.” A § 487 plaintiff “may recover the legal expenses
Schweitzer of the Supreme Court of the State New York
incurred as a proximate result of a material
denied the TRO application. Id. ¶ 166.
misrepresentation in a prior action” “regardless of
whether the attorney’s deceit was successful.” Melcher v.
In the original complaint, Plaintiffs sued the Attorney
Greenberg Traurig LLP, 135 A.D.3d 547, 552 (N.Y. App.
Defendants for aiding and abetting the EZ Docs
Div. 1st Dep’t 2016). While some New York courts have
Defendants’ fraud. Compl. (Dkt. 1) Counts VII, IX. They
required “a chronic and extreme pattern” of legal
now seek to add a claim against the Attorney Defendants
delinquency by the defendant to maintain a § 487 action,
for violation of New York Judiciary Law § 487 in
“[t]hat requirement appears nowhere in the text of the
connection with allegedly false statements made in
statute.” Amalfitano v. Rosenberg, 533 F.3d 117, 123 (2d
submissions to the New York Supreme Court in the
Cir. 2008). The Court therefore concludes that “[a] single
Termination Lawsuit. Proposed Am. Compl. Count XVI.
act or decision, if sufficiently egregious and accompanied
by an intent to deceive, is sufficient to support liability.”
Amalfitano v. Rosenberg, 428 F. Supp. 2d 196, 207
(S.D.N.Y. 2006).
DISCUSSION
*3 Plaintiffs have alleged that the Attorney Defendants
were aware of the actual underlying organization of EZ
Docs through, among other things, documents drafted by
the Attorney Defendants that: (1) describe Hernandez and
I. Legal Standards Grimaldi as “de facto shareholders, officers and
A party may amend its pleadings at any time with the directors”; and (2) state that Mattiucci was holding the
court’s leave, which the court should freely give when shares of EZ Docs “for the benefit of and as nominee for”
justice so requires. See Fed. R. Civ. P. 15(a)(2). Grimaldi and Hernandez. See Proposed Am. Compl. ¶
Generally, “[a] district court has discretion to deny leave 161. Then, notwithstanding this knowledge, the Attorney
© 2023 Thomson Reuters. No claim to original U.S. Government Works. 2
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Canon U.S.A., Inc. v. Divinium Technologies, Inc., Not Reported in Fed. Supp. (2017)
2017 WL 696693
Defendants prepared and filed documents in the EZ Docs and any potential fraud perpetrated on
Termination Lawsuit that contained such statements as: Canon—while not the sole basis for the filing of the
(1) “neither Anthony Grimaldi nor ex-employee Steven Termination Lawsuit—certainly were part and parcel of
Hernandez were ever in Senior Management positions” that litigation.” Opp’n at 12. Plaintiffs have plausibly
with EZ Docs; and (2) Mattiucci was the “sole owner” of alleged that the material misrepresentations in the
EZ Docs and “[n]o other person has ever held any equity Termination Lawsuit proximately caused Canon USA’s
interest in [EZ Docs].” Id. ¶¶ 161, 295. In light of the harm.
conflict between these two positions, the Court concludes
that Plaintiffs have plausibly alleged that the Attorney
Defendants violated § 487.
The Attorney Defendants make several unavailing
arguments to attack the sufficiency of the proposed B. The Section 487 Claim Is Properly Asserted in
pleadings. First, the Attorney Defendants appear to take This Action
the position that an attorney does not have an intent to The Attorney Defendants assert that Canon USA was
deceive if he is merely asserting arguments and points at required to bring its § 487 claim in the Termination
the client’s request, to advance the client’s position. Lawsuit and thus is precluded from raising it here. They
Opp’n at 6. The Court rejects this argument. An attorney are wrong. Because Canon USA does not seek to
that has knowingly and intentionally filed material collaterally attack a prior adverse judgment or order, and
misrepresentations with a court in order to induce the because it seeks “to recover lost time value of money and
court to take an action that it would not otherwise take the excess legal expenses incurred” in the prior action,
cannot stand behind vigorous advocacy as an excuse to Canon USA is permitted to bring “a separate action under
avoid § 487 liability. the Judiciary Law.” Melcher, 135 A.D.3d at 554.
Second, the Attorney Defendants argue that Plaintiffs *4 Nor is the claim precluded by res judicata. Under the
knew of Grimaldi and Hernandez’s involvement with EZ doctrine of res judicata, “a final judgment on the merits of
Docs. Opp’n at 6. This, however, is not relevant to the an action precludes the parties or their privies from
question of whether the Attorney Defendants intended to relitigating issues that were or could have been raised in
deceive the New York Supreme Court by filing papers that action” when “the parties have had a full and fair
with material misrepresentations. opportunity to litigate the matter.” Channer v. Dep’t of
Homeland Sec., 527 F.3d 275, 279 (2d Cir. 2008). Res
Third, the Attorney Defendants contend that any deceit in judicata has no application here as the Termination
the Termination Lawsuit did not proximately cause harm Lawsuit was dismissed for failure to prosecute, and the
to Canon USA because the Termination Lawsuit could dismissal order did not specify that dismissal was on the
have gone forward without the material merits, see Exhibit D to the Declaration of Jonathan B.
misrepresentations. See Amalfitano v. Rosenberg, 12 Bruno (Dkt. 92-4); N.Y. C.P.L.R. 3216(a); Hanrahan v.
N.Y.3d 8, 15 (N.Y. 2009). They urge that “it is clear that Riverhead Nursing Home, 592 F.3d 367, 369 (2d Cir.
the crux of the Termination Lawsuit was EZ Docs’ 2010).
contention that the termination violated the written notice
provision of the Agreement.” Opp’n at 7-8. While this
may be true, the Attorney Defendants’ argument misses
the mark. The “crux” of the Termination Lawsuit is not
CONCLUSION
what is at issue; rather what is at issue is whether the
action was “grounded in a material misrepresentation of Plaintiffs’ motion for leave to amend the complaint is
fact.” See Amalfitano, 12 N.Y.3d at 15. Plaintiffs have GRANTED. The Clerk of Court is directed to close the
alleged that “the Termination Lawsuit was grounded in motion at Docket 88.
EZ Docs’ principal position, based upon material
misrepresentations of fact, that Canon USA’s stated basis SO ORDERED.
for terminating EZ Docs’ dealership was erroneous, and
that Mattiucci, and not Grimaldi and Hernandez, at all
times owned and controlled EZ Docs.” Proposed Am. All Citations
Compl. ¶ 164. And the Attorney Defendants appear to
concede as much. They state that “it is evident that the Not Reported in Fed. Supp., 2017 WL 696693
issue of the roles of Mattiucci, Hernandez and Grimaldi in
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FILED: SUFFOLK COUNTY CLERK 04/11/2023 02:02 PM INDEX NO. 206004/2022
NYSCEF DOC. NO. 45 RECEIVED NYSCEF: 04/11/2023
Canon U.S.A., Inc. v. Divinium Technologies, Inc., Not Reported in Fed. Supp. (2017)
2017 WL 696693
End of Document © 2023 Thomson Reuters. No claim to original U.S. Government Works.
© 2023 Thomson Reuters. No claim to original U.S. Government Works. 4
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FILED: SUFFOLK COUNTY CLERK 04/11/2023 02:02 PM INDEX NO. 206004/2022 NYSCEF DOC. NO. 45 RECEIVED NYSCEF: 04/11/2023 Canon U.S.A., Inc. v. Divinium Technologies, Inc., Not Reported in Fed. Supp. (2017) 2017 WL 696693 Appx. 2 KeyCite Yellow Flag - Negative Treatment Distinguished by In re Fierro, Bankr.E.D.N.Y., March 31, 2020 BACKGROUND 2017 WL 696693 Only the Westlaw citation is currently available. The Court summarizes here the relevant factual United States District Court, S.D. New York. allegations from Plaintiffs’ Proposed Amended Complaint, which the Court accepts as true for purposes CANON U.S.A., INC., et al., Plaintiffs, of this motion for leave to amend. See Henneberry v. Sumitomo Corp. of America, 415 F. Supp. 2d 423, 432-33 v. (S.D.N.Y. 2006). Defendants Divinium Technologies DIVINIUM TECHNOLOGIES, INC., et (formerly known as EZ Docs, Inc. (“EZ Docs”)), Anthony al., Defendants. Grimaldi, Steven Hernandez, Catherine Mattiucci, and Leonard Harac (together, the “EZ Docs Defendants”) 15 Civ. 1804 (PAC) defrauded Canon USA to obtain an authorized Canon | business equipment dealership. Proposed Am. Compl. Signed 02/21/2017 (Dkt. 89-1) ¶¶ 1-2. The scheme arose in 2008, after Canon USA refused authorization for Empire Technology (“Empire”) to acquire an authorized Canon retail Attorneys and Law Firms dealership. Id. ¶¶ 45–47. Grimaldi and Hernandez were Empire’s principals, and Canon USA rejected Empire’s Elizabeth Rozon Baksh, Richard Howard Silberberg, attempted acquisition due, in part, to Grimaldi and Robert Gregory Manson, Dorsey & Whitney LLP, Dai Hernandez’s prior arrests in connection with a fraud Wai Chin Feman, Satterlee Stephens Burke & Burke LLP, scheme involving business equipment leases. Id. ¶ 46. New York, NY, Robert G. Manson, for Plaintiffs. Grimaldi, Hernandez, and Harac realized that to obtain a James A. Kridel, Law Office of James A. Kridel, Jr. & dealership, they had to conceal Grimaldi and Hernandez’s Associates, Jonathan B. Bruno, Deborah M. Isaacson, involvement. Id. ¶ 48. They agreed with Grimaldi’s sister, Rivkin Radler, LLP, New York, NY, Charles Xavier Mattiucci, to create a new corporation, EZ Docs, to Gormally, David J. Klein, Brach Eichler, L.L.C., pursue acquisition of the dealership. See id. ¶ 49. EZ Docs Roseland, NJ, for Defendants. was set up to have Mattiucci as President and nominal shareholder. Id. But in reality, Grimaldi and Hernandez were to split ownership and primarily perform the actual management of EZ Docs, with Harac’s and Mattiucci’s assistance and participation. See id. Grimaldi, Hernandez, and Mattiucci then retained Freireich to help provide legal services with respect to EZ Docs. Id. ¶ 53. At the time, Freireich worked for non-party Poe & Freireich, but OPINION & ORDER moved to Brach Eichler in March 2010. Id. ¶¶ 53, 63. Canon USA approved EZ Docs’ acquisition of the dealership in November 2008, as well as another HONORABLE PAUL A. CROTTY, United States dealership in February 2010. Id. ¶¶ 52, 63. District Judge: After acquiring the dealerships, the EZ Docs Defendants *1 Plaintiffs Canon U.S.A., Inc. (“Canon USA”) and engaged in a series of improper and illegal activity. See Canon Financial Services, Inc. allege that Jay J. Freireich, generally id. § IV.F. Because of her status as owner and and his law firm, Brach Eichler LLC (“Brach Eichler,” principal of EZ Docs, Mattiucci grew concerned about her and together with Freireich, the “Attorney Defendants”), potential personal liability in connection with this activity. aided and abetted a fraud perpetrated by their former See id. ¶ 161. Consequently, Mattiucci, Grimaldi, and clients. Plaintiffs now move for leave to amend their Hernandez asked Freireich to draft a “Nominee complaint to add a claim against the Attorney Defendants Declaration.” Id. Freireich addressed this request in a June for violation of New York Judiciary Law § 487. The 2011 letter to Mattiucci, Grimaldi, and Hernandez, Court grants the motion. wherein Freireich described Grimaldi and Hernandez as the “de facto shareholders, officers and directors” of EZ © 2023 Thomson Reuters. No claim to original U.S. Government Works. 1 1 of 4 FILED: SUFFOLK COUNTY CLERK 04/11/2023 02:02 PM INDEX NO. 206004/2022 NYSCEF DOC. NO. 45 RECEIVED NYSCEF: 04/11/2023 Canon U.S.A., Inc. v. Divinium Technologies, Inc., Not Reported in Fed. Supp. (2017) 2017 WL 696693 Docs. Id. Thereafter, Freireich prepared the Nominee for good reason, including futility, bad faith, undue delay, Declaration, dated October 5, 2011 and executed by or undue prejudice to the opposing party.” McCarthy v. Mattiucci, Grimaldi, and Hernandez. Id. The Nominee Dun & Bradstreet Corp., 482 F.3d 184, 200 (2d Cir. Declaration provided, among other things, that at the time 2007). “An amendment to a pleading is futile if the EZ Docs was formed, it was intended that Grimaldi and proposed claim could not withstand a motion to dismiss Hernandez would hold 100% of EZ Docs’ stock, and that pursuant to Fed. R. Civ. P. 12(b)(6).” Lucente v. Int’l Bus. Mattiucci was holding the shares of EZ Docs “for the Machs. Corp., 310 F.3d 243, 258 (2d Cir. 2002). benefit of and as nominee for” Grimaldi and Hernandez. Id. It also provided that Mattiucci, Grimaldi, and Hernandez understood “that Canon was and is unwilling to permit [Grimaldi and Hernandez] to have an ownership interest in a Canon licensed dealership.” Id. II. Application *2 By the fall of 2011, Canon USA began considering The Attorney Defendants contend that Plaintiffs’ terminating EZ Docs’ dealership due, among other things, proposed amendment would be futile. However, they to learning of Grimaldi and Hernandez’s involvement concede—and the Court agrees—that there is no bad faith with EZ Docs. See id. ¶ 160. On October 25, 2011, Canon or undue delay on the part of Plaintiffs, or undue USA notified EZ Docs that EZ Docs’ authorized Canon prejudice to the Attorney Defendants. See Opp’n (Dkt. retail dealer agreement was terminated, effective 93) at 13. immediately. Id. ¶ 162. On November 1, 2011, EZ Docs, represented by Freireich and Brach Eichler, sued Canon USA in New York State Supreme Court to seek reinstatement of the dealership A. Amendment Would Not Be Futile (the “Termination Lawsuit”). Id. ¶ 163. Freireich and New York Judiciary Law § 487 provides that an attorney Brach Eichler also filed an application for a temporary who “[i]s guilty of any deceit or collusion, or consents to restraining order (“TRO”), together with an affidavit from any deceit or collusion, with intent to deceive the court or Mattiucci that contained such statements as “[n]o other any party ... is guilty of a misdemeanor, and ... forfeits to person has ever held any equity interest in [EZ Docs].” Id. the party injured treble damages, to be recovered in a civil ¶¶ 164-165. On November 4, 2011, Justice Melvin L. action.” A § 487 plaintiff “may recover the legal expenses Schweitzer of the Supreme Court of the State New York incurred as a proximate result of a material denied the TRO application. Id. ¶ 166. misrepresentation in a prior action” “regardless of whether the attorney’s deceit was successful.” Melcher v. In the original complaint, Plaintiffs sued the Attorney Greenberg Traurig LLP, 135 A.D.3d 547, 552 (N.Y. App. Defendants for aiding and abetting the EZ Docs Div. 1st Dep’t 2016). While some New York courts have Defendants’ fraud. Compl. (Dkt. 1) Counts VII, IX. They required “a chronic and extreme pattern” of legal now seek to add a claim against the Attorney Defendants delinquency by the defendant to maintain a § 487 action, for violation of New York Judiciary Law § 487 in “[t]hat requirement appears nowhere in the text of the connection with allegedly false statements made in statute.” Amalfitano v. Rosenberg, 533 F.3d 117, 123 (2d submissions to the New York Supreme Court in the Cir. 2008). The Court therefore concludes that “[a] single Termination Lawsuit. Proposed Am. Compl. Count XVI. act or decision, if sufficiently egregious and accompanied by an intent to deceive, is sufficient to support liability.” Amalfitano v. Rosenberg, 428 F. Supp. 2d 196, 207 (S.D.N.Y. 2006). DISCUSSION *3 Plaintiffs have alleged that the Attorney Defendants were aware of the actual underlying organization of EZ Docs through, among other things, documents drafted by the Attorney Defendants that: (1) describe Hernandez and I. Legal Standards Grimaldi as “de facto shareholders, officers and A party may amend its pleadings at any time with the directors”; and (2) state that Mattiucci was holding the court’s leave, which the court should freely give when shares of EZ Docs “for the benefit of and as nominee for” justice so requires. See Fed. R. Civ. P. 15(a)(2). Grimaldi and Hernandez. See Proposed Am. Compl. ¶ Generally, “[a] district court has discretion to deny leave 161. Then, notwithstanding this knowledge, the Attorney © 2023 Thomson Reuters. No claim to original U.S. Government Works. 2 2 of 4 FILED: SUFFOLK COUNTY CLERK 04/11/2023 02:02 PM INDEX NO. 206004/2022 NYSCEF DOC. NO. 45 RECEIVED NYSCEF: 04/11/2023 Canon U.S.A., Inc. v. Divinium Technologies, Inc., Not Reported in Fed. Supp. (2017) 2017 WL 696693 Defendants prepared and filed documents in the EZ Docs and any potential fraud perpetrated on Termination Lawsuit that contained such statements as: Canon—while not the sole basis for the filing of the (1) “neither Anthony Grimaldi nor ex-employee Steven Termination Lawsuit—certainly were part and parcel of Hernandez were ever in Senior Management positions” that litigation.” Opp’n at 12. Plaintiffs have plausibly with EZ Docs; and (2) Mattiucci was the “sole owner” of alleged that the material misrepresentations in the EZ Docs and “[n]o other person has ever held any equity Termination Lawsuit proximately caused Canon USA’s interest in [EZ Docs].” Id. ¶¶ 161, 295. In light of the harm. conflict between these two positions, the Court concludes that Plaintiffs have plausibly alleged that the Attorney Defendants violated § 487. The Attorney Defendants make several unavailing arguments to attack the sufficiency of the proposed B. The Section 487 Claim Is Properly Asserted in pleadings. First, the Attorney Defendants appear to take This Action the position that an attorney does not have an intent to The Attorney Defendants assert that Canon USA was deceive if he is merely asserting arguments and points at required to bring its § 487 claim in the Termination the client’s request, to advance the client’s position. Lawsuit and thus is precluded from raising it here. They Opp’n at 6. The Court rejects this argument. An attorney are wrong. Because Canon USA does not seek to that has knowingly and intentionally filed material collaterally attack a prior adverse judgment or order, and misrepresentations with a court in order to induce the because it seeks “to recover lost time value of money and court to take an action that it would not otherwise take the excess legal expenses incurred” in the prior action, cannot stand behind vigorous advocacy as an excuse to Canon USA is permitted to bring “a separate action under avoid § 487 liability. the Judiciary Law.” Melcher, 135 A.D.3d at 554. Second, the Attorney Defendants argue that Plaintiffs *4 Nor is the claim precluded by res judicata. Under the knew of Grimaldi and Hernandez’s involvement with EZ doctrine of res judicata, “a final judgment on the merits of Docs. Opp’n at 6. This, however, is not relevant to the an action precludes the parties or their privies from question of whether the Attorney Defendants intended to relitigating issues that were or could have been raised in deceive the New York Supreme Court by filing papers that action” when “the parties have had a full and fair with material misrepresentations. opportunity to litigate the matter.” Channer v. Dep’t of Homeland Sec., 527 F.3d 275, 279 (2d Cir. 2008). Res Third, the Attorney Defendants contend that any deceit in judicata has no application here as the Termination the Termination Lawsuit did not proximately cause harm Lawsuit was dismissed for failure to prosecute, and the to Canon USA because the Termination Lawsuit could dismissal order did not specify that dismissal was on the have gone forward without the material merits, see Exhibit D to the Declaration of Jonathan B. misrepresentations. See Amalfitano v. Rosenberg, 12 Bruno (Dkt. 92-4); N.Y. C.P.L.R. 3216(a); Hanrahan v. N.Y.3d 8, 15 (N.Y. 2009). They urge that “it is clear that Riverhead Nursing Home, 592 F.3d 367, 369 (2d Cir. the crux of the Termination Lawsuit was EZ Docs’ 2010). contention that the termination violated the written notice provision of the Agreement.” Opp’n at 7-8. While this may be true, the Attorney Defendants’ argument misses the mark. The “crux” of the Termination Lawsuit is not CONCLUSION what is at issue; rather what is at issue is whether the action was “grounded in a material misrepresentation of Plaintiffs’ motion for leave to amend the complaint is fact.” See Amalfitano, 12 N.Y.3d at 15. Plaintiffs have GRANTED. The Clerk of Court is directed to close the alleged that “the Termination Lawsuit was grounded in motion at Docket 88. EZ Docs’ principal position, based upon material misrepresentations of fact, that Canon USA’s stated basis SO ORDERED. for terminating EZ Docs’ dealership was erroneous, and that Mattiucci, and not Grimaldi and Hernandez, at all times owned and controlled EZ Docs.” Proposed Am. All Citations Compl. ¶ 164. And the Attorney Defendants appear to concede as much. They state that “it is evident that the Not Reported in Fed. Supp., 2017 WL 696693 issue of the roles of Mattiucci, Hernandez and Grimaldi in © 2023 Thomson Reuters. No claim to original U.S. Government Works. 3 3 of 4 FILED: SUFFOLK COUNTY CLERK 04/11/2023 02:02 PM INDEX NO. 206004/2022 NYSCEF DOC. NO. 45 RECEIVED NYSCEF: 04/11/2023 Canon U.S.A., Inc. v. Divinium Technologies, Inc., Not Reported in Fed. Supp. (2017) 2017 WL 696693 End of Document © 2023 Thomson Reuters. No claim to original U.S. Government Works. © 2023 Thomson Reuters. No claim to original U.S. Government Works. 4 4 of 4