SPECIALIZED INDUSTRIAL SERVICES CORP v. CARTER (2009)

In an action, inter alia, to recover damages for fraud and violation of Judiciary Law § 487, the defendant appeals, as limited by his notice of appeal and brief, from so much of an order of the Supreme Court, Suffolk County (Jones, J.), dated July 23, 2008, as denied that branch of his motion which was, in effect, pursuant to CPLR 3211(a)(1) and (7) to dismiss the first cause of action in the amended verified complaint.

ORDERED that the order is affirmed insofar as appealed from, with costs.

 Contrary to the defendant's contention, the Supreme Court properly denied that branch of his motion which was to dismiss the first cause of action in the amended verified complaint alleging his violation of Judiciary Law § 487 during the course of the underlying action brought by his client against the plaintiff.   Accepting the factual allegations in the amended verified complaint as true (see Simmons v. Edelstein, 32 A.D.3d 464, 465, 820 N.Y.S.2d 614;  Manfro v. McGivney, 11 A.D.3d 662, 663, 783 N.Y.S.2d 288), as augmented by the affidavits submitted by the plaintiff in opposition to the defendant's motion (see Nonnon v. City of New York, 9 N.Y.3d 825, 827, 842 N.Y.S.2d 756, 874 N.E.2d 720;  Leon v. Martinez, 84 N.Y.2d 83, 88, 614 N.Y.S.2d 972, 638 N.E.2d 511;  Rovello v. Orofino Realty Co., 40 N.Y.2d 633, 635-636, 389 N.Y.S.2d 314, 357 N.E.2d 970), the plaintiff sufficiently stated a cause of action under Judiciary Law § 487 for the defendant's alleged intentional deceit during the course of the underlying action (see Moormann v. Perini & Hoerger, 65 A.D.3d 1106, 1106, 886 N.Y.S.2d 49;  Izko Sportswear Co., Inc. v. Flaum, 25 A.D.3d 534, 537, 809 N.Y.S.2d 119;  cf. Mahler v. Campagna, 60 A.D.3d 1009, 1012-1013, 876 N.Y.S.2d 143).

 In the underlying action, judgment was entered against the plaintiff upon its default in answering or appearing.   The plaintiff obtained an order vacating the default judgment, which was ultimately reversed by this Court (see Dave Sandel, Inc. v. Specialized Indus. Servs. Corp., 35 A.D.3d 790, 826 N.Y.S.2d 735).   Generally, a party who has lost a case as a result of alleged fraud or false testimony cannot collaterally attack the judgment in a separate action for damages against the party who adduced the false evidence, and the plaintiff's remedy lies exclusively in moving to vacate the default judgment (see North Shore Envtl. Solutions, Inc. v. Glass, 17 A.D.3d 427, 792 N.Y.S.2d 610;  Retina Assoc. of Long Is. v. Rosberger, 299 A.D.2d 533, 751 N.Y.S.2d 50;  New York City Tr. Auth. v. Morris J. Eisen, P.C., 276 A.D.2d 78, 87, 715 N.Y.S.2d 232;  Yalkowsky v. Century Apts. Assoc., 215 A.D.2d 214, 215, 626 N.Y.S.2d 181).   Under an exception to that rule, a separate lawsuit may be brought where the alleged perjury or fraud in the underlying action was “merely a means to the accomplishment of a larger fraudulent scheme” (Newin Corp. v. Hartford Acc. & Indem. Co., 37 N.Y.2d 211, 217, 371 N.Y.S.2d 884, 333 N.E.2d 163) which was “greater in scope than the issues determined in the prior proceeding” (Retina Assoc. of Long Is. v. Rosberger, 299 A.D.2d at 533, 751 N.Y.S.2d 50 [internal quotation marks omitted] ).   The plaintiff here, in its amended verified complaint and supplemental affidavits, has sufficiently alleged a larger fraudulent scheme to fit within the exception to the rule against collateral attack (see New York City Tr. Auth. v. Morris J. Eisen, P.C., 276 A.D.2d at 80, 87-88, 715 N.Y.S.2d 232;  cf. North Shore Envtl. Solutions, Inc. v. Glass, 17 A.D.3d at 428, 792 N.Y.S.2d 610).

 Contrary to the defendant's contention, the first cause of action in the amended verified complaint is not barred by the doctrine of res judicata since the Judiciary Law cause of action did not arise out of the factual transaction which was the subject matter of that action (see Matter of Hodes v. Axelrod, 70 N.Y.2d 364, 372, 520 N.Y.S.2d 933, 515 N.E.2d 612;  Mahler v. Campagna, 60 A.D.3d at 1011, 876 N.Y.S.2d 143;  Lazides v. P & G Enters., 58 A.D.3d 607, 609, 871 N.Y.S.2d 357;  Triboro Fastener & Chem. Prods. Corp. v. Lee, 236 A.D.2d 603, 603-604, 653 N.Y.S.2d 960).   Nor is the first cause of action precluded by principles of collateral estoppel in that the claim was not litigated in the underlying action and much of the evidence upon which the plaintiff relies was discovered subsequent to entry of the default judgment in the underlying action (see Kaufman v. Eli Lilly & Co., 65 N.Y.2d 449, 456-457, 492 N.Y.S.2d 584, 482 N.E.2d 63;  Izko Sportswear Co., Inc. v. Flaum, 25 A.D.3d at 537, 809 N.Y.S.2d 119;  Chambers v. City of New York, 309 A.D.2d 81, 85, 764 N.Y.S.2d 708).

The defendant's remaining contentions are without merit.