Ray v. Watnick, 1:15-cv-10176

Background

Ames Ray (plaintiff) sued attorneys Donald Watnick and Julie Stark under N.Y. Judiciary Law § 487, alleging they made or consented to knowingly deceitful statements in related New York state litigation.
The alleged misconduct arises from eight specific statements in state-court filings (including briefs on spoliation, summary-judgment papers, and appellate filings) about: admissions of physical abuse/oppression, production of documents relating to a confession of judgment and a penalty letter, missing files from a separate contractor action, and payments of Christina Ray's credit-card debt.
Defendants moved to dismiss under Fed. R. Civ. P. 12(b)(6); the Court considered state-court records referenced in the Complaint.
The district court found the Complaint failed to plead plausibly that defendants acted with intentional deceit: many contested statements were citations to the state trial judge’s findings or were matters of context/dispute over production, not clear, intentional falsehoods.
Independently, the Court concluded that § 487 liability requires deceit that is "extreme" or "egregious," a threshold not met by the alleged statements.
The Complaint was dismissed with prejudice; the Court declined to convert the motion to summary judgment and noted additional grounds (collateral attack, insufficient allegations as to Stark) that it did not reach.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Complaint plausibly alleges intent to deceive under § 487	Ames: defendants knowingly made or consented to false statements in state-court filings	Watnick/Stark: statements were citations, context-based advocacy or reasonable positions, not intentional deceit	Dismissed — plaintiff failed to plausibly plead deceitful intent
Whether statements cited (e.g., judge's finding, document-production assertions) were intentionally false	Ames: specific produced documents contradict defendants’ statements	Defs: statements reflected judge’s interpretation or referred narrowly to documents about creation; reasonable dispute over context	Dismissed — allegations show at most disagreement, not intentional deceit
Whether § 487 requires an "extreme" or "egregious" level of deceit to be actionable	Ames: intent to deceive alone suffices under some precedents; no heightened standard required	Defs/Court: New York precedent and policy require extreme/egregious misconduct to avoid chilling advocacy; federal court must predict NY Court of Appeals would adopt that rule	Dismissed (independent ground) — alleged conduct not egregious or extreme
Whether diversity jurisdiction and procedural posture allow dismissal rather than remand/summary conversion	Ames: asserted diversity and asked (implicitly) to proceed	Defs: challenged merits; court noted jurisdictional concern but concluded amount-in-controversy satisfied; opposed conversion to summary judgment	Court retained jurisdiction and denied conversion; proceeded to dismiss on merits with prejudice

Key Cases Cited

Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard: plausibility)
Arbaugh v. Y & H Corp., 546 U.S. 500 (court's independent duty to ensure subject-matter jurisdiction)
Ocean Ships, Inc. v. Stiles, 315 F.3d 111 (second circuit standard re: amount-in-controversy uncertainty)
Amalfitano v. Rosenberg, 533 F.3d 117 (§ 487 can apply to a single intentionally deceitful act; discussion of scope)
Phansalkar v. Andersen Weinroth & Co., L.P., 344 F.3d 184 (predicting state law; respect for intermediate state decisions)
Town of Babylon v. Fed. Hous. Fin. Agency, 699 F.3d 221 (2d Cir. pleading/inference principles)