Lawyers' Fund for Client Protection v. JP Morgan Chase Bank, N.A.Lawyers' Fund for Client Protection v. JP Morgan Chase Bank, N.A.
Garry, J. Appeal from an order of the Supreme Court (Platkin, J.), entered May 14, 2010 in Albany County, which denied defendant‘s motion to dismiss the amended complaint.
Plaintiff has the statutory purpose of promoting public confidence in the legal profession by reimbursing losses caused by the dishonest conduct of New York attorneys (see
In December 2009, defendant moved to dismiss the complaint for failure to state a cause of action due to, among other things, its failure to identify the claimants and particularize their individual losses. On December 22, 2009, plaintiff responded by filing, as of right (see
Under the relation back doctrine, an otherwise untimely claim in an amended pleading will be deemed interposed at the time of the original pleading “unless the original pleading does not give notice of the transactions, occurrences, or series of transactions or occurrences, to be proved pursuant to the amended pleading” (
The original complaint named the attorney and law firm responsible for the fraud, identified the escrow accounts set up in defendant‘s bank, and described the manner in which the accounts were intended to function and the means by which the lawyer manipulated them to misappropriate funds. With regard to defendant‘s conduct, the complaint alleged that, despite knowing that the accounts in question were attorney fiduciary accounts, defendant disregarded certain warning signs, such as regular negative account balances, that placed it on notice and triggered a duty to make reasonable inquiries, as well as other specific errors, acts and omissions that allegedly facilitated and exacerbated the fraud. As to the subrogors, the complaint stated the number of claimants, the time frame within which their losses occurred, and the aggregate amount of their damages, and that, after being reimbursed, the subrogors each signed an agreement transferring their claims to plaintiff. The amended complaint restated these allegations and provided additional detail by narrowing the time frame, naming the individual claimants, and pleading separate causes of action which particularized each claimant‘s losses and the specific reasons why the misappropriated funds had been deposited into the escrow accounts. The new allegations in the amended complaint
Defendant claims that the original complaint was fatally defective for failing to identify the individual claimants and particularize their claims. In support of this claim, defendant relies on cases involving efforts by health insurers and others to recoup from the tobacco industry the cost of health care provided to large groups of persons injured by the use of tobacco (see Blue Cross & Blue Shield of N.J., Inc. v Philip Morris USA Inc., 344 F3d 211, 217-218 [2d Cir 2003]; A.O. Fox Mem. Hosp. v American Tobacco Co., 302 AD2d 413, 414 [2003], lv denied 100 NY2d 503 [2003]; Eastern States Health & Welfare Fund v. Philip Morris, Inc., 188 Misc 2d 638, 652-653 [2000]). However, the claims in those cases were dismissed not merely because the injured persons had not been identified, but because they could not be identified in a manner appropriate to a subrogation claim. The separate claims asserted on behalf of the injured persons involved such a high degree of individualized inquiry that, as the federal court noted, they “[could not] properly be considered to be subrogated claims” (Blue Cross & Blue Shield of N.J., Inc. v Philip Morris USA Inc., 344 F3d at 218). Here, in contrast, the group of subrogors whose claims were paid by plaintiff is small, clearly defined and readily identifiable. Notably, the claimants were members of a group that was not entirely unknown to defendant, as defendant had previously dishonored $2.1 million in checks drawn against the escrow accounts for the benefit of these claimants and others. Each claimant was injured in the same way, each claimant‘s subrogation relationship to plaintiff arose in the same way, and the specific acts and omissions by defendant which were alleged to have caused the claimants’ losses were the same. In light of the detail within the original complaint regarding defendant‘s allegedly wrongful acts and omissions, we are satisfied that the amended complaint was “a mere expansion” of the allegations in the original complaint (August Bohl Contr. Co., Inc. v L.A. Swyer Co., Inc., 74 AD3d at 1651; compare McHale v Anthony, 41 AD3d 265, 265-267 [2007]). Accordingly, the motion for dismissal was properly denied.
Mercure, J.P., Rose, Lahtinen and Kavanagh, JJ., concur.
Ordered that the order is affirmed, with costs.