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Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: May 27, 2018

Misstatements in Court Documents That Were Not Material and a Single Act of Deceit Insufficient Basis for Malicious Prosecution Claim

On May 22, 2018, the First Department issued a decision in Shawe v. Elting, 2018 NY Slip Op. 03644, holding that misstatements that were not material and a single act of deceit were an insufficient basis for a malicious prosecution claim, explaining:

[O]ur rulings in Elting v Shawe (129 AD3d 648 [1st Dept 2015]) and Elting v Shawe (136 AD3d 536 [1st Dept 2016]), in which we held that the payroll access and corporate ownership assertions, made in support of the TRO and preliminary injunction applications in the 2014 action, were not material, collaterally estop Shawe from relying on those misstatements. Since those misstatements form the entire basis of Shawe’s current malicious prosecution claim, collateral estoppel constitutes a second, independent basis for dismissal of that cause of action.

The payroll access misstatements likewise form a substantial portion of Shawe’s current claim for violation of Judiciary Law § 487. Given especially that Elting was granted a TRO, the payroll access misstatements, which we have determined to be immaterial, were not sufficiently egregious to support this claim of § 487 violation. Shawe’s allegations that the attorney defendants deceptively backdated a retainer agreement primarily relates to privilege assertions in the Delaware action, and not in New York, and, as such, is not actionable under § 487. The remaining basis of Shawe’s claim under § 487 — the allegedly knowing filing of a baseless defamation counterclaim — is a single alleged act of deceit not sufficiently egregious to support a claim under.

(Internal quotations and citations omitted).

New York courts are tolerant of litigants would advance claims or defenses that ultimately are found to be meritless. However, if a litigant brings claims that are completely without a legal or factual basis in bad faith, they can be subject to sanctions and can be held liable for the tort of malicious prosecution. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have questions regarding whether you have recourse against someone who has brought baseless claims against you.

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