A Fraud Charge Requires A Material Fact, Scienter And Reliance. The Lawyer’s Failure Of Proof Resulted In Monetary Sanctions

    In Yeun-Ah Choi v. Shoshan, 136 AD3d 506 (1st Dept. 2016) the wife sued for divorce. The husband’s divorce attorney Walter Bottger, found by the divorce court and the appellate court to be experienced and qualified, allowed his client to enter into a settlement agreement wherein he agreed to pay wife’s reasonable interim counsel fees. According to the published court opinion on appeal, the husband later moved in court to set aside the settlement agreement, alleging that it was the result of fraud, misrepresentation, or other misconduct or that to enforce stipulation would have been unjust or inequitable or have permitted wife to gain unconscionable advantage. The trial court denied the husband’s motion to set aside the settlement agreement, and the panel of Appellate Division judges affirmed that finding. The appellate court stated: “counsel’s claim that he had been “misled” into entering the stipulation was properly rejected, given counsel’s significant legal experience, and the fact that the wife never made any representation in the stipulation regarding future increases in her counsel’s average monthly legal fees * * * ” The appellate court did not stop there. It also affirmed the trial court’s award of monetary sanctions for making the motion to set aside the settlement agreement. Pursuant to the New York there is a New York court rule which bars conduct defined as “frivolous” [22 NYCRR § 130-1.1(c)(1)].   The appellate court stated that the “husband’s counsel had not been misled into entering into the stipulation and that wife never made representation regarding future increases in her counsel’s average monthly legal fees.  The husband’s conduct was frivolous and warranted sanctions because the motion to vacate stipulation was not based on good-faith argument that was ultimately found to be unpersuasive, and because there was no legal merit to husband’s motion.