it is neither novel, nor a surprise that legal malpractice might come up in a complicated trust/estate/real estate/debtor-creditor case. Here, a valuable building in the meatpacking district of New York City was at issue. Romanoff v Trustees of the Sheryl Romanoff Irrevocable Grantor Trust. 2020 NY Slip Op 31150(U) May 4, 2020 Supreme Court, New York County
Docket Number: Index No. 157641/2014 Judge: James E. d’Auguste illustrates how the thicket grows.
“New Roads, a Delaware company, was the sole shareholder of GHC, and Gerald had sole control over New Roads. Gerald and his spouse Sheryl each owned 49.5% of the common stock of New Roads. Nicholas Romanoff (Nicholas), Robert’s son and their grandson, owned the remaining 1%. In turn, GHC owned the property located at 55 Gansevoort Street in Manhattan (the Property). Over the years, GHC, New Roads, and Gerald had taken out or guaranteed millions of dollars in loans. As a result of these guarantees, there were two mortgages on the Property. When the debtors were unable to repay their debts, the Gans defendants obtained judgments against them in New Jersey and sought their enforcement in New York. Gerald had transferred his 49.5% share of New Roads to his wife in an effort to keep the stock from his creditors. Sheryl put the stock into two trusts: The Sheryl Romanoff Irrevocable Grantor Trust (the IGT), which contained 49.5% of the shares of the common stock of New Roads, and the Sheryl Romanoff Grantor Retained Annuity Trust (the GRAT), which initially contained 49.5% of the New Roads shares. Robert and Zimmerman had been the co-trustees of both trusts, and Robert was a lifetime beneficiary. In 2012, the GRAT ceased to exist and the corpus transferred to the IGT. The Gans defendants sought and obtained an order which set aside the transfers as fraudulent (55 Gans Judgment LLC v Romanoff, Sup Ct, NY County, Feb. 6, 2013, Mendez, J., index No. 106008/2011 [the 55 Gans Judgment order], appeal dismissed 123 AD3d 452 [1st Dept 2014], lv dismissed 26 NY3d 1073 ). The order effectively denuded the IGT, which by this time contained 99% of the shares of the New Roads stock. On June 25, 2012, the Gans defendants settled their disputes with Gerald, Sheryl, GHC, and New Roads (NYSCEF Doc. No. 238 [the Settlement]). Under the Settlement, the Gans defendants forgave all mortgage obligations, released Gerald’s debts, released their judgments against the debtors, satisfied an unrelated judgment against GHC, and made certain payments to GHC and its attorney. In exchange, the debtors transferred the Property to the Gans defendants. The 55 Gans Judgment order rejected Robert’s attempt to intervene in the action and oppose the settlement, and Robert’s appeals on behalf of the trusts were dismissed because the co-trustee did not take part in or support the litigation (see 55 Gans Judgment LLC v Romanoff, 123 AD3d 452 [1st Dept 2014]). ”
“Collateral estoppel and res judicata protect litigants from repetitive lawsuits, promotes judicial economy, and preserves the integrity of the judicial system (Paramount Pictures Corp. v
Allianz Risk Transfer AG, 31 NY3d 64, 73  [Paramount]). Collateral estoppel “precludes a party from relitigating in a subsequent action or proceeding an issue clearly raised in a prior action or proceeding and decided against that party or those in privity, whether or not the tribunals or causes of action are the same” (Wilson v Dantas, 29 NY3d 1051, 1062 
[internal quotation marks and citation omitted]). The doctrine is a subset of the broader doctrine of res judicata (see Wilson v Dantas, 29 NY3d at 1062). Res judicata bars all claims “arising out of the same transaction or series of transactions as a claim that was previously resolved on the merits and which the party opposing preclusion had a full and fair opportunity to litigate” (Platon v Linden-Marshall Contr. Inc., 176 AD3d 409, 410 [1st Dept 2019] [internal quotation marks and citation omitted]). Res judicata applies even to claims that were not litigated if they were or could have been raised previously (Wilson, 29 NY3d at 1062; see Munroe v Park Ave. S. Mgt., 99 AD3d 426, 427 [1st Dept 2012]). For this reason, a judgment on the merits in a prior action between the same parties bars litigation under a different legal theory (see Dickerson v United Way of N.Y. City, 113 AD3d 452, 452-453 [1st Dept 2014]). Further, if the losing party does not appeal an adverse judgment in a prior case between the same parties, that party cannot assert the claim in another lawsuit (see Cohen v Glass, 173 AD3d 580, 580 [1st Dept 2019]). ”
“The Court grants motion sequence no. 005 in its entirety. As the Gans defendants argue, plaintiffs lack standing to raise the trust-based claims they assert against them in the third and fifth causes of action. The issue of standing, the Gans defendants point out, has been resolved in several prior orders within and outside of the New York State courts. They cite the First Department decision in Romanoff III, which found that Romanoff I collaterally estopped Robert from pursuing trust-based claims, and that due to Nicholas’ privity with Robert, collaterally estoppel precluded Nicholas as well (Romanoff III, 148 AD3d at 617). In Romanoff I, Justice Singh emphasized in 2017 that “both Robert and Nicholas do not have standing to bring these claims on behalf of the trusts in any capacity, and Robert has no standing to bring the derivative claims on behalf of the corporations” (Romanoff I, NYSCEF Doc. No. 185 [2017 NY Slip Op 30461[U], *16 (March 8, 2017)]). That order further found that there was no standing because the trusts had been terminated, and that this also meant that plaintiff lacked standing to sue derivatively on behalf of New Roads (id. at 16-17). The Gans defendants also annex copies of the oral argument transcripts from Romanoff v New Roads Realty Corp. (Chancery Ct, DE, Civ Action 12375 –VCS, April 10, 2017, Slights, Vice Chancellor [“Slights Transcript”] [NYSCEF Doc. No. 195]), in which the Vice Chancellor adheres to the New York State court rulings. Further, the trust beneficiaries have no standing to sue regarding property that was in the trusts (see Matter of Larchmont Pancake House v Board of Assessors and/or Assessors of the Town of Mamaroneck, 33 NY3d 228, 240 ; Buechel v Bain, 275 AD2d 65, 65 [1st Dept 2000]).
As Griffon correctly notes, the sixth cause of action for rescission also must be dismissed based on collateral estoppel. Justice Singh dismissed plaintiffs’ rescission claim
in Romanoff III. The trial court ruled that adequate monetary damages were available, noting that plaintiffs’ asserted goal had been to sell the Property at a higher value. It stated that plaintiffs’ assertions to the contrary were conclusory and without any evidentiary basis (Romanoff III, “