Issue Preclusion Under NJ and NY Law

Kesselman v. Kesselman, No. A-3620-19 (App. Div. March 2, 2022)

The issue on appeal was whether issue preclusion under res judicata and collateral estoppel were applicable to the plaintiff’s complaint. In its analysis, the Appellate Division discussed the applicability of the Constitution’s full faith and credit clause, and then thoroughly addressed the respective interpretations of both res judicata and collateral estoppel under New York and New Jersey law.  Ultimately, the court held that the doctrines precluded plaintiff’s claims to void the 2002 and 2014 amendments to a family trust, but were not preclusive as to plaintiff’s challenge to a 2015 amendment as the New York court had not ruled on the issue in prior litigation.

One of the difficult arguments presented by this matter appears to have centered on plaintiff’s due process rights.  For example, in the New York iteration of the dispute, plaintiff requested, but did not receive, responses to his discovery requests.  The discovery requests included requests focused on the mental capacity of the trustees and the defendant-sister’s alleged undue influence over the trustees (her parents).  The New York court rendered judgment against plaintiff and dismissed all of his claims, and the judgment was subsequently affirmed on appeal. Plaintiff never received the discovery he requested.

After the New York appeal, plaintiff brought an action in New Jersey, reiterating and expanding on the claims made in the New York litigation.  The New Jersey trial court found that the New Jersey litigation was precluded by the New York judgment and granted summary judgment against plaintiff.  At the time summary judgment was granted, both trustees had passed away.

On appeal, the Appellate Division found full faith and credit was due to the New York judgment even if the New York court had erred.  The court specifically found that such error would not warrant the denial of the res judicata effect to the New York judgment and that “. . . a subsequent suit in New Jersey is not a proper means for correcting an allegedly erroneous ruling from a foreign jurisdiction.”  Kesselman, slip op. at 29, n. 4 (citing Velasquez v. Franz, 123 N.J. 498, 511-12 (1991)).  The court further reasoned that plaintiff “chose to pursue his claims in New York, and he framed the issues to be resolved by the court, including his parents’ promise to bequeath a fifty percent interest in the Chelsea building to him, their alleged mental incapacity, and [his sister’s] alleged undue influence.” Id. at 29.

While plaintiff’s arguments regarding claims to void the 2002 and 2014 amendments were precluded, the Appellate Division reviewed the New York courts’ decisions and found it undisputed that the “New York judgment did not address anything related to the [2015 amendment].”  As a result, the Appellate Division reversed and remanded the matter for further proceedings in connection with the 2015 amendment, including allegations of the defendant-sister’s alleged undue influence.

There was a secondary issue the court addressed, which was plaintiff’s claim regarding an alleged fraud committed on the New York court.  The court dismissed this claim, finding that there was “no clear and convincing evidence of [fraud] in the record.”  Id. at 33.