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Posted: October 22, 2015

Res Judicata Does Not Apply to Surrogate’s Court Decision

On October 22, 2015, the First Department issued a decision in Arroyo-Graulau v. Merrill Lynch Pierce, Fenner & Smith, Inc., 2015 NY Slip Op. 07774, rejecting an argument that a Surrogate’s Court decision had res judicata effect.

In Arroyo-Graulau, the defendants moved to dismiss claims regarding a securities account arguing, among other things, that a decision in an earlier Surrogate’s Court action had res judicata effect in a later Supreme Court action. The First Department reversed the Supreme Court’s decision adopting that conclusion, explaining:

Res judicata does not apply in this case because a linchpin of the doctrine, that there be an identity of parties litigating against each other in the two actions, is missing. The parties in the earlier Surrogate’s Court action were plaintiff and the coexecutors of the estate of Alberto Arroyo. Although plaintiff served Merrill Lynch with her petition to vacate the decree admitting the 2008 will to probate, Merrill Lynch was not an interested party in that proceeding nor did it participate in it, having absolutely no right or interest whatsoever in decedent’s estate. Collateral estoppel has no application here either, because the issues in the Surrogate’s Court action are not identical to those raised here and were not “necessarily decided” by the Surrogate’s Court. The only issue before the Surrogate to decide was whether the 2008 will should be admitted to probate. At no point did the Surrogate determine what assets actually constituted the probate estate, and she did not decide whether the securities owned by decedent at the time of his death were probate assets. By admitting the will to probate, the Surrogate did not assert authority over the account and did not implicitly or explicitly find that the securities account should be distributed as part of the estate. The will itself does not reference the securities account.

Admitting a will to probate involves the validity of the will and the designation of an estate representative, who is then responsible for, among other things, marshaling probate assets. Disputes about particular assets are usually the subject of subsequently brought collateral proceedings, including discovery, turnover and accounting proceedings. No party claims that there is any collateral proceeding concerning the securities account currently pending in the Surrogate’s Court.

(Internal quotations and citations omitted).

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