Fourth Department – Devaluation of trust: Matter of the R.W. Burrows Grantor Family Trust

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New York State Supreme Court, Appellate Division, Fourth Judicial Department

Devaluation of trust

Ratification – Judicial estoppel – Divorce settlement agreement

Matter of the R.W. Burrows Grantor Family Trust

CA 22-00967

Appealed from Surrogate’s Court, Herkimer County

Background: The petitioner commenced a proceeding seeking discovery and delivery of certain assets that allegedly belong to the trust, which was established by the decedent for the benefit of his daughters and was also the subject of certain terms in the divorce settlement between the decedent and the guardian of the beneficiaries. The petitioner moved for partial summary judgment that certain stock transactions did not constitute an equivalent exchange. The Surrogate’s court denied the motion and effectively granted leave to the respondents to serve an amended answer which included the affirmative defenses of ratification and judicial estoppel.

Ruling: The Appellate Division held that the surrogate erred in granting the cross-motion. The court held that the respondents’ own submissions failed to eliminate triable issues of fact whether the petitioner ratified the transaction that caused the trust to lose value. Furthermore, judicial estoppel does not apply as the petitioner was not a party to the matrimonial action or divorce settlement agreement upon which the respondents rely.

Timothy M. Ferges, of McCarter & English, for the petitioner-appellant; Ceclia R. S. Cannon, of Bousquet Holstein, for the appellants; Robert H. Rosh, of McCarthy Fingar, for the respondents-respondents.

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