Issue Preclusion in New York Attorney Discipline: Out‑of‑State Probate Findings (Including Intent and Bad Faith) Bind the Respondent, But Rule Violations Remain for the Court

Introduction

Matter of Black (2025 NY Slip Op 04174) is a disciplinary decision by the Appellate Division, Second Department, addressing an attorney’s misconduct that arose while serving as a court‑appointed fiduciary in Colorado probate proceedings and, crucially, clarifying how New York’s attorney disciplinary courts apply collateral estoppel to out‑of‑state judgments. The Grievance Committee for the Ninth Judicial District prosecuted Bernard S. Black, a long‑tenured law professor, for conduct found by a Colorado probate court and affirmed on appeal to be deceptive, conflicted, and in bad faith.

The core issues were:

Whether New York’s disciplinary tribunal would accord collateral estoppel effect to the Colorado probate and appellate courts’ determinations—including determinations labeled as “legal” such as bad faith and intent—so as to bar relitigation of those issues in the New York proceeding.
Whether misconduct occurring outside the traditional practice of law (here, as conservator and executor) can violate the New York Rules of Professional Conduct.
What sanction is appropriate when an attorney acting as a court‑appointed fiduciary fails to disclose a serious conflict, misleads a tribunal, and diverts funds away from a protected person.

The court sustained most charges, rejected one, disaffirmed a finding of “no venal intent,” and imposed disbarment. Its discussion of collateral estoppel’s scope in disciplinary matters sets a notable procedural precedent.

Summary of the Judgment

The Second Department held that:

Charges Two, Three, Four, and Six were properly sustained based on the Colorado courts’ findings, which the court had previously held were entitled to collateral estoppel effect in the New York disciplinary proceeding.
Charge One was not sustained.
The Special Referee’s finding that there was “no venal intent” was disaffirmed; the court treated the Colorado determinations—including bad faith, deception, and intent—as encompassed within the factual specifications to which collateral estoppel applied.
Although the Colorado findings bound the respondent on the facts (including intent), the New York court independently determined that those facts constituted violations of:
- Rule 8.4(c) (dishonesty, fraud, deceit, or misrepresentation),
- Rule 3.3(a)(1) (false statements to a tribunal or failure to correct),
- Rule 8.4(d) (conduct prejudicial to the administration of justice), and
- Rule 8.4(h) (conduct adversely reflecting on fitness).
Disbarment was the appropriate sanction.

In imposing disbarment, the court emphasized that the respondent attempted to deprive his sister—an individual with chronic schizophrenia—of approximately $1 million by engineering a conflicted disclaimer and by withholding material information from the Colorado probate court, in bad faith, all while continuing to justify the conduct as being in her interest.

Factual and Procedural Background

The respondent’s mother amended her estate plan late in life, designating approximately $3 million to pass directly to the respondent’s sister, Joanne, via payable-on-death (POD) accounts, rather than through an existing Supplemental Needs Trust (SNT). After the mother’s death, the respondent became Joanne’s conservator in Colorado. Acting as conservator, he disclaimed Joanne’s POD interests so the funds would flow back to the estate and then be distributed two‑thirds to the SNT and one‑third to an Issue Trust (IT) benefitting himself and his children. He also diverted a Roth IRA (approximately $300,000) to his children.

After contested proceedings, the Colorado probate court found that the respondent:

Failed to disclose his conflicts and his intent to redirect assets to a trust benefitting himself and his children,
Filed an inventory that did not disclose assets as of his appointment, but only after the disclaimer,
Violated court orders restricting use of estate funds,
Acted deceptively and in bad faith, and
Committed “civil theft,” resulting in treble damages, surcharge, interest, and fees.

The Colorado Court of Appeals affirmed and denied rehearing; the Colorado Supreme Court denied certiorari. The New York Grievance Committee then commenced formal disciplinary proceedings. Before the disciplinary hearing, the Second Department granted a motion applying collateral estoppel to the Colorado court findings, precluding relitigation of those issues in the New York proceeding. After hearings before a Special Referee, who sustained most charges but found no venal intent, the Appellate Division confirmed most findings but rejected the “no venal intent” determination and imposed disbarment.

Analysis

Precedents and Sources Cited in the Judgment

Although this New York decision does not canvass New York’s collateral estoppel jurisprudence in detail, it anchors its reasoning in:

The New York court’s own prior order applying collateral estoppel to “the factual specifications in charge one … including the Colorado court orders.”
The Colorado probate court’s findings and the Colorado Court of Appeals’ affirmance, which include determinations about conflict of interest, bad faith, deception, lack of disclosure, and the harm to Joanne.
Restatement (Third) of Trusts § 78 cmt. c(1) (cited by the Colorado Court of Appeals) addressing the fiduciary’s affirmative duty to disclose material information about conflicted transactions.
United States v. Dunkel, 927 F.2d 955, 956 (7th Cir. 1991) (the “judges are not like pigs hunting for truffles” admonition), quoted by the Colorado appellate court to reject the notion that a tribunal must infer undisclosed conflicts from scattered filings.

The Second Department integrates the Colorado courts’ determinations as binding for purposes of the disciplinary fact pattern, while reserving for itself the professional rules analysis and sanction.

Legal Reasoning

1) The scope of collateral estoppel in New York disciplinary proceedings

The court had previously ruled that collateral estoppel (issue preclusion) would apply to the Colorado decisions. In this opinion, it clarifies the scope of that preclusion:

All “factual specifications” in the petition—including the Colorado courts’ “findings, legal and factual”—were binding and not subject to relitigation.
However, whether those established facts “constitute violations of the Rules of Professional Conduct” remained for the New York court to decide.

This is a significant procedural refinement. In disciplinary cases, intent, bad faith, and conflict determinations made by another court often straddle the line between “fact” and “legal conclusion.” The Second Department treats such determinations—so long as they were actually litigated and necessary to the judgment—as encompassed within the estopped “factual specifications” when they are incorporated into the petition. In other words, labels do not control; issues necessarily decided after a full and fair opportunity to litigate are preclusive in New York’s disciplinary forum.

2) Misconduct outside the “practice of law” still falls within the Rules of Professional Conduct

The Special Referee recognized—and the Appellate Division agreed—that the misconduct’s location (probate/fiduciary capacity rather than a client‑representation context) is “inconsequential” for disciplinary purposes. The New York Rules of Professional Conduct reach:

Dishonesty, fraud, deceit, or misrepresentation (Rule 8.4[c]) in any context,
False statements to a tribunal (Rule 3.3[a][1])—here, the attorney appeared before a court in a fiduciary role and made material non‑disclosures and misleading filings,
Conduct prejudicial to the administration of justice (Rule 8.4[d]), and
Conduct adversely reflecting on fitness as a lawyer (Rule 8.4[h]).

The court’s application of Rule 3.3 is especially noteworthy: a lawyer’s duty of candor to tribunals travels with the license. It is not limited to the courtroom work of advocacy on behalf of a client; it attaches when the lawyer appears before a court in any capacity and makes representations.

3) Candor and conflict disclosure duties in fiduciary roles

The Colorado courts’ findings—now binding in New York—establish that the respondent:

Purposefully failed to disclose a direct, personal financial conflict,
Engineered a disclaimer to shift approximately one‑third of assets away from his incapacitated sister to a trust benefitting himself and his children, and
Filed key documents in a manner that obscured material facts (including submitting the inventory only after the disclaimer was executed and not disclosing the Roth IRA).

The New York court endorses the principle that fiduciaries owe “an affirmative duty to disclose material information” about conflicted transactions. Where a lawyer occupies multiple fiduciary roles (conservator, executor, trustee), the duty of candor and loyalty is heightened, not diminished. The respondent’s “in effect” and “implicit” disclosures were inadequate as a matter of law and professional ethics.

4) Venal intent and sanction

The Special Referee found no venal intent based on in‑person credibility assessments and mitigating testimony. The Appellate Division disagreed, treating the Colorado findings of bad faith and deception as binding and concluding that the respondent “attempted to deprive his schizophrenic sister of approximately $1 million.” The court also weighed aggravating factors:

Vulnerability of the victim (an incapacitated sibling),
Position of trust (court‑appointed conservator and other fiduciary roles),
Disregard of court orders and candor obligations, and
Continuing rationalization of the conduct despite definitive adverse findings.

Against these considerations, letters of support and evidence of prior assistance to the sister could not mitigate the gravity of the misconduct. Disbarment followed.

Impact and Implications

A. Procedural: A refined blueprint for collateral estoppel in attorney discipline

The opinion crystallizes an important procedural rule:

New York disciplinary courts may give preclusive effect to out‑of‑state civil/probate judgments, including determinations that touch on intent, bad faith, and conflict, when those issues were actually litigated, necessarily decided, affirmed on appeal, and incorporated into the petition’s factual specifications.
The disciplinary tribunal, however, retains exclusive authority to decide whether those established facts amount to violations of the Rules and to fix sanction.

Practically, respondents cannot use the disciplinary forum to re‑try adverse factual and intent determinations already decided in competent, final tribunals elsewhere—significantly streamlining disciplinary litigation.

B. Substantive: Candor and conflicts when acting as a fiduciary

Lawyers who assume fiduciary roles—guardian, conservator, executor, or trustee—carry the profession’s ethical obligations with them, especially the duty of candor to tribunals and of loyalty to the protected person/beneficiary.
“Implicit” or “in effect” disclosures are not disclosures. A court does not—and should not—ferret out conflicts from scattered hints. Full, explicit, and documented disclosure is mandatory where conflicts exist.
Even if the lawyer believes a course of action benefits the protected person, conflicted self‑dealing without disclosure and judicial authorization violates both fiduciary law and professional ethics.

C. Sanction posture

Deception, bad faith, and misappropriation‑adjacent conduct toward a vulnerable person under court protection is presumptively disbarment‑level misconduct, even absent prior disciplinary history.
Misconduct “outside practice” is not a shield; the license is conditioned on integrity everywhere the lawyer interacts with the legal system.

Complex Concepts Simplified

Collateral estoppel (issue preclusion): A doctrine preventing parties from re‑litigating issues that were already actually litigated and necessarily decided in a prior proceeding where they had a full and fair opportunity to be heard. In this case, it meant the attorney could not contest the Colorado courts’ findings (including bad faith and conflict) in New York’s disciplinary forum.
Fiduciary duty: A duty of loyalty and care owed by someone managing another’s affairs (e.g., a conservator). It includes candor, avoidance of self‑dealing, and affirmative disclosure of conflicts.
Supplemental Needs Trust (SNT): A trust designed to provide for a disabled person without jeopardizing public benefits. Direct inheritances can disqualify a beneficiary; SNTs allow funds to be used for supplemental needs.
Issue Trust (IT): Here, a trust benefitting the attorney and his children, creating a direct personal financial conflict with the interests of his sister.
Payable‑on‑Death (POD) account: A non‑probate transfer that passes directly to a named beneficiary at death.
Disclaimer: A legal refusal to accept a bequest or non‑probate transfer, which can redirect the asset as if the beneficiary predeceased—often used for tax or planning reasons. When used by a court‑appointed conservator, disclaimers generally require full disclosure and judicial authorization, especially if a conflict exists.
Surcharge: A monetary award against a fiduciary to compensate for losses caused by breach of duty.
Civil theft and treble damages: A statutory cause of action in some jurisdictions, including Colorado, allowing triple damages for intentional, unauthorized control over another’s property.
Rule 3.3(a)(1) (candor to tribunal): Prohibits lawyers from making false statements of fact or law to a court or failing to correct a false statement previously made. It encompasses material non‑disclosures that mislead a tribunal.
Rule 8.4(c), (d), and (h): Broad professional norms prohibiting dishonesty and conduct prejudicial to the administration of justice, and requiring overall fitness to practice.
Venal intent: A disciplinary term signaling intentional, self‑interested wrongdoing. Its presence aggravates sanction; its absence can mitigate. Here, findings of deception and bad faith supported the court’s rejection of “no venal intent.”

Key Takeaways

New York disciplinary courts will give collateral estoppel effect to out‑of‑state probate findings—including intent and bad faith—when those issues were fully litigated and are incorporated into the petition’s factual specifications. The disciplinary court then decides only whether those established facts violate the Rules and, if so, the sanction.
Lawyers must make explicit, affirmative disclosures of conflicts when seeking judicial authorization for transactions in fiduciary roles. Courts will not infer conflicts from oblique references.
Rule 3.3’s duty of candor applies whenever a lawyer appears before a tribunal, not only in traditional client representation.
Misconduct aimed at diverting funds from a vulnerable, protected person—coupled with deception—will generally warrant disbarment despite mitigating character evidence.

Conclusion

Matter of Black accomplishes two important things. First, it clarifies the procedural posture for attorney discipline in New York by confirming that out‑of‑state courts’ determinations—factual and issue determinations of intent and bad faith—may be imported wholesale through collateral estoppel, narrowing what remains for contest in the disciplinary forum to the professional rules analysis and the sanction. Second, it sends a clear substantive message: a lawyer’s duties of candor, loyalty, and avoidance of self‑dealing are non‑negotiable, especially when acting under court appointment for a vulnerable person. The court’s imposition of disbarment underscores that the integrity of the legal profession is judged by how lawyers wield power in all legal settings, not just traditional client advocacy.