In re Dunn

In the underlying federal action commenced by the Securities and Exchange Commission (SEC) against David Smith and his investment services firm, the SEC obtained a temporary restraining order freezing Smith’s assets and those of his wife, including the couple’s irrevocable trust (Trust). The Trust, represented by Jill Dunn, intervened in the matter. Due to Dunn’s actions in that action, the United States Magistrate Judge sanctioned Dunn with a public admonishment. Thereafter, the Committee on Professional Standards for the Third Department filed a petition alleging that Dunn had engaged in fraudulent conduct prejudicial to the administration of justice. The text of the Magistrate’s sanctions opinion was essentially the basis of the complaint. The Appellate Division concluded that collateral estoppel applied to the Magistrate’s sanctions order and found Dunn guilty of the charged misconduct. The Court of Appeals reversed, holding that under the circumstances of this case, Dunn did not have a full and fair opportunity to litigate the issue of her alleged misconduct, and therefore, collateral estoppel did not apply in her disciplinary proceeding to bar her from challenging the findings of the Magistrate. View "In re Dunn" on Justia Law