Lowenstein Sandler building, Roseland, New Jersey.

Lowenstein Sandler and one of its attorneys are now the sole defendants in a real estate mogul's malpractice lawsuit following the dismissal of a co-defendant, accounting firm CohnReznick.

Bergen County Superior Court Judge Robert Wilson dismissed CohnReznick in a decision made public Thursday, finding that an arbitration provision in its engagement letter with Samuel Raia is valid and enforceable.

The decision comes as Lowenstein Sandler and attorney Eric Weinstock seek the dismissal of claims by Raia and 17 of his relatives over a "dynasty" trust created by the law firm and accounting firm that failed to provide the hoped-for tax savings. Wilson will hear a motion to dismiss on Oct. 25.

Wilson rejected an attempt by Raia and his co-defendants to defeat the arbitration agreement by claiming the engagement letter was invalid. They claimed a line crossed out in the engagement letter, which concerned use of the Raia family name in marketing materials,  rendered the letter unenforceable.

The parties were paid for services rendered under the contract, and there was no evidence that the parties' failed to have a "meeting of the minds" for the purpose of the contract, Wilson said. The plaintiffs claimed that the change created a counteroffer to the contract, but to the extent the letter is a counteroffer, "the law is clear that when there is subsequent performance, a contract will be upheld as written," Wilson said. The issue of the validity of the engagement letter cannot be used to evade arbitration, he said.

Wilson also found that the individual plaintiffs and trusts named in the complaint do not have a cognizable claim against CohnReznick, since Raia Properties is the only party to the engagement letter. Because they are not clients of CohnReznick, the remaining defendants are third parties with no standing to assert a claim, Wilson said.

The Lowenstein suit was filed in February and in March it was consolidated with the CohnReznick case, which was filed in March 2018.

The Raia family acquires, develops and manages real estate, and owns a portfolio of 3,000 multifamily properties in seven states. Samuel Raia is a past president of the Republican State Committee and was mayor of Saddle River from 2009-2017.

Lowenstein Sandler has advised the Raia family business and its operators on professional and personal matters for roughly 30 years, according to the lawsuit. The firm began providing the family with estate planning advice in the early 2000s.

Weinstock, along with accounting firm J.H. Cohn, a predecessor to CohnReznick, established a series of dynasty trusts in 2012. A dynasty trust is designed to pass assets from one generation to the next without incurring transfer or gift taxes.

In its motion to dismiss, Lowenstein says that only Joseph, Lawrence and Samuel Raia and their spouses were its clients, and therefore the other 18 plaintiffs should be dismissed.

Lowenstein also takes issue with the plaintiffs' claims for speculative damages that might potentially arise in the future. In its motion to dismiss, the firm says problems arose several years after the dynasty trusts were formed, when two members of the Raias' second generation decided to dispose of the family's entire real estate portfolio in a taxable cash sale, a plan that was not anticipated when the estate plan was being developed. The second generation saw this as a way to redeploy proceeds of the sale into new real estate investments without the same family constraints they were under in the existing business, Lowenstein said in a court filing.

Around the time the portfolio was sold, in 2016, the second generation consulted with a different law firm concerning the new business plan, and they were told that the advice from Lowenstein could lead to adverse tax consequences.

"Alleged acts that could lead to 'adverse consequences,' however, are insufficient to sustain a claim against Lowenstein," the firm said in its filing.

Attorneys for the plaintiffs dispute Lowenstein's claim that they are seeking redress for speculative damages. In an opposition to the motion to dismiss, lawyers for the Raias say that to term their damages claim as speculative is "a gross distortion of our allegations" and that they have already incurred damages due to the firm's negligent advice. They also argued that Lowenstein's claim that it owes no duty to 18 of the plaintiffs ignores the extensive interactions it had with the entire Raia family, the plaintiffs said in their filing.

Philip Touitou of Akerman in New York, who represents Lowenstein and Weinstock, declined to comment. Gary Werner of Schenck, Price, Smith & King in Florham Park, who represents the Raia plaintiffs, and Joan Schwab and Amy Smith of Saiber, also in Florham Park, who represent CohnReznick, did not respond to requests for comment.