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Vision Holdings, LLC v. Zappala

United States District Court, D. New Jersey

December 29, 2014

VISION HOLDINGS, LLC, et al., Plaintiffs,
Gregory R. ZAPPALA, Defendant.


KEVIN McNULTY, District Judge.

On June 30, 2014, Magistrate Judge Michael A. Hammer granted the motion of the defendant, Gregory R. Zappala, to transfer venue of this action to the Middle District of Pennsylvania pursuant to 28 U.S.C. § 1404. ( See Order, ECF No. 41; Transcript of Oral Opinion ("Op."), ECF No. 45-5) The plaintiffs, Vision Holdings, LLC ("Vision") and Robert J. Powell, have appealed that ruling to this Court. (ECF No. 45) For the reasons expressed in Magistrate Judge Hammer's well-reasoned Opinion, as well as those set forth below, the appeal is DENIED.


Vision is a Pennsylvania corporation with a principal place of business in Hazle Township, Pennsylvania. (Compl. ¶ 9, ECF No. 1). Powell, a managing member of Vision, is a citizen of Florida. ( Id. ¶ 10). Zappala, who is the president and principal shareholder of Consulting Innovations and Services, Inc. ("Consulting"), is a citizen of New Jersey. ( Id. ¶¶ 4, 11).

The relevant facts stem from a case of judicial corruption. Powell and Zappala built and operated juvenile detention facilities in Pennsylvania, facilities which continue to operate today. ( Id. ¶ 1). Between 2004 and 2006, Powell "made about a dozen payments... totaling several hundred thousand dollars" to Michael Conahan and Mark Ciavarella, who were then Judges of the Court of Common Pleas of Luzerne County. ( Id. ¶2). In return for such payments, Ciavarella ordered juveniles incarcerated. (Def. Opp. Br. 5, ECF No. 46 (citing Wallace v. Powell , Civ. A. No. 3:09-cv-286, 2012 WL 2590150 (M.D. Pa. July 3, 2012); Wallace v. Powell, 2010 WL 3398995 (M.D. Pa. Aug. 24, 2010)). Powell did not inform Zappala of these payments until 2007, when the judges became subjects of a federal criminal investigation. (Compl. ¶¶2-3). As a result of the investigation, Powell and the two judges were convicted and sentenced in the United States District Court for the Middle District of Pennsylvania. (Def. Opp. Br. 5-6).

In 2008, Zappala and Powell allegedly entered into an agreement with respect to the juvenile detention facility business. ( Id. ¶4). Zappala allegedly promised to attempt to sell the business and share the proceeds with Powell, "or-if efforts to sell the business were fruitless for a period of time-obtain an appraisal of the business and pay [] Powell his share of its appraised value." ( Id. ). Zappala allegedly "made these promises on behalf of himself and Consulting." (Id.). The negotiation of the agreement occurred in Pennsylvania. (Def. Transfer Mot., Schur Decl. Ex. 1 (Brucker Decl.) ¶3, ECF No. 11-3). The agreement contains a choice of law provision specifying that is it to be interpreted under Pennsylvania law. (Def. Transfer Mot. 1, ECF No. 11-1).

Powell and Vision allege that Zappala and Consulting did not comply with the terms of the agreement and "never had any intention of complying with the promises by which they induced Vision and [] Powell to part with their interests in the business." ( Id. ¶17-8). Specifically, Powell and Vision allege that Zappala and Consulting neither attempted to sell the business nor made the agreed payments. ( Id. ¶7). These and other actions allegedly fraudulently induced Powell, who was then in "distress, " to enter into the agreement. ( Id. 1115-70).

The Complaint, filed on December 6, 2013, alleges two causes of action: (1) common law fraud; (2) aiding and abetting fraud. Jurisdiction is premised on diversity of citizenship. ( Id. ¶ 13)

Zappala moved to transfer venue to the Middle District of Pennsylvania (ECF No. 11), to dismiss the complaint (ECF No. 10), and to stay proceedings (ECF No. 12). On June 30, 2014, Magistrate Judge Hammer heard oral argument on those motions. ( See Transcript, ECF No. 45-6) On July 8, 2014, Judge Hammer dictated into the record an oral opinion in which he granted the motion to transfer venue and denied the remaining motions as moot. ( See Order, ECF No. 41; Op., ECF No. 45-5).

Powell and Vision now appeal the Order. (ECF No. 45).


a. Standard of Review

The standard of review of a Magistrate Judge's report and recommendation as to dispositive matters is de novo. As to a nondispositive ruling, however, review is more deferential. Pursuant to Federal Rule of Civil Procedure 72(a), "a district court may reverse a magistrate judge's determination of a non-dispositive motion only if it is clearly erroneous or contrary to law.'" See also 28 U.S.C. § 636; L. Civ. R. 72.1(c)(1)(A); Haines v. Liggett Group, 975 F.2d 81, 92 (3d Cir. 1992); Cipollone v. Liggett Group, Inc., 785 F.2d 1108, 1113 (3d Cir. 1986). Moreover, as to a "discretionary matter... courts in this district have determined that the clearly erroneous standard implicitly becomes an abuse of discretion standard." Halsey v. Pfeiffer, No. 09-1138, 2010 WL 3735702, at *1 (D.N.J. Sept. 17, 2010) (internal quotations and citation omitted); see also Cooper Hospital/Univ. Med. Ctr. v. Sullivan, 183 F.R.D. 119, 127 (D.N.J. 1998); Kresefky v. Panasonic Commc'ns & Sys. Co., 169 F.R.D. 54, 64 (D.N.J. 1996). An order transferring venue under 28 U.S.C. § 1404 has been held to be non-dispositive, and hence subject to the more deferential standard. See Security Police and Fire Prof'ls v. Pfizer, Inc., 2011 WL 5080803 at *3 (D.N.J. Oct. 25, 2011); Stephen L. LaFrance Pharmacy, Inc. v. Unimed Pharm., Inc., 2009 WL 3230206 (D.N.J. Sept. 30, 2009).

Ultimately, however, the standard of review matters little. I have carefully reviewed Magistrate Judge Hammer's thorough opinion (Op., ECF No. 45-5), and find myself in agreement with it. Even reviewing the decision de novo ...

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