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Florence Wallace, et al v. Robert J. Powell

July 3, 2012


The opinion of the court was delivered by: (judge Caputo)


Presently before the Court are Plaintiffs' Partial Motion for Summary Judgment Against Robert Powell, PA Child Care, LLC, Western PA Child Care, LLC, Mid-Atlantic Youth Services Corp., and Vision Holdings, LLC (Doc. 1024) and Defendants Mid-Atlantic Youth Services Corp., PA Child Care, LLC, and Western PA Child Care, LLC's Cross-Motion for Partial Summary Judgment (Doc. 1079) and Supplemental Cross-Motion for Partial Summary Judgment Out of Time. (Doc. 1080.)*fn1 Plaintiffs seek summary judgment as to liability against Private Defendants on their 42 U.S.C. § 1983 denial of an impartial tribunal claims. Provider Defendants, on the other hand, seek summary judgment on all of Plaintiffs' § 1983 claims. Because a dispute of fact exists as to whether Private Defendants, through Robert Powell, willfully participated in a conspiracy with state actors to cause the deprivation of Plaintiffs' constitutional rights, Plaintiffs' motion and Provider Defendants' cross-motions will be denied.

I. Factual Background

This civil action arises out of the alleged conspiracy related to the construction of juvenile detention facilities, and subsequent detainment of juveniles in these facilities, orchestrated by two former Luzerne County Court of Common Pleas judges, Michael Conahan ("Conahan") and Mark Ciavarella ("Ciavarella"). Plaintiffs in this action, juveniles or the parents of juveniles who appeared before Ciavarella, seek redress from the former judges, as well as the individuals and business entities involved in the construction and operation of these facilities, for the alleged unlawful conspiracy and resulting deprivations of Juvenile Plaintiffs' rights. These motions for partial summary judgment all implicate Private Defendants' liability for Plaintiffs' 42 U.S.C. § 1983 claims.

A. The Construction of the Facilities and the Concealed Payments

The idea of constructing a new juvenile detention center in Luzerne County was first mentioned to Robert Powell ("Powell") by Ciavarella at some time in 2000. (Doc. 1025, Plfs.' Statement Material Facts, "Plfs.' SMF", ¶ 55.) Ciavarella suggested that Powell discuss the idea of constructing a juvenile detention center with Gregory Zappala ("Zappala"). (Id.) On June 9, 2000, Powell, Robert Mericle ("Mericle"), John Kimball, and Keith Frederick, a financial specialist who worked for Zappala, attended a kick-off meeting about the juvenile detention center project at Mericle's office. (Id. at ¶ 56, Ex. 21, Powell Tr., 113:7-114:25.) Mericle subsequently acquired property at the Pittston Industrial Park for the purpose of constructing a juvenile detention center, and Powell and Zappala formed PACC to build the facility. (Plfs.' SMF, ¶¶ 57-58.)

Thereafter, Powell and Zappala sought financing for the construction of the facility. (Powell Tr., 117:7-24.) However, obtaining financing was difficult for Powell and Zappala because neither individual had experience constructing juvenile detention facilities. (Id.) As such, Powell informed Conahan and Ciavarella, on or about July 11, 2001, that PACC would not be able to build a detention facility unless it had an agreement with Luzerne County or some other entity that could ensure that juveniles would be sent to the newly constructed facility. (Id. at 118:10-119:3.) On December 21, 2001, the Court of Common Pleas of Luzerne County and PACC entered into a Placement Guarantee Agreement which required any juvenile determined to be committed to a detention facility to be sent to the PACC facility, provided that the facility had vacancy for the juvenile. (Doc. 1120, Provider Defs.' Corrected Statement Material Facts, "Prov. Defs.' SMF", Ex. 10.) Conahan signed the Placement Guarantee on behalf of Luzerne County as president judge. (Id.) At this time, Powell was aware that the Luzerne County Commissioners were also trying to construct a juvenile detention facility, but he did not show the Commissioners the Placement Guarantee at Conahan's direction. (Powell Tr., 122:3.)

After Conahan became president judge in January of 2002, he informed the Luzerne County Commissioners that the court would no longer send juveniles to the then-existing detention center. (Plfs.' SMF, ¶ 66.) Conahan, Ciavarella, and their staff then arranged for the existing detention center's employees to be hired to work at the PACC facility. (Id. at ¶ 68.)

On February 19, 2002, Mericle Construction, Inc. and PACC entered into an agreement for the construction of a juvenile detention center in Pittston. (Id. at ¶ 70.) The facility was completed approximately eleven months later, in or about January of 2003. (Id. at ¶ 72.) Upon completion of the facility, Powell became aware that Mericle intended to pay Conahan and Ciavarella a fee of close to one million dollars ($1,000,000.00) in connection with the construction of the facility. (Id. at ¶ 73.)

On or about January 3, 2003, Powell signed an agreement which provided that he would be paid a referral fee upon completion of the PACC facility. (Powell Tr., 130:22.) Powell received the agreement from Mericle, and after he signed the agreement, he returned it to Mericle. (Id. at 131:13.) The agreement, however, was not dated as of January 3, 2003, but was instead back-dated to February 19, 2002. (Id., at 130:22.) And, the referral fee referenced in the back-dated agreement was not for Powell, but was intended for Ciavarella and Conahan. (Id. at 131:10-12.)

On January 28, 2003, Mericle wired $610,000.00 to Attorney Robert Matta ("Matta"). (Powell Tr., 132:20-133:12.) Matta then transferred the same sum of money to Beverage Marketing of PA, Inc., (Plfs.' SMF, Ex. 24, Matta Tr., 95:19-23,), a company owned by Conahan. (Powell Tr., 135:1-2.) Powell also accepted $387,000.00 of the initial payment from Mericle. (Id. at 133:24-134:4.) Powell paid taxes on the sum before giving Conahan a check from Vision Holdings for $326,000.00. (Powell Tr., 136:3.)

In 2004, Mericle Construction, Inc. and WPACC entered into a construction agreement with a stated price of $9,745,300.00 for the construction of a juvenile detention facility in Western Pennsylvania. (Plfs.' SMF, ¶ 85.) Construction of the WPACC facility was completed in July of 2005. (Id. at ¶ 88.) Upon completion of the WPACC facility, Conahan and Ciavarella were paid one million dollars ($1,000,000.00) by Mericle. (Id. at ¶ 90.)

Thereafter, in February of 2006, an addition to the PACC facility was completed which increased the number of beds available in the detention center by twelve. (Id. at ¶¶ 93, 96.) Mericle paid Conahan and Ciavarella a fee of $150,000.00 to build the addition to the PACC facility. (Id. at ¶ 95.)

Powell also made multiple payments to the Pinnacle Group of Jupiter, LLC, a company which was formed by Conahan, Ciavarella, and their wives. (Powell Tr., 142:1-2.) The payments to the Pinnacle Group were noted as being paid for reasons such as "rent prepay," "marina prepay," "reserving lease," "rental," and "slip rental fee." (Id. at 145:15-152:21.) The sum paid by Powell to Conahan and Ciavarella included $590,000.00 from draws that were taken from PACC. (Id. at 150:14-18; Prov. Defs.' SMF, ¶ 173.) Ultimately, from January of 2003 until January 1, 2007, Conahan and Ciavarella accepted a total of more than $2.1 million dollars from Mericle. (Plfs. SMF, ¶ 114.) And, Conahan accepted $590,000.00 by check and wire from Powell for rent, and Conahan and Ciavarella accepted $142,000.00 in cash from Powell. (Id. at ¶ 115.)

B. The Business Entities

PACC is a Pennsylvania limited liability company that was formed by Powell and Zappala. (Doc. 1099, Plfs.' Answer Prov. Defs.' Statement Material Facts, "Plfs.' Answer", ¶ 150). The members of PACC are Vision Holdings, LLC, and Consulting and Information Services, Inc. ("CIS"). (Id.) The members of Vision Holdings are Powell and his wife. (Id. at ¶ 143.) CIS was formed by Zappala. (Doc. 1119, Prov. Defs.' Corrected Answer Plfs.' SMF, "Prov. Defs.' Answer", ¶ 47.) As with PACC, the members of WPACC are Vision Holdings and CIS. (Plfs. Answer, ¶ 149.) As such, Powell himself, as opposed to through Vision Holdings, was not a member of PACC or WPACC, nor was he a manager of PACC or WPACC. (Id. at ¶¶ 151-152.)

Mid-Atlantic Youth Services Corp. ("MAYS") is a Pennsylvania corporation. (Id. at ¶ 144.)*fn2 In November of 2004, Luzerne County entered into an agreement to lease the PACC facility from PACC and the contract was ultimately awarded to MAYS to operate the PACC facility. (Id. at ¶¶162-163.) And, in May of 2005, MAYS entered into an agreement with WPACC to operate the WPACC facility. (Id. at ¶ 161.)

In addition to his involvement in the construction of the detention facilities, Powell was also an attorney and owner, officer, shareholder, and/or operator of the Powell Law Group. (Doc. 1060, Powell Answer Plfs.' SMF, ¶ 46.) Beginning in July of 2003, Patrick Owens ("Owens") became the Chief Financial Officer and Treasurer of the Powell Law Group. (Prov. Defs.' SMF, Owens Decl., ¶ 1.) In or about September of 2003, the Powell Law Group began to sell Owens' accounting and bookkeeping services to PACC for a fee. (Id. at ¶¶ 10-11.) The Powell Law Group also sold Owens' services to WPACC for a fee. (Id. at ¶ 12.) And, in May of 2005, MAYS entered into an agreement with the Powell Law Group to contract for Owens' accounting and bookkeeping services. (Id. at ¶ 15.) Despite these arrangements, Owens received his wages from the Powell Law Group, and not from PACC, WPACC, and/or MAYS. (Id. at ¶ 43.)

In or around 2006, Owens began to transfer money from PACC and/or WPACC to other corporate entities owned by Powell and record the transfers as loans. (Id. at ¶ 29.) Typically, Owens would move the funds from PACC or WPACC to Vision Holdings, and then the money would be transferred to other Powell entities. (Id. at ¶ 32.) Owens also obtained large amounts of cash by writing checks from the Powell Law Group, Vision Holdings, and/or PACC and then cashing the checks. (Id. at ¶ 40.) While Owens never informed Zappala of the fund transfers between the companies and he never sent Zappala financial information about the entities, the financial information was available to Zappala. (Id. at ¶ 49.)

C. The Pennsylvania Supreme Court Expunges Juvenile Plaintiffs' Records

On January 26, 2009, the United States Attorney for the Middle District of Pennsylvania filed a Bill of Information alleging two counts of fraud against Conahan and Ciavarella. (Plfs.' SMF, Ex. 9, Bill of Information.)*fn3 Thereafter, on February 11, 2009, the Pennsylvania Supreme Court assumed plenary jurisdiction and appointed the Honorable Arthur E. Grim as Special Master "to review all Luzerne County juvenile court adjudications and dispositions that have been affected by the recently-revealed criminal allegations." (Id. at Ex. 27, In re: J.V.R., No. 81 MM 2008, Feb. 11, 2009 Order.) At the conclusion of the case, the Court determined:

Ciavarella admitted under oath that he had received payments from Robert Powell, a co-owner of the PA Child Care and Western PA Child Care facilities, and from Robert K. Mericle, the developer who constructed the juvenile facilities, during the time that Ciavarella was presiding over juvenile matters in Luzerne County. It is a matter of record that Ciavarella routinely committed juveniles to one or another of these facilities. It is also a matter of record that Ciavarella failed to disclose his ties to Powell, much less the financial benefits he received in connection with the facilities to which he routinely committed Luzerne County juveniles. Ciavarella's admission that he received these payments, and that he failed to disclose his financial interests arising from the development of the juvenile facilities, thoroughly undermines the integrity of all juvenile proceedings before Ciavarella. Whether or not a juvenile was represented by counsel, and whether or not a juvenile was committed to one of the facilities which secretly funneled money to Ciavarella and Conahan, this Court cannot have any confidence that Ciavarella decided any Luzerne County juvenile case fairly and impartially while he labored under the specter of his self-interested dealings with the facilities.

In short, there is ample support before us to assess the bases cited by Judge Grim for his finding that all juvenile adjudications and consent decrees entered by Ciavarella between January 1, 2003 and May 31, 2008, are tainted. (Id. at Ex. 28, In re: J.V.R., No. 81 MM 2008, Slip. Op. (Oct. 29, 2009) (per curiam)). Accordingly, the Supreme Court ordered the expungement of the records of all juveniles "whether final or not, where a juvenile either proceeded before Ciavarella without counsel, or was committed by Ciavarella to PA Child Care or Western PA Child Care." (Id.)

D. Procedural History and the Instant Motions for Summary Judgment

Pursuant to the Court's May 14, 2009 Case Management Order, the present actions have all been consolidated for purposes of discovery. (Doc. 82.) Thereafter, on June 25, 2009, Class Plaintiffs filed a Master Complaint. (Doc. 136.) Individual Plaintiffs also filed a Master Long Form Complaint on the same day. (Doc. 134.)

Subsequently, Private Defendants filed multiple motions to dismiss Plaintiffs' Complaints, which were granted in part and denied in part. As to the Master Complaint for Class Actions, the claims remaining in this case against Private Defendants are: (1) Count II- Conspiracy to Violate Plaintiffs' Right to an Impartial Tribunal pursuant to 42 U.S.C. § 1983; (2) Count IV- Conspiracy to Deprive Youth of their Right to Counsel and/or a Knowing, Intelligent, and Voluntary Guilty Plea pursuant to 42 U.S.C. § 1983; (3) Count V-Civil RICO against Powell and Vision Holdings only; (4) Count VII- Civil Rico Conspiracy against all Private Defendants; and (5) Count IX- Wrongful Imprisonment against Powell, PACC, WPACC, and MAYS only. (Plfs.' SMF, ¶ 9.) The Individual Plaintiffs' Master Long Form Complaint contains the following non-dismissed claims against Private Defendants:

(1) Count I- RICO against Powell and Vision Holdings only; (2) Count II- Conspiracy to Violate RICO against all Private Defendants; (3) Count III- Deprivation of Substantive and Procedural Due Process Rights pursuant to the Civil Rights Act of 1871 against all Private Defendants; (4) Count IV- Deprivation of Rights pursuant to the Civil Rights Act of 1871, 42 U.S.C. ยง 1983 against all Private Defendants; (5) Count VIII- Civil Conspiracy against Powell, PACC, ...

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