Zazzali v. Swenson
852 F. Supp. 2d 438
D. Del.2012Background
- Plaintiff James R. Zazzali is the trustee for the DBSI Estate Litigation Trust and the DBSI Private Actions Trust, citizen of New Jersey.
- Defendants include several former DBSI officers/directors located in Idaho, Utah, Texas, Nebraska, and Utah; Mick Defendants are in Nebraska/Delaware ties.
- Plaintiff filed the Amended Complaint asserting federal and Idaho RICO claims, securities laws violations, breaches of fiduciary duties, and related state-law claims.
- Defendants moved to dismiss for lack of personal jurisdiction, improper venue or transfer, and to dismiss various counts (Non‑RICO and RICO).
- The court granted transfer to the District of Idaho, denied other motions without prejudice to renew after transfer, and later denied a motion for reconsideration of the transfer decision.
- DBSI entities filed bankruptcy in Delaware; DBSI Estate Litigation Trust and DBSI Private Actions Trust were created by the Bankruptcy Court’s Confirmation Order.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Delaware is proper venue for the securities and RICO claims | Zazzali argues venue lies in Delaware under Exchange Act § 78aa (basis one). | Defendants contend venue may be improper and challenge transfer to Idaho; some resist Delaware as forum. | Delaware is proper venue for the Non‑Mick Defendants' securities and RICO claims; pendent venue supports RICO claims. |
| Whether Mick Defendants are properly subject to venue in Delaware | Plaintiff asserts venue extends to all defendants due to co‑conspirator/agency theory. | Mick Defendants argue only Non‑Mick defendants' venue applies; co‑conspirator theory permits venue for Mick as well. | Venue is proper for Mick Defendants under co‑conspirator venue and pendent venue for negligence claims. |
| Whether the case should be transferred to the District of Idaho under 28 U.S.C. § 1404(a) | Plaintiff argues Delaware is the proper forum due to plaintiff’s ties and related bankruptcy proceedings. | Defendants show convenience and efficiency favor Idaho; witnesses and local interests aligned with Idaho. | Transfer to the District of Idaho is appropriate; other motions denied without prejudice to renew after transfer. |
| Whether collateral estoppel or res judicata bars Delaware venue challenge | Defendants are precluded from challenging venue due to prior orders. | Venue issue was not decided in bankruptcy confirmations and thus not barred. | Collateral estoppel and res judicata do not bar the venue challenge. |
Key Cases Cited
- Delaware River Port Auth. v. Fraternal Order of Police, 290 F.3d 567 (3d Cir. 2002) (collateral estoppel requires identical issue decided in prior adjudication)
- In re Mullarkey, 536 F.3d 215 (3d Cir. 2008) (precludes claims that could have been brought elsewhere; res judicata analysis)
- Albright v. W.L. Gord & Assocs., Inc., 2002 WL 1765340 (D.Del. 2002) (res judicata barriers depend on when a venue challenge could be raised)
- Beattie v. United States, 756 F.2d 91 (D.C.Cir. 1984) (pendency of related actions can inform transfer decisions (public policy factor))