STRASSMAN et al v. ESSENTIAL IMAGES et al

Filing 15

OPINION. Signed by Judge Kevin McNulty on 03/09/2018. (ek)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

JORDAN STRASSMAN, in his
capacity as trustee of the Robert H.
Strassman Revocable Trust and in
his individual capacity, and THE
ROBERT H. STRASSMAN
REVOCABLE TRUST,

Civ. No. 2:17-cv-4227-KM-JBC
Plaintiffs,
OPINION
vs.
ESSENTIAL IMAGES, d/b/a
Essential Images Fine Art and
Antique Appraisal Service, JOHN W.
ROCKAFELLOW, and SALLY
ROCKAFELLOW,
Defendants.

KEVIN MCNULTY, U.S.D.J.:

Plaintiffs Jordan Strassman and the Robert H. Strassman Revocable
Trust allege that they engaged defendants Essential Images, John W.
Rockafellow, and Sally Rockafellow, to appraise and sell personal and Trust
property. Plaintiffs claim that defendants have failed to provide an accounting
of sales and have not forwarded sale proceeds. Plaintiffs first brought an action
in the Superior Court of New Jersey, where the Judge dismissed all claims by
the Trust for lack of personal jurisdiction and all of Strassman’s personal
claims for failure to state a claim. Plaintiffs then filed this federal court action.

1

Now before the court is defendants’ motion to dismiss the complaint on
grounds of collateral estoppel’ and failure to state a claim.
I.

BACKGROUND2
A. Factual History

Plaintiff Jordan Strassman (“Strassman”), a New Jersey resident, is the
trustee of the Robert H. Strassman Revocable Trust (“Trust”), whose situs is in
Virginia. (Compl.

¶J

9-10). Strassman contacted defendant Essential Images, a

“fine arts and antique appraisal service” based in Littlestown, Pennsylvania and
Washington, D.C., to sell Trust assets as well as his personal property. (Compl.

¶

11, 22-23). Strassman had several phone conversations with John W.

Rockafellow (“Rockafellow”), a Pennsylvania resident who owns or works for
Essential Images. (Compl.

¶11

12, 23). Sally Rockafellow, too, is a Pennsylvania

resident who owns or works for Essential Images. (Compl.

¶

13).

On October 8, 2012, Rockafellow traveled to Virginia to review and
inventory the Trust property. (Compl.

¶

24). Rockafellow valued the property

and stated prices that he could sell items for. (Compi.

¶

24). On October 23,

I use the phrases “issue preclusion” and “collateral estoppel” throughout this
providing the preclusive effect to a fact,
opinion “interchangeably to refer to the nile
in a prior case.” Burlington N. R.R. Co. u. Hyundai
question, or right determined
Merchant Marine Co., Ltd., 63 P.3d 1227, 1231 n.2 (3d Cir. 1995).
2
All facts and inferences are made in favor of the nonmoving party on a motion
to dismiss. Citations to the record are abbreviated as follows:
...

“Compl.”

=

Complaint (ECF No. 1)

“Def. Br.” = Defendants’ Memorandum of Law in Support of Their Motion to
Dismiss Plaintiffs’ Complaint (ECF No. 8)
“Def. Ex. B” = Complaint in Strassman v. Essential Images, Superior Court of
New Jersey (ECF No. 8-2)
“DeL Ex. C” = Order in Strassman v. Essential Images, Superior Court of New
Jersey (ECF No. 8-3)
“Def. Ex. D” = Motion for Reconsideration Order in Strassman v. Essential
Images, Superior Court of New Jersey (ECF No. 8-4)
“P1. Ex. A” = Transcript of November 28, 2016 Motion Hearing on Motion for
Reconsideration, Strassman v. Essential Images, Superior Court of New
Jersey (ECF No. 13-1)

2

2012, Strassman retained Essential Images to complete the appraisal of Trust
property. (Compl.

¶17

2425). Pursuant to the agreement, Essential Images

would keep a twenty percent commission on the total sale. (Compl.

¶

27).

Essential Images would send the Trust sale proceeds within ten days and
communicate sales and inventory information to Strassman. (Compl.

¶

27). If

any items were not sold within 120 days, they would be returned to the Trust
within seven working days thereafter. (Compl.

¶

27).

Rockafellow took items from the Trust’s Virginia property to Pennsylvania
and Washington, D.C. for sale. (Compi.

¶17

33-34). Strassman alleges that

Rockafellow took possession of items that were not part of the agreement and
failed to inventory certain items. (Compl.

¶17

28-3 1). At that time, Rockafellow

represented that he had sold several items. (Compl.

¶

37). Rockafellow also

provided Strassman with a detailed receipt that showed each item sold, the
value of each sale, the total dollar volume for the day, Essential Images’
commission, and the net amount due to the Trust. (Compl.

¶

37).

After the Virginia transactions, Strassman agreed that Rockafellow would
travel to New Jersey to appraise and sell the personal property of Strassman
and his parents. (Compl.

35-36). On December 18, 2012, representatives of

¶17

Essential Images cane to New Jersey to Strassman’s parents’ residence,
Strassman’s storage unit, and Strassman’s residence to collect personal
property for sale. (Compl.

¶

36). Strassman asked Rockafellow whether they

needed to form a separate agreement or contract. (Compl.

17

36). Rockafellow

said, “You are covered by the original contract. You signed it personally.”
(Compl.

¶

36).

Later, Rockafellow told Strassman he had sent an email that listed the
items sold. (Compl.

17

39). Strassman had not received the email and verified

his email address. (Compl.

¶

39). Rockafellow forwarded a “test” email, which

17 39). Strassman still did not receive
an accounting of the items sold. (Compi. ¶ 39). Rockafellow explained that his
computer system was not working. (Compl. 17 39).

Strassman confirmed receiving. (Compl.

3

On April 29, 2013, Strassman sent Rockafellow an email that stated, “I
still have not received any of the e-mails” and therefore “have no idea what has
or has not been sold so far.” (Compi.

¶

39). Rockafellow responded that

everything had been sold except for the camera equipment and the trailer.
(Compl.

¶

40). Rockafellow then stated, “I have the trailer sold

for most of the other pieces from the house
sale of the garage equipment.” (Compl.

...

...

I have buyers

I am working on finalizing the

41). In June 2013, Rockafellow sent

¶

an email to Strassman that stated, “The sale that I’m having with your camera
equipment is on the weekend starting on the 28th
far and believe it will all sell.” (Compl.

¶

...

I’ve had a lot of interest so

42).

Strassman continued to request that Rockafellow send him checks from
the sale proceeds. (Compl.

¶

43). Rockafellow left a voicemail in July 2013

stating that someone from Essential Images would send him a check as soon
as possible. (Compl. ¶ 43). In September 2013, Rockafellow sent Strassman an
email that stated, “I am working on your estate and will get a check out to you
sometime this week.” (Compl.

¶

43). Rockafellow also told Strassman by phone

that he would send a check immediately. (Compi.

¶

43).

After months of not receiving checks, Strassman sent a written demand
for payment. (Compl.

¶

44). Essential Images has represented that almost all of

the items were sold and that Strassman should have received an accounting for
those sales. (Compl. ¶ 45). Strassman has still not received an accounting of
the property transferred to defendants or checks for the sales of the property.
(Compl.

¶f

46-47). Essential Images and Rockafellow have failed to

communicate with Strassman about the status of the property. (Compl.

¶

47).

B. New Jersey Superior Court Action
On June 2, 2016, plaintiffs filed an action in the Superior Court of New
Jersey, asserting claims against Essential Images, John W. Rockafellow, and
Sally Rockafellow. (Def. Ex. B). The complaint included eight counts under New
Jersey law for alleged violations of the New Jersey Consumer Fraud Act, breach
of contract, violations of good faith and fair dealing, misrepresentation,

4

common law fraud, promissory estoppel, conversion, conspiracy to commit a
tort, and aiding the commission of a tort. (Def. Ex. 3).
On September 30, 2016, Judge Camille M. Kenny of the Superior Court
of New Jersey dismissed plaintiffs’ complaint, with prejudice, as to all claims by
the Robert H. Strassman Revocable Trust. (Def. Ex. C). At the motion hearing,
Judge Kenny stated that New Jersey courts did not have personal jurisdiction
over the claims arising from the Trust. (P1. Ex. A).
Judge Kenny dismissed Strassman’s personal claims against defendants
without prejudice; she would have permitted Strassman to submit a new
complaint to pursue causes of action on his own behalf. (Def. Ex. C). Plaintiffs
filed a motion for reconsideration, which was denied by Judge Kenny on
November 18, 2016. (Def. Ex. D).
C. Filing in Federal Court
On June 12, 2017, Strassman and the Trust filed this action in federal
court against Essential Images, John W. Rockafellow, and Sally Rockafellow.
(Compl.). The complaint alleges thirty counts under New Jersey, Pennsylvania,
Virginia, and Washington, D.C. law.
Under New Jersey law, plaintiffs allege violations of the New Jersey
Consumer Fraud Act, breach of contract, violation of good faith and fair
dealing, misrepresentation, common law fraud, promissory estoppel,
conversion, breach of quasi-contract, breach of fiduciary duty, conspiracy to
commit a tort, and aiding the commission of a tort. (Compl.

¶11

48-98). Under

Pennsylvania law, plaintiffs allege violations of the Pennsylvania Unfair Trade
Practice and Consumer Protection Law, breach of contract, unjust enrichment,
breach of fiduciary duty, common law fraud, conversion, and conspiracy.
(Compl. ¶1J 99-127). Under Virginia law, plaintiffs allege violations of the
Virginia Consumer Protection Act, breach of contract, common law fraud,
negligent misrepresentation, conversion, and breach of quasi-contract. (Compi.

¶1J

128-155). Under Washington, D.C. law, plaintiffs allege breach of contract,

violation of good faith and fair dealing, negligent misrepresentation, common

5

law fraud, unjust enrichment, breach of fiduciary duty, and violations of the
District of Columbia Consumer Protection Procedures Act. (Compl.

¶T

156-88).

Defendants have moved to dismiss this action on the grounds of
collateral estoppel. They argue that the New Jersey Superior Court’s dismissal
bars plaintiffs from relitigating the issue of personal jurisdiction. In the
alternative, defendants claim that this complaint does not fulfill basic pleading
requirements because it fails to differentiate Strassman’s individual claims
from those asserted on behalf of the Trust. (Def. Br. 1-2, 6-13). Plaintiffs argue
in the alternative that if collateral estoppel prevents them from relitigating the
issue of personal jurisdiction, the action should be transferred to an
appropriate venue. (P1. Br. 22-23).
H.

LEGAL STANDARD

Issue preclusion “prevents parties from relitigating an issue that has
already been actually litigated.” Peloro a United States, 488 F.3d 163, 174 (3d
Cir. 2007). “[TJhe principle is simply that later courts should honor the first
actual decision of a matter that has been actually litigated.” 18 Wright & Miller,
Federal Practice & Procedure

§

4416 (3d ed. 2016). This doctrine ensures that

“once an issue is actually and necessarily determined by a court of competent
jurisdiction, that determination is conclusive in subsequent suits based on a
different cause of action involving a party to the prior litigation.” Montana v.
United States, 440 U.S. 147, 153 (1979); see Parklane Hosiery Co. a Shore, 439
U.S. 322, 326 (1979); Burlington N. R.R. a Hyundai Merchant Marine Co., 63
F.3d 1227, 1232 (3d Cir. 1995).
A district court sitting in diversity applies the collateral estoppel rules of
the state in which it sits. Nationwide Mid. Fire Ins. Co.

t’.

George V Hamilton,

Inc., 571 F.3d 299, 310 (3d Cir. 2009) (citing Semtek Int’l Inc. v. Lockheed
Martin Corp., 531 U.S. 497, 508 (2001)). In New Jersey,
Collateral estoppel, which is also known as issue preclusion,
prohibits relitigation of issues if its five essential elements are met.
Those elements are that (1) the issue to be precluded is identical to

6

the issue decided in the prior proceeding; (2) the issue was actually
litigated in the prior proceeding; (3) the court in the prior
proceeding issued a final judgment on the merits; (4) the
determination of the issue was essential to the prior judgment; and
(5) the party against whom the doctrine is asserted was a party to
or in privity with a party to the earlier proceeding.
Allen v. V & A Bros., Inc., 26 A.3d 430, 444 (N.J. 2011) (citations omitted).
The underlying principles of issue preclusion include securing peace for
the parties and promoting the court’s efficient resolution of claims. See Allen u.
McCumj, 449 U.S. 90, 94 (1980). Thus issue preclusion is concerned with “the
defendant’s interest in avoiding the burdens of twice defending a suit,” and also
“the avoidance of unnecessary judicial waste.” Arizona v. California, 530 U.S.
392, 4 12-13 (2000) (citing United States v. Sioux Nation of Indians, 448 U.s.
371, 432 (1980) (Rehnquist, J., dissenting)). Moreover, as the first Justice
Harlan long ago explained, issue preclusion is necessary for courts to function
as effective tribunals:
This general rule is demanded by the very object for which civil
courts have been established, which is to secure the peace and
repose of society by the settlement of matters capable of judicial
determination. Its enforcement is essential to the maintenance of
social order; for the aid of judicial tribunals would not be invoked
for the vindication of rights of person and property if, as between
parties and their privies, conclusiveness did not attend the
judgments of such tribunals in respect of all matters properly put
in issue, and actually determined by them.
£ Pac. R.R. Co. v. United States, 168 U.S. 1, 49 (1897).
DISCUSSION

Ill.

Defendants claim that, as to the claims on behalf of the Trust, the issue
of personal jurisdiction has already been conclusively decided by the Superior
Court of New Jersey and cannot be relitigated here. Defendants also argue that
Strassman’s individual claims fail to state a claim upon which relief may be
granted.

7

A. Collateral Estoppel/Personal Jurisdiction

In a diversity action such as this, the law of the state in which the
district court sits determines whether a nonresident defendant is subject to the
court’s personal jurisdiction. See DeJames v. Magnificence Carriers, Inc., 654
F.2d 280, 284 (3d Cir. 1981); Database Am. v. Bellsouth Advert. & Publ’g Corp.,
825 F. Supp. 1195, 1207 (D.N.J. 1993). Accordingly, this court applies New
Jersey law to decide questions of personal jurisdiction. Personal jurisdiction in
New Jersey is governed by New Jersey Court Rule 4:4—4, the New Jersey
long-arm statute. Judge Kenny of the New Jersey Superior Court dismissed the
state-court complaint regarding all claims from the Virginia-based Trust,
finding that the Superior Court lacked personal jurisdiction over claims arising
from the Trust.
I first analyze whether Judge Kenny’s prior determination that the New
Jersey Superior Court lacks personal jurisdiction over defendants (regarding
the Trust’s claims) precludes that issue from being relitigated. As discussed in
Part II, a collateral-estoppel analysis involves five essential elements:
(1) whether the issue to be precluded is identical to the issue decided in the
prior proceeding; (2) whether the issue was actually litigated in the prior
proceeding; (3) whether the court in the prior proceeding issued a final
judgment on the merits; (4) whether the determination of the issue was
essential to the prior judgment; and (5) whether the party against whom the
doctrine is asserted was a party to or in privity with a party to the earlier
proceeding. See Allen v. V & A Bros., Inc., 26 A.3d 430, 444 (N.J. 2011)
(citations omitted).
i. Identical Issue
In the prior proceeding, Judge Kenny of the Superior Court of New Jersey
dismissed, with prejudice, the claims involving the Virginia-based Trust for
lack of personal jurisdiction. In this action, the plaintiffs again assert claims on
behalf of the Trust (and Strassman). The identical issue is presented—whether

8

New Jersey can exercise personal jurisdiction over claims arising from
defendants’ interactions with the Trust.
This court explained in Kitces v. Wood that principles of collateral
estoppel apply to the issue of personal jurisdiction just as they do to other
issues:
The principles of collateral estoppel apply with equal force to a
prior determination by a court that it lacks personal jurisdiction
over a party. Therefore, once a New Jersey state court
has concluded that it lacks personal jurisdiction over a party, that
jurisdictional issue cannot be relitigated in this Court.
917 F. Supp. 338, 341 (D.N.J. 1996); see also Baldwin v. Iowa State Traveling
Men’s Ass’n, 283 U.S. 522, 525-26 (1931) (adjudication of personal jurisdiction
issue precludes subsequent relitigation of same issue).
The New Jersey Supreme Court has identified several factors to consider
when evaluating the similarity of issues for purposes of collateral estoppel:
In deciding the similarity of issues for issue preclusion purposes, a
court should consider whether there is substantial overlap of
evidence or argument in the second proceeding; whether the
evidence involves application of the same rule of law; whether
discovery in the first proceeding could have encompassed discovery
in the second; and whether the claims asserted in the two actions
are closely related.
First Union Nat’? Bank v. Penn Salem Marina, Inc., 921 A.2d 417, 424 (N.J.
2007) (citations omitted). First, in this case, the arguments and evidence
regarding personal jurisdiction are substantially the same. Second, it is clear
that the governing rules of law are identical: “A federal court sitting in New
Jersey has jurisdiction over parties to the extent provided under New Jersey
state law.” Miller Yacht Sales, Inc. v. Smith, 384 F.3d 93, 96 (3d Cir. 2004)
(citations omitted); see also Braman v. Mary Hitchcock Mem’? Hosp., 631 F.2d 6,
8 (2d Cir. 1980) (holding that “[tjhe district court correctly considered itself to
be bound by the state court construction of the long-arm statute”). Third, any
jurisdictional discovery ordered by the Superior Court of New Jersey would

9

parallel or encompass any jurisdictional discovery ordered by this court. See
Wallace v. Keystone Printed Specialties Co., Inc., No. 14-cv-5978, 2016 WL
5403088, at *5 (D.N.J. Sept. 27, 2016); see also 1 Five 0, Inc. v. A. Schulman,
Inc., No. 99-cv-354E(SC), 2000 WL 744003, at *2 (W.D.N.Y. June 5, 2000).
Finally, the claims asserted are closely related. While the federal-court
complaint contains more detailed factual allegations and alleges violations of
different states’ laws, the same factual circumstances underlie both
complaints. The underlying wrong sounds in conversion and fraud.
The issue on this motion, then, is the same issue decided by Judge
Kenny in the prior action. The first element of collateral estoppel has been
satisfied.
ii. Actually Litigated in the Prior Proceeding
The issue of personal jurisdiction was actually litigated in the Superior
Court action. New Jersey courts have looked to the Restatement (Second) of
Judgments in defining when an issue is “actually litigated” for purposes of
collateral estoppel: an issue is actually litigated “[wlhen an issue is properly
raised, by the pleadings or otherwise, and is submitted for determination, and
is determined.” Allesandra v. Gross, 453 A.2d 904, 909 (N.J. Super. Ct. App.
Div. 1982) (quoting Restatement (Second) of Judgments

§

27(d)). “[A]n issue

may be submitted and determined on a motion to dismiss.” Id. (quoting
Restatement (Second) of Judgments § 27(d)); see also Wallace, 2016 WL
5403088, at *56
The issue of personal jurisdiction was presented to the Superior Court of
New Jersey, the court held a hearing on the issue, and then it dismissed the
claims arising from the Trust for lack of personal jurisdiction. The second
element of collateral estoppel is thus satisfied.
iii. Final Judgment on the Merits
While a dismissal for lack of jurisdiction generally is not “an adjudication
on the merits,” see Fed. R. Civ. P. 4 1(b) and N.J. Ct. R. 4:37-2(d), courts take a
more flexible view of finality in the context of collateral estoppel. See Wallace,
10

2016 WL 5403088, at *5• “Unlike claim preclusion, the effectiveness of issue
preclusion, sometimes called collateral estoppel, does not require the entry of a
judgment, final in the sense of being appealable.” In re Brown, 951 F.2d 564,
569 (3d Cir. 1991). “[T]he doctrine of collateral estoppel applies whenever an
action is ‘sufficiently firm to be accorded preclusive effect.” Id. (citing Hills Dcv.
Co. v. Twp. of Bemards, 510 A.2d 621, 652 (N.J. 1986) (quoting Restatement
(Second) of Judgments

§ 13)). Indeed, “[fjthality for purposes of issue preclusion

is a more ‘pliant’ concept than it would be in other contexts.” Id. (citation and
internal quotation marks omitted). In short, an action does not proceed to a
final judgment after it has been dismissed for lack of personal jurisdiction;
such a dismissal is as “final” as it is ever going to be.
In this case, Judge Kenny’s order dismissing the Trust’s claims for lack
of personal jurisdiction is “sufficiently firm” to preclude this court from
questioning the previously litigated issue. See Wallace, 2016 WL 5403088, at
*57; Kitces, 917 F. Supp. at 341-42; see also Wright & Miller, iSA Federal
Practice & Procedure

§ 4436 (3d ed. 2017) (“Dismissal for want of personal

jurisdiction precludes relitigation of the same issue of jurisdiction ....“). Nothing
in the order suggests that the dismissal for lack of personal jurisdiction was
tentative or subject to change. The hearing transcript shows that Judge Kenny
entered that dismissal “with prejudice.” Accordingly, the third element of
collateral estoppel is met.
iv. Essential to the Prior Judgment
The determination that New Jersey courts cannot exercise personal
jurisdiction over the Trust-based claims was essential to the prior state-court
judgment. Judge Kenny dismissed the Trust-based claims precisely and solely
because she found that the court lacked personal jurisdiction over those
claims. See Wallace, 2016 WL 5403088, at *7 Therefore, the fourth element of
collateral estoppel is satisfied.

11

v. Identity of Parties

The fifth element requires that “the party against whom the doctrine is
asserted was a party to or in privity with a party to the earlier proceeding.”
Allen, 26 A.3d at 444. Here, “the part[ies] against whom the [collateral estoppel]
doctrine is asserted” are the plaintiffs. The orders and complaints filed in the
Superior Court of New Jersey make clear that the plaintiffs in the state action
are the same as the plaintiffs in this federal suit. The fifth element of collateral
estoppel is therefore satisfied.
vi. Fairness Considerations

I find that the miscellaneous “fairness factors,” see Allen, 26 A.3d at 445,
also weigh in favor of applying collateral estoppel here. The fairness factors
include the conservation of judicial resources; avoidance of repetitious
litigation; and the prevention of waste, harassment, uncertainty, and
inconsistency. Id. First, applying collateral estoppel in this instance conserves
judicial resources by preventing the court from engaging in an analysis of
personal jurisdiction. Second, it avoids repetitious litigation. The defendants
should not have to defend another lawsuit in New Jersey federal court when
the initial suit was dismissed from New Jersey state court for lack of personal
jurisdiction. Third, applying the doctrine prevents any potential inconsistencies
between the state and federal courts. Other fairness factors include whether
the parts’ against whom preclusion is sought could not have
obtained review of the prior judgment; the quality or extent of the
procedures in the two actions is different; it was not foreseeable at
the time of the prior action that the issue would arise in
subsequent litigation; and the precluded party did not have an
adequate opportunity to obtain a full and fair adjudication in the
prior action.
Id. There is no indication that the plaintiffs could not have appealed Judge
Kenny’s prior judgment.3 The parties were able to avail themselves of the
Plaintiffs claim that the Superior Court order was an “interlocutory order,” but
the order dismissed all of the claims in the case. (The Trust-based claims were
dismissed for lack of personal jurisdiction and Strassman’s personal claims were
12

procedures and hearings in the state court system. Moreover, the parties
foresaw that the issue of personal jurisdiction would arise in the federal court
context. Plaintiffs were concerned at the motion for reconsideration stage that
the state-court dismissal would have preclusive effect on a future federal-court
suit. (P1. Ex. A. 17:20-23). They argue that Judge Kenny did not want to—and
did not believe that she would—bind the federal court with her determination.4
By that, she seems to have meant nothing more controversial than that the
federal court would decide for itself whether it was bound. At any rate, Judge
Kenny decided the issue of personal jurisdiction and this same issue is brought
before this court. It has already been determined and this court will respect the
prior determination.
All five of the collateral-estoppel elements have been met and the fairness
factors weigh in favor of the application of that doctrine. Therefore, I find that
plaintiffs are precluded from asserting that this Court may exercise personal
jurisdiction over plaintiffs with regard to the Trust-based claims.
vii. Out-of-Circuit Case Law

Plaintiffs cite two out-of-circuit cases for the proposition that a prior
state-court ruling on personal jurisdiction does not have collateral-estoppel
effect. Those cases are distinguishable and do not dictate a similar result here.
First, in Pohlmann u. Bil-Jax, Inc., the Eighth Circuit found that a
Missouri appellate-court determination “that the trial record did not establish
the trial court’s personal jurisdiction over [defendantj” was not a jurisdictional
finding of lack of personal jurisdiction. 176 F.3d 1110, 1113 (8th Cir. 1999). In
dismissed for failure to sufficiently plead). Although Sfrassman had leave to amend his
personal claims, he was not required to do so; he could have rested on his complaint
and appealed from the order of dismissal. The matter could have been appealed to the
Appellate Division. See, e.g., Baanyan Software Sen’s., Inc. u. Kuncha, 81 A.3d 672
(N.J. Super. Ct. App. Div. 2013); Jacobs u. Walt Disney World, Co., 707 A.2d 477 (N.J.
Super. Ct. App. Div. 1998).
Judge Kenny stated at the motion hearing, “I don’t bind Federal Courts. The
Federal Judges will do as they see fit. If they have a question about New Jersey law,
they will certify it over to much higher authorities than me.” (P1. Ex. A. 17:20-23).

13

this case, by contrast, the state trial court explicitly ruled, at a merits hearing,
that New Jersey courts lacked personal jurisdiction over the Trust-based
claims. Pohiman was also complicated by an issue over whether the court
possessed jurisdiction over the person of the defendant at the time the suit was
commenced in 1993, as opposed to the date of commencement of the second
action in 1997. Id. at 1112. No such change of circumstances has been
identified or is likely in this matter, where the plaintiffs filed the Superior Court
action on June 2, 2016 and the federal court action on June 12, 2017. (Def.
Ex. B; Compl.).
Second, in Barrett v. Tema Development (1988), Inc., the Southern
District of New York denied collateral estoppel because it found that the
state-court and federal-court actions were based on different causes of action
and had different underlying facts. 463 F. Supp. 2d 423, 428 (S.D.N.Y. 2006).
Thus in state court the plaintiff alleged conversion, but in federal court alleged
breach of contract and breach of fiduciary duty. Id. Here, when filing in this
Court, the plaintiffs added claims under other states’ laws, but they retained
the same New Jersey claims and did not allege different facts. There is nothing
to indicate that the additional causes of action involved different jurisdictioncreating facts with respect to New Jersey.
B. Change of Venue
Plaintiffs argue in the alternative that if Judge Kenny’s order estops them
from asserting the Trust-based claims against defendants, this court should
transfer this action to an appropriate venue that does possess jurisdiction. (P1.
Br. 22-23). 1 agree.
Title 28, United States Code

§

1406 permits transfers to cure defects:

(a) The district court of a district in which is filed a case laying
venue in the wrong division or district shall dismiss, or if it be in
the interest of justice, transfer such case to any district or division
in which it could have been brought.
Moreover, 28 U.S.C.

§

1631 provides:

14

Whenever a civil action is filed in a court as defined in section 610
and that court finds that there is a want of
of this title
jurisdiction, the court shall, if it is in the interest of justice,
to any other such court in which the action
transfer such action
and the
could have been brought at the time it was filed
the court to
shall proceed as if it had been filed in
action
which it is transferred on the date upon which it was actually filed
in
the court from which it is transferred.
Thus the court has the power to transfer the action to another federal
...

...,

...

...

...

district court if the action originally could have been brought there, and if it
finds such a transfer to be in the interest of justice. See Chicosky v.
Presbyterian Med. Ctr., 979 F. Supp. 316, 3 19-20 (D.N.J. 1997); see also
Goldlawr, Inc. p. Heiman, 369 U.S. 463 (1962) (where plaintiff had accidentally
filed suit in wrong district and statute of limitations had run, interest of justice
required transfer pursuant to section 1406, rather than dismissal and finding
that section 1406(a) exists to “remove whatever obstacles may impede an
expeditious and orderly adjudication of cases and controversies on their
merits”); Renner v. Lanard Toys Ltd., 33 F.3d 277, 284 (3d Cir. 1994) (if plaintiff
on remand could not establish personal jurisdiction, district court should
consider whether transfer under sections 1406 or 1631 is appropriate); 1 Five
*23
O Inc. v. A. Schulman, Inc., No. 99-cv-354E(SC), 2000 WL 744003, at
(W.D.N.Y. June 5, 2000).
The court will transfer this case to the Middle District of Pennsylvania.
First, the action originally could have been brought there. Essential
Images is domiciled in Littlestown, located in Adam County, which is within the
Middle District of Pennsylvania. (Compl.

¶

11). John W. Rockafellow and Sally

Rockafellow are also residents of Pennsylvania (although the locality is not
further specified). 5 (Compl. ¶‘jj 12-13). Per 28 U.S.C. § 139 1(b), venue is

See Court Locator Results, United States Courts, http://www.uscourts.gov/
court-locator! city/ Litfiestown / state! PA! court! district (showing that Littlestown, PA is
located in the Middle District of Pennsylvania). Plaintiffs suggest transfer to the
Eastern District of Pennsylvania (P1. Br. 22-23), but they do not plead any facts
15

appropriate in “a judicial district in which any defendant resides, if all
defendants are residents of the State in which the district is located.”
Second, a transfer, as opposed to dismissal, is in the interest of justice. A
transfer may avoid potential problems under applicable statutes of limitations
that would not have arisen if the action had been originally filed in
Pennsylvania. The Pennsylvania Unfair Trade Practice and Consumer
Protection Law, for example, has a six-year statute of limitations. See Gabriel v.
O’Hara, 534 A.2d 488, 496 (Pa. 1987). Pennsylvania also permits a plaintiff to
employ theories of estoppel (or fraudulent concealment) to extend other
applicable statute of limitations. See Fine u. Checchio, 870 A.2d 850, 860 (Pa.
2005)

6

In addition, the defendants are located in Pennsylvania. The costs of
prosecuting and defending the action are not likely to rise significantly for the
parties involved if the action is transferred there. And finally, there is no
indication that the filing in New Jersey was anything other than a good faith
mistake. See Chicosky, 979 F. Supp. at 32 1-22.
Therefore, since it appears that the action could have been filed in
Pennsylvania in the first instance, and that a transfer would be in the interest
of justice, this action will be transferred to the Middle District of Pennsylvania.

IV.

CONCLUSION

For the foregoing reasons, plaintiffs cannot relitigate here whether New
Jersey courts can exercise personal jurisdiction over defendants regarding the
Trust-based causes of action. That issue is barred by collateral estoppel. In the

suggesting that Essential Images, John W. Rockafellow, or Sally Rockafellow is a
resident of that district.
6
The U.S. District Court for the Middle District of Pennsylvania may, of course,
make its own determination on a more complete record regarding the statute of
limitations. See Chicosky, 979 F. Supp. at 321.

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interest of justice, this case will be transferred to the Middle District of
Pennsylvania.
An appropriate order accompanies this opinion.
Dated: March 9, 2018

United States District Judge

17