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First Posted: 3/8/2013
BUTLER — Attorney Robert Powell claims his one-time partner in PA Child Care juvenile detention centers has failed to pay him any money associated with a 2008 sales agreement in which Powell gave up his 50 percent ownership in the center and related properties.
The lawsuit, filed in Butler County Court, claims Gregory Zappala, Powell’s partner in the PA, Western PA and Southwestern PA Child Care detention centers, reneged on an agreement that was supposed to pay Powell 50 percent of the monthly net operating profits of the facilities.
The suit also alleges Zappala violated a separate section of the agreement that said Powell was to be paid 50 percent of the net sales profit should the centers be sold. If they were not sold within a certain time frame, Zappala was to obtain an appraisal of the fair market value, with 50 percent of the value being paid to Powell.
Powell agreed to sell his interest in the centers to Zappala in June 2008, seven months after news of the “kids for cash” scandal broke with the indictment of former Luzerne County judges Mark Ciavarella and Michael Conahan.
The PA Child Care center, located in Pittston Township, and Western PA Child Care, located in Butler Township, played a major role in the scandal. Prosecutors say Ciavarella and Conahan conspired with others to wrongfully jail juveniles in order to ensure the centers remained profitable.
Powell, formerly of Drums, pleaded guilty in July 2009 to paying two former judges $772,500 in kickbacks and helping them conceal the source of nearly $2 million more they received from area real estate developer Robert Mericle, who built the two juvenile detention centers that were co-owned by Powell.
Powell was sentenced in November 2011 to 18 months in prison for helping Ciavarella and Conahan disguise the source of payments made to them. He recently was released to a halfway house to serve out the remainder of his sentence, which will be completed on April 16.
The lawsuit against Zappala has been pending in Butler County Court since October 2012. Zappala’s attorney, Bernard Schneider, is seeking to have the complaint dismissed, arguing Powell has not provided sufficient evidence to support his allegations. A hearing of that motion is scheduled for March 25.
Schneider also argues the lawsuit was improperly filed in Butler County since the purported agreement was negotiated in Luzerne County.
According to the lawsuit, Powell signed the sales agreement on June 8, 2008, but has never received any payment from Zappala. The suit says Powell believes Zappala executed the sales agreement, but he has not been able to definitively show that because Zappala has refused to provide him a copy of the executed agreement.
Powell’s suit asks a judge to review the case to determine if the agreement is, in fact, binding. He is also seeking damages for breach of contract and breach of fiduciary duty. In the alternative, Powell asks a judge to rule that he retains his 50 percent ownership in the detention centers.