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KEVIN WAL ENTERPRISE JOHN R. DAL 'S VI, LLC, Y, SH and TERRYHILL vs. Nee Ne Ne ee ee ee ee Se” Pending For the followi Followil 2005,” by an O and this matter a Complaint 0 occasions, alle the parcels in Plaintiffs respon parties’ en analysis. The Co’ Court including L 2 Following a recu September 5, 200 recused himself o pc. R. Civ. P. 11.1. MEMORANDUM OPINION SUPERIOR COURT OF THE VIRGIN ISLANDS DIVISION OF ST. THOMAS AND ST. JOHN CASE NO. ST-01-CV-165 | before the Court is Defendant’s January 9, 2004, Motion to Dismiss.! ng reasons, Defendant’s Motion will be granted. FACTUAL & PROCEDURAL HISTORY Ing a series of recusals and case reassignments dating back to September der dated January 7, 2014, the Hon. Denise M. Francois recused herself, was subsequently reassigned to the undersigned. The matter arises out of iginally filed on April 2, 2001, that has since been amended on several bing that Defendant John Daly, who obtained ownership of a majority of the Virgin Grand Estates Subdivision on St. John from the original ded on January 22, 2004, to which Defendant replied on February 6, 2004. Of note, the s only sparsely cite to relevant authority and are stunningly insufficient in their legal Irt strongly cautions counsel to abide by the rules that govern the practice before this sal by the Hon. Ive A. Swan, this matter was assigned to the Hon. Leon Kendall on . On March 25, 2010 the case was reassigned to the Hon. Adam G. Christian, who h September 9, 2011. On September 19, 201 1, the Hon. Brenda J. Hollar recused herself, after which this " lay dormant until it was assigned to the Hon. Denise M. Francois. Walsh, et. al v. Daly Case No. ST-01-CV-165 Memorandum Opinion, June 18, 2014 developer in July 2000, improperly acted as a developer and unilaterally moved the location of the| primary access route to the subdivision, significantly diminishing the value of Lot 72} currently owned by Plaintiff Terryhill Enterprises VI, LLC (“Terryhill”). STANDARDS Defenddnt’s Motion to Dismiss advances several grounds for relief, including (1) that Plaintiffs have failed to state a claim upon which relief can be granted, in part, because Plaintiffs lack standing, and (2) that Plaintiffs have failed to join necessary parties to the action. I. Failure to State a Claim Upon Which Relief Can Be Granted Pursuant to Fed. R. Civ. P. 12(b)(6), a defendant may test the sufficiency of the pleadings by s¢eking dismissal for the plaintiffs “failure to state a claim upon which relief can be granted.”? Generally, when considering such a motion, the Court must first liberally construe the pleadings to the extent permitted by the pleading requirements of Fed. R. Civ. P| 84 and “accept as true all well-pleaded allegations in the complaint” in favor of the plaintiff.5 While “the Court must take all of the factual allegations in the [c]omplaint as true, courts are not bound to accept as true a legal conclusion couched as a 3 FED. R. CIv. P. 12(b)(6). 4 Ashcroft v. Iqbal] 556 U.S. 662, 678 (2009) (‘the pleading standard Rule 8 announces does not require ‘detailed factual allegations,’ but it demands more than an unadorned, the-defendant-unlawfully-harmed- me accusation”) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). 5 Gov't Guarantee |Fund v. Hyatt Corp., 166 F.R.D. 321, 325-26 (D.V.1. 1996) aff'd sub nom. Gov't Guarantee Fund of Republic of Finland v. Hyatt Corp., 95 F.3d 291 (3d Cir. 1996) (“[I]n considering a motion to dismiss tinder Rule 12(b) (6), the Court must accept as true the well-pleaded allegations in the complaint . . . . [T]he plaintiff is required to set forth sufficient information to outline the elements of his claim or to permit inferences to be drawn that these elements exist. . . . Finally, when evaluating a 12(b)(6) motion the court njust be mindful of the liberal pleading practice permitted by Rule 8(a) . . . .”) (internal citations omitted). Walsh, et. al v. I Case No. ST-01- Memorandum O factual allegati distinguished, t allows the cou misconduct all motion to dism| raise a right to what the .. . cla Il. Pursuan aly CV-165 pinion, June 18, 2014 on.” © Second, once the legal and factual allegations have been lhe Court must decide whether “the plaintiff pleads factual content that It to draw the reasonable inference that the defendant is liable for the eged,”” such that the claim is plausible on its face. In other words, “[a] iss a complaint should be denied if the factual allegations are ‘enough to relief above the speculative level’”® and “give the defendant fair notice of im is and the grounds upon which it rests.”” Real Party in Interest & Standing tt to Fed. R. Civ. P. 17(a), a complaint may also be dismissed if a plaintiff is not a “real party in interest.” However, The “ré principle regar I f substituted into the action. After ratification, joinder, or substitution, t I t]he court may not dismiss an action for failure to prosecute in the name of the real party in interest until, after an objection, a reasonable ime has been allowed for the real party in interest to ratify, join, or be he action proceeds as if it had been originally commenced by the real party in interest.!° al party in interest” requirement is also similar to the justiciability Hing standing, since both concepts address whether the plaintiff has a personal interest in the matter. To prove standing, however, “ [a] plaintiff must allege [a] personal injury fairly traceable to the defendant's allegedly unlawful conduct and likely to 6 Webster v. CBI A 478 U.S. 265, 286 7 Igbal, 556 US. cquisitions, LLC, 2012 WL 832044, at *1 (V.L Super. Ct 2012) (citing Papasan y. Allain, (1986)). 678 (citing Twombly, 550 U.S. at 446). 8 Williams v. Setar V.L, Inc., 2010 WL 7371480, at *1 (V.I.Super. Ct 2010) (citing Phillips v. County of Allegheny, 200 ° Twombly, 550 U 10 Fep. R. Civ. P. | WL 305025, at *6 (3d Cir. 2008)). S. at 555. 7(a)(3). See Brooks v. Gov't of the V.I. Dept. of Edu., 58 V1. 417 (V1. 2013). Walsh, et. al v. D Case No. ST-01- Memorandum O be redressed by aly CV-165 pinion, June 18, 2014 the requested relief.”!! While the application of the standing doctrine in the Virgin Islands courts is derived from the federal courts, where standing determines jurisdiction und Islands has hel claims process jurisdiction bed concept of stan! a judicially-imy ler Article III of the U.S. Constitution, the Supreme Court of the Virgin id that in the Virgin Islands, “standing . . . functions . . . [simply] as a ng rule” and does not determine whether a Virgin Islands court holds ause the Virgin Islands courts are not Article III courts.!?, However, the Wing has been repeatedly incorporated into Virgin Islands jurisprudence as nosed restraint, particularly when raised by a defendant as an affirmative defense,'3 because it is “prudential”'* for the Court, in its discretion, to hear cases in which the plain Ill. Pursuar pursuant to Fe considered necf (A (B tiff has a personal interest.!° Failure to Join Necessary and Indispensable Party t to Fed. R. Civ. P. 12(b)(7), a party may move to dismiss a matter id. R. Civ. P. 19(a) for failure to join a necessary party. A party is essary when ) in that person's absence, the court cannot accord complete relief among existing parties; or that person claims an interest relating to the subject of the action and is so situated that disposing of the act in the person's absence may: (i) as a practical matter impair or impede the person's ability to protect the interest; or "| Hein vy. Freedon 737, 751 (1984); § 2 Benjamin v. Ald 3 See In re Guard h From Religion Found, Inc., 551 U.S. 587, 598 (2007) (citing Allen v. Wright, 468 US. ee Turnbull v. Twenty-Sixth Legislature of the V.I., 48 V.I. 127 (V.1. Super. Ct 2006). F Ins. Co. of Puerto Rico, 56 V.1. 558 (V.I. 2012). ianship of Smith, 54 V.1. 517, n. 5 (V.I. 2010) “Significantly, because claims-processing rules are equivalent to the statute of limitations and other affirmative defenses, litigants who seek to invoke a claims-processiy becoming fully bri 4 Benjamin, 56 V| op. (V.I. Super. C) 5 See, e.g., per ch g rule to dismiss or limit an appeal must do so at the first opportunity prior to the case efed.”). I. at 564. ov. VL. Gov't Hospitals & Health Facilities Corp., ST-13-CV-137,__ V-I.__, slip. May 28, 2014). Walsh, et. al v. D Case No. ST-014 Memorandum O; aly CV-165 pinion, June 18, 2014 (ii) leave an existing party subject to a substantial risk of incurring double, multiple or otherwise inconsistent obligations because of the interest.!® If the Court de must then deter enumerated by prove a party is necessary and indispensable.!’ ANALYSIS As a thy a Third Ameng explicitly grant on the assumpti the Third Amended Complaint! in their briefs. Plaintiffs’ Opp “sneak” !? in a termines a party is necessary and that party cannot be joined, the Court mine whether the party is indispensable utilizing several balancing factors Fed. R. Civ. P. 19(b). The burden is on the party moving for dismissal to eshold matter, while Plaintiff filed a Motion for Leave to Amend and File led Complaint on November 25, 2003, it appears that the Court never ed Plaintiff leave to amend. However, the parties seem to have proceeded on that leave would be granted, particularly because both parties rely on Insofar as Defendant’s Reply to bsition to Motion to Dismiss suggests that Plaintiffs are attempting to disagrees. The notice of the gn there is minim minimal prejud| new cause of action into the Third Amended Complaint, the Court facts asserted in the original complaint placed Defendant on sufficient ounds for Plaintiffs’ claims in the Third Amended Complaint,” such that al prejudice to Defendant. Considering that these facts suggest there is ice to Defendant in granting leave and that the Court “should freely give 16 Fep. R. CIv. P. "7 See Richards v. '8 Tn his Motion to Complaint.” Hows Third Amended C: '9 Defendant’s Rep 20 Fep. R. CIv. PRG defense that arose original pleading .|. 119(a)(1). See Epstein v. Fancelli Paneling, Inc., 55 V.1. 150 (V.I. Super. Ct 2011). Gov't of the V.1., 49 V1. 1086 (D.V.I. 2008). Dismiss Defendant refers to the November 25, 2003, Complaint as the “Fourth bver, this Memorandum Opinion shall refer to the November 25, 2003, Complaint as the mplaint. ly to Plaintiffs’ Opposition to Motion to Dismiss, Feb. 6, 2004, at 4. . 15(c)(1)(B) (permitting “relation back” where “the amendment asserts a claim or but of the conduct, transaction or occurrence set out — or attempted to be set out — in the ”). Walsh, et. al v. Daly Case No. ST-014CV-165 Memorandum Opinion, June 18, 2014 leave [to amen) Third Amended will examine t Dismiss.?” I Plaintiff Walsh does not have standing to prosecute this action. id] when justice so requires,”*! the Court grants Plaintiffs leave to file a 1 Complaint, nunc pro tunc to November 25, 2003. As a result, the Court he Third Amended Complaint when considering Defendant’s Motion to Even construing the facts alleged in the Complaint in a light most favorable to Plaintiffs, 7? Plaintiffs have not averred facts demonstrating that Walsh suffered a “personal injut Specifically, in|summary, the Plaintiffs’ Complaint states the following: (1) (2) Walsh “len[t] substantial funds under a Construction Loan Agreement” to Grand Development, Inc. (“GDI”), an affiliate of the original leveloper of Virgin Grand Estates, A. W. Landvest, Inc.,”> based on the premium market value of Lot 72” because of its prime location at the nd of a cul de sac based on the original development plans for Virgin Grand Estates, as memorialized by the Virgin Grand Estates’ Declaration of Covenants, Conditions and Restrictions dated June 21, 990 (“1990 Declaration”);?° Walsh held a senior mortgage of Lot 72;7” 21 FED. R. CIV. PR . 15(a)(2). y fairly traceable to the defendant's allegedly unlawful conduct. 99 24 22 While leave to amend should not be granted where an amendment would be considered futile, Harvey v. Christopher, 55 V|L. 565, n. 8 (V.I 2011) (citing Foman v. Davis, 371 U.S. 178, 182 (1962)), for the sake of clarity, the Court will address Plaintiffs’ Third Amended Complaint in its entirety and will dismiss Plaintiffs’ Third Amended Complaint because it does not withstand the Fed. R. Civ. P. 12(b)(6) standard as asserted in Defendant’s January 9, 2004, Motion. 3 See Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992) (“The party invoking federal jurisdiction bears the burden of establishing these elements. Since they are not mere pleading requirements but rather an indispensable part of the plaintiff's case, each element must be supported in the same way as any other matter on which tHe plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the sucressive stages of the litigation. At the pleading stage, general factual allegations of injury resulting from the defendant's conduct may suffice, for on a motion to dismiss we presum[e] that general allegations embraqe those specific facts that are necessary to support the claim. . . . [But,] at the final stage, those facts (if eatin a must be supported adequately by the evidence adduced at trial.”) (emphasis added) (internal ci 4 Hein, 551 US. 25 Compl. 4 5. 26 Compl. §f 6 - 8. 27 Compl. { 3. tions and quotations omitted). t 598. Walsh, et. al v. I aly Case No. ST-01-CV-165 Memorandum Opinion, June 18, 2014 @) (4) t (5) (6) These facts sug suffered a loss well as a loss of The Co Walsh, as the ] Defendant’s co defendant whe threatening the it some point after June 4, 1998, Defendant began altering the location id design of the subdivision’s roads including altering the main ntrance to the subdivision causing the premium market value of Lot 72 diminish;”* n July 6, 2000, Defendant purchased the remaining lots from the riginal developer and improperly began to act as the successor leveloper by (1) taking on the duties of the “successor Declarant and eveloper” when such rights were not conveyed by the original leveloper; (2) by obtaining a “retroactive” assignment of rights from e original developer on or about June 12, 2001, (3) by unilaterally mending the Declaration and restricting the rights of other property owners on or about February 21, 2001; and (4) by “excluding all other owners from effective representation and membership” by holding oard meetings outside of the territory;”° n some unspecified date, upon default of GDI, Walsh initiated reclosure proceedings, and ultimately became the owner of Lot 72 by urchasing Lot 72 at the foreclosure sale from GDI.;*° and, t some point, Walsh transferred his interest via Marshall’s Deed dated May 29, 2002, to Terryhill?! gest that Plaintiffs allege that Walsh, as the prior mortgagee of Lot 72, pf value of his security interest in Lot 72 due to the acts of Defendant, as f property value as the equitable interest holder of Lot 72 after foreclosure. urt finds Plaintiffs have not articulated sufficient facts to establish that prior mortgagee of Lot 72, ultimately suffered any injury as a result of nduct. Generally, a mortgagee enjoys standing to assert claims against a n that defendant has diminished the value of the property, thereby mortgagee’s security interest in the property.>? But, once a foreclosure is 28 Compl. ff 8-11. Osake Pankki (Sko, Complaint. See Cq 29 Compl. ff 12-17. 3° Compl. | 3. The The June 4, 1998, date is taken from the date of decision of Saastopankkien Keskus- pbank) v. Allen-Williams Corp., 39 V.1. 220 (D.V.I. 1998), a case cited in Plaintiffs’ pmpl. 8. role of Grand Development, Inc. and its relationship to the original developer is unclear to the Court. How! Inc.’s role is not 3! Compl. 4. ever, construing the facts in a light most favorable to Plaintiff, Grand Development, terial to the Court’s determination of standing. 32 See, e.g., Williams v. Mackay, 54 V.1. 713 (D.V.I. App. Div. 2009); Armstrong v. Armstrong, 266 F. Supp. 2d 385, 394 \(D.V.L App. Div. 2003) (holding that the Virgin Islands has adopted a lien theory of mortgages, such that a mortgage is considered a security interest); Gov't Guarantee Fund y. Hyatt Corp., Walsh, et. alv. D Case No. ST-01- Memorandum Oj aly CV-165 pinion, June 18, 2014 complete and the property is sold at a Marshall’s sale, the mortgagee’s security interest expires.> Whi third party may injury caused b Islands law is t e in some cases a prior mortgagee’s standing to assert a claim against a survive a foreclosure action, the prior mortgagee must allege an actual y the third party because the mortgagee’s primary remedy under Virgin » recover any deficiency against the mortgagor. In other words, where the sale of foreclosed property is insufficient to fully satisfy the judgment of foreclosure, the mortgagee may) While th foreclosure to } mortgagee exp] seek to recover a deficiency judgment against the defaulting party.*° his action was initiated prior to the District Court granting a judgment of Walsh against Grand Development, Inc., Walsh’s security interest as the ired at the time of the Marshall’s sale. Further, the Complaint fails to assert any facts which establish that Walsh, as the mortgagee of Lot 72, sustained damages as a r¢ lot’s value was to property, wh property’s valu sult of Defendant’s conduct other than the overly broad allegation that the diminished prior to the foreclosure sale. Unlike the rights of a title holder en a property has been foreclosed upon, allegations of the depletion of a b, without more, do not necessarily constitute sufficient facts establishing 166 F.R.D. 321 (D 95 F.3d 291 (3d C 3 See generally 55 34 Accord William: joined to an action 35 See 28 VIC. §5 and the proceeds d judgment as to the ordinary cases. WI shall be deemed a Warlick, CIV. 199 “deficiency is calc property”). See ge to seek a personal debt for such defig to have applied to .V.I. 1996) aff'd sub nom. Gov't Guarantee Fund of Republic of Finland v. Hyatt Corp., ir. 1996). Am. Jur. 2d Mortgages § 719. + y. Mackay, 54 V.I. 713 (D.V.I. Jan. 6, 2011) (suggesting a mortgagee must also be where the action will threaten the value of its security interest in the property). 24(c) (“When the judgment is also against the defendants or any one of them in person, f the sale of the property upon which the lien is foreclosed are not sufficient to satisfy the sum remaining unsatisfied to either, the judgment may be enforced by execution as in hen in such case the judgment is in favor of different persons not united in interest, it separate judgment as to such persons, and may be enforced accordingly.”); Soly v. 1/212, 2011 WL 3625393 (D.V.I. Aug. 17, 2011) (finding that under Virgin Islands law ulated based on the proceeds of the foreclosure sale, not the fair market value of the nerally 125 Am. Jur. Trials 541 (Originally published in 2012) (“[T]he lender is entitled judgment or decree against the mortgagor or any other person liable for the mortgage iency. The deficiency is the difference between the amount which the mortgagee is able the debt and the amount of that debt.”) Walsh, et. al v. Daly Case No. ST-01-CV-165 Memorandum Opinion, June 18, 2014 that the mortgagee, a lien holder, sustained damages or any actual injury.*° In fact, Walsh concedgs, and the Complaint alleges, that he won a judgment of foreclosure against GDI, the mortgagor. But Plaintiffs do not assert any facts establishing that Walsh was, for instance, unable to recover all his damages against GDI through a deficiency judgment.3”? As a matter of law, Plaintiff may not recover in excess of his actual damages.*® Thus, pleading additional facts that establish an actual injury other than a generalized lors of property value is essential to Walsh’s causes of action against Defendant. Asla result, the Court finds that Plaintiff Walsh, as the prior mortgagee of Lot 72, lacks standing to assert any causes of action against Daly because, even construing Plaintiffs’ allegations in a light most favorable to Walsh, Plaintiffs have alleged no actual injury fairly traceable to Defendant’s conduct. Insofar|as Plaintiffs allege that Walsh has standing as a prior equitable interest holder of the |property, the Court also disagrees. Even construing the facts of the Complaint in a light most favorable to Plaintiffs, Plaintiffs do not allege sufficient facts to establish that Defendant committed any wrongful conduct that caused Walsh an injury during the limited period of time between Walsh’s purchase of the property at foreclosure and subsequent assignment of the property to Terryhill. Specifically, Plaintiffs concede in their Opposition to Defendant’s Motion to Dismiss that foreclosure was granted by the 36 See, e.g, Allstate Fin. Corp. v. Zimmerman, 272 F.2d 323, 325 (5th Cir. 1959) (noting that a mortgagee may only recover| damages measured by the impairment of its ability to collect its debt). 37 Defendant provided the Court with a copy of the Order Confirming Sale of Lot 72, among others, which indicates that Walsh received a deficiency judgment in the amount of $729,3 16.29 plus interest. Plaintiff makes no referente to this Order Confirming Sale in his Complaint and conveniently omits the fact that he received a substahtial deficiency judgment. See Defendant’s Motion to Dismiss, Jan 9, 2004, at Exhibit 1. 38 See Soly, 2011 |WL 3625393 at *4, *5; see also Cohen v. Ortzsik, CIV. 7-1973, 1974 WL 383711 (D.V.I. Dec. 23, 1974). Walsh, et. al v. D Case No. ST-014 Memorandum O; District Court a which point W assigned his ini exhibit submitt submitted no d as a copy of th Marshall’s Dee Plaintiff and continued in July 2000, u sale.*! While t allege that on a property owner of rights as dev also occurred pt While tl was ongoing immediately as: aly CV-165 pinion, June 18, 2014 n August 17, 2000, and the Marshall’s sale was held on June 26, 2001, at falsh purchased the property at the foreclosure sale. Walsh asserts he terest to Terryhill via a Marshall’s deed dated May 29, 2002,°? but an ed by Defendant suggest the assignment occurred earlier.“ Plaintiff has ycumentary evidence establishing an assignment on some other date, such e assignment referred to in the Order Confirming Sale or a copy of the 1. appears to allege that Defendant’s wrongful conduct began around 1998 after Defendant purchased the remaining lots from the original developer Itimately diminishing the value of Lot 72 by the time of the Marshall’s he Complaint does not provide a complete timeline of events, Plaintiffs rx about February 21, 2001, Defendant unilaterally amended the rights of k under the Declaration and received an unlawful retroactive assignments eloper from the original developer on June 12, 2001. But, both these acts tior to the Marshall’s sale. he Complaint also appears to suggest that Defendant’s wrongful conduct hfter the date of the Marshall’s sale, it is unclear whether Walsh igned all his equitable rights in Lot 72 to Terryhill or if Walsh held his equitable interdst in the property for a period of time before he assigned his rights to 3° Compl. 4 4. 40 Defendant’s Motion to Dismiss indicates that the Order Confirming Sale of Lot 72 “assigned, at Walsh’s request, his interes! Defendant’s Motia 41 Compl. ff 9-19 the Plaintiff, the O1 clearly assigns the in Lot 4-72 to Terryhill,” an allegation that the Order Confirming Sale clearly supports. in to Dismiss, Jan 9, 2004, at 4. While the Court makes its finding by construing the facts in a light most favorable to der Confirming Sale of Lot 72, among others, appears to be dated April 12, 2002, and rights in the judgment and sale to Terryhill. Walsh, et. al v. D Case No. ST-01- Memorandum O; Terryhill. Furth prior to the ass} sustained damai - as a result of does not even ¢ was less than tl the Court finds Defendant. il. While it Plaintiffs allege property based Virgin Grand E 21, 1990. Whi Terr inte} the | aly CV-165 pinion, June 18, 2014 her, even if Walsh was an equitable interest holder for some period of time ignment of Lot 72 to Terryhill, the Complaint does not allege that Walsh pes or had an actual injury - such as a diminution in value of the property [Defendant’s wrongful conduct during that period. In fact, the Complaint ver that Lot 72 was assigned to Terryhill for value or for a value which he amount Walsh paid at the Marshall’s sale. For the foregoing reasons, that Plaintiff Walsh lacks standing to assert any causes of action against ryhill has standing to prosecute this action and is a real party in rest for all damages occurring after Terryhill acquired an interest in property. appears that Terryhill has not yet recorded the Marshall’s deed to Lot 72, in the Complaint that Terryhill is currently the lawful title holder of the bn the May 29, 2002, Marshall’s deed which was conveyed subject to the states’ Declaration of Covenants, Conditions and Restrictions dated June le it was unwise for Terryhill to have failed to record title immediately after the enter of ownership because the Virgin Islands is a race-notice jurisdiction,” absent evidence alleged by Plais Lot 72.4 Aq + of another innocent purchaser for value, the Court finds that the facts ntiffs are sufficient to establish that Terryhill is the lawful title holder of urrent holder of property subject to certain covenants and restrictions ® See 28 V.LC. §1 is not filed for recq valuable considera| recorded.”); Morto, 48 Cf Callwood v. d shall be void against any subsequent innocent purchaser in good faith and for a ion of the same real property, or any portion thereof, whose conveyance is first duly 1 v. Ernest, 44 V.L. 153 (V.L Terr. 2001). Callwood, 3 V.1. 287, 158 F. Supp. 54, 56 (D.V.I. 1958). fs (“Every conveyance of real property hereafter made within the Virgin Islands which r Walsh, et. al v. D aly Case No. ST-014CV-165 Memorandum Opinion, June 18, 2014 certainly has standing to enforce the rights granted under the covenants that run with the land.“4 As a result, unlike Walsh, the Court finds that Terryhill is a real party in interest and has standinlg to prosecute this matter because Terryhill, the current lawful title holder of the property| that is adversely} Howeve has alleged — albeit only in general terms — ongoing wrongful conduct affecting Terryhill’s rights as a property owner under 1990 Declaration. r, Terryhill does not have standing to assert a claim for damages that occurred prior to Terryhill acquiring an interest in the property. While the Complaint appears to suggest that Terryhill and Walsh were both prior mortgagees,*° viewing the Complaint as < alleged any faq Virgin Grand of Lot 72 beca Walsh - not Te: Finally, the Apj 1 whole, even in a light most favorable to Terryhill, Terryhill has not ts establishing that it was a mortgagee of any property located in the tates subdivision. In fact, it is clear that Terryhill was never a mortgagee se Plaintiffs exhibits to his original Complaint clearly demonstrate that Lryhill - entered into multiple “construction loan agreements” with GDI.“ il 12, 2002, Order Confirming Sale clearly refers to the entry of judgment in favor of Walsh on August 17, 2000, the sole Plaintiff in the foreclosure action.*” As a result, Terryhill Terryhill never does not have standing to assert any claims as a prior mortgagee because held an interest in the property prior to Walsh’s assignment of the 44 See, e.g., Dalton 4 Compl. ¥ 9. 46 See Plaintiff's Oj and Walsh); Nove Walsh); Novembei Walsh); February Walsh); February and Security Agreg Restated Construct 47 See Defendant’s v. Kosick, 24 V.1. 222 (Terr. V.I. 1989). iginal Complaint (February 11, 1993, “Construction Loan Agreement” (between GDI ber 8, 1993, “First Amendment to Construction Loan Agreement” (between GDI and 25, 1992, “First Priority Construction Mortgage Security Interest” (between GDI and 1, 1993, “First Amended and Restated Construction Mortgage Note” (between GDI and 1, 1993, “Amended and Restated First Priority Construction Mortgage Security Interest ‘ment” (between GDI and Walsh); November 8, 1993, “Modification of Amended and ion Mortgage Note” (between GDI and Walsh)). Motion to Dismiss, Jan 9, 2004, at Exhibit 1. Walsh, et. al v. D Case No. ST-01- Memorandum O property to Tey assignment of t The Co damages to its lawful title o asserted on beh Il. Bre Fair Loy, Bad Even ca finds that Terry generalized for aly CV-165 pinion, June 18, 2014 ryhill. Thus, any alleged claims for damages to the property prior to the he property must be dismissed. urt’s having found that Terryhill does enjoy standing insofar it avers rights as a property owner and to the property value after it became the T of the property, the Court will now discuss each cause of action If of Terryhill. ach of Contract (Count ID); Breach of the Covenant of Good Faith & Dealing (Count III); Breach of Fiduciary Duties of Due Care, alty, Good Faith & Fair Dealing (Count VI); and “Unconscionable, Faith Exercise of ... Power” (Count VII) mstruing the Complaint in a light most favorable to Terryhill, the Court hill’s factual assertions seeking recovery under a contract theory are too the Court to establish that Defendant breached any duty to Terryhill under the 1990 Declaration or its subsequent amendments. Specifically, Terryhill’s breach of contract claims 1990 Declarati time of the subdivision.*® breach of fiduc the developer unlawfully limi Declaration. *” “y alleges that, even if Defendant held the rights of the developer under the n, his rights as developer were “greatly reduced rights” because at the etroactive” assignment Defendant no longer owned any lots in the Terryhill’s causes of action for covenant of good faith and fair dealing and jary duties seem to allege that, even if Defendant holds all or any rights as pursuant to the original or amended 1990 Declaration, Defendant ted Terryhill’s rights and benefits as a property owner by amending the While it is unclear under what theory Terryhill seeks to recover for 48 Compl. { 25. 4 Compl. { 32. Walsh, et. al v. aly Case No. ST-01-CV-165 Memorandum O “unconscionab pinion, June 18, 2014 le, bad faith exercise of power,” this claim also relies on the allegation that Defendant unlawfully amended the Declaration. The Cad majority of De construing the that Defendan urt finds that Defendant has alleged specific damages. Although a fendant’s conduct occurred prior to Terryhill acquiring title to Lot 72, Complaint in a light most favorable to Plaintiff, the Complaint suggests ’s wrongful conduct is ongoing and continuing to cause damages to Terryhill’s interests under the Declaration as well as to its property. For instance, Terryhill asser that Defendant} s that it is no longer permitted to place a “for sale” sign on its property, has reassigned most of the “cost of the development and maintenance” of the subdivision to property owners, and that Defendant has held board meetings at his home or place the subdivision road constructi question by fut ndamentally altering its character. . . of business in Virginia, limiting the opportunity for owners of properties to participate meaningfully.°° Further, Terryhill claims that “Defendant’s on is causing substantial and irreparable harm to the real property here in 951 Nevertheless, these damages are insufficient in and of themselves to establish a cause of actio h under a breach of contract theory because Plaintiff has not established facts demonsttating that Defendant has breached any duty owed to Terryhill under the specific terms Complaint off Specifically, 1 sufficient facts of the covenants enumerated in the 1990 Declaration. Rather, the ers several sweeping legal conclusions couched as factual allegations. h order to establish a breach of contract claim, a plaintiff must allege showing there was (1) an agreement; (2) a duty created by that agreement; 5° Compl. fq 14-] 5! Compl. 4 9-11 > 6, 32. 52. Walsh, et. al v. I Case No. ST-014 Memorandum O (3) a breach of| sufficient facts between the pn argues that th Defendant and| amended by I aly ICV-165 pinion, June 18, 2014 that duty; and (4) damages.” While the Court finds that Plaintiff alleges to suggest that the 1990 Declaration may constitute an agreement? operty holders and the original developer, Plaintiff subsequently simply b rights enumerated in the Declaration were unlawfully assumed by the covenants in the 1990 Declaration were subsequently unlawfully Defendant. °4 Plaintiff does not enumerate a specific instance where Defendant breached a specific duty as the purported developer of the property under the terms of the 19 Similar] fair dealing an contract. There of the contract state a claim ft allege: 90 Declaration or its amendments. ly, a claim under a theory of a breach of the covenant of good faith and 1 a claim under a theory of breach of fiduciary duties both arise out of -fore, a plaintiff must allege some sort of specific breach under the terms or agreement to recover under these theories. In the Virgin Islands, to br breach of the covenant of good faith and fair dealing, Plaintiff must 1) that a contract existed between the parties, and 52 Considering the v. Connor, S. Ct. q of its “concurrent ¢ absence of local lal Joseph , 8. Ct. Civ 56 V.I. 674 (V.1. 2 Virgin Islands has Cornwall, 58 VI. fundamental to the this instance. 33 While Plaintiff d sufficient that the because it is attach states that the cove Declarant [“Devel 54 Compl. {f 14-16. recent Supreme Court of the Virgin Islands decision in Government of the Virgin Islands iv. No. 2013-0095, slip. op at 6 (V.I. Feb. 24, 2014), the Superior Court, in an exercise huthority with . . . [the Supreme] Court to shape Virgin Islands common law” in the Ww to the contrary or binding precedent, must conduct a “Banks analysis,” see Simon v. . No. 2012-0011, slip. op (V.L Sept. 11, 2013) (interpreting Banks); Matthew v. Herman, 012), to determine the applicable common law. However, the Supreme Court of the repeatedly upheld the basic elements of a breach of contract claim. See, e.g., Chapman v. 431 (V.I. 2013). Furthermore, the essential elements of a breach of contract claim are so common law jurisprudence in the Virgin Islands that a Banks analysis is unnecessary in oes not attach the Declaration to the Third Amended Complaint, the Court finds it 990 Declaration is incorporated into the Third Amended Complaint by reference led to the original complaint, thereby placing Defendant on notice. The 1990 Declaration nants “shall be deemed to run with the land” and is both “a burden and benefit to pper”]... and. . . persons acquiring or owing an interest in the Real Property.” Walsh, et. al v. aly Case No. ST-01-CV-165 Memorandum Opinion, June 18, 2014 Further, in ord allege sufficien “A fiduciary re for or to give relation.”** Fin amending the I] Declaration, wi allege any spec the Declaration ) that, in the performance or enforcement of the contract, the posing party engaged in conduct that was fraudulent, deceitful, or therwise inconsistent with the purpose of the agreement or the asonable expectations of the parties.°° to establish a claim for a breach of fiduciary duties,°° a plaintiff must facts establishing that: 1) there must be a fiduciary relationship 2) the fiduciary must have breached its duty imposed by such relationship, 3) the plaintiff must have been harmed, and 4) the fiduciary's breach must be a proximate cause of the plaintiffs harm.*” lation exists between two persons when one of them is under a duty to act advice for the benefit of another upon matters within the scope of the ally, Plaintiff's claim for “bad faith exercise of power” for altering or eclaration must also be supported by some facts alleging a breach of the hich Terryhill has failed to do. Since Terryhill has generally failed to ific breach of any duty owed by Defendant to Plaintiff under the terms of the Court will dismiss all counts related to a breach of contract theory or 55 Roebuck v. V.1. f Mortgage Ltd. v. F Restatement (Seco} Torts § 205 here 4 Housing Authority, 2014 WL 2109066, at *6 (V.I. Super. Ct 2014) (quoting LPP rosper, 50 V.I. 956, 960-61 (D.V.I. 2008)). This language is derived from the nd) of Torts § 205. A Banks analysis is unnecessary to adopt Restatement (Second) of ecause the Supreme Court of the Virgin Islands affirmed a Superior Court’s grant of summary judgment on this basis in Chapman v. Cornwall, 58 V.1. 431, 441 (V.I. 2013) (“The duty of good faith limits the parties' ability to act unreasonably in contravention of the other party's reasonable expectations. A sui bcessful claim ... requires proof of acts amounting to fraud or deceit on the part of the employer.”) (citing Pennick v. V.I. Behavorial Serv. Inc., No. 2006-0060, 2012 U.S. Dist. LEXIS 23402 (D.V.I. App. Div. Feb. 22, 2012)). Court finds that Plaintiffs have failed to allege sufficient facts establishing a breach of a 56 Considering the fiduciary relationship, it is unnecessary for the Court to conduct a Banks analysis regarding the common law action of a breach of fiduciary duties here. 57 Roebuck, 2014 WL 2109066 at *6 (citing Watts v. Blake-Coleman, Civil No. 2011-61, 2012 WL 1080323, at *4 (D]V.I. March 29, 2012)). 58 Guardian Ins. .v. Khalil, 2012 WL 3114601, at *7 (V.L Super. Ct 2012) (citing RESTATEMENT (SECOND) OF Torts § 874 (1979). Walsh, et. al v. I] Case No. ST-014 Memorandum O aly CV-165 pinion, June 18, 2014 related to a “ok faith exercise of power as developer” and grant Plaintiff leave to amend in this regard c Iv. Dec Terryhi Defendant has to the original assign its righ property.’ Th pursuant to5 V justiciable cont whether Terry! Defendant begs of authority t impermissible. from Defendan) 1990 Declarati Terryhill, it se conduct which no justiciable 4 Terryhill even pnsistent with this Memorandum Opinion. laratory Judgment (Counts I and X) V’s demand for a declaratory judgment arises out of the allegation that never lawfully held rights as the Virgin Grand Estate’s developer pursuant 990 Declaration because the original developer never had the authority to ts to a successor after the original developer’s abandonment of the Court holds the discretionary authority to grant declaratory judgment LC. § 1261, et seqg., but declaratory judgment is only permissible where a roversy exists.! Here, it is unclear to the Court based on the Complaint hill asserts that it has suffered any actual injury due to the fact that in to act as the developer of the property, even assuming the initial grant Defendant from the original developer was unlawful or otherwise Rather, the Complaint suggests that Terryhill’s enumerated damages arise t°s amendment to the Declaration or failure to abide by the terms of the bn. Thus, even construing the Complaint in a light most favorable to pms that Terryhill has not alleged any actual injury from the wrongful forms the basis of Terryhill’s claim for declaratory judgment, and thereby ontroversy exists on this basis. Furthermore, it is questionable whether has standing to assert a claim for Defendant’s alleged “unlawful” 5° Compl. ¥ 20. 6 See Flavo-Rich 61 See Companion . Quinn, 18 V.1. 530 (D.C.V.I. 1981). Assurance Co. v. Alliance Assurance Co., 21 V.1. 34 (D.C.V.I. 1984). Walsh, et. al v. D Case No. ST-01- Memorandum O assumption of t Terryhill acquis properly briefe amend its claim V. Bre Terryhil Plaintiffs and 0 exchange of cé¢ sums from De binion, June 18, 2014 he rights of developer under the 1990 Declaration, which occurred prior to fing any interest in the property. However, since the Court has not been d on this matter by the parties, the Court will grant Plaintiff leave to | for declaratory judgment consistent with this Memorandum Opinion. ach of Settlement Agreement (Count IV) 1 seeks recovery for breach of a settlement agreement on the basis that efendant “orally agreed to settle their dispute . . . in consideration of the rtain real properties involved in this litigation, the crediting of certain fendant to Plaintiffs, and the execution of mutual releases.” While Plaintiff alleg¢s that a draft settlement agreement was delivered by Plaintiffs to Defendant, and settlement agre placed in writin the “conduct an Plaintiffs and Defendant orally agreed to certain amendments to the ement,® Plaintiffs do not aver that the final settlement agreement was g and signed by the parties to be bound. Rather the Complaint states that d communications” between Plaintiffs, Plaintiffs’ counsel, Defendant, and Defendant’s counsel “resulted in the creation of a binding settlement contract, conclusion couthed as a factual allegation. Generally, a settlement agreement “voluntarily entered into, is binding upon the parties, whether or not made in the presence of the court, and even in the absence of a writing." Wh ether a settlement agreement is valid is “governed by principles of local & Compl. | 35. © Compl. Ff 35-37. 4 Compl. ¢ 38. 65 Nicholas v. Wyndham Int'l, Inc., CIV. 2001-147, 2007 WL 481 1566 (D.V.I. Nov. 20, 2007) (quoting Green v. John H. |] ewis & Co., 436 F.2d 389, 390 (3d Cir.1970)). Walsh, et. al v. Daly Case No. ST-01-CV-165 Memorandum Opinion, June 18, 2014 law applicable to contracts generally,”®° and thereby the agreement can be enforced only where “all matprial terms have been agreed upon by the parties.”®” However, where a settlement agreement specifically involves a transfer of interest in land, the agreement must be in writing pursuant to Virgin Islands statute of frauds,® in order to be a valid and enforceable agreement under local contract law.” Here, Plaintiffs did not outline sufficient facts to support a plausible claim for a breach of a settlement agreement because, while Plaintiffs clearly allege the settlement agreement invdlved a transfer of properties, Plaintiffs do not assert that the agreement was in writing and signed by the parties in accordance with the Virgin Islands statute of frauds, an essential element to their cause of action. At most, the Complaint claims that the parties entered into an oral agreement for the transfer of land, which is insufficient to survive a motibn to dismiss. Further, a general expression of intent to settle does not amount to an enforceable agreement.” As a result, the Court will dismiss Plaintiffs’ claim for breach of a settlement agreement. 6 Id. 8? Castolenia v. Crafa, 2014 WL 239427, at *2 (V.I. Super. Ct 2014) (citing Pennsbury Village Assocs., LLC v. Mcintyre, || 1 A.3d 906 (Pa. 2011)). 68 See 28 V.LC. §|242 (“Every contract for the leasing for a longer period than one year from the making thereof, or for the|sale of any lands, or any interest in lands, shall be void unless the contract or some note or memorandum is in writing, and signed by the party to be charged, or by his lawful agent under written authority.”). ® See generally 72 Am. Jur. 2d Statute of Frauds § 93 (“Generally, when a settlement agreement includes a transfer of an intefest in land, it necessarily implicates the Statute of Frauds . . . In determining whether the Statute of Frauds applies to a settlement agreement conveying an interest in real property, courts must consider the term$ of the settlement agreement, not the subject matter of the litigation.”). 1 See generally Castolenia, 2014 WL 239427. Walsh, et. al v. I Case No. ST-014 Memorandum O} aly CV-165 pinion, June 18, 2014 VI. Codetructiv Fraud (Count V) Plaintifi fs’ claim for constructive fraud arises out of Plaintiff's allegation that “Plaintiffs loaned Defendants funds, acquired a mortgage interest and ultimately purchased title specified in the to Lot 72 in justifiable reliance upon the landscape and roadway design original Declarations.” As already discussed, the Court has found that Walsh does nat have standing to assert this claim because he has failed to allege any actual injury At the prior mortgagee.’! Further, the Court has already found that the Complaint fails of the property analysis here, common law a¢ claim for const Vil. Bre to allege sufficient facts to establish that Terryhill was a prior mortgagee .2 Finally, while it is unnecessary for the Court to undergo a Banks t looks as if no Court in the Virgin Islands has previously adopted the tion of constructive fraud.”? As a result, the Court shall dismiss Plaintiffs’ tuctive fraud. heh of U.S. Interstate Land Sales Full Disclosures (Count VIII) Plaintiffs have indicated that they will no longer pursue Count VIII of the Third Amended Com VII. Insofar after Terryhill 4 of the roadway plaint. Asa result, the Court will dismiss Count VIII. Damage to Environmental Landscape around Lot 72 (Count IX) hs the Court has limited its claims to damages to the property occurring cquired an interest in the property, Terryhill alleges that the construction has caused damages to the landscape surrounding his property by 71 Supra n. 23-41; ? Supra n. 45-47. ® See Nicholas v. that, in addition to! the Virgin Islands see also 37 Am. Jur. 2d Fraud and Deceit § 25. Wyndham Int'l, Inc., CIV. 2001-147, 2007 WL 4201032 (D.V.L. Nov. 13, 2007) (noting the Restatements being silent in regards to an action for constructive fraud, no Court in or the Third Circuit has recognized a claim for constructive fraud). Walsh, et. al v. Daly Case No. ST-01- Memorandum Oj “clearing land, CV-165 pinion, June 18, 2014 butting down mature trees, wiping out mature natural vegetation, and otherwise devastating the environment immediately surrounding Lot 72.” It appears that this Count may arise out of a theory of tort, but Plaintiff also asserts a similar claim arising out of a doctrine bars pl breach of an un theory of contract under Counts II, III, and IV. “[T]he ‘gist of the action’ aintiffs from bringing a tort claim that merely replicates a claim for derlying contract.””> Further, while the Court acknowledges that Terryhill claims damages to the property surrounding Lot 72, Plaintiff fails to assert that Defendant has breached ahy specific duty in altering the landscape around Lot 72. Asa result, the Court shall dismiss Count IX. However, considering the Court shall grant Terryhill leave to amend on Counts II, II, and IV, the Court shall also grant Terryhill leave to amend Count IX consistent with this Memorandum Opinion. IX. Ned essary Parties Pursuant to Fed. R. Civ. P. 19(a). The Court recognizes that some parts of Complaint may implicate rights of other property ownets in the Virgin Grand Estates subdivision under the Declaration and covenants that|run with the land because Plaintiffs are generally alleging Defendant has unlawfully amended the Declaration. However, the Court finds that Defendant has not met his burdey} to show that the rights of other property owners would not be adequately represented here or would be otherwise adversely effected. 74 Compl. § 53. 33 Addie v. Kjaer, 51 V.1. 463 (D.V.I. 2009) (omitting internal citations). Walsh, et. al v. Daly Case No. ST-01-CV-165 Memorandum Opinion, June 18, 2014 CONCLUSION For the foregoing reasons, the Court will grant Defendant Daly’s January 9, 2004, Motion to Dismiss, Plaintiff Walsh shall be dismissed from this action, and Plaintiff Terryhill will|be granted leave to amend consistent with the holdings of this Memorandum Opinion. An Order consistent with this Opinion shall follow. Dated: June /#”, 2014 —,._. EE HON. MICHAEL C. DUNSTON TTEST: Estrella George JUDGE OF THE SUPERIOR COURT Cting Cle: of Co OF THE VIRGIN ISLANDS by: <f VAG, YY Donna D. onayan Court Clerk Supervisor