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IN THE SUPERIOR COURT OF THE VIRGIN ISLANDS DIVISION OF ST. THOMAS AND ST. JOHN HEAVY MATERIALS, LLC, ) ) CASE NO. ST-13-CV-222 Plaintiff, ) ) ACTION FOR BREACH OF VS. ) CONTRACT, DEBT, AND ) FORECLOSURE OF DANIEL’S CONSTRUCTION CO., INC., ) CONSTRUCTION LIEN WINSOR DANIEL a/k/a WINDSOR DANIEL, AND _) NO. 481-1 ESTATE CHOCOLATE HOLE ) REALTY, LLC, ) ) Defendants. } ) MEMORANDUM OPINION THIS MATTER is before the Court on the Motion to Dismiss for failure to state a claim upon which relief can be granted, filed by Heavy Materials, LLC pursuant to F. R. Civ. P. Rule 12(b)(6), where it seeks to dismiss Defendant No. 481- 1 Est. Chocolate Hole Reality LLC’s Second Amended Counterclaim. For the reasons set forth herein, the Motion will be granted in part and denied in part. BACKGROUND Plaintiff Heavy Materials, LLC (“Heavy Materials”) is a producer and supplier of ready mixed concrete, construction aggregates and sand, soil cement, bagged cement and masonry block in the Virgin Islands. Defendant Daniel’s Construction Co., Inc. (“DCC”) is a construction company which operates in the Virgin Islands. According to the filings in this case, Defendant Winsor Daniel a/k/a Windsor Daniel Heavy Materials, LLC v. Daniel’s Construction Co., Inc. et al Case No. ST-13-CV-222 Memorandum Opinion (“Daniel”) operates DCC. Defendant No. 481-1 Estate Chocolate Hole Realty, LLC (“CHR”) is a Virgin Islands company which owns No. 481-1 Estate Chocolate Hole (the “Property”), which is the property at the center of this dispute. According to Heavy Materials, it entered into an account agreement with DCC in which DCC promised to pay for materials and services provided by Heavy Materials within thirty (80) days of invoice. Heavy Materials alleges that the agreement called for it to supply and deliver construction materials. It claims that the materials at issue were used to improve the physical condition of the Property. DCC was the prime contractor improving the Property. Heavy Materials alleges that DCC and Daniel failed or refused to pay Heavy Materials for materials used on the Property. On February 15, 2013, Heavy Materials recorded a “Notice of Claim of Construction Lien” on the Property. On May 14, 2013, Heavy Materials filed this action for debt, breach of contract, and foreclosure of its lien against Daniel, DCC, and CHR. CHR filed its Second Amended Counterclaim against Heavy Materials for abuse of process and slander of title and claims that it only contracted with DCC and it has no obligation to Heavy Materials.! Heavy Materials has moved for dismissal of CHR’s Second Amended Counterclaim for failure to state a claim pursuant to Fed. R. of P. 12(b)(6) and the matter is fully briefed. 1 CHR filed its (original) Answer, Counterclaim and Cross Ciaim on June 11, 2013, then filed its First Amended Counterclaim and Amended Defenses on August 13, 2013, and its Second Amended Counterclaim on April 7, 2015. Heavy Materials, LLC v. Daniel’s Construction Co., Inc. et al Case No. ST-13-CV-222 Memorandum Opinion STANDARD OF REVIEW When considering a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6),? the Court must conduct its analysis under the assumption that all facts (as opposed to mere legal conclusions) pleaded by the non-movant are true.’ In evaluating the sufficiency of pleadings, courts usually must identify the legal elements of the claimant’s cause of action; identify well-pleaded factual allegations; and compare the well-pleaded allegations against the legal elements and assess whether those allegations, if true, would plausibly lead to the conclusion that the claimant is entitled to relief.‘ “[W]here there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement of relief.”5 “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”6 When deciding whether to grant a 12(b)(6) motion, a court may consider extrinsic materials attached to the pleadings.’ 2 Applicable through Super. CT. R. 7. 3 See, e.g., Joseph v. Bureau of Corrections, 54 V.1. 644, 650 (V.I. 2011). 4 Id. at 649-650. 5 Brady v. Cintron, 55 V.1. 802, 823 (V.I. 2011). ® Fleming v. Cruz, 62 V.\. 702, 710 (V.I. 2015) (citing Bell Att. Corp. v. Twombly, 550 U.S, 544, 678 (U.S. 2007). 7 See Benjamin v. AIG ins. Co. of P.R., 56 V.I. 558, 566 (V.1. 2012). Heavy Materials, LLC v. Daniel’s Construction Co., Inc. et al Case No, ST-13-CV-222 Memorandum Opinion ANALYSIS The Construction Lien filed by Heavy Materials pursuant to Virgin Islands Construction Lien Act’ (“VICLA”) sits at the bottom of CHR’s Second Amended Counterclaims and Heavy Material’s Motion to Dismiss. CHR alleges that it has no legal obligation to Heavy Materials as it did not order any supplies from Heavy Materials, that it has satisfied all obligations to DCC, and that DCC is the party liable to Heavy Materials. CHR further alleges that Heavy Materials filed the Construction Lien against the Property knowing that it cannot legally collect on the lien but with the intent to “intimidate” and “bully” CHR into paying the debts that DCC and Daniel, not CHR, owe to Heavy Materials. Consequently, CHR filed claims for abuse of process and slander of title. The Court will now individually analyze the causes of action under the 12(b)(6) legal standard. I. ABUSE OF PROCESS Abuse of process is a common law tort claim which arises when one uses the court's process for a purpose other than that for which the process was designed.® “In its most basic sense, an action for abuse of process is intended to prevent parties from using litigation to pursue objectives other than those claimed in the suit.”'? The 828 V.I.C. §§ 251-276. ® See Rusheen v. Cohen, 128 P.3d 713 (Cal. 2006); see also Kiwi Construction, LLC v. Pono, 2016 V.I. LEXIS 1, *7 {V.L. Super. Ct. Jan. 15, 2016) “historically, liability for abuse of process only attached for actions taken after the initiation of a lawsuit”). 10 Am. Jur. 2d Abuse of Process Section 1 p.457 of volume 1. Heavy Materials, LLC v. Daniel’s Construction Co., Inc. et al Case No. ST-13-CV-222 Memorandum Opinion Supreme Court of the Virgin Islands has not yet issued an opinion that defines the elements of a claim for abuse of process. However, the Superior Court of the Virgin Islands (Honorable Denise M. Francois) in the case of Kiwi Construction v. Pono,"! conducted the analysis mandated by Banks v. International Rental & Leasing Corp.,'* and adopted abuse of process elements which are common to most. jurisdictions.!3 Being satisfied with the conclusions from Kiwi Construction, this Court finds the Kiwi Construction formulation of the elements of abuse of process constitutes the soundest rule for the Virgin Islands and adopts the analysis as though this Memorandum Opinion fully set forth those conclusions. Thus, CHR must plead two elements to state a claim for abuse of process: “(1) while acting with an ulterior motive or an improper purpose, (2) the defendant used process in a manner that would not be proper in the normal prosecution of a case.”"4 To satisfy these elements, CHR must first allege that Heavy Materials had an improper purpose or ulterior motive. CHR alleges that Heavy Materials brought the instant suit “for purposes of trying to coerce 481-1 [CHR] to pay the debts of another [DCC].”!5 More specifically, CHR claims that Heavy Materials filed the construction lien to extract monies from it which Heavy Materials knew were owed only by DCC, rather than CHR, and consequently were not recoverable by Heavy Materials 11.9016 V.1. LEXIS 1, *7 (V.I. Super. Ct. Jan. 15, 2016). 1255 VI. 967 (V.I. 2011). 13 Kiwi Construction states that one commits abuse of process if: “while acting with an ulterior motive or an improper purpose, (2) the defendant used process in a manner that would not be proper in the normal prosecution of a case.” See Kiwi Construction, LLC, 2016 V.I. LEXIS 1, *9-10. 14 Kiwi Construction, 2016 V.I. LEXIS at *9. 15 Second Amended Counterclaim 4] 13. Heavy Materials, LLC v. Daniel’s Construction Co., Inc. et al Case No. ST-13-CV-222 Memorandum Opinion pursuant to VICLA. Therefore, CHR satisfies the first element for pleading an abuse of process claim because trying to coerce another to pay a debt which it does not lawfully owe would be an improper purpose or ulterior motive.'6 To satisfy the second prong, CHR must allege that Heavy Materials used process in such a manner that would not be proper in the normal prosecution of a case. “The gravamen of [abuse of process] is ‘not the wrongful procurement of legal process or the wrongful initiation of . . . proceedings’ but the misuse of process.”!7 The judicial processes implicated by CHR’s counterclaim are the “filing of this civil suit to foreclose the construction lien” and “continuation of suit, knowing that no sums are owed to the primary contractor.”!8 The filing of a lawsuit is a normal use of the judicial process. So CHR’s Count I of CHR’s Second Amended Counterclaim fails to satisfy the second prong of an abuse of process analysis without more.!9 Accordingly, the Court finds CHR fails to state a claim for abuse of process because it has not alleged any misuse of the civil or criminal processes.”° As a result, the Court will grant Heavy Material’s motion to dismiss CHR’s abuse of process claim. 16 See Kiwi Construction, 2016 V.I. LEXIS at 8. 17 Hlaraza v. Hovensa, L.L.C., 73 F. Supp. 3d 588, 610 (D.V.1. Nov. 12, 2014). 18 Second Amended Counterclaim and Amended Defenses, 4] 13. 19 See Kiwi Construction, 2016 V.I. LEXIS at *10. 20 MicDonald v. Davis, 51 V.I. 573, 601 (D.V.1. 2009) (listing “intentional withholding critical documents, ignoring court orders, permitting false testimony at depositions and misrepresenting facts to opposing counsel and the court” as examples of abuse of process). Heavy Materials, LLC v. Daniel’s Construction Co., Inc. et al Case No, ST-13-CV-222 Memorandum Opinion II. SLANDER OF TITLE The Supreme Court of the Virgin Islands has not yet issued an opinion that defines the elements of a claim for slander of title. As a result, the Court will conduct the three-part analysis promulgated by Banks and its progeny”! to determine the best common law rule for the Virgin Islands. The first step of the Banks analysis requires the Court to examine whether any other courts of the Virgin Islands have considered the issue and rendered reasoned decisions.22 In reviewing the decisions of local courts, the elements of slander of title have been uniformly predicated on the Restatement (Second) of Torts § 623A.” The second step of the Banks analysis compels the Court to assess the positions taken by a majority of courts in other jurisdictions on the issue at hand.?4 The majority of other jurisdictions base their analyses on the Restatement (Second) of Torts § 623A,25 21 See Gov't of the Virgin Islands v. Connor, 60 V.I. 597, 603 (V.I. 2014); Simon v, Joseph, 59 V.1. 611, 622 n.1 (V.1. 2013); Matthew v. Herman, 56 V.!. 674, 680-81 (V.I. 2012). 22 Connor, 60 V.I. at 603. 23 See White v. White, 2013 V.I. LEXIS 64, *3 (V.I. Super. Ct. Oct. 10, 2013); Glenn v. Dunlop, 423 Fed. Appx. 249, 253 (3d Cir. V.1. 2010); Morris v. Ernest, 44 V.I. 153, 158 (V.I. Terr. Ct. 2002); see also Thomson v. Fia. Wood Treaters, inc., 52 V.1. 986, 1006 (D.V.I. 2009); accord SBP, |, LLC v. Family Props. Caribbean, LLC, 2010 V.I. LEXIS 76, *3 (V.I. Super. Ct. Nov. 8, 2010); Thomas v. Bonanno, 2013 U.S. Dist. LEXIS 106214, *29 {D.V.1. July 30, 2013); Cabrita Point Dev., Inc. v. Evans, 2008 U.S. Dist. LEXIS 105405, *14 (D.V.I. Dec. 31, 2008). 24 Connor, 60 V.I. at 603. 25 See System Operations, inc. v. Scientific Games Dev. Corp., 555 F.2d 1131, 1140 (3d Cir. N.J. 1977); Jordan v. United States Bank Nat'l Ass'n, 2014 U.S. Dist. LEXIS 143638, *5 (D. Minn. Oct. 9, 2014) (applying Minnesota law); Burnett v. Mortgage Elec. Registration Sys., 706 F.3d 1231, 1243 (10th Cir. Utah 2013) (applying Utah law); Wharton v. Tri- State Drilling & Boring, 2003 VT 19, 14 (Vt. 2003); Poindexter v. Mercedes-Benz Credit Corp., 2014 U.S. Dist. LEXIS 102600, *4 (E.D. Va. July 25, 2014) (applying Virginia law); Hondroulis v. Homecomings Fin., LLC, 2007 U.S. Dist. LEXIS 93623, *11 (M.D. Fla. Dec. 19, 2007) (applying Florida law); Carrozza v. Voccola, 90 A.3d 142, 152 (R.|. 2014); CHFA- Small Props. v. Elazazy, 2013 Conn. Super. LEXIS 2588, *22 (Conn. Super. Ct. Nov. 12, 2013) (applying Connecticut law); Parr v. Parr, 2015 Mich. App. LEXIS 872, *19-20 (Mich. Ct. App. Apr. 23, 2015). Heavy Materials, LLC v. Daniel’s Construction Co., Inc. et al Case No. ST-13-CV-222 Memorandum Opinion Some jurisdictions include an additional element which requires loss of a specific sale.26 Other jurisdictions expressly refuse to require a specific sale as an element of a slander of title claim.”’ The third prong of a Banks analysis requires the Court to consider which rule is the soundest rule for the Virgin Islands from a policy perspective.?* The Court finds that the slander of title elements set forth in the Third Circuit opinion Glenn v. Dunlop,?9 are the best fit for the Virgin Islands because the Dunlop elements reflect the standard typically applied in Virgin Islands courts as well as that of the majority of jurisdictions in the United States. Thus, in order to prevail on a slander of title claim, a claimant must show: “a) falsity of the statement; b) injury to pecuniary interests, such as property, products, or business; c) publication to a third person; d) special harm in the form of actual pecuniary loss; and e) intent, malice, or fault to cause harm.”30 The first element of a slander of title claim requires CHR to allege a false statement. CHR alleges that the construction lien contains false allegations that CHR owes Heavy Materials money.3! Thus, CHR satisfies the first element. 26 See A. H. Belo Corp. v. Sanders, 632 S.W.2d 145, 146 (Tex. 1982); Teegarden v. Mortg. Elec. Registration Sys., 2014 U.S. Dist. LEXIS 174424, *8 (W.D. Wash. Dec. 17, 2014). 27 See Tym v. Ludwig, 196 Wis. 2d 375, 383 (Wis. Ct. App. 1995) (rejecting the specific sale requirement in favor of the Restatement (Second) of Torts § 633); accord Hosey v. Central Bank of Birmingham, Inc., 528 So. 2d 843, 845 (Ala. 1988); Montgomery v. Milam, 910 S.W.2d 237, 240 (Ky. 1995). 28 Connor, 60 V.I. at 603. 29 423 Fed. Appx. 249, 253 (3d Cir. V.I. 2010). 30 Glenn v. Dunlop, {citing The Restatement (Second) of Torts § 623A). 31 Second Amended Counterclaim and Amended Defenses, 94] 16 & 17. Heavy Materials, LLC v. Daniel’s Construction Co., Inc. et al Case No. ST-13-CV-222 Memorandum Opinion The second element requires CHR to allege an injury to a pecuniary interest. To satisfy this element, CHR alleges that Heavy Materials’ false statement has caused the Property’s value to diminish proportionally to the lien value.’ In meeting the third element, CHR alleges that Heavy Materials published a statement to a third party when it filed the construction lien.*3 The fourth element requires CHR to allege special harm in the form of actual pecuniary loss. CHR alleges that it cannot obtain financing due to the construction lien and that the value of the property has diminished proportionally to the value of the lien.*4 Here, CHR alleges more than just a clouded title because it claims that the construction lien deterred third parties from lending on the property.» Thus, CHR satisfies the fourth element. The final element requires CHR to allege that Heavy Materials made the publication with intent, malice, or fault to cause harm. CHR argues that the construction lien was recorded with intent to cause harm because Heavy Materials filed the construction lien knowing that it could not use the lien to collect monies from CHR, as CHR satisfied all of its obligations regarding the Property when it paid DCC.%6 Thus, CHR has met the pleading requirement for the final element of slander of title. 32 fd. at 9 20. 33 fd, at 7 8. 34 Id, at 9 20. 35 See White v. White, 2013 V.1. LEXIS 64, *4 (V.I. Super. Ct. Oct. 10, 2013) (granting 12(b)(6) motion to dismiss a slander of title claim because the claimant failed to allege how the false statement affected the conduct of third parties with relation to the property); see also Dunlop, 423 Fed. Appx. at 254 (finding that an assertion of clouded title, without more, fails to satisfy the pecuniary loss prong of a slander of title claim). 36 Second Amended Counterclaim and Amended Defenses, 4] 17. Heavy Materials, LLC v. Daniel’s Construction Co., Inc. et al Case No. ST-13-CV-222 Memorandum Opinion Taking all of CHR’s factual allegations as true, the Court will deny Heavy Materials’ motion to dismiss with respect to CHR’s slander of title claim. An Order consistent with this Opinion will be entered. / iF ye 2 DATED: July & /, 2016 LA Z— 47 LES Kathleen Mackay ¢ Judge of the Superior Court of the Virgin Islands ATTEST: ESTRELLA H. GEORG Acting of the rt BY: UA. : DONNA DONOVAN ) aT, 20 L Court Clerk Supervisor