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BANK OF NOVA SCOTIA, SARAH J. FLAVIUS A/K/A SARAH FLAVIUS A/K/A S. FLAVIUS AND CURTIS A. FLAVIUS A/K/A CURTIS FLAVIUS A/K/A C, FLAVIUS, IN THE SUPERIOR COURT OF THE VIRGIN ISLANDS DIVISION OF ST. CROIX Plaintiff, v. SX-16-CV-125 Defendant. SARAH J. CHITOLIE, Plaintiff, Vv. BANK OF NOVA SCOTIA, Defendant. MEMORANDUM OPINION BEFORE THE Court are the following motions: 1. 2s Plaintiff/Counter Defendant Bank of Nova Scotia’s Motion to Dismiss Chitolie’s Counterclaim filed on May 24, 2016. Defendant/Counter Plaintiff Sarah Chitolie’s Opposition to Bank of Nova Scotia’s Motion to Dismiss filed on July 18, 2016 Plaintiff/Counter Defendant Bank of Nova Scotia’s Reply was filed on August 15, 2016. Plaintiff/Counter Defendant’s Motion to Stay Discovery filed on April 5, 2017. Defendant/Counter Plaintiff's Opposition to the Motion to Stay Discovery filed on December 15, 2017. Defendant Curtis Flavius did not respond to any of the motions. For the following reasons, Bank of Nova Scotia’s Motion to Dismiss and Motion to Stay Discovery shal! be denied. BNS v. Flavius, et. al. SX-16-CV-125 MEMORANDUM OPINION BACKGROUND This matter arises out of an action for debt and foreclosure. Sarah Chitolie, formerly known as Sarah Flavius (hereinafter “Chitolie”) and Defendant Curtis Flavius hold title to a deed dated June 9, 2008 and recorded in the Office of the Recorder of Deeds for the District of St. Croix (hereinafter “Recorder’) on June 25, 2008, at PC 1149, page 238 as Document No. 2008003183, to real property (hereinafter “Property”) described as;! Plot 260 (0.2651 U.S. acre) of Estate St. George, Prince Quarter, St. Croix, U.S. Virgin Islands as shown on OLG Drawing No. 4957, dated October 25, 1994, last revised, March 5, 1998. “On June 24, 2008, Chitolie executed and delivered to Bank of Nova Scotia (hereinafter “BNS”) a promissory note (hereinafter “Note”) obligating Chitolie to pay the principal amount of $160,550, together with interest at the rate of 6.55% per annum.”” Payment of interest on the Note was to be made monthly on the 22™ day of each month.? “To secure payment of Note, Chitolie executed and delivered to BNS a first priority mortgage dated June 24, 2008 (hereinafter Mortgage”) over the Property. The Mortgage was duly recorded with the Recorder on June 25, 2008 at PC 1149, page 244 as Document No. 2008003185.’* According to the terms of the Mortgage, the Defendants were responsible for paying BNS all sums due under the Note.» On or about July 14, 2014, the Defendants defaulted on the Note.® On January 9, 2015, BNS sent a letter advising the Defendants that “failure to cure the default would result in acceleration of the debt and foreclosure of the mortgage lien.”’ To date, the Defendants remain ' Compl. 44. 2 Compl. 5. 3 Compl. 6. 4 Compl. 47. 5 Compl. 48. § Compl. 99. 7 Compl. J11. BNS v. Flavius, et. al. SX-16-CV-125 MEMORANDUM OPINION in default under the terms of the Mortgage and the Note.® On March 18, 2016, BNS filed an action for Debt and Foreclosure of Real Property Mortgage. Chitolie filed an Answer and Counterclaim on April 29, 2016. Curtis Flavius was personally served with a copy of the Complaint on May 4, 2016, yet he failed to appear, answer or otherwise defend. As a result, the clerk entered default against Curtis Flavius on August 3, 2016. On May 24, 2016, BNS filed a Motion to Dismiss Chitolie’s Counterclaim. Chitolie filed a Motion to Stay Discovery on April 5, 2017. STANDARD OF REVIEW Motion to Dismiss for Failure to State a Claim Upon Which Relief Can Be Granted Virgin Islands Rule of Civil Procedure 12(b)(6) governs motions to dismiss for failure to state a claim upon which relief can be granted.? Virgin Islands Rule of Civil Procedure Rule 8(a) governs the general rules of pleading.'° Rule 8(a)(2) prescribes, in pertinent part, that a pleading that states a claim for relief must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.”"! The Virgin Islands is a notice pleading jurisdiction and the plausibility standard articulated in Twombly and its progenies no longer applies in this jurisdiction.!? Under Rule 8(a)(2), a complaint is sufficient “so long as it ‘adequately alleges facts that put an accused party § Compl. 9912-16. 9 VI. R. Civ. P. 12(b)(6). 10 See Mills-Williams v. Mapp, 2017 V.1. Supreme LEXIS 35, at *11 (V.I. July 14, 2017) (Effective March 31, 2017, the Supreme Court of the Virgin Islands adopted the Virgin Islands Rules of Civil Procedure, which supersede all previous civil procedure rules applicable to the Superior Court, including the Federal Rules of Civil Procedure that had been applicable through former Superior Court Rule 7). See V.I. R. Civ. P. 8(a). VR. Civ. P. 8(a)(2). '2 See Mapp, 2017 V.1. Supreme LEXIS 35, at *12 (holding that going forward, it is clear that the adoption of Rule 8 of the Virgin Islands Rules of Civil Procedure supersedes our prior precedents which imposed the Twombly plausibility standard). BNS vy. Flavius, et. al. SX-16-CV-125 MEMORANDUM OPINION on notice of claims brought against it.””!? The language in Rule 8(a)(2) “is calculated to ‘apply[ ] an approach that declines to enter dismissals of cases based on failure to allege specific facts which, if established, plausibly entitle the pleader to relief.’”!* DISCUSSION A. Res Judicata BNS argues that Chitolie’s Counterclaim is barred by the doctrine of res judicata. In support, BNS asserts that the claims raised in Civil No. SX-12-CV-323 “are substantially the same as those raised by Chitolie in her Counterclaim... and Chitolie is seeking to relitigate all of the issues decided by the Superior Court in its November 19, 2013 Order.”!5 Last, BNS asserts that “even if the allegations were sufficient, Plaintiff waived any legal right to raise such claims by their execution of the loan documents containing explicit waivers of their rights.”! The waiver argument is not properly before the Court and will not be addressed because BNS did not cite to any Virgin Islands law or any legal authority and makes no substantial argument to support this assertion.'® '3 Mapp, supra. (explaining that since the adoption of the Virgin Islands Rules of Civil Procedure, Rule 8 of the Virgin Islands Rules of Civil Procedure supersedes our prior precedents which imposed the Twombly plausibility standard by virtue of the now-amended Superior Court Rule 7, and restores the notice pleading regime that had previously been in effect). 4 Id. (quoting V.1. R. Civ. P. 8 Reporter's Note (emphasis added); see also Brathwaite v. H.D.V.1. Holding Co., Super. Ct. Civ. No. 764/2016 (STT),__—sV.I.__i«s__, 2017 V.I. LEXIS 76, *3, [WL], at *2 (V.I. Super. Ct. May 24, 2017) (acknowledging that Virgin Islands Civil Procedure Rule 8(a)(2) eliminates the plausibility standard and instead will permit a complaint so long as it “adequately alleges facts that put an accused party on notice of claims brought against it”)). '5 Mot. at 2. © Gerald v. R.J. Reynolds Tobacco Co., 2017 V.I. LEXIS 150, *37 (noting that a bare assertion made without citing any legal authority is not properly before the court); see Simpson v. Golden, 56 V.I. 272, 280 (V.1. 2012)(“The rules that require a litigant to brief and support his arguments... before the Superior Court, are not mere formalistic requirements. They exist to give the Superior Court the opportunity to consider, review, and address an argument”); Bertrand, 63 V.I. at 782(“[S]imply stating a principle of law without any argument or explanation of how it applies to the case at hand is not sufficient to fairly present the issue to the Superior Court”) (citing Yusuf v. Hamed, 59 V.1. 841, 851 n.5 (V_I. 2013)). See also V.I. R. Civ. P. 11(b)(5). BNS v. Flavius, et. al. SX-16-CV-125 MEMORANDUM OPINION In her Opposition, Chitolie contends that her Counterclaim is not barred by res judicata because “while the parties in this action were also parties to the earlier action brought under SX- 12-CV-323 and the prior judgment was valid, final, and on the merits, the claims brought in this case and the facts supporting these claims, are very different from those upon which Counter- Plaintiff brought her claims in the first action, SX-12-CV-323.”!” Last, Chitolie contends that paragraph 6 of her Counterclaim asserts a new claim— “that BNS, in retaliating against her for filing SX-12-CV-323, discriminated against her when handling her loan.”!® “Res judicata, also known as claim preclusion, precludes relitigation of ‘any claims that were raised or could have been raised in a prior action.’”'? The common law doctrine of res judicata is recognized in the Virgin Islands.”° Stewart reasoned that res judicata is the soundest rule for the Virgin Islands because it “protects litigants ‘from the expense and vexation of attending multiple lawsuits, conserves judicial resources, and fosters reliance on judicial action by minimizing the possibility of inconsistent decisions.’””! “[T]o bar the relitigation of a claim under the doctrine of res judicata, an asserting party must demonstrate: (1) the prior judgment was valid, final, and on the merits; (2) the parties in the subsequent action are identical to or in privity with the parties in the prior action; and (3) the claims in the subsequent action arise out of the same transaction or occurrence as those in the prior action.””? As an initial matter, both parties submit that the prior judgment entered on 17 Opp’n at 9. 18 Opp’n at 10. 19 See Stewart v. V.I. Bd. of Land Use Appeals, 66 V.I. 522, 531 (2017). 20 Id. at 533. Cf Lindqvist v. Cohen, 2017 V.I. LEXIS 164, *4 (citations omitted). 21 Id. 22 Id. at 549-50 (citations omitted). BNS v. Flavius, et. al. SX-16-CV-125 MEMORANDUM OPINION November 19, 2013 in Civil No. SX-12-CV-323 was valid, final and on the merits.? Also, both parties agree that the parties in the instant matter are identical to or in privity with the parties in Civil No. SX-12-CV-323.4 Thus, the res judicata analysis will focus on the third element. To determine whether the matters arise out of the same transaction or occurrence, the Supreme Court held that “the transactional test represents the soundest rule for the Virgin Islands.”*> Under this test, the measure of a cause of action is the aggregate of connected operative facts that can be handled together conveniently for purposes of trial. A prior judgment bars a later suit arising out of the same aggregate of operative facts even though the second suit relies on a legal theory not advanced in the first case, seeks different relief than that sought in the first place, and involves evidence different from the evidence relevant to the first case.7° “In applying this test, the court must pragmatically consider ‘whether the [connected operative] facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties' expectations or business understanding or usage.’”2’ Applying the transactional test, the court must evaluate whether or not the legal theories or rights asserted in Chitolie’s Counterclaim were raised or could have been raised in Civil No. SX-12-CV-323 based on the conduct, transaction, or occurrence giving rise to that action, regardless of the legal elements or the evidence upon which that complaint depended, or the particular remedies sought.”® 23 Mot. at 2-3 and Opp’n at 9. In the November 19, 2013 Order, granting BNS’s motion to dismiss for failure to state a claim and dismissing Chitolie’s Complaint with prejudice was a final order on the merits. See Hard Rock Café v. Lee, 54 V.1. 622, 638 (2011) (citations omitted) (“A final judgment ‘ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.’ ”). Cf Boynes v. Transp. Servs. of St. John, 60 V.I. 453, 458 (2014). See Island Tile & Marble, LLC v. Bertrand, 57 V.1. 596, 620 (2012) (a dismissal with prejudice “constitutes an adjudication of the merits as fully and completely as if the order had been entered after trial”). 24 Mot. at 2-3. 25 See Stewart, 66 V.1. at 542 (holding that the transactional test represents the soundest rule for the Virgin Islands). 26 Id, at 543 (citations omitted). 27 ld. 28 Id. at 542-43. BNS v. Flavius, et. al. SX-16-CV-125 MEMORANDUM OPINION Chitolie’s Counterclaim alleges in pertinent part 4. Counter Plaintiff entered into a mortgage with Counter Defendant.”? 5. Counter Plaintiff initiated litigation against Counter Defendant related to recommending that she purchase certain property and use a certain builder.*° 6. Counter Defendant, in retaliation for the filing of that law suit, discriminated against the Counter Plaintiff in the handling of her loan to include but not be limited to refusing to aid her in refinancing the loan, refusing to allow her to avail herself of certain loan benefit programs, refusing to inform her of assistance that was available to her.*! 7. Counter Defendant unreasonably required the Counter Plaintiff to insure the premises up to the value of the mortgage even though they knew that as a result of the condition of the home it was not worth that amount of money.** 8. Counter Defendant was responsible to inspect the construction of the house and to certify for Counter Plaintiff and itself that the construction was properly done before the loan proceeds to [sic] could be expended.*? 9. Counter Defendant negligently and improperly certified the expenditures from the loan when the property had not been properly constructed.*4 10. As a result of the negligent acts and omissions of the Counter Defendant, Counter Plaintiff suffered economic loss, mental anguish, suffering and loss of enjoyment of life.* I, Paragraphs 7 through 10 of the Counterclaim are barred by res judicata. Paragraphs 7 through 10 of the Counterclaim arise out of the same transaction or occurrence as Civil No. SX-12-CV-323. In both cases, Chitolie alleges that BNS was responsible for inspecting the construction site before expending loan proceeds.*© To support her negligence claim in the instant matter, Chitolie plead that BNS did not conduct the necessary construction inspections before expounding the loan payments.*’ Chitolie alleges negligence in the current action, but she did not plead negligence in the 2012 case.?® Although she did not raise negligence 29 Countercl. 94. 3° Countercl. 5. 3! Countercl. 6. 32 Countercl. 47. 33 Countercl. 78. 34 Countercl. 9. 35 Countercl. 10. 36 Compare Countercl. 48. and 2012 Compl. §20. 37 2012 Compl. 420. 38 Countercl. 999-10. BNS v. Flavius, et. al. SX-16-CV-125 MEMORANDUM OPINION in her 2012 Complaint, Chitolie is barred from raising negligence in the instant matter because she could have raised her negligence claim in 2012 had she exercised due diligence.°? Furthermore, regarding the allegations in paragraph 7, Chitolie knew or should have known, by exercising due diligence, that the insurance requirements exceeded the value of the mortgage because of the condition of the home when she filed her 2012 case. Although the allegations in paragraph 7 of the Counterclaim were not raised in the 2012 Complaint, by exercising due diligence, Chitolie could have raised the allegation in 2012. Consequently, because the 2012 Complaint was previously resolved on the merits, paragraphs 7 through 10 of Chitolie’s Counterclaim are barred by res judicata and shall be stricken from the record. Il. Paragraph 6 of the Counterclaim is not barred by res judicata. “{R]es judicata does not apply to claims arising from events occurring after the filing of the prior complaint.’*° “The crucial date is the date the complaint was filed. The plaintiff has no continuing obligation to file amendments to the complaint to stay abreast of subsequent events; plaintiff may simply bring a later suit on those later-arising claims.”*! Utilizing this rule, paragraph 6 could not have arisen out of the same transaction or occurrence as the 2012 Complaint. As mentioned above, in paragraph 6 of the Counterclaim, Chitolie alleges that Counter Defendant, in retaliation for the filing of that law suit, discriminated against the Counter Plaintiff in the handling of her loan to include but not be limited to refusing to aid her in refinancing the loan, refusing to allow her to avail herself of certain loan benefit programs, refusing to inform her of assistance that was available to her’? 3° See Stewart, 66 V.I. at 544 (noting that claims that could have been raised in the previous matter if the complainant had exercised due diligence are barred). “Id. at 545 (res judicata does not apply to claims arising from events occurring after the filing of the prior complaint). 41 7d. (citations omitted). “ Countercl. 6. BNS v. Flavius, et. al. SX-16-CV-125 MEMORANDUM OPINION Chitolie alleges that BNS discriminated against her in the handling of the loan in retaliation for the 2012 lawsuit. Based on the timing of the alleged discrimination, this allegation arose after the filing of Chitolie’s 2012 Complaint. Consequently, paragraph 6 is not barred by res judicata because the allegations arose from events occurring after the filing on 2012 Complaint. B. Failure to State a Claim BNS argues that the Counterclaim should be dismissed because “Chitolie’s Counterclaim fails to provide any information as to how BNS retaliated or discriminated against or breached any duty of care owed to her.”*? Furthermore, BNS asserts that Chitolie’s Counterclaim presents nothing more than “the unadorned ‘the defendant unlawfully harmed me’ type of accusations which are prohibited under the Jgbal/Twombly standard.”*> In opposition, Chitolie argues that her Counterclaim should not be dismissed for failure to state a claim because the allegations are sufficient to put BNS on notice of Defendant/Counter-Plaintiff s claim against it, as...the Virgin Islands is a notice pleading jurisdiction.’”*° BNS’s Motion was filed on May 24, 2016— a little under a year before the Supreme Court of the Virgin Islands adopted the Virgin Islands Rules of Civil Procedure that became effective on March 31, 2017. “[T]he Virgin Islands Rules of Civil Procedure, [] supersede all previous civil procedure rules applicable to the Superior Court, including the Federal Rules of Civil Procedure that had been applicable through former Superior Court Rule 7.47 43 Mot. at 3. 4 Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556, 127 S. Ct. 1955, 1966, 167 L. Ed. 2d 929 (2007) and Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1949-50, 173 L. Ed. 2d 868 (2009). 45 Mot. at 5. 46 Opp’n at 11. 47 See Mapp, No. 2016-0054, 2017 V.I. Supreme LEXIS 35, at *11. BNS v. Flavius, et. al. SX-16-CV-125 MEMORANDUM OPINION BNS moves for dismissal for failure to state a claim by applying the plausibility standard articulated in Twombly.** In prior precedents, the Supreme Court applied the Twombly plausibility standard.*? However, Virgin Islands Rule of Civil Procedure 8(a) explicitly provides that the Virgin Islands “is a notice pleading jurisdiction.”>° “The Virgin Islands Rules of Civil Procedure permit their application to pending cases in the Superior Court if doing so would not be infeasible or work an injustice.”>! Under the notice pleading approach, Virgin Islands courts decline “to enter dismissals of cases based on failure to allege specific facts which, if established, plausibly entitle the pleader to relief.”*? Effectively, the court takes a more liberal approach when reviewing the sufficiency of a pleading.*? The Supreme Court has “a strong preference for trial courts to decide doubtful cases on their merits rather than dismiss them for a failure to strictly follow purely procedural tules.”°* All things considered, application of the more liberal notice pleading standard articulated in Rule 8(a) to the instant matter would not work an unjust result. Since paragraphs 7-10 of the Counterclaim are barred by res judicata, the Court’s sole determination is whether paragraph 6 was properly plead. Applying the notice pleading standard, the Court must determine whether the allegations of discrimination and retaliation give sufficient notice of the claims being brought. In paragraph 6 of the Counterclaim, Chitolie alleges that Counter Defendant, in retaliation for the filing of that law suit, discriminated against the Counter Plaintiff in the handling of her loan to include but not be 48 Mot. at 3-5. ? See Mapp, supra (citing e.g., Fleming v. Cruz, 62 V.I. 702, 710 (V.I. 2015); Brady v. Cintron, 55 V.1. 802, 823 (V.I. 2011); Robles v. HOVENSA, L.L.C., 49 V.I. 491, 500 (V.I. 2008)). 3° VT, R. Civ. P. 8(a)(2). 5! See Mapp. supra at *12. V.1.R. Clv. P. 1-1(c) See Brathwaite v. H.D.V.1. Holding Co., 2017 V.1. LEXIS 76, *3. %3 Id. (the Court determined that it should take an even more liberal approach than that prescribed by Virgin Islands precedent applying FED. R. Civ. P. 8(a)(2) when considering if a complaint adequately alleges facts that put an accused party on notice of claims brought against it).s 54 See Joseph v. Bureau of Corr., 54 V.1. 644, 650 (2011). BNS vy. Flavius, et. al. SX-16-CV-125 MEMORANDUM OPINION limited to refusing to aid her in refinancing the loan, refusing to allow her to avail herself of certain loan benefit programs, refusing to inform her of assistance that was available to her.* “Under notice pleading, there is a very low threshold to determine whether a complaint states a claim.”>° “All the party must provide is ‘a short and plain statement showing that [they are] entitled to relief.’"°’ “Such a statement must simply ‘give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests.’"°* “This simplified notice pleading standard relies on liberal discovery rules and summary judgment motions to define disputed facts and issues and to dispose of unmeritorious claims.”°? “[T]he bare allegation of discrimination satisfies notice pleading standards.” Applying the notice pleading standard, Chitolie does not have to plead a prima facie case for discrimination. The allegation of discrimination is sufficient to put BNS on notice of the discrimination claim.*' Therefore, Chitolie properly pleaded that she was discriminated against by BNS. C. Motion to Stay Discovery BNS argues that discovery should be stayed because of the pending motion to dismiss. Chitolie counterargues, stating that she would be unduly prejudiced if discovery were stayed because the interest on the mortgage would continue to increase and there is no urgent reason to 53 Countercl. 46. 5° Jackson v. Marion County, 66 F.3d 151, 153-54 (7th Cir. 1995). 57 Cook v. Winfrey, 141 F.3d 322, 327 (7th Cir. 1998); V.1. R. CIV. P. 8(a). %8 Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512, 122 S. Ct. 992, 998 (2002) (citing Conley v. Gibson, 355 U.S. 41, 47, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957)). Cf Fua Mai Jiang v. Allstate Ins. Co., 199 F.R.D. 267, 272 (N.D. Ill. 2001). 59 Id. (citations omitted). 6 Fua Mai Jian., 199 F.R.D. at 272. $! See Rennie v. Hess Oil V.1. Corp., 62 V.1. 529, 544 n.10 (2015) (stating that there can be no doubt that by simply pleading that he was discharged in violation of that act, Rennie gave HOVIC sufficient notice of the claim he was bringing) (citing Joseph v. Bureau of Corr., 54 V.1. 644, 650 (V.I. 2011) (the Virgin Islands is a “notice pleading” jurisdiction)). BNS y, Flavius, et. al. SX-16-CV-125 MEMORANDUM OPINION delay the proceedings. Pursuant to Virgin Islands Rule of Civil Procedure 26(d)(4), filing a motion to dismiss shall not stay discovery in the action unless the judge so orders. At this juncture, the Court finds that there is no reason to stay discovery. CONCLUSION Based on the foregoing analysis, the Court shall deny BNS’s Motion to Stay Discovery. BNS’s Motion to Dismiss the Counterclaim shall be denied. Paragraphs 7-10 are barred by res judicata and shall be sua sponte stricken from the record. However, paragraph 6 is not barred by res judicata because the allegations arose from events which occurred after the 2012 case was filed. The discrimination claim in paragraph 6 is properly plead under the notice pleading standards. In light of the foregoing, Chitolie will be ordered to file an Amended Counterclaim striking paragraphs 7-10.°* An Order consistent with this Opinion follows. DATED this Fiiay of February, 2038. ATTEST: LLL) x, Estrella George HAROLD W. L. WILLOCKS Clerk of the Court Administrative Judge of the Superior Court 8 VI. R. CIV. P 26(d)(4). $ VIR. CIV. P 12(f(1). $4 VIR. CIV. P 15-2.