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IN THE SUPERIOR COURT OF THE VIRGIN ISLANDS DIVISION OF ST. THOMAS AND ST. JOHN GREAT ST. JIM, LLC, and LSJE, LLC, ) ) Plaintiffs, ) CASE NO. ST-19-CV-57 vs. ) ) PROSOLAR SYSTEMS, LLC, ) ACTION FOR BREACH ) OF CONTRACT AND Defendant, ) FRAUD ) Cite as 2020 VI Super 25U MEMORANDUM OPINION {1 THIS MATTER is before the Court on Defendant ProSolar Systems, LLC (hereinafter “ProSolar”)’s Motion to Dismiss Count II of Plaintiff's Complaint, filed on April 2, 2019 pursuant to the gist of the action doctrine and Virgin Islands Rules of Civil Procedure 9(b) and 12(b)6. Plaintiffs, Great St. Jim, LLC and LSJE, LLC (together “GSJ”), oppose the Motion.! For the reasons set forth herein the Motion will be denied. {2 In support of its Motion, ProSolar argues that 1)GSJ is “disguising a contract claim as a tort claim in contradiction of the gist of the action doctrine,” and 2) GSJ has “failed to plead fraud with the requisite particularity required by V.I. R. Civ. P. 9(b).” For these reasons, ProSolar argues that Count II of GSJ’s complaint should be 1 The motion is fully briefed. Great St. Jim, LLC v. ProSolar System Case No. ST-19-CV-57 Cite as 2020 VI Super 25U Memorandum Opinion Master Company, LLC No. 2-17-17, 2018 WL 1193010 at *3 (D.V.I. Mar. 7, 2018) (quoting Holst v. Oxman, 290 Fed. Appx. 508, 510 (3d Cir. 2008) (quoting Lum v. Bank of Am., 361 F.3d 217, 224 (3d Cir. 2004))). The Court acknowledges that the Third Circuit’s finding is in no way binding on this Court.? However, since Virgin Islands courts have yet to establish a test by which the factual particularity of a complaint for fraud is evaluated—at least under a notice pleading standard—this Court will apply a heightened level of specificity similar to the Third Circuit and evaluate the facts alleged in GSJ’s complaint accordingly. Importantly, this does not mean that the Court is establishing a conjunctive test akin to that of the Third Circuit that requires complaints for fraud to definitively state the date, place or time of the fraud, the person or entity that made a misrepresentation, and the general content of the misrepresentation. To require complaints for fraud to allege these exact facts (e.g., date, place, time) would be to demand more than is appropriate and required in a notice pleading jurisdiction, !° especially since nothing in the text of V.I. R. Civ. P. 9(b) 9 Third Circuit decisions are only binding on the Superior Court when such decisions “can be traced to a case where the Third Circuit had exercised its power as the final arbiter of Virgin Islands local] law.” Najawicz v. People, 58 V.I. 315, 328 (V.I. 2013) (footnote omitted) (collecting cases); see also Government of the Virgin Islands v. Connor, 60 V.I. 597, 606 n. 1 (V.I. 2014) (citation omitted) (“Superior Court should treat decisions of the United States Court of Appeals for the Third Circuit. . . as binding precedent with respect to issues of local law.”). Third Circuit cases “are merely persuasive authority if the case was before that court on appeal from ... the District Court of the Virgin Islands sitting as a federal trial court.” Ernest v. Morris, 64 V.I. 627, 630 (V.I. 2016). However, the Third Circuit’s standard in Lum v. Bank of America originated in New Jersey and is not a in case that can be traced to the Virgin Islands. 10 Such requirements are more appropriate in federal courts in which the more rigorous plausibility standard applies. Great St. Jim, LLC v. ProSolar System Case No. ST-19-CV-57 Cite as 2020 VI Super 25U Memorandum Opinion states that the date, place, and time are required.!! Rather, V.I. R. Civ. P. 9(b) requires the plaintiff to allege facts with sufficient specificity to put the defendant on notice of the plaintiffs claim. The Court finds that a complaint that alleges sufficient factual specificity satisfies V.I. R. Civ. P. 9(b) heightened requirement for claims of fraud.!2 B. Count II Satisfies the Pleading Requirement under V.I. R. Civ. P. 9(b) {11 ProSolar argues that Count II of GSJ’s complaint should be dismissed because it fails to satisfy the heightened pleading requirement. The Parties agree that if V.I. R. Civ. P. 9(b) is the appropriate standard by which to evaluate GSJ’s complaint, then GSJ’s complaint must satisfy a heightened pleading requirement. Citing to this Court’s decision in Tutu Park, Ltd. V. Harthman Leasing I, LLLP, No. ST-14-CV-456, 2016 WL 5853346 at *4 (V.I. Super. Ct. Sept. 27, 2016), ProSolar argues that V.I. R. Civ. P. 9(b) “requires a claimant to do more than the ‘usual investigation’ before filing his fraud claim.” Specifically, ProSolar argues that GSJ must have alleged precise information, mirroring that required by the Third Circuit, including the “date, time, 11 GSJ also argues this point, citing Merchants Commercial Bank v. Oceanside Vill., Inc., No. ST-2011- CV-653, 2015 WL 9855658 at *9 (V.I. Super. Ct. Dec. 18, 2015) for support. However, since this case was decided before the Virgin Islands Rules were set forth and before the notice pleading standard was restored, the Court refrains from using this case, and others of the like, as support. 12 The Court clarifies that the standard in VI. R. Civ. P. 9(b) is one that demands less than the three- pronged plausibility analysis applied by federal courts, but more than the notice pleading standard for non-fraud claims under V.I. R. Civ. P. 8(a). Great St. Jim, LLC v. ProSolar System Case No. ST-19-CV-57 Cite as 2020 VI Super 25U Memorandum Opinion and place of the alleged fraud or misrepresentation,” for Count II of their complaint to satisfy V.I. R. Civ. P 9(b). ProSolar argues that GSJ failed to satisfy this requirement because the complaint only contains the date of “November 2016” and “does not state when the solar power system was installed, the warranty was purchased, or when the Plaintiffs noticed the alleged deficiencies within the system and warranty.” ProSolar explains that without such information, ProSolar cannot identify the exact date of the alleged fraud. ProSolar also argues that GSJ only makes “overly general statements” of fraudulent misrepresentation and fails to “specify what exactly ProSolar knew and when they knew it.” 412 The Court finds that nothing in the text of, nor case law relevant to V.I. R. Civ. P. 9(b) requires the plaintiff to state the specific date, time, or place of the alleged fraud, or to allege what the defendant knew and when they knew it. The Court finds that such demands go beyond the parameters of the notice pleading standard as it applies to V.I. R. Civ. P. 9(b). The cases cited by ProSolar concern Fed. R. Civ. P. 9(b) and were not analyzed under a notice pleading standard. Ordinarily, local case law concerning federal rules would be highly persuasive to this court, since the language of the federal rules are identical or very similar to that adopted by the Virgin Islands. However, as a notice pleading jurisdiction, there are variances and the cases cited by ProSolar were decided prior to the restoration of the notice pleading standard and include reasoning predicated on the plausibility standard. This standard would require more definitive factual allegations, such as those required by the Third Great St. Jim, LLC v. ProSolar System Case No. ST-19-CV-57 Cite as 2020 VI Super 25U Memorandum Opinion Circuit, in order to satisfy the more rigorous three-pronged analysis. However, since the plausibility standard is no longer applied by Virgin Islands courts, decisions applying or predicated on that standard are no longer relevant to this Court’s analysis. While V.I. R. Civ. P. 9(b) implies a heightened standard, the standard is not so demanding as to go beyond the notice pleading standard entirely. As such, the Court finds that all that is required for a complaint for fraud to survive a motion to dismiss, is that the claim is pled with enough factual specificity to put the defendant on notice. 413 Here, GSJ alleges that, in or about November 2016—when GSJ purchased a solar power system and warranty from ProSolar—ProSolar “represented to GSJ that it could provide a fully functional solar power system and [that] it would provide for all of GSJ’s power needs on an uninterrupted basis.” GSJ further alleges that: *“ProSolar was well aware that it could not provide such a system,” *ProSolar “intentionally misrepresented its ability to provide such a system,” -ProSolar “promoted and sold GSJ a warranty which ProSolar claimed would cover replacement parts among other things,” * “at the time ProSolar sold the warranty, ProSolar knew it had no ability to guarantee that any replacement parts existed or would exist in the future,” and *ProSolar “intentionally misrepresented its ability to provide [a fully functioning solar power system].” Great St. Jim, LLC v. ProSolar System Case No. ST-19-CV-57 Cite as 2020 VI Super 25U Memorandum Opinion The Court finds that these allegations are sufficiently specific to satisfy V.I. R. Civ. P. 9(b)’s particularity requirement. GSJ alleges the “specific misrepresentations known by ProSolar to be false when made” and alleges that ProSolar “intended GSJ to rely on those misrepresentations,” which GSJ did “to its detriment.” The Court finds that these factual allegations are sufficiently specific so as to adequately state and put ProSolar on notice of GSJ’s claim for fraud. CONCLUSION 414 The Court finds that GSJ’s fraud claim is distinct from its claim for breach of contract. So, GSJ’s fraud claim is not barred by the gist of action doctrine. GSJ has also pled sufficient facts to satisfy a heightened pleading requirement for V.I. R. Civ. P 9(b). Therefore, the Motion to Dismiss will be denied. An Order consistent with this opinion will immediately follow. DATED: February “> , 2020 GOCE Aig ¥ Kathleen Mackay Judge of the Superior Court of the Virgin Islands ATTEST: DONNA DONOVAN J Court Clerk Supervisor a / (3 / dO aD