USVI Public Records

Document text

IN THE SUPERIOR COURT OF THE VIRGIN ISLANDS DIVISION OF ST. THOMAS AND ST. JOHN KEEE KIWI CONSTRUCTION, LLC, Case No. ST-2013-CV-11 Plaintiff, Vv. PAUL PONO, LANNY ROBERTS and BIG BEAR CONSTRUCTION, INC., Defendants. BIG BEAR CONSTRUCTION, INC., PAUL Case No. ST-2013-CV-0000670 PONO and LANNY ROBERTS, (formally Case No. ST-2013-TOR- 20) Plaintiffs, v. JURY TRIAL DEMAND PHILIP HOLFORD and KIWI CONSTRUCTION, LLC, Defendants. Nome” Nome? “ume! Nome Nome! Nume Neee” Ne” Nee pee ee” Nee Ne Sn Nee Nee te Nee” See Nee Nee ee MEMORANDUM OPINION AND ORDER Before the Court is Philip Holford’s Motion to Intervene by Third-Party Beneficiary Tom Secunda and Big Bear Holdings, LLC, by and through Assignee Philip Holford and Brief in Support, which was filed on October 21, 2016. Paul Pono, Lanny Roberts, and Big Bear Construction, Inc. (herein collectively referred to as “Big Bear’) filed an Opposition on November 21, 2016. Holford filed a Reply on December 8, 2016. Holford files his Motion to Intervene as an assignee of Thomas Secunda and Big Bear Holdings, LLC’s’ purported third-party beneficiary rights under a pertinent general contractor-subcontractor agreement (Tom Secunda and Big Bear Holdings are herein collectively referred to as “Secunda”). Neither the Motion to Intervene nor Reply specifies whether Holford seeks to intervene in the above-captioned matter with case number ST-2013-CV-11, ST-2013-CV-0000670, or both. In addition, the caption on the proposed complaint attached to the Motion to Intervene does not depict Holford as either a plaintiff or counterclaimant.* However, considering that Holford seeks to assert claims against Big Bear and his claims derive from the alleged breach of the subcontractor agreement, it logically follows that Holford seeks to intervene in ST-2013-CV-11. On August 30, 2016, the Court issued a Memorandum Opinion and Order denying Holford’s previously filed motion attempting to intervene as Secunda’s assignee. The Court found that the assignment of rights was invalid because it lacked adequate consideration. The present assignment includes consideration of one thousand ($1,000) in exchange for Secunda’s purported } Holford informs the Court that Big Bear Holdings and Big Bear Construction are unrelated and the similarity of their names is coincidental. 2 Mot. to Intervene, Ex. 2, Compl. of Third-Party Beneficiaries Tom Secunda and Big Bear Holdings, LLC [. . .] Against Big Bear Construction, Inc. [ . . .] Kiwi Construction, LLC v. Pano, et al. Case No. ST-2013-CV-11 & ST-2013-CV-670 Memorandum Opinion and Order right to bring an action against Big Bear. The Court determines that the second assignment includes adequate consideration. Therefore, the Court will proceed to determine if Holford should be allowed to intervene in ST-13-CV-11. BACKGROUND Kiwi Construction, LLC (“Kiwi”) and Big Bear are parties to a Subcontractor Agreement.* Big Bear agreed to perform all concrete work on real property know as Parcel No. 5A, Estate Peter Bay, St. John, Virgin Islands.* Thomas Secunda is the alleged owner of the real property and sought to build a personal residence on the parcel.> Philip Holford is president of Kiwi. On January 8, 2013, Kiwi filed a multi-count complaint against Big Bear alleging that Big Bear breached the Subcontractor Agreement by failing to perform certain work and not meeting workmanship standards mandated in the Subcontractor Agreement.° The Subcontractor Agreement includes a provision requiring Kiwi and Big Bear to attempt to mediate disputes arising out of the agreement and, if mediation fails, to submit disputes to binding arbitration. Accordingly, after they failed to reach a settlement in mediation, the Court stayed all claims asserted by Kiwi against Big Bear pending completion of arbitration.’ On September 24, 2015, Arbitrator Reynaldo Quifiones-Marquez issued an Award by the Arbitrator.’ The Arbitrator found that Big Bear breached the Subcontract Agreement and the “additional costs required to fix the defense work and to complete the project were $569,436.47.” However, he determined that “Kiwi is not entitled to an award of damages for fixing and finishing what [Big Bear] should have performed under the Subcontract, because those costs were paid and assumed by The Owner [Secunda] and not Kiwi.”"° The arbitrator also awarded Big Bear damages totaling $181,204.87 resulting from Kiwi’s conversion of Big Bear’s tools, materials, and equipment.'! Secunda did not participate in the arbitration. '? Holford seeks to intervene as an assignee of Secunda’s purported third-party beneficiary rights under the Subcontractor Agreement. Holford filed an initial motion to intervene as Secunda’s assignee on February 12, 2016. However, the Court determined that the assignment was invalid due to lack of consideration.'* On October 19, 2016, Secunda executed another Assignment of Claim for Damages, assigning to Holford all his claims against Big Bear arising out of the concrete work at Parcel No. 5A, Estate Peter Bay.'* This assignment was provided in exchange for * Mot. to Intervene, Ex. B, Subcontractor Agreement (executed on June 9, 2011). 4d. 5 Big Bear contests that Secunda is the owner of the parcel. Def.’s Opp. to the Second Mot. to Intervene 2. However, for the limited purpose of determining whether the Motion to Intervene is timely, the Court will assume Secunda is the owner and intended third-party beneficiary of the Subcontractor Agreement. © Kiwi Construction, LLC v. Pono, et al., Case No. ST-2013-CV-11, Compl., at 1, 4] 6 (filed on Jan. 8, 2013). 7 Order (Apr. 14, 2014). * Mot. to Intervene, Ex. 1, Award by the Arbitrator (Sept. 24, 2015). 9 Id. at 10, Jf 28, 29. 19 fg at 11,937. "l fd. at 25,99. 2 id. at 20, 42. ‘3 Memorandum Opinion and Order (Aug. 30, 2016). '4 Mot. to Intervene, Ex. F, Assignment of Claim for Damages (executed on Oct. 19, 2016). Kiwi Construction, LLC v, Pono, et al. Case No. ST-2013-CV-11 & ST-2013-CV-670 Memorandum Opinion and Order “$1,000.00 and . . . Eighty Percent (80%) of any amounts recovered by Holford against Big Bear and its principals . . ..”'> Holford, as Secunda’s assignee, secks to intervene about three (3) years after Kiwi’s complaint in ST-2013-CV-11 was filed. The complaint filed by Holford alleges similar claims as those alleged in the complaint filed by Kiwi. However, Holford’s complaint extensively cites to the Arbitrator’s Award when pleading facts and assertions of law. STANDARD FOR INTERVENTION Virgin Islands Rule of Civil Procedure 24 governs motions to intervene in a lawsuit.'© A person or entity can intervene as a right or pursuant to a court’s discretion. V.1. R. Civ. P. 24 (a)(2) provides that, “[o]n timely motion, the court must permit anyone to intervene who: . . . claims an interest relating to the property or transaction that is the subject of the action, and is so situated that disposing of the action may as a practical matter impair or impede the movant's ability to protect its interest, unless existing parties adequately represent that interest.” To determine if an application for intervention as a right should be granted, the Court must consider the following four requirements that must be met: (1) the application for intervention is timely; (2) the applicant has a sufficient interest in the litigation; (3) the interest may be affected or impaired, as a practical matter by the disposition of the action; and (4) the interest is not adequately represented by an existing party in the litigation.'’ “The applicant bears the burden of persuading the court that each element is met.”!* V.I. R. Civ. P. 24(b)(1)(B) provides that, “[o]n timely motion, the court may permit anyone to intervene who: .. . has a claim or defense that shares with the main action a common question of law or fact.” When exercising its discretion under Rule 24(b){1)(B), a “court must consider ete intervention will unduly delay or prejudice the adjudication of the original parties’ rights.” A. Standard for Determining Timeliness of a Rule 24 Motion The Supreme Court of the Virgin Islands has instructed that determining the timeliness of an application for intervention requires a review of the totality of circumstances.”° “Whether the litigation has reached a stage that is too advanced for a motion to intervene to be deemed timely depends on the circumstances of each particular case.”*! Adopting analysis provided the U.S. Court of Appeals for the Third Circuit, the V.I Supreme Court held that a court should consider the following three factors: (1) the stage of the proceeding; (2) the prejudice that delay may cause 15 Id. 16 Philip Holford, as Secunda’s assignee, filed his Motion to Intervene under Federal Rule of Civil Procedure 24, pursuant to the now-amended Superior Court Rule 7. However, considering that the pertinent text of Federal Rule of Civil Procedure 24 and Virgin Islands Rule of Civil Procedure 24 are identical, the Court determines it would not be unfair or work an injustice to apply the Virgin Islands rule. '7 Anthony v. Indep. Ins. Advisors, Inc., 56 V.1. 516, 526 (V.1. 2012) (“Harris v. Pernsley, 820 F.2d 592, 597 (3d Cir. 1987)). 18 I. MVR. Civ. P. 24(b)(3). 20 Anthony, 56 V.I. at 527. 2! Id, at 528. Kiwi Construction, LLC vy. Pono, et al. Case No, ST-2013-CV-11 & ST-2013-CV-670 Memorandum Opinion and Order the parties; and (3) the reason for the delay.” While “[{t]he mere passage of time does not render an application untimely,””> “the later in the procecdings the motion [to intervene] comes, the more compelling the justification for that delay must be.””4 ANALYSIS A. The Court Determines that the Motion to Intervene Was Not Filed Timely. Holford asserts he should be allowed to intervene both as a right and pursuant to the Court’s discretion. Therefore, the Court will consider the Motion under both Rule 24(a) and 24(b). Big Bear argues that the Motion to Intervene was filed untimely.*> Timeliness is a required element under both rules. The Court will determine the timeliness of the Motion to Intervene based on the filing date of Holford’s first motion to intervene. Holford filed his first motion to intervene over three years after Kiwi filed its complaint in ST-13-CV-11. Kiwi filed its complaint on January 8, 2013 and Holford filed the first motion to intervene on February 12, 2016. While Big Bear claims Secunda participated in the mediation between the parties, it provides no evidence supporting this proffer.”° However, the Award by the Arbitrator reveals that Secunda “did not file a claim against [Big Bear] and was not part of the Arbitration proceedings.”*” The Court considers three years to be a significant passage of time to intervene in a lawsuit. Because the parties are bound by the Arbitrator’s Award, these proceedings have bypassed the substantive discovery stage.”* In a January 15, 2016 Order, the Court confirmed the Arbitrator’s Award and held it should be treated as a judgment entered by the Superior Court. At this stage, Big Bear seeks to execute on said judgment. Allowing Secunda to intervene creates a concern that discovery in this matter might have to be reopened to allow Holford to develop his case and to allow Big Bear to develop a defense. Reopening discovery would further delay this matter’s resolution and increase litigation costs. In its Reply, Holford proffers that no further discovery would be needed because all relevant facts are set forth in the Arbitration Award and, therefore, he would not need to engage in discovery to develop facts for his claims.” The complaint attached to the Motion to Intervene cites the Arbitrator’s Award to support its pleadings.*° However, this brings up the question of whether Big Bear should be bound by the factual findings provided in the Arbitrator’s Award with regards 22 Td. at 527. 3 Id. 24 Id, at 528. 25 Def.’s Opp. to the Second Mot. to Intervene 5. 26 Big Bear references the Mediation Report in the record, which makes no reference to Secuda. 2” Award by the Arbitrator 20, § 2. 28 The parties still can engage in discovery to aid in the enforcement of a judgment. 29 Reply to Opp. to Mot. to Intervene 8 (“As the Arbitration Award already has determined all of the facts at issue between Secunda and Defendants, there would be no delay to the existing parites by allowing the claims of Secunda to be added to this suit”). 3° Mot. to Intervene, Ex. 2, Compl. of Third-Party Beneficiaries Tom Secunda and Big Bear Holdings, LLC [. . .] Against Big Bear Construction, Inc. [ . . .] Kiwi Construction, LLC v. Pono, et al. Case No. ST-2013-CV-11 & ST-2013-CV-670 Memorandum Opinion and Order to Secunda’s claims. While Big Bear and Kiwi agreed to arbitrate disputes,>' Big Bear and Secunda have not agreed to be bound by an arbitrator’s conclusions. Accordingly, the Court must determine whether a nonparty to an arbitration agreement can assert collateral estoppel to preclude a party from making arguments and proffers in contradiction to an arbitrator’s findings of fact. 1. The Court Holds that Nonmutual Collateral Estoppel Does Not Apply to Arbitration Awards. Virgin Islands court have recognized the common law doctrine of collateral estoppel.*” Collateral estoppel is also referred to as issue preclusion. The V.I. Supreme Court stated “[c]ollateral estoppel means simply that when an issue of ultimate fact has once been determined by a valid and final judgment, that issue cannot again be litigated between the same parties in any future lawsuit.”*> Issue preclusion in favor of a nonparty is sometimes referred to as nonmutual collateral estoppel. Arbitration in the Virgin Islands is governed by common law™ and the V.I. Supreme has not addressed whether a nonparty can assert issue preclusion against a party to an arbitration. Therefore, to determine whether it should apply the doctrine of nonmutual collateral estoppel to arbitration awards, the Court must consider the factors provided in Banks v. International Leasing and Rental Corp. Specifically, the Court must 1) determine whether any Virgin Islands courts have previously adopted a rule, 2) determine the position taken by a majority of courts from other jurisdictions, and 3) identify the soundest rule for the Virgin Islands.*° Whether a nonparty to an arbitration can assert issue preclusion against a party appears to be a question of first impression for the Superior Court. In addition, this issue has not been addressed by most jurisdictions within the United States. Of the jurisdictions that have adopted a rule, the majority holds that a nonparty can use an arbitrator’s award to assert nonmutual collateral estoppel.*” In contrast, courts in California and Utah have held only parties to an arbitration agreement can use an arbitrator’s award to assert collateral estoppel.** 31 Subcontractor Agreement ] 10. ® See Stewart v. V.1. Bd. of Land Use Appeals, No. 2014-0067, 2017 V.1. Supreme LEXIS 25, at *36 (V.I. Apr. 26, 2017); Gilbert v. People of the Virgin Islands, 52 V.1. 350, 364 (V.1. 2009). BGilbert, 52 V.1. at 364 (citing Ashe v. Swenson, 397 U.S. 436, 443 (1970)). 4 Gov't of the V.1, Dep't of Ed. v. St. Thomas/St. John Educ. Adm'rs Ass'n, Local 101, No. 2016-0105, 2017 V.L. Supreme LEXIS 40, at *13 (V.I. July 20, 2017). 33 Banks v. Int'l Rental & Leasing Corp., 55 V.1. 967 (V.1. 2011). %® Gov't of the V.I. vy. Connor, 60 V.1. 597, 600 (V.I. 2014). 7 See Riverdale Dev, Co., LLC vy. Ruffin Bldg. Sys., 146 S.W.3d 852 (Ark. 2004) (‘a valid and final award by arbitration has the same effects under the rules of res judicata, subject to the same exceptions and qualifications, as a judgment of a court”); Russo v, Allstate Ins. Co., Case No. CV 940123171, 1997 Conn. Super. LEXIS 3359, at *5-6 (Conn. Super. Ct. Dec. 16, 1997) (“the plaintiff had a full and fair opportunity to litigate his [prior arbitration] claim. Therefore, it was fair to preclude him, on the basis of the accepted public policy reason behind collateral estoppel, from relitigating the same issue with a second party”); Bailey v. Metro. Prop. & Liab. Ins, Co., 505 N.E.2d 908 (Mass. App. Ct. 1987); Konieczny v. Micciche, 702 A.2d 831, 836-837 (N.J. Super. 1997); Ray v. Cont'l Western Ins. Co., 920 F. Supp. 1094 (D. Nev. 1996); Cities Service Co, v. Gulf Oil Corp. 980 P.2d 116, 123-130 (OkI. 1999); Western Indus, v. Kaldveer Assocs., 887 P.2d 1048, 1050-1052 (Idaho 1994); Aufderhar y. Data Dispatch, Inc., 452 N.W.2d 648, 650-654 (Minn. 1990); Clemens v. Apple, 102 A.D.2d 236 (N.Y. App. Div. 1984) affd. 481 N.E.2d 560, 561 (N.Y. 1985); Lunde v. Batchelder, 125 A.3d 903 (Vt. 2015) (unpublished) (“‘{a] third party [can] use a prior arbitration award to bind another party as long as the general requirements for collateral estoppel are met”). 38 Vandenberg v. Superior Court, 982 P.2d 229 (Cal. 1999) (“California's statutory scheme nowhere specifies that, despite the arbitral parties’ failure to so agree, a private arbitration award may be binding in favor of nonparties in litigation involving different causes of action”); Buckner v. Kennard, 99 P.3d 842, 849 (Utah 2004). Kiwi Construction, LLC v. Pono, et al. Case No. ST-2013-CV-11 & ST-2013-CV-670 Memorandum Opinion and Order Courts in the majority camp note that it is ubiquitously accepted that a confirmed arbitrator’s award is treated as a judgment entered by a court. Accordingly, they reason that an arbitrator’s award should have the same preclusive effect as a judgment by a court would have on nonparties. These courts also consider if a party against whom collateral estoppel is asserted had a full and fair opportunity to litigate his prior arbitration claim and if he agreed to be bound by an arbitrator’s findings of fact and conclusions of law.°? The Supreme Court of California in Vandenberg v. Superior Court provided an extensive discussion on the arguments for and against allowing nonparties to use an arbitrator’s award to assert collateral estoppel. The California Supreme Court ultimately decided not to follow the majority and, instead, held that a nonparty could not assert collateral estoppel. The court stated that the primary purposes of collateral estoppel are to “preserve the integrity of the judicial system, promote judicial economy, and protect litigants from harassment by vexatious litigation.*° It reasoned that “because a private arbitrator's award is outside the judicial system, denying the award collateral estoppel effect has no adverse impact on judicial integrity.”*' In addition, because arbitration does not involve the use of the judicial system, “later relitigation does not undermine judicial economy by requiring duplication of judicial resources to decide the same issue.” “Finally, when collateral estoppel is invoked by a nonparty to the private arbitration, the doctrine does not serve the policy against harassment by vexatious litigation.” Like the California Supreme Court,” this Court also realizes that an arbitration agreement is a contract and the extent of its effect on future litigation is limited to the terms of the agreement. Confirmation of an arbitrator’s award is fundamentally an enforcement of a contract to arbitrate disputes.** The primary purpose of contract interpretation is to ascertain and give effect to the parties' objective intent.*° Parties to an arbitration agreement agree to limit the judicial system’s ability to adjudicate their disputes. They voluntarily trade the safeguards and formalities of litigation for an expeditious and ostensibly less costly means of resolving disputes.*’ Parties must make tactical determinations regarding whether foregoing the protections and formalities provided by courts, such as rules concerning evidence and discovery, is worth avoiding the costs and time typically involved with litigation. To make such calculation, parties must consider the potential disputes and liabilities that may arise out of their relationship. It is especially important that a party make an astute decision »° See, e.g., Russo, 1997 Conn. Super. LEXIS 3359, at *5-6. © Vandenberg, 982 P.2d at 240. 4" Id. 2 Id. 8 fd. 4 Id. at 238. 45 See Gov't of the V.,, Dep't of Ed, 2017 V.1. Supreme LEXIS 40, at *20 (“we anchor our search for the soundest rule of law for the Virgin Islands to the principles that arbitration is a matter of contract); see also Order 2 (Jan. 15, 2016) (“by confirming the arbitration award between Kiwi and Big Bear, this Court is doing nothing more than effectuating the result agreed to by the parties”). 4 Gov't of the V.1., Dep't of Ed., 2017 V.1. Supreme LEXIS 40, at *20 (“courts should strive to most appropriately implement the intent of the parties [to an arbitration agreement]); Phillip v. Marsh-Monsanto, No. 2015-0040, 2017 V.I. Supreme LEXIS 30, at *15 (V.I. May 30, 2017). 47 Gov't of the V.L, Dep't of Ed., 2017 V.1. Supreme LEXIS 40, at *21 (“by consenting to binding arbitration, parties relinquish the legal and procedural safeguards that accompany judicial proceedings”). Kiwi Construction, LLC v. Pone, et al. Case No. ST-2013-CV-11 & ST-2013-CV-670 Memorandum Opinion and Order to bind itself to arbitration considcring that an arbitrator’s award is not subject to judicial review due to misapplication of the law, unlike a trial court’s ruling.“* In addition, an arbitration agreement typically specifies that the parties agrec to arbitration disputes among themselves, which indicates that the parties considered the potential disputes and liabilities arising within the universe of their relationship, as opposed to other persons who could bring a claim. The Court finds that, unless otherwise specified, it would be unreasonable to assume that a party meant for an arbitration proceeding to apply to claims brought by nonparties. Therefore, the Court chooses to adopt the minority approach and rejects the application of nonmutual collateral estoppel to arbitration agreements, unless an arbitration agreement provides for such relief to nonparties. 2. Secunda Would Be Unable to Assert Nonmutual Collateral Estoppel and, Therefore, He and Big Bear Would Have to Engage in Discovery. The arbitration provision in the Subcontractor Agreement provides in pertinent part “any dispute [not resolved in mediation] shal! be submitted to binding arbitration under conducted [sic] pursuant to the rules of the American Arbitration Association and conducted in the United States Virgin Islands on the Island of St. Thomas or St. John.”*? The arbitration provision does not provide that an arbitrator’s award is binding with regards to claims brought by nonparties. Therefore, the findings of fact provided in the Arbitrator’s Award are not binding upon Big Bear with regards to Secunda’s complaint. As such, Secunda and Big Bear would have to conduct discovery to develop factual assertions. 3. Due to the Late Stage of These Matters’ Proceedings and Holford’s Failure to Explain His Delay in Seeking to Intervene, the Court Determines that the Motion to Intervene is Untimely. First, the Court notes that Holford’s pleadings are bereft of reasons why he waited for three years after the commencement of ST-2013-CV-11 before seeking to intervene. A review of the record does not reveal when Secunda became aware of the dispute from which ST-2013-CV-11 arose. The Arbitrator’s Award reveals that Secunda did not take part in the arbitration proceedings. However, it is Holford’s burden, as an applicant for intervention, to demonstrate the Motion to Intervene was filed timely. Second, the late stage of these matters’ proceedings weighs against granting the Motion to Intervene. The Court has confirmed the Arbitrator’s Award*! and these matters are currently at the judgment enforcement stage. Third, the Court does not find that allowing Holford to intervene would cause Big Bear to suffer greater litigation costs than if Holford initiated a separate action against Big Bear. 48 See id, at *23. 49 Subcontractor Agreement ¥[ 10. 50 Award by the Arbitrator 20, { 2. 5! Order (Jan. 15, 2016). 52 See Order (Aug. 30, 2016) (granting Big Bear’s request for a judgment debtor’s examination). Kiwi Construction, LLC y. Pono, et al. Case No. ST-2013-CV-11 & ST-2013-CV-670 Memorandum Opinion and Order Upon review of the above-factors, the Court determines that the Motion to Intervene is not timely filed. ST-2013-CV-11 is in the final phase and allowing Holford to intervene would require the Court to reopen discovery. The Court takes into consideration that denying the Motion to Intervene will not unfairly prejudice Holford. The Court notes that Kiwi has initiated a separate action as Secunda’s assignee currently before Judge Renée Gumbs Carty.** Therefore, the Court will deny the Motion to Intervene. Accordingly, it is hereby ORDERED that Philip Holford’s Motion to Intervene by Third-Party Beneficiary Tom Secunda and Big Bear Holdings, LLC, by and through Assignee Philip Holford and Brief in Support is DENIED as untimely; and it is further ORDERED that a copy of this Memorandum and Order shall be directed Attomey Charlotte K. Perrell of Dudley, Topper and Feuerzeiz, LLP and Attorney Anna H. Paiewonsky of the Paiewonsky Law Firm, PLLC. Dated: Sept lt ,2017 DENISE M. FRANCOIS Judge of the Superior Court of the Virgin Islands *3 Kiwi Construction, LLC v, Paul Pono et al., Case No. ST-16-CV-338, Compl. (filed on June 14, 2016). While Kiwi asserts itself as Secunda’s assignee in ST-16-CV-338, the assignment attached to the complaint still names Holford as the assignee. Therefore, even though the complaint in ST-16-CV-338 was brought by Kiwi, the Court finds Holford is not prejudiced by denial of the Motion to Intervene.