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IN THE SUPERIOR COURT OF THE VIRGIN ISLANDS DIVISION OF ST. THOMAS AND ST. JOHN FIRSTBANK PUERTO RICO, ) ) Plaintiff, ) CASE NO. ST-12-CV-239 v. ) ) ACTION FOR DEBT, ) FORECLOSURE OF EDMOND WEBSTER a/k/a EDMOND R. WEBSTER, ) LIENS, and SPECIFIC BERNICE WEBSTER, CLEVE E. WEBSTER a/k/a) PERFORMANCE CLEVE WEBSTER, OASIS DEVELOPMENT, LLC, ) and TRIUMPH DEVELOPMENT, LLC, ) ) Defendants. ) ) MEMORANDUM OPINION Pending before the Court is Plaintiff's motion for summary judgment on Count III of Defendants’ Counterclaim.' For the following reasons, Plaintiffs motion for summary judgment will be granted. FACTUAL AND PROCEDURAL HISTORY On January 17, 2013, the Court denied Plaintiff's motion to dismiss Count III of Defendants’ Counterclaim, which adequately stated a claim for breach of the implied duty of good faith and fair dealing. STANDARD Rule 56 of the Federal Rules of Civil Procedure, made applicable to the Virgin Islands Superior Court through Rule 7 of the Rules of the Superior Court, provides that summary judgment is appropriate only “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a dlaintiff filed its motion on March 22, 2013. FirstBank v. Webster, et al. Case No. ST-12-CV-239 Memorandum Opinion, March 7, 2014 Judgment as a matter of law.” In considering a motion for summary judgment, a court must “draw ... all reasonable inferences from the underlying facts in the light most favorable to the non-moving party.” An issue is “genuine” if a reasonable jury could possibly hold in the non-movant’s favor with regard to that issue. ANALYSIS “To succeed on a breach of contract claim, a plaintiff must show four elements: (1) an agreement, (2) a duty created by that agreement, (3) a breach of that duty, and (4) 2 Count III of the Counterclaim is governed by Restatement (Second) of damages.” Contracts § 205,? which provides that: “[e]very contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.” In order to state a claim for breach of the implied duty of good faith and fair dealing in the Virgin Islands, a plaintiff must allege: “(1) that a contract existed between the parties, and (2) that, in the performance or enforcement of the contract, the opposing party engaged in conduct that was fraudulent, deceitful, or otherwise inconsistent with the purpose of the agreement or the reasonable expectations of the parties.” Arlington Funding Services, Inc. v. Geigel, 2009 WL 357944, at *8 (V.I. 2009). 3 In Banks v. Int’l Rental & Leasing Corp., 55 V.1. 967 (V.I. 2011), the Supreme Court of the Virgin Islands held that, while the Restatements may be persuasive authority in determining the common law, they are no longer binding legal authority in this jurisdiction pursuant to 1 V.I.C. § 4. Notwithstanding, in Chapman v. Cornwall, S. Ct. Civ. No. 2012-0032, 2013 WL 2145092, at *5 (V.I. 2013) the Virgin Islands Supreme Court affirmed the Superior Court’s grant of summary judgment based on a party’s failure to establish a genuine dispute of material fact concerning a breach under Restatement (Second) of Contracts § 205. Accordingly, a Banks analysis is not necessary in this case. “ LPP Mortgage Ltd. v. Prosper, 2008 WL 5272723, at *2 (D.V.1 Dec. 17, 2008) (citing Restatement (Second) of Contracts § 205). The District Court developed this element test after evaluating the comment sections of Restatement (Second) of Contracts § 205. FirstBank v. Webster, et al. Case No. ST-12-CV-239 Memorandum Opinion, March 7, 2014 Considering that it is undisputed that the parties entered into several loan agreements, the Court will evaluate Count III in light of the second prong of the two part test. In his affidavit,” Mokiri N’Sele® attests that the statements in Plaintiff's Statement of Undisputed Material Facts (“SOF”) are true. The SOF indicates that N’Sele asked Cleve Webster and Edmond Webster if they wanted him to make some calls to “private lenders” to explore if the lenders would be willing to provide short term financing to pay off the Construction Loan and provide some working capital.’ According to N’Sele, CW and EW asked N’Sele to make inquiries on their behalf.2 On or about January 12, 2011, N’Sele approached a private lender and discussed with him the possible private lending arrangement.” N’Sele then sent an email to CW and EW informing them what N’Sele learned during the conversation with the private lender.'? None of the Defendants responded to the email." In CW’s affidavit, submitted in support of Defendants’ Counter Statement of Undisputed Material Facts (“CSOF”), CW indicated that N’Sele had talked to a private investor who could offer Defendants third-party financing.!* CW also stated that he told Mr. Cassan Pancham’? that he and his parents “had decided not to accept the third-party ° Attached as Exhibit 1 to Plaintiffs motion for summary judgment. * In 2011, N’Sele was FirstBank’s Vice President of Commercial Banking. ” Plaintiff's Statement of Undisputed Material Facts (“SOF”), dated October 3, 2013, at paragraph 22. * id. *id., at paragraph 23 * ig., at paragraph 24 ™ Id., at paragraph 25. ” cw’s affidavit, at paragraph 31. 13 1m 2011, Pancham was a Senior Vice President at FirstBank. FirstBank v. Webster, et al. Case No. ST-12-CV-239 Memorandum Opinion, March 7, 2014 financing offer that Mr. N’Sele had made to [them].”!* Defendants’ CSOF also refers to the email N’Sele sent to CW on Wednesday, January 12, 2011, describing the particulars of the third-party financing proposal.'> The bottom of the January 12, 2011, email contains a separate undated correspondence between what would appear to be CW and N’Sele. The email states: Good morning Mokiri: Thanks for the visit on Sunday. I sat with my parents Sunday evening and briefly discussed with them the investors you mentioned you have that can help us payoff First Bank and get us back on a steady footing. When you and your investors respond please do so via email, whereby my parents can read a hard copy instead of text message on my phone which they can’t read. Lets see if we can get some movement. Thank you. P.S. They are interested in see the proposal. In Exhibit Z-2 to the CSOF, Defendants submitted text message correspondence between N’Sele and CW in which the parties arranged to meet on Sunday, January 9, 2011, and appeared to meet on that date. Defendants’ own exhibits indicate that Defendants were in favor of N’Sele taking action to acquire third-party financing for them. Even if the contents of Defendants’ Exhibits Z-2 and Z-3 are ignored, CW’s affidavit indicates that Defendants did not object to N’Sele’s efforts to acquire third-party financing. Instead, Defendants evaluated the financing proposal N’Sele described to them. Although Defendants ultimately decided to decline the third-party financing offer, CW’s affidavit indicates that Defendants ratified N’Sele’s actions to acquire third-party financing for them.'° In addition, Defendants have 4 cw’s affidavit, at paragraph 32. * See Exhibit Z-3 to Defendants’ CSOF. ® cee Regan v. Estate Questa Verde, 2006 WL 3613280, at *4 (D.V.I. App. Div. 2006) (quoting Restatement (Third) of Agency § 4.01 and comments b, f (2006) (“If the principal ratifies the agent's act, it is thereafter not necessary to establish that the agent acted with apparent authority;” noting that the failure to act or ” » ~ FirstBank v. Webster, et al. Case No. ST-12-CV-239 Memorandum Opinion, March 7, 2014 Page SofS presented no evidence refuting N’Sele’s assertion that he disclosed Defendants’ financial information to a private investor only after acquiring Defendants’ permission to acquire third-party financing on their behalf. Drawing all reasonable inferences from the underlying facts in the light most favorable to the non-moving party, the Court finds that Defendants have not presented any evidence of behavior on the part of Plaintiff that was fraudulent, deceitful, or otherwise inconsistent with the purpose of the loan agreements or the reasonable expectations of the parties. In addition, Defendants have not provided any evidence suggesting that the disclosure of their financial information to a private investor caused them any injury. As a result, there is no genuine issue of material fact as to whether Plaintiff breached the implied duty of good faith and fair dealing or as to whether Plaintiff caused Defendants to suffer damages. Accordingly, Plaintiff's motion for summary judgment dismissing Count III of Defendants’ Counterclaim will be granted and the Counterclaim will be dismissed with prejudice.'” Dated: March 7 , 2014 HON. MICHAEL C. DUNSTON JUDGE OF THE SUPERIOR COURT ATTEST: Estrella George ; OF THE VIRGIN ISLANDS repudiate the actions may also amount to ratification)). As the holdings of the Appellate Division of the District Court are binding on the Superior Court, a Banks analysis is not necessary. 7 On January 17, 2013, the Court dismissed all the other counts of Defendants’ Counterclaim.