Petition for Writ of Certiorari — Warren Mosler, et al., Petitioners v. Joseph Gerace, et al.
Supreme Court briefApr 2, 2024
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No. 23–_____
In the
Supreme Court of the United States
————¨————
WARREN MOSLER, CHRIS HANLEY,
AND CHRISMOS CANE BAY, LLC,
Petitioners,
v.
JOSEPH GERACE AND VICTORIA VOOYS
D/B/A CANE BAY BEACH BAR,
Respondents.
————¨————
ON PETITION FOR A WRIT OF CERTIORARI
TO THE SUPREME COURT OF THE VIRGIN ISLANDS
————¨————
PETITION FOR WRIT OF CERTIORARI
————¨————
Andrew C. Simpson
Counsel of Record
Andrew C. Simpson, P.C.
2191 Church St., Ste. 5
Christiansted, St. Croix
U.S. Virgin Islands 00820
340.719.3900
asimpson@coralbrief.com
www.coralbrief.com
i
QUESTION PRESENTED
The Supreme Court of the Virgin Islands ordered
entry of judgment against Petitioners on a theory that
was never pled;
was not identified in the Final Pretrial Order;
the jury was not instructed upon;
did not appear on the jury verdict form;
was not argued to the jury;
was not raised in a post-trial motion; and
was in favor of the Respondents even though they
did not sustain the putative damages.
While the question presented could be, “Does the
Rule of Law still apply in the U.S. Virgin Islands?”
Petitioner will state it in a more traditional format:
The question presented is:
Does Due Process allow an appellate court
to shortcut the trial proceedings; the jury
deliberations; and the verdict itself; and
ignore the plaintiffs’ corporate form and
enter judgment in favor of a corporation’s
shareholders for damages putatively
sustained by the corporation on a theory
never tried or presented to the jury?
ii
CORPORATE DISCLOSURE
Petitioner Chrismos Cane Bay, LLC is a limited
liability company whose sole members are coPetitioners Warren Mosler and Chris Hanley. No
publicly-owned company owns any portion of Chrismos
Cane Bay, LLC.
DIRECTLY RELATED PROCEEDINGS
•
Gerace, et al. v. Bentley, et al., Case No. SX2005-CV-00368, Superior Court of the Virgin
Islands. Order entered on Sept. 12, 2022.
Judgment in conformance with the mandate of
the Virgin Islands Supreme Court entered on
Feb. 13, 2024.
•
Mosler, et al. v. Gerace, et al., S. Ct. Civ. No.
2022-0049, Supreme Court of the Virgin Islands.
Judgment entered on January 3, 2024.
iii
TABLE OF CONTENTS
Question Presented . . . . . . . . . . . . . . . . . . . . . . . . . . i
Corporate Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . ii
Directly Related Proceedings. . . . . . . . . . . . . . . . . . . ii
Table of Authorities . . . . . . . . . . . . . . . . . . . . . . . . . vi
Opinion Below . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Jurisdiction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Statutory Provisions at Issue . . . . . . . . . . . . . . . . . . 1
Statement of the Case . . . . . . . . . . . . . . . . . . . . . . . . 1
Reasons for Granting the Petition. . . . . . . . . . . . . . . 5
A. The decision of the Supreme Court of the
Virgin Islands to enter—on appeal—a
judgment against Petitioners on an
unpled theory never considered by the
jury is contrary to this Court’s precedent
and an abandonment of the usual course
of judicial proceedings. . . . . . . . . . . . . . . . . . . 5
B. The decision of the Supreme Court of the
Virgin Islands to ignore the corporate
form and allow Respondents to pursue
damages on behalf of a corporation,
particularly when combined with the
decision to impose a verdict against
Petitioners on an issue not presented to
the jury, was such a far departure from
the accepted and usual course of judicial
proceedings as to justify this Court’s
intervention. . . . . . . . . . . . . . . . . . . . . . . . . . 10
iv
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Opinion
Virgin Islands Supreme Court
entered January 3, 2024 . . . . . . . . . . . . . . . A-1
Judgment
Virgin Islands Supreme Court
entered January 3, 2024 . . . . . . . . . . . . . . A-50
Opinion
Superior Court
of the Virgin Islands
entered September 12, 2022 . . . . . . . . . . . A-53
Judgment and Order
Superior Court
of the Virgin Islands
entered February 14, 2014 . . . . . . . . . . . A-126
Complaint, June 8, 2005 . . . . . . . . . . . . . . . . A-129
Joint Final Pretrial Order
entered August 5, 2021 . . . . . . . . . . . . . . A-141
Jury Instructions . . . . . . . . . . . . . . . . . . . . . . A-176
Plaintiff’s closing . . . . . . . . . . . . . . . . . . . . . . A-203
Plaintiff’s rebuttal . . . . . . . . . . . . . . . . . . . . . A-231
Jury Verdict Form . . . . . . . . . . . . . . . . . . . . . A-247
v
TABLE OF AUTHORITIES
PAGE(S)
CASES
Aetna Cas. & Sur. Co. v. P & B Autobody,
43 F.3d 1456 (1st Cir.), supplemented
sub nom. Aetna Cas. Sur. Co. v.
P & B Autobody, 43 F.3d 1546,
1994 WL 717998 (1st Cir. 1994) . . . . . . . . . . . . . . 8
Alford v. Frontier Enterprises, Inc.,
599 F.2d 483 (1st Cir. 1979) . . . . . . . . . . . . . . . . 11
Cioffe v. Morris,
676 F.2d 539 (11th Cir. 1982) . . . . . . . . . . . . . . . . 8
Cone v. W. Virginia Pulp & Paper Co.,
330 U.S. 212 (1947) . . . . . . . . . . . . . . . . . . . . . . . . 7
Cottingham v. Gen. Motors Corp.,
119 F.3d 373 (5th Cir. 1997) . . . . . . . . . . . . . . . . 10
Curtis v. Loether,
415 U.S. 189 (1974) . . . . . . . . . . . . . . . . . . . . . . . . 7
Fountain v. Filson,
336 U.S. 681 (1949) . . . . . . . . . . . . . . . . . . . . . . . . 9
Gaff v. Fed. Deposit Ins. Corp.,
814 F.2d 311 (6th Cir.),
on reh’g in part,
828 F.2d 1145 (6th Cir. 1987) . . . . . . . . . . . . . . . 11
Global Liquor Co. v. San Roman,
332 U.S. 571 (1948) . . . . . . . . . . . . . . . . . . . . . . . . 7
vi
Jimenez v. Tuna Vessel Granada,
652 F.2d 415 (5th Cir. 1981) . . . . . . . . . . . . . . . . . 8
Keller v. Est. of McRedmond,
495 S.W.3d 852 (Tenn. 2016) . . . . . . . . . . . . . . . . 12
Monod v. Futura, Inc.,
415 F.2d 1170 (10th Cir. 1969) . . . . . . . . . . . . . . . 8
R. S. Smero, Inc. v. Levine,
51 A.D.2d 273,
381 N.Y.S.2d 337 (1976) . . . . . . . . . . . . . . . . . . . 12
Sherman v. Brit. Leyland Motors, Ltd.,
601 F.2d 429 (9th Cir. 1979) . . . . . . . . . . . . . . . . 11
Statesman Sav. Holding Corp.
v. United States,
41 Fed. Cl. 1 (1998) . . . . . . . . . . . . . . . . . . . . . . . 10
Twohy v. First Nat’l Bank,
758 F.2d 1185 (7th Cir. 1985) . . . . . . . . . . . . . . . 10
Unitherm Food Systems, Inc. v.
Swift-Eckrich, Inc.,
546 U.S. 394 (2006) . . . . . . . . . . . . . . . . . . . . . . . . 6
Wilhelm v. United States,
257 F. Supp. 16 (D. Wyo. 1966) . . . . . . . . . . . . . . . . 12
Will v. Comprehensive Accounting Corp.,
776 F.2d 665 (7th Cir.1985),
cert. denied, 475 U.S. 1129 (1986) . . . . . . . . . . . . . 8
Yakus v. United States, 321 U.S. 414 (1944). . . . . . . 9
vii
STATUTES
28 U.S.C. § 1260 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
48 U.S.C. § 1561 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
28 V.I.C. § 242 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
RULES
Fed. R. Civ. P. 15(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . 7
Fed. R. Civ. P. 15(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . 7
Fed. R. Civ. P. 50 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Fed. R. Civ. P. 50(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Fed. R. Civ. P. 50(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Supreme Court Rule 10(a) . . . . . . . . . . . . . . . . . . . . . 5
Supreme Court Rule 10(c) . . . . . . . . . . . . . . . . . . . . . 5
V.I. R. Civ. P. 15(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . 7
V.I. R. Civ. P. 15(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . 7
V.I. R. Civ. P. 50 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1
OPINION BELOW
The decision of the Supreme Court of the Virgin
Islands appears in the Appendix to this petition at A-1.
JURISDICTION
The Supreme Court of the Virgin Islands entered its
decision on January 3, 2024. This Court has
jurisdiction under 28 U.S.C. § 1260 to review the
Supreme Court of the Virgin Islands’s decision on a
writ of certiorari. Specifically, the Court has certiorari
jurisdiction “where any . . . right, . . . is . . . claimed
under the Constitution . . . or statutes of . . . the United
States.” Id.
STATUTORY PROVISIONS AT ISSUE
The Due Process Clause of the United States
Constitution, applicable to the Territory of the U.S.
Virgin Islands by virtue of 48 U.S.C. § 1561, provides
that no person shall be “deprived of life, liberty or
property without due process of law.”
STATEMENT OF THE CASE
Shortly after graduating from a culinary school,
Joseph Gerace and Victoria Vooys (“Respondents”), saw
an Internet advertisement offering to sell the Cane Bay
Beach Bar on St. Croix, U.S. Virgin Islands. Gerace
impulsively bought the business in August 2003 even
though: the seller did not have a lease or an assignable
trade name; the landlord was selling the underlying
land and buildings; and neither he nor Vooys even
knew how utilities were split with other businesses on
the property. Respondents formed a corporation,
Barabus, Inc. (“Barabus”), five days after the purchase
2
to serve as the owner/operator of the beach bar, with
Gerace and Vooys each owning half of the shares of
Barabus. Gerace and Vooys treated Barabus as a
separate business and reported the losses from
Barabus, an S-corporation, on their tax returns.
In September 2003, one month after the beach bar
sale closed, Petitioners Warren Mosler and Chris
Hanley formed Petitioner Chrismos Cane Bay, LLC
(“Chrismos”) and bought the underlying property.
Petitioners met with Respondents at this time and
discussed potential lease terms, including the
possibility of a seven-year lease; but, the parties did
not reach an agreement on terms.
In March 2004, and again in November 2004, Mosler
and Hanley proposed a lease that had only a two or
two-and-a-half year term and had other terms that
were not acceptable to Respondents. In March or April
2005, Mosler identified a new prospective tenant for
the beach bar and the relationship between the parties
deteriorated.
In June 2005, Respondents sued Chrismos, Mosler,
and Hanley for a variety of claims, including, as
relevant here, breach of agreement to enter into a lease
(Count V; A-137 [against Chrismos only]); intentional
misrepresentation (Count VIII; A-138); and breach of
the contractual duty of good faith and fair dealing
(Count X; A-139).1 There was no count in the complaint
1
The remaining counts of the complaint are not relevant to
this petition. In addition to alleging that Petitioners defamed
them, Respondents also sued the parties who sold the beach bar
to them, alleging that Respondents had purchased the business for
3
based upon promissory estoppel. Shortly after filing
suit, Respondents sold the business for $30,000.
In advance of the trial, the parties filed a joint final
pretrial order in accordance with V.I. R. Civ. P. 16(e).2
The joint final pretrial order provided that it could not
be amended unless the court determined that manifest
injustice would result if an amendment were not
allowed. A-174. The trial judge signed the order. A-175.
The joint final pretrial order described Gerace’s and
Vooys’ breach of contract, misrepresentation, and
breach of good faith/fair dealing claims against
Chrismos, Mosler and Hanley, but made no mention of
a promissory estoppel claim.
The case proceeded to trial on February 22, 2022. At
the close of the case, the judge delivered his jury
instructions (A-176), which included the elements of
breach of contract and misrepresentation, A-188; and
breach of the duty of good faith and fair dealing. A-189.
No instruction on promissory estoppel was given and
Gerace and Vooys did not request one.
As relevant to this petition, Questions 1 through 3
on the jury verdict form (A-247) related to the
$45,000 but that the sellers had not owned most of the property
that was transferred; that equipment Respondents had purchased
from the sellers was being repossessed; and that the sellers had
not even owned the trade name they sold to Respondents. A130–31, ¶¶14–19.
2
For all material purposes, V.I. R. Civ. P. 16(e) is identical to
Fed. R. Civ. P. 16(e). Indeed, the final pretrial order, A-141,
erroneously refers to the federal rule in its introductory
statement.
4
determination of liability on the breach of contract,
misrepresentation and good faith and fair dealing
claims. A-247–48. There was no question on the verdict
form relating to promissory estoppel.
Petitioners’ moved for judgment as a matter of law
on the breach of contract, misrepresentation, and
breach of good faith/fair dealing claims, A-88, ¶43,
arguing that they were not proven and that Gerace and
Vooys, shareholders of Barabus, were not the proper
parties to recover for the business losses of the
corporation.3 The Superior Court of the Virgin Islands
agreed that Respondents had not proven breach of
contract or good faith/fair dealing, A-53, A-88–92, but
upheld the verdict on the misrepresentation claim, A92–98, and rejected, in a footnote, the argument that
shareholders could not sue for the corporation’s losses.
A-98, n.24.
Petitioners appealed to the Supreme Court of the
Virgin Islands. That court upheld the dismissal of the
breach of contract and good faith/fair dealing claims.
But, Respondents argued for the first time in the case
that the court should affirm the jury award on the
alternative basis of an unpled promissory estoppel
theory. The court, citing two cases that dealt with
allowing—before judgment—a plaintiff to pursue legal
theories reflected by the facts that were pled in the
complaint, determined that it could recognize a legal
theory first raised at the appellate level and after the
jury had been discharged, based upon facts proven at
3
Gerace and Vooys did not assert derivative claims on behalf
of the corporation.
5
trial. Further, the court found it appropriate to order
the entry of judgment on the jury verdict based upon
this unpled legal theory that the jury had not
considered. The court rejected (in a footnote) the
argument that Respondents could not pursue the
pecuniary losses of Barabus. It ignored the corporate
form under the novel theory that Respondents were
“essentially Barabus’s alter ego.” A-24, n.8.
REASONS FOR GRANTING THE PETITION
This Court should grant certiorari pursuant to
Supreme Court Rule 10(a) and 10(c), as the Supreme
Court of the Virgin Islands has “so far departed from
the accepted and usual course of judicial proceedings,
as to call for an exercise of this Court’s supervisory
power,” and has also decided important Due Process
issues in ways that conflict with relevant decisions of
this Court.
A. The decision of the Supreme Court of the
Virgin Islands to enter—on appeal—a
judgment against Petitioners on an unpled
theory never considered by the jury is
contrary to this Court’s precedent and an
abandonment of the usual course of
judicial proceedings.
In the proceedings below, the Supreme Court of the
Virgin Islands found that the evidence presented at
trial met all of the elements of a claim for promissory
estoppel and directed that on remand the trial court
enter judgment on that theory in favor of Respondents.
But that theory was never pled and never presented to
6
the jury. The trial court did not instruct the jury on a
promissory estoppel theory and Respondents did not
argue the theory to the jury. Respondents did not
request that a promissory estoppel theory appear on
the verdict form. The jury had no opportunity to find
promissory estoppel was proven. And because the issue
never arose until Respondents filed their opposition
brief in the Supreme Court of the Virgin Islands,
Petitioners never had the opportunity to present
defenses to the theory.4 It turns Due Process on its
head to think that an appellate court can order the
entry of a verdict against a party that was not on
notice of the claim and never had the opportunity to
present a defense to it.
The judicial system has erected barricades to
prevent judges from supplanting the right to a jury
trial. It is for this reason that there are rules that limit
the power of appellate tribunals to review challenges to
the sufficiency of the evidence to support a jury verdict.
Appellate courts cannot consider such challenges
unless they are properly preserved via pre- and postverdict motions under Fed. R. Civ. P. 50 or its
state/territorial equivalent.5 See, e.g., Unitherm Food
Systems, Inc. v. Swift-Eckrich, Inc., 546 U.S. 394 (2006)
4
Petitioners had potentially viable defenses to a promissory
estoppel theory, including, inter alia, the statute of frauds, 28
V.I.C. § 242; waiver; and equitable estoppel based upon
Respondents’ pleadings and other conduct.
5
Rule 50 of the Virgin Islands Rules of Civil Procedure is
identical to its federal equivalent except that “Supreme Court of
the Virgin Islands” is substituted for “appellate court” wherever
the latter phrase appears in the federal rule.
7
(holding that appellate court could not review
sufficiency of evidence challenge if the appellant did
not first raise the issue before the case was submitted
to the jury pursuant to Fed. R. Civ. P. 50(a) and then
renew that motion under Fed. R. Civ. P. 50(b) after the
verdict was returned). The failure to follow this process
leaves an appellate court “without power to direct the
[trial court] to enter judgment contrary to the one it
had permitted to stand.” Cone v. W. Virginia Pulp &
Paper Co., 330 U.S. 212, 218 (1947); accord Global
Liquor Co. v. San Roman, 332 U.S. 571, 573–74 (1948).
In the proceedings below, the Supreme Court of the
Virgin Islands ran roughshod over the safeguards to
the right to a jury trial recognized by this Court in
Unitherm Food Systems, Cone and Global Liquor.
The rules of civil procedure afford litigants ample
opportunity to amend or refine their theories even late
in the game. For example, the final pretrial order may
amend the complaint without a formal amendment.
Curtis v. Loether, 415 U.S. 189, 190, n.1 (1974) (where
a claim was not included in the complaint, but was
included in the pretrial order, “it is irrelevant that the
pleadings were never formally amended”). Even during
trial, if “a party objects that evidence is not within the
issues raised in the pleadings, the court may permit
the pleadings to be amended. Fed. R. Civ. P. 15(b)(1);
V.I. R. Civ. P. 15(b)(1) (substantively identical to the
federal rule). But, there are limits. After judgment has
been entered, a court may allow the pleadings to be
amended to conform to the evidence, but only when “an
issue not raised by the pleadings is tried by the parties’
express or implied consent.” Fed. R. Civ. P. 15(b)(2);
V.I. R. Civ. P. 15(b)(2) (substantively identical to the
8
federal rule). See Cioffe v. Morris, 676 F.2d 539, 541
(11th Cir. 1982) (holding that a judgment may not be
based upon issues not presented in the pleadings and
not tried with the express or implied consent of the
parties); accord Monod v. Futura, Inc., 415 F.2d 1170,
1173–74 (10th Cir. 1969).6
Further, it is well-settled that “each party must live
with the legal theory reflected in instructions to which
it does not object.” Will v. Comprehensive Accounting
Corp., 776 F.2d 665, 675 (7th Cir.1985), cert. denied,
475 U.S. 1129 (1986). While parties may pursue
alternative contentions at trial, once the evidence is
closed, if the party does not submit jury instructions on
a particular theory, it has effectively chosen to waive
that theory. Cf. Aetna Cas. & Sur. Co. v. P & B
Autobody, 43 F.3d 1456 (1st Cir.), supplemented sub
nom. Aetna Cas. Sur. Co. v. P & B Autobody, 43 F.3d
1546, 1994 WL 717998 at *5 (1st Cir. 1994) (observing
that when a party does not request an instruction
submitting a particular theory to the jury, that party
is “almost certainly preclud[ed]” from asserting the
6
Implied consent “will not be found if the defendant will be
prejudiced; that is, if the defendant had no notice of the new issue,
if the defendant could have offered additional evidence in defense,
or if the defendant in some way was denied a fair opportunity to
defend.” Cioffe, 676 F.2d at 542. A defendant “cannot realistically
be said to have given his implied consent to the trial of unpled
issues” if its failure to recognize the unpled issue was reasonable.
Jimenez v. Tuna Vessel Granada, 652 F.2d 415, 421 (5th Cir.
1981). “A prime example of such a circumstances occurs when
evidence is introduced that is relevant to an issue already in the
case and there is no indication that the party who introduced the
evidence was seeking to raise a new issue.” Id. (footnote omitted).
9
omitted theory after the verdict). “No procedural
principle is more familiar to this Court than that
a . . . right may be forfeited . . . by the failure to make
timely assertion of the right before a tribunal having
jurisdiction to determine it.” Yakus v. United States,
321 U.S. 414, 444 (1944)—yet the Supreme Court of
the Virgin Islands departed from that principle.
The concept that a court cannot order entry of a
judgment on a theory without giving the opposing
party an opportunity to defend against it is so
fundamental that this Court summarily reversed a
court of appeals that had reviewed evidence in a case
and remanded with instructions to enter summary
judgment in favor of the appellee “on a new issue as to
which the opposite party had no opportunity to present
a defense before the trial court.” Fountain v. Filson,
336 U.S. 681, 683 (1949) (granting certiorari and
reversing).
Although Fountain dealt with a court of appeals
ruling on summary judgment (before there was a jury
trial), the Supreme Court of the Virgin Islands
effectively entered a post-verdict summary judgment
against Petitioners, because the promissory estoppel
theory was first raised in the case on appeal. The
decision below is contrary to this Court’s precedent in
Fountain and is so far outside of the bounds of accepted
judicial proceedings as to warrant granting certiorari,
vacating the decision below, and summarily reversing
the Supreme Court of the Virgin Islands.
10
B. The decision of the Supreme Court of the
Virgin Islands to ignore the corporate form
and allow Respondents to pursue damages
on behalf of a corporation, particularly
when combined with the decision to
impose a verdict against Petitioners on an
issue not presented to the jury, was such a
far departure from the accepted and usual
course of judicial proceedings as to justify
this Court’s intervention.
As if entering judgment on a jury verdict against
Petitioners based upon a theory the Respondents had
not asserted to the jury did not put a heavy enough
thumb on the scales of justice, the Supreme Court of
the Virgin Islands went further and allowed the
Respondents to recover damages (under both the
misrepresentation and promissory estoppel theories)
that were ostensibly suffered by their corporation,
Barabus. Once again, this is a far departure from the
usual course of judicial proceedings, which require that
claims be pursued by the real party in interest.
“[I]t is axiomatic that in general damages suffered
by a corporation are recoverable by the corporation, not
by its shareholders.” Statesman Sav. Holding Corp. v.
United States, 41 Fed. Cl. 1, 16 (1998) (citing Twohy v.
First Nat’l Bank, 758 F.2d 1185, 1194 (7th Cir. 1985)).
As the Twohy court noted, “the American rule barring
shareholder damages actions arising out of corporate
transactions with third parties has universal
application among Western nations.” Twohy, 758 F.2d
at 1194. Accord Cottingham v. Gen. Motors Corp., 119
F.3d 373, 378 (5th Cir. 1997) (recognizing that
11
corporation owned a cause of action and that the
putative plaintiff—the sole shareholder and chief
executive of the corporation—could not pursue the
corporation’s claims); Gaff v. Fed. Deposit Ins. Corp.,
814 F.2d 311, 315 (6th Cir.), on reh’g in part, 828 F.2d
1145 (6th Cir. 1987) (holding that “[a] suit for damages
arising from an injury to the corporation can only be
brought by the corporation itself or by a shareholder
derivatively if the corporation fails to act); Sherman v.
Brit. Leyland Motors, Ltd., 601 F.2d 429, 440, n.13 (9th
Cir. 1979) (stating that “[w]here there is an injury to
the corporation, the cause of action should be brought
by the corporation, or by the shareholders derivatively
if the corporation fails to act; only for separate
individual damage does an individual cause of action
lie”).
From a public policy standpoint, the rule makes
eminent sense. It prevents a plaintiff from using “the
corporate form both as shield and sword at his
will.”Alford v. Frontier Enterprises, Inc., 599 F.2d 483,
484 (1st Cir. 1979) (footnote omitted). Because the
corporate form shields the individual from corporate
liability, the shareholder cannot deploy the sword of
“disregard[ing] the corporate entity and recover[ing]
damages for himself.” Id. (footnote omitted). Otherwise,
a corporation could avoid its creditors while the
shareholders were enriched.
The Supreme Court of the Virgin Islands justified its
departure from this well-established rule on the
grounds that the Barabus was a closely-held,
subchapter-S corporation and Respondents were it sole
shareholders. Corporations are creatures of
12
state/territorial law and the Virgin Islands does not
distinguish between corporations that elect to take
advantage of federal tax laws under subchapter-S of
the Internal Revenue Code and those that do not. See
generally 13 V.I.C. §§ 1–473. Moreover, the legislative
history of the development of subchapter-S does not
support the notion that shareholders of subchapter-S
corporations are treated like partners in a partnership
for any purpose other than federal tax law. See Wilhelm
v. United States, 257 F. Supp. 16, 19 (D. Wyo. 1966)
(analyzing legislative history of subchapter-S and
noting that subchapter-S “does not provide that
corporations should be treated as partnerships, nor
that the shareholders should be considered partners”).
As the court stated in R. S. Smero, Inc. v. Levine, 51
A.D.2d 273, 276, 381 N.Y.S.2d 337, 339 (1976),
subchapter-S is purely a federal income tax chapter
providing income tax advantages which are
accomplished in a manner which does not involve
ignoring the corporate entity. In other words, electing
one form of federal tax treatment or another does not
change the state law. “[W]here parties have
deliberately chosen to do business in corporate form for
other reasons such as tax or accounting purposes, they
cannot disregard the corporate form. Keller v. Est. of
McRedmond, 495 S.W.3d 852, 882 (Tenn. 2016).
CONCLUSION
For the foregoing reasons, this Court should issue a
writ of certiorari to the Supreme Court of the Virgin
Islands, vacate the decision of that court, and remand
for further proceedings.
13
Respectfully submitted,
ANDREW C. SIMPSON
Andrew C. Simpson P.C.
2191 Church St., Suite 5
Christiansted, St. Croix
U.S. Virgin Islands 00820
(340) 719-3900
asimpson@coralbrief.com
APPENDIX
A-i
TABLE OF CONTENTS
Appendix to Petition
PAGE
Opinion
Virgin Islands Supreme Court
entered January 3, 2024 . . . . . . . . . . . . . . . A-1
Judgment
Virgin Islands Supreme Court
entered January 3, 2024 . . . . . . . . . . . . . . A-50
Opinion
Superior Court
of the Virgin Islands
entered September 12, 2022 . . . . . . . . . . . A-53
Judgment and Order
Superior Court
of the Virgin Islands
entered February 14, 2014 . . . . . . . . . . . A-126
Complaint, June 8, 2005. . . . . . . . . . . . . . . . A-129
Joint Final Pretrial Order
entered August 5, 2021 . . . . . . . . . . . . . . A-141
Jury Instructions . . . . . . . . . . . . . . . . . . . . . A-176
Plaintiff’s closing. . . . . . . . . . . . . . . . . . . . . . A-203
Plaintiff’s rebuttal. . . . . . . . . . . . . . . . . . . . . A-231
Jury Verdict Form . . . . . . . . . . . . . . . . . . . . A-247
A-1
For Publication
IN THE SUPREME COURT
OF THE VIRGIN ISLANDS
Warren Mosler, Chris
Hanley, and Chrismos Cane
Bay, LLC,
Appellants/Defendants
S. Ct. Civ. No.
2022-0049
Re: Super. Ct. Cs.
No. 368/2005
v.
Joseph Gerace and Victoria
Vooys d/b/a Cane Bay
Beach Bar,
Appellees/Plaintiffs.
On Appeal from the Superior Court
of the Virgin Islands
Division of St. Croix
Superior Court Judge: Hon. Harold W.L. Willocks
Argued: March 8, 2023
Filed: January 3, 2024
Cite as 2024 VI 1
BEFORE:
RHYS S. HODGE, Chief Justice;
MARIA M. CABRET, Associate Justice,
and I’VE ARLINGTON SWAN,
Associate Justice.
A-2
APPEARANCES:
Joel H. Holt, Esq.
Law Offices of Joel Holt
St. Croix, U.S.V.I.
Attorney for Appellants,
Rhea R. Lawrence, Esq. (argued)
Lee J. Rohn, Esq.
Law Offices of Lee J. Rohn and Associates, LLC
St. Croix, U.S.V.I.
Attorneys for Appellees.
OPINION OF THE COURT
HODGE, Chief Justice
¶1 Warren Mosler, Chris Hanley, and Chrismos Cane
Bay, LLC (collectively “Defendants”) appeal the
Superior Court’s September 13, 2022 opinion and
order, which granted in part and denied in part their
motion for judgment as a matter of law and denied
their motion for a new trial. Joseph Gerace and
Victoria Vooys (collectively “Plaintiffs”) filed a
cross-appeal, arguing that the Superior Court erred in
vacating the jury’s award for breach of contract, breach
of good faith and fair dealing, defamation and punitive
damages. For the reasons that follow, we affirm in part
and reverse in part the judgment below.
I. BACKGROUND
¶2 Plaintiffs met in culinary school and upon
graduation looked into buying a restaurant together.
They found a posting online for Cane Bay Beach Bar
A-3
and Restaurant (“CBBBR”) in St. Croix, U.S.V.I. They
decided to buy CBBBR and move to St. Croix in August
2003. Shortly before arriving in St. Croix, the previous
owner of CBBBR told the Plaintiffs that CBBBR did
not have a lease for the restaurant premises. Despite
not having a lease, Plaintiffs decided to continue with
the move because they had already sold their property
in Arizona and had packed up all their belongings.
Once they arrived in St. Croix, Plaintiffs discovered
that the landlord was selling the property where
CBBBR is located.
¶3 The new landlord and owner of the property was
Chrismos Cane Bay, LLC (“Chrismos”), a limited
liability company formed by Hanley and Mosler.
Plaintiffs met Hanley and Mosler a few weeks after
Plaintiffs started operating the restaurant. During this
first meeting, Plaintiffs requested that Defendants
provide them with a seven-year lease. Defendants
believed the request was reasonable, but articulated
some conditions before Plaintiffs would get a lease.
Defendants wanted Plaintiffs to replace screens and
sinks, to paint the outside of the restaurant, to
resurface the bar and do a general cleanup.
¶4 In March 2004, Defendants presented Plaintiffs
with a two-and-a-half-year lease. Plaintiffs believed
this lease to be terrible. The lease did not give
Plaintiffs an option to extend, raised the rent from
$1,500 to $2,000 and was not assignable to any other
person. Under its terms, Plaintiffs would also have to
give up their right to a jury trial if there was a conflict
and had to perform all repairs on the building. Vooys
testified that she shared their concerns with Hanley
and he agreed that the lease was not good and he
A-4
would work on a new lease.
¶5 In August 2004, CBBBR suffered a fire in the
kitchen and the restaurant part of CBBBR had to close,
although the bar area still could be used. The cause of
the fire was a ventilation hood over the kitchen stove
that was too small. Before Plaintiffs invested more
money in the restaurant, they again asked Defendants
whether they would get a seven-year lease. Defendants
told Plaintiffs if they fixed the damages caused by the
fire that Defendants would discuss giving them a
longer lease. Defendants also told Plaintiffs that they
should focus on the repairs and not worry if rent was
late. Plaintiffs therefore bought a new hood for the
stove, which was the proper size, and re-painted the
restaurant.
¶6 In November 2004, Defendants offered Plaintiffs
another lease. This lease kept the rent at $1,500 per
month at first but then increased the rent to $2,500 per
month after six months. Per Gerace’s request, the
tenant’s name was Barabus, Inc., a corporation that
Plaintiffs formed. However, like the March 2004 lease,
this November 2004 lease was not for seven years, but
for two years. Plaintiffs gave this proposed lease to the
attorney they had used to form Barabus. The lawyer,
however, did not reach out to Defendants and Plaintiffs
did not follow up with their attorney about the lease.
¶7 In March 2005, Mosler began to accuse Plaintiffs of
being late with their rent and informed Plaintiffs that
he did not like the direction the restaurant was going,
that “[h]e had issues with the full moon parties and the
crowds and element that the parties brought,” and that
“[h]e wanted to turn it in[to] a white, middle-class
A-5
restaurant.” Mosler also met with Plaintiffs and told
them that he had a buyer in place for the restaurant,
Jim Jordan, and he wanted Jordan to take over. About
a week later, Defendants and Plaintiffs sat down for a
meeting at CBBBR. At the meeting, Mosler told
Plaintiffs that they were not getting a lease and
reiterated that he wanted a white, middle-class
restaurant. According to Vooys, Mosler specifically
stated that “[h]e thought [the restaurant] was dirty”
and that “he didn’t like ... the clientele we were
bringing in and he wanted to be able to bring his
clients to have meetings, more like a white,
middle[-]class restaurant, and we needed to come up
with an exit strategy.” When the meeting ended,
Plaintiffs were upset; Vooys left the table crying. A few
days later, Hanley returned to CBBBR and offered
Plaintiffs the seven-year lease they had requested, but
only so they could sell the restaurant to Jordan.
¶8 On April 12, 2005, Chrismos served a letter on
Plaintiffs stating that it was Defendants’
understanding that Plaintiffs were vacating the
premises by the end of the month. The letter also
stated that any personal property that remained at
that time would be deemed abandoned. Plaintiffs hired
a new attorney, who sent a letter on Plaintiffs’ behalf
stating that they had no intention of leaving the
premises.
¶9 After receiving the April 12, 2005 letter, Mosler
went on a broadcast radio talk show hosted by Roger
Morgan and began what Plaintiffs describe as a smear
campaign. Mosler stated that Plaintiffs were always
late with rent, and that they did not know how to run
a restaurant, and otherwise talking negatively about
A-6
Plaintiffs. As a result of Mosler going on the radio,
Vooys claims that the restaurant started to decline,
and that people were not coming. Plaintiffs ended up
selling the restaurant to Jordan on June 17, 2005, for
$30,000. Jordan had initially offered $50,000.
¶10 Plaintiffs filed a lawsuit on June 8, 2005, against
the Defendants, suing them for defamation, libel,
slander, and defamation per se, fraud,
misrepresentation, intentional or negligent infliction of
emotional distress, and breach of the duty of good faith
and fair dealing. Plaintiffs also sued Chrismos only for
breach of contract.1 Plaintiffs also pled for recovery of
punitive damages and requested an award of pre- and
post-judgment interest.
¶11 After more than 15 years of legal proceedings,
including an earlier appeal to this Court, see Gerace v.
Bentley, 65 V.I. 289 (V.I. 2016), a trial on Plaintiffs’
claims began on February 23, 2022. Plaintiffs’ main
witness was Victoria Vooys. Defendants moved for
judgment as a matter of law after Plaintiffs rested
their case, which the Superior Court partially granted,
partially denied, and partially took under advisement.
The Superior Court granted the motion with respect to
the claim for intentional or negligent infliction of
emotional distress but denied it as to the breach of
contract claim. Although Defendants also sought
judgment as a matter of law as to the remaining
claims, the Superior Court took that portion of the
1
Plaintiffs initially also sued three other defendants, but the
counts against them were dismissed and have no bearing on this
appeal.
A-7
motion under advisement.
¶12 On March 1, 2022, after Defendants rested their
case, Defendants again moved for judgment as a
matter of law on all remaining counts. The Superior
Court again took the matter under advisement. On
March 4, 2022, the jury returned a verdict finding that
Chrismos had an agreement with Plaintiffs and
breached that agreement by not giving them a lease,
that Defendants intentionally misrepresented to
Plaintiffs that they would get a seven-year lease, and
that Defendants also breached their duty of good faith
and fair dealing. The jury awarded $100,000 in
damages to the Plaintiffs. The jury also found that
Mosler and Hanley had defamed Plaintiffs and
awarded Gerace and Vooys $60,000 each on those
claims. Finally, the jury found that the actions of
Mosler and Hanley warranted punitive damages and
awarded Vooys $100,000 on that claim.2
¶13 On March 22, 2022, Defendants renewed their
motion for judgment as a matter of law, and on March
24, 2022, Plaintiffs moved the Superior Court to enter
judgment. On June 9, 2022, Plaintiffs renewed their
motion to enter judgment. (J.A. 461.) The Superior
Court denied Plaintiffs’ motion on July 9, 2022.
¶14 Ultimately, the Superior Court issued an opinion
and order on September 13, 2022, that granted in part
Defendants’ motion for judgment as a matter of law,
2
Due to an apparent mistake in the verdict form, there was no
opportunity for the jury to determine punitive damages for Gerace
because this question was omitted from the form. Plaintiffs have
not raised this issue as part of their cross-appeal.
A-8
but denied their motion for a new trial. In its opinion,
the Superior Court upheld the jury’s verdict on the
intentional misrepresentation claim, but set aside its
verdict on the claims for breach of contract, breach of
the duty of good faith and fair dealing, and defamation,
and also vacated the punitive damage award. The
Superior Court then entered judgment later that same
day.
¶15 Defendants timely filed their notice of appeal with
this Court on September 27, 2022. See V.I. R. APP. P.
5(a)(1). On October 7, 2022, Plaintiffs timely filed their
notice of cross-appeal. Id.
II. DISCUSSION
A. Jurisdiction and Standard of Review
¶16 The Supreme Court [has] jurisdiction over all
appeals arising from final judgments, final decrees or
final orders of the Superior Court.” 4 V.I.C. § 32(a); see
also 48 U.S.C. § 1613a(d). The Superior Court’s
September 13, 2022 opinion and order disposed of all
issues and claims between the parties and is a final
order within the meaning of section 32. As such, this
Court possesses jurisdiction over this appeal.
¶17 We exercise plenary review over applications of
law and reviews finding of fact for clear error. See St.
Thomas-St. John Bd. of Elections v. Daniel, 49 V.I. 322,
329 (V.I. 2007). Additionally, this Court
exercises plenary review of an order granting or
denying a motion for judgment as a matter of
law. When reviewing such motions, we apply the
same standard as the Superior Court. Although
judgment as a matter of law should be granted
A-9
sparingly, a scintilla of evidence is not enough to
sustain a verdict of liability. A motion for
judgment as a matter of law should be granted
only when viewing the evidence in the light
most favorable to the nonmovant and giving it
the advantage of every fair and reasonable
inference, there is insufficient evidence from
which a jury reasonably could find liability. In
performing this narrow inquiry, trial courts and
appellate courts must refrain from weighing the
evidence, determining the credibility of
witnesses, or substituting their own version of
the facts for that of the jury.
Charles v. Payne, 71 V.I. 638, 643 (V.I. 2019)
(alterations omitted).
B. Motion for Judgment as a Matter of Law
¶18 Both Plaintiffs and Defendants raise issues with
respect to the Superior Court’s disposition of
Defendants’ motion for judgment as a matter of law.
“This Court reviews the sufficiency of the evidence to
support a damages award pursuant to the same
standard under which it reviews a motion for a
directed verdict—that is, we must consider the
evidence in the light most favorable to [the plaintiffs],
including giving [the plaintiffs] the benefit of all
reasonable inferences to be drawn from that proof.” Atl.
Human Res. Advisors, LLC v. Espersen, 76 V.I. 583,
630 (V.I. 2022) (citing Chestnut v. Goodman, 59 V.I.
467, 475 (V.I. 2013)). Under this highly deferential
standard, this Court is prohibited from independently
weighing the evidence or determining the credibility of
witnesses. See Fontaine v. People, 56 V.I. 571, 585-86
A-10
(V.I. 2012). Importantly, it is the quality of the
evidence that controls, and not the number of
witnesses or the type of evidence used. LIAT (1974),
Ltd. v. Cherubin, 2022 VI 21, ¶25. Applying this
standard, we discuss each claim in turn.
1. Breach of Contract
¶19 To succeed in a breach of contract case, “a plaintiff
must allege: (1) an agreement, (2) a duty created by
that agreement, (3) a breach of that duty, and (4)
damages.” Pollara v. Chateau St. Croix, LLC, 58 V.I.
455, 473 (V.I. 2013) (quoting Arlington Funding Servs.,
Inc. v. Geigel, 51 V.I. 118, 135 (V.I. 2009)). Here, the
Superior Court set aside the jury’s verdict in favor of
Plaintiffs on the contract claim because it concluded, as
a matter of law, that there had been no enforceable
agreement between the parties. Specifically, the
Superior Court determined that, for an agreement to
lease premises to be enforceable, it needs to have
material information that is certain, such as the length
of the lease, the names of the parties, and the rent
amount.
¶20 The issue of what constitutes an enforceable
agreement in the Virgin Islands is certainly a question
of common law. This Court, however, has never
resolved that question, let alone adopted the elements
that the Superior Court applied in its September 13,
2022 opinion. As a result, the Superior Court possessed
an obligation to conduct a Banks analysis regarding
the best rule for application in the Virgin Islands—and
its failure to do so constitutes reversible error. See
Banks v. International Rental & Leasing Corp., 55 V.I.
967 (V.I. 2011); Toussaint v. Stewart, 67 V.I. 931,
A-11
951-52 (V.I. 2017). Nevertheless, given that the
underlying lawsuit has been pending for nearly 20
years, in the interest of judicial economy we exercise
our discretion to conduct the Banks analysis in the first
instance, rather than electing to remand the matter to
the Superior Court. Inniss v. Inniss, 65 V.I. 270, 280
n.7 (V.I. 2016).
¶21 In conducting a Banks analysis, a court must
“consider three non-dispositive factors: (1) whether any
Virgin Islands courts have previously adopted a
particular rule; (2) the position taken by a majority of
courts from other jurisdictions and (3) most
importantly, which approach represents the soundest
rule for the Virgin Islands.” Simon v. Joseph, 59 V.I.
611, 623 (V.I. 2013) (citing Matthew v. Herman, 56 V.I.
674, 680-81 (V.I. 2012)). As we recently explained,
While none of these three factors is individually
dispositive, each plays an important role in the
analysis. The first factor—whether other Virgin
Islands courts previously adopted a particular
rule—in effect requires a court to consider stare
decisis; that is, whether the legal community
and the public have reason to rely on a
particular common law rule despite it not
having yet been adopted by this Court. The
second factor—the positions taken by other
jurisdictions—informs the court of the existence
of the majority and minority rules as well as the
reasoning other jurisdictions relied upon to
support them, thus ensuring that the court is
not only aware of the potential possibilities but
that it also may benefit from any national
debate and how those rules may have operated
A-12
in practice elsewhere. And the third and most
important factor—determining the soundest
rule for the Virgin Islands—requires a court to
consider the practical implications of adopting a
particular rule in the Virgin Islands as well as
what rule is best in accord with the public policy
of the Virgin Islands, including its consistency
with related statutes, court rules, and judicial
precedents. Notably, the ultimate goal of a
Banks analysis is to ensure the creation of
indigenous Virgin Islands law free of undue
outside influence—as intended by Congress and
the Virgin Islands Legislature in creating a local
judiciary independent of the federal judiciary.
Robertson v. Banco Popular de P.R., 2023 VI 3, ¶28
(internal citations and quotation marks omitted).
¶22 A look at our case law reveals that no Virgin
Islands court has definitively established the standards
for an enforceable agreement. In Phillip v.
Marsh-Monsanto, 66 V.I. 612 (V.I. 2017), this Court
determined the elements of a breach of contract cause
of action, one of which is that there needs to be an
agreement. In determining the elements for a breach
of contract claim, we also cited Brouillard v. DLJ Mort.
Capital Inc., 63 V.I. 788, 798 (V.I. 2015), which listed
the first element for a breach of contract claim as there
needing to be “a contract” which is different from the
language used in Marsh-Monsanto of the first element
being “an agreement.” However, we cannot say that
this fleeting reference, unaccompanied by any
substantive analysis, constitutes a definitive
determination by this Court that these terms may be
used interchangeably. See In re Moorhead, 2022 VI 20,
A-13
¶17 n.1 (“[U]nstated assumptions on non-litigated
issues are not precedential holdings binding future
decisions.”) (quoting Sakamoto v. Duty Free Shoppers,
Ltd., 764 F.2d 1285, 1288 (9th Cir. 1985)),
¶23 A review of the jurisprudence from other
jurisdictions reflects that seemingly all jurisdictions
have determined that an agreement “is a manifestation
of mutual assent on the part of two or more persons,”
and thus broader than a contract. Int’l Bus. Machs.
Corp. v. Khoury, 177 A.3d 724, 731 (N.H. 2017) (citing
RESTATEMENT (SECOND) OF CONTRACTS § 3
(1981)); see also Ames v. Ames, 370 P.3d 246, 249 (Ariz.
Ct. App. 2016) (“An agreement is formed only when a
manifestation of mutual assent occurs.”); Reigelsperger
v. Siller, 150 P.3d 764, 767 (Cal. 2007); Denver Truck
Exch. v. Perryman, 307 P.2d 586 (Colo. 1957); Roberts
v. Veterans Co-op. Housing Ass’n, 88A.2d 324 (D.C.
1952); Bd. of Educ. of Arbor Park Sch. Dist. No. 145,
Cook Cty. v. Ballweber, 451 N.E.2d 858, 861 (Ill. 1983);
Goldstein v. Miles, 859 A.2d 313, 327 (Md. Ct. Spec.
App. 2004); Youngs v. Conley, 505 S.W.3d 305 (Mo. Ct.
App. 2016) (discussing that an agreement is reached
when the minds of the contracting parties meet and
assent to the same thing); Carter v. Prairie Oil & Gas
Co., 160 P. 319 (Okla. 1916); Helpin v. Trs. of Univ. of
Pa., 969 A.2d 601, 611 (Pa. Super. Ct. 2009); Gaskins
v. Blue Cross-Blue Shield of S.C., 245 S.E.2d 598 (S.C.
1978); Vander Heide v. Boke Ranch, Inc., 736 N.W.2d
824, 8323 (S.D. 2006); Martin v. Martin, 326 S.W.3d
741 (Tex. App. 2010); Corbit v. J.I. Case Co., 424 P.2d
290, 296-97 (Wash. 1967); Farmer’s Auto. Ins. Ass’n v.
Union Pac. R. Co, 756 N.W.2d 461, 467 (Wis. Ct. App.
A-14
2008).3
¶24 Finally, we conclude that recognizing a distinction
between an “agreement” and a “contract” constitutes
the soundest rule for the Virgin Islands. As the
analyses conducted by the above-cited courts reflects,
these words possess different meanings both in
common usage in the English language as well as in
the law, and we can discern no legitimate reason to
disregard those well-established meanings. Thus, we
conclude that the terms “agreement” and “contract” are
not synonyms, in that an agreement is a broader term
than a contract. An agreement is “a coming together of
parties in an opinion or determination, the union of
two or more minds in a thing done or to be done.” See
Gaskins, 245 S.E.2d at 600. In contrast, a contract
requires more than simply agreeing to do something: “a
contract is created only when parties mutually assent
to specific terms” in which there is “an offer and an
acceptance” in which “the offer and acceptance must
mirror each other in order for a contract to be legally
formed.” Toussaint, 67 V.I. at 951-52 (citing
3
See also Sutherland v. Sutherland, 28 A.3d 1093, 1100 (Del.
Fam. Ct. 2010); Luke v. Gentry Realty, Ltd., 96 P.3d 261, 267
(Hawai’i 2004); Kumberg v. Kumberg, 659 P.2d 823, 831 (Kan.
1983); Belanger v. Yorke, 226 A.3d 215, 225 (Me. 2020); Jordan
Panel Sys., Corp. v. Turner Constr. Co., 45 A.D.3d 164 (N.Y. App.
Ct. 2007); Schwarz v. St. Jude Medical, Inc., 802 S.E.2d 783, 789
(N.C. Ct. App. 2017); Bennet v. Heidinger, 507 N.E.2d 1162, 1164
(Ohio Ct. App. 1986); Kabil Devs. Corp. v. Mignot, 566 P.2d 505,
507 (Or. 1977). But see Fitzpatrick v. Vermont State Treasurer, 475
A.2d 1074, 1077 (Vt. 1984) (“Although the terms ‘agreement’ and
‘contract’ do not precisely [have] the same meaning, they are
frequently used as exact synonymous.”).
A-15
Restatement (Second) of Contracts §§ 17, 22, 24, 35, 36,
38, 39).
¶25 Here, there certainly was not enough evidence to
support the jury’s finding that Plaintiffs had entered
into a contract with Chrismos. Vooys testified that she
and Gerace had discussed with Defendants that they
wanted a seven-year lease. However, on March 1, 2004,
six months after Plaintiffs had completed repairs to the
restaurant, Defendants proffered a two-year lease to
Plaintiffs.4 This lease had a per-month rent increase to
$2,500, which was $1,000 more than what Plaintiffs
were at that time paying each month. The lease was in
Plaintiffs’ individual names and not in the name of
Barabus, Inc., their business entity. It made Plaintiffs
responsible for all repairs and made them forego a jury
trial should any issues arise. All of these terms were
either not discussed or were incorrect; Plaintiffs
believed that this lease was terrible. While the jury
certainly could conclude that the parties had made an
agreement—that Chrismos would provide a long-term
lease if Plaintiffs made the requested repairs—the
absence of any mutual assent to specific terms
establishes, as a matter of law, that the parties had not
formed a contract.5
4
The March 1, 2004 lease was not what the parties had
discussed, a seven-year lease.
5
Plaintiffs also argue that Defendants owed them duties of
good faith and fair dealing and that these duties were breached.
Because we conclude that there was no contract between the
parties, there was no duty of good faith and fair dealing. A duty of
good faith and fair dealing exists solely in the performance of a
contract and in its enforcement. See RESTATEMENT (SECOND) OF
A-16
¶26 But this does not end our analysis. Plaintiffs urge
us to reinstate the jury verdict based on promissory
estoppel, an alternate ground that was not pled in the
complaint. They argue that the evidence in the record
supports affirming the jury’s verdict under a
promissory estoppel theory. Defendants counter by
stating that Plaintiffs did not plead promissory
estoppel in their complaint and thus they cannot
attempt to seek affirmance of the judgment under that
new theory of liability. Defendants, however, are
incorrect. Pursuant to Virgin Islands Rule of Civil
Procedure 54(c), which was based on Federal Rule of
Civil Procedure 54(c), a judgment that is not a default
judgment “should grant the relief to which each party
is entitled, even if the party has not demanded that
relief in its pleadings.” V.I. R. Civ. P. 54(c). That is, “a
party is not bound by his prayer for relief but may
receive such relief as the proof shows him to be entitled
to.” Glen Falls Indem. Co. v. Golden, 148 F. Supp. 41,
43 (D.D.C 1957). Therefore, if a plaintiff pleads breach
of contract, and fails to prove the existence of a
contract, but nevertheless introduces evidence which
establishes the elements of some other cause of action
that had not been pled—such as quantum meruit or
promissory estoppel—the plain text of Rule 54(c)
allows the court to enter judgment on that unpled
cause of action. See Electrical Const. & Maintenance
TORTS, § 205; see also id. cmt. c (“This Section ... does not deal with
GOOD faith in the formation of a contract.”) Here, a contract was
not formed, and therefore Defendants could not have had a duty
of good faith and fair dealing in their promise to provide a
seven-year lease.
A-17
Co., Inc. v. Maeda Pacific Corp., 764 F.2d 619, 622 (9th
Cir. 1985) (affirming dismissal of breach of contract
judgment for lack of consideration but permitting
recovery for promissory estoppel even though
promissory estoppel had not been pled). Here the
pleadings and the evidence provided the Defendants
with adequate notice of the elements and supporting
proof for a promissory estoppel ground for relief as a
natural implementation of the contractual claim.
¶27 Having decided that the jury’s verdict for breach of
contract could be sustained if Plaintiffs proved the
elements of an unpled cause of action, we must now
decide whether Plaintiffs did in fact establish the
elements of promissory estoppel. However, this Court
has neither recognized a cause of action for promissory
estoppel, nor established the elements for such a cause
of action. Consequently, we must conduct a Banks
analysis on these questions as well.
¶28 We need not engage in a detailed analysis,
however, because we are persuaded by the Banks
analysis performed by the United States District Court
of the Virgin Islands in Whitaker v. Martin, where it
considered the three Banks factors regarding
promissory estoppel to assist it in predicting whether
this Court would recognize a cause of action for
promissory estoppel. 2020 WL 7481783 (D.V.I. Dec. 18,
2020) (unpublished). As to the first factor, the District
Court determined that few cases in the Virgin Islands
had dealt with claims of promissory estoppel but that
those cases that did address it, referenced § 90 of the
Restatement (Second) of Contracts. Id. at *4 (collecting
cases). Section 90 provides that “[a] promise which the
A-18
promisor should reasonably expect to induce action or
forbearance on the part of the promisee or a third
person and which does induce such action or
forbearance is binding if injustice can be avoided only
by enforcement of the promise. The remedy granted for
breach may be limited as justice requires.” Next, the
District Court determined that most of the other
jurisdictions also followed the Restatement approach.6
6
See Branch Banking & Trust Co. v. Nichols, 184 So.3d 337
(Ala. 2015); Thomas v. Archer, 384 P.3d 791 (Alaska 2016);
Higginbottom v. State, 51 P.3d 972 (Ariz. Ct. App. 2002); Holmes
v. Potter, 523 S.W.3d 397 (Ark. Ct. App. 2017); Jones v. Wachovia
Bank, 179 Cal. Rptr.3d 21 (Cal. Ct. App. 2014); Patzer v. City of
Loveland, 80 P.3d 908 (Colo. Ct. App. 2003); Chotkowski v. State,
690 A.2d 368 (Conn. 1997); Fanean v. Rite Aid Corp. of Del., Inc.,
984 A.2d 812 (Del. Super. Ct. 2009); Kauffman v. Int’l Bhd. of
Teamsters, 950 A.2d 44 (D.C. 2008); FCCI Ins. Co. v. Cayce’s
Excavation, Inc., 901 So.2d 248 (Fla. Dist. Ct. 2005); Mitchell v.
Ga. Dept. of Comty. Health, 635 S.E.2d 798 (Ga. Ct. App. 2006);
Furuya v. Assoc. of Apartment Owners of Pacific Monarch, Inc.,
375 P.3d 150 (Haw. 2016); Profits Plus Capital Mgmt., LLC v.
Podesta, 332 P.3d 785 (Idaho 2014); Centro Medico Panamericano,
Ltd. v. Benefits Mgmt. Gr., Inc., 61 N.E.3d 160 (Ill. App. Ct. 2016);
Biddle v. BAA Indianapolis, LLC, 860 N.E.2d 570 (Ind. 2007);
Kunde v. Estate of Bowman, 920 N.W.2d 803 (Iowa 2018);
Templeton v. Kan. Parole Bd., 6 P.3d 910 (Kan. 2000); Sawyer v.
Mills, 295 S.W.3d 79 (Ky. 2009); Acurio v. Cage, 257 So. 3d 824
(La. Ct. App. 2018); Harvey v. Dow, 962 A.2d 322 (Me. 2008);
Oliveira v. Sugarman, 130 A.3d 1085 (Md. Ct. Spec. App. 2016);
Harrington v. Fall River Hous. Auth., 538 N.E.2d 24 (Mass. App.
Ct. 1989); McMath v. Ford Motor Co., 259 N.W.2d 140 (Mich. Ct.
App. 1977); Greuling v. Wells Fargo Home Mortg., Inc., 690
N.W.2d 757 (Minn. Ct. App. 2005); Thompson v. First Am. Nat.
Bank, 19 So. 3d 784 (Miss. Ct. App. 2009); Bauer Dev. LLC v. BOK
Fin. Corp., 290 S.W.3d 96 (Mo. Ct. App. 2009); S&P Brake Supply,
Inc. v. STEMCO LP, 385 P.3d 567 (Mont. 2016); Hawkins Const.
Co. v. Reiman Corp., 511 N.W.2d 113 (Neb. 1994); Torres v. Nev.
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Finally, it found that the soundest rule was to follow
the Restatement “[g]iven both the Territory’s previous
reliance on the Second Restatement of Contracts as
well as its continued use by the majority of the states.”
Whitaker, 2020 WL 7481783 at *4. We agree with this
analysis and thus recognize a cause of action under the
promissory estoppel theory when a plaintiff proves the
following three elements: “(1) the promisor made a
promise that he should have reasonably expected to
induce action; (2) the promisee took action in reliance
on the promise; and (3) injustice can be avoided only by
enforcing the promise.” See Restatement (Second) of
Contracts § 90.
Direct Ins. Co., 353 P.3d 1203 (Nev. 2015); Jackson v. Morse, 871
A.2d 47 (N.H. 2005); E. Orange Bd. of Educ. v. N.J. Schs. Const.
Corp., 963 A.2d 865 (N.J. Super. Ct App. Div. 2015); Magnolia
Mountain Ltd., P’ship v. Ski Rio Partners, Ltd., 131 P.3d 675
(N.M. Ct. App. 2005); Schroeder v. Pinterest Inc., 133 A.D.3d 12
(N.Y. App. Div. 2015); Miller v. Walsh Cty. Water Res. Dist., 819
N.W.2d 526 (N.D. 2012); Ford Motor Credit Co. v. Ryan, 939
N.E.2d 891 (Ohio Ct. App. 2010); Garst v. Univ. of Okla., 38 P.3d
927 (Okla. Civ. App. 2001); Hills v. Mayers, 802 P.2d 694 (Or. Ct.
App. 1990); Sullivan v. Chartwell Inv. Partners, LP, 873 A.2d 710
(Pa. Super. Ct. 2005); Filippi v. Filippi, 818 A.2d 608 (R.I. 2003);
N. Am. Rescue Prods., Inc. v. Richardson, 769 S.E.2d 237 (S.C.
2015); Canyon Lake Park, LLC v. Loftus Dental, P.C., 700 N.W.2d
729 (S.D. 2005); Kinard v. Nationstar Mortg., LLC, 572 S.W.3d
197 (Tenn. Ct. App. 2018); Davis v. Texas Farm Bureau Ins., 470
S.W.3d 97 (Tex. App. 2015); Cottonwood Imp. Dist. v. Qwest Corp.,
296 P.3d 754 (Utah Ct. App. 2013); Taylor v. Nat’l Life Ins. Co.,
652 A.2d 466 (Vt. 1993); Mongold v. Woods, 677 S.E.2d 288 (Va.
2009); Clipse v. Commercial Driver Servs., Inc., 358 P.3d 464
(Wash. Ct. App. 2015); Champine v. Milwaukee C’ty, 696 N.W.2d
245 (Wis. Ct. App. 2005); Singer v. Lajaunie, 339 P.3d 277 (Wyo.
2014).
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¶29 Applying this test to the case here, we conclude
that Plaintiffs established all elements of promissory
estoppel. Vooys testified that she and Gerace had
discussed with Defendants that they wanted a
seven-year lease. Defendants told Plaintiffs, however,
that they would only receive a lease from Chrismos if
they completed a list of repairs and improvements.
Based on this promise, Plaintiffs started to work on
improving the restaurant in the manner Defendants
requested. They invested their time and money,
sanding down the bar, painting the restaurant, and
buying equipment and advertisements. Yet while
Defendants knew Plaintiffs had requested and
expected a seven-year lease, Defendants never offered
them the seven-year lease that they wanted;
nevertheless, Defendants received the benefit of the
improvements and repairs. On these facts, Plaintiffs
established the elements of a promissory estoppel
cause of action.
¶30 One issue, however, remains: the damages
Plaintiffs are entitled to receive for promissory
estoppel. Although the jury had awarded $100,000 to
Plaintiffs, it did so on their breach of contract claim,
and not for promissory estoppel. Yet there may
potentially be instances where a monetary judgment
for an unproven but pleaded cause of action cannot be
sustained based on a proven but unpled cause of
action. This, however, is not such a case. This Court
has previously held that “[a] plaintiff claiming a breach
of contract has available and need not choose between
three types of damages—actual, consequential, and
benefit-of-the-bargain.” Robertson, 2023 VI at ¶21
(quoting Catroppa v. Metal Bldg. Supply, Inc., 267
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S.W.3d 812, 817 (Mo. Ct. App. 2008)). Courts in other
jurisdictions, however, have observed that the damages
a plaintiff may recover in a promissory estoppel action
may potentially be broader: while “[a] promissory
estoppel claim generally entitles a plaintiff to the same
damages available on a breach of contract claim,” State
Ready Mix, Inc. v. Moffatt & Nichol, 181 Cal. Rptr. 3d
921, 926 (Cal. Ct. App. 2015), “the circumstances of the
case” may entitle the plaintiff to recover other damages
not necessarily traditionally awarded in breach of
contract cases, such as for reputational harm, for the
purpose of making the plaintiff whole. See Tour Costa
Rica v. Country Walkers, Inc., 758 A.2d 795, 802 (Vt.
2000). Here, because the jury awarded its $100,000
verdict for breach of contract based on the same
evidence that sustains the promissory estoppel claim,
and a successful promissory estoppel plaintiff is—at a
minimum—entitled to the same damages for
promissory estoppel as for breach of contract, this
Court may simply reinstate the $100,000 verdict
rather than remand the matter for a new trial for
damages, given that Plaintiffs have not requested a
damages award for promissory estoppel that exceeds
the damages previously awarded for breach of contract.
2. Intentional Misrepresentation
¶31 Defendants argue that the Superior Court erred
when it affirmed the jury’s verdict on Plaintiffs’
intentional misrepresentation claim. Defendants make
three arguments in their brief as to why this Court
should vacate the verdict on intentional
misrepresentation. First, they argue that there “was
never a promise to give Vooys and Gerace a lease with
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all of the terms they deemed acceptable, and there was
no representation here they have could [sic] reasonably
relied upon.” (Defendants’ Br. 18.) Second, they argue
that Plaintiffs failed to show a pecuniary loss because
they personally did not incur a loss and that it was in
fact Barabus, Inc. that incurred a loss. Finally,
Defendants argue that “there was no evidence that
supported a finding that the alleged promises of
seven-year lease were knowingly false when made.”
(Defendants’ Br. 20.)
¶32 Before addressing Defendants’ issues, we must
determine whether an intentional misrepresentation
claim arises from contract or torts. See Love Peace v.
Banco Popular de Puerto Rico, 75 V.I. 284, 288-89. (V.I.
2021). In Love Peace, this Court explained that when a
party “seeks only to rescind an underlying contract
based on an alleged misrepresentation, entitlement to
that relief is determined according to the law of
contracts, but where the claimant seeks damages
arising from the misrepresentation, such a claim
sounds in torts, rather than contracts.” Id. at 289
(citing Wilkinson v. Wilkinson, 70 V.I. 901, 908 (V.I.
2019)). Here, Plaintiffs sought to recover damages,
therefore the law of torts applies to their claim.7
7
The Superior Court determined that the intentional
misrepresentation claim sounded in tort because there was no
agreement between the parties. However, it is not whether there
is an agreement or not that governs which type of law applies, but
what type of remedy a party is seeking. This error is harmless as
we determine above that the misrepresentation was in fact based
on a tort. V.I. R. App. R. 4(i); see also Antilles Sch., Inc. v.
Lembach, 64 V.I. 400, 438 n.23 (V.I. 2016) (“It is well established
that, under the right result, wrong reason doctrine, where the
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¶33 To prevail in an intentional misrepresentation
claim based on tort, a plaintiff is “required to
demonstrate that (1) defendant misrepresented a
material fact, opinion, intention, or law; (2) that [the
defendant] knew or had reason to believe was false; (3)
and was made for the purpose of inducing [plaintiff] to
act or refrain from acting; (4) which [plaintiff]
justifiably relied on; and (5) which caused [plaintiff] a
pecuniary loss.” Love Peace, 75 V.I. at 291.
¶34 As established above, Defendants did promise
Gerace and Vooys that they would give Plaintiffs a
long-term lease if Plaintiffs completed certain
improvements and repairs to CBBBR. All that
Defendants wanted was for the repairs and
improvements to get done. There is also testimony
from Mosler that a lease was not important to him.
Additionally, Plaintiffs provided evidence that despite
their requests for a seven-year long lease, it was never
given to them. They also showed that when another
potential tenant appeared, Defendants gave him a
lease for seven years. This evidence shows that
Defendants never really wanted or intended to give
Gerace and Vooys a long-term lease, despite explicitly
agreeing to do so if Plaintiffs completed the
contemplated improvements and repairs: initially,
replacing screens and sinks, painting the outside of the
restaurant, resurfacing the bar and doing a general
cleanup; and subsequently, fixing the damages to the
record otherwise supports the trial court’s judgment, an appellate
court may affirm that judgment for reasons other than those
relied upon by the trial court, even if the trial court’s reasons are
erroneous.”)
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CBBBR kitchen and restaurant caused by the
incorrectly-sized ventilation hood over the kitchen
stove.
¶35 This promise of a seven-year lease was more than
adequate, in fact, to induce Plaintiffs to act. The
evidence showed that Plaintiffs were eager to get a
lease. Defendants knew that Gerace and Vooys would
act in order to get the lease as Plaintiffs bought the
restaurant for $50,000 and wanted to stay to get a
return on their investment. Finally, the evidence
showed that Plaintiffs lost money because they
invested money in order to fix and improve the
restaurant.8 Vooys testified that Plaintiffs had spent
over $40,000 in repairs, over $20,000 in equipment and
$50,000 in promotions and advertising. On the facts in
the present record, this Court affirms the Superior
Court’s decision to uphold the jury’s verdict as to the
8
Defendants argue that Plaintiffs did not suffer a pecuniary
loss because it was their company, Barabus, Inc., that in fact spent
the money in repairing the restaurant. Assuming that we agree,
we find that the Superior Court properly allowed the evidence of
the expenses incurred by Barabus. When the shareholder of an S
corporation “is so actively engaged in the company’s day-to-day
operations that he is akin to the entity’s alter ego, an S
corporation may be treated differently from a C Corporation.”
Bova v. Gary, 843 N.E.2d 952, 958 (Ind. Ct. App. 2006). Here,
Barabus is an S corporation, meaning that Gerace and Vooys are
the sole shareholders; they are also the president and vice
president respectively and, as such, are the primary decision
makers. Plaintiffs worked on improving CBBBR, constantly trying
to fix it to meet Defendants’ expectations. Thus, Gerace and Vooys
are essentially Barabus’s alter ego and the expenses incurred by
Barabus can serve to represent the losses Gerace and Vooys
incurred.
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intentional misrepresentation claim.
3. Defamation
¶36 Plaintiffs argue, on several grounds, that the
Superior Court erred in vacating the jury’s verdict on
the claim for defamation. “In the Virgin Islands, a
claim of defamation requires: (a) a false and
defamatory statement concerning another; (b) an
unprivileged publication to a third party; (c) fault
amounting at least to negligence on the part of the
publisher; and (d) either actionability of the statement
irrespective of special harm or the existence of special
harm caused by the publication.” Espersen, 76 V.I. at
614 (citing Kendall v. Daily News Pub. Co., 55 V.I. 781,
787 (V.I. 2011)). We address each claim with respect to
each defendant.
a. Hanley
¶37 The Superior Court determined that there was no
evidence that Hanley had defamed either Vooys or
Gerace, on the ground that Plaintiffs failed to link any
purportedly defamatory statement to Hanley. We
agree. Vooys testified that “Mosler started like a smear
campaign on why he was getting rid of us on the radio
and TV.” (J.A. 1032.) She never mentioned any
statements made by Hanley. John Woodson testified
that he never heard Hanley on the radio. Michael
Belcheff testified to only hearing Mosler on the radio
but not Hanley. And John Reed, the bartender,
testified about Mosler going on the radio show. While
Hanley did admit to going on the Roger Morgan show
and that he stated that Plaintiffs were not current with
the rent, this statement was true as Plaintiffs went to
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pay the outstanding rent after Hanley was on the
show. On this record, the Superior Court correctly
vacated the jury’s verdict against Hanley for
defamation.
b. Mosler
¶38 The Superior Court set aside the defamation
verdicts against Mosler on two different grounds. It
found that one statement—that Plaintiffs did not know
how to run a restaurant—constituted an unactionable
opinion and determined that all other statements
attributable to Mosler were true.9 Specifically, the
9
In their appellate brief, Plaintiffs first claim that the
Superior Court improperly vacated the jury’s defamation verdict
against Mosler because the court vacated that verdict based on
grounds that were not raised in Defendants’ pre-verdict Rule 50(a)
motion and were therefore waived. We agree. In Charles v. Payne,
we determined that when an argument is not raised in a
pre-verdict Rule 50(a) motion, it cannot be raised in a post-verdict
motion for judgment as a matter of law. 71 V.I. 638, 648-49 (V.I.
2019). Although Mosler made a pre-verdict motion, he failed to
argue in that pre-verdict motion that the statements made by him
were merely his opinion and not actionable. Rather, Mosler only
argued that the statements were true, that Plaintiffs failed to
show special harm, and that Plaintiffs made themselves public
figures by thrusting themselves into the limelight. While the issue
of whether a statement is an opinion is a matter of law that a
court must review de novo without any deference to the finder of
fact, Simpson v. Andrew L. Capdeville, P.C., 64 V.I. 477, 486 (V.I.
2016), the fact that an issue is reviewed de novo does not excuse
a party’s failure to preserve the issue for such review. See Fischer
v. Fischer, 348 S.W.3d 582, 590 (Ky. 2011) (“Ultimately, it is the
responsibility of the movant to put the legal ground before the
court, because it is, after all, his motion, and he bears the burden
of proof and persuasion. ... While it is correct that [the issue] is
reviewed de novo ... such review is limited to the question of
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Superior Court determined to be true Mosler’s
statements that (1) Plaintiffs were always late with
rent, (2) that Plaintiffs borrowed $150,000 from family,
(3) that Defendants had reduced Plaintiffs’ rent, and
(4) that drugs were around the property.
¶39 As noted above, a statement must be false to
constitute defamation, and opinions and true
statements thus are not calculated to form the basis for
defamation liability because they are not provably
false. Espersen, 76 V.I. at 614. But this does not
necessarily mean that true statements cannot be
defamatory, because “in certain circumstances even a
technically true statement can be so constructed as to
carry a false and defamatory meaning by implication
or innuendo.” Martin v. Hearst Corp., 777 F.3d 546,
552 (2d Cir. 2015). As the Second Circuit explained,
The classic example of defamation by
implication is [a case] in which a newspaper
reported that a woman, upon arriving at the
home of another woman and finding her own
husband there “first fired a shot at her husband
interpretation presented.”). Therefore, the Superior Court erred
when it vacated the jury’s defamation verdict against Mosler on
grounds that the statements constituted an unactionable opinion,
when Mosler failed to properly preserve such a claim. See Gatz v.
Otis Ford, Inc., 691 N.Y.S.2d 113, 114 (N.Y. App. Div. 1999)
(holding that defense that statements which gave rise to
defamation judgment were pure opinions is unpreserved for
appellate review if not properly preserved in the trial court).
Nevertheless, because we conclude that all Mosler’s statements
must be interpreted together to ascertain his liability for
defamation, we exercise our discretion to overlook this waiver and
consider the claim on the merits.
A-28
and then at the other woman, striking her in the
arm.” The article neglected to mention, however,
the additional facts that several neighbors and
the husband of the other woman were also
present, that all were sitting together in the
living room talking, and that the shooting was
accidental. Even though the statements in the
article were all technically true, the article
falsely implied that the husband and the other
woman had been shot at because they were
caught in an adulterous affair and had become
targets of an enraged wife—a meaning both
false and defamatory.
777 F.3d at 552-53 (citing Memphis Publishing Co. v.
Nichols, 569 S.W.2d 412 (Tenn. 1978)) (internal
citations and quotation marks omitted).
¶40 The same is true of statements framed as opinions.
In reaching the conclusion that an opinion can never be
defamatory, the Superior Court placed heavy emphasis
on language in our decision in Simpson v. Andrew L.
Capdeville, P.C., stating that “hyperbole and
expressions of opinion are typically not provable as
false, and therefore not actionable,” 64 V.I. 477, 486
(V.I. 2016), concluding that “saying that someone does
not know how to run a business is an opinion and could
never be defamatory.” (J.A. 99.) But this Court in
Simpson did not establish a per se rule that opinions
may never give rise to defamation liability: we said
that “expressions of opinion are typically not provable
as false.” 64 V.I. at 488 (emphasis added). “This Court
has adopted the basic elements for a claim of
defamation set forth in the Second Restatement of
A-29
Torts.” Joseph v. Daily News Pub. Co., 57 V.I. 566,
585-86 (V.I. 2012) (citing Kendall v. Daily News Pub.
Co., 55 V.I. 781, 787 (V.I. 2011)). The Second
Restatement expressly provides that
A defamatory communication may consist of a
statement in the form of an opinion, but a
statement of this nature is actionable only if it
implies the allegation of undisclosed defamatory
fact as the basis for the opinion.
RESTATEMENT (SECOND) OF TORTS § 566. The comments
to this Restatement provision further clarify that “if
the recipient draws the reasonable conclusion that the
derogatory opinion expressed in the comment must
have been based on undisclosed defamatory facts, the
defendant is subject to liability.” Id. at cmt. c. As one
court has succinctly summarized, “[t]he bottom line is
[that] protected opinion exists if the reader is in as
good a position as the author to judge whether the
conclusion is correct.” Loftus v. Nazari, 21 F.Supp.3d
849, 853 (E.D. Ky. 2014) (collecting cases).
¶41 The evidence in the present case, when viewed in
the light most favorable to Plaintiffs, was sufficient for
a rational jury to conclude that Mosler’s statements
were collectively false, even if some may have been
technically true. People who heard Mosler’s statements
about Plaintiffs and their restaurant on the radio were
certainly not “in as good a position” as Mosler “to judge
whether the conclusion [was] correct,” Loftus, 21
F.Supp.3d at 853—Mosler was, after all, not just a
successful businessman, but also one of the two owners
of Chrismos, the entity that leased the property to
Plaintiffs. Mosler’s statements, when viewed in this
A-30
context, establish an intent to defame Plaintiffs.
Mosler’s statement that Plaintiffs did not know how to
run a restaurant—while nominally an opinion—must
be considered together with his statements that (1)
Plaintiffs were always late with rent, (2) that Plaintiffs
borrowed $150,000 from family, (3) that Defendants
had reduced Plaintiffs’ rent, and (4) that drugs were
around the property. While Plaintiffs were sometimes
late with rent—calculated by the Superior Court as
being late 42.86% of the time—they were not always
late with rent, or even late most of the time. Although
Plaintiffs received $45,000 from their family, they did
not borrow $150,000. At no point did Defendants ever
reduce Plaintiffs’ rent. Nor was any evidence
introduced by anyone at trial which provided even a
hint that drugs had ever been on the premises, let
alone that Mosler had reason to know there were drugs
there—on the contrary, several witnesses described the
restaurant as clean.
¶42 All the above statements, when read together and
not analyzed in isolation divorced from context, would
lead the radio audience to believe that Plaintiffs were
essentially insolvent, having borrowed $150,000 from
family yet never being able to pay rent on time, even
after rent had been reduced.10 A listener would also
give enhanced credence to Mosler’s claim that drugs
were on the property, given that Mosler essentially
10
In fact, the emphasis that $150,000 had been borrowed from
family enhances the impression that Plaintiffs were insolvent, in
that it necessarily implies that Plaintiffs may not have been
creditworthy enough to obtain a loan from a legitimate financial
institution and had to seek assistance from family instead.
A-31
served as Plaintiffs’ landlord, and could also
reasonably conclude that Plaintiffs were turning a
blind eye to—or even participating in—drug sales at
the restaurant due to their seeming insolvency. It also
transforms what otherwise might be a protected
statement of opinion—that Plaintiffs did not know how
to run a business—into a defamatory statement, in
that it implies that Plaintiffs got to the point where
they are severely in debt, unable to ever pay rent on
time despite having their rent reduced, and permitted
drugs in their restaurant due to their own bad business
decisions as opposed to other factors, such as the fact
that the restaurant had been closed for two months due
to a fire, or that Plaintiffs had spent money on repairs
and renovations they did not wish to make but paid for
anyway because Defendants made them a precondition
to receiving a long-term lease that was never offered.
Accordingly, the evidence was sufficient to sustain the
verdict on this claim, and we reinstate the jury’s
verdict on the defamation cause of action with respect
to Mosler.
4. Punitive Damages
¶43 Plaintiffs further argue that the Superior Court
erred in vacating the jury’s punitive damages award
for lack of sufficient evidence. Plaintiffs also argue that
the Superior Court inappropriately reweighed the
evidence.
¶44 “Punitive damages are damages awarded in cases
of serious or malicious wrongdoing to punish or deter
the wrongdoer or deter others from behaving
similarly.” Cornelius, 67 V.I. at 824 (internal quotation
marks omitted). “Punitive damages must be based
A-32
upon conduct that is not just negligent but shows, at a
minimum, reckless indifference to the person injured
conduct that is outrageous and warrants special
deterrence.” Id. (collecting cases). “Plaintiffs must ...
prove their entitlement to punitive damages by clear
and convincing evidence.” Espersen, 76 V.I. at 629.
When determining whether there is sufficient evidence
to support the jury’s award, “[t]his Court must consider
the evidence in the light most favorable to [Plaintiffs],
including giving [them] the benefit of all reasonable
inferences to be drawn from that proof. Id. at 630
(citing Chestnut v. Goodman, 59 V.I. 467, 475 (V.I.
2013)).
¶45 Because we uphold the Superior Court’s decision
to vacate the jury’s verdict on the defamation claim
against Hanley, we need to determine whether there
was sufficient evidence to reinstate the punitive
damages award against Hanley based on the
intentional misrepresentation claim. When assessing
the sufficiency of the evidence, we consider the
evidence in the light most favorable to Plaintiffs. This
includes the benefit of all reasonable inferences to be
drawn from that proof. Chestnut, 59 V.I. at 475. The
Superior Court concluded that the evidence only
showed that Defendants misled Plaintiffs into thinking
they would get a long-term lease, and that it was
Mosler who made most of the misrepresentations, not
Hanley.
¶46 We agree. The record reflects that Hanley seemed
to have an amicable relationship with Plaintiffs. He
frequented the restaurant, assisted Plaintiffs in trying
to get a better deal in the sale to Jordan, agreed with
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Plaintiffs that the proposed March 1, 2004 lease was
terrible and offered to help them get a better one. We
cannot say that Hanley’s conduct was so outrageous or
done with reckless indifference such as to warrant a
punitive damages award. For these reasons, we affirm
the Superior Court’s decision to vacate the punitive
damages award against Hanley.
¶47 We cannot say the same, however, with respect to
the punitive damage award against Mosler. As
mentioned above, punitive damages can be awarded
when the conduct is so reckless or outrageous that it
warrants special deterrence. Cornelius, 67 V.I. at 824.
At trial, Plaintiffs established that Mosler essentially
began a smear campaign against Plaintiffs with the
intention to tarnish their reputations to such an extent
that they could no longer have a successful business
and would have no choice but to sell it to Jordan,
Mosler’s preferred purchaser. This, standing alone,
constitutes more than a sufficient basis for a punitive
damages award. See, e.g., Sprague v. Walter, 656 A.2d
890, 923 (Pa. Super. Ct. 1995) (affirming punitive
damages award where evidence established that
defendant engaged in a “smear campaign” to “destroy
[the plaintiff’s] career”). However, Mosler’s conduct is
even more outrageous when we consider that Virgin
Islands law vested him with legal means to attain his
desired result, such as by initiating a forcible entry and
detainer action predicated on nonpayment of rent, see
28 V.I.C. § 281 et seq., yet Mosler nevertheless chose to
forego those legal means in favor of waging a
defamation campaign. Accordingly, we reinstate the
jury’s punitive damages award against Mosler.
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C. Closing Arguments
¶48 Defendants argue that the trial court erred in
denying their motion for a new trial based on Plaintiffs’
attorney’s alleged misconduct during closing
arguments. Defendants raise three issues: (1) that the
closing arguments were inflammatory when Plaintiffs’
attorney referred to Mosler wanting a “white,
middle-class restaurant”; (2) that Plaintiffs’ attorney
improperly testified as a witness; and (3) that
Plaintiffs’ attorney misrepresented evidence to the
jury.
¶49 Plaintiffs counter by arguing that Defendants’
attorney failed to contemporaneously object to all of
these statements and that review is therefore waived.
In R.J. Reynolds Tobacco Co. v. Gerald, this Court
stated that when reviewing a motion for a new trial
based on an attorney’s misconduct, we look at whether
the conduct was improper and whether it was
prejudicial in the context of the entire trial. 76 V.I.
657, 680-81 (V.I. 2022). We review for abuse of
discretion when a contemporaneous objection is
sustained and the party then moves for a mistrial. Id.
at 681-82. A party can also preserve an argument if the
Superior Court definitively denies a motion in limine.
See Davis v. Varlack Ventures, Inc., 59 V.I. 229, 233 n.1
(V.I. 2013) (“[T]he denial of the motion in limine alone
is sufficient to preserve [an] issue for appeal because
the motion in limine ‘specifically raised the evidentiary
issues’ presented to [the Supreme Court], and the
Superior Court definitely ruled on the motion before
trial.”). However, when there is no contemporaneous
objection or denial of a motion for mistrial, this Court
A-35
reviews for plain error. R.J. Reynolds, 76 V.I. at
682-83.
¶50 We agree with Plaintiffs that Defendants waived
most of their claims on these issues. Defendants failed
to contemporaneously object to any of the
complained-of statements. While Defendants state that
this Court did not decide in Espersen or R.J. Reynolds
whether an objection must be made after each
offending statement, this Court has already
determined that a contemporaneous objection means
just that: an objection that occurs concurrently with
the statement that is believed to be objectionable. For
instance, in R.J. Reynolds, we looked at whether each
distinct statement that was being complained of on
appeal was objected to or not. See, e.g., id. at ¶¶31-45.
See also John Cheeseman Trucking, Inc. v. Dougan,
853 S.W.2d 278 (Ark. 1993); R.J. Reynolds Tobacco Co.
v. Townsend, 90 So. 3d 307 (Fla. Dist. Ct. App. 2012);
Dagne v. Schroeder, 783 S.E.2d 426 (Ga. App. 2016);
International Union, United Automobile, Aerospace and
Agricultural Implement Workers of America v. Dorsey,
730 N.W.2d 17 (Mich. Ct. App. 2006).11
¶51 Therefore, we review the only claim that
Defendants did preserve: Plaintiffs’ attorney’s
reference to Mosler wanting a “white, middle-class
11
This is not a new practice in the Virgin Islands. The United
States Court of Appeals for the Third Circuit when reviewing
cases from the Virgin Islands has stated since the 1970s that a
contemporaneous objection is required during closing arguments
to avoid plain error review. See e.g., Herman v. Hess Oil V.I. Corp.,
12 V.I. 240, 248 (3d Cir. 1975); Dunn v. HOVIC, 28 V.I. 467,
474-75 (3d Cir. 1993).
A-36
restaurant.” The Superior Court had denied Mosler’s
motion based upon these statements, determining that
the statements could be relevant to reflect Mosler’s
motive as to why he did not want to give Plaintiffs a
lease. The court also stated that “[d]efendants [were]
free to argue against the relevance that race played in
[Mosler’s] actions with all the arguments developed in
their motion and reply during trial.” (J.A. 124.) The
Superior Court definitively denied the motion and thus
the issue was preserved for appeal.
¶52 We disagree that counsel’s reference to a “white,
middle-class restaurant” so inflamed the jury so as to
warrant a new trial. “Using some degree of emotionally
charged language during closing arguments in a civil
case is a well-accepted tactic in American courtrooms.”
Settlegoode v. Portland Pub. Sch., 371 F.3d 503, 518
(9th Cir. 2004). However, such arguments must not be
so inflammatory that they “divert the jury’s attention
from its duty to decide the case on the evidence.”
DeSilvia, at 55 V.I. 872; see also New York Cent. R. Co.
v. Johnson, 279 U.S. 310, 318 (1929). But while
Plaintiffs’ attorney did refer to Mosler wanting
Plaintiffs to leave the restaurant because he wanted a
white, middle-class restaurant, there was evidence
introduced at trial that Mosler made this statement to
Vooys and Gerace. There was also testimony from Gary
Anthony, a patron of CBBBR, that the clientele
changed when Plaintiffs left, with Anthony testifying
that there were “less locals.” (J.A. 986-87.) Because an
evidentiary basis existed for Plaintiff’s counsel to make
these statements, we find that the argument was
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proper.12
¶53 Other than the reference to the “white,
middle-class restaurant,” Defendants failed to
contemporaneously object to the any of the other
statements made in Plaintiffs’ closing argument that
they now challenge on appeal. Thus we review the
effect of these statements only for plain error. When
plain error exists, this Court will determine whether
the error, though affecting a substantial right,
seriously affected “fairness, integrity, or public
reputation of the judicial proceeding,” thus warranting
reversal. Cornelius, 67 V.I. at 816–17.
¶54 First, Defendants argue that Plaintiffs’ attorney
improperly testified during initial closing argument.
Plaintiffs’ attorney read a letter she sent to Defendants
and then stated: “It is [Plaintiffs’] position that there
was promise made to them to enter into a two-year
lease – that’s my mistake, I misunderstood because I
had seen one of the leases ...” (J.A. 1850.) While it may
be unusual for an attorney to read a statement made in
a letter written by her fifteen years earlier, the April
20, 2005 letter had been admitted into evidence at trial
and constituted part of the record. Therefore, we
discern no error in permitting counsel to read from it
as part of closing argument.
12
Even if it was an error to allow this argument, we would not
find it was prejudicial. Plaintiffs’ attorney referred to the white,
middle-class restaurant about four times in an hour-long initial
closing argument. See Whittenburg v. Werner Enters. Inc., 561
F.3d 1122, 1130 (10th Cir. 2009). This is not so pervasive as to
warrant a new trial.
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¶55 Defendants also contend that Plaintiffs’ attorney
committed misconduct when she told the jury “that had
they had a lease, had there been a promise for that
maintained, we know from Miss Alex Myers, they could
have sold the lease, like Mr. Jordan did, for $125,000,”
J.A. 1856, when the $125,000 figure had only been
allowed as impeachment evidence. Impeachment
evidence can be commented upon during closing
argument, but only when it goes to the credibility of a
witness and not a main issue in the case. See Drake v.
Caterpillar Tractor Co., 474 N.E.2d 291, 294 (Ohio
1984) (finding that a new trial was warranted because
the jury used impeachment evidence to decide main
issue in case). We thus agree that Plaintiffs’ counsel
should not have referenced the sum of $125,000 that
Myers paid as part of the damages that could be
awarded in the case. However, we can discern no way
in which this isolated reference infringed upon
Defendants’ substantial rights, given that the jury only
awarded $100,000 to Plaintiffs on the relevant count.
¶56 Defendants also argue that Plaintiffs’ attorney
misrepresented multiple facts in her rebuttal closing
arguments. Among these were statements about: (1)
Vooys adding a notation to a $2,000 rent check; (2)
Plaintiffs intending to leave because there was no
lease; (3) Defendants evicting Plaintiffs; and (4)
Defendants not producing a witness.13
13
Defendants also challenge a statement with respect to
whether CBBBR had been open in June 2005. But as the Superior
Court stated, there was conflicting testimony as to whether they
were open, and attorneys are given latitude in presenting evidence
in the best light to their clients. See James v. People, 59 V.I. 866,
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¶57 “[T]he cardinal rule of closing argument [is] that
counsel must confine comments to evidence in the
record and to reasonable inferences from that
evidence.” James v. People, 59 V.I. 866, 888 (V.I. 2013)
(quoting United States v. Lopez-Medina, 596 F.3d 716,
740 (10th Cir. 2010)). Defendants are correct that the
first two cited statements misconstrue evidence
adduced at trial, and that the last two statements
misconstrued the law. However, the record reflects that
the Superior Court issued curative instructions with
respect to these issues in its final jury instructions.
“When a jury is given an instruction, including a
curative instruction, the presumption is that the jury
will follow the instruction.” Monelle v. People, 63 V.I.
757, 770 (2015) (citing Francis v. People, 59 V.I. 1075,
1080 (V.I. 2013); Ostalaza v. People, 58 V.I. 531, 555
(V.I. 2013)). Consequently, these statements, although
improper, were not prejudicial, and certainly not so
prejudicial as to constitute plain error. Therefore, we
conclude that the Superior Court committed no error in
denying Defendants’ motion for a new trial.
D. Prejudgment Interest & Failure to Enter
Judgment
¶58 Plaintiffs argue that they are entitled to
prejudgment interest on the compensatory damages
awarded to them on their breach of contract and
888 (V.I. 2013) (“The purpose of closing argument is to mold the
facts given during trial in the light most favorable to one’s
client.”).
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intentional misrepresentation claims14 pursuant to title
11, section 951(a) of the Virgin Islands Code, yet the
Superior Court failed to award prejudgment interest
when it ultimately entered judgment. Defendants
argue that Plaintiffs waived their entitlement to
prejudgment interest by failing to request it in the
joint final pretrial order as to Defendants and, in the
alternative, that the damages were allegedly not
ascertainable.
¶59 We first consider whether Plaintiffs waived their
entitlement to prejudgment interest. Defendants argue
that this Court stated in Vlaun v. Briscoe, 2022 VI 18,
¶19 that a party can waive prejudgment interest if that
form of recovery is not asserted. While it is true that
Plaintiffs failed to mention it in the joint final pretrial
order, Plaintiffs did assert an entitlement to
prejudgment interest in their complaint, and in their
motion to enter judgment. See Indemnity Ins. Co. of N.
Am. v. Guidant Mut. Ins. Co., 99 So.3d 142, 157 (Miss.
2012) (holding that the party requesting prejudgment
interest may demand it in its complaint); Dixie Bell,
Inc. v. Redd, 656 S.E.2d 765 (S.C. Ct. App. 2007)
(discussing that prejudgment interest may be pled in
complaint). Therefore, we conclude that, having
asserted a claim for prejudgment interest in the
complaint, Plaintiffs did not waive their entitlement to
prejudgment interest.
14
Plaintiffs do not claim an entitlement to prejudgment
interest on the compensatory damages awarded on their
defamation claim, nor to the portion of the award representing
punitive damages.
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¶60 Having found that Plaintiffs did not waive their
entitlement to prejudgment interest, we turn to the
question whether section 951(a) entitles Plaintiffs to
prejudgment interest on the damages awarded.
Plaintiffs assert that their entitlement to prejudgment
interest began to run from March 1, 2004, the date that
Plaintiffs assert that Defendants provided them with
a lease agreement that did not provide for a seven-year
lease term. There are only two provisions of section
951(a) that could possibly warrant an award of
prejudgment interest in this case: section 951(a)(1)
authorizing such interest on “all monies which have
become due,” and section 951(a)(4), providing for
interest on “money due or to become due where there
is a contract and no rate is specified.”
¶61 We conclude, however, that neither provision is
applicable, at least with respect to the period prior to
the jury rendering its verdict on March 3, 2022. We
previously recognized that “interest on monies owed
but not paid is a necessary component of the damages
incurred for breach of contract due to the time value of
money, in that money in hand today is worth more
than the same amount of money received at some
future date because it can be invested and reap the
benefits of compound interest.” Vlaun, 2022 VI, ¶19
(collecting cases). But as explained above, there was no
contract between Plaintiffs and Defendants that
Defendants breached—rather, Defendants are liable to
Plaintiffs only on theories of promissory estoppel and
intentional misrepresentation. In this context, section
951(a)(4) cannot authorize a prejudgment interest
award.
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¶62 Section 951(a)(1), of course, differs from section
951(a)(4) in that it does not expressly require a
contract. Thus, we recently concluded that section
951(a)(1) “is broader than similar statutes in other
states limiting prejudgment interest to contractual
damages only.” R.J. Reynolds, 76 V.I. at 736.
Nevertheless, “[t]he mere fact that a jury has
determined an award does not mean it is automatically
‘money due’ “ dating back to the time of the alleged
wrongful conduct that gave rise to the defendant’s
liability. Id. at ¶134. Rather, we held that section
951(a)(1) only permits interest on “ascertainable
sums,” i.e., monetary damages for claims that were
liquidated. R.J. Reynolds, 76 V.I. at 726.
¶63 We agree with Defendants that the compensatory
damages in this case were not readily ascertainable on
March 1, 2004, or any other date prior to the March 3,
2022 jury verdict. As a threshold matter, Plaintiffs
acknowledge in their brief that at least some of the
damages awarded by the jury were for “building good
will” and “Plaintiffs’ sweat equity.” (Appellees’ Br. 42.)
These damages, however, are intangible and
unliquidated, and thus cannot qualify for prejudgment
interest under section 951(a)(1), at least with respect
to any periods before announcement of the jury verdict.
R.J. Reynolds, 76 V.I. at 736. But while some aspects
of the compensatory damages award—such as $40,000
for repairs, $20,000 for equipment—may arguably be
ascertainable, we agree with the courts that have held
that to qualify for prejudgment interest on a claim the
entire amount in controversy must be ascertainable,
with litigants not entitled to partial prejudgment
interest when one portion of the damages for a cause of
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action is ascertainable but the plaintiff also seeks, and
successfully recovers, other unascertainable damages.
See, e.g., Winston v. Guelzow, 855 N.W.2d 432, 437
(Wisc. Ct. App. 2014) (holding no entitlement to partial
prejudgment interest for a $33,300 debt that the
defendant did not contest, when the plaintiff had
sought and recovered other damages against the
defendant on the same claim that were not
ascertainable).
¶64 But this does not mean, however, that Plaintiffs
possess no entitlement to any interest for any period
prior to the September 13, 2022 judgment. As noted
above, the jury rendered its verdict on March 3, 2022,
and conclusively determined the extent of Defendants’
liability to Plaintiffs, as well as the specific monies
that Defendants owed Plaintiffs. Consequently, the
previously unliquidated monies owed by Defendants to
Plaintiffs all became liquidated—and thus
ascertainable—when the jury announced its verdict on
March 3, 2022. See, e.g., Rogers v. City of Kennewick,
2007 WL 9759254, at *4 (E.D. Wash. Aug. 15, 2007)
(“Prejudgment interest is recoverable on liquidated
damages. . . . In this case, the damages became
liquidated when the jury rendered its verdict, therefore
the date prejudgment interest began to run was the
date of the verdict . . .The Court awards prejudgment
interest on the amount of the verdict to the date of the
judgment. Plaintiffs are entitled to post-judgment
interest from the date of the judgment.”); Zeigler v.
Goelzer, 211 N.W. 140, 144 (Wisc. 1964) (awarding
postverdict, pre-judgment interest for a tort claim
accruing from the date of the initial jury verdict rather
than the date of final judgment, despite an appeal and
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a new trial on an issue unrelated to damages, because
the tort damages “became liquidated” and
ascertainable when the jury announced its verdict);
Kent v. Chapel, 70 N.W. 2, 3 (Minn. 1897) (“In the case
at bar the claim for damages became liquidated and
determined by the verdict. There was no further
uncertainty about the claim.”).
¶65 This, of course, would be true with respect to any
civil case tried before a jury. And in a typical case, that
the damages become ascertainable upon the
announcement of the jury verdict is merely academic:
Rule 58(b) of the Virgin Islands Rules of Civil
Procedure requires that entry of judgment on a jury
verdict occur “promptly,” and title 5, section 426 of the
Virgin Islands Code provides that “[t]he rate of interest
on judgments and decrees for the payment of money
shall be 4 percent per annum.” 5 V.I.C. § 426(a). Thus,
when the Superior Court complies with the edicts of
Civil Rule 58(b) and promptly enters a judgment on the
jury verdict on the same day or the next day, the
amount of prejudgment interest accrued at the 9
percent rate pursuant to section 951(a)(1) for the
fleeting period between announcement of the jury
verdict and entry of judgment on the verdict should be
either zero or de minimis.
¶66 In this case, however, the Superior Court failed to
enter judgment “promptly,” electing to enter judgment
on the verdict more than six months later, on
September 13, 2022, despite both the plain text of Civil
Rule 58(b) and the Plaintiffs even filing motions for
entry of judgment. Because the March 3, 2022 jury
verdict established that Defendants were liable to
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Plaintiffs for a specific monetary amount, and
judgment was not entered until September 13, 2022,
Plaintiffs were entitled to postverdict prejudgment
interest at the 9 percent per annum rate pursuant to
section 951(a)(1) for the period from March 3, 2022,
through September 13, 2022.
¶67 In making this holding, we are cognizant of two
potential arguments against requiring postverdict
prejudgment interest for this period. It is certainly true
that Plaintiffs could not execute on the jury verdict
until and unless the Superior Court entered judgment
based on the verdict. See 5 V.I.C. § 471 (providing for
a judgment for the payment of money to be enforced by
writ of execution). However, section 951(a)(1) permits
prejudgment interest on “all monies which have
become due,” without requiring that such monies be
collectable by writ of execution or other judicial
process. The reason for that is because imposing such
a requirement would literally render section 951(a)(1)
a complete nullity since its purpose is to provide for
prejudgment interest, yet prejudgment interest could
never be awarded in any case since no debt, no matter
how ascertainable, can be judicially enforced prior to
entry of a judgment. Accord, R.J. Reynolds, 76 V.I. at
736 (declining to interpret section 951 in a way that
would require an award of prejudgment interest prior
to verdict in every single case).
¶68 Likewise, we find unpersuasive the reasons the
Superior Court set forth in its July 25, 2022 order
denying Plaintiffs’ motion to enter judgment. The
Superior Court justified its refusal to enter judgment
by stating that
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the Court still has under consideration the
[Defendants’] Post-Trial Rule 50(b) and Rule
59(a) Motion. Entering judgment would
implicitly deny the [Defendants’] motions, might
constitute an abuse of discretion, and would
likely cause further delay and invite additional
costs and expense if [Defendants] simply refiled
their motions after judgment had been entered.
Moreover, if the motion for a new trial were
granted, it would require vacating the judgment
that [Plaintiffs’] want entered.
(J.A. 118.) This, however, constitutes a
misinterpretation of Civil Rule 58(b) that is wholly
inconsistent with our prior precedents interpreting
that rule. As we previously explained, not only does
Civil Rule 58(b) obligate a judge to promptly sign the
judgment, but “[t]he Judges and Clerk of the Superior
Court are without discretion in this matter.” World
Fresh Markets, LLC v. Henry, 71 V.I. 1161, 1180 (V.I.
2019). Moreover, entry of judgment pursuant to Civil
Rule 58(b) cannot possibly constitute an implicit denial
of a post-judgment motion filed pursuant to Civil Rules
50(b) or 59(a) because a post-judgment motion cannot
take effect until after the entry of the judgment it
pertains to. We held in Charles v. Payne that the
limitations period for filing a motion under Civil Rules
50(b) or 59(a) does not commence until the Superior
Court enters judgment under Civil Rule 58(b). 71 V.I.
638, 645 (V.I. 2019). Thus, when Defendants filed their
renewed motion for judgment as a matter of law on
March 22, 2022, they elected to do so before the start of
the limitations period set forth in Civil Rules 50(b) and
59(a), since the deadline to file such a motion did not
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begin to run until September 13, 2022, when the
Superior Court later filed the judgment.15 See id.
Consequently, entry of judgment would not have
implicitly denied Defendants’ motion, nor would it have
required Defendants to file their motion again, as the
Superior Court suggests. To the extent the Superior
Court was concerned with Defendants paying a
judgment that might be changed by its determination
of the post-judgment motions, Rule 62 of the Virgin
Islands Rules of Civil Procedure provided it with a
mechanism to stay execution of the judgment. See
Reporter’s Note, V.I. R. Civ. P. 62 (“Under subpart (b)
the court may stay the execution of a judgment – or
any proceedings to enforce it – pending the disposition
of any of the specified post-trial motions, upon proper
security.”) Therefore, we conclude that the Superior
Court erred when it declined to enter judgment
promptly in accordance with Civil Rule 58(b), and that
the effect of that error is that postverdict prejudgment
interest accrued for the approximately six-month
period from the announcement of the jury verdict on
15
Defendants argue that their renewed motion took effect on
March 22, 2022, because it addressed a jury issue not determined
by the verdict. They stated that they raised issues other than
those decided by the verdict, such as the denial of their motion in
limine, the impropriety of counsel’s closing argument, the gist of
the action doctrine and liability of LLC members. (Defendants’
Rep. Br. 28-29.) However, Defendants are misconstruing the rule.
Civil Rule 50(b) states that “if the motion addresses a jury issue
not decided by a verdict,” it should be filed no later than 28 days
after the jury is discharged. The issues that the motion raised
were not jury issues, but issues that needed to be decided by the
court.
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March 4, 2022, and the eventual entry of judgment on
September 13, 2022.16
III. CONCLUSION
¶69 This Court agrees with the Superior Court that
there was no contract between the parties, but because
we nevertheless find that Plaintiffs introduced
sufficient evidence to prevail on their claim for the
same damages under a theory of promissory estoppel,
we reverse that portion of the September 13, 2022
opinion and order vacating the damages awarded by
the jury for breach of contract. We also affirm the
portions of the Superior Court’s decision which set
aside the jury awards on the claims for defamation and
punitive damages as to Hanley, and which upheld the
jury’s verdict and award as to the intentional
misrepresentation claim. We, however, conclude that
the Superior Court erred in vacating the jury’s verdict
in favor of Plaintiffs on the defamation claim with
respect to Mosler, as well as the award of punitive
damages as to Mosler, and therefore vacate those
portions of the September 13, 2022 opinion and order
and reinstate those portions of the jury verdict. And
16
As outlined earlier, not all portions of the jury’s March 4,
2022 verdict remain valid in light of the subsequent decisions of
this Court and the Superior Court. Moreover, as also noted earlier,
Plaintiffs have not claimed an entitlement to any prejudgment
interest on their defamation claim or the punitive damages award.
Consequently, on remand the Superior Court shall calculate
postverdict prejudgment interest for the period from March 4,
2022, to September 13, 2022, only based on the portion of the jury
verdict that has not been set aside and for which Plaintiffs have
requested prejudgment interest.
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while we find that the Superior Court properly denied
the motion for a new trial, we conclude that it erred in
failing to award prejudgment interest for the
compensatory damages awarded on the claims for
breach of contract (recharacterized as promissory
estoppel) and intentional misrepresentation for the
period stemming from March 3, 2022, through
September 13, 2022. Accordingly, we affirm in part and
reverse in part the September 13, 2022 opinion and
order, and remand the case to the Superior Court to
calculate the amount of postverdict prejudgment
interest owed to Plaintiffs.
Dated this 3rd day of January, 2024.
BY THE COURT:
/s/ Rhys S. Hodge
Rhys S. Hodge
Chief Justice
ATTEST:
VERONICA J. HANDY, ESQ.
Clerk of the Court
By:
/s/Reisha Corneiro
Deputy Clerk II
Dated: January 3, 2024
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For Publication
IN THE SUPREME COURT
OF THE VIRGIN ISLANDS
Warren Mosler, Chris
Hanley, and Chrismos Cane
Bay, LLC,
Appellants/Defendants
S. Ct. Civ. No.
2022-0049
Re: Super. Ct. Cs.
No. 368/2005
v.
Joseph Gerace and Victoria
Vooys d/b/a Cane Bay Beach
Bar,
Appellees/Plaintiffs.
On Appeal from the Superior Court
of the Virgin Islands
Division of St. Croix
Superior Court Judge: Hon. Harold W.L. Willocks
Argued: March 8, 2023
Filed: January 3, 2024
BEFORE:
RHYS S. HODGE, Chief Justice;
MARIA M. CABRET, Associate
Justice, and I’VE ARLINGTON
SWAN, Associate Justice.
APPEARANCES:
Joel H. Holt, Esq.
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Law Offices of Joel Holt
St. Croix, U.S.V.I.
Attorney for Appellants,
Rhea R. Lawrence, Esq. (argued)
Lee J. Rohn, Esq.
Law Offices of Lee J. Rohn and Associates, LLC
St. Croix, U.S.V.I.
Attorneys for Appellees.
JUDGMENT
HODGE, Chief Justice.
AND NOW, consistent with the Opinion of even date,
it is hereby
ORDERED that the Superior Court’s September 13,
2022 opinion and order are
REVERSED IN PART with respect to the portions
addressing damages under a theory of promissory
estoppel, the defamation claim against Warren Mosler,
and prejudgment interest, and AFFIRMED IN PART
with respect to the portions addressing the defamation
claim against Chris Hanley, the intentional
misrepresentation claim, and the denial of the motion
for a new trial. This case is REMANDED to the
Superior Court for the purpose of calculating the
amount of damages to be awarded to Plaintiffs, which
shall include postverdict prejudgment interest for the
period set forth in the Opinion of this Court. It is
further
ORDERED that copies be directed to the appropriate
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parties.
SO ORDERED this 3rd day of January, 2024.
BY THE COURT:
/s/ Rhys S. Hodge
Rhys S. Hodge
Chief Justice
ATTEST:
VERONICA J. HANDY, ESQ.
Clerk of the Court
By:
/s/Reisha Corneiro
Deputy Clerk II
Dated: January 3, 2024
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SUPERIOR COURT OF THE VIRGIN ISLANDS
DIVISION OF ST. CROIX
CASE NO. SX-2005-CV-00368
Joseph GERACE, Victoria Vooys, d/b/a Cane Bay
Beach Bar, Plaintiffs,
v.
Maria BENTLEY; David Bentley; CB3, Inc.; Warren
Mosler; Chris Hanley; and Chrismos Cane Bay, LLC,
Defendants.
|
September 12, 2022
MEMORANDUM OPINION
WILLOCKS, Administrative Judge.
¶1 BEFORE THE COURT are the post-trial motions of
Warren Mosler (hereinafter “Mosler”), Chris Hanley
(hereinafter “Hanley”), and Chrismos Cane Bay, LLC
(hereinafter “Chrismos”) (collectively “Defendants” or
“Chrismos Defendants”) to vacate the jury’s entire
verdict or, in the alternative, for a new trial based on
statements of opposing counsel during closing
arguments. Joseph Gerace (hereinafter “Gerace”) and
Victoria Vooys (hereinafter “Vooys”), formerly doing
business as Cane Bay Beach Bar (hereinafter “Beach
Bar”) (collectively “Plaintiffs”), oppose the Defendants’
motions. For the reasons stated below, the Court will
grant the motion for post-trial relief in part and set
aside the jury’s verdict on the breach of contract,
breach of the duty of good faith and fair dealing, and
defamation claims but otherwise affirm the verdict on
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the intentional misrepresentation claim. Additionally,
because the jury awarded a single amount in
compensatory damages on all the business torts, the
Court must affirm the entire award since the Court
cannot reallocate damages and remittitur is not
available in the Virgin Islands. The Court will also
vacate the award of punitive damages because the
evidence was insufficient for a rational trier of fact to
have found that Mosler and Hanley acted with reckless
disregard. Lastly, finding no prejudice to the
Defendants from Plaintiffs’ counsel’s remarks, the
Court will deny their alternate request for a new trial.
I. FACTUAL AND PROCEDURAL
BACKGROUND
¶2 Gerace and Vooys met in culinary school in Arizona.
They decided to go into business together and “came
across Cane Bay Beach Bar on St. Croix, on the
internet.” (Trial Tr. 168:24-25.17) Gerace traveled to St.
Croix in June of 2003 to check out the restaurant. He
“looked at it and fell in love with the island[,]” he told
the jury. Id. at 438:24-25. “It was everything a
25-year-old kid can dream for.” Id. at 439:16-17. The
first time Vooys saw the restaurant—and the first time
she stepped foot on St. Croix was after she and Gerace
had driven their belongings “down to Florida, got on a
17
Unless otherwise noted, all citations to a transcript are from
the transcripts of the trial. Additionally, the Court has omitted
giving the day of the trial because the court reporter paginated the
trial transcripts consecutively, even though each day of trial is
contained in separate volumes.
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plane, [and] landed.” Id. at 169:20-22. They found out
in Florida, just before leaving for St. Croix, that the
previous owner of the Beach Bar did not have a lease
for the restaurant. See id. at 172:14-17, Gerace and
Vooys were engaged to be married. So, they continued
on because they that “had gotten that far. We had sold
a condo, packed up all our stuff.... So when we found
out there was no lease, we thought we’d take a leap of
faith and continue.” Id. at 172:19-24. Not long after
they arrived on St. Croix, Gerace and Vooys also
learned “that the landlord was going to ... sell the
property.” Id. at 173:2-3.
¶3 Gerace closed on the sale of the restaurant on
August 7, 2003, and started running it the same day,
“A few weeks after that, Hanley and Mosler came to
introduce themselves as the new landlords.”Id. at
173:15-16. Mosler & Hanley had formed Chrismos, a
limited liability company, on September 7, 2003, to
purchase the property, on which the Beach Bar was
situated, for $1,050,000. A dive shop, the Cane Bay
Dive Shop (hereinafter “Dive Shop”), owned and
operated by Hal and Susan Rosbach, was located to the
back of the same building. The Beach Bar and the Dive
Shop shared a cistern and electricity. One, contiguous
roof also covered the entire structure.
¶4 During their initial discussions with Mosler and
Hanley, Gerace and Vooys asked for a seven-year lease.
“We were just taught in school, seven years. Five and
five is okay, but seven years is the best lease for a
restaurant ... [b]ecause the first three years you’re not
even making a profit yet, so if there’s anything shorter
than seven, you need time to stay there long enough to
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recoup your investment[,]” she told the jury. Id. at
174.3-10.18 The prior Beach Bar owner, Maria Bentley,
had been paying the prior landlord $1,500 a month,
which included a residential cottage on the property.
Gerace and Vooys continued paying the same amount
but were not given a cottage to live in. When they first
discussed a seven-year lease, Mosler and Hanley “said
that that seemed ... reasonable. We would work on that
and we’d get one, you know. We’d talk more about it.”
Id. at 175:10-12.
¶5 Mosler and Hanley had conditions for getting a
seven-year lease, however. Gerace and Vooys had to
“make some improvements, general cleanup, some
repairs, paint the place,” id. at 175:23-24, repairs they
“thought were the landlord’s responsibility....” Id. at
175:25-176:1. Vooys explained that they “went ahead
and ... replaced screens and plywood and the outside of
the kitchen[,]” “resurfaced the bar[,]” “power washed
and did general cleanup and ... painted.” Id. at
176:9-11. They replaced ice coolers. They also hired
more bartenders. See id. at 155:7-13. “We had to
replace the sinks in the bathroom[,]” Vooys explained,
even though “things that are fixture[s] should normally
be the landlord’s responsibility.” Id. at 176:11-14. The
Beach Bar also had to split water and electricity costs
with the Dive Shop and Vooys said she asked Mosler
and Hanley about getting separate meters installed.
Rosbach had informed Gerace and Vooys after they
purchased the Beach Bar that the Bar pays 2/3 of the
18
“Five and five” refers to a five-year lease with an option to
renew for a second five-year term. (Cf. Trial Tr. 235:18-20.)
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bill and the Dive Shop pays 1.3. Vooys thought that
might not be fair. Gerace and Vooys could not install
separate meters because they did not own the building.
¶6 John Reed (hereinafter “Reed”) worked for the
Beach Bar as a bartender through multiple owners. He
helped Gerace and Vooys with the repairs Mosler
required for getting a lease: cleaning, power washing
the deck, painting. “It went on for a while. Two to three
weeks, at least, for the initial part. We kept doing more
after we opened[,]” Reed recalled. Id. at 510:22-24.
Gerace’s younger brother, Edward, also moved to St.
Croix in August 2003 at the age of 21, to help him and
Vooys run the Beach Bar. He “was to be a barback ...
[or] a bartender helper.” Id. at 417:6-7. He also worked
as a line clerk for Sunday brunches and helped with
the full moon parties. He was there when Gerace and
Vooys closed on the restaurant and described the state
as “need[ing] some work. There was painting. There
was maintenance issues. There was nails coming out of
the floor boards.” Id. at 418:6-8. Michael Belcheff
(hereinafter “Belcheff”) corroborated their testimony.
He met Vooys and Gerace “when they took over the
restaurant....” Id. at 400:24-25. He recalled that they
went “crazy making all kinds of improvements, making
the place better, just ... working their butts off.” Id. at
401:3-5. Belcheff even helped with some of the repairs
like “carpentry, some electrical work.... helping them
with the lighting....” Id. at 402:6-8.
¶7 Vooys testified that Mosley [sic] and Hanley wanted
them to prioritize the repairs to the restaurant over
rent and were “pretty casual” about whether rent was
paid on time. See id. at 193:13-14. At first, Hanley
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“was going to come by and pick up the rent when he
would stop by.” Id. at 175:5-6. Later, Mosler and
Hanley told Gerace and Vooys to drop the rent off at
Hanley’s real estate office, Farchette & Hanley,
“whenever [they] went to run errands in town....” Id. at
193:7-11, 194:1. Hanley agreed that he had said
Chrismos would be flexible on the rent. However, his
deposition testimony, which was read to him,
established both that rent was due on the 1st of the
month, and late if not paid by the 2nd of the month,
but also that if “they were current by the end of the
month on the rent, we were completely fine with that.
And that went for the dive shop as well.” Id. at 651:5-7.
¶8 Sometime in the beginning of March 2004, Mosler
and Hanley gave Gerace and Vooys a proposed lease.
Id. at 184:19-21. Vooys testified that the lease was
“terrible.”
We’d asked for seven years, because you need
you won’t make profit for at least three years.
This lease was two or two and a half years. We
couldn’t assign it; so in the future if we did want
to turn the bar over to someone else, we would
have to have them get a new lease. There was a
late fee, penalty[,] and attorney fees.... [W]e had
to decline our right to a trial by jury if there was
a conflict. And they were not obligated to do any
repairs, like the repairs we’[d] been talking
about, on the building.... [And rent] was going to
go from [$]1,500 to [$]2,000. Id. at 186:22-187:9.
Later that month Vooys shared their concerns with
Hanley who agreed, according to her, that “it was a
terrible lease....” Id. at 187:11-12. Hanley told them
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“they’d work on a better one.” Id. at 187:13.
¶9 In August 2004, a fire broke out in the kitchen. The
hood over the stove was too small for the size of the
space. Vooys and Gerace “had to order and ship and
install another hood, a larger hood, exhaust fan, new
fire suppression Ansul system, electrical, backsplash
for the kitchen.” Id. at 190:24-191:1. The Beach Bar
had to close for two months while they made the
repairs and waited for parts to be shipped on-island.
They approached Mosler & Hanley for assistance with
the repairs or forgiveness on the rent but were only
allowed to pay the rent late. Full rent had to be paid,
Vooys told the jury, and she and Gerace had to do all
the repairs and buy all the equipment themselves.
Because of the fire, Vooys and Gerace asked Mosler,
“before we do all these repairs, are we going to get a
seven-year lease before we put a bunch of money into
this place?” Id. at 187:20-22. According to Vooys,
Mosler said “[t]hey wanted to wait until they fixed
everything and got up and running and then we’d talk
about it again.” Id. at 191:16-17; see also id. at 192:1
(identifying Mosler as the person who made the
assurances). Vooys estimated the repairs from the fire
cost them between $15,000 and $20,000.
¶10 Mosler and Hanley offered Vooys and Gerace
another lease in November 2004, but with few
differences from the previous one in March. The name
of tenant was changed from Joseph Gerace to Barabus,
Inc., the corporation Vooys and Gerace had formed on
August 12, 2003, and the rent was put back at $1,500,
but would also increase sometime later to $2,500. The
lease also was not for seven years as they had asked.
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So Vooys and Gerace reached out to Gerald T. Groner,
Esq., the attorney they had used to form Barabus, for
advice about the second lease. Neither could recall if
Attorney Groner reached out to Mosler and Hanley’s
attorney, and they never followed up with Attorney
Groner. See id. at 467:22-468:13.
¶11 Sometime in February 2005, Rosbach, the Dive
Shop owner, introduced Reed to James Jordan
(hereinafter Jordan). Jordan asked Reed to meet him
at Off the Wall, another bar and restaurant on St.
Croix’s north shore not far from the Beach Bar. They
met after Reed finished work. Jordan told Reed that
“[h]e was going to be taking over the lease and Warren
Mosler was his boss....” Id. at 514:10-11. Jordan asked
Reed if he “was interested in going to work for them.”
Id. at 514:12. Reed said yes because he needed the job.
Jordan asked Reed “to keep everything low, don’t tell
anybody, which [Reed] didn’t feel too good about, but
[he] went with it.” Id. at 514:13-15.
¶12 Beginning in March 2005, Mosler began to accuse
Gerace and Vooys of being behind on their rent. He
also visited the restaurant around the same time and
told them that
he did not like the direction [they] ... were
taking the bar and restaurant. He had issues
with the full moon parties and the crowds and
element that the parties brought. He wanted to
turn it in a white, middle-class restaurant and
he had somebody in place to take over from ...
[them] and [they] ... needed to make this
transaction within a month. (201-23-202:4.)
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Vooys disagreed, saying she was “pretty adamant
about ... cleanliness, especially in a bathroom.” Id. at
178:21-22. “If you’re in a restaurant, if people see a
dirty bathroom, they think your kitchen is dirty. So I
was adamant about cleaning[,]” she said. Id. at
176:22-24. “My employees knew the bathrooms had to
be spick and span.” Id. at 176:25. Donna Christensen
(hereinafter “Christiansen”), family physician and
former delegate to Congress, corroborated Vooys’s
testimony, saying she had no problem with the
cleanliness of the restaurant or the bathroom but had
only patronized the Beach Bar a few times. John H.
Woodson, III (hereinafter “Woodson”) agreed. He owns
a home in LaVallee on St. Croix, where he lived until
2011, when he moved to St. Thomas. He frequented the
Beach Bar and attended most of the full moon parties
when Gerace and Vooys owned it. He said he found the
cleanliness of the bathrooms and the restaurant
“normal.... Otherwise, [he] would not eat there.” Id. at
390:19-24.
¶13 Gerace and Vooys called Hanley to ask what was
going on because they had “just got back on [their] feet
and ... [by] the beginning of 2005 ... were doing great.”
Id. at 202:15-17. Hanley told them that Mosler “had a
guy in place ... and ... [he] wanted that guy to take
over.” Id. at 202:20-22. They told Hanley they did not
want to sell and the four had a meeting about a week
later. According to Vooys, “Mosler told us we were not
getting a lease.... [H]e did not like the way we were
running the restaurant. He thought it was dirty.” Id. at
204:1-3. “He reiterated he didn’t like the direction we
were going and the clientele we were bringing in and
he wanted to be able to bring his clients to have
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meetings, more like a white, middle-class restaurant,
and we needed to come up with an exit strategy.” Id. at
204:14-18. Mosler also complained that “[t]here were
too many dogs around[,]” id. at 205:3, and said that
they “just weren’t making a go of it, that [they] didn’t
know what [they] were doing.”Id. at 205:6-7. Vooys
walked away and went to the back of the restaurant
and “wailed”. Id. at 205:18. Gerace came back to check
on her and console her and when they returned Mosler
& Hanley had left. Belcheff corroborated their
testimony. He said he saw Mosler and Hanley meeting
with Gerace and Vooys, so he left, and returned about
30 minutes later. When he returned, he “saw V.I.C. §
crying ... [and] Joe with like a stunned look on his
face....” Id. at 405:9-10.
¶14 Hanley came back a few days later to discuss
“facilitating th[e] transfer from [them] to the[ ] guy
they wanted to come in and take over....” Id. at
207:10-12. Hanley offered to give Gerace and Vooys a
lease but only so they could sell it to Jordan. Jordan
insisted on having a lease before he would take over
the Beach Bar. Chrismos then served a letter on Vooys
and Gerace, dated April 12, 2005, saying that it was
their understanding that Gerace and Vooys had agreed
to vacate the premises by the end of the month and if
not, their property would be confiscated. The letter
concluded by asking Vooys and Gerace to confirm
whether Mosler and Hanley’s recollection of their
discussion was accurate. Vooys and Gerace reached out
to Lee J. Rohn, Esq. who sent a letter on April 20, 2005
on their behalf, stating that they had no intention of
leaving the Beach Bar.
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¶15 According to Vooys, Mosler then “started like a
smear campaign on why he was getting rid of [them] on
the radio and TV.” Id. at 208:10-11. No one could recall
exactly when, but Vooys recalled that it was after they
received the April 12, 2005 letter. The talk show was
hosted by Roger Morgan (hereinafter “Morgan”).
Morgan read the April 12, 2005 letter on the radio and
Mosler told listeners that he was “getting rid of [Gerace
and Vooys] because [they] didn’t know what [they]
were doing ... were always late on rent ... were behind
on rent, [and] ... didn’t know how to run a restaurant.”
Id. at 210:1-4. Vooys also said she heard Mosler claim
that he had reduced their rent, which she denied. Reed
heard Mosler on the radio talking negatively about the
Beach Bar and Gerace and Vooys, “saying that they
didn’t pay rent, that they supposedly loud parties were
there. I think they even mentioned something about
drugs or something in that area on the radio[,]” he
said. “[I]t was always negative.” Id. at 520:21-25.
Christensen too heard about Mosler being on Roger
Morgan’s show talking about the Beach Bar but had
not heard the show herself. Woodson went on the radio
show to complain about Gerace and Vooys being put
out of the Beach Bar. He told listeners the reason was
not “noise ... [but] the music and type of clientele that
that music probably brought.” Id. at 392:18-20. Hanley
too went on the radio show, and so did Vooys but only
because Morgan called her for a rebuttal. Hanley said
he went on the radio to “defend[ his] ... character ...
[his] position, and ... made statements that were
basically countering the lies and inaccuracies that they
were claiming on the radio.” Id. at 624:2-5. Hanley said
Vooys and Gerace were telling everyone that “they
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were always current on their rent and that they were
current at that time, and [he] stated that that’s not
true. They had been late a lot and that they were not
current at that time, when [he] was on the radio.” Id.
at 624:8-11. Later that afternoon, after Hanley spoke
on the Roger Morgan show, Vooys and Gerace arrived
at Farchette and Hanley “with April’s rent check.” Id.
at 624:18.
¶16 Business started to decline after Mosler went on
the radio. Reed recalled that “for the last couple
months ... Joe and V.I.C. § were there, this whole radio
thing was going on and ... everybody that came in or I
saw elsewhere was talking about it, not in a good way.”
Id. at 535:16-19. Vooys and Gerace signed an asset
purchase agreement with Jordan, dated June 17, 2005,
for $30,000. Jordan initially offered $50,000. “By the
time we signed and left, we just felt like total
failures[,]” Vooys testified. Id. at 222:6-7. “It’s like we
lost everything[,]” she explained. “And it’s not just
money, it’s energy. You know, we were there like ten,
12 hours a day every day. You know, you put a lot of
passion into it. We loved that place and the people that
- that became our patrons and it just stunk.” Id. at
205:21-25. Anthony recalled Vooys and Gerace “were
majorly bummed,” id. at 162:3, when they learned they
had to leave. He also said the Beach Bar declined after
they Gerace and Vooys left. “Less locals.” Id. at 163:3.
Anthony continued to attend and reggae music is still
played at the bar though “not as often ...” Id. at 164:5.
He stopped going as frequently because “[t]he food
wasn’t as good. We weren’t having as much fun. Less
and less of people that we used to hang out who were
also locals were going there.” Id. at 165:12-14.
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¶17 Vooys testified that when they left at the end of
June, they did not owe WAPA and did not owe
anything to the Dive Shop. She estimated that they
had spent $40,000 on repairs, $20,000 on equipment,
and $50,000 in good will such as advertising and
promotions. Vooys and Gerace left island for a time
after leaving the Beach Bar but returned to start a new
business, Club 54, in August or September of 2005.
Vooys testified that she had not returned to the north
shore until days before trial and never returned to the
Beach Bar. “It was too emotional. Too emotional, too
painful. Too embarrassed.” Id. at 230:17-18.
¶18 In the interim, on June 8, 2005, Gerace and Vooys,
doing business as Cane Bay Beach Bar, sued the
former owners, Maria Bentley, David Bentley, and
their company CB3, Inc. (collectively the “Bentleys”),
as well as Mosler, Hanley, and Chrismos. From the
Bentleys, Vooys and Gerace sought damages, including
punitive damages, for breach of contract (Count I),
fraud (Count II), and misrepresentation (Count III) for
not having a lease and not owning the “Cane Bay
Beach Bar” tradename. From Chrismos, Vooys and
Gerace sought damages, including punitive damages,
for breach of an agreement to enter into a lease (Count
V). From Chrismos, Mosler, and Hanley, Vooys and
Gerace sought damages, including punitive damages,
for defamation, slander, libel, and defamation per se
(Count VI), fraud (Count VII), misrepresentation
(Count VIII), intentional or negligent infliction of
emotional distress (Count IX), and breach of the duty
of good faith and fair dealing (Count X). The demands
for punitive damages were erroneously labeled as
Counts IV and XI, respectively, as to the Bentleys and
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the Chrismos Defendants.
¶19 Chrismos and Mosler appeared on July 12, 2005,
and jointly answered the complaint but counterclaimed
separately. Mosler asserted a counterclaim for
defamation [check that] and Chrismos asserted a debt
counterclaim for unpaid rent. Chrismos also asserted
the affirmative defenses of failure to state a claim for
relief, statute of frauds, laches, estoppel, waiver,
unclean hands, and failure of consideration. Mosler did
not assert any affirmative defense. David Bentley
appeared on July 13, 2005, and answered the
complaint. Hanley appeared on August 22, 2005,
answered the complaint, and asserted the same
affirmative defenses as Chrismos. He did not assert a
counterclaim. The Court (Ross, J.) entered default
against Maria Bentley and CB3, Inc. on December 29,
2005, and entered on January 2, 2006. Maria Bentley
appeared pro se on January 23, 2006, answered the
complaint, and asserted a counterclaim on her own
behalf and on behalf of CB3, Inc. for the unpaid
balance on the sale of the Beach Bar. On January 24,
2006, Bentley moved to vacate her default, which the
Plaintiffs opposed. The case then went dormant for
several years until the Chrismos Defendants moved to
dismiss for failure to prosecute or for a stay pending
the posting of a bond. The Court (Donohue, P.J.) later
denied the motion to dismiss but also directed the
parties to submit a propose scheduling order to get the
case back on track.19
19
The case had been reassigned to the Honorable Julio A.
Brady after the retirement of the Honorable Edgar D. Ross. It was
reassigned to the Honorable Darryl Dean Donohue, Sr. after
A-67
¶20 After several extensions of discovery deadlines,
David Bentley was dismissed, over Plaintiffs’ objection,
because Plaintiffs failed to file a motion within 90 days
to substitute a personal representative for Mr. Bentley
after he died in a plane crash. Discovery, and motions
pertaining to discovery, continued for several years.
Eventually the case was reassigned to this Court who,
on April 14, 2016, dismissed the complaint after the
Plaintiffs, who subsequently had moved off-island,
failed to post a bond in accordance with Title 5, Section
547 of the Virgin Islands Code. See Gerace v. Bentley,
62 V.I. 254 (Super. Ct. 2015), rev’d 65 V.I. 289 (2016).
On appeal, the Supreme Court of the Virgin Islands
reversed and remanded, holding the statute
unconstitutional. See Gerace v. Bentley, 65 V.I. 289
(2016), writ dismissed sub nom. Vooys v. Bentley, 69
V.I. 975 (3d Cir. 2018) (en banc). On remand, and after
delays due in part to the COVID-19 pandemic, jury
selection and trial commenced on February 24, 2022.
Plaintiffs, Maria Bentley, and the Chrismos
Defendants previously had submitted a proposed joint
final pretrial order, which the Court approved on
August 12, 2021, in which Mosler dropped his
counterclaim for defamation. Plaintiffs, Maria Bentley,
and CB3, Inc. also voluntarily dismissed their claims
and counterclaims against each other before trial,
leaving only the claims by and against Chrismos
Defendants to be decided by the jury.
¶21 In addition to the testimony summarized above,
the jury was also presented with documentary
Judge Brady recused himself.
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evidence. Plaintiffs’ Exhibit 47 is a group of cancelled
checks. The first two checks, numbered 355 and 357,
were written by Vooys on her Bank of America account
to the Farchette & Hanley Escrow Account, for
$1,500.00 (for October 2003) and $3,000.00 (for
November and December 2003). The remaining checks
were issued by Cane Bay Beach Bar on a FirstBank VI
account, also to the Farchette & Hanley Escrow
Account. Collectively, the checks show rent the
Plaintiffs paid from October 2003 to June 2005, but on
an irregular basis. At least one rent check bounced but
it was eventually covered. Vooys and Gerace also paid
rent for June 2005 before vacating the premises at the
end of that month. All checks were made out to
Farchette & Hanley, not to Chrismos or to Hanley or
Mosler directly.
¶22 Copies of some of the rent checks, specifically
checks numbered 544 for $921.00 and 772 for
$2,000.00, differed between the parties. On
Defendants’ copy of check number 544, the memo line
reads: “Rent March — Plumber Bills”, while on
Plaintiffs’ copy March is crossed out, “April” is written
above March, and parentheses are added around the
words “Plumber Bills.” On Defendants’ copy of check
number 722, the memo line was blank, while on
Plaintiffs’ copy, the memo line reads: “July / August 1000 for Roof)”. Vooys did not have copies of receipts
for the repairs done by Raycon Mechanical to the roof
after the fire, or for repairs done by a plumber for the
bathroom. She reiterated that both repairs were
approved by Hanley and denied adding the notations
on the memo lines to make it look like rent was
current. Vooys explained on cross examination that she
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only added to, or revised, the checks’ memo lines for
record-keeping purposes, explaining that she “wouldn’t
just write a weird number ... rent check for a weird
number.” (Trial Tr. 361:25-362:1.) Vooys conceded on
redirect examination that she was not good about
keeping receipts and that Gerace was “[e]ven worse.”
Id. at 370:15.
¶23 On direct and cross-examination, Hanley disputed
that Chrismos would have agreed to pay for plumbing
repairs but agreed that Chrismos would have paid for
repairs to the Beach Bar’s grease trap. He assumed
that the $921.00 rent check (#544) was for the grease
trap repairs. But when pressed why he did not object
when the check for less than the full amount came
without a receipt, he explained that he would have
treated the check as a partial payment toward the rent.
Chrismos never gave Plaintiffs receipts for rent or a
statement showing a balance due. Hanley also
admitted on cross-examination that he was mistaken
when he testified that Vooys and Gerace paid rent late
in October, November, and December of 2003, and
January and February of 2004. Mosler also confirmed
that he and Hanley “always acted in the capacity as
members of Chrismos.” Id. at 714:18-19.
¶24 After Plaintiffs rested, Defendants moved for
judgment as a matter of law on all counts. As to Count
V (breach of an agreement to enter into a lease),
Defendants claimed that Vooys and Gerace failed to
present any evidence that they incurred financial
losses, as opposed to the company, Barabus, who
owned and operated the Beach Bar. The Court denied
the motion, finding a dispute of fact. Regarding Counts
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VII (fraud), VIII (misrepresentation), and X
(intentional or negligent infliction of emotional
distress), Defendants argued that all three claims were
barred by the gist of the action doctrine, as adopted by
Pollara v. Chateau St. Croix, LLC, Case No.
SX-06-CV-423, 2016 V.I. LEXIS 49, 2016 WL 2865874
(V.I. Super. Ct. May 3, 2016), which held that tort
claims merge with contract claims when the dispute
between the parties arises from a contract. Defendants
also asserted a lack of evidence of fraud or intentional
misrepresentation. Plaintiffs opposed, claiming
Defendants waived gist of the action as an affirmative
defense by not asserting it in their answers. The Court
took the motion under advisement as to the tort claims.
Mosler moved to dismiss Count VI (the defamation
claims), contending that Plaintiffs thrust themselves
into the limelight by being the first ones to go on the
radio. The Court also took the motion under
advisement as to Count VI. As to Count IX (intentional
or negligent infliction of emotional distress), Plaintiffs,
after hearing Defendants’ arguments, agreed that they
did not carry their burden of proof and agreed to
withdraw the claim. Lastly, Mosler and Hanley argued
that all counts against them failed because they were
shielded from individual liability by the Virgin Islands’
limited liability company laws, specifically Title 13,
Section 1303(a) of the Virgin Islands Code. Plaintiffs
again objected, claiming Mosler and Hanley failed to
allege the individual immunity of the members of a
limited liability company as an affirmative defense.
The Court took Defendants’ statutory immunity
argument under advisement as well.
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¶25 Defendants renewed their motion after they
presented their defense and rested, and Plaintiffs
called one witness in rebuttal. Defendants’ arguments
after the close of all evidence largely mirrored their
earlier arguments. However, Defendants also moved to
dismiss Plaintiffs’ allegations of mental anguish and
emotional distress within their breach of an agreement
to enter into a lease claim (Count V), arguing that
damages of this sort were unavailable in a contract
action. The Court also sua sponte removed Plaintiffs’
libel claim, finding no evidence of libel. Defendants
renewed their gist of the action claim but further
argued that the fraud and misrepresentation counts
were duplicative. Mosler and Hanley also renewed
their statutory immunity claim as members of
Chrismos, a limited liability company. In addition to
renewing their argument that the evidence Plaintiffs
presented was insufficient as to all their claims,
Defendants also argued that Plaintiffs failed to present
any evidence to support punitive damages, noting that
“punitive damages aren’t allowed for the contract[
claims].” (Trial Tr. 793:22-23.) Plaintiffs also moved for
judgment as a matter of law on Chrismos’s debt
counterclaim for unpaid rent. The Court reserved
ruling on both motions. After discussing the jury
instructions and the verdict form, Plaintiffs informed
the Court that they could only be awarded damages
once whether for breach of contract, intentional
misrepresentation, or breach of the duty of good faith
and fair dealing.
¶26 After deliberating, the jury returned a verdict in
Plaintiffs’ favor, finding that Chrismos had an
agreement with Plaintiffs and breached that
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agreement by not giving them a lease, finding that all
three Defendants made intentional misrepresentations
to Plaintiffs, and that all three Defendants also
breached their duty of good faith and fair dealing to
Plaintiffs. The jury awarded $ 100,000 to Plaintiffs in
damages. The jury also found that Mosler and Hanley
had defamed Gerace and Vooys and separately
awarded Gerace and Vooys $30,000 apiece from each
defendant. Lastly, the jury found that Mosler and
Hanley’s actions warranted punitive damages and
awarded Vooys $50,000 apiece from Mosler and
Hanley. Defendants renewed their motion for judgment
as a matter of law and also moved for a new trial based
on statements made by Plaintiffs’ counsel during
closing arguments, which Defendants contend were
prejudicial.
II. MOTION FOR JUDGMENT AS A MATTER
OF LAW
A. Legal Standard
¶27 “A party is entitled to judgment as a matter of law
when, in considering all of the evidence, accepting the
nonmoving party’s evidence as true, and drawing all
reasonable inferences in favor of the nonmoving party,
the court concludes that a reasonable jury could only
enter judgment in favor of the moving party.” Antilles
Sch., Inc. v. Lembach, 64 V.I. 400, 409 (2016). “ ‘In
performing this narrow inquiry, trial courts and
appellate courts must refrain from weighing the
evidence, determining the credibility of witnesses, or
substituting their own version of the facts for that of
the jury.’ “ Id. (brackets omitted) (quoting Chestnut v.
Goodman, 59 V.I. 467, 475 (2013)). “ ‘Although
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judgment as a matter of law should be granted
sparingly, a scintilla of evidence is not enough to
sustain a verdict of liability.’ “ Chestnut, 59 V.I. at 475
(quoting Corriette v. Morales, 50 V.I. 202, 205 (2008)
(per curiam)). Instead, “ ‘[a] motion for judgment as a
matter of law should be granted only when viewing the
evidence in the light most favorable to the nonmovant
and giving it the advantage of every fair and
reasonable inference, there is insufficient evidence
from which a jury reasonably could find liability.’ “ Id.
(brackets omitted) (quoting Corriette, 50 V.I. at 205).
B. Discussion
¶28 Before turning to the parties’ arguments, the
Court first must note some preliminary points. In
addition to the claims against the Bentley Defendants,
Plaintiffs also asserted one count against Chrismos,
which counsel continuously referred to as a breach of
contact claim, even though the complaint stated the
claim as being for breach of an agreement to enter into
a lease. The remaining counts—defamation, fraud,
misrepresentation, intentional or negligent infliction of
emotional distress, and breach of the duty of good faith
and fair dealing were asserted against all three
Chrismos Defendants. After Plaintiffs rested and
Defendants moved for judgment as a matter of law,
Plaintiffs withdrew Count IX, intentional or negligent
infliction of emotional distress. Thus, the Court must
enter judgment in favor of Chrismos, Mosler, and
Hanley as to Count IX.
¶29 Additionally, after both sides had rested and
Defendants renewed their motion for judgment as a
matter of law, Defendants raised a new argument, that
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Plaintiffs’ fraud and misrepresentation claims were
duplicative. (See Trial Tr. 778:2-5 (“And we respectfully
submit those are the same counts and there’s no
separate count under Virgin Islands [law] for fraud and
for misrepresentation. It’s the same count.”).) Plaintiffs
initially disagreed. However, after reviewing the
proposed jury instructions and hearing the arguments
of Defendants counsel, Plaintiffs’ counsel agreed that
the damages were the same. See generally id.
824:16-826:7; see also id. at 837:1-7 (“MS. ROHN: Your
Honor, if you’ll recall earlier, I said you can take out
‘fraud’ and put in ‘intentional misrepresentation.’ So
we don’t intend to have a jury instruction on fraud
because we are doing intentional misrepresentation
because I agree with Attorney Holt that they’re both
that the damages are the same.”). As Plaintiffs
consented either to the dismissal of their fraud count,
or its merger with their misrepresentation count, and
because the jury was not instructed on the fraud count,
the Court also must enter judgment in favor of
Defendants as to Count VII.
i. Gist of the Action Doctrine and Immunity of
Individual LLC Members
¶30 In their motion for judgment as a matter of law,
Defendants incorporate their prior arguments
regarding the gist of the action doctrine, which they
first raised after the Plaintiffs had rested and then
renewed at the close of all evidence. They also
incorporate their prior arguments regarding the
immunity of Mosler and Hanley under Title 13, Section
1303 of the Virgin Islands Code, as members of
Chrismos, a limited liability company (hereinafter
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“LLC”). Plaintiffs’ response to both arguments is the
same - the gist of the action doctrine and the immunity
of individual LLC members are affirmative defenses
that are waived. (See generally Trial Tr. 795:4-9 (“Even
if not waived, the general rule of officers, directors and
shareholder liability is that an officer or director of a
corporation who takes part in the commission of a tort
by the corporation is personally liable for resulting
injuries.”); id. at 796:3-5 (“As to the gist of the action
argument ... that defense has been waived.”).) As both
arguments raise unsettled questions of law, and do not
necessarily concern the evidence admitted at trial, the
Court will address these questions first.
¶31 Contrary to Plaintiffs’ assertions, not every
defense is affirmative. “A defense which demonstrates
that plaintiff has not met its burden of proof as to an
element plaintiff is required to prove is not an
affirmative defense.” Zivkovic v. S. Cal. Edison Co.,
302 F.3d 1080, 1088 (9th Cir. 2002) (citing In re:
Rawson Food Serv., Inc., 846 F.2d 1343, 1349 (11th
Cir. 1988)). Defenses that attack the plaintiff’s
complaint are called negative defenses. (Cf. Trial Tr.
783:16 (“[W]e would call them negative defenses....”).)
“A negative defense is an attack on the plaintiff’s
prima facie case, for example, a defense of no causation
to a negligence claim. As one court put it, a negative
defense is the equivalent of a defendant saying, I did
not do it.” Hon. Amy St. Eve & Michael A. Zuckerman,
The Forgotten Pleading, 7 Fed. Cts. L. Rev. 152, 160
(2013) (internal quotation marks, footnotes, and
footnoted citations omitted). “Indeed, it is well settled
that ‘a defense which points out a defect in the prima
facie case is not an affirmative defense.’ These defenses
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are sometimes referred to as ‘negative’ defenses
because they are simply an attack on a party’s prima
facie case.” Gomez v. Bird Auto., LLC, 411 F. Supp. 3d
1332, 1339 (S.D. Fla. 2019) (brackets, ellipsis, and
citations omitted).
¶32 “Unlike a negative defense, an ‘affirmative defense
is one that admits the allegations in the complaint, but
seeks to avoid liability, in whole or in part, by new
allegations of excuse, justification, or other negating
matter.’ “ St. Eve, et al., The Forgotten Pleading, 7 Fed.
Cts. L. Rev. at 160 (footnoted citation omitted). “As one
court explained, a ‘true affirmative defense raises
matters outside the scope of plaintiffs prima facie case
and such matter is not raised by a negative defense.’ “
Id. at 161 (footnoted citation omitted). “The modem
concept of the affirmative defense is ‘derived from the
common law plea of ‘confession and avoidance.’ ‘ “ Id.
(footnoted citation omitted). Thus, an “affirmative
defense ... ‘admits that the plaintiff has a claim (the
“confession”) but asserts some legal reason why the
plaintiff cannot have any recovery on that claim (the
“avoidance”).’ “ Baraby v. Swords, 851 N.E.2d 559, 571
(Ohio Ct. App. 2006) (quoting Eulrich v. Weaver Bros.,
846 N.E.2d 542, 546 (Ohio Ct. App. 2005)). The statute
of limitations is a quintessential example of an
affirmative defense because the defendant who asserts
it admits, or confesses, to the truth of the plaintiff’s
claim, but seeks to avoid liability because the plaintiff
delayed too long in bringing that claim to court. So too
with other affirmative defenses such as res judicata or
worker’s compensation. All affirmative defenses
concede the truth of the plaintiff’s allegations but avoid
liability for that claim based on facts not stated in the
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complaint. See In re: Top Flight Stairs & Rails, Ltd.,
398 B.R. 321, 325 (Bankr. N.D. Ill. 2008) (“An
affirmative defense ‘requires a responding party to
admit a complaint s allegations but then assert that for
some legal reason the responding party is nonetheless
excused from liability.’ “ (brackets and ellipsis omitted)
(quoting Reis Robotics USA, Inc. v. Concept Indus., 462
F. Supp. 2d 897, 906 (N.D. Ill. 2006))).
¶33 “Identifying whether a defense is negative or
affirmative is often easy.” St. Eve, et al., The Forgotten
Pleading, 7 Fed. Cts. L. Rev. at 161. Negative defenses
do not have to be pled in an answer. See id. at 164 (“In
contrast to affirmative defenses, negative defenses
need not be affirmatively pleaded in the answer.
Courts do not read the word ‘defenses’ in Rule 8(b)(1)
as extending to negative defenses. Because a negative
defense is an attack on the prima facie case—and not
a separate defense to prove at trial—the plaintiff
presumably already has sufficient notice of the basis
for the negative defense, and the reasons underlying
the requirement of pleading fall away.” (footnotes
omitted)). Failure to state a claim for relief is an
example of a negative defense that does not have to be
pled in an answer. See, e.g., Unigestion Holding, S.A.
v. UPM Tech., Inc., 305 F. Supp. 3d 1134, 1143-44 (D.
Or. 2018) (“ ‘Failure to state a claim’ is a negative
defense that merely argues that plaintiff has not met
its burden in establishing one or more elements of a
claim, whatever that burden may be at a given stage of
litigation.”). Affirmative defenses must be alleged in an
answer because they raise matters not alleged in the
complaint.
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¶34 “Although sometimes difficult to discern, the
distinction between the two categories of defenses is
crucial since affirmative defenses are generally waived
if not plead.” Ford Motor Co. v. Transp. Indem. Co., 795
F.2d 538, 546 (6th Cir. 1986); accord Coastal Air
Transp. v. Royer, 64 V.I. 645, 658 (2016) (“[A]ffirmative
defenses are waived if not raised at the first
opportunity in the Superior Court[.]”) (citation
omitted). Courts ask first whether the defense admits
or denies the allegations in the complaint. Defenses
that deny the complaint’s allegations are negative or
general defenses. Defenses that seek to avoid liability
for reasons not stated in the complaint are affirmative
defenses. “In determining whether a defense is an
affirmative one, the starting point should be the list of
affirmative defenses in Rule 8(c). A defense analogous
to or a derivative of one of the listed defenses should
generally be deemed an affirmative defense.” Ford
Motor Co., 795 F.2d at 546; accord Whyte v. Bockino, 69
V.I. 749, 754-55 (2018) (courts look first to the plain
language of Rule 8(c)(1) of the Virgin Islands Rules of
Civil Procedure in reviewing affirmative defenses).
¶35 Neither the gist of the action doctrine nor Title 13,
Section 1303 of the Virgin Islands Code are among the
enumerated defenses listed in Rule 8(c) of the Virgin
Islands Rules of Civil Procedure. That does not end the
Court’s inquiry, however. Instead, the Court must
consider whether each defense admits to the
allegations in the complaint or raises matters outside
the complaint. If the defense merely denies the
allegations in the complaint, it would be a negative
defense and need not be listed in Rule 8(c). Plaintiffs
would be mistaken in asserting that Defendants
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waived the defense in that instance. However, if the
defense requires proof of facts not alleged in the
complaint, it would be affirmative, and the next
question would be whether the defense is analogous or
derivative of another affirmative defense.
¶36 Turning first to Mosler and Hanley’s claim of their
statutory immunity of individual LLC members,
Section 1303 of Title 13 of the Virgin Islands Code does
provide that “[a] member or manager is not personally
liable for a debt, obligation, or liability of the company
solely by reason of being or acting as a member or
manager.”13 V.I.C. § 1303(a). Additionally, “[t]he
failure of a limited liability company to observe the
usual company formalities or requirements relating to
the exercise of its company powers or management of
its business is not a ground for imposing personal
liability on the members or managers for liabilities of
the company.” Id. § 1303(b). LLC members may be
liable in their capacity as members if provided in the
articles of organization and the member consents in
writing. See generally id. § 1303(c).
¶37 Clearly, the statutory immunity of an LLC
member is an affirmative defense. The members of an
LLC, and whether the consented to individual liability,
will generally require proof of facts outside the
complaint. As a form of immunity provide by statute it
is analogous to the worker’s compensation affirmative
defense. Additionally, several courts in other
jurisdictions have also held that the statutory
immunity of individual LLC members is an affirmative
defense. See, e.g., Philp v. SE. Enterps., LLC, No.
M2016-02046-COA-R3-CV, 2018 WL 801663, *15
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(Tenn. Ct. App. Feb. 9, 2018) (“[Tennessee statutes]
provide limited liability to members, managers and
agents of a limited liability company. As such, the
statutes are affirmative defenses that must be pled in
accordance with Tennessee Rule of Civil Procedure
8.03.”); Baraby, 851 N.E.2d at (“We find the protection
against individual liability afforded to members and
managers of a limited liability company is an
affirmative defense.”); Klaus v. United Equity, Inc.,
2010-Ohio-3549, ¶27 (“The plain language of R.C.
1705.48 assumes the existence of a valid claim (the
‘confession’) by using the terms ‘debts,’ ‘obligations,’
and ‘liabilities,’ as well as ‘judgment,’ ‘decree,’ or ‘order
of a court.’ The statute, then, provides ‘the avoidance’
by specifically exempting members and managers of
limited liability companies from personal liability on
these assumed, valid claims against the limited
liability company. As such, the statute provides an
affirmative defense, by definition, as we found in
Baraby.”); accord Downing v. Goldman Phipps PLLC,
No. 4:13-CV-206 CDP, 2017 WL 1050980, 2017 U.S.
Dist. LEXIS 39408, *18-19 (E.D. Mo. Mar. 20, 2017)
(referring to immunity of individual member of former
professional limited liability company as an affirmative
defense); Lieberman v. Mossbrook, 208 P.3d 1296,
1312-13 (Wy. 2009) (referring to assertion that
individual members were not proper parties as an
affirmative defense and reversing imposition of
individual liability and remand for correction of
judgment to name LLC as defendant); see also Keller
Williams Consultants Realty v. Trio Custom Homes,
Ltd., No. 12 CVH-09-11908, 2013 Ohio Misc. LEXIS
10959, *32 (Ohio Ct. Com. Pl. Dec. 23, 2013) (finding
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defendant adequately raised lack of personal liability
by moving to amend answer to allege he was acting as
member of LLC at all times). Cf. Joe Hand Promotions
v. Davis, No. C 11-6166 CW, 2012 WL 4803923, 2012
U.S. Dist. LEXIS 145402, *9-10, *18-20 (N.D. Cal. Oct.
9, 2012) (referring to individual LLC member
immunity affirmative defense as failure to join an
indispensable party or failure to state a claim);
¶38 “A limited liability company (LLC) is a hybrid of
two basic business entities. It ‘combines the
organizational flexibility and pass-through tax
treatment of a partnership with the limited liability
protection of a corporation.’ “ Shelter Mortg. Corp. v.
Castle Mortg. Co., L.C., 117 F. App’x 6, 13 (10th Cir.
2004) (quoting 1A William Meade Fletcher, et al.,
Fletcher Cyclopedia of the Law of Private Corporations
§ 70.50 (perm. ed. 2002)). Mosler and Hanley were
entitled to claim the limited liability protection of
Chrismos as its members. They did not. First, in the
answer that Mosler and Chrismos filed on July 12,
2005, did not assert the statutory LLC immunity of
Mosler as an affirmative defense. In fact, Mosler did
not assert any affirmative defenses since their answer
clearly provided that “Chrismos Cane Bay, LLC hereby
asserts the following affirmative defenses....” (Ans. 5,
filed July 12, 2005.) The Answer does not define both
Mosler and Chrismos as “Chrismos” and the language
just quoted is written in the singular tense: Chrismos
“asserts”, not Chrismos and Mosler “assert.” Since
Mosler did not assert any affirmative defenses, he
clearly waived the LLC member immunity defense. So
did Hanley. His answer, filed separately from the
answer filed jointly by Mosler and Chrismos, asserted
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the same affirmative defenses as Chrismos. Section
1303 immunity belongs to the members, not the LLC.
Hanley did not assert it either. Thus, Plaintiffs are
correct that Mosler and Hanley waived the affirmative
defense of the statutory immunity afforded LLC
members by waiting until the close of the Plaintiffs’
case in chief to raise it. See Coastal Air Transp., 64 V.I.
at 658.
¶39 As for the gist of the action doctrine, it is clear that
Plaintiffs are mistaken, the gist of the action doctrine
is a negative defense. “The gist of the action doctrine is
a theory under common law ‘designed to maintain the
conceptual distinction between breach of contract
claims and tort claims.’ The doctrine is policy-based,
arising out of the concern that tort recovery should not
be permitted for contractual breaches.” Addie v. Kjaer,
60 V.I. 881, 897-98 (3d Cir. 2013) (citation omitted).
The gist of the action doctrine is a negative defense
because it does not require proof of any fact not already
alleged in the plaintiff’s complaint. Instead, the
defendant asserting the gist of the action doctrine
contends that the complaint alleges a contractual
relationship between the plaintiff and the defendant
and tort claims are not permitted. Instead, the plaintiff
is limited to whatever rights the parties agreed to in
their contact. However, contrary to what Defendants
represented during oral argument, the Supreme Court
of the Virgin Islands has not recognized the gist of the
action doctrine yet.20, 21 Thus, a Banks analysis would
20
Defendants’ counsel represented multiple times that the
Supreme Court of the Virgin Islands had recognized the gist of the
action doctrine in Pollara. (See Trial Tr. 572:14-22 (“Your Honor,
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under the Supreme Court holding in Pollara versus Chateau St.
Croix ... this jurisdiction recognizes the gist of the action [d]octrine
which states that if there is a contract claim, it can’t be turned
into a tort claim. And in particular, our Supreme Court adopted
the gist of the doctrine as the law in the Virgin Islands after doing
a Banks analysis.”).) Pollara is not binding. It was decided by a
Superior Court judge. There is a Pollara decision issued by the
Virgin Islands Supreme Court, Pollara v. Chateau St Croix, LLC,
58 V.I. 455 (2013), but that decision was issued three years prior
to the gist of the action Pollara decision. There is also a Pollara
decision by the United Sta
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