First American Development Group/Carib, LLC v. WestLB AG

55 V.I. 594, 2011 WL 3489889, 2011 V.I. Supreme LEXIS 19
CourtSupreme Court of The Virgin Islands
DecidedJuly 26, 2011
DocketS. Ct. Civ. No. 2010-0084
StatusPublished
Cited by30 cases

This text of 55 V.I. 594 (First American Development Group/Carib, LLC v. WestLB AG) is published on Counsel Stack Legal Research, covering Supreme Court of The Virgin Islands primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
First American Development Group/Carib, LLC v. WestLB AG, 55 V.I. 594, 2011 WL 3489889, 2011 V.I. Supreme LEXIS 19 (virginislands 2011).

Opinion

OPINION OF THE COURT

(July 26, 2011)

Hodge, C.J.

Appellant First American Development Group/Carib, LLC appeals from the Superior Court’s June 9, 2010 Opinion and Order appointing Richard Morawetz as receiver for properties owned by First American and mortgaged to Appellee WestLB AG, as well as an April 8, 2010 Order that reaffirmed the appointment of the receiver. For the reasons that follow, we will dismiss First American’s appeal for lack of jurisdiction.

I. FACTUAL AND PROCEDURAL BACKGROUND

On March 28, 2007, First American and WestLB entered into a loan and security agreement in which WestLB agreed to lend First American up to $61,600,000.00 to enable First American to construct a luxury fractional ownership resort, known as Pond Bay, in St. John, U.S. Virgin Islands. As security for the repayment of this loan, First American also [598]*598entered into a mortgage agreement with WestLB in which it provided WestLB with a first priority mortgage and construction security interest in the Pond Bay property and assigned various others interests to WestLB, including a security interest in the collateral pledged to secure repayment of the loan, as well as an assignment to all permits, government approvals, and architectural and engineering plans related to Pond Bay.2 In addition to WestLB’s loan, First American secured an equity contribution from Arcapita, Inc. — a Bahraini bank — to fund the remaining costs of the project.

Pursuant to the loan agreement, the Pond Bay project was scheduled to be completed on May 19, 2009. But although construction had begun in 2008 and continued into 2009, representatives of First American and WestLB, after meeting on April 1, 2009, set the completion date back to November or December 2009 because additional funding beyond that provided in the loan agreement was necessary to continue work. Thus, from April 2009 through October 2009, First American and WestLB, together with representatives from Arcapita, Glass Ratner Advisory & Capital Group LLC — a firm Arcapita and First American hired to assist them with restructuring the budget of the Pond Bay project in order to obtain additional financing — and Alvarez & Marshal — a firm hired by WestLB to provide it financial advice and consulting services — discussed possible ways to complete the project despite the shortfall. While negotiations were ongoing, WestLB, in a June 26, 2009 letter, notified First American that the loan was not “In Balance” because the $61,600,000.00 would not be sufficient to complete the Pond Bay project. On July 14, 2009, WestLB again sent First American a letter stating that the loan was almost fully funded and that there was an expected shortfall of $12,654,386.96.

Ultimately, for reasons the parties heavily dispute, the negotiations were not successful.3 Although WestLB paid a $500,000.00 “protective payment” to various subcontractors in order to ensure that work on the [599]*599Pond Bay project would continue, several liens were filed against the Pond Bay property beginning on September 25, 2009, which, according to WestLB, exceed $7,000,000.00. Around this same time, WestLB filed an application with the Division of Coastal Zone Management (“CZM”) to have First American’s permit for the Pond Bay project assigned or transferred to WestLB. According to First American, WestLB failed to provide it with any notice of this application. As a result of the parties’ failure to provide sufficient funds, various subcontractors ceased work on the Pond Bay project on November 9, 2009, eventually resulting in construction being suspended.

On November 12, 2009, WestLB sent a letter to First American formally notifying it that it was in default under the loan agreement, and demanding that all unpaid principal, accrued interest, and other charges be immediately paid. In addition, the November 12, 2009 letter notified First American of WestLB’s intent to seek appointment of a receiver. The following day, WestLB filed an action for foreclosure in the District Court of the Virgin Islands. On November 16, 2009, First American filed suit against WestLB for breach of contract in the Superior Court. WestLB filed an answer and a counterclaim for foreclosure to the First American lawsuit on December 2, 2009, and on the same day filed an emergency motion for appointment of a receiver, which the Superior Court granted without a hearing on December 15, 2009. However, after First American filed a motion for reconsideration on December 16, 2009, the Superior Court, in a December 18, 2009 Order, vacated the December 15, 2009 Order after agreeing that a hearing should have been held to allow First American to argue in opposition to WestLB’s motion and to challenge the factual and legal bases for appointing a receiver.

On January 12, 22, 29, and 30, 2010, the Superior Court heard testimony from the parties, and heard oral argument on February 10, 2010. In addition, the Superior Court visited the Pond Bay property on January 23,2010, and recorded a video of the site visit, which it made part of the Superior Court record. In an April 8, 2010 Opinion and Order, the Superior Court again granted WestLB’s motion for appointment of a receiver, but required the parties to submit supplemental briefs as to the receiver’s identity and powers. After considering the parties’ submissions, [600]*600the Superior Court, in a June 4, 2010 Opinion and Order, appointed Richard Morawetz — a managing director of Alvarez & Marshal — the receiver of the Pond Bay project, and set forth the powers Morawetz would possess as receiver.

On June 16, 2010, First American filed a document captioned “Motion to Temporarily Stay and Clarify the Court’s Order Dated June 3, 2010, or to Correct and/or Reconsider,” which stated that it was being brought pursuant to Federal Rule of Civil Procedure 59(e), Federal Rule of Civil Procedure 60(a), Federal Rule of Civil Procedure 60(b), and District Court Local Rule of Civil Procedure 7.3. The Superior Court, in a September 30, 2010 Opinion and Order, held that First American’s motion could not arise under Rule 59(e), but denied the requested relief on the merits with respect to the other three authorities.

First American filed its notice of appeal on October 29, 2010. However, in its notice of appeal, First American stated that it was only appealing the April 8, 2010 and June 4, 2010 Opinions and Orders, and did not reference the September 30, 2010 Opinion and Order. Accordingly, this Court, in a November 12, 2010 Order, required the parties to submit letter-form briefs addressing (1) this Court’s appellate jurisdiction over First American’s appeal; and (2) whether First American timely filed its notice of appeal. After considering each party’s briefs, this Court, in a December 13,2010 Order, deferred consideration of the jurisdictional and timeliness issues, and directed the parties to further brief those issues along with the merits so that they could be addressed at oral arguments.

II. JURISDICTION

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Bluebook (online)
55 V.I. 594, 2011 WL 3489889, 2011 V.I. Supreme LEXIS 19, Counsel Stack Legal Research, https://law.counselstack.com/opinion/first-american-development-groupcarib-llc-v-westlb-ag-virginislands-2011.