Joseph Gerace, Victoria Vooys, d/b/a Cane Bay Beach Bar v. Maria Bentley; David Bentley; CB3, Inc.; Warren Mosler; Chris Hanley; and Chrismos Cane Bay, LLC

• Court: Superior Court of The Virgin Islands
• Decided: September 12, 2022
• Docket: SX-05-CV-368
• Status: Published

Opinion

SUPERIOR COURT OF THE VIRGIN ISLANDS DIVISION OF ST CROIX

JOSEPH GERACE, VICTORIA VOOYS, D/B/A Case No SX 2005 CV 00368 CANE BAY BEACH BAR, Action for Damages PLAINTIFFS, Jury Trial Demanded v

MARIA BENTLEY, DAVID BENTLEY, CB3, INC , WARREN MOSLER, CHRIS HANLEY, AND CHRISMOS CANE BAY, LLC,

DEFENDANTS

JUDGMENT

AND NOW, for the reasons stated in the accompanying Memorandum Opinion, it is hereby

ORDERED ADJUDGED AND DECREED that Count I Count II and Count [II are

DISMISSED as to Defendants David Bentley Maria Bentley and CB3, Inc and judgment is further

entered in favor of Defendants David Bentley, Maria Bentley, and CB3, Inc on all three counts [t is

further

ORDERED ADJUDGED AND DECREED the Count V is DISMISSED as to Defendant

Chrismos Cane Bay, LLC and judgment is further entered in favor of Defendant Chrismos Cane Bay, LLC

on Count V It is further

ORDERED ADJUDGED AND DECREED that Count VI CountVII CountIX and CountX

are DISMISSED as to Defendants Warren Mosler Chris Hanley and Chrismos Cane Bay, LLC and

judgment is further entered in favor of Defendants Warren Mosler, Chris Hanley, and Chrismos Cane Bay,

LLC on all four counts It is fiarther

ORDERED ADJUDGED AND DECREED that Count IV and Count XI are CONSTRUED

as a demand for punitive damages It is further Gerace e! a] v Bentley e! a! Case No SX 2005 CV 00368 JUDGMENT Page 2 of 2

ORDERED ADJUDGED, AND DECREED that judgment is entered in favor of Plaintiffs

Joseph Gerace and Victoria Vooys doing business as Cane Bay Beach Bar in the amount of one-hundred

thousand ($100,000 00) dollars against Defendants Warren Mosler, Chris Hanley, and Chrismos Cane

Bay LLC, jointly and severally, on Count VIII, including post Judgment interest at 4% per annum per the

statutory rate set by Title 5, Section 426(a) of the Virgin Islands Code As no motion for attomeys’ fees

was filed the Court will defer further consideration until after the time to appeal has passed or appellate

proceedings have resolved It is further

ORDERED, ADJUDGED, and DECREED that the counterclaim of Defendant Chrismos Cane

Bay LLC is DISMISSED and judgment is further entered in favor of Plaintiffs Joseph Gerace and

Victoria Vooys doing business as Cane Bay Beach Bar on the counterclaim

DONE and so ORDERED this l9» day of September 2022

HAROLD W L WILLgKS ATTEST Administrative Judge of the Superior Court Tamara Charles Clerk of the Court

Court Cler Dated 7 / #1 :2 fl al 47" SUPERIOR COURT OF THE VIRGIN ISLANDS DIVlSION OF ST CROIX

JOSEPH GERACE, VICTORIA Voovs, D/B/A Case No SX 2005 CV 00368 CANE BAY BEACH BAR, Action for Damages PLAINTIFFS, Jury Trial Demanded V

MARIA BENTLEY, DAVID BENTLEY, CB3, [NC , WARREN MOSLER, Cums HANLEY, AND CHRISMOS CANE BAY, LLC,

ORDER

AND NOW, for the reasons stated in the accompanying Memorandum Opinion, it is hereby

ORDERED that the Post Trial Rule 50(b) and Rule 59(a) Motion filed by Defendants Warren

Mosler, Chris Hanley, and Chrismos Cane Bay, LLC is GRANTED in part as to the motion to set aside

the verdict as to Count V, Count VI, and Count X, and the award of punitive damages, and DENIED as

to the motion to set aside Count VIII and DENIED as to the motion for a new trial It is further

ORDERED that the jury’s verdict as to breach of an agreement to enter into a lease, breach of the

duty of good faith and fair dealing, and defamation, and the award of punitive damages, are SET ASIDE

DONE and so ORDERED this L23“ day of September 2022

HAR LD W L WILLOCKS ATTEST Administrative J udge 0f the Superior Court Tamara Charles Clerk of Court

By 2} /c<é AA [31» Court Clerk 11 Dated 211%; Qfiyql SUPERIOR COURT OF THE VIRGIN ISLANDS DIVISION OF ST CROIX

JOSEPH GERACE, VICTORIA Vooys, D/B/A Case No SX 2005 CV 00368 CANE BAY BEACH BAR, Action for Damages PLAINTIFFS, Jury Trial Demanded v

MARIA BENTLEY; DAVID BENTLEY, CB3, INC , WARREN MOSLER, CHRIS HANLEY, AND CHRISMOS CANE BAY, LLC,

Cite as 2022 VI Super 78

Appearances

LEE J ROHN ESQ Lee J Rohn & Associates LLC Christiansted V1 00820 For Plamtgf/fs‘

JOEL H HOLT ESQ Law Offices of Joel Holt Christiansted VI 00820 For Warren Mosler Chm: Hanle) and Chrzsmos Cane Bay LLC

MEMORANDUM OPINION

WILLOCKS, Administrative Judge

111 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 (hereinafier

Gerace ’) and Victoria Vooys (hereinafier Vooys ’) formerly doing business as Cane Bay Beach Bar

(hereinafier ‘Beach Bar”) (collectively “Plaintiffs”), oppose the Defendants’ motions For the reasons Gemce e! a] 1 Bentley at a! 2022 VI Super 78 Case No SX 2005 CV 00368 MEMORANDUM OPINION Page 2 of 51

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 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 5 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 intemet ’ (Trial Tr 168 24 25 ') 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 [d at

439 16 17 The first time Vooys saw the restaurant and the first time she stepped foot on St Croix

was afier she and Gerace had driven their belongings “down to Florida, got on a plane, [and] landed ’ Id

at I69 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 I7 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

' 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 Gerace e! a] v Bentley e! a! 2022 VI Super 78 Case No SX 2005 CV 00368 MEMORANDUM OPINION Page 3 of 51

continue Id at 172 19 24 Not long after they am'ved on St Croix Gerace and Vooys also learned “that

the landlord was going to sell the property 1d at 173 2 3

T3 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 ” 1d 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

TH 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 recoup your investment[,] ’ she told the

jury [d at 174 3 l0 7 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 I75 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,” 1d at I75 23 24, repairs

they thought were the landlord s responsibility Id at 175 25 I76 1 Vooys explained that they

7 “Five and five‘ refers to a five year lease with an option to renew for a second five year tenn (Cl Trial Tr 235 18 20 ) Gerace e! ((1 i Bentley 9! a! 2022 VI Super 78 Case No SX 2005 CV 00368 MEMORANDUM OPINION Page 4 of51 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 l 1 They replaced ice coolers

They also hired more bartenders See 1d 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 l 1 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 23 of the bill and the Dive Shop pays

L3 Vooys thought that might not be fair Gerace and Vooys could not install separate meters because

they did not own the building

116 John Reed (hereinafier “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 afier we opened[,]” Reed recalled 1d 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 4l8 6 8 Michael Belcheff (hereinafter ‘ Belcheff‘)

corroborated their testimony He met Vooys and Gerace “when they took over the restaurant ” 1d 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

1|7 Vooys testified that Mosley and Hanley wanted them to prioritize the repairs to the restaurant over Gerace e! a] 1 Bentley e! a] 2022 V! Super 78 Case No SX 2005 CV 00368 MEMORANDUM OPINION Page 5 of 5]

rent and were pretty casual” about whether rent was paid on time See Id at 193 l3 14 At first, Hanley

“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 8 real estate office, Farchette & Hanley

‘ whenever [they] went to run errands in town ’ Id at 193 7 1 1, 194 l 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 [st 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

1]8 Sometime in the beginning of March 2004, Mosler and Hanley gave Gerace and Vooys a proposed

lease [d 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 [$12 000 Id at 186 22 l87 9

Later that month Vooys shared their concerns with Hanley who agreed, according to her, that ‘ it was a

terrible lease Id at 187 ll 12 Hanley told them they d work on a better one Id at 187 13

119 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 I 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 Gerace e! a] 1 Bentley e! a] 2022 VI Super 78 Case No SX 2005 CV 00368 MEMORANDUM OPINION Page 6 of51 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

1d 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

1110 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 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 1d at 467 22 468 I3

‘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 afier 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 l 1 Jordan

asked Reed if he ‘ was interested in going to work for them ’ [d 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

T 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 Gemce e! a] 1 Bentley e! a] 2022 VI Super 78 Case No SK 2005 CV 00368 MEMORANDUM OPINION Page 7 of5]

from [them] and [they] needed to make this transaction within a month (201 23 202 4 )

Vooys disagreed, saying she was ‘ pretty adamant about cleanliness, especially in a bathroom ” Id at

[78 2| 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 1d at 176 22 24 My employees knew the bathrooms had to be

spick and span ” Id at 176 25 Donna Christensen (hereinafier ‘ 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, [II (hereinafier ‘ Woodson ) agreed He owns a home in LaVallee on St Croix where he lived

until 20l 1 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

1H3 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 IS 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 ” 1d 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 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[,] ’ 1d 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 IS Gerace came back to check on her and Gerace e: a! ‘ Bentley eta! 2022 v1 Super 78 Case No SK 2005 CV 00368 MEMORANDUM OPINION Page 8 of 51

console her and when they returned Mosler & Hanley had lefi Belcheff corroborated their testimony He said he saw Mosler and Hanley meeting with Gerace and Vooys, so he left, and retuned about 30 minutes

later When he returned, he “saw Vic crying [and] Joe with like a stunned look on his face ” Id at

405 9 10

1H4 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

ms According to Vooys, Mosler then ‘ started like a smear campaign on why he was getting rid of

[them] on the radio and TV [cl at 208 10 l 1 No one could recall exactly when, but Vooys recalled that

it was after they received the April [2, 2005 letter The talk show was hosted by Roger Morgan (hereinafi er “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 ’ [d 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 Christens en Gemce er a! t Bentley 9! a] 2022 VI Super 78 Case No SX 2005 CV 00368 MEMORANDUM OPINION Page 9 of 51

too heard about Mosler being on Roger Morgan 3 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 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 afiemoon 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

1H6 Business started to decline after Mosler went on the radio Reed recalled that for the last couple

months Joe and Vic 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 I9 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 lefi 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 3 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,’ 1d at 162 3 when they learned they had to leave He also said the

Beach Bar declined afier they Gerace and Vooys lefi “Less locals Id at 163 3 Anthony continued to

attend and reggae music is still played at the bar though not as ofien 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 Gelace e! a/ 1 Bentley eta] 2022 VI Super 78 Case No SX 2005 CV 00368 MEMORANDUM OPINION Page 10 of 51 that we used to hang out who were also locals were going there ” Id at 165 12 14

1117 Vooys testified that when they lefi 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 afier 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 painfill Too embarrassed 1d at 230 17 18 1118 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 Bentley s Vooys and Gerace sought

damages, including punitive damages, for breach of contract (Count 1), fraud (Count II), and misrepresentation (Count 111) 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 defamat ion per se (Count VI), fraud (Count VII), misrepresentation (Count VIII), intentional or negligent inflicti on 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 Bentley s and the Chrismos Defendants

1119 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 affirmat ive defenses of failure to state a claim for relief, statute of frauds, 1aches, estoppel, waiver, unclean hands, and failure of Gerace e! [1/ v Bentley e! a! 2022 VI Super "8 Case No 8X 2005 CV 00368 MEMORANDUM OPINION Page 11 OH!

consideration Mosler did not assert any affirmative defense David Bentle y 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 counte rclaim The Court (Ross, J ) entered default against Maria Bentley and CBS, 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 3 1120 After several extensions of discovery deadlines, David Bentley was dismis sed, over Plaintiffs’ objection, because Plaintiffs failed to file a motion within 90 days to substit ute a personal representative for Mr Bentley after he died in a plane crash Discovery, and motions pertain ing 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 1 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 remand ed, holding the statute unconstitutional See Gerace v Bentley, 65 V I 289 (2016), Mt 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 Februa ry 24 2022 Plaintiffs Maria Bentley,

and the Chrismos Defendants previously had submitted a proposed joint final pretrial order, which the

3 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 Judge Brady recused himself Gerace a a] v Bentley et a1 2022 VI Super 78 Case No 5X 2005 CV 00368 MEMORANDUM OPINION Page :2 of5[

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

1121 In addition to the testimony summarized above, the jury was also presented with documentary

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

1122 Copies of some of the rent checks, specifically checks numbered 544 for $921 00 and 772 for

$2,000 00, differed between the parties 0n 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

l000 for Root) 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 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 l ) Vooys conceded on redirect examination that she was not good Gelace eta] \ Bentley eta] 2022 VI Super 78 Case No SX 2005 CV 00368 MEMORANDUM OPINION Page 13 of 51

about keeping receipts and that Gerace was ‘ [e]ven worse ’ Id at 370 15

1123 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 5 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 ” [d at 714 18 19

1]24 Afier 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 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 Pollarat Chateau St Crow 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 Getace e! a! \ Bentley 6! a! 2022 VI Super 78 Case No 8X 2005 CV 00368 MEMORANDUM OPINION Page 14 of 51

motion under advisement as to Count VI As to Count [X (intentional or negligent infliction of emotional

distress), Plaintiffs, afier 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 affinnative defense The Court took Defendants’ statutory immunity argument under advisement as

well

1125 Defendants renewed their motion afier they presented their defense and rested, and Plaintiffs called

one witness in rebuttal Defendants arguments afier 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 Gerace eta] v Bentley (I a] 2022 VI Super 78 Case No 5X 2005 CV 00368 MEMORANDUM OPINION Page [5 ofSl 1|26 After deliberating, the jury retumed a verdict in Plaintiffs’ favor, finding that Chrismos had an agreement with Plaintiffs and breached that 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 $l00 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 $50,00 0 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

[I MOTION FOR JUDGMENT AS A MATTER OF LAW

A Legal Standard

1127 ‘ A party is entitled to judgment as a matter of law when, in consid ering all of the evidence, accepting the nonmoving party's evidence as true, and drawin g 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 1 Lembach, 64 VI 400, 409 (2016) “‘In performing this narrow inquiry, trial courts and appellate courts must refrain from weigh ing 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 VI 467 475 (2013) ) Although 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 VI at 475 (quoting Corrzette v Morales 50 VI 202 205 (2008) (per curzam)) 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, Gelace eta! v Bentley eta] 2022 VI Super 78 Case No SX 2005 CV 00368 MEMORANDUM OPINION Page 16 0f 51

there is insufficient evidence from which a Jury reasonably could find liability 1d (brackets omitted)

(quoting Corrzette 50 VI at 205)

B Discussion

1128 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 [X intentional or negligent

infliction of emotional distress Thus, the Court must enter judgment in favor of Chrismos, Mosler, and

Hanley as to Count IX

1129 Additionally, after both sides had rested and Defendants renewed their motion for judgment as a

matter of law, Defendants raised a new argument, that 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 [t s the same count ’) )

Plaintiffs initially disagreed However, afier reviewing the proposed Jury instructions and hearing the

arguments of Defendants’ counsel, Plaintiffs counsel agreed that the damages were the same See

generally 1:! 824 16 826 7, see also 1d at 837 l 7 (“MS ROI-IN 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 Gerace at a! v Bentlev er a] 2022 VI Super 78 Case No SX 2005 CV 00368 MEMORANDUM OPINION Page 17 of51 instructed on the fraud count, the Conn also must enter judgment in favor of Defendants as to Count V11

i Gist of the Action Doctrine and Immunity of Individual LLC Members

1130 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 (hereinafier ‘ LLC ) Plaintiffs’ response to both arguments is the same the

gist of the action doctrine and the immunity of individual LLC members are affin'native 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

1131 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 anovzc \ S Cal Edison Co 302 F 3d 1080 1088 (9th Cir 2002) (citing In re

Ranson Food Sen 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 [did not do it Hon Amy St Eve & Michael A Zuckemian, 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 Gerace eta! v Bentley e! a! 2022 VI Super 78 Case No SK 2005 CV 00368 MEMORANDUM OPINION Page 18 of51 affirmative defense ’ These defenses are sometimes referred to as ‘negative defenses because they are

simply an attack on a party’s prima facie case Game v Bird Auto LLC, 41 I F Supp 3d 1332, 1339

(S D Fla 2019) (brackets, ellipsis and citations omitted)

fil32 “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

plaintiff‘s prima facie case and such matter is not raised by a negative defense [d at 161 (footnoted

citation omitted) ‘ The modern concept of the affirmative defense is ‘derived from the common law plea

of ‘confession and avoidance 1d (footnoted citation omitted) Thus, an “affirmative defense ‘admits

that the plaintiff has a claim (the ‘ confession ’) but asserts some legal reason why the plaintiffcannot have

any recovery on that claim (the ‘avoidance”) ’ Baraby \ Swords, 851 N E 2d 559, 571 (Ohio Ct App

2006) (quoting Eulrzch 1 Ween er 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 resyudzca ta 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 complaint See In re Top Flight Stairs &

Rails Ltd 398 B R 321, 325 (Bankr N D 111 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 Rel: Robotzcs USA Inc v (onceptlndus 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 Gerace e! a] 1 Bentley e! a! 2022 VI Super 78 Case No SX 2005 CV 00368 MEMORANDUM OPINION Page 19 of 5!

Forgotten Pleadmg, 7 Fed Cts L Rev at 161 Negative defenses do not have to be pled in an answer

See 1d 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 eg,

Umgestzon Holding SA 1 UPM Tech Inc 305 F Supp 3d 1 I34 1 143 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

fl34 “Although sometimes difficult to discern, the distinction between the two categories of defenses

is crucial since affirmative defenses are generally waived if not plead ’ F0rd Mom; Co v Tramp lndem

C0 795 F 2d 538 546 (6th Cir 1986)‘ accord Coastal Atr Tramp t 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 3 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(0) 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 Whvte v Bockmo 69 V I 749 754 55 (2018) (courts

look first to the plain language of Rule 8(c)( l) of the Virgin Islands Rules of Civil Procedure in reviewing

affirmative defenses) Gemce e! (1/ I Bentlev e! a! 2022 VI Super 78 Case No 8X 2005 CV 00368 MEMORANDUM OPINION Page 20 of 51

1135 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(0) 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(0) Plaintiffs

would be mistaken in asserting that Defendants 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

1B6 Tuming first to Mosler and Hanley‘s claim of their statutory immunity of individual LLC

members, Section 1303 of Title 13 0f 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

§ [303(0)

1137 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 , Phllp v SE Enterps LLC, No

M2016 02046 COA R3 CV 2018 WL 801663 *15 (Tenn Ct App Feb 9 2018)( [Tennessee statutes] Gerace e! a! 1 Bentley 6! a1 2022 VI Super 78 Case No SK 2005 CV 00368 MEMORANDUM OPINION Page 21 of 51

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 Unztea’ Eqmty Inc ,

2010 Ohio 3549, 1] 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 ) accordDowmngv Goldman Phipps PLLC No 4 13 CV 206 CDP 2017 U S Dist LEXIS

39408 *18 19 (ED M0 Mar 20, 2017) (referring to immunity of individual member of former

professional limited liability company as an affinnative defense); Lieberman i 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 ofjudgment

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

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 Promotzons v Dams, No C l 1 6166 CW, 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),

1138 ‘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 Gerace eta! 1 Bentley er a1 2022 v1 Super 78 Case No SX 2005 CV 00368 MEMORANDUM OPINION Page 22 of 51 Cir 2004) (quoting 1A William Meade Fletcher et a1 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 the same

affin'native 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

1139 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 \ [Qaer 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, Gemce e! a! \ Bentley 9! (II 2022 VI Super 78 Case No SX 2005 CV 00368 MEMORANDUM OPINION Page 23 of 51

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 45 Thus, a Banks analysis would be necessary

Cf Pollara, 2016 V I LEXIS 49 at *1 l ( ‘Because this common law gist of the action doctrine is not the

subj ect of any binding precedent, we perform an analysis pursuant to Banks v Int! Rental & Leasmg Corp ,

55 V I 967 (201 l) to determine whether the doctrine applies in the Virgin Islands )

1140 In this instance, however, the Court declines to conduct a Banks analysis Gerace and Vooys doing

business as the Cane Bay Beach Bar were commercial tenants and Chrismos was their landlord As other

courts have explained, ‘ [t]he existence of a landlord tenant relation is contractual in nature and may be

express or implied Such a relationship can arise from the conduct of the parties and may be implied even

‘ Defendants counsel represented multiple times that the Supreme Court of the Virgin Islands had recognized the gist of the action doctrine in Pollma (See Trial Tr 572 14 22 ( Your Honor under the Supreme Court holding in Pollara t erms Chateau S! Crow 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 panicular, our Supreme Court adopted the gist of the doctrine as the law in the Virgin Islands after doing a Banlts analysis ‘) ) Pollma is not binding It was decided by a Superior Court judge There is a Pollara decision issued by the Virgin Islands Supreme Court, Pollma t Chateau S! C1011 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 Pollam decision by the United States Court of Appeals for the Third Circuit see Frank C Pollam 01p LLC 1 Ocean View 1m Holdmg LLC 62 V I 758 (3d Cir 2015) which does contend that the Virgin Islands Supreme Court has adopted the gist of the action doctrine See at at 769 n 11 However as discussed in the following footnote that contention was mistaken

5 In Frank C Pollara Group LLC 1 Ocean Vten [mestment Holdmg LLC 62 VI 759 769 n 11 (3d Cir 2015) the United States Court of Appeals for the Third Circuit rejected a request by the appellants to hold that the gist of the action doctrine does not apply under the law of the Virgin Islands The Third Circuit rejected that request for two reasons First the court had previously held in Addte 60 V 1 at 899 that the doctrine is applicable in the Virgin Islands Only the full appellate court sitting en banc could have overruled Addie But the second, and more troubling, reason the Third Circuit gave for not revisiting Addle is because the Supreme Court of the Virgin Islands has recently held that the gist of the action (or barred by contract) doctrine does apply in the Virgin Islands anlt C Pollam Grp LLC 62 V I at 769 n 11 (citing Caccmmam & Rate; Corp t Banco Popular de P R S Ct Civ No 2013 0063 2014 WL 4262098 3 (V I Aug 29 2014)) Cacetamam and R019} Corporalton did recognize the barred by contract doctrine See Can 1amam & Rater Com t Banco Popula: (1e P R , 61 V I 247, 253 (2014) Some of the reasoning behind Caccmmam and Rm e1 Catporatzon could also be persuasive when analyzing the gist of the action doctrine Cf 1d ( [t is clearly the sounder rule to hold the parties to a contract to the terms of their agreement and the legal remedies provided for a breach of those terms ”) But the question in Caccmmam and R01 er Corporation was not whether tort claims should be barred when the relationships between the parties is based on a contract Instead, the question was whether panics could seek relief unjust enrichment rather than the contract they entered into See It! ( Parties entering into a contract assume certain risks with the expectation of a beneficial return; however when such expectations are not realized, they may not turn to a quasi contract theory for recovery (quoting Balm Capttel & Schwmt t Tapanes 517 N E 2d 1216 1219 (111 1987) parenthetically))) This Court has not found any decision other than Frank C Pollma Gloup LLC that equates the barred by contract doctrine with the gist of the action doctrine The Third Circuit was mistaken the Supreme Court of the Virgin Islands has not held that the gist of the action doctrine applies in the Virgin Islands Gemce e! a] 1 Bentley e! a! 2022 VI Super 78 Case No SK 2005 CV 00368 MEMORANDUM OPINION Page 24 of 51

in the absence of a written agreement under certain circumstances WG Assocs v Estate ofRoman, 753

A 2d 1236 1238 (N J Super Ct App Div 2000) (citations omitted) Schuman v Kobets 716 N E 2d

355, 356 (1nd 1999) (“Since a lease is a contract, the essence of the landlord tenant relationship is

contractual in nature ’) See also e g , Shuachman v Dams Radio Corp , No 93 01912, 1994 Mass

Super LEXIS 710 *7 (Mass Super Ct July l, 1994)( Originally at common law a lease agreement

created a property relationship between the landlord and tenant Today, however, the landlord tenant

relationship is viewed as contractual in nature wherein the landlord promises to deliver and maintain the

premises in a habitable condition and the tenant promises to pay rent for the use thereof While a warranty

of habitability is implied in residential leases, “no such warranty may be implied in the rental of

commercial property ’" (citations and footnote omitted» Accord 28 V I C § 242 (referring to contracts

for lease of land) But of Nicholas 1 Howard 459 A 2d 1039 1040 (D C 1983) ( A landlord tenant

relationship does not arise by mere occupancy of the premises; absent an express or implied contractual

agreement, with both privity of estate and privity of contract, the occupier is in adverse possession as a

squatter ’ ’)

1141 Chrismos inherited the Dive Shop and the Beach Bar tenants when it purchased the property from

the former owner Although Virgin Islands law is unclear on the effect of the sale of real property,

residential or commercial where tenants are in possession at the time of the conveyance, but cf 28 V I C

§ 752, other jurisdictions have held that a conveyance of a commercial property terminates the tenancy 0f

the tenants See e g , Farris 1 Hershfield 89 N E 2d 636 637 (Mass 1950) (explaining that tenancy at

will terminated with the conveyance of the land ’ ‘ [s]ince the premises were not occupied for dwelling

purposes )' [rvmg 01! Corp v Me Amman Corp 704 A 2d 872 874 (Me 1998) ( A tenancy at

will cannot be conveyed or assigned; it does not pass with the alienation of the underlying estate

When title to property occupied by a tenant at will is passed by deed or lease, the tenancy is terminated Getace e! a] 1 Bentley e! (1/ 2022 VI Super 78 Case No SX 2005 CV 00368 MEMORANDUM OPINION Page 25 of 51

and the tenant becomes a tenant at sufferance ’ (citations omitted» The evidence clearly showed that the

Beach Bar did not have a lease The Bentley Defendants did not have a lease to sell to Gerace and Vooys

and Gerace and Vooys, or Barabus, the company they formed to buy the Beach Bar business And Vooys

and Gerace repeatedly requested a lease from Mosler and Hanley The fact that they did not have a lease

is, after all, what this case is about Vooys and Gerace were still tenants of Chrismos, in a month to month

tenancy Even if the Court were to conclude that the soundest rule for the Virgin Islands is to recognize

the gist of the action doctrine, it would not matter here because Plaintiffs and the Chrismos Defendants

were not parties to any contract at issue The gist of the action doctrine might have barred the fraud (Count

II) and misrepresentation (Count III) counts Plaintiffs asserted against the Bentley Defendants because

Plaintiffs and the Bentley Defendants did sign a contract, the July 1, 2003 asset purchase agreement that

Plaintiffs attached to their complaint If the Bentley Defendants had moved to dismiss for failure to state

a claim for relief based on the gist of the action doctrine it might have been sound to “hold the parties

to the terms of their agreement and the legal remedies provided for a breach of those terms, and to

reserve [tort claims] for those instances where there is no contract and other legal remedies are

unavailable ’ Cacczamam & Rater Corp 61 VI at 253

1l42 Here, Gerace and Vooys were tenants of Chrismos, but the claims they asserted in this action did

not arise out of that tenancy In other words the gist of the action Vooys and Gerace brought against the

Chrismos Defendants has nothing to do with the rent they paid each month or the duties the law imposes

on commercial landlords There was a contractual relationship between Chrismos and Gerace and Vooys,

the landlord tenant relationship But that relationship was not the gravamen of this action and Defendants

repeatedly denied having entered into any agreement with Plaintiffs other than a month to month tenancy

Instead it was the request to enter into a new and long term landlord tenant relationship that is the gist of

this action In some instances, ‘it is possible that a breach of contract also gives rise to an actionable tort Gerace eta! v Bentley eta! Case No 5X 2005 CV 00368 2022 VI Super 78 MEMORANDUM OPINION Page 26 of 51

To be construed as in tort, however, the wrong ascribed to the defend ant must be the gist of the action, the contract being collateral Howe v LC Philly LLC No 10 5495 2011 U S Dist LEXIS 41534 *10 (E D Pa Apr 15 2011) (quotingEtoll Inc v Elzas/Savzon Adver Inc 811 A2d 10 14 (Pa Super Ct 2002)) Here, the month to month tenancy, a contract implied in fact throug h the actions of the parties is collateral t0 the wrongs Plaintiffs complained of namely the time, money, energy, and passion they

invested into the Beach Bar under the expectation that they would be given a lease The contract that existed between the parties, the month to month tenancy, is collate ral to that claim and, for this reason, the Court finds it unnecessary to determine whether Virgin Island s common law should recognize the gist

of the action doctrine Even if the negative defense were recognized in the Virgin Islands, it would not apply here

ii The “Contract” Claims

1143 Defendants move for Judgment as a matter of law on three of Plainti ffs’ claims, which they refer to collectively as the ‘ contract claims (See Defs ’ Post Trial R 50(b) & R 59(a) Mot 2, filed Mar 22, 2022 ( The jury verdict form included three similar counts—one for breach of contract, one for intentional

misrepresentation and one for breach of the duty of good faith and fair dealing (hereinafter collectively

referred to as the “contract claims) ’ (bold font omitted» ) Havin g reviewed all three claims , the Court agrees that it must set aside the Jury s verdict as to the breach of contract claim and the breach of the duty

of good faith and fair dealing Both claims presume the existe nce of an agreement between the parties

which the evidence did not show The Court will uphold the jury s verdict as to intentional

misrepresentation however

1144 Count V of the Complaint alleged that Chrismos breached an agreem ent with Plaintiffs to enter into a lease ‘ There is a marked distinction in both the rights and liabili ties of the parties between a lease and a mere agreement for a lease The question whether an agreem ent is a lease or an agreement for a Gerace el al 1 Bentley e! a] 2022 VI Super 78 Case No SX 2005 CV 00368 MEMORANDUM OPINION Page 27 of 51 lease depends upon the intent of the parties ’ Kzlbrzde v Wilson, 8 VI 129, 133 (Mun Ct 1970)

(citation omitted) 1f parties intend that an agreement be one of leasing, it so operates notwithstanding a

written formal lease is to be later executed On the other hand, if they intend that an agreement should be

as finally evidenced by a written lease, there is only an agreement for a lease Engle v Hezer, 173 N W 2d

454 456 (S D 1970) (citation omitted) As the court in Engle explained

To be binding, an agreement for a lease must be certain as to the terms of the fiJture lease If it appears that any of the terms of the future lease are left open to be settled by fiature negotiation between the lessor and lessee “there is no complete agreement the minds of the parties have not fully met Id (quoting Cypert 1 Holmes 299 P 2d 650 65] (Ariz 1956))

1145 Count X of the Complaint alleged that the Chrismos Defendants breached their duty of good faith

and fair dealing Every contract imposes upon each party a duty of good faith and fair dealing in its

performance and enforcement ’ ’ Baszc Servs Inc v Gov t of the V I , 71 V l 652, 660 (2019) (citation

omitted) In fact, ‘ the implied duty of good faith and fair dealing arises by implication through the

existence of a contract itself Chapman v Cornwall 58 VI 431 441 (2013) Although the Virgin Islands

Supreme Court has not held that the existence of a contract—or a factual dispute for the jury to resolve as

to whether a contract existed is a prerequisite to asserting this claim, courts in the Virgin Islands and

elsewhere agree “there can be no claim for breach of good faith and fair dealing when there is no contract

to which such obligation attaches Geesey 1 CltzMortgage Inc , 135 F Supp 3d 332, 347 (W D Pa

20l5) (applying Pennsylvania law); see also Estate of Burnett v Kan Foods of the V I , 69 V I 50, 61

(Super Ct 2016) (‘ [T]he covenant of good faith and fair dealing is imposed upon parties by virtue of the

existence of a contract )‘ Websterv CBIAcqmsztzons LLC No ST 11 CV 558 2012 V1 LEXIS 9, *9

(V I Super Ct Mar 5 2012) ( Plaintiff may not allege a claim for breach of the duty of good faith and

fair dealing absent a contractual relationship ”); accord Macklm v CzttMortgage Inc , 2015 Ohio 97, 1]

14 (Ct App ) ( The covenant of good faith and fair dealing is part of a contract claim and does not stand Gerace e! a! I Bentley e! a! Case No SX 2005 CV 00368 2022 VI Super 78 MEMORANDUM OPINION Page 28 of51

alone as a separate claim from breach of contract (citing Lakota Local Sch D13! Bd ofEduc v Buckner,

671 N E 2d 578 583 84 (Ohio Ct App 1996)) Youngv Allstate Ins Co 198 P 3d 666 691 (Haw 2008) ( Absent a contract [the] claim for breach of the assumed duty of good faith and fair dealin g must fail )' Beukas v Bd of Tr: ofFatrlezgh Dickinson Umv 605 A 2d 776 783 n 4 (N J Super Ct 1991) (“It is widely acknowledged that absent a contract there can be no breach of the implied covenant of good faith and fair dealing (citing Noye 1 Hoffmann La Roche 570 A 2d 12 (N .1 App Div 1990)) 1146 The evidence clearly shows that there was no agreement Witho ut an agreement, there is no contract and without a contract there can be no breach Cf Coasta l Air Transp v Lockhart, 73 V I 672, 677 n 5 (2020) (“To establish a breach of contract claim, the Plaint iff must show ‘( I) an agreement, (2) a duty created by that agreement; (3) a breach of that duty and (4) damages ’ (quoting Phillip v Marsh Monsanto, 66 V I 612 621 (2017)) Vooys testified that when she and Gerace first discus sed a seven year lease with Mosler and Hanley either Mosler or Hanley said that that seemed reasonable We would work on that and we’d get one, you know We d talk more about It ‘ (Trial Tr 175 10 12 (emphasis added) ) Vooys’s own testimony shows that the four agreed to talk more about the terms of the lease

‘ Ordinarily, where the parties contemplate the further negoti ation and execution of a formal instrument,

a preliminary agreement does not create a binding contract ” Citadel Broad C0 1 Renaissance 632 Broadway LLC 2010 NY Slip Op 31482(U) 1| 9 (Sup Ct ))

1147 Either Mosler or Hanley, on behalf of Chrismos eventually did give Vooys and Gerace a lease but it was a two year lease, not a seven year lease Vooys testifi ed that it was a ‘horrible’ lease, and she voiced her disagreement with to Hanley He agreed, according to her, and said they would work on it Then the kitchen fire occurred and Vooys and Gerace expres sed their reservations to Mosler and Hanley

about investing further in the business without the security of a long term lease Mosler, according to Vooys, wanted them to get back on their feet first before discus sing the terms of the lease A second lease Gerace e! a! l Bentley e! a] 2022 VI Super 78 Case No SX 2005 CV 00368 MEMORANDUM OPINION Page 29 of 51

was offered, but Vooys said it did not differ much from the first Vooys and Gerace went to Attorney

Groner, but they never followed up with him

1148 This evidence shows on going negotiations between the parties but also that Chrismos, through

Mosler and Hanley, did, in fact offer Plaintiffs a lease, just not the lease they wanted Even if there had

been a preliminary agreement, which Vooys’s own testimony contradicts, the parties’ negotiations clearly

show no agreement When viewing all the evidence in the light most favorable to Plaintiffs, as the

nonmoving parties, the Court cannot find sufficient evidence of an agreement A ‘ scintilla ’ is not enough

See Chestnut, 59 V I at 475 There was no certainty over the terms of the lease, apart from the parties’

dispute as to the length Vooys testified that the initial proposed lease was in Gerace s name, while the

later lease was in the name of Barabus The initial lease had Gerace waiving his right to a Jury trial and

indemnifying Chrismos The amount of rent to be paid each month was not settled, with the initial lease

increasing rent to $2,000 a month and the revised version leaving rent at $1,500 a month but eventually

increasing it to $2 500 Clearly there was no meeting of the minds as to any of the terms of a lease for the

Beach Bar As a result, the Court must grant Defendants’ motion to set aside the jury’s verdict as to Counts

V (breach of contract agreement to enter into a lease), and Count X (breach of the duty of good faith and

fair dealing) Both counts fail because there was no agreement

1|49 The evidence was sufficient, however, for a reasonable jury to find the Chrismos Defendants liable

on Count VIII (misrepresentation) As noted, Plaintiffs essentially agreed to the dismissal of their fraud

claim as duplicative of their intentional misrepresentation claim In instructing the jury, the Court relied

on the decision of the Supreme Court of the Virgin Islands in Love Peace v Banco Popular de Puerto

cho, 75 V I 284 (2021) In Love Peace the Virgin Islands Supreme Court explained that

misrepresentation claims can sound both in contract and in tort “[W]here a claimant seeks only to rescind

an underlying contract based on an alleged misrepresentation, entitlement to that relief is determined Gerace e! a! 1 Bentley eta! 2022 VI Super 78 Case No SX 2005 CV 00368 MEMORANDUM OPINION Page 30 of 51

according to the law of contracts ‘ 1d at 289 “[W]here the claimant seeks damages arising from the

misrepresentation, such a claim sounds in torts, rather than contracts ” Id The Court has already

determined that there was no agreement between Plaintiffs and the Chrismos Defendants Thus, Plaintiffs

misrepresentation claim sounds in tort The elements of an intentional misrepresentation claim are 6

(1) that a material fact, opinion intention, or law was misrepresented; (2) that the person making the

misrepresentation knew or had reason to believe it was false; (3) that the misrepresentation was made for

the purpose of inducing another to act or refrain from acting, (4) that the other person justifiably relied on

the misrepresentation; and (5) that the other person suffered a pecuniary loss See 1d at 291

1150 Mosler and Hanley told Vooys and Gerace they would talk more about a lease and then gave them

a list of improvements they wanted done to the restaurant Gerace s brother, Edward corroborated the

testimony that Mosler and Hanley had conditions for getting lease and so did Reed, the longtime bartender

of the Beach Bar (See Trial Tr 5l2 4 9 ( It lasted well, it lasted until they were gone I mean they

they never got a lease And and and each time they were promised one, they had certain more things

they had to do; and when they were getting these things done, they still hadnt gotten a lease ))

Conditioning improvements to the property to get a lease continued after the fire According to Vooys

Mosler said ‘ [t]hey wanted to wait until we fixed everything and got up and running and then we’d talk

° Although Plaintiffs characterized their misrepresentation claim as being for intentional misrepresentation, courts in other jurisdictions have recognized that fraudulent misrepresentation and intentional misrepresentation are the same Sec e g Thompson t Bank ofAm N A 773 F 3d 74] 751 (6th Cir 2014) ( [T]he Tennessee Supreme Court explained that the terms ‘intentional misrepresentation, fraudulent misrepresentation and fraud all refer to the same tort, and expressed its preference for the term ‘intentional misrepresentation (Citation omitted»; Plum Indem Ins Co v Ghana Control St: , 289 F Supp 3d 114! 115] n 1 (D Haw 2018) ( The Hawaii Supreme Court has referred to intentional misrepresentation as interchangeable with fraudulent misrepresentation (citing Ass’n ofApartment Owners ofNewtown Meadows er rel us Bd of Dus t Venluu [5 Inc [67 P3d 225 256 (Haw 2007)) Kramel t Pens: 940 A2d 800 806 n9 (Conn 2008) ( [A]t common law, fraudulent misrepresentation and intentional misrepresentation are the same tort ’); Doe 67C 1 Archdiocese of Milwaukee 700 N W 2d I80 193 n 10 (Wis 2005) ( [Wle use intentional misrepresentation and fraudulent misrepresentation,” and “fraud interchangeably (citation omitted» Since Plaintiffs withdrew their fraud claim, and since the Court instructed the Jury based on the elements of fraudulent misrepresentation as provided in Late Peace, the Court assumes the Virgin Islands also views intentional misrepresentation and fraudulent misrepresentation as synonymous Gemce e! [1/ 1 Bentley eta! 2022 VI Super 78 Case No SX 2005 CV 00368 MEMORANDUM OPINION Page 31 of 51

about [a lease] again [d at 191 l6 17 In his deposition, which was read to him during cross

examination, Mosler acknowledged that leases did not matter much to him See id at 739 7 l 1 (“I don't

think it mattered much Get the rent every month or you don't If someone violates the lease, you can't go

after anybody down here anyway so it didn't seem to be a big deal to me one way or the other ") He also

testified that the short term lease that he did offer

would have been an improvement over what they already had They were there on a month to month basis and they were there on a month to month basis before I got there where they could be asked any time to leave with 30 day’s notice and lose their entire $80 000 purchase price By having a two year lease, they would at least have two more years So it was an improvement over what they already had And it was a drafi lease, it was a proposal, to further negotiations 1d at 723 19 724 3

1|Sl Having viewed the evidence in the light most favorable to the nonmoving party, the Court

concludes that Plaintiffs clearly and convincingly established that Mosler and Hanley, and Chrismos

through them, are liable for the tort of intentional misrepresentation There is no dispute in the testimony

that Vooys and Gerace wanted a long term lease seven years according to them What is disputed is

whether Mosler and Hanley promised to give them a seven year lease The Court concluded above that

the evidence does not support finding of a promise between the parties But the evidence is undisputed

that Vooys and Gerace asked for a long term lease, that a Mosler and Hanley represented that it was a

reasonable request, and they would talk more about it, but Vooys and Gerace had to make repairs to the

Beach Bar first

1152 Viewing Vooys s testimony in the light most favorable to Plaintiffs, Mosler and Hanley, on behalf

Chrismos, represented that they would give, or at least consider giving Vooys and Gerace a long term

lease, knowing they had no intention to honor that representation They made the representation to induce

Vooys and Gerace into make repairs to the building Chrismos owned Vooys and Gerace may have

purchased the Beach Bar business, but the building in which that business operated was owned by Gama eta] v Bentlev e! a] 2022 VI Super 78 Case No SX 2005 CV 00368 MEMORANDUM OPINION Page 32 of 5]

Chrismos Mosler and Hanley did offer a lease, but they had to know that Vooys and Gerace would not

have accepted that lease By the time the first lease was offered in March 2004, Vooys and Gerace had

been running the Beach Bar for approximately six months and made significant improvements to the

building, including to the bathrooms and other parts of the structure The March 2004 proposed lease

would have required that Vooys and Gerace make all future repairs, pay the property taxes, obtain

insurance and indemnify Chrismose and pay the utilities No mention was made of the Dive Shop or its

responsibility for half of the utilities or for sharing in the payment of property taxes The March 2004

proposed lease also did not give Vooys and Gerace a right to renew, but did Chrismos the right to show

the property three months before the term ended and put ‘ For Rent ’ signs up (See genemlly Pls ’ Ex 7 )

‘53 A copy of the November 2004 proposed lease was not admitted into evidence, but the testimony

established that it did not differ much from the March 2004 proposal and further that Mosler and Hanley

waited to offer another lease until after Gerace and Vooys had already invested a substantial amount of

money to repair the building afier the fire If Gerace and Vooys had decided to rent another location for

the Beach Bar after the fire or to give up the restaurant, Chrismos would have had to cover the cost of the

repairs to the structure itselfbecause the parties did not have a lease that specified responsibility for repairs

and there was no security deposit in place; the proposed lease would have added that requirement (Cf

Trial Tr 657 10 ll ) Further even though Mosler said he did not care about leases he and Hanley did not

have an objection to a long term lease because Chrismos gave Jordan a seven year lease with an option to

extend for another three years Clearly, Vooys and Gerace suffered pecuniary loss when they repeatedly

made repairs to a building owned by Chrismos and were then deprived of the benefits and use of those

improvements Cf 28 V I C § 436 For these reasons, the Court finds that Plaintiffs submitted sufficient

evidence to support the jury’s verdict as to Count VIII Defendants’ motion for judgment as a matter of Gerace LI (1! t Bentley e! a! 2022 VI Super 78 Case No SX 2005 CV 00368 MEMORANDUM OPINION Page 33 of 51

law will be denied and the award of $ 1 00,000 to Plaintiffs affirmed 7 8

iii Defamation

1|S4 Mosler and Hanley move to set aside the jury’s verdict finding them liable for defamation As they

point out in their motion, Vooys was the primary witness who testified as to any defamatory statements

No audio or video recording from the Roger Morgan show was presented at trial Further, Christensen

testified only that she had heard about Mosler going on the radio and talking about the Beach Bar She did

not testify as to what Mosler said and did not mention Hanley having been on the radio Gerace was not

asked whether he heard Mosler or Hanley on the radio

1|55 In Joseph 1 Daily News Publishing Company 57 V I 566 (2012) the Supreme Court of the Virgin

Islands established the elements of a defamation claim under Virgin Islands law

The first element is a false and defamatory statement concerning another The truth

7 The verdict form asked the jury to award damages but only if they found liability as to breach of an agreement to enter into a lease intentional misrepresentation, or breach of the duty of good faith and fair dealing In other words, one amount was to be awarded for any of the three counts Although the Court will grant the motion for judgment as a matter of law as to the two contract claims, the Court must presume that the jury followed the instructions on the verdict form and concludes therefore, that the $100 000 was awarded for the tort claim Further, since the Court concludes that Plaintiffs asserted misrepresentation as a ton and not a contract claim the damages the jury awarded were reasonable and the Court rejects Defendants contrary arguments that the amount of Plaintiffs loss had to be accounted for with mathematical precision

8 Defendants also argue, in essence, that any losses that might have been incurred were incurred by Barabus Inc the corporation Gerace fomied Plaintiffs Exhibit 1 is an asset purchase agreement, effective July 1 2003, between Gerace and CB3 Inc Vooys testified that they closed on the sale of the Beach Bar on August 7 2003 which is reflected on the signature page of the asset purchase agreement Vooys‘s name does not appear in that agreement Defense Exhibit 2 is a promissory note dated August 7 2003 given by Gerace to Maria Bently as holder Vooys name does not appear on the note The articles of organization for Barabus, Inc which is Defense Exhibit 5, is dated August 12, 2003 The incorporators were Gerace June Davis and Eileen des Jardin Gerace was listed as president, Edward Gerace was vice president and Vooys was secretary and treasurer None of documents pertaining to Barabus which Defendants admitted at trial, show a transfer from Gerace to Barabus of his purchase of the Beach Bar from CB3, Inc or an assignment or transfer of the promissory note to Barabus The Barabus documents also do not show Vooys 5 financial interest in the business She did not sign the promissory note or the asset purchase agreement and was listed simply as an officer of Barabus But Vooys did testify that she provided some of the financing for the asset purchase (See generally Trial Tr 248 13 251 13 ) And Vooys and Gerace are listed as the sellers on Plaintiffs Exhibits )7 and 21 with Jordan listed as purchaser Barabus Inc did not buy the Beach Bar from CB3 Inc nor did Barabus, Inc sell the Beach Bar to Jordan When or if, Vooys acquired a legal interest in the Beach Bar or Barabus, and what role Barabus played with respect to the claims Plaintiffs asserted should have been raised prior to trial Furthermore apart from challenging the evidence of the expenses Plaintiffs incurred Defendants do not cite to any authority regarding the effect of claims brought by officers of a corporation instead of the corporation itself Furthermore persuasive authority recognizes that dismissal for misjoinder or is disfavored and proper parties can be substituted at any stage See generally Liberman, 208 P 3d 1312 13 1315 (affirming but finding error with trial court 5 disregard of corporate form and remanding for entry of amended judgment against company) Having considered Defendants arguments and objections, the Court finds no merit in them Gemce e! a! v Bentley 9! a1 2022 VI Super 78 Case No sx 2005 CV 00368 MEMORANDUM OPINION Page 34 of 51

or falsity of a statement is generally a question of fact for the jury, and [a] statement or communication is only defamatory if it tends so to harm the reputation of another as to lower him in the estimation of the community or to deter third persons from associating or dealing with him

The second element is an unprivileged publication to a third party Publication means the communication intentionally or by negligent act to one other than the person defamed There are two methods ofpublication libel and slander Libel is the [] publication of defamatory matter by written or printed words Slander is the publication of defamatory matter by spoken words The term unprivileged refers to the alleged defamer's inability to demonstrate that he was in some way privileged to make the defamatory communication The types of privilege defenses available fall into two categories, absolute privileges, and conditional privileges Privilege, however, can be abused in such a way as to subject to privileged defamer to liability despite his privilege

The third element can generally be described as fault The level of fault varies with the parties to the defamation action, but the minimum standard is[] fault amounting to at least negligence on the part of the publisher It is the element of fault that is given a higher threshold when the defendant in a defamation action is a public official or public figure and the defamatory statements reference matters of public concern In the case of a defendant who is not a public figure or official, the minimum standard applies, and the defendant need prove only that the publisher acted at least negligently in failing to ascertain whether the statements concerning the defendant were true or false

The fourth element is either the actionability of the statement irrespective of special harm or the existence of special harm caused by the publication [S]pecial harm [i]s the loss of something having economic or pecuniary value which must result from the conduct of a person other than the defamer or the one defamed and must be legally caused by the defamation in essence, this element refers to two general categories of liability producing statements First, there are those that the Plaintiff is able to demonstrate caused him special harm Second, there are those for which Plaintiff need not prove the existence of special harm because they are actionable on their face This second category clearly begs the question what makes a defamatory statement actionable on its face, or actionable per se? The answer to this question depends in part on whether the statement is either a libel or a slander Specifically, oral defamation[,] i e slander[.] is tortious if the words spoken fall within a limited class of cases in which the words are actionable per se, or if they cause special damages Written defamation[,] i e libel[,] is actionable per se Thus, special damages need only be proven when the statement is slanderous and it does not fall into one of the limited classes of speech which is actionable per se The classes of speech that are actionable per 5e are outlined in Restatement (Second) of Torts §§ 570 574 Id at 585 88 (quotation marks brackets ellipses, citations and footnote omitted)

1156 Contrary to Defendants arguments Vooys was not the only witness who testified to having heard

Mosler on the radio Reed testified that he heard Mosler on the radio saying that they [Vooys and Gerace] Gemce e! a! t Bentley e! a! 2022 VI Super 28 Case No 5X 2005 CV 00368 MEMORANDUM OPINION Page 35 of 51

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 But it was always negative ” (Trial Tr 520 2t 25 )

Reed partially corroborated Vooys’s testimony earlier in trial when she said she heard Mosler say on the

radio “[t]hat he was getting rid of us because we didn't know what we were doing, we were always late

on rent, we were behind on rent, we didn't know how to run a restaurant ” 1d at 210 l 4 Counsel for

Plaintiffs then testified, asking about the ‘ accusation about the dogs in the restaurant, did you have dogs

in your restaurant? Id at 210 7 8 Defendants did not object and Vooys acknowledged that there were

dogs on the beach at Cane Bay but denied that there were dogs in the restaurant The problem here is that

only mention of dogs occurred shortly before when Vooys was testifying about the March 2005

conversation with Mosler where he expressed his disagreement with how they were running their business

See id at 204 13 205 19 In other words the jury never heard that Mosler said on the radio that the Beach

Bar owners allowed dogs to be in the restaurant Woodson denied seeing dogs in the restaurant, and no

one asked him if he had heard it said on the radio that dogs were in the restaurant Hanley testified that he

saw dogs in the restaurant, but no one said they heard him, or Mosler, publish that statement on the radio

1157 Furthermore, no one testified to any defamatory statements allegedly made by Hanley Counsel

for Plaintiffs testified, saying ‘ So when Mosler and Hanley started going on the radio and TV and

essentially declaring you deadbeats, what happened to your clientele? [0' at 227 12 14 And to be sure,

Hanley did admit to going on the radio to defend his reputation and character See id at 624 2 5 But only

Hanley testified to any particular statement he, himself, made on the radio and those statements were made

to counter Vooys s statements that they were current on the rent Based on Hanley s testimony only, it

was not possible for the jury to find that he defamed Gerace or Vooys

1158 As for Mosler, other than the comment about dogs in the restaurant all of what Mosler supposedly

said was either true or his opinion “Whether an allegedly defamatory statement is one of opinion or fact Gerace eta! v Bentley er a1 2022 VI Super 78 Case No SX 2005 CV 00368 MEMORANDUM OPINION Page 36 of 51

is a question of law ’ SlMpSOI’l v Andrew L Capdewlle P C , 64 V I 477 486 (2016) Considering

that Vooys and Gerace were running a business and that the allegedly defamatory statements concerned

their fitness to run that business, the statements could be per se actionable, and damages would be

presumed if they were, in fact, defamatory See Joseph, 57 V I at 588 (citing Restatement (Second) of

Torts §§ 570 74 (1977))

1159 Section 573 of the Restatement (Second) of Torts explains that [o]ne who publishes a slander that

ascribes to another conduct, characteristics or a condition that would adversely affect his fitness for the

proper conduct of his lawful business is subject to liability without proof of special harm ” However,

because damages are presumed in defamation per se cases and in some jurisdictions, punitive damages

can be awarded without an award of any other damages, see e g , Lawnwood Med Ctr Inc v Sadow,

43 So 3d 710 727 (Fla Dist Ct App 2010) ( [P]unitive damages may be the primary relief in a cause

of action for defamation per se ’ (citing Jones v Gleeley 6 So 448, 450 (Fla 1889)); Nat I Recruiters

Inc v Cashman, 323 N W 2d 736, 741 (Minn 1982) (‘ In Minnesota ‘when words are defamatory per se

punitive damages are recoverable without proof of actual damages ”’ (ellipsis omitted) (quoting Anderson

1 Kammeter 262 N W 2d 366 372 (Minn 1977))) Collier 1 Bryant 719 S E 2d 70 82 (N C Ct App

201 l) (‘ To Justify an award of punitive damages, nominal damages must be recoverable, but there is no

requirement that nominal damages actually be recovered ” (citing Hawkins v Hawkins, 417 S E 2d 447,

449 (N C 1992)) courts must independently determine whether allegedly defamatory statements are

actionable See Slmp50i1 64 V I at 486 ‘ ‘Hyperbole and expressions of opinion not provable as false’

fail to meet this actionability element of a defamation claim Id at 487 (quoting Kendall v Daily

News Pub] g Co , 55 VI 781 788 (2011)) For example, ‘ [a] standalone statement that someone is

‘dangerous is a subjective opinion, not a provable fact, as instances of name calling generally are And

‘a statement that is merely “rhetorical hyperbole, ’ moreover, is considered nonactionable ’” Alerana’er v Gerace e! a] v Bentley er a1 2022 VI Super 78 Case No SX 2005 CV 00368 MEMORANDUM OPINION Page 37 of 51

Strong Ct File No 27 CV 20 2841 2020 Minn Dist LEXIS 357 *6 (Minn Dist Ct Dec 7 2020)

(citations omitted) As the Restatements explain,

[d]isparagement of a general character, equally discreditable to all persons, is not enough unless the particular quality disparaged is of such a character that it is peculiarly valuable in the plaintiff‘s business or profession Thus, a statement that a physician consorts with harlots is not actionable per se, although a charge that he makes improper advances to his patients is actionable; the one statement does not affect his reputation as a physician whereas the other does so affect it Restatement (Second) of Torts § 573 cmt e (1977)

Other examples include a statement that a merchant is either insane or insolvent, both of which would be

actionable per se, as would saying that a lawyer is ignorant and unqualified to practice law See generally

1d cmt c, illus 4 6 However, saying that a bricklayer is a hypocrite or that a university professor is a

drunk would not be defamatory per se because being forthright or sober, respectively, are not inherently

part of being a bricklayer or a professor

'60 Similarly, saying that someone does not know how to run a business is an opinion that could never

be defamatory because “‘only statements that are provable as false are actionable ’ Simpson, 64 V I at

487 (quoting Kendall 55 V l at 788) See also e g Miller 1 Richman 592 N Y S 2d 201 203 (App

Div 4th Dept 1992) (“The individual defendants’ unfavorable assessments of plaintiff's work are

incapable of being objectively characterized as true or false[ ] (citations omitted», see also 1d

(collecting cases under state law where opinion was subject of defamation suit) Thus, the statements that

Plaintiffs ‘ didn't know what [they] were doing {and} didn't know how to run a restaurant[,] ’ (Trial Tr

210 l 4), were expressions of opinion and not defamatory because they could be provable as false

1l6l In addition, the statements on the radio that Plaintiffs “were always late on rent [and] were behind on rent[,] id at 210 2 3, were mostly true Plaintiffs admitted that they had been late with rent,

and cancelled checks admitted into evidence showed bounced checks, late payments, and checks that

covered more than one month’s rent Plaintiffs’ Exhibit 47 contains copies of cancelled checks from Gerace e! a! I Bentley at a] 2022 VI Super 78 Case No SX 2005 CV 00368 MEMORANDUM OPINION Page 33 ofSl October 2003 through June 2005 Rent for October 2003 was paid on October 7, 2003 However, rent for

November and December 2003 was not paid until December 19, 2003 Rent for January 2004 was paid

on January 4, 2004 rent for February 2004 was paid on February 1 2004; but rent for March 2004 was

not paid until March 12, 2004 Rent for April 2004 was paid on March 22, 2004 minus the cost of

plumbing repairs Rent for May and June 2004 was paid on June 7, 2004 Rent for July and August 2004

was paid on August 2, 2004, with roof repairs deducted Rent for September and October 2004 was not

paid until January 23, 2005 The check for rent for November and December 2004 and January 2005 was

written on February 7, 2005, but it bounced and did not clear until March 2, 2005 Rent for February and

March 2005 was paid on March 15 2005 Rent for April 2005 was paid on April 14 2005 Rent for May

2005 was paid on May 3 2005 Finally rent for June 2005 was paid on June 9 2005 Out of the twenty

one months Plaintiffs rented from Chrismos, they were clearly late nine times November 2003, May

2004 July 2004 September 2004 October 2004 November 2004 December 2004 January 2005 and

February 2005 Given the uncertainty about when rent had to be paid, the Court excluded from its count

rent that was paid by the middle or the end of the same month in which it was due 9 out of 21 is 42 86%,

close to half It may have been an exaggeration for Mosler to say Plaintiffs were always late but not by

much

1162 The Court does acknowledge Plaintiffs frustration with a landlord who on the one hand, tells

them it is okay if they cannot pay rent on time and then, on the other hand, goes around broadcasting to

everyone when they do not pay on time The Court also understands Plaintiffs’ disappointment with a

landlord sharing with the general public concerns that it has over how its tenant operates its own business

Vooys and Gerace did not go into business with Mosler and Hanley to operate the Beach Bar Chrismos

leased a building to Vooys and Gerace on its property How that business was run what the atmosphere

was like, what clientele frequented the restaurant what music was played, or what food was served was Geltlce e! a! v Bentley eta! 2022 VI Super 78 Case No SX 2005 CV 00368 MEMORANDUM OPINION Page 39 of 51 none of the landlord’s concern so long as it did not subject the landlord to liability or violate the law

Mosler acknowledged that the Beach Bar was on a month to month tenancy Chrismos could have evicted

them at any time with thirty days notice Thus, it does beg the question why Mosler took to the radio to

share grievances about his tenants and air their ‘ dirty laundry” if all he wanted was for them to leave

163 However, Plaintiffs did not assert a business disparagement claim They asserted a defamation

claim Cf McDonald Oilfield Operations LLC v 33 Insp LLC 582 S W3d 732 749 (Tex Ct App

2019) (“Business disparagement and defamation are similar in that both involve harm from the

publication of false information (quoting In re szs/cy, 460 S W 3d 579, 591 (Tex 20l5)); see also 1d

at 750 (‘ ‘To prevail on a business disparagement claim, a plaintiff must establish that (l) the defendant

published false and disparaging information about it, (2) with malice, (3) without privilege, (4) that

resulted in special damages to the plaintiff (quoting szsky 460 S W 3d at 592)) Even when viewing

the evidence in the light most favorable to Plaintiffs as the nonmoving parties, the Court cannot conclude

that they proved defamation No one testified as to what Hanley said except Hanley himself and no specific

statements were attributed to him The statements attributed to Mosler were either true or his opinion

Reed did mention that he heard Mosler say ‘ something about drugs or something in that area " (Trial

Tr 520 24 25 ) But he did not connect Mosler 3 statement directly to the Beach Bar or Vooys and Hanley

No documentary evidence was introduced at trial What 3 more, Plaintiffs did not question Gerace as to

what he heard or Mosler as to what he allegedly said Vooys’s testimony, even when corroborated by Woodson and Reed simply does not establish statements that rise to the level of slander Accordingly the

Court must grant Mosler and Hanley s motion for judgment as a matter of law and set aside the jury s

verdict as to Count VI

iv Punitive Damages

1164 Defendants also move for Judgment as a matter of law on the award of punitive damages, Gerace eta! \ Bentley et a1 2022 VI Super 78 Case No SX 2005 CV 00368 MEMORANDUM OPINION Page 40 of 51

challenging both the sufficiency of the evidence and the law “Punitive damages are ‘damages awarded in

cases of serious or malicious wrongdoing to punish or deter the wrongdoer or deter others from behaving

similarly called also exemplary damages, smart money Cornelms v Bank of Nova Scotta, 67 V I

806, 824 (2017) (citation omitted) Punitive damages must be based 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

1[65 Defendants had argued afier Plaintiffs rested that by law punitive damages are unavailable for

contract claims They renewed that challenge after both sides rested and again, after the jury returned its

verdict However, at no point did either side inform the Court that the law in the Virgin Islands was not

settled on the question See id at 824 25 (emphasizing that it is reversible error for the trial court to fail

to conduct a Banks Analysis’ in the first instance” and noting that ‘ the trial court and the patties entirely

failed to consider whether the courts of the Virgin Islands have ever adopted a definition of punitive

damages failed to consider the majority rule among the jurisdictions of the United States, and failed to

consider what rule is most appropriate for the Virgin Islands[ ]” (citations omitted» Defendants are

correct that persuasive authority does hold that ‘ ‘punitive damages are not recoverable for a breach of

contract unless the conduct constituting the breach is also a tort for which punitive damages are

recoverable Ishzmatsu v Royal Crown Ins Corp , 8 N Mar 1 424, 439 (2010) (quoting Restatement

(Second) of Contracts § 355 (1981)) “Punitive damages will not lie for breach of contract, even if it is

proven that the breach is willful, wanton or malicious [A] recovery of punitive damages can only be

had where the alleged breach of contract ‘merges with, and assumes the character of, a willful tort

Bede]! v [nver Haas Inc 506 A 2d 202, 206 (D C 1986) (citations omitted) However, Defendants failed

to inform the Court that Virgin Islands law is unsettled and thus the Court could deem it waived Cf.

Cornelius 67 VI at 825 (citing Ubtles v People 66 VI 572 589 (2017)) However because the Court Getace et a! \ Bentley 9! a! 2022 VI Super 78 Case No SX 2005 CV 00368 MEMORANDUM OPINION Page 41 of 51 has already determined that the verdict on the contract claims must be vacated, filrther discussion as to

whether Virgin Islands should permit punitive damages for contact claims would be academic at best 9

1166 Nonetheless, after considering the arguments and the record, the Court concludes that the punitive

damages award must be vacated However, before addressing the sufficiency of the evidence, the Court

must point out two errors with the jury verdict form that weigh in favor of setting aside the punitive

damages award First, even though both Vooys and Gerace demanded punitive damages, and even though

the jury verdict form asked the jury to determine whether Defendants acted with reckless disregard for the

rights of the Plaintiffs t0 entitle them to punitive damages, the verdict form only gave the jury the option

of awarding punitive damages to Vooys In other words, the verdict form, inadvertently, did not ask the

jury how much they might have awarded Gerace, if they found that he was entitled to punitive damages

Plaintiffs did not object so any error would be waived but it underscores a potential source of confusion

to the jury Second the verdict form also asked the jury to consider whether Plaintiffs were entitled to

punitive damages separate and apart from any particular claim There is no way for the Court to determine

which or claims the jury determined warranted punishing Mosler and Hanley for Virgin Islands law is

clear that punitive damages is not a separate or stand alone claim but simply a form of damages See Der

Ween Hess 011 Virgin Island Corp 61 V I 87 102 (Super Ct 2014) (citing Anthony v FirstBank V I

58 V I 224 227 n 4(2012)) Mame]! v Amerada Hess Corp Case No SX 05 CV 846 2010 V I LEXIS

128 *31 (V 1 Super Ct June 30 2010) ( [P]punitive damages cannot be a stand alone claim );

Hodge v Dally News Pub] g Co Inc 52 VI 186 200 (Super Ct 2009) ( [I]is not proper so plead

punitive damages as a separate cause of action ” (citing I rgent 1 Havana, Civ No 103 2006, 2008 U S

Dist LEXIS 77455 *31 (D VI Oct 2 2008)) The verdict form did instruct the jury that they were not

9 Additionally the jury verdict form limited punitive damages to the defamation and intentional mtsrepresentation claims which also renders Defendants argument academic Gerace et a! v Bentley e! a! 2022 VI Super 78 Case No SX 2005 CV 00368 MEMORANDUM OPINION Page 42 of51 to consider punitive damages unless they found one or more Defendants liable for intentional

misrepresentation, defamation as to Gerace, or defamation as to Vooys The jury found all three

Defendants liable for intentional misrepresentation but only Mosler and Hanley liable for defamation and

only imposed awarded punitive damages on Mosler and Hanley Imposing punitive damages only on

Mosler and Hanley but not Chrismos would correlate with the jury s defamation determination Since the

Court concluded that the verdict on defamation must be set aside the award of punitive damages would

also have to be set aside for the same reasons

1167 Yet, even if the Court were to assume that the jury imposed punitive damages on Mosler and

Hanley, but not Chrismos, for the intentional misrepresentation, the Court still cannot find that Plaintiffs

proved punitive damages by clear and convincing evidence Cf Atlantzc Human Resource Adwsors LLC

1 Espersen, 2022 VI 1], 1] 70 (citing 5 V I C § 740(5)) To be sure punitive damages is an appropriate

sanction for fraudulent or intentional misrepresentation Cf DeNQfio v Soto, No 00 5866, 2003 U S Dist

LEXIS 12225, *4 (E D Pa June 24, 2003) ( Punitive damages may be imposed where there is

sufficiently aggravated conduct contrary to the plaintiff‘s interests, involving bad motive or reckless

indifference Fraudulent misrepresentation certainly meets this standard ’ (citation and ellipsis

omitted))' accord Namryo 1 Paul] 803 P 2d 254 261 (N M Ct App 1990) ( Punitive damages is an

appropriate sanction for common law fraud ) But it is not mandatory that punitive damages be awarded

because punitive damages punishes wrongdoers and makes an example out of them to others See

Cornelius, 67 V l at 824 In fact, “the focus of punitive damages is not the individual plaintiff ’ Duhon v

Conoco 937 F Supp 1216 [220 (W D La 1996) ( Punitive damages thus have more to do with the

tortfeasor than with the victim (quoting Bilbo! v 3P 0!] Co 645 So 2d 604 612(La 1994)) Instead

“a punitive damages award is about the defendant's actions ‘The purpose of punitive damages is not to

compensate a plaintiff but to punish the guilty, deter fiJture misconduct, and to demonstrate society's Gerace e! a] t Bentley er a1 2022 VI Super 78 Case No SX 2005 CV 00368 MEMORANDUM OPINION Page 43 of 5!

disapproval Dardmger 1 Anthem Blue Cross & Blue Shield 78] N E 2d 12| 145 (Ohio 2002)

1]68 First “rather than assessing the reprehensibility of all defendants collectively, it is important to

consider the role each defendant played in that conduct Espersen, 2022 VI ll at 1] 82 Plaintiffs failed

to distinguish between the conduct of Hanley and that of Mosler, with respect to the intentional

misrepresentation claim In fact, the evidence tended to show that Hanley was more willing to work with

Plaintiffs than Mosler and, arguably, seemed to be more concerned for them overall, meeting with them

to show them how to determine the value of the business, for example The testimony also tended to show

that Hanley was more involved than Mosler But even when viewing all the evidence in the light most

favorable to Plaintiffs, the Court cannot conclude that it shows, clearly and convincingly, that either

Mosler or Hanley acted with ‘reckless indifference’ or engaged in ‘ conduct that is outrageous and

warrants special deterrence ’ Cornelzus, 67 V I at 824 At best, the evidence shows that a 25 year old

kid, (Trial Tr 439 16 I7), and his fiancee, both new to the restaurant industry, were taken advantage of

by two older and more sophisticated businessmen Mosler, an “economist" and “special[ist] in monetary

operations[,] 1d at 710 15, 23, and Hanley, a seasoned relator, established a limited liability company to

purchase several parcels of land on which a restaurant, residential cottages, and a dive shop were situated

They inherited not only the tenants of the prior landowners but problems with those buildings They

encouraged Vooys and Gerace to make repairs to the restaurant while leading them to believe that they

would give them a lease in return As the Court noted earlier, Plaintiffs and the Chrismos Defendants were

in a contractual relationship as tenants and landlord but were also negotiating a new relationship, a long

term landlord tenant relationship There was no duty to bargain or negotiate in good faith at that point

Vooys and Gerace took Mosler and Hanley at their word, ultimately to their detriment, because Mosler

eventually began to look for a new tenant to replace them He succeeded That does not rise to the level

of outrageous conduct that warrants special deterrence, however Gemce et a! 1 Bentley e! a] 2022 VI Super 78 Case No SX 2005 CV 00368 MEMORANDUM OPINION Page 44 of 5]

1169 Admittedly, land is scare on an island and commercial space is at a premium The Beach Bar could

not easily relocate to a different location and retain its unique characteristics But rather than insist, as

Jordan did for example, on having a lease before making further improvements, Vooys and Gerace trusted

Mosler and Hanley Whether that was unwise is not clear under Virgin Islands law But cf Parke Hayden

Inc v Loews Theatre Mgmt Corp 91 Civ 0215 (RWS) 1993 U S Dist LEXIS [0318 *8 9 (S D N Y

July 24, 1993) (‘ New York law still adheres to the common law doctrine of caveat emptor in real estate

negotiations The lack of a duty to bargain in good faith has been considered part of the definition of

freedom of contract ’ (citations omitted» The jury determined that the Chrismos Defendants

intentionally misrepresented that they intended to give Vooys and Gerace a long term lease That

misrepresentation, on its own cannot rise to the level of warranting punitive damages otherwise, punitive

damages would always be awarded any time someone was found liable for fraudulent or intentional

misrepresentation There must be something more and it is the something more that was lacking here

1170 Vooys and Gerace knew before they moved to St Croix that there was no lease for the Beach Bar

(See Trial Tr I72 16 [7 (“We actually found out that when we were in Florida, before we flew down ") )

Vooys explained why they still decided to continue

[b]ecause we had gotten that far We had sold a condo, packed up all our stuff Word sent to Joe, went down end of June we were daydreaming about it and what to do and what we would do and how great it would be for over a month 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

They could have delayed the move or even delayed the closing, which did not occur until August 7, 2003

They also learned soon after they arrived that the land under the Beach Bar was being sold Although they

would not have it known at the time, Chrismos was not formed until September 7, 2003, so the closing on

the land purchase had to have occurred sometime afierward Vooys testified that they asked Mosler and

Hanley about a long term lease the same day they met them as the new owners, yet did nothing to speed Gerace e! a! v Bentlev et a! 2022 VI Super 78 Case No SX 2005 CV 00368 MEMORANDUM OPINION Page 45 of 51

up that process She did testify that they ‘ kept asking for a seven year lease[ ] 1d at 215 21 but what

else they did, if anything, was not explained, nor was what Hanley or Mosler said in response Thus, the

evidence, even viewed in the light most favorable to Plaintiffs, shows only that Mosler and Hanley mislead

Vooys and Gerace into thinking they would get a long term lease This is not conduct so outrageous that

it must be punished by punitive damages Accordingly, the Court will also set aside the Jury’s award of

punitive damages against Mosler and Hanley

[[1 Motion for New Trial

1[71 Virgin Islands Rule of Civil Procedure 59(a)(l)(A)(vi) provides in relevant part that The court

may, on motion, grant a new trial on all or some of the issues and to any party as follows for

attorney or party misconduct that undermined the trial RJ Reynolds Tobacco Co v Gerald 2022

VI 4, 1] 24 Courts evaluating motions for new trial based on an attomey’s remarks during closing

arguments ‘ must assess whether the closing arguments were both improper and prejudicial, meaning that

they impacted the substantial rights of a party ” 1d (collecting cases) Thus, for Defendants to prevail they

‘must show that the conduct complained of was in fact improper and that the improper argument was so

highly prejudicial and inflammatory that it denied the opposing party its right to a fair trial Id at 1| 25

1|72 Defendants argue, in the alternative, that they should be given a new trial because of comments

Plaintiffs’ counsel during closing arguments that undermined the fairness of the trial During her closing

argument, Plaintiffs’ counsel said, ‘ And then had they had a lease, had there been a promise for that

maintained we know from Miss Alex Myers they could have sold that lease for $l25,000 So the

failure to give them that lease that was promised, they lost the ability to sell that lease The Court had to

call a short recess before Plaintiffs’ counsel had concluded, and Defendants during the break, Defendants Gemce eta! v Bentley eta! 2022 v1 Super"8 Case No SX 2005 CV 00368 MEMORANDUM OPINION Page 46 of 51 moved for a mistrial based on the reference to Myers‘s testimony

1173 Alex Myers had been called by Plaintiffs as a rebuttal witness to impeach Jordan Jordan had

testified that he sold the Beach Bar (including the seven year lease) for around $25,000 00 or $30,000 00

and denied that the total sales price was $ 120,00 00 Myers impeached his testimony when she told the

Jury she purchased the Beach Bar (including the lease) from Jordan for approximately $175,000 00 She

also told the Jury and that she had fallen behind on the rent owed to Chrismos After Defendants moved

for a mistrial, the Court reiterated that Myers’s testimony was limited solely to impeachment and then

deferred ruling until closing arguments were over Once counsel finished, the Court ruled that Plaintiffs’

counsel 3 arguments were “not so egregious to declare a mistrial [and] final instruction would show

and explain that argument by counsel is not evidence and that the[ jury] must rely upon their memory as

to the facts ofthis case ’ (Trial Tr l 108 6 10 )However the Court did emphasize that ‘ [i]fthere is another

instance like that, I will review the record and if I find it is cumulative, the Court will find it's egregious

and I will declare a mistrial ’ Id at ”08 13 16 (emphasis added) After Defendants counsel made his

closing arguments and Plaintiffs’ counsel gave her rebuttal, Defendants then renewed their motion for a

mistrial based on misstatements 0f Plaintiffs’ counsel The Court took the matter under advisement In

their post trial motion Defendants renewed their request for a new trial

1174 The first statements Defendants point to concern check number 722 for $2,000 00 Plaintiffs’

version, admitted as part of a group as Plaintiffs Exhibit 47, had “July August l000 for Roof" written

on the memo line, whereas the memo line on Defendants’ copy of the same check was blank Defendants’

counsel argued in his closing that Vooys wrote the notation on the memo line to falsify the evidence

Plaintiffs counsel in rebuttal claimed it was not falsification Instead, according to her, Gerace had signed

the check but simply forgot to add the notation on the memo line However, Plaintiffs’ counsel confused

two different checks Gerace had signed check number 544 for $92! 00 with the notation Rent March Gemce eta! I Bentley eta] 2022 VI Super "3 Case No SK 2005 CV 00368 MEMORANDUM OPINION Page 47 of 51 Plumber Bills” which Vooys later corrected by crossing out March ’ and writing “April ’ Vooys signed

check number 772 for $2,000 00 and wrote ‘ July 1’ August 1000 for R001" on it after it was returned She

explained that she may have added the notation afterward to explain why the payment did not match the

rent due Plaintiffs’ counsel did conflate two different pieces of evidence and thus, her argument was

improper, but the Court does not find any prejudice here because the jury was instructed that their

recollection of the facts controls

1175 The second statements Defendants point to are Plaintiffs counsel’s summary of facts that to put

it plainly were not in evidence “‘The cardinal rule of closing argument is that counsel must confine

comments to evidence in the record and to reasonable inferences from that evidence ’ ’ RJ Reynolds

Tobacco Co 2022 V1 14 at 11 40 (brackets omitted) (quoting James v People 59 V I 866 888 (2013)

parenthetically)) Plaintiffs’ counsel violated this rule when she spoke about Vooys and Gerace wanting

to leave St Croix and cut their losses but Mosler and Hanley convinced them to stay, promising to make

a deal (See Trial Tr 1114 24 1115 5 (‘ [B]ut at some point they said, we don t get if we don’t get a

lease, this isn't going to work, we should take our losses and go And that’s when Mosler and Hanley say,

no don t do that we [1 make a deal for you to stay And so they did And they invested And they made

improvements ’) ) There was no testimony about Vooys and Gerace wanting to sell the Beach Bar, cut

their losses, and leave island ‘ The purpose of closing argument is to mold the facts given during trial in

the light most favorable to one’s client[,] ’ James, 56 V l at 888, not to make up facts to enhance that

light

‘176 The third statements Defendants point to concern whether the Beach Bar was open in June 2005

Reed, the bartender, had recalled that the Beach Bar was closed ‘sometime towards end of May maybe

somewhere in that area ’ (Tn'al Tr 516 16 17 ) When asked if he was guessing, he said he was See

(d at 516 20 22 (‘ I'm going to guess within a month period I'm sorry I'm going to that's all I can Gerace e! a! 1! Bentley er a1 2022 VI Super 78 Case No SX 2005 CV 00368 MEMORANDUM OPINION Page 48 of 51

remember on that part ”) On cross examination, he reiterated that the Beach Bar was “open until the very

end[,] 1d at 532 21, but believed that “the end” was in May During rebuttal, Plaintiffs’ counsel referenced

Reed’s testimony, specifically that he was there till the end, and argued that the restaurant was open in

June because Plaintiffs’ paid rent Defendants claim counsel misrepresented the evidence However that

evidence was conflicting at best Vooys did testify that they vacated the premises at the end of June 2005

and the restaurant was open that month On cross examination, she reiterated that the Beach Bar was open

in June, but when pressed and presented with contrary testimony from her deposition Vooys

backtracked, saying ‘I believe we were open in June I don’t know if it was til the end of June ’ Id at

286 22 23 When pressed further Vooys said ‘ I have gross receipts for June so I made money [0'

at 287 I Vooys was later recalled so the Beach Bar’s taxes could be admitted into evidence On redirect,

she stated that she believed the Beach Bar was open in June because they paid rent for June However

after seeing no gross receipts for June, Vooys conceded that the restaurant must not have been open Given

the conflicting testimony, the Court does not find Plaintiffs’ counsel 3 characterization of the evidence

prejudicial

1W7 The fourth statement Defendants point to is Plaintiffs’ counsel 5 characterization of the April 12,

2005 letter as an illegal attempt to evict Vooys and Gerace During rebuttal, Plaintiffs’ counsel

characterized the letter as follows

So the idea that they that they didn't give them a notice to quit that letter when you serve someone with a letter and tell them that you’ve got on April 12th which you got it April 18th, and they tell you you have to get out or we're going to take your stuff and throw it away by April 30th thats illegal You cant do that Id at 1125 9 15

Defendants contend that characterization of this letter and the applicable law is totally wrong as the letter

only sought to confirm they were leaving and asked to be corrected if they were not doing so (Defs’ R

50(b) & R 59(a) Post Tr Mots 18 ) However Defendants overlook that Plaintiffs’ counsel make similar Gerace e! «I 1 Bentley er a1 2022 VI Super 78 Case No SK 2005 CV 00368 MEMORANDUM OPINION Page 49 of 51 remarks during her opening statement, which their attorney attempted to refute (Compare Trial Tr

125 23 126 13, Wlth Id at 143 9 20) Defendants also overlook testimony comparing the letter to an

eviction notice it was written by an attorney on behalf of a landlord and served by a process server, stating

what would happen if the tenants did not leave Gerace and Vooys referred to the letter as an eviction

letter, which Hanley denied “In attempting to convince a Jury that a defendant's conduct was outrageous

and should be punished, an advocate must go beyond the kind ofarguments necessary to establish ordinary

negligence Herman 1 Hess 01/ V I Corp 10 V1 521 538 (D VI 1974) (footnote omitted) aff d 12

V I 240 (3d Cir 1975) The Court finds no prejudice from Plaintiffs counsel characterization of the letter,

particularly since the Court also instructed the jury as to the definition of a notice to quit or to terminate a

tenancy

178 The fifth statement Defendants point to concerns Plaintiffs’ counsel’s reference to Defendants’

burden of proof regarding defamation Plaintiffs counsel argued in rebuttal that Defendants could have

called Roger Morgan as a witness (See Trial Tr 1126 15 23 (‘ Now, and where’s Roger Morgan? Well

first of all, the judge, I believe, will instruct you that no one is required to bring all the witnesses that there

are But there’s no evidence in this case that anybody has the ability to bring Mr Morgan here So and

if indeed they wanted to prove that they didn‘t say those things on Mr Morgan 5 show, it would be they

who would bring Mr Morgan and they did not ) ) Defendants correctly note that it is the plaintiff who

has the burden of proof By arguing, during rebuttal, that Defendants should have produced evidence in

their defense, which they did get a chance to respond to Defendants claim they were prejudiced The

Court disagrees The jury was instructed on the burden of proof and further, that the court 5 instructions,

not the arguments of counsel must guide their deliberations

1179 The last statement Defendants point to concerns Plaintiffs counsel 5 reference to Woodson having

heard Mosler and Hanley defame Plaintiffs on the radio In his closing, Defendants’ counsel pointed out Gemce eta! i Bentley e! a] 2022 VI Super 78 Case No SX 2005 CV 00368 MEMORANDUM OPINION Page 50 of 51

that Plaintiffs had called John Woodson Did John Woodson say that he heard anything negative about

them? No ’ Id at 1084 24 25 Dunng her rebuttal argument Plaintiffs counsel responded, saying

And the statement that says Mr Woodson didn't say that he heard bad things on being said by Hanley and Mosler His testimony was, I called up the show to let me see if I got it I called up the show to support it to support them Well you wouldn't call up the show to support Vicki Vic and Joe if people weren’t saying bad things about them So of course he heard people saying bad things about them That's the reason he called to support them Id at 1126 241127 8

Defendants argue that Plaintiffs’ counsel misrepresented the evidence, claiming “Woodson only testified

that he called in to support Reggae (Defs R 50(b) & R 59(3) Post Tr Mots 18 ) Here both sides

are mistaken Woodson had testified that he heard from Vooys and Gerace and on the airwaves that they

were being put out of the restaurant The Court raised and sustained its own objection to Woodson 5

statement that he heard it on the airwaves Counsel then asked if Woodson himself had ever gone on the

airwaves to complain about Vooys and Gerace being removed from the restaurant, and he said yes He

claimed, in his opinion, the reason ‘ was not a noise issue at Cane Bay It had to do with the music and

type of clientele that that music probably brought (Trial Tr 392 18 20 ) When asked directly if he ever

heard Mosler or Hanley on the radio Woodson said Not that I can recall Id at 395 20, 22 The word

‘ support does not appear anywhere in his testimony and Woodson did not tell the Jury that he called the

radio in support of reggae music Thus, Defendants are mistaken Further, even though Woodson did not

hear Mosler or Hanley on the radio, he did testify that he had heard from Plaintiff why they were being

put out of the restaurant and, when coupled with the other testimony, the jury could reasonably infer that

Woodson was of the opinion that the full moon parties and reggae music motivated Mosler and Hanley s

decision The Court finds no prejudice from Plaintiffs’ counsel’s arguments here

'580 Finally Defendants argue that the cumulative effect of all the misstatements of Plaintiffs counsel

warrants a new trial Courts assume that Juries for the most part understand and faithfully follow Gemce e! a] l Bentley eta! 2022 VI Super 78 Case No SX 2005 CV 00368 MEMORANDUM OPINION Page 51 of 51

instructions Fret! v People 66 V I 399 413 (2017) See also Bland v Szrmons 459 F 3d 999 1015

(IOth Cir 2006) (even where there has been misleading argument by counsel juries are presumed to

follow court instructions) More importantly, however, Defendants have failed to show how Plaintiffs

counsel’s misstatements prejudiced them It is not the duty of the Court to scour the record looking for

suppon for a party 3 arguments Since the Court did in fact instruct the jury that either counsel’s arguments

are not to be considered as evidence and considering that courts assume that juries followed instructions,

the Court concludes that the conduct of Plaintiffs’ counsel, while certainly far from laudable, did not

undermine the fairness of the tn'al

[V CONCLUSION

T81 For the reasons stated above, the Court concludes that Plaintiffs failed to carry their burden of

proof as to defamation, breach of the duty of good faith and fair dealing and breach of an agreement to

enter into a lease The Court further concludes that the award of punitive damages is unwarranted here

Accordingly, the Court will grant Defendants’ motion in part and set aside the jury’s verdict as to all three

counts and the award of punitive damages The Court will deny Defendants’ motion as to the verdict for

intentional misrepresentation and deny the motion for a new trial An order accompanying this Opinion,

and a judgment, will follow 44x DONE this lg day of September 2022

HAR§LD W L WILLgCKS ATTEST Administrative Judge of the Superior Court Tamara Charles Clerk of the Court

59// 4 “L “’4‘ Court Cle JP Dated Jr ?J’ 36-?—