Legacy Venture West Development LLC, d/b/a Legacy Development v. The Summer's End Group, LLC.

• Court: Superior Court of The Virgin Islands
• Decided: June 24, 2020
• Docket: ST-17-CV-93
• Status: Unpublished

Opinion

IN THE SUPERIOR COURT OF THE VIRGIN ISLANDS DIVISION OF ST THOMAS AND ST JOHN

LEGACY VENTURE WEST DEVELOPMENT ) LLC D/B/A LEGACY DEVELOPMENT ) ) CASE NO ST 17 CV 93 Plaintiff ) V ) ) THE SUMMER S END GROUP LLC ) ) Defendant ) )

Cite as 2020 VI Super 7OU

MEMORANDUM OPINION

111 THIS MATTER is before the Court on Defendant’s Legacy Venture West

Development, LLC, D/B/A Legacy Development (“Legacy”) Motion to Dismiss

Plaintiffs First Amended Complaint Pursuant to VI R CIV P 12(b)(6) ( motion to

d1smiss”), filed January 16, 2018 The motion is fully briefed

BACKGROUND

1m The original complaint was filed February 13 2017 See (Compl 9 Feb 13

2017) The Summer’s End Group, LLC (“SEG”) filed a motion to dismiss June 5, 2017

See (Mot Dismiss 14, June 5, 2017) In response, Legacy filed a motion for leave to

file an amended complaint1 See (Mot Leave File First Am Compl, July 7, 2017)

Then, SEG filed an opposition to Legacy’s motion to amend complaint See (Def ’s

OppnPl sMot Am Compl Aug 25 2017)

1 Legacy also filed an opposition to SE6 5 motion to dismiss See (Opp n Mot Dismiss July 7, 2017) Legacy Venture w Dev LLC v The Summer’s End Grp LLC Case No ST 17 CV 93 Memorandum Opinion Cite as 2020 VI Super 70U Page 2 of 12

113 In light of Legacy’s efforts to cure the deficiencies asserted by SEG, the Court

allowed Legacy to file an amended complaint See (Order 1, Jan 2, 2018) The Court

did not provide a substantive analysis of the motion, nor did the Court deny SEG’s

motion to dismiss since it appeared the proposed amended complaint would resolve

some, if not all, of SEG’s arguments See Id Legacy filed the amended complaint and

SEG filed a new motion to dismiss, which is the subject motion before the Court See

(First Am Compl 16 Jan 3 2018)‘ (Def s Mot Dismiss P1 5 First Am Compl

PursuantVI R CIV P 12(b)(6) 14 Jan 16 2018) [hereinafter (Mot Dismiss)]

FACTS

114 According, to the First Amended Complaint, SEG “was the developer of a

proposed marina project located in Coral Bay, St John referred to as ‘The Yacht

Club at Summers End " First Am Compl 1111 5 6 At some point, SEG apparently

“lacked the funds to contlnue the PrOJect[] ” Id 11 8 “In August 2014, in an effort to

raise additional capital and continue the development of the Project, SEG contacted

Legacy to discuss its potential involvement in the Project” and “Legacy

representatives agreed to look at the PrOJect to determine whether to make an

investment” Id 1111 9 10 “Legacy[] representatives proceeded to conduct a detailed

due diligence review of the Project’s permits, financials, Entitlements and Plans ” Id

11 10 According to Legacy, after a site visit of the Project in St John, “SEG and Legacy

exchanged communications outlining the type and scope of the investment Legacy Legacy Venture w Dev LLC v The Summer 5 End Grp LLC Case No ST 17 CV 93 Memorandum Opinion Cite as 2020 VI Super 7OU Page 3 of 12

would provide to SEG and the equity ownership interest Legacy would take in the

venture to partner with SEG for the development of the Project ” See id 1H 11 12

1i5 Legacy further alleges it contributed financial capital and other services

between at least June 2015 and September 2016, while Legacy and SEG discussed

finalizing a partnership agreement” See Ld 1H] 15 35 Legacy alleges that by July

2016, it had “invested over $600,000 in capital contributions ” Id 1i 32 A

substantially non binding Letter of Intent (“LOI”) was executed by SEG “on May 2,

2016 setting out the proposed terms of the Joint Venture Id 1H] 29 30 In late 2016

Legacy and SEG “continued to negotiate the terms of the Joint venture/partnership

agreement and exchanged various drafts of letters of intent with multiple revisions

per draft Id 11 35

TI6 In January 2017 SEG informed Legacy that [SEG] had begun

conversations with another potential partners [sic] and were going to vet that

opportunity before completing any agreement with Legacy ” Id 1] 38 Legacy claims

that SEG is using Legacys financial contributions and services to attract a better

joint venture deal with another partner See Ld 1H 39 41 Legacy also claims that if

SEG is successful in securing another partner, “SEG intends to treat Legacy’s

financial contributions to the Project and the Joint Venture as mere debt obligations

of SEG, which may or may not be repayable, and not to provide any compensation to

Legacy for its substantial contributions of time and expertise ” Id 11 42 Legacy Venture W Dev , LLC V The Summer S End Grp LLC Case No ST 17 CV 93 Memorandum Opinion Cite as 2020 VI Super 7OU Page 4 of 12

1W Legacy asserts claims for declaratory Judgment and injunctive relief and asks

the Court to 1) declare that a partnership was formed “and that the Plans and

Entltlements are partnership property,” 2) enter Judgment that the parties had a

joint venture, 3) declare the joint venture dissolved and 4) enter “injunctive relief

prohibiting SEG from negotiating alternative joint ventures for the Project” Id at

15 16 Legacy also seeks damages for breach of contract, unjust enrichment, quantum

meruit, breach of duty of loyalty, breach of good faith and fair dealing and breach of

partnership agreement Id

ANALYSIS

118 SEG moves to dismiss pursuant to Virgin Islands Rules of Civil Procedure

12(b)(6), which states that “[e]very defense to a claim for relief in any pleading must

be asserted in the responsive pleading if one is required But a party may assert the

following defenses by motion failure to state a claim upon which relief can be

granted VI R CIV P 12(b)(6) [T]he Virgin Islands is a notice pleading

jurisdiction,” and a plaintiff must meet the notice pleading standard in V I R CIV P

8(a)(2) to overcome a 12(b)(6) motion See Mills Williams U Mapp 67 VI 574 585

86 (V I 2017) (citations omitted) (explaining that V I R CIV P 8(a)(2) eliminated the

plausibility standard) Brathwatte 0 HD VI Holdmg Co Case No ST 16 CV 764

2017 VI LEXIS 76 at *2 *3 (VI Super Ct May 24 2017) (unpublished) (same) Legacy Venture w Dev LLC v The Summer 5 End Grp LLC Case No ST 17 CV 93 Memorandum Opinion Cite as 2020 VI Super 70U Page 5 of 12

Under a notice pleading regime a plaintiff must provide “a short and plain statement

of the claim showing that the pleader is entltled to relief See V I R CIV P 8(a)(2)

1H3 SEG’s motion to dismiss argues that Legacy s first amended complaint fails to

properly allege the existence of a partnership and “admits to the existence of facts

which establish that no partnership could have existed as a matter of law ” See (Mot

Dismiss 10 13) SEG further contends that Legacy’s amended complaint alleges that

the parties discussed creating a partnership, but never entered into an agreement

See id

1i10 Legacy argues that SEG’s motion to dismiss should be denied because the

Court already denied the same arguments in “SEG’s opposition to Legacy’s motion to

amend complaint” on futility grounds See (Opp’n Mot Dismiss First Am Compl 2

3, Feb 5, 2018) [hereinafter (Opp’n Mot Dismiss)] Legacy quotes the Supreme Court

of the Virgin Islands in Mills Williams v Mapp, stating “[t]he standard for assessing

a motion to amend challenged on futility grounds matches the standard for a motion

to dismiss” See id at 1 (alteration in original) (quoting Mills Williams, 67 VI at

583) Legacy contends that when the Court granted Legacy’s motion to amend, the

“Court [had] already tested whether the First Amended Complaint could survive

dismissal, determined it would and thus, allowed the amendment Such a decision

constitutes the law of the case” Id at 3 Legacy uses VI Taxi Assn 0 VI Port

Authority 67 VI 643 (VI 2017) to explain that the law of the case[ ] doctrine

dictates that ‘when a court decides upon a rule of law, that rule should continue to Legacy Venture W Dev LLC v The Summer 5 End Grp , LLC Case NO ST 17 CV 93 Memorandum Opinion Cite as 2020 VI Super 7OU Page 6 of 12

govern the same issue in subsequent stages in the litigation ’” See Ld 2 (quoting VI

Tam Ass n, 67 V I at 668) However, VI TaxL Ass n also states that “a litigant cannot

invoke the law of the case doctrine to preclude a trial Judge from recons1dering his or

her own ruling ” VI TaxL Ass n, 67 V I at 671

fill The Court did not analyze the motion to amend nor SEG’s futility argument,

nor did the Court deny SEG’s motion to dismiss See (Order 1, Jan 2, 2018) The

Court simply stated that the amended complaint appeared to resolve some of SEG’s

arguments, granted the motion to amend and directed SEC to file a response to the

amended complaint See Ld Nevertheless, the Court finds that even if the law of the

case doctrine was invoked by the Court’s decision to allow Legacy to amend its

complaint, the Court is not bound by this decision and may decide whether Legacy’s

first amended complaint survives SEG’s motion to dismiss

1H2 Legacy 5 allegations convey that while the specific terms of a partnership

agreement were in negotiation, actions pertaining to a partnership were occurring

simultaneously See (First Am Compl 1M 12, 15 35) Neither a signed writing, nor

the intention to form a partnership, is required to prove a partnership See V I CODE

ANN tit 26, § 2(7) (stating that a partnership agreement can be “written, oral[] or

implied”); 26 V I C § 22(a) (“the association of two or more persons to carry on as co

owners a business for profit forms a partnership, whether or not the persons intend

to form a partnership”); (Opp’n Mot Dismiss 8) However, “the parties must ‘inten[d]

to do things that constitute a partnership ”’ Yusuf v Hamed, 59 VI 841, 850 (V I Legacy Venture w Dev LLCv The Summer s End Grp LLC Case No ST 17 CV 93 Memorandum Opinion Cite as 2020 Vi Super 70U Page 7 of 12

2013) (alteration in original) (quoting RedZand U RedZand 288 P 3d 1173 1213 (Wyo

2012)) (citing Brown U 1401 New York Ave Inc 25 A 3d 912 913 14 (D C 2011))

As Legacy argues, “[n]o single factor is determinative as to whether a partnership

does or does not exist ” (Opp’n Mot Dismlss 8) (citing Yusuf, 59 V I at 850) Legacy’s

allegations as set forth in the first amended complaint are sufficient to Show a

partnership may have formed Accordingly, it would be improper for the Court to

decide on a motion to dismiss Whether a partnership was created while the terms of

such partnership were in negotiation See Oxley v Sugar Bay Club & Resort Corp ,

C1VilN0 ST 18 CV 96 2018VI LEXIS 81 at *3 (VI Super Ct May 14 2018) (citing

Hans Lollik Corp v Govt of the VI 17 VI 220 230 (VI Super Ct 1981)) (on a

12(b)(6) motion, “the Court does not address the merits of the claim but merely tests

whether the claim has been adequately stated in the pleading”); (First Am Compl

1H] 12 30 35)‘ (Mot Dismiss 10 13)

1i13 SEG contends that no agreement to share profits and losses was established

between SEG and Legacy (Mot Dismiss 8 10) However, facts alleged by Legacy,

such as a conversation between Legacy and SEG regarding “the equity ownership

interest Legacy would take in the” Project, suggest the possibility of shared profits

See (First Am Compl ii 12) Similarly, in conjunction with facts that allege

discussions ofa partnership, e g , “on January 20, 2015, [SEG] exchanged emails with

[Legacy] regarding the parties’ intentions for Legacy to partner and take an

ownership interest”, Legacy’s allegation that it “invested over $600,000 in capital Legacy Venture W Dev , LLC v The Summer’s End Grp LLC Case No ST 17 CV 93 Memorandum Opinion Cite as 2020 VI Super 7ou Page80f12

contributions” and “substantial time and expertise” shows the possibility that Legacy

rlsked loss if the Project was not successful, especially if Legacy was unable to

recuperate its investment See id 1] 13, 15, 32

1H4 SEG further argues that since Legacy did not establish there was a

partnership, and Legacy’s claims for declaratory judgment, breach of contract, breach

of duty of loyalty, breach of good faith and fair dealing, breach of partnership

agreement and dissolution of the partnership are all contingent on a partnership,

these claims must be dismissed See (Mot Dismiss 13 14); (Def ’s Reply P] ’s Opp’n

Mot Dismiss First Am Compl Pursuant VI R CIV P 12(b)(6) 6 Feb 12 2018)

Conversely, Legacy argues that its complaint does establish a partnership, and

therefore, these claims should not be dismissed See (Opp n Mot Dismiss 7, 10 11,

13) The Court finds the First Amended Complaint alleges suffi01ent facts to satisfy

the notice pleading standard of a claim for a partnership Therefore, the Court must

deny the motion to dismiss the above mentloned claims, which are contingent on a

partnership See 26 VI C §§ 4(a) 4(b)(3) 4(b)(5) 4(b)(8) 74(b) 74(d) 75(b)(iii)

171(5)‘ 3RC & Co v Boynes Truckmg Sys Case No ST 14 CV 624 2018 VI LEXIS

62 at *21 22 (VI Super Ct May 31 2018) (unpublished) ( Defendants only

argument regarding Counts II and IV is that they fail because of the absence of a

joint venture Since the [c]ourt will not determine [that] issue[] here, summary

judgment must be denied as to” those claims); (Mot Dismiss 13 14); (Opp’n Mot

Dismiss 10) Legacy Venture w Dev, LLC v The Summer’s End Grp , LLC Case No ST 17 CV 93 Memorandum Opinion Cite as 2020 VI Super 70U Page 9 of 12

1115 However, not all of Legacy’s claims are dependent on proof of a partnership In

the absence of a partnership or contract, a party may prevail on a claim of unjust

enrichment See Cacciamani & Rover Corp 0 Banco Popular de Puerto R100, 61 VI

247 251 52 (VI 2014) (citation omitted) (citing Mitsubishi Intl Corp v CardLnal

Textzle Sales 14 F 3d 1507 1518 (11th Cir 1994)) ( Because unjust enrichment is an

equitable remedy, it is inappropriate where a legal remedy is available”); see also

Speelmon 1) Tucker Case No C16 1526 JCC 2018 U S Dist LEXIS 176222 at *8

(W D Wash Oct 11, 2018) (unpublished) (“Because the [c]ourt finds there was a

partnership, Plaintiff’s quantum meruit and unjust enrichment claims fail as a

matter of law”)

1H6 As a preliminary matter, Legacy argues in its opposition to motion to dismiss

that “unjust enrichment and [quantum meruit] are not the same cause of action ”

See (Mot Dismiss 14) Legacy uses the VI Supreme Court case Vanterpool U Govt

of the VI 63 V I 563 (V I 2015) to support this assertion See (Opp n Mot Dismiss

11 12) (citing Vanterpool, 63 V I at 590) However, Legacy is mistaken The

Vanterpool opinion specifically states that “[a]s [the VI Supreme Court has]

previously explained, the terms ‘quantum meruit’ and ‘unjust enrichment’ refer to the

same cause of action, which is available where there is no enforceable contract”

Vanterpool 63 VI at 589 n 16 (citing Walters U Walters 60 VI 768 776 (V I 2014)

CaCCLamani & Rover Corp U Banco Popular de Puerto Rico, 61 VI 247, 251 52 (VI

2014)) In In re Change of Name of Reynolds 60 VI 330 336 (VI 2013) the VI Legacy Venture W Dev LLC v The Summer’s End Grp LLC Case No ST 17 CV 93 Memorandum Opinion Cite as 2020 VI Super 70U Page 10 of 12

Supreme Court stated that “a party must be ‘afforded notice and an opportunity to

amend or otherwise respond before a trial court may sua sponte dismiss a

complaint that fails to state a cause of action” In re Change of Name of Reynolds, 60

V I at 336 (citing Martinez Rwera U Ramos 498 F 3d 3 7 (1st Cir 2007)) Although

this rule refers to dismissing a complaint, the Court finds the rule instructive when

facing the possibility of dismissing a claim sua sponte Therefore, Legacy must

determine whether it wishes to pursue its claim for unjust enrichment or its claim for

quantum meruit since they are identical The Court will give Legacy an opportunity

to make its selection

1H7 Legacy argues that if the Court finds there is no agreement between the

parties, Legacy is still entitled to payment for services rendered See (Opp’n Mot

Dismiss 12) SEC counters that Legacy is not entitled to payment for “due diligence

and the efforts [Legacy] rendered in investigating and considering a partnership”

(Mot Dismiss 14) Additionally, SEG argues that “[t]0 the extent [Legacy] can seek

repayment of monies, as with its breach of contract claims, [Legacy] needs to

articulate what the terms of any loan was, and how SEG breach[ed] those

terms ” Id These are merit arguments that the Court need not address on a motion

to dismiss Oxley 2018 V I LEXIS 81 at *3 (citing Hans Lollzk Corp 17 VI at 230)

“[H]owever, as a legal matter, if it is found that a joint venture and contract

existed then the unjust enrichment claim necessarily must fail ” 3RC & Co , 2O 18 V I

LEXIS 62 at *22 23 (citation omitted) Legacy Venture W Dev, LLC v The Summer’s End Grp LLC Case No ST 17 CV 93 Memorandum Opinion Cite as 2020 VI Super 7OU Page 11 of 12

1118 SEG argues that “’injunctive relief is a form of relief, not a cause of action”

(Mot Dismiss 14) (citing Alleyne U Diageo USVI Inc 63 VI 884 418 19 (VI Super

Ct 2015)) The Court agrees Consequently, SEG’s motion to dismiss regarding

Legacy’s injunctive relief claim will be granted

CONCLUSION

1119 The Court finds that Legacy has provided “a short and plain statement of the

claim showing that the pleader is entitled to relief’ regarding its declaratory

Judgment claim See V I R CIV P 8(a)(2) Further, since Legacy’s breach of contract,

breach of duty of loyalty, breach of good faith and fair dealing, breach of partnership

agreement and dissolution of the partnership claims are contingent upon the

existence of a partnership and Legacy’s complaint makes sufficient allegations to

assert same, the Court must allow Legacy to pursue those claims Additionally, the

Court will allow Legacy to amend the first amended complaint to delete the claim for

quantum meruit or the claim for unjust enrichment Moreover, the Court declines to

dismiss Legacy’s unjust enrichment or quantum meruit claim because if Legacy is

not able to prove that a partnership was established, Legacy is entitled to prove its

quasi contract claim Finally, the Court will dismiss Legacy’s injunctive relief cla1m

because injunctive relief “is a remedy and not a cause of action” Alleyne, 63 VI at

418 Therefore, SEG’s motion to dismiss will be denied in part and granted in part Legacy Venture W Dev LLC v The Summer's End Grp LLC Case No ST 17 CV 93 Memorandum Opinion Cite as 2020 VI Super 70U Page 12 of 12

An order will accompany this opinion

DATED June (7/2311 2020 éé % éé g: Kathl n Mackay ATTEST Judge of the Superior Court T RA CHARL of the Virgin Islands Clerk e Court

BY M DO NA D DON AN (Q w Co rt Clerk Supervisor / /