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)
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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
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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
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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)
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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
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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
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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
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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)
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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
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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)
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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
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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 / /