Oriental Bank v. Nehemiah Frey and Tara N. Lee a/k/a Tara Lee

• Court: Superior Court of The Virgin Islands
• Decided: September 7, 2021
• Docket: SX-19-CV-309
• Status: Published

Opinion

SUPERIOR COURT OF THE VIRGIN ISLANDS DIVISION OF ST CROIX

ORIENTAL BANK PLAINTIFF, Civil No SK 2019 CV 309 v ACTION FOR DEBT & FORECLOSURE OF NEHEMIAH FREY AND TARA N LEE REAL PROPERTY A/K/A TARA LEE MORTGAGE

DEFENDANTS CITE AS 2021 VI SUPER 3 2‘

Appearances Samuel T Grey, Esq Groner & Grey, P C Christiansted, U S Virgin Islands For Plamtzjf

MEMORANDUM OPINION AND ORDER

WILLOCKS, Presiding Judge

1] 1 THIS MATTER came before the Court on Plaintiff Oriental Bank 3 (hereinafter

“Plaintiff ) motion for default judgment filed on May 6 2021

BACKGROUND

1[ 2 On July 17, 2019, Bank of Nova Scotia (hereinafter BN8”) filed a complaint against

Defendant Nehemiah Frey (hereinafter “Frey”) and Defendant Tara N Lee a/k/a Tara Lee

(hereinafter “Lee” and together with Frey, “Defendants”) in connection with a promissory note

and a first priority mortgage In its complaint, BNS alleged two causes of action—Count I debt

and Count II foreclosure ofreal property mortgage and made the following allegations in support

thereof (1) Defendants are titleholders of the following real property “Plot No 40 (comprising

1 7637 U S acre, more or less) of Estate River, Prince Queen, St Croix, U S Virgin Islands as

more pafiiculariy shown on OLG Drawing No 4193 F dated December 5, 1986, revised January Orlental Bankv Frey e: a1 SX 2019 CV 309 fig Memorandum Opinion and Order 2021 VI SUPER Page 2 of 1 I

29, 1987’ (hereinafter “Property ’) (Compl 11 4), (ii) On July 30, 2008, Defendant Frey execute

and delivered to BN8 a promissory note (hereinafter “Note”) “obligating Defendant Frey to pay

the principal amount of Forty Seven Thousand Four Hundred Five Dollars and No Cents

($47,405 00), together with interest at the rate of 4 5% per annum ’ (Compl 11 5), (iii) To secure

payment of the Note, Defendants executed and delivered to BNS a first priority mortgage, dated

July 30, 2008 (hereinafter ‘Mortgage”), against the Property (Compl 11 7), (iv) Subsequently,

Defendant Frey “defaulted under the terms and conditions of the Note” and Defendants “defaulted

under the terms and conditions of the Mortgage ” (Compl 1111 9 10), (v) Despite notice of default

given to Defendant Frey, “[t]o date, the default has not been cured and [Defendant] Frey remains

in default under the terms of the Note ” (Compl 11 l 1), (vi) ‘Pursuant to the terms of the Note and

Mortgage, BNS has elected that the whole principal sum with all unpaid accrued interest shall be

immediately due and payable ” (Compl 11 14); (vii) “To date, principal, accrued interest, and other

amounts remain due and outstanding from [Defendant] Frey t0 BNS (Compl 1111 12 15), (viii)

“The Mortgage provides that BNS is entitled to all court expenses, disbursements and attorneys’

fees incurred in collecting the obligation due under the Mortgage ” (Compl 11 16); (ix) BN8 is

the holder ofthe Mortgage, and is entitled to maintain this foreclosure action ” (Compl 11 24), and

(x) “BNS is entitled to foreclosure of its lien upon the property, the sale of the Property to satisfy

the Note, and the recovery of any deficiency from [Defendant] Frey ’ (Compl 11 26 ) BNS sought

for the following relief (i) Judgment that [Defendant] Frey is indebted to BN8 in the amount of

$38,067 38 ” (ii) ‘Judgment declaring that [Defendant] Frey has defaulted under the terms of the

Note and that [Defendants] have defaulted under the terms of the Mortgage thereby entitling BNS

to exercise all of the remedies provided for in those instruments,” (iii) “Judgment declaring the Oriental Bank v Frey, er a1

fifiiiiél$°épmionandom Page 3 of ll 2021 v1 SUPER 3; outstanding unpaid debt due on the Note, including principal, interest, costs, expenses, and

attorneys fees,” (iv) “Judgment against [Defendant] Frey awarding ENS all amounts declared due

on the Note,” (v) ‘Judgment foreclosing the Mortgage lien of BN8,” (vi) “Judgment ordering that

the Property be sold and that BN8 be paid from the proceeds of the sale all amounts due on the

Note, including, but not limited to, any sums that BNS may pay for insurance premiums, taxes, or

other charges with respect to the Property, with interest from the date of payment,” (vii) ‘ Judgment

declaring that [Defendants], and all persons claiming from and under them are barred and forever

foreclosed of all right, title lien, claim, and equity of redemption in and to the Property, subject

only to the statutory right of redemption except where waived and released,” (viii) “Judgment

against [Defendant] Frey for any deficiency that may remain after the sale of the Property,” (ix)

“An order appointing a receiver, if requested by BN8, to collect and receive the rents and profits

from the Property, if any, dur1ng the pendency of this act1on,” and (x) “Judgment awarding BNS

such other and further relief as is just and equitable ” (Compl pp 1 2 ) The following documents

were attached as exhibits to the complaint Exhibit A a copy of a warranty deed for the Property,

dated July 14 2008 showing Richard M Hart and Judith A Hart as grantors and Defendants as

grantees Exhibit B a copy of the Note Exhibit C a copy of the Mortgage Exhibit D a copy of the

default letter from Scotiabank de Puerto Rico to Defendant Frey, dated April ll, 2018, and a

various copies of the corresponding envelopes and certified mail labels addressed to Defendant

Frey

1] 3 On May 14, 2020, the Court granted BNS’s motion for substituted service by publication,

granted BNS “leave to effect service upon [Defendants] by publication of the summons in the St

Croix Avis once 1n each week for four (4) consecutive weeks,” and ordered that “a copy of the Oriental Bank v Frey et a1 SX 2019 CV 309 Memorandum Opinion and Order 2021 VI SUPER 5&3 Page 4 of I I

summons and complaint be mailed to defendants, at their last known address ” (May 14, 2020

Order )

1] 4 On July 16, 2020, the Court granted BN8 3 motion for substitution of parties, and ordered

that the “caption reflect that Oriental Bank is substituted as Plaintiff in this action ”1 (July 16, 2020

Order ) On August 12, 2020, two copies of affidavit of service were filed—one for Defendant Frey

and one for Defendant Lee indicating that Defendants were personally served On October 2,

2020, when Defendants failed to plead or otherwise defend, the Clerk ofthe Court granted Plaintiff

Oriental Bank’s motion for entry of default2 and default was entered against Defendants

1} 5 On October 21, 2020, the Court entered an order whereby the Court granted Plaintiff’s

motion to dispense with mediation as required under Title 28 V I C § 531 3

1] 6 On May 6 2021 Plaintiff filed thls instant motion for default judgment

STANDARD OF REVIEW

1]? Rule 55 of the Virgin Islands Rules of Civil Procedure (hereinafter “Rule 55 ) governs

entry for default and default judgment An entry of default does not necessitate a default judgment

See Chaput v Scafidz 66 V I 160 188 (Super Ct June 14 2017) ( Plaintiffs do not win by default

1 According to BNS’s motion for substitution, “Oriental Bank, a wholly owned subsidiary of OFG Bancorp purchase the assets of [ENS] and Scotiabank de Puerto Rico including the interest held by the plaintiff in this matter ’ and that “[p]ursuant to V I R Civ P 25(c) Oriental Bank as the current owner of the Note and the mongage that are the subject of this action should be substituted into the action’ (Motion for Sub p l ) A copy of the United States Securities and Exchange Commission Fem 8 K was attached as Exhibit 1 to BN8 5 motion for substitution 2 According to the affidavit of Samuel T Grey Esq , dated September 16, 2020, attached to Plaintiff‘s motion for entry of default, Samuel T Grey Esq “swore according to law upon his oath deposes and says Based on information and belief, defendants are not infants, incompetent persons, nor are they engaged in the military service ” (Grey Aff 1} 4 ) 3 Title 28 V I C § 531 provides in relevant part (b) Prior to the entry of any judgment of foreclosure, the parties must provide the Court with evidence that a good faith effort was made to settle the matter through mediation The type and form of the mediation repoxt shall be prescribed by the Superior Court of the Virgin Islands Title 28 V I C §531(b) Oriental Bank v Frey et a1 SX 2019 CV 309 Memorandum Opinion and Order 2021 VI SUPER E§ Page 5 of 11

just because the defendants fail to appear ”) [W]hen default is entered against a defendant the

defendant is admitting only to the allegations against him as alleged in the charging document ”

Redemptlon Holdings Inc v Gov tofthe VI 65 V I 243 255 (V I 2016) (citing ngv Appleton

61 V I 339 346 (V I 2014)) In ng the Virgin Islands Supreme Court pointed out that the

Superior Court must consider whether the unchallenged facts constitute a legitimate cause of

action, since a party in default does not admit mere conclusion of law” and that if the Superior

Court determines that the unchallenged facts constitute a legitimate cause of action, then it is ‘to

hold a default judgment hearing to establish the amount of damages ” 61 V I at 346 (internal

quotes and citations omitted) (footnote omitted) However, a default judgment can be entered

without a hearing “[w]hen the plaintiff‘s claim against a defendant is for a sum certain or for a sum

which can by computation be made certain ” Appleton v Harrlgan, 61 V I 262, 270 (V I 2014)

(citing Super Ct R 48(a)(1)) 4 see V I R CIV P 55(b)(1) ( If the plaintiffs claim is for a sum

certain or a sum that can be made certain by computation, the court or the clerk on the plaintiff‘s

request, with an affidavit showing the amount due must enter judgment for that amount and

costs against a defendant who has been defaulted for not appearing and who is neither a minor nor

4 The Hamgan court noted “We again look to federal case law for persuasive authority because, even though Superior Court Rule 48 exclusively governs defauit judgment in the Superior Court, Federal Rule of Civil Procedure 55(b) similarly provides that default judgment can be entered without a hearing only where the damages sought are a “sum certain ” SUPER CT R 48(a)(l) (“When the plaintiff‘s claim against a defendant is for a sum certain or for a sum which can by computation be made certain, the clerk upon request of the plaintiff shall enter judgment for the net amount due and costs against the defendant ) FED R CIV P 55(b)(] )( Ifthe plaintiff‘s claim is for a sum certain or a sum that can be made certain by computation, the clerk must enter judgment for that amount and costs against a defendant ”) ”) 61 V! at 270 n 9 Since Harrtgan, the Virgin Islands Supreme Court adopted the Virgin Islands Rules of Civil Procedure, which went into effect on March 31, 2017 Subsequently, Superior Court Rule 48 was repealed on April 7, 2017 by Supreme Court Promulgation Order No 2017 0006 While Superior Court Rule 48 has been repealed and the Federal Rules of Civil Procedure does not apply in this matter, the Court nevertheless finds the Harrzgan court’s analysis as to sum certain claims helpful here since Rule 55(b)( 1) closely mirrors its federal counterpart and Superior Court Rule 48 Oriental Bankv Frey et al SX 2019 CV 309 Memorandum Opinion and Order 2021 VI SUPER :3 Page 6 of 1 I

an incompetent person ) In Harrzgan, the Virgin Islands Supreme Court explained that “[a] claim

is not a sum certain unless there is no doubt as to the amount to which a plaintiff is entitled as a

result of the defendant's default ” 61 V I at 270 “In ah other cases [not involving a claim for a

sum certain}, the party must apply to the court for a default The court may conduct hearings or

make referrals preserving any statutory right to a jury trial when, to enter or effectuate

judgment, it needs to (A) conduct an accounting, (B) determine the amount of damages,

(C) establish the truth of any allegation by evidence, or (D) investigate any other matter ” V I R

Cw P 55(b)(2)

DISCUSSION

1| 8 In its motion, Plaintiff moved for the Court for an entry ofjudgment by default in favor of

Plaintiff and against Defendants and an award of costs including reasonable attorney’s fees

Plaintiff advised the Court, inter alia, that (i) Defendant Frey “has failed to pay the principal and

interest due pursuant to the Note and there remains past due and owing the principal and interest

due pursuant to the Note and there remains past due and owing the principal sum of $33,303 56,

together with accrued interest thereon to April 30, 2021, in the sum of $8,681 12, and late charges

in the amount of $231 52 to April 30, 2021, with interest accruing thereafter at the rate of $6 2044

The Bank, in order to protect the security of the Mortgage, has expended the amount of $ 1 0 00 for

original document fees, $1,170 00 for property inspections and $1,111 38 for the payment of

property taxes for a total due as of April 30 2021 in the sum of $44 507 58 (Motion 1| 11) and

(ii) “Pursuant to paragraph 18 S of the Mortgage, the piaintiff “is authorized to foreclose on the

property mortgaged as security for the Note in the event of a default ” (Motion, 1] I3 ) A copy of

affidavit of proof of Michelle P Thomas, “Advisor, Retail Operations Delinquency Management Oriental Bankv Frey et a] SX 2019 CV 309 Memorandum Opinion and Order 2021 VI SUPER % Page 7 of 11

Unit of Oriental Bank,” and a copy of a one page computer printout reflecting the payoff

calculation in connection with Defendant Frey’s loan with Plaintiff were attached to Plaintiffs

motion

I Whether Plaintiff is Entitled to a Judgment by Default

1[ 9 The Court must first determine whether the facts, as alleged in Plaintiffs complaint,

constitute a legitimate cause of action

A Debt Claim 1|10 As noted in Carlos Warehouse v Thomas, ‘no Virgin Islands precedent (binding or

persuasive) explains what common law rule governs a claim for money owed” and thus, a Banks

analysis was necessary to determine whether a debt claim should be recognized under the common

law of the Virgin Islands and what specific rules should apply 64 V I 173 183 84 (V I Super

Ct May 12, 2016) The Carlos Warehouse court conducted a Banks analySIS and concluded that

“it is unquestionably the soundest rule for the Virgin Islands to recognize a claim for debt,” Id at

192 (quotation marks and internal citation omitted), and that “[t]o state a common law claim for

debt under Virgin Islands law, the plaintiff must allege that the defendant owes a certain amount

and that the defendant is or should be obligated to pay that amount ’ Id Having reviewed the

Banks anaiysis conducted in Carlos Warehouse, this Court sees no reason to depart from that ruling

and adopts that analysis as though the same were set forth herein

{I 11 Based on the unchallenged facts the Court finds that Defendant Frey owes Plaintiff a

certain amount of money under the Note and Defendant Frey is obligated to pay Plaintiff such

money Thus, the Court concludes that the unchallenged facts constitute a legitimate cause of

action for debt under Virgin Islands law OrzentalBankv Frey er a1 SX 2019 CV 309 Memorandum Opinion and Order 2021 V! SUPER _ޤ Page 8 of 11

B Foreclosure of Real Property Mortgage Claim

1] 12 In Carrlllo v szzmortgage Inc , the Virgin Isiands Supreme Court confirmed that for the

plaintiff to prevail on the foreclosure claim, the plaintiff must establish that ‘ (1) the debtor

executed a promissory note and mortgage (2) the debtor is in default under the terms of the note

and mortgage, and (3) the lender is authorized to foreclose on the property mortgaged as security

for the note 63 V I 670 674 (V I 2015)

1! 13 Based on the unchallenged facts the Court finds that Defendant Frey executed the Note,

Defendants executed the Mortgage securing the Note, Defendant Frey is in default under the terms

of the Note, Defendants are in default under the terms of the Mortgage, and Piaintiff is authorized

to foreclose on the property mortgaged as security for the Note Thus, the Court concludes that the

unchallenged facts constitute a legitimate cause of action for foreclosure under Virgin Islands law

C Damages

1] 14 The Court must now determine whether a hearing is necessary to establish the amount of

damages Here, Plaintiff submitted the affidavit of Michelle P Thomas, “Advisor, Retail

Operations Delinquency Management Unit of Oriental Bank , and a copy of a one page computer

printout reflecting the payoff calculation in connection with Defendant Frey’s ioan with Plaintiff

in support of its motion Michelle P Thomas stated in her affidavit that Defendant Frey “is in

default of his obligations under the Note and the Bank has exercised its option to accelerate the

indebtedness evidenced by the Note and secured by the Mortgage,” that “there remains past due

and owing the principal sum of $33,303 56, together with accrued interest thereon to April 30,

2021 in the sum of $8 681 12 and late charges in the amount of $231 52 to April 30 2021 with

interest accruing thereafter at the rate of $6 2044,” and that “[t]he Bank, in order to protect the

security of the Mortgage, has expended the amount of $10 00 for original document fees, OrlenIaIBankv Frey et a1 SX 2019 CV 309 Memorandum Opinion and Order 2021 VI SUPER % Page 9 of l 1

$1 170 00 for property inspections and $1 111 38 for the payment of property taxes for a total due

as of April 30, 2021 in the sum of $44,507 58 ” (Thomas Aff 1H] 5 6 ) The information contained

in the one page computer printout supports the numbers provided in Plaintiff’s motion and in

Michelle P Thomas’s affidavit Additionally, Plaintiff had previously submitted a copy of the

executed Note and a copy ofthe executed Mortgage with its complaint Based on the foregoing, the

Court finds Plaintiff‘s claim for the total amount Defendant Frey owes Plaintiff under the

Note qualifies as a sum certain because ‘ there is no doubt as to the amount to which [Plaintiff] is

entitled as a result of [Defendant's] default ” Harrigan, 61 V I at 270 In other words, the Court

finds that there can be no dispute as to the amount due under the Note Thus, a hearing is not

necessary to establish the amount of damages in this matter

D Foreclosure

11 15 In addition to Plaintiff‘s request for a judgment in the amount of $44,507 58, with interest

accruing at the rate of $6 2044 per diem5 after April 30 2021 Plaintiff also requested for a

judgment of foreclosure upon the Property However, Plaintiff failed to submit a copy of the title

search of the Property Thus, the Court cannot discern whether there are any subsequent

lienholders that should be made a defendant in this action See Title 28 V I C § 532 (“Any person

having a lien subsequent to the plaintiff upon the same property or any part thereof, or who has

given a promissory note or other personal obligation for the payment of the debt or any part thereof,

secured by the mortgage or other lien which is the subject of the action, shall be made a defendant

in the action ’ ) Furthermore, if there are other liens recorded against the Property, the Court cannot

55 Although not specified as ‘ per diem" in the motion or in Michelle P Thomas’s affidavit Plaintiff alleged in the complaint that the mterest accrued on the principal at the rate of $6 2044 “per diem ” (Comp! 1[ 18 ) Oriental Bankv Frey eta! SX 2019 CV 309 Memorandum Opinion and Order 2021 VI SUPER 93 Page 10 of ll

discern the order of priority without the title search 6 Accordingly, the Court will order Plaintiff to

supplement its motion for default judgment with a certified copy of the title search of the Property

11 Whether Plaintiff is Entitled to Costs Including Reasonable Attorney’s Fees

1| 16 Plaintiff also requested costs, including reasonable attorney's fees, in its motion for default

judgment and as part of the relief in the complaint However, Plaintiff failed to provide any

evidence supporting its request for costs and reasonable attorney’s fees 7 At this time, the Court

will deny without prejudice Plaintiff’s request for costs including reasonable attorney’s fees If

Plaintiff wishes to move the Court for costs and reasonable attomey’s fees, then Plaintiff should

file a separate motion “[w]ithin 30 days after the entry of a final judgment or a judgment allowing

costs” pursuant to Rule 54 of the Virgin Islands Rules of Civil Procedure, with proper briefing and

supporting documents See V I R Civ P 54(d)(l)(A) (“Within 30 days after the entry of a final

judgment or a judgment allowing costs the prevailing party shall serve on the adverse party and

file with the court a bill of costs, together with a notice of motion when application will be made

to the court to tax the same ”)

CONCLUSION

11 17 Based on the foregoing, the Court will order Plaintiff to supplement its motion for default

judgment with a certified copy of the title search of the Property and deny without prejudice

Plaintiff’s request for costs including reasonable attomey’s fees At this juncture, the Court Will

6 In its motion Plaintiff” requested a judgment [d]eclaring that the interest of the Oriental Bank Scotia is senior and superior to that of any other lienholder against the referenced property ’ (Motion, p 4 ) However Plaintiff failed to provide any support thereof 7 The Court notes that Michelle P Thomas indicated in her affidavit that “Nichols Neman [sic] legal fees of $320 00 and Foreclosure expense of $2,560 70 were subtracted for the total outstanding balance” and that “[t}hese sums totaling $2,880 70 represent attomey’s fees and costs incurred as of April 15, 2021, which will be awarded at the Court’s discretion ” (Thomas Aff 1] 6, n 1 )However, Plaintiff failed to provide any support of its requests for costs and reasonable attomey’s fees Oriental Bank v Frey er al SX 2019 CV 309 Memorandum Opinion and Order 2021 VI SUPER £13 Page 11 of I]

reserve ruling on Plaintiff’s motion for default judgment and entering a judgment in this matter

until after receipt of said title search Accordingly it is hereby

ORDERED that, within thirty (30) days from the date of entry of this Memorandum

Opinion and Order, Plaintiff shall file a certified copy of the title search for the Property to

supplement its motion for default judgment And it is further

ORDERED that Plaintiff’s request for costs including reasonable attorney’s fees is

DENIED WITHOUT PREJUDICE K DONE and so ORDERED this EBS day of 5gp? , 2021

t« ) / ff / / v , / / /‘ 2 ATTEST C 5: gm, 6/; do!“ n? 56 4/ Tamara Cha. {es HAROLD W L WILLOCKS Clerk of th curt Presiding Judge of the Superior Court 4 1;: ,

By £4365” /Com1 glerk 17:. I” W, ,; Dated M