Theodore R. Newman, Jr. v. Board of Directors of Sapphire Bay West Condominium Association

• Court: Superior Court of The Virgin Islands
• Decided: November 1, 2022
• Docket: ST-2022-CV-90
• Status: Unpublished

Opinion

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

THEODORE R NEWMAN JR ) ) CASE NO ST 2022 CV 00090 Plaintiff ) ) ACTION FOR DECLARATORY V ) RELIEF BREACH OF FIDUCIARY ) DUTY BREACH OF CONTRACT BOARD OF DIRECTORS OF SAPPHIRE BAY ) BREACH OF GOOD FAITH AND WEST CONDOMINIUM ASSOCIATION ) FAIR DEALING AND INJUNCTIVE through its president, John Brasile ) RELIEF ) Defendant )

Cite as 2022 VI Super 90U

MEMORANDUM OPINION AND ORDER

W Pending before the Court are

1 Defendant 5 Motion to Dismiss and Compel Arbitration and Memorandum of Law in Support Thereof filed on April 21 2022

2 Plaintiff‘s Opposition to Defendant 5 Motion to Dismiss and Compel Arbitration filed on May 12 2022

3 Defendant 5 Reply in Further Support of Its Motion to Dismiss and Compel Arbitration and Incorporated Memorandum of Law in Support Thereof filed on July 8 2022 and

4 Defendant 5 Reply to Plaintiff‘s Opposition to Defendant 5 Motion to Stay Discovery filed on July 19 2022

I FACTUAL AND PROCEDURAL BACKGROUND

‘32 The Plaintiff, Theodore R Newman Jr is the owner of a condominium unit at Sapphire Bay West (the Property ) Newman brought the instant action alleging that

1 The By Laws of Sapphire Ba) Condominiums Westl (SBCW) require that improvements costing in excess of $50 000 00 must be approved by at least two thirds (2/3) or seventy five condominium units and that the Board of Directors ( BOD ) is only authorized to

‘ Since at least 1990 the recorded official By Laws including amended By Laws have identified the name of the condominium as Sapphire Bay Condominiums West and not Sapphire Bay West Condominium as stated in the caption and the body of Plaintiff s Verified Complaint The Court will utilize the name stated in the recorded By Laws Theodore R Vewman, Jr v Brd of Directors 0fSapp/ure Bay Wen C0nd Assn 2022 VI Super 90U Case No ST 2022 CV 00090 Memorandum Opinion and Order Page 2 0f 16

make expenditures in excess of $50 000 00 upon a vote and appropriate approval of the association membership

2 After hurricanes Irma and Maria hit St Thomas in September 2017 SEC W received an insurance settlement in relation to hurricane damage to the Property

3 The insurance settlement is owned by all members of SEC W and does not belong to the BOD

4 After September 2017 the BOD mismanaged association finances by failing to properly vet and superVise the contractor hired to repair/replace the condominium s roofs The contractor hired to carry out the Roof Replacement Contract did not complete the project multiple construction liens were filed against SBWC and two lawsuits were filed against SBWC

5 At the March 20, 2021 annual meeting the BOD represented that it had a proposal from H&W Construction to replace windows stairs doors and sidewalls at SBCW for the sum of $3 1 million

6 Despite repeated requests SBCW refused to furnish H&W s proposal

7 At the time of the March 20 2021 annual meeting the BOD acknowledged that ownership needed to be involved in the decision making process for the ‘ proposed (but still yet undefined) improvements to the Property ’2

8 At the March 1 2022 meeting the BOD stated that it does not need to have the approval of the ownership to sign the contract to proceed with a proposed improvement project (the Improvement Project’) which upon information and belief is to include replacement of all Stairways removal and replacement of the front facades of all buildings removal and replacement of all windows and doors 3

9 The expected cost of the ImprOV cmcnt Project is 0V er $3 million

10 There is no emergency condition that requires the Improvement Project be undertaken without proper approval of the association membership 4

Pl 5 Ver Compl £20 Pl 5 Ver Compl 1525 4 P1 3 Ver Compl $27 Theodore R ’Vewman, Jr v 8rd 0fDIrectors 0fSappltlre Bay West C0nd Assn 2022 VI Super 90U Case No ST 2022 CV 00090 Memorandum Opinion and Order Page 3 of 16

11 The BOD refused to provide names of contractors who have been asked to provide bids and has refused to provide the bid package and/or scope of work that is presumably being proyided to all contractors

12 The “SBCW has failed or refused to address the issues of repeated wrongful conduct by SBC W and the purported Board of Directors by

a Refusing to follow the By Laws by properly putting matters for discussion and voting by the membership of SBCW b Refusing to provide information to the membership of SBC W as required by the fiduciary duties imposed on the members of the BOD c Hiding 0r destroying evidence of meeting of SBCE members and in some instances altering the minutes of the meetings to falsely represent the meetings 3

13 Individuals within SBCW have sought to undermine Plaintiff’s grieV ances and undertook a concerted campaign to violate the By Laws of SBCW 6 £3 Count 1 0f the Verified Complaint seeks an order or judgment declaring that (a) the SBCW is required to obtain an affirmative vote of at least 75 of the apartment owners to conduct any projects costing in excess of $50 000 00, and (b) [a]11 individual members of SBCW BOD may be liable in their personal capacities for violation of the By Laws of SBCW 7

$4 Count 2 of the Verified Complaint alleges breach of fiduciary duty by the BOD based upon its actions or inactions as alleged above

05 Count 3 of the Verified Complaint alleges Breach of Contract based upon the BOD 3 failure to comply with the By Laws

H6 Count 4 of the Verified Complaint alleges Breach of Good Faith and Fair Dealing based upon the BOD s engagement in fraudulent and deceitful conduct 17 Count 5 of the Verified Complaint seeks injunctive relief or remedy in the form of an order which requires the BOD to immediately cease and desist from entering into any contracts costing in excess of $50 000 00 including a contract for the Improvement Project without obtaining an affirmatiVe vote representing 75 units requiring the BOD to supply information to the association as requested by the membership requiring the BOD to comply with the By Laws moving forward ’8

5 Pl 5 Ver Comp] {1 39 ‘ PI 3 Ver Comp! 1340 P1 sVer Comp! 1M6 8 Pl 5 Ver Compl ti 77 Theodore R Newman, Jr v Brd ofDlrectors ofSapplure Bay West ('0an Assn 2022 VI Super 90U Case No ST 2022 CV 00090 Memorandum Opinion and Order Page 4 of 16

118 In response to Newman’s Verified Complaint the BOD filed a Motion to Dismiss and Compel Arbitration based on the SBCW’S By Laws as amended on March 20, 2021, which provide at Article II Section 16

If informal discussion of any disputes between a unit owner and the Board which shall fail to resolve the controversy the issue shall referred to arbitration American Arbitration Association rules shall be observed Each party shall select one arbitrator who shall agree upon a third arbitrator to be selected The place of arbitration shall be St Thomas unless an alternative place is agreed upon by both parties to the controversy The resolution reach [sic] through arbitration shall be binding and not subject to review 9 119 The BOD 3 position is that the foregoing section of the By Laws requires that any owner such as Newman arbitrate any dispute he may have with the Board should informal discussions fail to resolve the matter '0 The BOD points out that the 2010 By Laws which are attached to Newman 5 Verified Complaint as Exhibit 1 contain the same arbitration clause Indeed the By Laws of SBCW, as amended September 26 2010 and attached as Exhibit 1 to the Verified Complaint state at Article II Section 16

If informal discussion of any disputes between a unit owner and the Board which shall fail to resolve the controversy the issue shall [be] referred to arbitration American Arbitration Association rules shall be observed Each party shall select one arbitrator who shall agree upon a third arbitrator to be selected The place of arbitration shall be St Thomas unless an alternative place is agreed upon by both parties to the controversy $110 The BOD further argues that (1) Virgin Islands law favors arbitration (2) both sets of By Laws require that condominium unit owners arbitrate any dispute with the BOD (3) both the By Laws relied upon by Newman and the most recently amended By Laws require him to submit his claims to arbitration; and (4) the economic activities of the SEC W demonstrate a nexus to interstate commerce

1111 In opposing arbitration Newman argues that (1) the BOD 3 Motion is procedurally improper and the Court should be permitted to interpret the language and/or determine arbitrability (2) judicial interpretation of a contract is not covered by the arbitration clause (3) his Complaint seeks judicial interpretation of the language of the By Laws which is not a dispute between a unit owner and the BOD (4) the arbitration clause neither addresses who determines arbitrability nor does it explicitly bar a court from determining arbitrability ” (5) there is no interstate nexus in the By Laws as they deal exclusively with real property the BOD and Plaintiff are all located on St Thomas and the BOD and the plaintiff are all exclusively Intrastate (6)

9 Def ’5 Mot to Dismiss & Compel Arb Ex B (in the By Laws there is a footnote to Section 16 which states that this section was amended March 6 2016 ‘0 Def 5 Mot to Dismiss & Compel Arb 2 ” Pl 5 Opp t0 Def s Mot to Dismiss & Compel Arb 3 Theodore R ’Vewman, Jr v Brd othrectars ofSappIure Bay West C0nd Assn 2022 VI Super 90U Case No ST 2022 CV 00090 Memorandum Opinion and Order Page 5 of 16

SBCW deliberately concealed the arbitration clause in the By LaWS' (7) there is no arbitration clause in Article III of the By Laws titled Unit Owners and therefore Unit Owners are not required to submit to arbitration only the BOD, because the arbitration clause located in Article II pertains to the Board of Directors (8) the By Laws” table of contents is misleading and arbitration is omitted from the table of contents (9) the table of contents contains a phantom arbitration clause referencing a page number which does not exist thereby leading one to reasonably conclude that the entire Article XI ‘Arbitration section had been intentionally deleted (10) the BOD is responsible for the language in the By Laws and because was the party with the excessive bargaining power the By Laws were presented to unit owners on a take it or leave it basis '2 and therefore that language it the typographical errors in the By Laws should be construed against the BOD (11) the arbitration clause is unconscionable (12) the hidden arbitration clause constitutes fraudulent concealment; (13) the arbitration clause is unenforceable because it prohibits judicial review and (15) the arbitration clause fails to articulate a procedure for inter alia who determines arbitrability

II APPLICABLE LEGAL STANDARD FOR A MOTION TO COMPEL ARBITRATION

1112 The Federal Arbitration Act ( FAA ) states that [a] party aggrieved by the alleged failure neglect or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court for an order directing that such arbitration proceed in the manner provided for in such agreement ” '3 While the Supreme Court of the Virgin Islands has previously expressed reservations concerning the applicability of the FAA to disputes in the Virgin Islands it has held that the FAA is a legislation which plainly states that it applies to the Virgin Islands [and] may very well apply to the territory by way of the Territorial Clause "4

1113 When ruling on a motion to compel arbitration under the FAA the Court need not consider the merits of the underlying claims ‘5 Rather the primary purpose of the FAA is to ensure that private agreements to arbitrate are enforced according to their terms '6 Courts have long recognized that arbitration is a creature of contract and litigants may contract to resolve their disputes through arbitration ’ ‘7 In determining whether a dispute may be arbitrated, the Court must follow a two step analy sis (1) whether an arbitration provision is present in a valid contract and (2) whether the particular dispute falls within the scope of that agreement '8 Only when a

‘3 P1 5 Opp to Def 5 Mot to Dismiss & Compel Arb 34 ' DameIt Treasure Ba) hrgm Islands Corp Super Ct Civ No 5X 10 CV 206 2015 WL 13579174 at * 1 (VI Super Ct May 14 2015) (unpublished) ( This Court may enforce arbitration agreements pursuant to the Act ) ‘4 ”kyle v Bockmo 69 V I 749 759 760 (V I 2018) (citations omitted) ” [d' Damelt Treaswe Bay llCorp 62 VI 423 425 426 (V I Super Ct 2015) (collecting cases) 16 Id

‘7 Valentmv Grapetlee Shores Super Ct Civ No SX 11 CV 305 2015 WL 1357963] at * 2 ‘3 Whyte at *2 Theodore R Newman, Jr v Brd ofDIrectors 0fSapplure Bay West Cand Assn 2022 V1 Super 90U Case No ST 2022 CV 00090 Memorandum Opinion and Order Page 6 of 16

defendant demonstrates that the pending dispute is arbitrable, does the burden shift to plaintiff to establish that the arbitration clause should not be enforced ‘9 A An arbitration provision is present in SBWC’s By Laws

1114 In addressing the Defendant 5 Motion to Compel Arbitration the Court must first determine whether an arbitration provision is present in a valid contract or in this case the condominium s by laws Exhibit 1 which was filed with Plaintiff‘s Verified Complaint is entitled

BY LAWS As amended September 26 2010 Unofficial copy of the bylaws July 2012

1115 The Defendant has attached as Exhibit B to its Motion to Dismiss and Compel Arbitration the following (1) a Certificate of Amendment to Condominium By Laws of Sapphire Bay Condominiums West and (2) Sapphire Bay Condominiums West By Laws As Amended March 20 2021 Both the Certificate of Amendment and attached amended By Laws were recorded in the Official Records of the St Thomas/St John Recorder of Deeds on May 1 1 2021

1116 Both the unofficial copy of the By Laws relied upon by the Plaintiff and the official copy of the By Laws amended March 20 2021 contain the following identical language

If informal discussion or any disputes between a unit owner and the Board which shall fail to resolve the controversy the issue shall [be] referred to arbitration, American Arbitration Association rules shall be observed Each party shall select one arbitrator who shall agree upon a third arbitrator to be selected The place of arbitration shall be St Thomas unless an alternative place is agreed upon by both parties to the controversy

1117 The only difference is that the official By Laws which were amended on March 20 2021, contain the following sentence at the end of the Article II Section 16 The resolution reach [sic] through arbitration shall be binding and not subject to review

1118 The Court finds that whether the unofficial By Laws relied upon by the Plaintiff or the official amended By Laws are applied there exists an arbitration proyision in the By Laws

'9 Valentin at * 4 Theodore R Aewman, Jr v Brtl 0fDIrectors 0fSapphIre Bay West C0nd Assn 2022 VI Super 90U Case No ST 2022 CV 00090 Memorandum Opinion and Order Page 7 0f 16

B The disputes articulated in Plaintiff’s Complaint fall within the scope of the SBWC’s By Laws’ arbitration clause

1?] 9 As pointed out by the BOD the very existence of the instant law suit is evidence of disputes or disagreements between the Plaintiff and the BOD A dispute is [a] conflict or controyersy [especially] one that has given rise to a particular lawsuit ’ 20 Plaintiff argues that the issues at hand center on the interpretation of the By Laws and not a dispute between a unit owner and the BOD Having reviewed the Verified Complaint, the Court disagrees with Plaintiff’s characterization of the basis for his causes of action and relief or remedies being sought The Verified Complaint and Declarations of John Brasile and Christian Pedini identify numerous areas of conflict controversy or disagreement between Plaintiff and the BOD and SBC W namely

1 The BOD failed to comply with the By Laws by entering into a contract for improvements to the SBCW property in excess of $3 million when the By Laws require 2/3rds of the unit owners to approve improvements in excess of $50 000 00

2 Despite repeated requests therefor the BOD has refused to provide to Plaintiff the proposal from H&W Construction to replace windows stairs doors and sidewalls ( Improvement Project ) at SBCW for the sum of $3 1 million

3 There is no emergency condition that requires the Improvement Project be undertaken without proper approval of the association membership;

4 The BOD refused to provide names of contractors who have been asked to provide bids and has refused to provide the bid package and/or scope of work that is presumably being provided to all contractors

5 SBCW has failed or refused to address the issues of repeated wrongful conduct by SBCW and the purported Board of Directors by

(a) Refusing to follow the By Laws by properly putting matters for discussion and voting by the membership of SBCW

(b) Refusing to provide information to the membership of SBCW as required by the fiduciary duties imposed on the members of the BOD

(c) Hiding 0r destroying evidence of meeting of SBCE members and in some instances altering the minutes of the meetings to falsely represent the meetings and

’0 BLACK 3 LAW DICTIONARY (I 1th ed 2019) Theodore R Newman, Jr v 8rd 0fDIrect0rs 0fSapp/ure Ba} West C0nd Assn 2022 VI Super 9011 Case No ST 2022 CV 00090 Memorandum Opinion and Order Page 8 0f 16

6 Individuals within SBCW have sought to undermine Plaintiff s grieV ance and undertook a concerted campaign to violate the By Laws of SEC W 1120 As a way of avoiding the arbitration clause in the By Laws Plaintiff argues that the instant action seeks judicial interpretation of the language of the By Laws This argument is not supported by the Verified Complaint and Declarations of John Brasile and Christian Pedini Rather due to his grievances disputes and disagreements with the BOD Plaintiff seeks seV era] forms of relief or remedies which include a declaration of the rights or the rights and legal relations between Plaintiff and SBCW and BOD A declaratory judgment is a statutory remedy for the determination of a justiciable controversy where the plaintiff is in doubt as to [its] legal rights 2‘ [D]eclaratory judgment is only permissible where a justiciable controversy exists 22 The contrOV ersy at issue must be definite and concrete touching the legal relations of parties having adverse legal interests It must be a real and substantial controversy admitting of specific relief through a decree of conclusive character as distinguished from an opinion advising what the law would be upon a hypothetical state of facts ’ 23 hi short by setting forth the necessary allegations to shovx that he is entitled to the remedy of declaratory judgment the Plaintiff has also detailed the existence of real and substantial controversy in other words the existence of a dispute

1,121 The Court finds that the allegations set forth in Plaintiffs Verified Complaint constitute disputes between a unit owner and the BOD Further the Court finds that the BOD has met its burden that arbitrable disputes exist in relation to the Plaintiff

1122 Although it may not comport with all the rules of grammar the Court finds that the arbitration clause in Article II Section 16 is clear and unambiguous Condominium by laws like corporate by laws are to be construed according to the rules used to interpret statutes, contracts and other written instruments ”24 Therefore SBCW s By Laws will be construed according to their plain meaning and within the context of the document as a whole ’ 2‘

'Hllli DeJongh CivilNo ST 10 CV 585 2012VI LEXIS 11 at*13(VI Super Ct Apr 19 2012) (citing Tip Top Construction v Depaltment 0f Propert) & Ploczlrement 41 V l 72 78 (V 1 Super Ct 1999)) Walsh v Dal) Case No ST—Ol—CV 165 2014 V I LEXIS 36 at *28 (V 1 Super Ct June 18 2014) (citing Companion Assurance Co 1. 4llmnce Assurance Co Ltd 585 F Supp 1382 I384 85 (D V I 1984)) See also Pate v Ooternmem 0fthe higm Islands Case No ST 14 CV~479 2014 V l LEXIS 112 *10 11 (V 1 Super Ct Dec 1 l 2014) (observing that [a]lthough the decision to entertain a declaratory action is within the discretion of the Court the matter must involve an actual andjusticiable controversy ) LUIS t Dennis 751 F 2d 604 607 (3d Cir 1984) (citing 4etna Life [nsmance (0 v Han orth 300 U S 227 240 41 (1937)) 74 14 em} t Long ReefCondomlmum 4ssouatlon 57 V I 163 170 (V I 2012) (citing S'mgh v Sing]? 9 Cal Rptr 3D 4 27 28 (Cal Ct App 2004)) Mabe v Bd ofDIiectors of Mahogany Run Condo Ass n Inc 2022 VI SUPER 34U {l 5 ’5 [d (citing Isaacs v Ame; [can Iron & Steel Co 690 N W 2d 373 376 (Minn Ct App 2004) Theodore R Newman, Jr v 3rd 0fDIrectors 0fSapplure Ba} West C0nd Assn 2022 VI Super 90U Case No ST 2022 CV 00090 Memorandum Opinion and Order Page 9 of 16

C There were informal discussions of the disputes or disagreements between the BOD and Plaintiff and other unit owners which failed to resolve the controversy or disagreements among them

q123 According to John Brasile a unit owner and former president of SBWC a few owners including Plaintiff disputed the need for post September 2017 hurricane repairs and claimed that the BOD may not proceed With this project unless there is a two thirds of owner vote to apprOVe the project 26 While Brasile was president, the Association convened meetings of owners on a regular basis generally every month to field complaints and discuss issues of interest with the owners including the repair project 77 In addition

[a]t these meetings Michael Sheesley who is also an owner of a unit at the Condominium, and a few other owners have stated their objections to proceeding with the repair project without the approval of two thirds of owners The other board members and I have attempted to respond to and resolve their objections to no avail 28 324 Finally, Brasile states that the objections of Attorney Sheesley and other owners to [the] repair project have been discussed over and over again over the course of sex era] meetings 29 The foregoing efforts to informally discuss any disputes between unit owners and the BOD which failed to resolve the controversy clearly establish to the Court 5 satisfaction that (1) there were informal discussions of disputes regarding the need for post September 2017 hurricane repairs, (2) that the disputes were between Plaintiff and other unit owners and the BOD and (3) by the very allegations of the Verified Complaint, the meetings failed to resolve the controversies

D The requirement of an interstate nexus is a low bar which has been met in the instant case

$25 The burden of demonstrating that an interstate nexus exists in on the party seeking to compel arbitration 30 The burden is a relatively low one 3‘ The parties contract need only affect interstate commence such as where the economic activities of at least one of the parties demonstrate a nexus to interstate commerce 32 $26 The Declaration of Christian Pedini President of SBWC submitted in support of Defendant 5 Reply to Opposition to Motion to Dismiss and Compel Arbitration states

7" Dec ofJohn Brasile 11 4 ’7 Dec of John Brasile 1} 5 78 Dec of John Brasile 1i 6 79 Dec of John Brasile 1i 7 ‘0 Johnston t St CIOH Fm Ct; Inc 2019 VI SUPER 133U {i 14 (citing Cm ens Bank l Alafabco Inc 539 U S 52 56 (2003)) ‘ [d 37 Id Theodore R Vewman, Jr v Brtl athrectors ofSapplure Bay West C0nd Assn 2022 VI Super 9OU Case No ST 2022 CV 00090 Memorandum Opinion and Order Page 10 0f 16

We have owners who are from New York, New Jersey and many other states I reside in California while the immediate past president resides in Connecticut other board members live throughout the U S mainland 33 Further several owners manage the rental of their units from their residences on the U S mainland Our meetings of owners and board members are conducted by Zoom and most of the participants attend from locations on the U S mainland Our Association 3 budget is funded by checks and other forms of payment sent by owners from their respective stateside residences to the U S Virgin Islands 34 In addition our repair project requires the Association to ship materials into the Virgin Islands and pay stateside vendors directly for those materials 3‘

1227 Unit owner Brasile who was the president of SBCW for two years ending on April 30 2022 stated the following with respect to the interstate nexus factor

In addition our repair project requires the Association to ship materials into the Virgin Islands from stateside locations and to pay stateside vendors directly for those materials To cite only one example the stairs that will be installed as part of this project will be fabricated in Alabama, assembled in Florida and shipped to the U S Virgin Islands by a Florida vendor 3" 1128 Based upon the Declarations of Pedini and Brasile the Court finds that the operations of the BOD and SBCW in accordance with the By Laws affect interstate commerce which demonstrate a nexus to interstate commerce 37 Therefore an interstate nexus sufficient to trigger application of the FAA exists 38 III THE PLAINTIFF HAS FAILED TO MEET HIS BURDEN THAT THE ARBITRATION CLAUSE SHOULD NOT BE ENFORCED

1129 The Plaintiff raises several arguments against enforcement of the arbitration clause F irst Plaintiff argues that the BOD should not benefit from the misleading convoluted and fraudulent language in the Bylaws which defendant knew or should have known would conceal the arbitration clause from anyone reading the Bylaws 39 A Presumption of arbitration does not disappears when arbitration clause disputed

$30 Without any binding legal authority for his position Plaintiffargues that [t]he parties here dispute the existence of a valid arbitration agreement and that the presumption in favor of

’ Dec of Christian Pedini in Support of Def 3 Reply to Opp to Mot to Dismiss & Compel Arb 1] 9 4 Dec of Christian Pedini in Support of Def 5 Reply to Opp to Mot to Dismiss & Compel Arb 1f 10 ” Dec of Christian Pedini in Support of Def 5 Reply to Opp to Mot to Dismiss & Compel Arb 1] ll 6 Dec of John Brasile in Support of Def 5 Reply to Opp to Mot to Dismiss & Compel Arb 11 ll 37 Johnston t St Cram Fm Ctr Inc 20l9 VI SUPER 133U 11 14 38 Whyte v Bockmo 69 V l 749 753 (2018) 39 Pl 5 Opp to Def 3 Mot to Dismiss & Compel Arb 16 Theodore R Newman, Jr v Brll of Directors 0fSappIure Bay West C0nd Assn 2022 V1 Super 90U Case No ST 2022 CV 00090 Memorandum Opinion and Order Page 11 of 16

arbitration disappears when the parties dispute the existence of a valid arbitration agreement ’40 A singIe plaintiff disputes the existed and application of the arbitration clause in SBCW’s By Laws This Court has determined that there is a Valid enforceable clear and unambiguous arbitration clause in the SBCW By Laws and it has not disappeared but is clearly subject to application and enforcement

$131 The authority provided by the Plaintiff for the proposition that the arbitration clause disappeared’ involved the following (1) how courts should review certain matters under the federal Arbitration Act how a district court should review an arbitrator's decision that the parties agreed to arbitrate a dispute and how a court of appeals should review a district court's decision confirming 0r refusing to vacate, an arbitration“ (2) whether an illiterate borrower had been fraudulently induced by lender's agent to sign stand alone arbitration agreements in connection with loans and accompanying insurance contracts was outside the scope of those arbitration agreements” (3) an employee handbook which permitted the employer to unilaterally alter modify change etc any provision of the handbook rendered the agreement to arbitrate illusory'43 and (4) an agreement between an employer and an employee to arbitrate employment related disputes does not bar the EEOC from pursuing Victim specific judicial relief such as backpay reinstatement and damages in an ADA enforcement action 4" In short the cases provided by Plaintiff in support of his position are factually distinguishable and non binding

1132 Contrary to Plaintiff‘s argument this Court finds as explained above, that the arbitration provision in the By Laws is clear and unambiguous and the fact that Plaintiff has contested the existence of a valid arbitration agreement does not result in the provision being non existent

B Tort claims such as breach of fiduciary duty are arbitrable in this jurisdiction

1133 Plaintiff argues that tort claims such as his claim for breach of fiduciary duty are not arbitrable based upon what some courts have held Observing that the central or primary purpose of the FAA is to ensure that private agreements to arbitrate are enforced according to their terms the Supreme Court of the Virgin Islands has upheld arbitration of a tort claim of negligence based upon a dispute resolution provision in an employment agreement“ In the instant case the SBWC’s By Laws state that any dispute between a unit owner and the BOD is subject to

40 P1 5 Opp to Def 3 Mot to Dismiss 9 4' First Options ofChlcago Inc v Kaplan 514 U S 938 940 (1995) ‘7 4m Heritage L(fe Ins Co v Lang 321 F 3d 533 (5th Cir 2003) 4 DumaIs 1 4m GolfCOIp 299 F 3d 1216 1218 (10th Cir 2002) 4“ E E 0 C \ Waffle House Inc 534 u s 279 (2002) 4‘ 4llen v Hmensa 59 V I 430 439 (V I 2013) citing S'tolt Vielsen SA v 4mmalFeeds InI’l Corp 559 U S 662 682 (2010) (quoting 1011‘ Info Sc: Inc v Bd 0/ Trs ofLeland Stanford Jumor (1an 489 U S 468 479 (1989)) Lite}? Lev Treasure Ba) 11(0)}? Super Ct Civ N0 SX 2016 CV 316 2017 WL 785873 (VI Super Ct Feb 27 2017) (Plaintiff bound by terms of membership agreement to submit her tort claim to arbitration) I alentm t Grapeflee Shores Super Ct Civ No SX 11 CV 305 2015 WL 13579631 *5 (V1 Super Ct June 30 2015) Farrell v Grapetree Shores Inc 2019 VI SUPER 130U (Super Ct Oct 25 2019) (valid arbitration agreement encompassed plaintiff‘s tort claim) Theodore R Newman, Jr v 8rd ofDIrectors ofSapplure Bay West Com! Assn 2022 V1 Super 90U Case No ST 2022 CV 00090 Memorandum Opinion and Order Page 12 0f 16

arbitration By virtue of the language of the By Laws and numerous cases cited herein Plaintiff’s claim of breach of fiduciary duty is subject to arbitration

C Language and typographical errors in the By Laws cannot be construed against the BOD

1134 Plaintiff next argues that the typographical and scrivener 5 errors in the By Laws must be construed to the benefit of the non drafter of the By Laws i e the BOD However this argument fails because (1) there is no eVidence that the By Laws were drafted by the BOD (given the procedure required by the statute to create a condominium development and association the original By Laws predate the current Board of Directors and (2) amendments to the By Laws are by Vote of 66 2/3% (75 apartments) of unit owners present in person or by proxy and voting at a meeting of unit owners held for such purpose “’6 D SBCW’s By Laws do not constitute an unenforceable contract of adhesion and the arbitration clause is not unconscionable

‘35 (Jenerally a Lonnact 01 provision thereof is procedurally unconscionable if it constitutes a contract of adhesion "47 A contact of adhesion is one prepared by the party with excessive bargaining power and presented to the other party on a take it or leave it basis ”48 The burden is on Plaintiff to prevail on his unconscionability claim

Unconscionability encompasses both procedural and substantive unconscionability, and the party seeking to invalidate a contract on this basis bears the burden of showing both Procedural unconscionability may exist for example, with a contract of adhesion where one party has no meaningful choice regarding acceptance or where the contract drafter obfuscates terms with convoluted 0r unclear language 49

$36 The By Laws in question invoke a condominium association and respective condominium unit owners There is no evidence that the Plaintiff was forced to purchase a condominium unit Rather unit owners such as the Plaintiff freely chose to purchase a unit and agreed to be bound by the Declarations and By Laws 30 SBCW 3 By Laws were not presented to the Plaintiff and purchasers of other condominium units on a take it or leave it basis Therefore SBWC 3 By Laws are not an unenforceable contract of adhesion

4" Def 5 Reply in Further Support oflts Mot to Dismiss 8. Compel Arb & Inc Memo of Law in Support Thereof6 and Def 5 Mot to Dismiss & Compel Arb & Mem of Law in Support Thereof Ex B 47 Moore v Hovensa LLC 47 V I 104 107 (V I Super June 22 2005) (internal citations omitted) 48 Id at 107 (citation omitted) Williams » Groundwater & Envtl Servs Inc Super Ct Civ N0 SX 18 CV 552 2020 WL 814414 at *3 (V 1 Super Jan 8 2020) ‘9 talentmi Grapetree Shows Super Ct Civ No SX 11 CV 305 2015 WL 13579631 *5(V1 Super Ct June 30 2015) quoting Browne v Acuren Inspection Inc 2014 WL 1308838 *2 2014 U S Dist LEXIS 43965 *4 5 (DVI Mar 31 2014) ’0 Unwelsal/V Am Ins Co v BrldgepamteCondo 4ss'r1 Inc 195 A 3d 543 552 (N J Super 2018) Theodore R Newman, Jr v Brtl ofDIrectors 0fSappIure Bay West C0nd Assn 2022 VI Super 90U Case No ST 2022 CV 00090 Memorandum Opinion and Order Page 13 of 16

137 Another reason why the By Laws are not a contract of adhesion is that amendments to the By Laws are Voted on by members of the SBCW The BOD argues that the Plaintiff has been on notice of any provisions in the By Laws since he became a unit owner in 1991 and his deed specifically proyides that the convey ance is SUBJECT TO the provisions of the Declaration and By Laws of the Condominium recorded simultaneously with and as part of the Declaration, as the same may be amended from time to time by instruments recorded at the Office of the Recorder of Deeds for St Thomas and St John "1 E The organization of the SBCW By Laws and omissions from the Table of Contents and Organization do not render the arbitration clause invalid

1138 Plaintiffrelies upon the case of Pm on a; v Bentzj 7 in support of his argument that SBCW 3 By Laws allegedly convoluted and unclear language concealed the supposed arbitration clause with misdirection and contradictory language both in the [Table of Contents] and in the By laws themselVes ‘3 HaVing presided over Piwowar v Bent this Court is aware that it is factually distinguishable and is inapplicable to the instant case The plaintiff Janusz Piwowar s first language was Polish ‘4 He was a handyman who had no prior experience hiring lawyers and was presented with a lengthy retainer agreement which no one to read or explain it to him “ Piwowar had no legal training and prior to a single lawsuit in 2013 he never had any exposure to the American legal system and he had never been a party in litigation in any capacity The retainer agreement was drafted by an attorney he was hiring, and he did not understand it ‘6 No one told Piwowar about the arbitration clause ‘7 F inally Piwowar desperately needed a lawyer to respond to the lawsuit that had been filed against him 38 1139 In response to Plaintiff’s claims that the arbitration clause is invalid due to the absence of an identifying title or caption the BOD points to Article X Section 3 0f the By Laws which state

Section 3 Captions The captions herein are inserted only as a matter of convenience and for reference and in [sic] way define limit or describe the scope of these By Laws or the intent of any provision thereof ’9

1140 As further argued by the BOD the Table of Contents and the written arbitration clause provide reasonable notice that an arbitration clause exists The Court has reviewed the By Laws

5‘ Def 5 Reply in Further Support ofIts Mot to Dismiss 8. Compel Arb & Inc Memo of Law in Support Thereof 5 2020 V I Super 88U 1159 3 Opp to Def 5 Mot to Dismiss & Compel Arbitration 42020v1 Super 88U g4 2020VI Super 88U 11115 8 9 14 18 20 through 23 62020VI Super 88U 111117 18 7 2020 V I Super 88U 1120 58 2020 V I Super 88U 11 19 ‘9 Def 5 Mot to Dismiss & Compel Arb Ex B (in the By Laws there is a footnote to Section 16 which states that this section was amended March 6 2016 Theodore R Newman, Jr v 8rd ofDIrectors ofSapplure Bay West Com! Assn 2022 VI Super 90U Case No ST 2022 CV 00090 Memorandum Opinion and Order Page 14 of 16

and finds no evidence that the arbitration clause was hidden or inserted in any deceptive way The font of all sections are uniform throughout The requirement of arbitration of disputes between a unit owner and the BOD is not new In fact a similar arbitration clause exists in SBCW s By Laws that were recorded in January 1990 60 1341 The BOD is correct that Plaintiff s arguments that the format of the By Laws errors in the Table of Contents and scriV ener’s errors render the arbitration clause invalid or unenforceable are not based upon the prevailing law in this jurisdiction The arbitration clause is set forth in the same font and font size throughout the By Law Unlike Pzwou ar sections are not differentiated with different font size or italicization The Court finds no basis in law or in fact to support a finding that the arbitration clause was fraudulently concealed or that its terms were obfuscated with convoluted language

F The By Laws’ arbitration clause is not unenforceable for prohibiting judicial review

$42 Plaintiff argues that the arbitration clause should be invalidated or found not applicable because it does not provide fox judicial review This argument is without merit Plaintiff fails to prOVide any binding legal authority from this jurisdiction for his position The BOD 3 position is that the arbitration clause at issue in this matter does not prohibit appropriate appeal 6' HOWCV er the By Laws attached as Exhibit B to the BOD s Motion to Dismiss and Compel Arbitration do state in the last sentence of Article II Section 16 that [t]he resolution reached through arbitration shall be binding and not subject to review ’ Nonetheless such a provision does not invalidate the By Laws’ arbitration clause because by consenting to binding arbitration parties relinquish the legal and procedural safeguards that accompany judicial proceedings ’62

G Failure to specify detailed procedures for all contingencies does not invalidate the arbitration clause

1:43 Plaintiffs final attack on the arbitration clause lacks sufficient detail He states that the arbitration clause lacks sufficient detail to provide for Inter aha who determines arbitrability what disputes are covered whether courts handle declaratory judgment actions or tort actions and how to resolve an impasse in appointing the third arbitrator 63 $44 First with respect to the failure to specify who determines the issue of substantiVe arbitrability the general rule is that in the absence of an agreement to the contrary issues of substantive arbitrability are for a court to decide and issues of procedural

6° Def 5 Reply in Further Support oflts Mot to Dismiss & Compel Arb & Inc Memo of Law in Support Thereof Ex D 6‘ Def 5 Reply in Further Support oflts Mot to Dismiss & Compel Arb & Inc Memo of Law in Support Thereof 9 62 Gov? 0] Pug”? Islands Dep't of Educ v St Tomas/St John Educ Administrators’ 433’}? Lac [0] 0 b 0 Forde 67 V I 623 639 (2017) 6 Pl sOpp to Def 3 Mot to Dismiss& CompelArb 15 16 Theodore R Aewmau, Jr v 3rd 0fDlrect0rs of Sapplure Bay West C0nd Assn 2022 VI Super 90U Case No ST 2022 CV 00090 Memorandum Opinion and Order Page 15 0f 16

arbitrability z e whether prerequisites such 64as ttme llmzts notice, laches estoppel, and other conditions precedent to an obligation to arbitrate have been met are for the arbitrators to decide

{£45 The issue of substantive arbitrability has already been decided by this Court all disputes between a unit owner such as the Plaintiff and the BOD are subject to arbitration Tort actions are arbitrable Plaintiffs declaratory judgment claim is subject to arbitration because it calls for a determination of whether the BOD has been complying with the By Laws Second the arbitration clause provides for the selection of three arbitrators and that the American Arbitration Rules shall be observed Arbitration clauses containing far less than the SBCW 5 By Laws haVe been found to be valid and enforceable 6’ In 1WOC0} v Buccaneer Inc 66 the arbitration clause in question stated

9 ARBITRATION I agree that any dispute surrounding my employ ment including but not limited to the terms of this Agreement shall be settled by binding Arbitration and judgment of the award rendered by the arbitrator may be entered in any court having jurisdiction thereof This arbitration agreement covers all claims as set forth herein between myself and the Hotel and/or its agents directors officers and employees and will continue from the time of the acknowledgement of this agreement by me the undersigned until it is otherwise terminated in writing by the agreement of both parties Based upon the foregoing arbitration clause the District Court rejected the employee 3 contention that the foregoing clause was invalid because it lacked essential terms In so ruling the District Court determined that the clause called for a single arbitrator and that the absence of an explicit arbitrator selection method ’ did not invalidate the arbitration agreement and that stop gap measures can be found in the Federal Arbitration Act For example Title 9 U S C § 5 authorizes a court to intervene to select the arbitrator itself if the parties were unable to agree on one Similarly in the case at hand if the arbitrators selected by Plaintiff and the BOD are unable to agree upon appointing a third arbitrator they can look to the mles of the American Arbitration Association or petition the Court to appoint the third arbitrator

H The Court will not dismiss the instant action

$46 In support of its Motion for dismissal of actions in which all claims have been referred to mandatory binding arbitration the BOD relies upon Whyte v Bockmo67 and Prentice v Seaborne

”4 Plaintiff‘s argument that he seeks judicial interpretation of the By Laws and not resolution of a dispute is a meaningless distinction 6 Vegrer v Forecast Fm Com 2007 WL 4178947 at *2 (W D Mich Nov 20 2007) (a Michigan federal court rejected an almost identical argument to the one Plaintiff makes here The arbitration clause in that case was a single sentence which stated that [a]ny and all disputes between the parties shall be resolved by way of binding arbitration in Okaloosa County Florida Id at *1 And despite the absence of various terms the parties could rely upon gap filling provisions provided by the FAA) (’6 Civ No 2015 003: 2020 WL 5096940 (D V l Aug 28 2020) 6 69Vl 83 95 (Super Ct 2017) Theodore R Newman, Jr v Brd ofDlrectors ofSapplure Bay West Com! Assn 2022 VI Super 90U Case No ST 202’ CV 00090 Memorandum Opinion and Order Page 16 0f 16

Awanon 68 HoweV er other than stating that this Court has the discretionary authority to dismiss this matter, the BOD offers neither specific nor compelling grounds as to why such discretion should be exercised Therefore the matter will be stayed pending arbitration and not dismissed

E47 Based on the foregoing the Court finds that the official SBCW By Laws as amended March20 2021 contain a valid and enforceable arbitration clause and that all of the disputes and disagreements between the Plaintiff the BOD are subject to arbitration Accordingly it is hereby

ORDERED that Defendant s Motion to Dismiss and Compel Arbitration and Memorandum of Law in Support Thereof is GRANTED t0 the extent that the Motion requests the Court to compel arbitration; and it is further

ORDERED that, effective immediately all disputes disagreements grievances controversies and claims between the Plaintiff and Defendant as expressed in Plaintiff‘s Verified Complaint filed herein are REFERRED TO ARBITRATION following the rules of the American Arbitration Association and it is further

ORDERED that effective immediately all proceedings in the abOVe captioned action are STAYED pending arbitration and it is further

ORDERED that Defendant’s Motion to Dismiss and Compel Arbitration and Memorandum of Law in Support Thereof is DENIED t0 the extent that its seeks dismissal of the above captioned action and it is further

ORDERED that a copy of this Memorandum Opinion and Order shall be directed to Attorneys Michael A Sheesley Jennifer Miller Brooks and Chivonne A S Thomas

DATED HI ([1021 EWW ggcuuxp DENISE M F NCOIS Judge of the Superior Court of the Virgin Islands

ATTEST

TAMARA CHA LES \ Cler f the Courtl

BY ling: 0V \tW D NA D DORO‘R AN, Court Clerk Supervisor J / <5 @039)

63 65 V I 96 113 (V I Super 2016)