Virgin Grand Estates 60 Villa Association v. Certain Underwriters At Lloyd's of London

• Court: District Court, Virgin Islands
• Decided: January 12, 2024
• Docket: 3:21-cv-00074
• Status: Unknown

Opinion

IN THE DISTRICT COURT OF THE VIRGIN ISLANDS DIVISION OF ST. THOMAS AND ST. JOHN

VIRGIN GRAND ESTATES #60 VILLA ) ASSOCIATION a/k/a VIRGIN GRAND NO. ) 60 HOMEOWNERS ASSOCIATION, ) ) Plaintiff, ) Case No. 3:21-cv-00074-RAM-RM ) v. ) ) INTER-OCEAN INSURANCE AGENCY, ST. ) THOMAS, LLC, ) ) Defendant.1 ) )

APPEARANCES:

DOUGLAS B. CHANCO, ESQ. CHANCO SCHIFFER LAW, LLC RKO ES NW NEE TLL H, RGA. B EHREND, ESQ.

BEHREN FD O LRA PW L AGIR NO TIU FP F VIRGIN GRAND ESTATES #60 VILLA ASSOCIATION P ITTSBURGH, PA SCOT F. MCCHAIN, ESQ. EDWARD L. BARRY, ESQ.

USVI LA FW O,R L DLECF ENDANT INTER-OCEAN INSURANCE AGENCY, CHRISTIA SN T.S TTE HD O,M VAIS , LLC

MEMORANDUM OPINION BEFORE THE COURT is Defendant Inter-Ocean Insurance Agency, St. Thomas, LLC’s Motion for Partial Judgment on the Pleadings (Mot.) (ECF No. 119), filed March 12, 2023.

1 see Because the Court has dismissed all claims against Defendants Certain Underwriters at Lloyd's, London, Subscribing to Policy Nosse. eGL-5218-028 AND GL-5740-028, and Red Hook Agencies, Inc. ( Order (ECF No. 93), entered September 28, 2022, and Order (ECF No. 98), entered October 12, 2022), as well as dismissing the Case No. 3:21-cv-00074-RAM-RM M emorandum Opinion Page 2 of 8 Plaintiff filed a response on April 3, 2023, (ECF No. 130), and said Defendant filed a reply in support of its motion, (ECF No. 132), on April 17, 2023. For the reasons stated below, the Court will grant in paIr.t FanAdC TdeUnAyL i nA NpaDr tP tRhOe CmEoDtiUoRn.A L BACKGROUND Because the Court writes for the parties, the underlying facts will not be reiterated 2 here. Currently, Defendant Inter-Ocean Insurance Agency, St. Thomas, LLC (Inter-Ocean), is the sole defendant, after the Court’s dismissal of Defendants Certain Underwriters at Lloyd’s, See London (Underwriters), and Red Hook Agencies, Inc. (Red Hook), and Third-Party Defendant Cimmaron Property Management, Inc. Orders at ECF Nos. 93, 98, and 150. Inter-Ocean believes it is entitled to judgment on the pleadings, that is, dismissal, of three of the remaining four counts asserted agaIIin. sLtE iGt. AL STANDARD See 3 Inter-Ocean properly brings its motion under Federal Rule of Civil Procedure 12(c) because the pleadings are closed. Answer of Inter-Ocean Insurance Agency to First Amended Complaint; Third-Party Complaint (ECF No. 61). The standard of review applicable See, e.g., Zimmerman v. Corbett to a Rule 12(c) motion for judgment on the pleadings is the same as a motion to dismiss brought under Rule 12(b)(6). , 873 F. 3d 414, 417 (3d Cir. 2017) (“’A motion for judgment on the pleadings based on the defense that the plaintiff has Boone v. Solid Wood Cabinet Co., LLC failed to state a claim is analyzed under the same standards that apply to a Rule 12(b)(6) motion.’" (footnote omitted)); , Civ. No. 17-4323 (KM) (JBC), 2018 U.S. Dist. LEXIS 91980, at *4 (D.N.J. May 31, 2018) (“A motion for judgment on the pleadings is often indistinguishable from a motion to dismiss, except that it is made after the filing of a responsive pleading. Fed. R. Civ. P. 12(h)(2) ‘provides that a defense of failure Turbe v. Gov't of Virgin Islands to state a claim upon which relief can be granted may also be made by a motion for judgment on the pleadings.’ , 938 F. 2d 427, 428 (3d Cir. 1991). Accordingly, when a Rule 12(c) motion asserts that the complaint fails to state a claim,

2 A full recitation of the background facts may be reviewed in the Court’s previous Memorandum Opinions 3docketed at ECF Nos. 92 and 97. Case No. 3:21-cv-00074-RAM-RM M emorandum Opinion Page 3 of 8 Id Ivers v. Brentwood Borough Sch. Dist. the familiar Rule 12(b)(6) standard applies. .”); , Civil Action No. 2:20-1244, 2021 U.S. Dist. LEXIS 36675, at *3 (W.D. Pa. Feb. 26, 2021) (“The primary distinction between motions under Rules 12(b)(6) and 12(c) is timing: if a motion is filed before an answer, it is a motion to dismiss; if it is filed after the answer, it is a motion Turbe v. Government for judgment on the pleadings. The distinction between these motions is merely semantic of the Virgin Islands Ivers because the same standard of review generally applies to both.” (citing , 938 F.2d 427, 428 (3d Cir. 1991)). As the court notes, the only meaningful difference between the two motions “is not the standard of a court's review, but its scope. Unlike with motions to dismiss, a court reviewing a motion for judgment on the Ivers pleadings considers not only the complaint, but also the written answer and attachments to the pleadings.” , 2021 U.S. Dist. LEXIS 36675, at *4. Thus, [a] motion for judgment on the pleadings should be granted if the movant establishes that "there are no material issues of fact, and he is entitled to judgment as a matter of law." In considering a motion for judgment on the pleadings, a court must accept all of the allegations in the pleadings of the party against whom the motion is addressed as true and draw all reasonable Zimmerman inferences in favor of the non-moving party. , 873 F. 3d at 417-18 (footnotes omitted). Bell Atlantic v. Twombly Ashcroft The Supreme Court set forth the “plausibility” standard for overcoming a motion to v. Iqbal dismiss in , 550 U.S. 544 (2007), and refined this approach in Twombly , 556 U.S. 662 (2009). The plausibility standard requires the complaint to allege “enough facts to state a claim to relief that is plausible on its face.” , 550 U.S. at 570. A complaint satisfies the plausibility standard when the factual pleadings “allow[ ] the court Iqbal Twombly to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. , 556 U.S. at 678 (citing , 550 U.S. at 556). This standard requires showing “more than a sheer possibility that a defendant has acted unlawfully.” A complaint which Id. pleads facts “merely consistent with a defendant’s liability, . . . stops short of the line between Twombly possibility and plausibility of entitlement of relief.” (internal quotation marks omitted) (citing , 550 U.S. at 557). To determine the sufficiency of a complaint under the plausibility standard, the Court Case No. 3:21-cv-00074-RAM-RM M emorandum Opinion Page 4 of 8 First, the court must “tak[e] note of the elements a plaintiff must plead to state a claim.” Second, the court should identify allegations that, “because they are no more than conclusions, are not entitled to the assumption of truth.” Finally, “where there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement Santiago v. Warminster Twp. Iqbal for relief.” , 629 F. 3d 121, 130 (3d Cir. 2010) (quoting , 556 U.S. at 674, 679). III. DISCUSSION 4 Plaintiff’s First Amended Complaint (FAC) alleges four specific counts against Inter- OA.c Ceaonu:n Cto IuVn (tNs eIgVl, iVgIe, nVcIeII), and X.5

Inter-Ocean acknowledges that Count IV, a claim for negligence, “is concededly not susceptible of disposition under Rules 12(b)(6) or 12(c).” Mot. at 5. Thus, this count need not bBe. Caodudnret sVsIe (dB brye athceh Coof uFridt uatc itahrisy tDimuety. ) Moving to Count VI, a claim for breach of fiduciary duty, Inter-Ocean argues that Plaintiff cannot demonstrate the fourth element of the tort, namely, that any breach by Inter- Ocean, as Plaintiff’s fiduciary, was the proximate cause of the harm. Mot. at 6-7. In the Virgin Islands, the elements of the tort of breach of fiduciary duty include: “’(1) that a fiduciary relationship exists; (2) that the fiduciary breached the duty imposed by said Arvidson v. Buchar relationship; (3) that the plaintiff must have been harmed; and (4) that the fiduciary's breach Guardian Ins. Co. v. Khalil was the proximate cause of said harm.’” , 72 V.I. 638, 645 (Super. Ct. 2020) (quoting , 63 V.I. 3, 18 (Super. Ct. 2012)). Inter-Ocean does not Virgin Grand Ests. #60 Villa Ass'n v. Certain Underwriters at dispute the Court’s finding that “’Inter-Ocean acted as broker for Plaintiff.’” Mot. at 5 (citing Lloyd's, London ECF No. 97 at 9, reported at , No. 3:21-cv-00074, 2022 WL 7006213, at *5 (D.V.I. Oct. 12, 2022)). Thus, See Plaintiff has established the first element of the tort. Nor does Inter-Ocean explicitly dispute that Plaintiff has or could de monstrate the second and third elements of the tort. Mot. at 4 5 The FSireset Amended Complaint is docketed at ECF No. 18 in the record. Case No. 3:21-cv-00074-RAM-RM M emorandum Opinion Page 5 of 8 Virgin Grand II 5-7. Inter-Ocean maintains, regarding the fourth element, that “Plaintiff has not plausibly alleged that the ‘fiduciary's breach was the proximate cause of [any] harm.’ , 2022 WL 7006213, at *3.” Mot. at 6. Inter-Ocean appears to base its position upon some of the allegations contained in the count referring to the fact that the application submitted by Plaintiff in March 2018 was See marked as “renewal” instead of reflecting the fact that the insurance policy had lapsed and, thus, could not be “renewed.” Mot. at 6-7; FAC at ¶¶ 267-73. However, the Court finds that Plaintiff’s claim is supported by the allegations regarding Inter-Ocean’s failure to communicate Underwriters’ willingness to renew the policy when it was informed of such See see also fact by Red Hook in January 2018, prior to the expiration of the policy on February 1, 2018. FAC at ¶¶ 265-66; Plaintiff’s Response [to] Inter-Ocean Insurance Agency’s Motion for Judgment on the Pleadings Pursuant to Rule 12(c) (Response) (ECF No. 130) at 1-2 (“The remaining claims in this case are against Defendant Inter-Ocean and arise from Inter-Ocean’s failure to procure the renewal of Virgin Grand’s commercial general liability insurance policy.” (footnote omitted)). This alleged breach of duty could be found to have proximately caused the harm suffered by Plaintiff. Accepting the factual allegations of the complaint as true and construing all reasonable inferences in favor of Plaintiff, the Court finds that Plaintiff has alleged a plausible claim for breach of fiduciary duty. In addition, because this claim is predicated upon the fiduciary relationship between Plaintiff and Inter- Ocean, which employs a different standard of care than ordinary negligence, the Court See disagrees with Inter-Ocean that the claim is duplicative of the negligence claim contained in CC.o Cuonut nIVt .V II ( MFroatu. adtu 6le. nt Concealment) Regarding this count, Inter-Ocean relies upon the Court’s earlier ruling dismissing similar claims against Red Hook. Mot. at 7. Such reliance is misplaced. To state a claim for fraudulent concealment, a plaintiff must plead that: (1) the defendant concealed or suppressed a material fact; (2) the defendant had a duty to disclose the fact to the plaintiff; (3) the defendant knew or had reason to know that the material fact had been concealed or suppressed; (4) the defendant concealed or suppressed the material fact for the purpose of Case No. 3:21-cv-00074-RAM-RM M emorandum Opinion Page 6 of 8 pecuniary loss caused by the his or her justifiable reliance on the concealed or Government of the U.S. Virgin Islands v. Takata Corp suppressed material fact. ., 67 V.I. 316, 417 (Super. Ct. 2017). First, See the Court found that Red Hook had no duty to disclose Underwriters’ willingness to renew the insurance policy to Plaintiff. Memorandum Opinion (ECF No. 97) at 12. Here, Inter- Ocean does not contest its fiduciary relationship with Plaintiff and the duties imposed thereby. Second, the alleged fraud asserted against Red Hook centered around Red Hook’s alleged “alteration” of the insurance application as “renewal” instead of “new.” FAC at ¶ 315. The fraud underlying the count against Inter-Ocean is not based upon the “renewal” application; rather, Plaintiff alleges fraud against Inter-Ocean for its failure to communicate See or otherwise act upon Underwriters’ willingness to renew the policy when Inter-Ocean received that information several weeks before the policy expired. FAC ¶¶ 308-12. Third, 6 regarding the “detrimental reliance” element of fraud, as Inter-Ocean itself notes: Merchants Com. Bank v. Oceanside Vill., Inc [t]he Virgin Islands cases cited refer to “justifiable,” as opposed to “reasonable,” reliance. In Love Peace ., 64 V.I. 3, 2015 WL 9855658 (Super.Ct. [sic] 2015)— a case cited with general approval by the Virgin Islands Supreme Court in , at ¶ 11— the Superior Court commented: “Depending on the jurisdiction, reliance must be either reasonable or justifiable, although no distinction appears to exist between these terms.” 64 V.I. at 27. Actually, there is a recognized difference: one measures the plaintiff’s conduct against the objective, reasonable Speee,r es.ogn., sFtiaelndd va.r dM; antshe other—a more forgiving standard from the plaintiff’s perspective—takes into account individual capabilities or limitations. , 516 U.S. 59, 73–75 (1995) (holding that § 523(a)(2)(A) of the

6 The Court has stated the following regarding fraud: To sufficiently plead fraud, a plaintiff must demonstrate, “(1) a false representation, (2) in rFeinfe. reTnrcues tt oC [oa.,] mInact. ervi.a lC fiaticbta, n(3k), mNa.Ad.e with knowledge of its falsity, (4) with the intent to deceiveS,”h ailnlidn g(f5o)r dd evt. rHimesesn Otaill orfe tlhiaen Vc.eI., or “action taken in reliance upon the representation.” , 351 F. Supp. 2d 329, 332, 46 V.I. 435 (D.V.I. 2004);B eachside Assocs., LLC v. Okem, o2 0L0t9d .U .LSi.a Dbi.s tC. oLEXIS 53371, at *28-29 (D.V.I. June 18, 2009). CAh afrraleusdwuellel nvt. iCnhdauscee Mmaennht actltaainm B haansk e, sNs.eAn.tially the same elements as common law fraud. ., 50 V.I. 1042, 1047 (D.V.I. 2008) (citing , 308 F. Supp. 2d 545, 568-69, 45 V.I. 495 Kiskidee,( LDL.VC. Iv. . 2C0e0rt4a)i)n. Interested Underwriters at Lloyd's of London Case No. 3:21-cv-00074-RAM-RM M emorandum Opinion Page 7 of 8 Bankruptcy Act, providing that certain fraud-related debt is nondischargeable, “requires justifiable, but not reasonable, reliance”). Although the plaintiff's reliance on the misrepresentation must be justifiable ... this does not mean that his conduct must conform to the standard of the reasonable man. Justification is a matter of the qualities and characteristics of the particular plaintiff, and the circumstances of the particular case, rather than of the application of a community standard of conduct to all cases. 516 U.S. at 70-71, quoting Restatement (Second) of Torts § 545A, Cmt. B. Mot. at 8 n.4. Because any finding of Plaintiff’s reliance upon the alleged misrepresentation takes into consideration “the qualities and characteristics of the particular plaintiff, and the See circumstances of the particular case,” the Court agrees with Plaintiff that “justifiable reliance” is a question of fact for the trier of fact to determine. Response at 17-19. Thus, construing the First Amended Complaint in the light most favorable to Plaintiff, the Court fDin. Cdos uthnatt X i t( hAaids ianlgle gaendd aA pbleatutsinibgl eF crlaauimdu floern ftr aCuodnuceleanltm ceonntc)ealment against Inter-Ocean.

Plaintiff alleges in this count that Inter-Ocean is liable for aiding and abetting Red Hook’s fraudulent concealment. FAC at ¶¶ 322, 328. However, the Court has found that See Plaintiff could not maintain a claim for fraudulent concealment against Red Hook because it did not plausibly allege that Red Hook owed Plaintiff any fiduciary duty. Memorandum Opinion (ECF No. 97) at 12. In addition, the Court found that Plaintiff could not show that Id Red Hook made a false statement or that it detrimentally relied upon the alleged fraud, that is, the altering of the insurance application. . at 13-14. Because the claim of fraudulent concealment against Red Hook has been dismissed, no claim for aiding and abetting fraudulent concealment can lie against Inter-Ocean. Consequently, the Court will grant the motion as to this count. IV. CONCLUSION Accepting the allegations of the FAC against Inter-Ocean as true and construing all reasonable inferences in Plaintiff’s favor, the Court determines that Plaintiff has plausibly alleged claims for breach of fiduciary duty and fraudulent concealment against said Case No. 3:21-cv-00074-RAM-RM M emorandum Opinion Page 8 of 8 Concomitantly, the claim against Inter-Ocean for aiding and abetting Red Hook’s fraudulent concealment also must be dismissed. Hence, the Court will grant in part and deny in part Inter-Ocean’s motion for judgment on the pleadings. An appropriate order follows. Dated: / Robert A. Molloy ROBERT A. MOLLOY Januar y 12, 20 24 Csh/i ef Judge