IN THE SUPREME COURT OF THE VIRGIN ISLANDS

DIVISION OF ST. CROIX

ROSALINA MARCANO a/k/a ROSALINA M. CLAUDIO,

S. Ct. Civ. No. 2020-0030 Plaintiff/Appellee,

v. SUPER. CT. CIVIL NO.

SX-14-CV-375 FRANCISCO ANTONIO AGUEDA a/k/a FRANCISCO AGUEDA,

ACTION FOR BREACH OF Defendant/Appellant. CONTRACT, FRAUD,

QUIET TITLE, AND DECLARATORY JUDGMENT

APPELLANT’S BRIEF

Counsel for Appellant Yvette D. Ross-Edwards, Esquire Virgin Islands Bar No. 450 The Reuckl Building 3227 Golden Rock, Office #2 Christiansted, Virgin Islands 00820 Telephone: 340-772-4444 yvette@rossedwardspc.com

TABLE OF CONTENTS I. TABLE OF AUTHORITIES ....................................................................... i-iii II. STATEMENT OF SUBJECT MATTER AND APPELLATE

JURISDICTION .............................................................................................. 1

A. Statement of the Basis for Jurisdiction in the Superior Court .................... 1

B. Statement of the Basis for Jurisdiction in the Supreme Court ................... 1

III. STATEMENT OF THE ISSUES PRESENTED AND STANDARD OF REVIEW .......................................................................................................... 2

A. Statement of the Issues Presented .............................................................. 2

B. Standard of Review .................................................................................... 2

C. Statement of Related Proceedings .............................................................. 3

D. Order Being Appealed ................................................................................ 3

IV. STATEMENT OF THE CASE ....................................................................... 4

A. The Parties Contracted for the purchase of Nine Properties for $850,000................................................................................................ 4

B. A Later Typewritten Document Purportedly Added Terms to the Parties’ Contracts but Lacked Consideration and Contradicted Years of Conduct ........................................................................................ 4

C. Unknown to Mr. Agueda, the Seller Lacked Title to the Nine Properties ................................................................................. 6

D. The Seller Breached the Contract and her Duties of Good Faith and Fair Dealing, Failing to Perform her Contractual Obligations and Preventing Mr. Agueda from Performing His. ............................................................. 6

V. ARGUMENT ................................................................................................... 8

A. The Trial Court Erroneously Awarded the Seller $283,945 on her Debt Claim Based on Contracts that the Seller Breached ................................... 8

B. Specific Performance is the Appropriate Remedy under these Circumstances in Light of the Seller’s Breach of Contract ...................... 10

1. Judgment in the Seller’s Favor on a Debt Claim Arising from

Contracts that She was Found to have Breached is Not Supported in either Law or Equity ........................................................................ 11

2. The Buyer Substantially Performed while the Seller Defaulted ......... 11

3. Virgin Islands law Precludes the Defaulting Seller from Recovering on a Debt Claim Grounded in the Contract she Breached .................. 13

a. Recovering the Balance on the Contract Price as a Debt .............. 13

b. Any Recovery by the Seller on her debt claim must be Limited to

Rental Payments, even if this Court Upholds the Determination that Consideration existed for the Typed 2011 Document ............ 16

C. The Typed 2011 Document is Void (a) for Lack of Consideration and

(b) because the Seller Breached the Contract and her Duties of Good Faith and Fair Dealing, and thus cannot Support a Debt Claim............... 17

D. Equity Requires Specific Performance to Avoid a Windfall ................... 21 VI. CONCLUSION .............................................................................................. 25 VII. CERTIFICATE OF COMPLIANCE WITH LENGTH LIMITATIONS ..... 27 CERTIFICATE OF MEMBERSHIP ....................................................................... 28 CERTIFICATE OF SERVICE ................................................................................ 29

i

I. TABLE OF AUTHORITIES Cases Addie v. Kjaer, 2011 WL 797402 (D.V.I. Mar. 1, 2011) (No. CIV. 2004-135), aff'd, 737 F.3d 854 (3d Cir. 2013) ................................................................. 13 Allen v. HOVENSA, L.L.C., 59 V.I. 430 (2013) ...................................................... 3 Andrews v. Nathaniel, 2000 WL 221937 (Terr. Ct. Jan. 26, 2000)

(No. 759/1994) ............................................................................................... 19

Bangor Punta Operations, Inc. v. Bangor & A.R. Co., 417 U.S. 703, 94 S.Ct. 2578, 41 L.Ed.2d 418 (1974) ........................................................... 21

Bigelow v. Armes, 108 U.S. 10, 1 S.Ct. 83, 27 L.Ed. 631 (1882) .......................... 22 Browne v. Stanley, 66 V.I. 328 (2017) .................................................................. 1, 3 Bouterie v. Carre, 6 So.2d 218 (La. App. 1942) .................................................... 23 Caribe Contracting Co., Inc. v. Edwards, 18 V.I. 194, 199 (Terr. V.I. May 31, 1982) ............................................................................... 9

Carlos Warehouse v. Thomas, 64 V.I. 173, 186 (V.I. Super. May 12, 2016) ......... 8 Christopher v. Herbert, 2006 WL 8418678 (Super. Ct. C St. Croix June 14, 2006)

(Civil No. 313/2000) (not designated for publication) ................................ 12 Creative Minds, LLC v. Reef Broad., Inc., ST-11-CV-131, 2014 wl 4908588 (V.I. Super. Sept. 24, 2014) ............................................................................ 9 David v. Scotland, Case No. SX-13-CV-036, 2014 WL 11034925 (V.I. Feb. 3, 2014) ........................................................................................ 10

DeCastro v. Stuart, 2004 WL 744194 (D.V.I. App. Div. Apr. 2, 2004) (CIV.A. 2001-20) (not designated for publication) ............................... 19, 20

Felton v. Elkins, 2004 WL 3048723 (D.V.I. Dec. 29, 2004) (No. CIV. 2003-86) (not designated for publication) ............................ 23, 24

ii

TABLE OF AUTHORITIES (cont’d)

Ferrara v. Walters, 919 So.2d 876 (Miss.2005) ...................................................... 14 Haffner v. Dorinski, 215 U.S. 446, 30 S.Ct. 172, 54 L.Ed. 277 (1910) .................. 21 Kintz v. Read, 626 P.2d 52, 55 (Wash. App. 1981) ................................................. 23 Heritage Visual Sales, Ltd., B-221226 (Comp. Gen. Feb. 6, 1986),

on reconsideration sub nom. Heritage Visual Sales, Ltd.-Reconsideration, B-221226 (Comp. Gen. July 6, 1987 ............................................................. 23

Mahabir v. Heirs of George, 63 V.I. 651 (2015) ....................................................... 1 Malloy v. Reyes, 61 V.I. 163 (2014) .......................................................................... 1 Markowitz v. Northeast Land Co., 906 F.2d 100 (3d Cir. 1990) ............................. 22 In re Millennium Lab Holdings II, LLC, 945 F.3d 126 (3d Cir. 2019) .................. 21 Post v. Palpar, Inc., 184 Cal.App.2d 676, 7 Cal.Rptr. 823 (1960) ................... 13-14 Matter of Estate of Pitterson, 40 V.I. 13 (Terr. V.I. Dec. 8, 1998) ......................... 24 Prudential Ins. Co. of Am. v. S.S. Am. Lancer, 870 F.2d 867 (2d Cir. 1989) .......... 21 St. ThomasBSt. John Bd. of Elections v. Daniel, 49 V.I. 322 (2007) ........................ 3

Selengut v. Poznak, 1991 WL 12008229 (D.V.I. June 26, 1991)

(Civ. Action No. 87-73) (not designated for publication) ............................. 12

United Corp. v. Hamed, 64 V.I. 297 (2016) .............................................................. 1

US Airways, Inc. v. McCutchen, 663 F.3d 671, 679 (3d Cir. 2011), vacated on other grounds, 569 U.S. 88, 133 S.Ct. 1537, 85 L.Ed.2d 654 (2013) ................................................................................... 21

Univ. of Virgin Islands v. Petersen-Springer, 232 F.Supp. 2d 462

(D.V.I. App. Div. 2002), dism’d, 90 F. Appx. 436 (3d Cir. 2003) ............... 18

iii

TABLE OF AUTHORITIES (cont’d)

Urh v. Buffo, 2018 WL 1020673 (Super. Ct. Feb. 20, 2018)

(No. ST-2015-CV-0000315) (not designated for publication) ...................... 11 Vidal v. Transcon. & Western Air, Inc., 120 F.2d 67 (3d Cir.1941) ................. 14, 15 V.I. Waste Mgmt. Auth. v. Bovoni Invs, LLC, 61 V.I. 355 (2014) ............................ 3 Watson v. LPP Mortgage, Ltd., 2019 WL 123878 (Jan. 7, 2019 Slip Op.) ............ 10 Webster v. FirstBank Puerto Rico, 66 V.I. 514 (2017) ............................................. 1 Western Union Tel. Co. v. Pennsylvania Co., 129 F. 849 (3d Cir. 1904) ............... 22 Whitney v. Hay, 181 U.S. 77, 21 S.Ct. 537, 45 L.Ed. 758 (1901) ........................... 23 Statutes 4 V.I. Code Ann. ' 32(a) ............................................................................................. 1

U.C.C. ' 2B503 ......................................................................................................... 14

Other Authorities RESTATEMENT (SECOND) OF CONTRACTS ' 73 .......................................................... 18

RESTATEMENT (SECOND) OF CONTRACTS ' 89 (Modification of Contracts) ............ 18

RESTATEMENT (SECOND) OF CONTRACTS ' 238 cmt. a, b (1981) ............................. 14

RESTATEMENT (SECOND) OF CONTRACTS ' 253(2) ................................................... 11

RESTATEMENT (SECOND) OF CONTRACTS '' 357, 359, 362, 364, 369 ....................... 10

RESTATEMENT (THIRD) OF PROPERTY: MORTGAGES ' 3.4 cmt. a ....................... 19, 20

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II. STATEMENT OF SUBJECT MATTER

AND APPELLATE JURISDICTION

A. Statement of the Basis for Jurisdiction in the Superior Court

Appellant did not assert subject matter jurisdiction over Appellee’s claims in

the Superior Court, lack of which would render the judgment below invalid.

Appellant would not object to this Honorable Court vacating the judgment below

based on lack of jurisdiction, eliminating the need to inquire further here.

B. Statement of the Basis for Jurisdiction in the Supreme Court

This Honorable Court has “jurisdiction over all appeals arising from final

judgments, final decrees or final orders of the Superior Court.” 4 V.I. Code Ann. '

32(a); Webster v. FirstBank Puerto Rico, 66 V.I. 514, 517 (2017); United Corp. v.

Hamed, 64 V.I. 297, 302 (2016); Browne v. Stanley, 66 V.I. 328, 331 (2017);

Mahabir v. Heirs of George, 63 V.I. 651, 658 (2015) (citing Malloy v. Reyes, 61

V.I. 163, 171-72 (2014)).

The bench trial here was conducted in June 2018; the Superior Court issued

its Findings of Fact and Conclusions of Law and Judgment two years later. (Appx.

0008-0009, 01334-10366, 0008-0009.) Because the Superior Court’s April 24,

2020 orders are final orders adjudicating all issues between the parties, this

Honorable Court has jurisdiction over this appeal, notice of which was timely filed

on May 14, 2020. (Appx. 00001-00005.)

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III. STATEMENT OF THE ISSUES PRESENTED

AND STANDARD OF REVIEW

A. Statement of the Issues Presented

1. Did the Trial Court erroneously award the Seller $283,845.00 on her debt claim based on a contract that she breached and the Buyer substantially performed by paying $679,555 of the total $850,000 Purchase Price?

2. Is Specific Performance the appropriate remedy where the trial court properly found that while the Seller’s inability to deliver clear title to the Nine Properties precluded Mr. Agueda from closing on a Loan that would have enabled him to pay off the balance under the 2009 and 2010 Contracts (Appx. 1343, 1362-1363 / FFCL 10:1-4, 29:19 B 30:3.), and

the Seller has the ability to deliver title to seven of the Nine Properties? 3. The sole basis for any additional Buyer’s obligation purportedly arose

under a later document lacking consideration from the Seller beyond her pre-existing legal duty to deliver title to the Nine Properties. (Appx. 1347 / FFCL 14:2-18.) Can that document be enforced as a valid contract where it lacks consideration beyond pre-existing legal obligations?

4. The Seller’s claim for debt is grounded solely in Contracts that the trial

court properly found her to have breached. Where the Buyer has substantially performed, does equity mandate Specific Performance requiring the conveyance of title to the parcels that the Seller can convey, to avoid a windfall?

B. Standard of Review

This appeal addresses legal determinations by the court below, the standard

of review for each of which is de novo.

The Virgin Islands Supreme Court exercises plenary review of the Superior

Court's application of law, reviewing legal determinations de novo, while factual

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findings are reviewed for clear error, and the application of equitable principles to

those facts is reviewed for abuse of discretion. Webster, 66 V.I. at 517; Browne,

66 V.I. at 331; V.I. Waste Mgmt. Auth. v. Bovoni Invs, LLC, 61 V.I. 355, 363

(2014); Allen v. HOVENSA, L.L.C., 59 V.I. 430, 436 (2013); St. ThomasBSt. John

Bd. of Elections v. Daniel, 49 V.I. 322, 329-30 (2007).

C. Statement of Related Proceedings

This case has not been before the Supreme Court previously, and Appellant

is not aware of any other case or proceeding that is related, has been completed, is

pending, or is about to be presented before this or any other court, state or federal.1

D. Order Being Appealed.

A copy of the order being appealed, and the relevant opinions of the

Superior Court consist of the court’s oral Findings of Fact and Conclusions of Law

and written Judgment, both issued April 24, 2020 following the June 2018 bench

trial, both of which are included in the attached Appendix. (Appx. 1335-1335,

0008-0009, respectively.)

1 Mr. Agueda and the Seller filed separate appeals of the Superior Court’s April 24, 2020 Judgment. The Appeals were consolidated on August 12, 2020 by Order of the Supreme Court of the Virgin Islands. (Appx 0010-0011.) Additionally, in an abundance of caution, Appellant advises that he filed two civil actions in the Superior Court of the Virgin Islands, Division of St. Croix, against Christina Anderson for eviction and debt both of which will be impacted by the court’s ruling in this appeal. [Francisco Agueda v. Christina Anderson, 16-CV-

0572; Francisco Agueda v. Christina Anderson, 16-CV-0458]

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IV. STATEMENT OF THE CASE

A. The Parties Contracted for the purchase of Nine Properties for

$850,000. Appellant’s case arises from 2009 and 2010 agreements (the “Contract”)

(Appx. 1446-1450) between Plaintiff-Appellee Rosalina Marcano a/k/a Rosalina

M. Claudio (the “Seller”) and Defendant-Appellant Francisco Antonio Agueda

a/k/a Francisco Agueda (“Mr. Agueda” or the “Buyer”) for the Seller to convey

title to nine lots located in Western Suburb in the town of Christiansted known as

Lots Nos. 6, 7, 8A, 8B, 8C, 8D, 9, 9A, and 15 (the “Nine Properties”) in exchange

for Mr. Agueda’s payment of $850,000 (the “Purchase Price”). (Appx. 1337, 1338

/ FFCL 4:16-25, 5:1-13).

Undisputed evidence established that the parties entered into this contract

verbally in 2009 and memorialized it in handwriting in 2010 (Appx. 1337, 1338,

1344-1345 / FFCL 4:16-25, 5:1-13, 11:22 B 12:2), and that Mr. Agueda made

payments totaling $679,555 toward the $850,000 Purchase Price. (FFCL 22-28 /

Appx. 1355-1361).

B. A Later Typewritten Document Purportedly Added Terms to the

Parties’ Contracts but Lacked Consideration and Contradicted Years of

Conduct.

A later typewritten document (the “Typed 2011 Document”) (Appx 1446-

1450) purported to change the terms of the parties’ Contract by adding

5

requirements for Mr. Agueda to make monthly rental payments to the Seller, for an

April 2014 final payment deadline, for the Seller to transfer title free and clear and

for notice of a closing date without consideration for its added requirements.

(Appx. 1346, 1347, 1351 / FFCL 13:24-25; 14:2-5; 18:5-9.) Notwithstanding

Virgin Islands law requiring consideration to support contract formation, the trial

court held that the additional obligations stated satisfied the consideration

requirement (Appx. 1346-1347, 13:14 – 14:18).

The trial court held that the Typed 2011 Document imposed additional

obligations to Mr. Agueda to pay $5,000 per month in rental payments to the

Seller. (Appx. 1339-1340 / FFCL 6:20-7:3.) However, the Seller admitted that

nothing in the parties’ Contract required Mr. Agueda to pay half the monthly

rentals to her, and that Mr. Agueda “was honoring the verbal agreement.” (Appx.

0372-0374 / Transcript of Bench Trial conducted June 6, 2018 (“2018 Bench Trial

Transcript”), 169:9 - 171:7.) Furthermore, the parties’ years of conduct confirmed

Seller’s acceptance of irregular but continuing installment payments toward the

Purchase Price: The Findings of Fact devoted many pages to reciting years of Mr.

Agueda’s tendering, and the Seller accepting, those payments toward the

contractual Purchase Price. (Appx. 1355-1356 / FFCL 22:17 - 28:23.)

C. Unknown to Mr. Agueda, the Seller Lacked Title to the Nine Properties.

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Significantly, it is undisputed that the Seller lacked clear title to the Nine

Properties even years later at the time of the 2018 trial. (Appx. 1341, 1363. 0306-

0312 / FFCL 8:16-17, 30:1-3, 2018 Bench Trial Transcript, 103:5 - 109:22.)

Evidence adduced at trial established her ability to convey title to seven of the

Nine Properties. (Id.)

D. The Seller Breached the Contract and her Duties of Good Faith and

Fair Dealing, Failing to Perform her Contractual Obligations and

Preventing Mr. Agueda from Performing His.

The trial court expressly and properly found that the Seller breached the

Contract, and her duties of good faith and fair dealing, by not clearing title as

needed to be able to convey the Nine Properties, and by causing tenants to stop

making monthly rental payments to Mr. Agueda:

Ms. Marcano breached the contract and also her duty to act in good faith in instructing a tenant at the Western Suburb premises to pay her the rental proceeds.

The Court also finds that Ms. Marcano knew sometime between June and October of 2013 that Mr. Agueda obtained a loan commitment from FirstBank to pay off Ms. Marcano towards the purchase price of Western Suburb. According to the terms of the agreement, Ms. Marcano was required to clear up any issue with regards to title pertaining [sic] those property [sic] in preparation for closing.

Instead of taking action to clear title, Ms. Marcano attempted to evict the tenants located at the Western Suburb property and did not take actions consistent with her obligations under the contract; and the Court finds that Mr. Agueda was unable to close on the loan; and that in October of 2013 the bank denied his request for the loan or withdrew the loan commitment because he was not able to obtain

7

certain documents to show that he was going to receive title and/or deed towards the property. So, therefore, the Court finds that Mr. Agueda prevails on his claim for breach of contract and breach of duty of good faith and fair dealing.

(Appx. 1351-1352 / FFCL 18:15 - 19:13 (emphasis added).)

The undisputed evidence further established that in June 2013 Mr. Agueda

obtained a loan commitment from FirstBank for a $350,000 loan (the “Loan”),

which he intended to use to pay off the roughly $200,000 balance of the purchase

price for the Nine Properties in full, and to further develop and improve the Nine

Properties. (Appx. 1342, 1351, 1362 / FFCL 9:15-20, 18:19-23, 29:1-3). The

court expressly found that Mr. Agueda:

was prepared to pay off the purchase price once he received the loan in June of 2013 from FirstBank and all that was needed was for Ms. Marcano to obtain clear and marketable title to transfer to Mr. Agueda. And she - its reasonable - well, the Court finds that Mr. - Ms. Marcano knew of that loan between June 2013 and October 2013, sometime between that period, and she did not make the proper arrangements to clear title for the property resulting in Mr. Agueda not being able to close on the loan.

Had Mr. Agueda been able to close on the loan, he . . . would have received the funds from the bank, paid off Ms. Marcano the balance of the purchase price and then no longer be indebted to her . . .

(Appx. 1362-1363 / FFCL 29:19-30:7 (emphasis added).)

V. ARGUMENT

A. THE TRIAL COURT ERRONEOUSLY AWARDED THE SELLER

$283,945 ON HER DEBT CLAIM BASED ON CONTRACTS THAT

8

THE SELLER BREACHED.

The trial court expressly found that Mr. Agueda “prevail[ed] on his claim for

breach of contract and breach of duty of good faith and fair dealing”. (Appx.

1351-1352 / FFCL 18:15-18, 19:1-13.) Moreover, the Seller confirmed her

inability to convey clear title to the Nine Properties even as of the 2018 trial.

(Appx. 0306-0312 / 2018 Bench Trial Transcript, 103:5 - 109:22.) These two

basic facts and findings are important to whether the Seller can recover on her

claim and whether specific performance is an appropriate damage award for the

Buyer.

The Seller proceeded to litigation on a claim for debt. Debt claims sound

in contract law. Carlos Warehouse v. Thomas, 64 V.I. 173, 186 (V.I. Super. May

12, 2016). Mr. Agueda defended on grounds that the Seller breached the contract,

and successfully proved that the Seller not only breached the sales contract but the

duty of good faith and fair dealing. In fact, breach of contract and failure of

consideration were raised as affirmative defenses to the Seller’s claims. (Appx.

1420-1422.)

Every breach gives rise to a claim for damages.” RESTATEMENT (SECOND) OF

CONTRACTS § 236, comment a. The measure of damages for breach

of contract may be one of two options: (1) an amount that would put the plaintiff

9

in the same position in which he would have been had the contract been performed

(Caribe Contracting Co., Inc. v. Edwards, 18 V.I. 194, 199 (Terr. V.I. May 31,

1982)); or (2) specific performance. In this case, the court ignored that the Seller

had breached the contract and awarded the Seller full recovery on the very contract

that she breached. “A material breach of contract by one party to a contract has the

effect of excusing performance by the other party to the contract from the date of

the breach.” Creative Minds, LLC v. Reef Broad., Inc., ST-11-CV-131, 2014 WL

4908588, at *7 (V.I. Super. Sept. 24, 2014). “A breach of contract is material if it

is significant or essential and would affect the decision-making of a party.” Id.

The Seller’s failure or refusal to clear title to all Nine Properties in 2013 resulted in

the bank withdrawing the loan is a material breach. Accordingly, the Seller should

not be permitted on a claim of debt to recover the difference on the contract as a

debt, particularly since she was, and remains, unable to convey title to all nine lots.

Such an award results in a windfall to the Seller, who not only receives the benefit

of the full contract price but is not obligated to transfer any title to Mr. Agueda.

B. SPECIFIC PERFORMANCE IS THE APPROPRIATE REMEDY

UNDER THESE CIRCUMSTANCES IN LIGHT OF THE SELLER’S

BREACH OF CONTRACT.

Specific performance is available as a remedy for breach of contract if no

adequate remedy at law exists for the breach, the party seeking relief has materially

10

performed his obligations under the contract, and the grant of such relief is not

unfair, against public policy, or otherwise inequitable. Watson v. LPP Mortgage,

Ltd., 2019 WL 123878, at *2 (Jan. 7, 2019 Slip Op.) (citing David v. Scotland,

Case No. SX-13-CV-036, 2014 WL 11034925, at *3 (V.I. Feb. 3, 2014) (citing

RESTATEMENT (SECOND) OF CONTRACTS §§ 357, 359, 362, 364, 369)).

In this case, Mr. Agueda paid $679,555 and was prepared to pay off the

remaining $170,445 balance of the $850,000 Purchase Price in June 2013 with a

Loan dependent only on Seller clearing title. (Appx. 1342, 1355, 1362 / FFCL

9:15-20, 22:6-7, 29:19-23.) Despite her awareness of that Loan, the Seller failed to

clear title for the Nine Properties, resulting in FirstBank withdrawing its loan

commitment and Mr. Agueda being able to pay off the Contract Purchase Price

balance in 2013. (Appx. 1342, 1343, 1351-1352, 1362-1363 / FFCL 9:15-24,

10:1-4, 18:19B19:13, 29:24 – 30:3, 30:7) Since the Seller, by admission, is able to

convey title to seven of the Nine Properties, and since Mr. Agueda has paid 80% of

the total contractual Purchase Price, equity and fairness lies with specific

performance by the Seller in conveying the seven lots.

1. Judgment in the Seller’s Favor on a Debt Claim Arising From

Contracts that She was Found to Have Breached Is Not

Supported in either Law or Equity.

The Buyer substantially performed under the Contract by paying $679,555

11

(80% of the $850,000 Purchase Price) to the Seller. Delivering seven of nine titles

would accomplish 77% of the Seller’s contractual obligations, still incomplete

under the Contract but closer to achieving an equitable result in light of the

Buyer’s payment of 80% of the total Purchase Price for all Nine Properties.

2. The Buyer Substantially Performed while the Seller Defaulted. Courts in the Virgin Islands have adopted the doctrine of Anticipatory

Breach of Contract, recognizing that “[w]here performances are to be exchanged

under an exchange of promises, one party's repudiation of a duty to render

performance discharges the other party's remaining duties to render performance.”

RESTATEMENT (SECOND) OF CONTRACTS ' 253(2). A party to a contract who placed

the other’s reasonably expected benefit at risk “violated the implied covenant of

good faith and repudiated the agreement.” Urh v. Buffo, 2018 WL 1020673, *8

(Super. Ct. Feb. 20, 2018) (No. ST-2015-CV-0000315) (not designated for

publication) (emphasis added) (party who fell behind on monthly payments placed

subject boat at risk of foreclosure, which would prevent other party from receiving

unhindered ownership). Here, the trial court found that the Seller’s failure to clear

title resulted in Mr. Agueda not being able to close on the Loan. This placed his

reasonably expected benefit at risk by preventing him from receiving unhindered

ownership of the Nine Properties — which seven years later he has not received,

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and the Seller is unable to convey.

Under Virgin Islands law, where one party substantially performs his duties

under a contract, the other is obligated to perform. Selengut v. Poznak, 1991 WL

12008229, *8 (D.V.I. June 26, 1991) (Civ. Action No. 87-73) (not designated for

publication) (plaintiff entitled to easement based on either contract or reasonable

reliance); cf. Christopher v. Herbert, 2006 WL 8418678, *4 (Super. Ct. , St. Croix

June 14, 2006) (Civil No. 313/2000) (not designated for publication) (substantial

performance not rendered, or breach was material, where only 55% of construction

contract was completed before work ceased). Here, Mr. Agueda substantially

performed under the Contract by paying $679,555, or 80% of the $850,000 total

Purchase Price before learning of the Seller’s inability to fulfill her obligation to

deliver clear title. Legal and equitable principles dictate that the Seller be made to

convey title to those lots over which she has title or the ability to obtain immediate

title, not that the Buyer pay her additional funds for lots she is unable to convey.

Moreover, Mr. Agueda raised as an affirmative defense to the Seller’s

Complaint (Appx. 0143) that that Seller breached the Typed 2011 Document and

that that document lacked due consideration. (Id.) Accordingly, the finding for the

Seller in the sum of $170,445.00 on her debt claim arising from the Contract for

13

sale of nine properties, which Contract she was found to have breached, was

erroneous, warranting reversal.

3. Virgin Islands law Precludes the Defaulting Seller from

recovering on a Debt Claim Grounded in the Contract she

Breached.

a. Recovering the Balance on the Contract Price as a Debt.

The Seller’s claim for debt is grounded solely in the Contract to sell Nine

Properties for $850,000. She breached that Contract in 2013 and still is unable to

convey the Nine Properties. Accordingly, awarding her the balance of the total

Purchase Price would be to award her a windfall. Such a result defies Virgin

Islands law and principles of equity and should be reversed.

A seller’s ability to recover on a breach of contract claim (and thus logically

on debt claims arising thereunder) is contingent on her performing her own

obligations under the contract. Addie v. Kjaer, 2011 WL 797402, *7-9 (D.V.I.

Mar. 1, 2011) (No. CIV. 2004-135), aff'd, 737 F.3d 854 (3d Cir. 2013) (failure to

convey title placed seller in default of purchase contract obligations); citing Post v.

Palpar, Inc., 184 Cal.App.2d 676, 7 Cal.Rptr. 823, 826 (1960) (“failure to tender

marketable title at the time the contract matures is a material breach....”); Ferrara

v. Walters, 919 So.2d 876, 882 (Miss.2005) (“where a contract expressly provides

a reasonable opportunity for the seller to cure discovered defects in title, the seller's

14

failure to cure constitutes a material breach of the contract.”).

The Restatement (Second) of Contracts cites the Uniform Commercial

Code's discussion of what an appropriate offer of performance entails: “that the

seller put and hold conforming goods at the buyer's disposition and give the buyer

any notice reasonably necessary to enable him to take delivery.” Addie, 2011 WL

797402, *10 (quoting U.C.C. ' 2B503). In the context of concurrent conditions, a

party's duty to perform under a contract is not triggered until the other party makes

a valid offer of performance. RESTATEMENT (SECOND) OF CONTRACTS ' 238 cmt. a,

b (1981). “[I]t is one of the consequences of concurrent conditions that a situation

may arise where no right of action ever arises against either party.” Vidal, 120

F.2d at 68 (citations omitted).

Here, Mr. Agueda substantially performed by paying 80% of the Purchase

Price, and he demonstrated his readiness to complete performance by obtaining the

Loan commitment from FirstBank to pay off the Contract balance in full.

Meanwhile, the Seller=s inability or refusal to convey title placed her in default.

The Seller is precluded from recovering on her debt claim because it arises

solely from a contract under which she defaulted. A party who defaults on a

concurrent obligation is precluded from recovering. See Vidal, 120 F.2d at 68

(“Payment and delivery are concurrent conditions since both parties are bound to

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render performance at the same time. In such a case, ... neither party can maintain

an action against the other without first making an offer of performance himself.@)

(internal citations omitted). As the Addie court did, this court is urged to assess the

viability of the Seller’s claim to recover the balance owed on the $850,000 as a

debt by considering the Seller’s failure to meet her concurrent obligations – the

transfer of title to the Nine Properties to Mr. Agueda. See Addie, 2011 WL

797402, *10.

FirstBank withdrew the 2013 Loan commitment only after - and solely

because - the Seller knew of her responsibility to clear title and failed to do so.

(Appx. 1342, 1343, 1351, 1352 / FFCL 9:15-19, 10:1-4, 18:19-25, 19:1-13.) Mr.

Agueda stopped payment on his final check in May 2013 after learning that the

Seller could not or would not provide clear title to the Nine Properties. (Appx.

0286-0287, 0352 / 2018 Bench Trial Transcript, 83-84, 148-149.) Indeed, she

could not provide clear title to all Nine Properties even at the time of trial, only

seven. (Appx. 1341, 1363, 0306-0312 / FFCL 8:16-17, 30:1-3, 2018 Bench Trial

Transcript, 103:5 - 109:22.)

The parties agreed to exchange $850,000 for title to the Nine Properties.

However, both legal and equitable principles require specific performance to

achieve an equitable outcome, warranting conveyance of seven (77%) of the

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Properties in exchange for the $679,555 (80%) of the total Purchase Price already

paid for the Nine Properties.

b. Any Recovery by the Seller on her debt claim must be Limited

to Rental Payments, even if this Court Upholds the

Determination that Consideration existed for the Typed 2011

Document.

As argued below, the trial court’s holding that the Typed 2011 Document

was supported with consideration is erroneous. However, even assuming

arguendo that the Typed 2011 Document is upheld as an enforceable contract, the

Seller’s recovery should be limited in accordance with the trial court’s factual

findings. The Court found that the obligation to pay rent began in April 2011 upon

signing of the Typed 2011 Document. (Appx. 1355 (FFCL 22:3-5.) It further

found that the Seller breached the duty of good faith and fair dealing in June 2013

when she instructed the tenant to cease paying rent to Mr. Agueda. (Appx. 1351,

FFCL 29:13-22) Appellant submits that rent logically then should be calculated

from April 2011 to May 2012 for a total of $125,000.00 (25 months x $5,000.00)

instead of $155,000. The court instead used the October 2013 date when the bank

withdrew the Loan commitment (Appx. 1355 / FFCL 22:3-5); however, Appellant

submits that five months prior, when the Seller breach the contract by interfering

with the tenant, is the appropriate date to end accrual of any debt. Accordingly,

Appellant requests that the court reverse the judgment of the trial court on the issue

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of rental payments, reducing the judgment to a maximum of $125,000 on the debt

claim.

C. THE TYPED 2011 DOCUMENT IS VOID (a) FOR LACK OF

CONSIDERATION AND (b) BECAUSE THE SELLER BREACHED

THE CONTRACT AND HER DUTIES OF GOOD FAITH AND FAIR

DEALING, AND THUS CANNOT SUPPORT A DEBT CLAIM.

The trial court erroneously held that Mr. Agueda was indebted to the Seller

for rent based on the Typed 2011 Document. (Appx. 1362 / FFCL 29:11-18.)

However, even if that document could have been construed as a valid contract,

imposing any additional obligation on Mr. Agueda is erroneous because the Seller

did not maintain a breach of contract claim under which recovery may be

appropriate.

While acknowledging that contracts require legally sufficient consideration,

the trial court held that “even if there was no consideration given [by Agueda], . . .

Mr. Agueda is precluded from claiming that he wasn’t given consideration in

entering into [the 2011] contract.” (Appx. 1347 / FFCL 14:19-23) That

determination contradicts Virgin Islands law and should be reversed.

The Seller’s only obligation under the Typed 2011 Contract was to convey

title to the Nine Properties in exchange for $850,000 payment. However, she

already owed that legal obligation under the 2009 and 2010 Contracts. (Appx.

1337, 1338 / FFCL 4:16-25, 5:1-13). Under Virgin Islands contract law, “[A]

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preexisting legal duty does not constitute consideration. The Restatement provides

that “[p]erformance of a legal duty owed to a promisor which is neither doubtful

nor the subject of honest dispute is not consideration.’ ” Univ. of Virgin Islands v.

Petersen-Springer, 232 F.Supp. 2d 462, 469-70 (D.V.I. App. Div. 2002), dism’d,

90 F. Appx. 436 (3d Cir. 2003); RESTATEMENT (SECOND) OF CONTRACTS ' 73.

“Performance of a legal duty to the promisor is not consideration.” RESTATEMENT

(SECOND) OF CONTRACTS ' 89 (Modification of Contracts).

The Typed 2011 Document speaks to the collection of rental money from

tenants, a benefit to Mr. Agueda already conferred by his possessory and equitable

ownership under the 2009 and 2010 Contracts, further supported by the parties’

two years of conduct confirming their understanding of their contractual

obligations consisting of Mr. Agueda possessing and improving the Nine

Properties and profiting from improvements he made thereon 2 while making

installment payments toward the contractual Purchase Price. His payments were

irregular but continued until the Seller manifested her intention not to perform

2 The undisputed evidence at trial established that when Mr. Agueda

received possession of the Nine Properties, there were two habitable commercial units and six habitable residential units; and by 2011 he had rehabbed four commercial units and added two and rehabbed six residential units and added three, for a total of eight habitable commercial units and 15 habitable residential units from whose rental payments he sought to benefit. (Appx. 0091 - 0092 / 2018 Bench Trial transcript, 79:24-25, 80:1-14.)

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when she refused to cooperate with FirstBank by clearing title after it issued the

Loan commitment in 2013.

The parties’ 2009 and 2010 Contracts fell squarely within the definition of

an installment contract as “a contract for the purchase and sale of real estate under

which the purchaser acquires the immediate right to possession of the real estate

and the vendor defers delivery of a deed until a later time to secure all or part of

the purchase price.” Andrews v. Nathaniel, 2000 WL 221937, *4 (Terr. Ct. Jan.

26, 2000) (No. 759/1994); RESTATEMENT (THIRD) PROPERTY (MORTGAGES) 3.4

cmt. a. Mr. Agueda became equitable owner of the Nine Properties upon

execution of the installment contract, since Virgin Islands law establishes that

Aequitable title is obtained as follows: “An unconditional contract for the sale of

land, of which specific performance would be decreed, grants the purchaser

equitable title, and equity considers him the owner.” DeCastro v. Stuart, 2004 WL

744194, *6 (D.V.I. App. Div. Apr. 2, 2004) (CIV.A. 2001-20) (not designated for

publication) (citations omitted) (reversing and remanding, holding that oral

agreement and partial payment transferred equitable ownership of real estate to

purchaser).

In an installment contract like the one at bar, equitable ownership is

transferred upon signing the contract even though the deed does not pass until

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payment is complete:

The purchaser normally takes possession upon execution of the contract for deed and makes installment payments of principal and interest until the contract balance is fully satisfied. While the purchaser obtains equitable title upon execution of the contract, legal title is retained by the vendor until the final payment is made.

DeCastro, 2004 WL 744194, *6; RESTATEMENT (THIRD) OF PROPERTY:

MORTGAGES ' 3.4 cmt. a.

Virgin Island law required performance of the parties’ mutual obligations

under the 2009 and 2010 Contracts, and it required valid consideration to support

the formation of another contract. Accordingly, performance of legal obligations

already existing under those Contracts could not suffice as consideration to support

a later contract, rendering the Typed 2011 Document void for lack of consideration

and thus unenforceable… and insufficient to support a claim of debt arising from

it by the Seller who was expressly found to have breached it. Judgment in her

favor was inequitable and legally erroneous and should be reversed.

D. EQUITY REQUIRES SPECIFIC PERFORMANCE TO AVOID A

WINDFALL.

Specific performance is necessary here to avoid the Seller receiving a

windfall by retaining 80% of the Purchase Price paid to her for all Nine Properties

while never conveying title to any of them. Such a windfall result is repugnant to

principles of equity and good conscience.

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“Equity abhors a windfall.” In re Millennium Lab Holdings II, LLC, 945

F.3d 126, 143-44 (3d Cir. 2019) (allowing party to retain benefits without losing

rights would lead to “profoundly inequitable results”); US Airways, Inc. v.

McCutchen, 663 F.3d 671, 679 (3d Cir. 2011), vacated on other grounds, 569 U.S.

88, 106, 133 S.Ct. 1537, 85 L.Ed.2d 654 (2013); Prudential Ins. Co. of Am. v. S.S.

Am. Lancer, 870 F.2d 867, 871 (2d Cir. 1989); see also Bangor Punta Operations,

Inc. v. Bangor & A.R. Co., 417 U.S. 703, 726, 94 S.Ct. 2578, 2590, 41 L.Ed.2d 418

(1974) (“The public interest against windfall recoveries is no doubt a significant

factor which a court of equity should consider”).

Although specific performance may be denied where the underlying contract

was “unreasonable… if not unconscionable, and void under the statute of frauds”

(Haffner v. Dorinski, 215 U.S. 446, 451, 30 S.Ct. 172, 174, 54 L.Ed. 277 (1910)),

such is not the situation here, where the parties undisputedly reduced their 2009

oral agreement to a handwritten Contract in 2010, and where there was nothing

unconscionable about their agreed exchange of the Nine Properties for $850,000.

The Third Circuit has confirmed that various contracts support specific

performance. Western Union Tel. Co. v. Pennsylvania Co., 129 F. 849, 861 (3d

Cir. 1904) (even where agreement did not concern interest in realty, there was “no

reason why the contract, with its modifications . . . should not be recognized in a

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court of equity, as the foundation for a suit for specific performance . . .”). A long

line of consistent authorities have confirmed the availability of specific

performance to achieve an equitable outcome in situations involving real estate

sales and exchanges. See Bigelow v. Armes, 108 U.S. 10, 1 S.Ct. 83, 27 L.Ed. 631

(1882) (one party’s performance under contract for exchange of real estate

supports specific performance); Markowitz v. Northeast Land Co., 906 F.2d 100,

105-06 (3d Cir. 1990) (mere presence of contractual provision for liquidated

damages in real estate sales contract does not prevent party from seeking specific

performance).

Here, although the validity of the Typed 2011 Document is disputed as

unsupported by consideration, there is no dispute that the parties entered into

Contracts in 2009 and 2010 for the purchase of Nine Properties in exchange for

$850,000. However, even in the absence of any enforceable contract, equity

requires that the party receiving the benefit of such an agreement “should not gain

a windfall at the expense of the performing party.” Heritage Visual Sales, Ltd., B-

221226 (Comp. Gen. Feb. 6, 1986), on reconsideration sub nom. Heritage Visual

Sales, Ltd.-Reconsideration, B-221226 (Comp. Gen. July 6, 1987); Bouterie v.

Carre, 6 So.2d 218, 220 (La. App. 1942); Kintz v. Read, 626 P.2d 52, 55 (Wash.

App. 1981).

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The United States Supreme Court long has recognized the importance of

equitably enforcing real estate contracts under which one party has performed.

Whitney v. Hay, 181 U.S. 77, 90-91, 21 S.Ct. 537, 542, 45 L.Ed. 758 (1901).

Virgin Islands authorities have similarly concluded that part performance supports

equitable ownership of real property titled in another’s name.

Virgin Islands law establishes that a buyer is entitled to specific performance

of contracts for the sale of land if he has substantially performed in situations

where, as here, the Buyer did not materially breach the parties’ Contract, using an

illustration held to be “particularly instructive,” which is equally illuminating here:

A contracts to sell to B his farm, conveyance and payment to be made on May 1. A tenders a deed on May 1 but B is not then able to pay. B tenders payment on May 10 but A refuses to convey although the delay is not such as would discharge his remaining duties of performance and B sues A for specific performance. Specific performance may properly be granted, conditional on B paying A damages caused by the delay.

Felton v. Elkins, 2004 WL 3048723, 427-28 (D.V.I. Dec. 29, 2004) (No. CIV.

2003-86) (not designated for publication) (seller’s specific performance by

conveying title was appropriate remedy despite buyers’ delay in tendering deposit);

RESTATEMENT (SECOND) OF CONTRACTS § 369.

Here, the Buyer did not breach the parties’ Contract; the only delay in full

and final payment was caused by the Seller’s failure to clear title to the bank’s

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satisfaction. (Appx. 1334 / FFCL 10:1-4, 29:19 B 30:3, 15.) Just as in Felton, the

Seller’s breach of Contract as found by the trial court warrants specific

performance as an appropriate remedy to cure her default.

Equitable principles further warrant specific performance to achieve a just

outcome, particularly where improvements to real property have been made by the

party seeking equitable ownership, without opposition by the legal owner. Matter

of Estate of Pitterson, 40 V.I. 13 (Terr. V.I. Dec. 8, 1998) (doctrine of part

performance supported claim of ownership by party who asserted agreement to

exchange land for uncompensated labor where he had rendered services to

decedent owner, defeating claims by heirs seeking to remove claimant from

decedent’s land).

The Pitterson court concluded, “All that remains to be decided is the portion

of property to be awarded the Claimant.” Pitterson, 40 V.I. at 13. Here, such

determination should be simple and straightforward, where the Buyer already has

paid 80% of the total Purchase Price for, and the Seller has admitted to her ability

to convey 77% of, the Nine Properties under the parties’ Contracts.

VI. CONCLUSION

This Court should reverse the trial court’s findings for the Seller on her

claim for debt and order specific performance in favor of the Buyer of the seven

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lots for which the Seller has title. Judgment for the Seller for a debt arising solely

from a contract she has breached is both erroneous and inequitable.

Furthermore, the lack of consideration and the parties’ years of conduct

establish that the Typed 2011 Document was void as a contract and thus cannot be

used as a basis to impose additional obligations in the form of monthly rental

payments by Mr. Agueda. Finally, even were the court to find the Typed 2011

document a valid contract, at best, the Seller’s debt claim is limited to $125,000.

Mr. Agueda respectfully requests that this Honorable Court reverse the

judgment below and order Specific Performance in the form of the Seller’s

conveyance of title to seven (or 77%) of the Nine Properties in exchange for his

previous payment of 80% of the $850,000 Purchase Price; that, if there is a finding

of a valid 2011 Contract, that the Seller’s debt recovery is limited to a maximum of

$125,000 for rent (and that only in the event that this Honorable Court determines

that the Seller’s pre-existing legal obligation can suffice as consideration for the

Typed 2011 Document); and that both parties be relieved of further obligations

under their Contracts regarding the Nine Properties.

Mr. Agueda respectfully requests such other and further relief, general and

special, at law and in equity, to which he may be entitled.

Respectfully Submitted, Yvette D. Ross-Edwards, P.C.

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Attorney for Appellant Francisco Antonio Agueda Date: December 28, 2020 By: /s/ Yvette Ross Edwards

Yvette D. Ross-Edwards, Esquire Virgin Islands Bar No. 450 The Reuckl Building 3227 Golden Rock, Office #2 Christiansted, Virgin Islands 00820 Telephone: 340-772-4444 yvette@rossedwardspc.com

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VII. CERTIFICATE OF COMPLIANCE

WITH LENGTH LIMITATIONS

I hereby certify that the foregoing Brief complies with the word limitations

set forth in Rule 22(f) of the Virgin Islands Rules of Appellate Procedure limiting

principal briefs to fewer than 7,800 words, exclusive of pages containing the Table

of Contents and the Table of Authorities. Specifically, the Brief contains 6,220

words according to the word count of the word processing system used to prepare

it.

By: /s/ Yvette Ross Edwards Yvette D. Ross-Edwards, Esquire Virgin Islands Bar No. 450 The Reuckl Building 3227 Golden Rock, Office #2 Christiansted, Virgin Islands 00820 Telephone: 340-772-4444 yvette@rossedwardspc.com

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CERTIFICATE OF MEMBERSHIP

Pursuant to Rule 22(l), the undersigned certifies that she is a member of the

bar of the Virgin Islands Supreme Court.

By: /s/ Yvette Ross Edwards Yvette D. Ross-Edwards, Esquire Virgin Islands Bar No. 450 The Reuckl Building 3227 Golden Rock, Office #2 Christiansted, Virgin Islands 00820 Telephone: 340-772-4444 yvette@rossedwardspc.com

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CERTIFICATE OF SERVICE

I hereby certify that on December 28, 2020, I caused a true and correct copy

of the foregoing to be served by email and delivered to the Superior Court Box of:

Martial A. Webster, Sr., Esquire 116 Queen Cross Street Frederiksted, Virgin Islands 00840 attywebster@hotmail.com Attorney for Appellee Rosalina Marcano

By: /s/ Yvette Ross Edwards Yvette D. Ross-Edwards, Esquire Virgin Islands Bar No. 450 The Reuckl Building 3227 Golden Rock, Office #2 Christiansted, Virgin Islands 00820 Telephone: 340-772-4444 yvette@rossedwardspc.com