in the supreme court of the virgin islands of the … · n.a., 308 f.supp.2d 545, 568 (d.c.v.i....
TRANSCRIPT
IN THE SUPREME COURT OF THE VIRGIN ISLANDS OF THE UNITED STATES
JAHLEEJAH LOVE PEACE d/b/a ) NATURAL LIVITY KULCHA SHOP ) & JUICE BAR, ) ) Plaintiff/Appellant, ) S. Ct. Civ. No. 2019-0057
) Super. Ct. ST- 15 - CV- 047 . ) ) BANCO POPULAR de PUERTO RICO ) ) Defendant/Appellee. ) _______________________________ )
APPEAL FROM THE SUPERIOR COURT OF THE VIRGIN ISLANDS
APPELLANTS’ BRIEF
June 15, 2020 Respectfully submitted,
THE RUSSELL LAW FIRM, LLP
By: /s/ Ronald E. Russell Ronald E. Russell, Esquire
Counsel for Plaintiff/appellant P.O. Box 3259 Kingshill, VI 00851 Tel: (340) 692-00832 Fax: (844) 272-0308 Email: [email protected]
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TABLE OF CONTENTS
Table of Authorities……………………………………………. 3 Statement of Subject Matter Jurisdiction……………………. 5 Standard of Review…………………………………………… 5 Statement of Related Cases and Proceedings…………….. 5 Statement of Issues…………………………………………… 5 Statement of the Case……………………………………….. 6 Statement of Facts…………………………………………… 7 Issues
I. The Court Erred in Finding No Misrepresentation By the Bank.………………………………. 12
II. The Court Erred in finding that Appellant Failed
to Establish that the Bank Interfered With Appellant’s Business Relations……………… 17
Conclusion……………………………………………………… 20 Certificate of Bar Membership……………………………….. 22 Certificate of Word Count……………………………………. 22 Certificate of Service…………………………………………. 23
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TABLE OF AUTHORITIES Cases
Barnett Bank of West Florida v. Hooper, 498 So. 2d 923 (Supreme Ct. Fl. 1986)……………………………. 13
Capital Bank v. Mvb, 644 So. 2d 515 (Fla. 1994)…………………. 13
Charleswell v. Chase Manhattan Bank, N.A., 308 F.Supp.2d 545, 568 (D.C.V.I. 2004)…………………………….. 12
Donastorg v. Daily News Publishing Co., Inc., 2015 V.I. LEXIS 105, *127 (V.I. Super. Ct. 2015)…………………. 17 Financial Trust Co., Inc. v. Citibank, N.A., 268 F.Supp. 2d 561(D.C.V.I. 2003)………………………………… 13
Haines v. Liggett Group, Inc., 975 F.2d 81(3d Cir.1992)………….. 19
Inter Medical Supplies, Ltd. v. EBI Medical Systems, Inc., 181 F.3d 446 (1999)…………………………………………………. 18
Preiss v. R.D. Severe & Baker’s Inc., 1985 V.I. LEXIS 43, *8 (Terr.Ct. Aug. 16, 1985)…………………………………………….. 18
Richfield Bank & Trust Co v. Sjogren, 244 N.W.2d 648 (Minn. 1976)………………………………………. 13
Rivera-Moreno v. Government of the Virgin Islands, 61 V.I. 279 (V.I. 2014)………………………………………………………… 4 St. Croix Renaissance Group, LLLP v. St. Croix Alumina, LLC, 2011 LEXIS 58481 (D.C.V.I. May 31, 2011………………………. 18 St. Thomas–St. John Bd. of Elections v. Daniel, 49 V.I. 322, 329 (V.I.2007)…………………………………………. 4
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V.I. Port Authority v, Callwood, 2014 V.I. LEXIS 11, *17-21 (Super. Ct. Feb. 28, 28 2014)………………………………………. 18 Watts v. Blake-Coleman, 2012 W.L. 1080323 (Super. Ct. 3/12/2012)………………………………………………. 13 STATUTES Title 4, V.I. Code section 32(a)…………………………………… 4 Restatement (Second) of Torts § 552………………………………. 12
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STATEMENT OF SUBJECT MATTER AND APPELLATE JURISDICTION
Title 4, section 32(a) of the Virgin Islands Code provides that “[t]he
Supreme Court shall have jurisdiction over all appeals arising from final
judgments, final decrees or final orders of the Superior Court, or as
otherwise provided by law.” Rivera-Moreno v. Government of the Virgin
Islands, 61 V.I. 279, 292-293 (V.I. 2014).
STATEMENT OF STANDARD OF REVIEW
The Supreme Court’s review of the trial court’s application of law is
de novo and findings of fact are reviewed for clear error. See St. Thomas–
St. John Bd. of Elections v. Daniel, 49 V.I. 322, 329 (V.I.2007).
STATEMENT OF RELATED CASES AND PROCEEDINGS
There are no related cases and proceedings.
STATEMENT OF ISSUE(S) PRESENTED FOR REVIEW
I. Whether the trial judge erred in finding that there was no misrepresentation by the bank
II. Whether the Court Erred in Finding That Appellant Failed to Establish That the Bank interfered with Appellant’s Business Relations
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STATEMENT OF THE CASE
Appellant filed the instant complaint on January 30, 2015, alleging
claims of negligent misrepresentation, fraud, and breach of contract against
Banco Popular. Appellee Bank moved for summary judgment on May 19,
2016, and Appellant filed its opposition on June 27, 2016. On December
13, 2016, the Court denied summary judgment on the claims of breach of
contract and misrepresentation.
A bench trial was held on March 22, 2018, after which the parties
submitted written closing arguments and proposed findings of fact and
conclusions of law to the Court. The Court entered judgment on May 29,
2019 in a Judgment and Order dated May 23, 2019. The Court made
findings of fact and drew conclusions of law against Jahleejah Love Peace
and Natural Livity Kulcha Shop and Juice Bar, LLC, on all counts of the
Complaint and entered judgment in the amount of S49,1 00.87, together
with post judgment and prejudgment interest.
Appellant filed this timely appeal on June 28, 2019.
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STATEMENT OF THE FACTS
This case arose out of the failure of Appellant’s thriving business
caused by the actions of Appellee Banco Popular de Puerto
Rico. Appellant was a humble up and coming business owner on St.
Thomas elling Afrocentric clothing, soaps, incense, oils, souvenirs, and
cultural items across from the small court on St. Thomas. Vol. II App.
126.
In 2004 plaintiff’s business grossed about $30,000.00 to
$40,000.00. Id. at 127. By 2010 plaintiff had established a permanent
location on Main Street St. Thomas (No. 9 Norre Gade). Id. at 129. Plaintiff
opened an ideal business account with the bank, with a checking account
and obtained a Visa Debit/Credit Card. Id. at 133 - 137. Plaintiff entered
into a 5-year lease with Stanley Parsons for the property at $2,500.00 per
month (No. 9 Norre Gade). Id. at 129. At her permanent location, plaintiff
had 5 to 7 employees in two (2) sections of her business: a restaurant and
deli selling food, specializing in vegan food and drink, and the Kulcha Shop
selling natural cosmetic and hair products, incense, clothing, books and
souvenirs. Id. at 130-131.
That was Appellant’s initial financing. Appellant also had a savings
and checking account with the bank. Vol. II App. 137. In 2010, When
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Plaintiff opened her businesses on main street in St. Thomas she
advertised in the Virgin Islands Daily News, on Facebook, Yelp, Twitter and
Trip Advisor; plaintiff had big tourist support. Id. at 131. By the end of 2010,
plaintiff was grossing more than $200,000.00 in sales. Id. at 131-
132. Appellant had contracts with vendors in New York for clothing and
merchandise, such as Steel Pulse Supplies and African World Books, and
contracts with Merchant’s Market for food and Produce. Id. at 141 & 142.
In 2012 and 2013 Appellant applied for financing to expand her
growing business. Id. at 142. Appellant and her accountant created a
business plan projecting a 300% increase in revenue based on the her
gross income and the proposed expansion to the business. Id. at
103. Both loans were denied.
Desperate to take advantage of the high volume sales caused by St.
Thomas Carnival, Appellant reached out to the bank. Vol. III App. 570,
572. She was advised by Bank employee Sterling Knight to apply for an
increase in her current credit card because it allowed credit up to
$50,000.00. Vol. III App. 619. Appellant followed his advice and applied
for an increase up to the $50,000.00 limit. That was in October 2013. Vol.
II App. 139, 154, 157; Exh. 25.
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When Appellant did not hear from the bank, and with carnival
approaching, she complained to the Consumer Center. Vol. II App.
196. Soon thereafter, she was called by the bank employee and informed
that her request for additional credit was approved. Vol. III App.
591. However, the credit increase did not show up on her card.
The bank finally called Appellant in early April and instructed her to
come into the bank to sign some documents. Vol. II App. 161, 178; 395-
396. Appellant was confused as to why she should sign documents for an
increase in her credit card limit and asked Sterling Knight about it. He
responded that this was “normal procedure”. Vol. II App. 172,
181. Unknown to Appellant, the Bank had instructed Knight to offer
Appellant a secured loan rather than an increase in her credit card
limit. Vol. II App. 398- 401. A visa revolving credit card is different from a
line of credit. Vol III App 595; Vol. III App 619, 620.
Sterling Knight had prepared all of the documents for the transaction
including a Corporate Resolution on behalf of her business and he directed
her to sign it. Vol. II App. 397, 416; Vol III 574-575, 576-577. Appellant
did not realize that the documents were for a secured line of credit rather
than an unsecured line of credit associated with her credit card. Vol. III
App. 583. The end result was that Appellant signed up for a secured
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business loan which placed a lien on her entire inventory. Vol II App.
400.
Additionally, Appellant was not told that a fee of $825.00 would be
assessed for the application. Vol II App. 171-172. She called the St
Thomas and Puerto Rico branches to inquire about the $825.00 fee. Vol II
App. 171, 176, 191, 230, 233; Vol. III App 583; Vol II App.175 - 176. She
was told then that no fee was necessary. Vol II p. 94, 113; Vol III App
583. Banco Popular’s corporate office contacted Monique Richards and
asked her to investigate why Appellant was charged a $825 fee for a credit
card limit increase. The fee was refunded to Appellant’s account after the
bank acknowledged that it had not been properly disclosed to
Appellant. Vol II App. 325, 359; Vol III App 584.
Unaware of the nature of the transaction, and still needing additional
financing, Appellant applied for a loan from the Economic Development
Authority [EDA]. Vol III App 636; Exh. 16. The EDA denied the loan and
the reason given was the lien placed by the Bank. Vol II App. 212. That
was Appellant’s first notice of the lien. Vol III App. 636. Appellant
immediately contacted the bank inquiring as to the origin of the lien. She
was told that the lien was legal. Eventually, the EDA approved the loan to
Appellant. Vol III App. 481 - 491. However, the funds disbursed by EDA
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were depleted by payments of outstanding debts totalling the amount of
the loan. Vol III App. 640; Vol II App. 209 - 210. Plaintiff was unable to
repay the EDA loan and defaulted on payment to her vendors. Vol III App.
643; Vol III App. 573.
Unable to survive the debt, Appellant was forced to close her
business in 2015. Vol II App. 214. Banco Popular is responsible for the
failure of Appellant’s business.
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I. THE TRIAL JUDGE ERRED IN FINDING NO MISREPRESENTATION ON THE PART OF THE BANK
Sterling Knight’s admission that he was ordered by Ian Smith to
change the nature of the transaction from an increase of a personal line of
credit which is unsecured, to a secured line of credit secured with a UCC
lien without informing Appellant is a clear case of misrepresentation. To
prevail on a claim for Misrepresentation in the Virgin Islands, Plaintiff must
allege and prove facts demonstrating (I) misrepresentation of fact, opinion,
intention or law; (2) knowledge by the maker of the misrepresentation that it
was false; (3) ignorance of the falsity by the person to whom it was made;
(4) an intention that the representations should be acted upon; and (5)
detrimental and justifiable reliance. Charleswell v. Chase Manhattan Bank,
N.A., 308 F.Supp.2d 545, 568 (D.C.V.I. 2004)(citing Restatement (Second)
of Torts § 552).
The evidence presented at trial clearly established a violation and the
Court erred in finding otherwise.
The Court erred in finding that Appellant failed to establish a
“misstatement” on the part of Appellee bank. The Court erred in ignoring
the overwhelming evidence that Appellant was not informed that her
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request for an increase in her credit card limit had been changed to a
secured line of credit.
When a bank knows, or has reason to know that a customer is
placing trust and confidence in the bank and is relying on the bank to
counsel and inform him, the bank is held liable if it fails to disclose a
material fact. Barnett Bank of West Florida v. Hooper, 498 So. 2d 923, 925
(Supreme Ct. Fl. 1986); Richfield Bank & Trust Co v. Sjogren, 244 N.W.2d
648, 650-51 (Minn. 1976); Capital Bank v. Mvb, 644 So. 2d 515 (Fla. 1994);
Financial Trust Co., Inc. v. Citibank, N.A., 268 F.Supp. 2d 561(D.C.V.I.
2003): Watts v. Blake-Coleman, 2012 W.L. 1080323 (Super. Ct.
3/12/2012).
Appellant had been a customer of the bank for at least eight years;
Appellant was the holder of a credit card issued by the bank; an employee
of the bank advised Appellant to request an increase in her credit limit after
she was denied a business loan; the loan the bank offered was different
from the one she requested; and Appellant was not informed of the
difference.
The testimony at trial was that Appellant had been banking with
defendant bank since the inception of her business in 2002. They knew
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her finances because she had a savings account, a checking account, a
credit card, and had applied for a loan from the bank in 2010 and 2012.
During the entire process the bank communicated with Appellant regarding
the inner workings of her business.
Appellant requested an increase in the credit limit on the unsecured
credit card issued by the bank after her loan applications were denied in
2010 and 2012. The bank employee admitted that an increase in a credit
card limit does not require collateral. It was Daren Brown, an employee of
the bank, who suggested that Appellant request an increase in her credit
card limit after the business loans were denied. Based on Brown’s advice,
Appellant applied for the credit card increase.
Sterling Knight, a bank employee at the time, testified that he was
directed by the bank to draft documents offering Appellant a business line
of credit. This facility differed from an increase in credit card limit in that it
had to be secured by Appellant’s inventory. However, Sterling Knight
confirmed that Appellant was not informed of the difference.
Appellant testified that she was directed to come to the bank to sign
documents. At the bank there was no discussion regarding the imposition
of the lien and Appellant was under the impression that she was simply
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receiving approval for an increase in her revolving credit limit. In fact
Appellant questioned why she was signing documents for an increase in
her credit card limit. Knight responded that the procedure was routine
although it was not.
Appellant trusted the bank to inform her of the difference and was
unaware that such a lien was included in the documents. Also, unknown to
her, the Bank charged her a fee of $800 which had to be refunded because
the Bank acknowledged that the fee had not been disclosed to Appellant.
The evidence established that the bank was familiar with Appellant’s
financial condition by virtue of doing her banking for several years including
managing her accounts and processing her loan applications and credit
card. The bank’s employee was the one who suggested Appellant apply
for an increase in her credit limit when she was denied a loan. Sterling
Knight called Appellant a few days before April 2, 2014 to let her know the
bank was going to approve the increase. Therefore, the bank had every
reason to inform Appellant as to the exact nature of the facility it was
offering and the effect it would have on her business.
Jose Escalera, Vice President and Manager of Commercial Credit
Center, testified that an increase in credit card limit does not require the
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imposition of a lien. He also testified that the bank was required to notify
Appellant and obtain her consent prior to imposing the UCC lien. Appellant
did not give her consent because she was not notified.
Appellant relied on the bank’s expertise and signed the loan
documents. Because the bank failed to make Appellant aware of this
material term prior to signing the loan documents, the bank’s failure to
disclose the material fact of the nature of the loan and the UCC lien
constituted misrepresentation of a material fact. The bank’s failure to
advise Appellant of the true nature of the loan constitutes a material
misstatement and the Court erred in finding otherwise.
The end result was that Appellant’s business was severely affected.
She was unable to secure much needed additional credit and financing that
she needed to continue her business. Eventually, her business failed. The
failure of Appellant's business caused Appellant $2,778,500.00 in
damages.
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II. THE TRIAL COURT ERRED IN FINDING THAT APPELLEE FAILED TO ESTABLISH THAT THE BANK’S ACTIONS INTERFERED WITH HER BUSINESS RELATIONS
The Court erred in finding no interference to Appellant’s business
relations caused by the bank’s actions. To prevail on a claim of
intentional interference with business relations Appellant needed to prove
1) the existence of a contract between the plaintiff and a third party; 2) that
the defendant knew of the contract; 3) that the defendant interfered with the
contract using improper means or with an improper motive; and 4) that the
plaintiff was damaged as a result. Donastorg v. Daily News Publishing Co.,
Inc., 2015 V.I. LEXIS 105, *127 (V.I. Super. Ct. 2015). A cause of action
for intentional interference with prospective business relations protects an
individual's right to develop networks and relationships and generally
conduct business without fear that their efforts will be unlawfully
undermined by competitors. Id. at *282.
First, the Court erroneously characterized Appellant’s argument as
referring to Appellant’s relationship with the EDA. The evidence at trial was
that bank knew that the Appellant was party to business contracts to
suppliers and vendors through Appellant’s submissions to the bank as part
of her applications. The bank improperly interfered with those relations by
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imposing a lien on all of Appellant’s inventory which, the bank knew, would
prevent her from obtaining additional credit. The lien caused Appellant to
default on her existing loans and vendor payments. As a result, between
2014, when she requested relief from the lien because it was interfering
with her obtaining additional credit, and March of 2015 when she received
a loan from the EDA, Appellant’s business suffered severe financial loss.
During that time, Appellant incurred debts that equalled the amount of the
EDA loan, leaving no funds to invest in the business. As a result, Appellant
was unable to repay the EDA loan and was forced to close her business.
There is a direct link between the bank’s actions and the demise of
Appellant’s business. Damages under a claim of misrepresentation are
measured by out of pocket expenses, recision, or benefit of the bargain.
V.I. Port Authority v, Callwood, 2014 V.I. LEXIS 11, *17-21 (Super. Ct. Feb.
28, 28 2014); Preiss v. R.D. Severe & Baker’s Inc., 1985 V.I. LEXIS 43, *8
(Terr.Ct. Aug. 16, 1985); Inter Medical Supplies, Ltd. v. EBI Medical
Systems, Inc., 181 F.3d 446 (1999); St. Croix Renaissance Group, LLLP v.
St. Croix Alumina, LLC, 2011 LEXIS 58481 (D.C.V.I. May 31, 2011.
The failure of Appellant's business caused Appellant $2,778,500.00
in damages. The evidence presented at trial was as follows:
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Gross income in 2014 $191,000
Times rate of growth (3 yrs, 6 mos)$2,005,500
Amount owed to EDA $50,000
Total $2,778,500
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CONCLUSION
The Court’s errors require reversal of the Judgment entered in this
matter. The appellate court accepts the factual determination of the fact
finder unless that determination ‘either (1) is completely devoid of minimum
evidentiary support displaying some hue of credibility, or (2) bears no
rational relationship to the supportive evidentiary data.’ “ Haines v. Liggett
Group, Inc., 975 F.2d 81, 91–92 (3d Cir.1992) (citations omitted).
The Court erred in finding that there was no misstatement by the
bank. However, the evidence adduced at trial was that the bank changed
the credit facility offered to Appellant from an unsecured line of credit to a
secured line of credit without notifying Appellant. This was a material
omission. The difference was that a lien was placed on Appellant’s
inventory without her knowledge.
The lien hampered Appellant’s ability to secure financing for her
business. As a result, she was unable to pay her vendors and her
business failed.
The evidence was sufficient to prove misrepresentation and
interference with business relations and the Court erred in finding
otherwise.
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For all the reasons as more fully described in the foregoing analysis,
Appellant prays that this Court reverse the Opinion of the Superior Court
and remand the matter with instructions for the trial court to vacate the
Judgment, and award Appellant the damages proven at trial.
Date: June 15, 2020 Respectfully submitted,
/s/ Ronald E. Russell
Ronald E. Russell Esq. V.I. Bar No. 86 P.O. Box 3259 St. Croix, VI 00851 (340) 690 - 0832 (cell) (800) 772 - 0376 (fax)
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CERTIFICATE OF BAR MEMBERSHIP The undersigned hereby certifies and affirms pursuant to Rule 22(l) of
the Rules of the Supreme Court of the Virgin Islands that the undersigned
is a member in good standing of the United States Virgin Islands Bar and
the Bar of the Supreme Court of the Virgin Islands.
By: /s/ Ronald E. Russell
CERTIFICATE OF WORD COUNT The undersigned hereby certifies and affirms that the instant brief
does not exceed 7,800 words.
/s/ Ronald E. Russell, Esq.
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CERTIFICATE OF SERVICE
I DO HEREBY CERTIFY that on June 15, 2020, I caused the
foregoing Appellant's Brief o to be delivered via the Supreme Court
Electronic Filing System (“VISCEFS”), which will deliver a copy of the same
to the following:
Veronica J. Handy Clerk of the Court Supreme Court of the Virgin Islands PO Box 590 Charlotte Amalie St. Thomas, US Virgin Islands 00804 Alex Muskovitz, Esq. Law House P.O. Box 756 St. Thomas, VI 00804 [email protected] By: /s/ Ronald E. Russell
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