Robert Addie v. Christian Kjaer

Citations: 65 V.I. 445; 836 F.3d 251Docket: 14-4265

Court: Court of Appeals for the Third Circuit; September 7, 2016; Federal Appellate Court

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The case involves appeals related to a failed real estate transaction concerning a small island in the U.S. Virgin Islands, originally contemplated by Robert Addie, Jorge Perez, and Jason Taylor as buyers, and Christian Kjaer and his family as sellers. The buyers entered into contracts requiring a total payment of $23.5 million, including a $1 million nonrefundable deposit and an additional $500,000 for an extension. After failing to complete the purchase, the buyers sought a refund of their deposits, leading to a lawsuit against the sellers and their attorney, Kevin D’Amour, who also owned the escrow company. 

The district court granted summary judgment in favor of the buyers on a conversion claim against D’Amour for $500,000. The jury awarded Taylor $1.5 million in contract damages and $46,000 for fraudulent misrepresentation by D’Amour. Conversely, the sellers were awarded $339,516.76 from Addie and Perez for misrepresentation of their purchasing ability, but this was overturned by the district court based on the gist of the action doctrine, which barred the tort claims. 

Ultimately, the district court also reduced Taylor’s damages award to zero, concluding that all parties had breached the contracts, while upholding the fraudulent misrepresentation verdict against D’Amour. The appellate court affirmed the application of the gist of the action doctrine, upheld the judgment for Addie and Perez, and reversed the summary judgment against D’Amour along with the jury verdict against him. The appeals primarily focus on issues of prejudgment and postjudgment interest and attorney's fees.

The buyers and sellers failed to perform under their contracts, leading the district court to deny all breach of contract damages. However, Taylor was awarded $1,500,000 in restitution from the sellers. On remand, the district court awarded prejudgment interest at a reduced rate of 3 percent, reasoning that a statutory 9 percent would constitute a windfall. The court awarded actual interest earned on funds held in its registry during a specific period and concluded that postjudgment interest should commence from the date of the remand judgment, not the original judgment date. Taylor was denied attorney’s fees due to limited prevailing claims, while D’Amour was also denied fees based on his fraudulent conduct. Appeals from Taylor, the sellers, and D’Amour led to five issues, primarily concerning the appropriateness of the prejudgment interest awarded. The court determined that the 9 percent interest mandated by the Virgin Islands statute was applicable and that the district court’s discretion in adjusting the rate was improperly exercised. The statute's mandatory language and precedent from similar statutes in other jurisdictions support that the 9 percent rate should have been applied without discretion.

New York law mandates recovery of interest on sums awarded for breaches of contract or property interference, with the discretion to determine interest in equitable actions. In breach of contract cases, prejudgment interest is required. The Virgin Islands case, Rasmussen v. Dalmida, which the district court cited for its discretion in awarding prejudgment interest, relied on inappropriate authority. The sellers argued that recovery for restitution, rather than breach of contract, justified the district court's variance from the statutory interest rate. However, the court affirmed that a 9 percent prejudgment interest rate is required by Virgin Islands law, rejecting concerns that it would constitute a windfall. Regarding interest on funds held in the district court registry from April 14, 2010, to November 7, 2011, the court ruled that Taylor should receive only the actual interest earned during that period, which Taylor contested. The district court's determination of when postjudgment interest begins was also debated. Sellers contended it should start from the original judgment on August 14, 2009, while Taylor argued for a start date of April 3, 2014, after remand. The court’s review of these determinations is plenary, guided by analogous federal statutes. The jury awarded Taylor $1,546,000 for breach of contract, later remitted to $1,500,000 by the district court. Sellers’ attempts to alter the judgment were based on Taylor's alleged failure to perform.

On March 1, 2011, the court amended a judgment, reducing it from $1,500,000 to $0. In the first appeal, it was determined that neither Taylor nor the sellers could recover for breach of contract, but Taylor was entitled to restitution of the $1,500,000 deposit. Subsequently, on April 3, 2014, the district court ordered the sellers to return the deposit and entered a judgment for that amount. The sellers contended that damages were established at the time of the August 2009 judgment, asserting the known amount of Taylor’s deposit. However, this argument was rejected; the court ruled that postjudgment interest begins from the April 3, 2014 judgment date, as that was when liability and damages were definitively determined.

The Virgin Islands Code allows for the award of attorney’s fees to the prevailing party, with the district court having discretion over the award, which can only be overturned for clear abuse of discretion. The determination of a prevailing party under the statute is a legal question subject to plenary review. Taylor claimed that the district court mistakenly found him not to be a prevailing party and sought a reversal and remand for proper discretion exercise. The district court clarified that it recognized Taylor as a prevailing party on one claim—unjust enrichment—but chose not to award fees due to his failure on most claims. The court considered the complexity of the case and the intertwined breaches by both parties, which justified its decision to deny attorney’s fees to Taylor.

D’Amour also appealed the denial of his attorney’s fees motion. The district court evaluated D’Amour’s conduct, noting his liability for conversion and the jury's finding of fraud. Although the initial appeal had barred these claims under the gist of the action doctrine, the district court on remand found D’Amour’s conduct against him in the attorney’s fees consideration. D’Amour argued that the court improperly relied on jury findings from legally barred claims, but this argument was not persuasive. The district court did not abuse its discretion in considering D’Amour’s conduct.

The judgment was affirmed in all respects except for the award of prejudgment interest, which was reversed and remanded due to the incorrect interest rate applied, differing from the statutorily mandated 9 percent.