Government of V.I. v. 0.459 Acres of Land

• Decision Date: 24 September 2003
• Docket Number: No. CIV. 855/1992.,No. CIV.A.1999/064.,CIV.A.1999/064.,CIV. 855/1992.
• Citation: 286 F.Supp.2d 501
• Parties: GOVERNMENT OF THE VIRGIN ISLANDS, Appellant, v. 0.459 ACRES OF LAND CONSISTING OF THE FOLLOWING: PARCEL NO. 6A ESTATE THOMAS KINGS QUARTER AND PARCEL NO. 9A, ESTATE THOMAS, VIRGIN ISLANDS and the Long Bay Trust, Appellees, v. Leo Francis, as Commissioner of the Department of Public Works and Delma Hodge, as Commissioner of the Department of Property and Procurement of the Government of the Virgin Islands. Third Party Appellants.
• Court: U.S. District Court — Virgin Islands

286 F.Supp.2d 501

GOVERNMENT OF THE VIRGIN ISLANDS, Appellant, v. 0.459 ACRES OF LAND CONSISTING OF THE FOLLOWING: PARCEL NO. 6A ESTATE THOMAS KINGS QUARTER AND PARCEL NO. 9A, ESTATE THOMAS, VIRGIN ISLANDS and the Long Bay Trust, Appellees, v. Leo Francis, as Commissioner of the Department of Public Works and Delma Hodge, as Commissioner of the Department of Property and Procurement of the Government of the Virgin Islands. Third Party Appellants.

No. CIV.A.1999/064.

No. CIV. 855/1992.

District Court, Virgin Islands, Appellate Division, D. St. Thomas.

September 24, 2003.

COPYRIGHT MATERIAL OMITTED

Robert W. Bornholt, AAG, for Appellant.

Ireston E. Moore, Esq., Morris M. Goldings, Esq., Ellen S. Shapiro, Esq., for Appellees.

Before: RAYMOND L. FINCH, Chief Judge, District Court of the Virgin Islands, THOMAS K. MOORE, Judge of the District Court of the Virgin Islands, and DARYL DEAN DONOHUE, Judge of the Territorial Court, Sitting by Designation.¹

OPINION OF THE COURT

PER CURIAM.

The Government of the Virgin islands ("appellant", "Government") appeals the Territorial Court's confirmation of an arbitration award in this condemnation action. Appellant raises a singular issue on appeal: Whether an assistant attorney general has the legal authority to agree to and engage in binding arbitration to determine the amount of compensation to be awarded a property owner. Answering that question requires consideration of several submissues, which the parties present, including: 1) whether estoppel applies to bar the Government from questioning the validity of the arbitration process here; 2) whether arbitration is permissible to resolve disputes under the eminent domain statute, during the course of litigation, and; 3) whether the arbitration agreement in advance of a specific legislative appropriation to pay the award was statutorily barred, in light of the statutory requirements for the formation of government contracts.

For the reasons which follow, this Court will affirm the Territorial Court's confirmation of the arbitration award, there being no statutory impediment to enforcement of the agreement to arbitrate.

I. STATEMENT OF FACTS AND PROCEDURAL POSTURE

The statement of facts are adopted largely from the Third Circuit's memorandum opinion in Brown v. Francis, 75 F.3d 860 (3d Cir.1996), [Appendix ("App.") at 121-29], and from the current record.

Sometime prior to 1989, Milead Associates owned commercial property at Parcels 6 and 9, in Estate Thomas, Kings Quarter, St. Thomas consisting of 2.64 U.S. acres. During that time, the Government commenced negotiations in an attempt to acquire the property by eminent domain to develop a federally-funded highway project in Long Bay ("the Long Bay project"). However, before completion of those negotiations, the property was sold to Jolie Stahl and Barry Brown ("appellees", "cotrustees"), as co-trustees of the Long Bay Trust, for $3.25 million.

The co-trustees subsequently filed an action for inverse condemnation in the District Court of the Virgin Islands, pursuant to title 28 section 436 of the V.I.Code, claiming the government had effected a de facto taking of their property through its approval of plans for a highway affecting that property. The Government filed a motion to dismiss below based on lack of jurisdiction. That motion was denied with prejudice. Subsequently, the Government filed an eminent domain action in the Territorial Court, pursuant to title 28, section 411 et.seq. of the Virgin Islands Code. That complaint included a declaration of taking, filed by the governor of the Virgin Islands, estimating the amount anticipated to be paid for the property at $1.2 million. [App. at 3-6]. The estimated amount was deposited with the Territorial Court. [Id.]. An order vesting title in the property to the government was entered by the Territorial Court on September 1, 1992. [App. at 18-20]. Thereafter, the co-trustees sought removal of the condemnation claim to the District Court, based on diversity of citizenship, and removal was granted over the government's objections. The District Court denied a motion to dismiss by the government, in which it asserted the court lacked subject matter jurisdiction. Just prior to a scheduled trial, the parties entered into a written joint stipulation to refer the dispute to binding arbitration, and also agreed that a court judgment would be entered on any award issued. [App. at 80].² That agreement was approved by the Court. Pursuant to that agreement, an arbitration hearing was held on October 5-6, 1994. The Government participated in those proceedings. The arbitrator issued an award of $2.89 million on October 24, 1994. [App. at 83-89].

By letter dated December 6, 1994, almost two months following that award, the then-Public Works commissioner wrote to the Attorney General of the Virgin Islands, apparently in response to an earlier inquiry, advising her that the federal government would not contribute to the arbitration award for any amounts in excess of $1.6 million. [App. at 98]. On December 7, 1994, the Government filed its motion to dismiss the award, asserting mistake, lack of authority to enter into such an agreement, and inapplicability of the Federal Arbitration Act ("FAA"). [App. at 90-93]. The co-trustees opposed the government's motion and filed a Motion to Confirm the award. The District Court (Moore, J.) subsequently confirmed the arbitrator's award on the co-trustees' motion, rejecting the Government's argument that the contract should be voided based on mutual mistake.

The government filed an appeal to the Third Circuit Court of Appeals, in Brown v. Francis, cited supra, challenging the court's confirmation of the arbitration award and removal to federal court based on diversity of citizenship. The Third Circuit concluded that removal was improper, holding the Territorial Court was the proper forum to consider that claim, as the Government was not deemed a "citizen" for the purpose of establishing diversity of citizenship. See, Brown, 75 F.3d at 865. Accordingly, that court vacated the District Court's order confirming the arbitration award and remanded the case to the District Court for a determination of the inverse condemnation claim, while remanding the eminent domain claim to the Territorial Court. Id.

Following remand, the Territorial Court, after a hearing on the matter, entered a memorandum opinion and order confirming the arbitration award, thereby rejecting the Government's argument that its attorney general lacked authority to agree to arbitration. (App. at 234-54). The Government now appeals from that order.

II. DISCUSSION

A. Jurisdiction and Standard of Review

This Court has jurisdiction to review final judgments and orders of the Territorial Court in civil cases. See, VIRGIN ISLANDS CODE ANN. tit. 4, § 33(1997). Because the issues on appeal present questions of law and statutory interpretation, our review is plenary. See, STEVEN A. CHILDRESS AND MARTHA S. DAVIS, FEDERAL STANDARDS OF REVIEW § 4.8-4.12 (3d ed.1999); see, also, Coastal Gen. Const. Services, Inc. v. Virgin Islands Housing Auth., 238 F.Supp.2d 707, 708-09 (D.Virgin Islands 2002); Bowen v. Amoco Pipeline Co., 254 F.3d 925, 931 (10th Cir.2001) (reviewing motion to vacate arbitration award).

B. Enforceability of the Arbitration Agreement

The Government argues generally that the arbitration award is unenforceable as a matter of law and cites three primary grounds in support of that result: 1) the attorney general who signed the arbitration agreement lacked contracting authority; 2) the stipulation entered into by the government to submit the issue to arbitration is void ab initio for failure to adhere to the statutory procedures for government contracting, and; 3) the amount of compensation in an eminent domain case is not an arbitrable issue, given the specific procedures established in the applicable statute. Each will be addressed in turn.

1. The Assistant Attorney General's Authority

The Government acknowledges the existence of an agreement to submit the issue of compensation to an arbitrator, but now attempts to repudiate that agreement on grounds, inter alia, the assistant attorney general who signed it lacked authority to enter into a contract on the Government's behalf.³

As an agent for his client, an attorney may freely enter into agreements regarding procedural aspects of the case, but may enter into agreements substantially impacting on the principal's case only to the extent he has the actual authority to do so. See, e.g., RESTATEMENT (SECOND) OF AGENCY §§ 50, 7, comment c(1958). Actual authority may be express or implied from the conduct of the principal, the circumstances of the case, or the nature of the transaction as one customarily associated with the underlying acts which were expressly authorized. Id. at §§ 35,50. Such authority may also be reasonably "implied by words, deeds, custom, acquiescence, and other circumstances," or where the acts committed are considered to be "an integral part of the duties assigned to a Government employee." H. Landau & Co. v. United States, 886 F.2d 322, 324 (Fed. Cir.1989) (remanding for determination of whether government employee acted with implied authority) (citing J. Cibinic & R. Nash, Formation of Government Contracts 43 (1982); United States v. Bissett-Berman Corp., 481 F.2d 764, 768-69 (9th Cir.1973) (holding the government's attorney had the implicit authority to bind the government in matters related to the litigation, despite the absence of express authority for the specific transaction)); see, also, RESTATEMENT at §§ 7, 35.

In the Virgin Islands, an assistant attorney general is authorized to "appear for and represent the government" in civil proceedings, by virtue of title 3, section 114(a)(1) of the Virgin Islands Code. That authority extends to representation "before all administrative tribunals or bodies of any nature, in all legal or quasi-legal...