Agueda v. Marcano

For Publication [N THE SUPREME COURT OF THE VIRGIN ISLANDS FRANCISCO ANTONIO AGUEDA a/k/a ) S Ct Civ No 2020 0030 FRANCISCO AGUEDA ) Re Super Ct Cw No 375 2014(STX) Appellant/Defendant ) ) v ) ) ROSALINA MARCANO a/k/a ROSALINA M ) CLAUDIO ) Appellee/Plaintiff ) )

On Appeal from the Superior Court of the Virgin Islands Division of St Croix Superior Court Judge Hon Robert A Molloy Argued May 1 l 2021 Filed May 10 2024 Cite as 2024 VI 22 BEFORE RHYS S HODGE ChiefJustice MARIA M CABRET Associate Justice and IVE ARLINGTON SWAN Associate Justice APPEARANCES

Martial A Webster, Sr , Esq Law Office of Martial A Webster, Sr St Croix U S V l Attorneyfor Appellant Yvette D Ross Edwards, Esq ' Law Offices of Yvette D Ross Edwards St Croix U S VI Attorney [01 AppclIee

OPINION OF THE COURT CABRET, Associate J ustice

' Judge Yvette Ross Edwards was elevated to the bench and confirmed as a Judge in the Superior Court of the Virgin Islands, before the tull senate, on June 14, 2023 Judge Ross Edwards was sworn m on August 14 2023 Altomey Kye Walker was substituted as counsel for the Appellee on July 31 2023 Agueda L Marcano 2024 VI 2" S Ct Civ No 2020 0030 Opinion of the Court of 24

1|] Rosalina Marcano (‘ Marcano ) filed suit against Francisco Agueda ( Agueda ) seeking a judgment for debt under a series of land sale contracts Agueda also filed counterclaims against Marcano, alleging breach of contract and breach of the duty of good faith and fair dealing The Supen'or Court entered judgment in favor of Marcano on her debt claim but also found that Agueda prevailed on his counterclaims 2 Both parties separately filed timely appeals, which were consolidated into this single appeal on August 12, 2020 For the reasons discussed below, this Court will reverse the judgment below and remand this matter to the Superior Court to resolve the issue of damages

‘ The Superior ( mm offset Marcano 5 debt claim by Agueda’s eounterclaims ultimately ordering Agueda to pay $283 945 in damages and $31 12 per day in post judgment interest Aguedm Marcano 2024 v122 S Ct Civ No 2020 0030 Opinion of the Court of 24 invitation Agueda also started operating a metal collection business from the Property around this time, although the exact date is unclear 114 Soon, Agueda 8 metal collection business began generating profits and the parties decided to enter into an oral agreement for the sale of the Property Marcano agreed to sell the Property to Agueda for $850 000 with a down payment of $70 000 another payment of $200 000 by December 1, 2010, and the remaining balance of $580,000 to be paid in three years The parties also agreed that Agueda could start repairing the Property and collecting rent from tenants The parties signed a handwritten agreement memorializing the 2009 oral agreement on August 2, 2010 115 From 2009 to early 201 1, Agueda made sporadic payments towards the purchase price but did not remain on a consistent payment schedule The method of payment was inconsistent as well Sometimes Agueda paid Marcano personally with cash or check; sometimes Agueda’s wife, Aracelis Ruiz, would provide payment directly to Marcano s creditors at FirstBank or the Vilhelm Frederiksen Trust; and other times Agueda’s business affiliates in Puerto Rico would give Marcano cash payments Despite these inconsistencies, Marcano accepted payment because of her close personal relationship with Agueda Agueda eventually fell behind on their agreed upon payment schedule, although he was still making large payments towards the purchase price Agueda continued to operate his meta] collection business, maintain the premises, improve the Property, and collect rent from tenants during this time 1[6 In 201 1, Agueda sought legal advice from Attorney Wilfredo Geigel ( Attorney Geigel ’) regarding the 2010 handwritten agreement Attorney Geigel advised Agueda that the 2010 handwritten agreement was ‘ worthless and would be rejected by a court of law Attorney Geigel met with the parties and drafted a new agreement with additional terms (‘ 201 1 Agreement”) The parties signed the 2011 Agreement titled ‘Option to Purchase Contract on April 14, 2011 Ag!“ (Ia \ Mar: mm 2024 VI 22 S Ct Ciw No 2020 0030 Opinion of the Court of 24 however, both Marcano and Agueda testified to being displeased with certain aspects of the contract 3 terms 77 The 201 1 Agreement acknowledged that Agueda had paid $135 000 as a deposit towards the purchase price before its signing and further required him to pay an additional $1 15,000 either before or on the date of its signing The 201 1 Agreement also stated that Agueda would make 36 monthly payments of $16,670 starting on April 1, 201 1; Marcano would receive $5,000 of the monthly rental proceeds collected from the commercial and residential tenants on the Property until the purchase price was paid in full, a $500 late fee would be charged for rental payments made afier the 15th of each month, and Agueda would be responsible for charges relating to the Property from the Virgin Islands Water and Power Authority insurance, maintenance, and garbage collection at $1,215 per month 118 The 2011 Agreement also contained provisions for closing For closing to take place, Agueda was obligated to give Marcano 30 days’ notice of his intention to render final payment in order to allow Marcano to prepare for the closing Marcano had to provide free and clear title and she was responsible for the costs associated with closing Once the final payment was made, either Agueda or Marcano could choose the date and time of closing by written notification Should Marcano not correct any defects in title before the closing date, Agueda would be relieved of his obligations under the contract and his deposit was to be returned in full 119 Following the execution of the 2011 Agreement, Agueda remained on an inconsistent payment schedule, he did not pay Marcano her agreed upon portion of rental proceeds or late fees, and he failed to insure the Property 3

‘ Agueda was arrested tor possession 0t stolen property while his loan application was pending but the charges Were eventually dismissed Agueda v Malctmo 2024 VI 22 S Ct Civ No 2020 0030 Opinion of the Court of 24 1112 On September 16, 2014, Marcano filed a complaint for breach of contract, fraud quiet title, and declaratory judgment (SX 14 CV 37S) Marcano also asserted that she was entitled to judgment for debt and foreclosure under the 201 1 Agreement Agueda counterclaimed for breach of contract, negligence, breach of the duty of good faith and fair dealing quiet title, declaratory judgment, and defamation of character By June 18, 2018, the only remaining issues were Marcano’s claim for debt, Marcano’s request for appointment of a receiver,5 and Agueda’s counterclaims for breach of contract and breach of the duty of good faith and fair dealing 1113 A bench trial was held on June 5 8 12 13 and 18 20 of 2018 and the Superior Court entered its findings of fact and conclusions of law on April 24, 2020 The Superior Court found that the 201 1 Agreement was a valid contract supported by an offer, acceptance, and consideration Further, the Superior Court held that Marcano properly demonstrated a basis for prevailing on her debt claim because Agueda had not paid the purchase price in full, nor had he transmitted any rental proceeds pursuant to the 201 1 Agreement Nonetheless, the Superior Court also held that Marcano breached the 201 1 Agreement and her duty of good faith and fair dealing by collecting rent from Anderson directly as well as failing to provide clear title to all nine plots and impeding Agueda’s ability to receive a loan Based on Marcano s breaches, the Superior Court reduced her damages by denying to award missed rental payments or late fees past October 2013, reasoning that Agueda would have paid off the purchase price and would not have been obligated to pay monthly rent had he been able to close on the loan in 2013 In total, the Superior Court awalded Marcano $283 945 with post judgment interest of $31 12 per day 6

1|16 Our standard of review in examining the Superior Court's application of law is plenary, while findings of fact are reviewed only for clear error ” Alexander v Alexander , 65 V I 372, 377 (V l 2016) (citing Santiago v VI Housmg Auth 57 V I 256 263 (V I 2012)) Contract construction that is, the legal operation of the contract, is a question of law mandating plenary review thllzp v Marsh Monsanto 66 V1 612 624 (V I 2017) (citing In re Cendant Com Pudcs Ling 233 F 3d 188 193 (3d Cir 2000)) Ordinarily when the terms of a contract are unambiguous, the Superior Court treats the issue of the meaning of those terms as a question of law, but if the terms are ambiguous, the issue of the meaning of the terms becomes a question of

1 The purchase price, $850,000, minus any payments Agueda was able to provide a receipt for Agueda was able to provide receipts for $679,555 towards the purchase of Western Suburb, making his remaining balance towards the purchase price $170,445 The Superior Court added rental payments owed from April 201 l to October 2013 totaling $155 000 After adding the remaining balance and rental payments owed from 201 l 2013, the Superior Court subtracted the amount of rental proceeds Marcano personally collected from Anderson totaling $41,500 Aguala \ Warcano 2024 V1 22 S Ct CiV No 2020 0030 Opinion ot the Court of 24 fact Untied Corp 1 Tutu Park Ltd 55 V I 702 708 (V I 2011) This Court must accept the factual determination of the fact finder unless the determination either (1) is completely devoid of minimum evidentiary support displaying some hue of credibility 0r (2) bears no rational relationship to the supportive evidentiary data ’ Fawkes v Saiauw, 66 V l 237, 250 n 5 (V I 2017) (quoting St Thomas St John Bd ofElectlons v Dame] 49 V I 322 329 (V I 2007)) (internal quotation marks omitted) III DISCUSSION A Overview of Issues 1117 Both parties raise several interrelated issues on appeal Agueda first argues that the Superior Court erred in awarding Marcano damages under a contract she breached Agueda also argues that the 201 I Agreement is void for lack of consideration and only acknowledges the terms the 2009 and 2010 agreements Finally, Agueda contends that he is entitled to specific performance without further payments on the purchase price as he has already substantially performed under the contract 1H8 On the other hand, Marcano disputes the Superior Court 5 finding of liability on her part as well as the Superior Court’s assessment of damages Marcano argues that she breached neither the contract nor her duty of good faith and fair dealing because she acted in accordance with the terms of the 20] 1 Agreement Marcano asserts that, in fact, Agueda is the breathing party and therefore she is entitled to either full payment on the agreement or restitution of the Property, including costs and expenses 1119 The parties’ arguments can be condensed into three issues for the purpose of this appeal (1) whether the 201 1 Agreement is an enforceable contract supported by sufficient consideration (2) whether either party breached that contract and (3) entitlement to damages For the sake of Agueda \ Mmumo 2024 VI 22 S Ct Civ No 2020 0030 Opinion of the Court of 24 judicial efficiency we will address Marcano s arguments first as this will allow us to resolve all issues iaised on appeal simultaneously Consequently, this Court will determine whether the Superior Court erred in holding that Marcano breached the 201 1 Agreement and her duty of good faith and fair dealing B Breach of Contract 1120 To establish breach of contract, a party must “demonstrate (1) an agreement; (2) a duty created by that agreement (3) a breach of that duty and (4) damages Plump 66 V l at 621 Each element will be discussed separately below i The 2011 Agreement 1|21 The Superior Court ruled that the 2011 Agreement was a valid and enforceable contract modification of the 2010 handwritten agreement The Superior Court reasoned that the 2011 Agreement was supported by additional consideration aside and apart from that underlying the prior 2009 and 2010 agreements because Marcano gave Agueda additional time to make payments and complete the purchase of the property by April 14, 2014, and five new provisions were added to impose additional obligations on both parties The Superior Court stated that Agueda, even if there were no consideration, is further estopped from asserting lack of consideration because he signed the 201 1 Agreement with advice from his attorney and used the 201 1 Agreement as a basis for dismissal of eviction proceedings and to obtain a loan commitment from the bank 1|22 Although neither party disputes the existence of an agreement for the sale of the Property, both parties disagree as to whether the 201 1 Agreement was a valid contract supported by adequate consideration and whether its additional terms should be binding In his brief, Agueda argues that the Superior Court erred in finding the 201 1 Agreement to be an enforceable contract modification because it imposed additional requirements on Agueda, while Marcano’s obligations remained the Agiaeda v Mwamo 2024 V1 22 S Ct Civ No 2020 0030 Opinion of the Court of 24 same under the 2009 2010, and 201 I agreements Agueda asserts that the 201 1 Agreement, which added additional terms to the 2009 oral agreement and 2010 handwritten agreement, fails for lack of consideration because Marcano did not promise anything more than what was already promised in the prior agreements This Court disagrees 1123 To assess the validity and enforceability of the 2011 Agreement this Court must first discuss contract formation as it pertains to land sale contracts We have previously stated that ‘ a contract is only formed or modified to the extent there is mutual assent and mutual consideration ’ Cornelius v Bank of Nova Scotm, 67 V I 806, 820 (V I 2017) Nevertheless, this Court has not expressly adopted a common law rule for contract formation Ordinatin a Banks analysis would be required to determine the soundest rule for the Virgin Islands; however, the elements of a valid contract are ‘ so widely accepted and fitndamental to the practice of law ’ that they most certainly represent the soundest rule for this jurisdiction Machado v Yacht Haven U S V] LLC, 61 V l 380 (V l 2014) see also Banks 12 Int] Rental & Leasmg Corp 55 V 1 967 981 84 (V I 2011)

1|24 In jurisdictions throughout the United States, the elements of an enforceable contract are an offer, acceptance of that offer, and consideration 7 “In addition to offer acceptance, and consideration, a valid contract requires that the parties assent to the same terms; that is, that they

1125 This Court will primarily focus on the consideration” element, as it is the subject of this appeal As with the issue of contract formation, we have not adopted a definition of consideration Once again, what constitutes consideration is so widely accepted, a Banks analysis in its entirety is unnecessary Machado, 61 V I at 380 See also V 1 Tax: Ass 11 v V 1 Port Auth , 2014 WL 12949301 at *5 (V I Super Ct Aug 7 2014) (unpublished) ( [T]he Supreme Court acknowledges that the basic elements of contract fomiation are such a straightforward part of the common law that they need not be analyzed further The most basic prerequisite for the formation of a contract is that there was a mutual assent to a bargained for exchange in which one party made a promise in return for another promise Therefore, a contract is formed in our jurisdiction by mutual assent and consideration ’) (citing Walters 1 Walters, 60 V 1 768, 796 97 (V I 2014) (internal quotation marks omitted» Before Banks, this Court briefly defined consideration as ‘ bargained for legal benefit and10r detriment ’ Peppertree Terrace v Williams, 52 V 1 225, 241 (V1 2009) (Swan,.l concurring)(citingNmazr Inc 1 [FR Amencas Inc 519 F 3d 1131, 1137 (10th Cir 2008)) While the Superior Court never conducted a Banks analysis in its entirety, the Superior Court has long recognized the common law definition of considelation as deri\ ed from Restatement (Second) of Contracts § 71, requiring a bargained 101 performance or a retum Aguadu v Marcuno 2024 V122 S Ct Civ No 2020 0030 Opinion of the Court of 24 promise, which is bargained for if sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise See szdson v Buchar 72 V1 500, 520 (V I Super Ct 2020)‘ see also Castolema v Craflz 2014 WL 239427 at *2 (V1 Super Ct Jan 15 2014) The performance may consist of either ‘ an act other than the promise, a forbearance, or the creation modification, or destruction of a legal relation ” RESTATEMENT (SECOND) 0F CONTRACTS §7l (quoted in Dutergee Inc v Gm tofthe VI 22 V1 56 65 66 (VI Terr Ct 1986))

1|26 Other jurisdictions similarly provide that consideration is generally "defined as some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss, or responsibility given, suffered, or undertaken by another " Dan Ryan Buzlders Inc v Nelson, 737 S E 2d 550, 556 (W Va 2012) 8 1n simpler terms, “[c]onsideration may consist of either a detriment to the promisee or a benefit to the promisor,” Williams v Ormsby 966 N E 2d 255 259 (Ohio 2012), that ‘ has been bargained for and exchanged for a promise ” SH t Campbell Cty Sch Dist 409 P 3d 1231 1233 (Wyo 2018) see also eg Bel Air Assocs v NH Dep t ofHealth & Human Servs , 158 N H 104, 107 08 (N H 2008) ‘ [T]here is consideration if the promisee does anything legal which he is not bound to do or refrains from doing anything which he has a

1128 Agueda argues that because the 201 1 Agreement contained certain provisions that altered the terms of the 2009 and 2010 agreements, it was effectively a contract modification and was invalid for lack of consideration because Marcano did not promise anything more than what she had already promised in the 2009 oral agreement and the 201 1 handwritten agreement Marcano asserts that there was a bargained for exchange in Agueda’s request for and signature on the 201 1 Agreement 1129 As an initial matter, the 2011 Agreement, a contract for the sale of real property, is governed by statutory requirements for land sale contracts under 28 V I C § 242, part of the Virgin Islands statute of frauds, which provides Every contract for the leasing for a longer period than one year from the making thereof, or for the sale of any lands, or any interest in lands, shall be void unless the contract or some note or memorandum is in writing, and signed by the party to be charged, or by his lawful agent under written authority

As a result, this Court is barred from enforcing any alleged oral contract for the sale of land unless the oral agreement is reduced to writing and signed by the patty to be charged 28 V l C § 242 4gueda t Mmamo 2024 VI 22 S Ct Civ No 2020 0030 Opinion of the Court 0f 24 See also Downing t Fortuna Bay Estate; Inc , 17 VI 20 25 (Terr Ct I980) ‘A note or memorandum may be sufficient under the statute of frauds in any numbei of forms, including a letter, an account statement, a draft or note, or a check ’ Kellv Stelmev & Assocs v MacDonald's Indus Prods 693 N W 2d 394, 399 (Mich Ct App 2005) A memorandum, by its very nature, is an informal instrument and the statute of frauds does not require that it be in any particular form Hurdle 1 White 239 S E 2d 589 592 (N C Ct App 1977) (holding that signatune on the back of a check satisfied the wn'ting requirement of the statute of frauds); Cmtron v Andrews, 7 VI 3l6 (D VI 1969) (holding that a paper acknowledging receipt of $5 000 as a deposit to purchase real property was a sufficient note under the statute of frauds), Revnolds v Dixon, 46 S E 2d 6, 9 10 (Va 1948) (explaining that any kind of writing, from a solemn deed down to mere hasty notes or memorandum in books or papers, is a sufficient writing to satisfy the statute of frauds, and holding that a letter from the seller to the buyer was a sufficient writing) Copano Energy LLC i Bujnoch 593 S W 3d 721 727 (Tex 2020) (finding that multiple writings when taken together may satisfy the statute of frauds) ‘ The statute of frauds [also] requires that contracts for the sale of land not only be in writing and signed by the party who is to be charged, but the writing must contain all the material terms and conditions of the oral agreement between the parties Amdahl v Lowe 471 N W 2d 770 774 (S D 1991) The contract must set forth the terms of the agreement with sufficient certainty and definiteness, specifying the identities of the parties and their mutual assent, the property which is the subject of the contract, the price of such property and the consideration " Zurchcr v He! veat, 605 N W 2d 329, 336 (Mich Ct App 1999), see also Reynolds, 46 S E 2d at 9 (“[A] memorandum in writing meets the requirements of the statute of trauds if it contains the names of the parties, the terms and conditions of the contract, and a description of the property sufficient to render it capable of identification ) In other words, the 4guedat chano 2024 V122 S Ct Civ No 2020 0030 Opinion of the Court of 24 writing ‘ must describe the land, the price, and the contracting parties, it need not detail the form or delivery of deed, the time and place of payment, or any other matters ’ Amdahl, 471 N W 2d at 774 1130 Here, the Superior Court was correct in finding that the parties had a legally enforceable contract for the sale of the Property; however, the Superior Court should have recognized that any oral agreements made in 2009 were void under 28 V I C {3‘ 242 This error was ultimately hannless because the contract complied with 28 V I C § 242 onee Marcano and Agueda memorialized their oral agreement in the 2010 handwritten note, which contained both parties’ signatures, the price of the Property, and a sufficient description of the Property The bargained for exchange of land for money constitutes adequate consideration and the parties’ mutual assent is represented by their signatures on the note as well as by Agueda taking possession of the Property and rendering partial payment For this reason, we affirm the Superior Court’s finding that the 2010 handwritten agreement is the original contract that became the basis for any subsequent modifications 1131 Like contract formation, contract modifications must be supported by consideration and a manifestation of mutual assent Cornelius, 67 V I at 820; see also Arvzdson v Buchar 72 V I 500 S20 21 (V I Super Mar 10, 2020) In the Virgin Islands, contracts may be modified with new, additional, or supplemental obligations to be fulfilled by the parties, subject to the same requirements as contract formation Smith v McLaughlm, 2019 V I LEXIS I80, *8 9 (V 1 Super Ct 2019) (unpublished) “[M]odification[s] to an existing contract must be supported by consideration independent from that which was gix en in order to form the ori ginal contract ” Lokan &Assocs v Am BeejProcessmg LLC 311 P 3d 1285 1288 (Wash App 2013) [I]ndependent consideration does not exist when one party is to perform some additional obligation while the othet party is simply to perform that which he promised in the original contract ” [d When a party Agueda l Marcano 2024 VI 2" S Ct Civ No 2020 0030 Opinion of the Court of 24 agrees to do no more than that which he is already bound to do under an existing contract, the consideration is not sufficient to support a modification ’ Arthur J Gallagher & Co 1 Dietench S W 3d 695 702 (Tex App 2008) 1132 The Superior Court found that the 201 1 Agreement was supported by sufficient consideration because, despite Agueda’s contentions, it imposed additional obligations on Marcano to provide free and clear title to the property and a legally acceptable description of the property, and contained new provisions describing what would occur if either party rejected an offer or if certain conditions made closing difficult This Court agrees Agueda vehemently asserts that Marcano’s legal obligations remained the same under the 2009, 2010, and 201 1 agreements, but this is simply not true The 2011 Agreement clearly imposes additional obligations on Marcano such as the obligation to pay off the mortgage on plots 88, C, and D, the obligation to provide free and clear title to the nine plots, and the obligation to pay for and provide all legally required closing documents Ironically, Agueda s counterclaims that Marcano breached her obligations by collecting rental proceeds directly from Anderson and failing to clear title are based solely on Marcano’s obligations in the 201 1 Agreement, which were not present in the 2009 or 2010 agreements This contradiction demonstrates that Agueda, at the least, implicitly acknowledges that the 2011 Agreement imposed additional requirements on Marcano that were not included in the 2009 or 2010 agreements 1133 Because we agree with the Superior Court that the imposition of additional duties on Agueda and Marcano constituted adequate consideration for the 2011 Agreement, the 2011 Agreement is an enforceable contract under Virgin Islands law and the Superior Court did not err when it made that determination Once a modified contract is deemed enforceable, “[t]he modified contract is regarded as creating a new single contract consisting of so many of the terms of the Aguatlai Marcano 2024 v122 S Ct Civ No 2020 0030 Opinion of the Court of 24 prior contract as the parties have not agreed to change, in addition to the new terms on which they have agreed Schwmdel 1 Austin Bank 809 N E 2d 180 189 90 ([11 Ct App 2004) [W]hen a contract is modified or amended by a subsequent agreement, any lawsuit to enforce the agreement must be brought on the modified agreement and not on the original agreement Id at 189 Said another way, a validly modified contract, as well as any of its additional or conflicting terms, replaces the original contract and becomes the controlling agreement Id Consequently, the 201 1 Agreement contains the controlling terms upon which this Court will base the remainder of its decision ii Duty and Breach 1134 Next, Marcano argues that the Superior Court erred when it found her to be the breaching party by failing to produce clear title to all nine plots during Agueda 3 loan application process Marcano specifically argues that she did not breach the 2011 Agreement by failing to produce clear title because Agueda had not given her 30 days‘ notice of final payment, as required to close the sale under the 201 1 Agreement Marcano insists that the only party who breached the 201 1 Agreement was Agueda, as he did not pay the remainder of the purchase price, rental income, and late fees $35 As stated above, to prevail on a breach of contract claim, the parties must “demonstrate (1) an agreement (2) a duty created by that agreement; (3) a breach of that duty; and (4) damages ” Phillip 66 V I at 621 This Court has already established that the first element of this claim that the parties had an agreement was satisfied Accordingly, this Court will now look to the duties created by the 201 1 Agreement and whether those duties were breached Phllllp 66 V l at 625 Where a contiact is eomplete, cleai and unambiguous the parties intent is derived from the plain meaning of its terms It!

Agueda t Mmcano 2024 V1 22 S Ct Ci» No 2020 0030 Opinion of the Court of 24 1136 As a preliminary matter, this Court deems the 2011 Agreement unambiguous and will follow its plain meaning thlltp, 66 V I at 625 The terms of the agreement are quite straightforward Agueda agreed to pay $850 000 in exchange for free and clear title to all nine plots of the Property; Agueda was to pay $1 15,000 of the purchase price on or before the signing of the 2011 Agreement and the remainder of the purchase price was to be paid in 36 monthly installments of $16,670; Marcano would receive $5,000 of the monthly rental income until the purchase price was paid in full; and a $500 late fee would be imposed if payment was received after the fifieenth day of each month Agueda was also obligated to give Marcano 30 days’ notice of final payment, during which time Marcano was obligated to gather the appropriate documents for closing Marcano was under no obligation to provide clear title or correct a defect in title until Agueda gave her 30 days notice of final payment 1137 The Superior Court found that Marcano breached the 201 1 Agreement terms and her duty of good faith and fair dealing when she failed to provide clear title to the properties, causing the bank to either deny Agueda’s loan request or withdraw his loan commitment We disagree on both grounds First, under the explicit terms of the 201 1 Agreement, Agueda had to give Marcano 30 days’ notice of final payment and he failed to provide this required notice It appears the Superior Court may have conflated closing on the loan with closing on the purchase of the Property when those were two separate transactions Although the loan would have allegedly been used to pay off the purchase price and facilitate closing on the Property, Agueda was still obligated to provide 30 days’ notice of final payment, and he never did so Even if this Court were to assume that the loan closing and notice of final payment were the same, pursuant to the 201 1 Agreement, Marcano was still not obligated to produce clear title until the closing took place following written notice by one of the parties, which once again was never done As Agueda ceased payments in 2013 and never Agueda v Malctmo 2024 VI 22 S Ct Civ No 2020 0030 Opinion ofthe Court 0f 24 gave Marcano 30 days notice of final payment, Marcano was under no obligation to produce clear title and did not breach the parties contract by failing to do so 1|38 The Superior Court also erred in finding that Marcano breached her duty of good faith and fair dealing because she was aware of Agueda’s loan request and acted in contravention of her obligation under the 2011 Agreement to eventually obtain clear title to the properties, causing Agueda to lose the loan commitment for failure to provide title or a deed to the properties Every contract imposes an implied duty of good faith and fair dealing upon the parties Chapman v Cornwall 58 VI 431 441 (2013) The duty of good faith limits the parties ability to act unreasonably in contravention of the other patty's reasonable expectations ’ Id Specifically, “[g]ood faith means faithfulness to an agreed common purpose and consistency with the justified expectations of the other party; it excludes a variety of types of conduct characterized as involving bad faith’ because they violate community standards of decency, fairness or reasonableness ’ Matthews 1 R&M Gen Contractors Inc 72 V I 583 594 (V I Super Ct 2020) (quoting Guardian Ins Co v Khaki 63 VI 3 21 (VI Super Ct 2012)) (internal quotation marks omitted) Therefore, to state a claim for breach of the implied duty of good faith and fair dealing a party must allege that, in the performance or enforcement of an existing contract between two parties, the opposing party engaged in conduct that was fraudulent, deceitfiJI, or otherwise inconsistent with the purpose of the agreement or the reasonable expectations of the parties Roebuck v V l Hons Auth & Gm tofthe VI 60 V I 137 146 (V I Super Ct 2014) (quoting LPP Mongage Ltd v Prospet 50 V I 956 960 61 (D V l 2008)) The implied duty ofgood faith and fair dealing is limited by the original bargain prevent[ing] a party’s acts or omissions that, though not proscribed by the contract expressly, are inconsistent with the contract’s purpose and deprive the other party of the contemplated value See 805w Seruces Inc v Gov t of the V I , 71 V I 652, Agueda 1 Marcano 2024 V1 22 S Ct Civ No 2020 0030 Opinion of the Coun of 24 64 (VI 2019) (citing MetcalfCons! C 0 Inc 1 United States 742 F 3d 984 991 (Fed Cir 2014)) 1139 Courts in the Virgin Islands have held that, “where a duty 01 good faith arises it arises under the law of contracts Abneyt Umv offhe VI 2016 U S Dist LEXIS 59947 at *22 23) (D VI May3 2016) (unpublished) (quoting Mende21 CoastalS)s Dei Inc No 05 0165 2008 WL 2149373 at *3 (D V I May 20 2008) (unpublished) (citing Jo Ann 3 Launder Ctr v Chase Manhattan Bank N A 29 V1 186 (D V I 1995))) As in a breach of contract claim damages suffered from acts in “unreasonable contravention of the parties’ reasonable expectations under the contract is an essential element of the duty of good faith claim See Dukes v Fay Servzcmg LLC 2022 U S Dist LEXIS 204948 at*11 12 (DVI Nov 20 2022) (citing Arvzdson 71 VI at 336 and also citing Merchants Commerczal Bank 1 V! F F 0 LLC 2018 WL 4586346 at *3 (V 1 Super Ct Sept 17, 2018) (unpublished) (noting that damages are a necessary component of a party’s breach of the implied covenant of good faith and fair dealing claim» Therefore if a breach of the implied duty of good faith claim is based on a breach of contract claim, and the claimant cannot prove damages on the breach of contract claim, the claim for the breach of good faith and fair dealing must also fail Abney 2016 WL 2349108 at *22 23 1140 Here the 201 1 Agreement did not impose a duty on Marcano to provide clear title to the properties before receiving the required 30 days’ notice for final payment to close on the property It is true that that the duty of good faith and fair dealing would normally obligate Marcano to cooperate with Agueda s obtaining of the loan as a customary step in financing a real property purchase Howevei, considering the terms of the 201 1 Agreement, Agueda 8 lack of purchase price payments since 2013 and Agueda’s failure to provide 30 days’ notice of final payment it was unreasonable for Agueda to expect Marcano to produce clear title in support of Agueda 5 loan Aguedat Marcano 2024 V122 S Ct Civ No 2020 0030 Opinion of the Court 0124 application Indeed, under the express terms of their agreement, Marcano’s duty to ptovide clear title to the properties would only be tfiggered by Agueda s satisfaction of a condition precedent specifically Agueda providing Marcano with 30 days’ notice of final payment The record establishes that this condition precedent was never satisfied For this reason, the Superior Court erred when it found that Marcano breached her duty of good faith and fair dealing by failing to provide clear title for the property 1141 The Superior Court also found that Marcano breached the 201 1 Agreement and her duty of good faith and fair dealing by collecting rent from Anderson directly Despite Agueda ceasing payments towards the purchase price in 2013 the Superior Court ordered that Marcano cease and desist from collecting any more rental payments from the tenants and offset those rental payment amounts Marcano eollected against the amount of debt Agueda owes to Marcano While it is true that Marcano s instructions for Anderson to make rental payments to Marcano directly was in contravention of the 2011 Agreement Agueda suffered no damages as a result of Mareano’s actions Pursuant to the 2011 Agreement Marcano was to receive $5 000 of the rental proceeds collected from the income properties until the purchase price was paid in full The 201 1 Agreement specified that Agueda was to collect rent from the tenants at the property and would submit $5,000 in monthly rental income to Marcano Here, Marcano only collected $500 a month from Anderson, an amount far below the $5,000 she was due to receive every month, as Agueda failed to remit the $5,000 monthly rental income since 2013 Because Marcano collected rents directly from Anderson Marcano’s actions were in contravention of the 2011 Agreement However, Agueda ultimately suffered no damages based on Marcano’s actions, because the monies Marcano collected directly from Anderson partially offset the monthly rental payments that Agueda had agreed to pay to Marcano pursuant to the 201 1 Agreement but that he had failed to pay Therefore Agucda v Mmcano 2024 VI 22 S Ct Civ No 2020 0030 Opinion of the Court of 24 Agueda s breach of contract claim cannot be sustained See Phillip, 66 V I at 621; see also James v Mosler 2021 VI LEXIS 25 at *30 (VI Super Ct 2021) (holding that the appellant could not satisfy the elements of his breach of contract claim because he was the breaching party and did not suffer damages)’ Abney 2016 WL 2349108 at *22 23 (holding that because damages are a required element under a Virgin Islands breach of contract claim, a claimant s breach of contract claim failed when the claimant failed to identify any damages) T42 Overall, Marcano acted in accordance with the terms of the 2011 Agreement and the Superior Court erred when it found her to be a breaching party Therefore, it was error for the Superior Court to find in favor of Agueda on his counterclaims given the complete disregard for his obligations pursuant to the 201 1 Agreement He never paid the purchase price in full by the agreed upon date, there is no evidence suggesting that he remained on the 36 month payment schedule, there is no evidence that he paid any rental proceeds or subsequent late fees to Marcano afier 2011, and he did not insure the Property Agueda seeks to conveniently avoid these legal obligations under the premise that the 201 1 Agreement was not a valid contract, yet he also argues that Marcano breached that same agreement Agueda cannot have it both ways Therefore, we agree with the Superior Court that the 201 1 Agreement is a valid contract, however, we conclude that Agueda breached that contract by failing to adhere to its terms We also conclude that although Marcano acted in contravention of the 201 1 Agreement by collecting rents directly from Anderson, Agueda did not ultimately suffer any damages from that collection, because those monies partially offset rental payments that Agueda had agreed to pay to Marcano pursuant to the 201 1 Agreement, but which he had failed to pay 4guuiu I Marcmm 2024 VI 22 S Ct Cw N0 2020 0030 Opinion of the Court of 24 iii Damagg 1143 Both parties contest the damages awarded by the Superior Court in this matter Agueda insists that he substantially performed under the eontract and is entitled to specific performanm. without fitrther payments towards the purchase price however, this Court has already detennined that Agueda was the breaching party, and not Malcano Further, Agueda has not suffered any damages as he has remained in possession of the Property without paying the purchase price in full and without paying Marcano anything since 2013 Marcano argues that she should be fully compensated for all debts Agueda was required to satisfy under the 20] 1 Agreement and this Court agrees 1|44 “To state a common law claim for debt under Virgin Islands law, the plaintiff must allege that the defendant owes a certain amount and that the defendant is or should be obligated to pay that amount Carlos Warehouse v Thomas 64 V I 173, 192 (V I Super Ct 2016) Marcano demonstrated that Agueda owes a certain amount under the 201 1 Agreement, and he should be obligated to pay that amount Both parties expressiy acknowledge they had a contract for the sale of the Property and Agueda admits to not paying the purchase price in full This Court affirms the Superior Court 8 findings that the 201 1 Agreement was a valid contract, meaning that Agueda s debt includes missed rental payments and late fees as well Since Agueda breached the 2011 Agreement and Marcano’s actions did not cause any damages to Agueda, the Superior Court erred in reducing hen damages award From 2009 to present, Marcano has been deprived of the use of her property and its subsequent income without being properly compensated, while Agueda remains in possession Mareano has proven her debt claim undet the 2011 Agreement and is entitled to fun compensation for debts due and unpaid Agueda v Marcano 2024 VI 22 S Ct Civ No 2020 0030 Opinion of the Court of 24

[[1 CONCLUSION 1145 The Superior Court committed reversible error when it found Marcano to be the breaching party and reduced her damages award on that basis Marcano provided a proper basis for her debt claim through the 2011 Agreement and her behavior did not contravene the agreement 3 terms Although Marcano acted in contravention of the 201 I Agreement by collecting rents directly from a tenant, she did not breach the 2011 Agreement because, for the reasons explained above, her actions did not ultimately result in any damages to Agueda For this reason, Marcano is entitled to be compensated for the debts Agueda was required to satisfy under the 201 1 Agreement, to the extent that those debts have not been offset by her direct collection of rents This Court will reverse that portion of the Superior Court decision finding in favor of Agueda on his counterclaims and remand this matter to resolve the issue of Marcano’s total damages All proceedings on remand are to be consistent with the findings and conclusions in this opinion

Dated this 10"I day of May, 2024 BY THE COURT c < 7 n, ARIA M CAB T / ssociate Justice r ATTEST VERONICA J HANDY ESQ Clerk of the Court By /s/ Reisha Relsha Corneiro Corneer Deputy Clerk Dated May 10, 2024