United Corp. v. Tutu Park Ltd.
2011 V.I. Supreme LEXIS 32
Supreme Court of The Virgin Is...2011Background
- United sues Tutu and P.I.D. for breach of contract related to a 1991 lease granting United exclusive rights to operate Plaza Extra in Tutu Park Shopping Center.
- Section 4.02 of the October 1991 agreement restricts landlord from leasing to another food supermarket, with specific treatment of K-Mart and a pre-existing 1989 K-Mart lease.
- K-Mart sold food at its store starting 1993 and expanded in 1995 and 2000, allegedly transforming into a supermarket under the contract terms.
- Both sides moved for summary judgment over several years; the trial court sua sponte addressed issues and denied United’s partial motion while granting Tutu’s cross-motion.
- The court ultimately dismissed United’s action with prejudice, prompting an appeal seeking reversal and reinstatement of United’s complaint.
- On appeal, the Virgin Islands Court of Appeals reverses, holding section 4.02 is ambiguous and Tutu had a duty to enforce the covenant against K-Mart; the matter is remanded for trial-ready issues on whether K-Mart is a supermarket under the contract.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does section 4.02 bind Tutu to enforce against K-Mart? | United: section 4.02, read with 14.01, binds Tutu to enforce against K-Mart. | Tutu: argued not bound or that enforcement was not established; treated as background language. | Tutu bound; section 14.01 makes 4.02 enforceable by United; court erred in not recognizing duty to enforce. |
| Is K-Mart's operation a supermarket under the contract's meaning of 'supermarket'? | United contends K-Mart qualifies as a supermarket under definitions presented in record. | Tutu argues K-Mart is not a supermarket under the contract. | Ambiguous term; issues of fact exist regarding whether K-Mart is a supermarket; remanded for trial. |
| Was summary judgment improper given the contract ambiguity and extrinsic evidence? | United contends there is no genuine issue of material fact and should prevail as a matter of law. | Tutu argued there is no breach or that the contract excludes liability. | Summary judgment improper; issue of contract meaning must be resolved by a fact-finder. |
| Did the Superior Court err by addressing grounds sua sponte without proper notice or opportunity to respond? | United asserts a fair opportunity to be heard was violated. | Tutu did not contest these grounds in the manner argued. | Court erred in sua sponte considerations; remand to address issues with proper procedure. |
Key Cases Cited
- Williams v. United Corp., 50 V.I. 191 (V.I. 2008) (appellate review of summary judgment standard)
- In re Columbia Gas System, Inc., 50 F.3d 233 (3d Cir. 1995) (ambiguity and extrinsic evidence in contract interpretation at summary judgment)
- White v. Spenceley Realty LLC, 53 V.I. 666 (V.I. 2010) (extrinsic evidence can render contract latent ambiguity; summary judgment standards)
- Cool Fuel, Inc. v. Connett, 685 F.2d 309 (9th Cir. 1982) (summary judgment cannot be granted when opposing party has fair chance to contest issue)
- Ramsey v. Coughlin, 94 F.3d 71 (2d Cir. 1996) (limitations on sua sponte grant of summary judgment; need for fair dispute)
- Gianni v. R. Russell & Co., 281 Pa. 320, 126 A. 791 (1924) (parol evidence and integration in contract interpretation)
- Halderman v. Pennhurst State Sch. and Hosp., 901 F.2d 311 (3d Cir. 1990) (contract interpretation guidance in appellate context)
- Sealey-Christian v. Sunny Isle Shopping Center, Inc., 52 V.I. 410 (V.I. 2009) (evidence weighing at summary judgment; credibility of conflicting testimony)
- Cedar Cove Homeowners’ Ass’n, Inc. v. DiPietro, 628 S.E.2d 284 (S.C. 2006) (covenants and contracts interpretation; binding covenants)