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Case: 3:06-cv-00042-CVG-RM Document #: 144 Filed: 10/25/13 Page 1 of 12

DISTRICT COURT OF THE VIRGIN ISLANDS
DIVISION OF ST. THOMAS AND ST. JOHN







Civil No. 2006–42


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Defendants.

Plaintiff,
v.


SBRMCOA, LLC, individually and on
behalf of its members,





BAYSIDE RESORT, INC.; TSG
TECHNOLOGIES, INC.; TSG CAPITAL, INC.;
and BEACHSIDE ASSOCIATES, LLC,



APPEARANCES:

James M. Derr, Esq.
Law Offices of James M. Derr
St. Thomas, VI

For SBRMCOA, LLC

Arthur Pomerantz, Esq.
Law Offices of Arthur Pomerantz
St. Thomas, VI


Gregory H. Hodges, Esq.
Dudley, Topper & Feuerzeig
St. Thomas, VI
Neil D. Goldman, Esq.
Goldman & Van Beek, P.C.
Alexandria, VA


For Bayside Resort, Inc.

For TSG Technologies, Inc.; TSG Capital, Inc. and Beachside
Associates, LLC,



MEMORANDUM OPINION



GÓMEZ, J.

partial summary judgment in this matter.


Before the Court are the motions of the plaintiff for

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SBRMCOA, LLC V. Bayside Resort, Inc.
Civil No. 2006–42
Memorandum Opinion
Page 2

I.

FACTUAL AND PROCEDURAL HISTORY

The plaintiff, Sapphire Bay Resort and Marina Condominium


Association, incorporated under the name “SBRMCOA, LLC”
(“SBRMCOA” or “the association”), is a condominium association.
SBRMCOA was initially sponsored by the defendant Bayside Resort,
Inc. (“Bayside”), in 1998. The declaration of condominium which
created the association (the “Declaration”) provided, among
other things, that Bayside would provide fresh water and
wastewater treatment services to “each [u]nit” and each unit
owner would be required to pay Bayside for these services.

To supply these water services, Bayside contracted with the

defendants TSG Technologies, Inc., and TSG Capital, Inc.
(collectively, “TSG”). Beginning in 1999, TSG provided water to
the unit owners at the rate of $0.02 per gallon.

Thereafter, Bayside became delinquent on various debts,

including several debts it owed to TSG. Bayside also defaulted
on a $9-million obligation to the defendant Beachside
Associates, LLC (“Beachside”).1

In 2005, Bayside, TSG, and Beachside reached an agreement
regarding the supply of water to the condominiums. The proposed
agreement (the “Water Supply Agreement”) assigned all of
Bayside’s rights to provide water services to TSG, who would


1 Beachside is a trust which served as one of Bayside’s mortgagees.

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SBRMCOA, LLC V. Bayside Resort, Inc.
Civil No. 2006–42
Memorandum Opinion
Page 3
provide water to the association and would be allowed to
increase the cost from $0.02 per gallon to $0.05 per gallon.
Pursuant to the Water Supply Agreement, TSG would provide

water to the association. The association would then provide
that water to unit owners. This was a change from the previous
service, in which TSG provided water directly to the individual
unit owners.

The Water Supply Agreement also provided that Bayside, not

SBRMCOA, owned all the water facilities, except the water plant.
Additionally, its terms stated that the association agreed that
all potable water charges incurred by individual unit owners
would be a “common expense,” as defined by the association’s
Declaration.

The Water Supply Agreement also included an arbitration

clause. That clause, in pertinent part, provided: “[A]ny
dispute or controversy arising out of or relating to this
Agreement shall be submitted to and settled by mandatory binding
arbitration to be held in the USVI [sic]. . . .” (ECF No. 105-
1.)

Myron J. Poliner (“Poliner”), president of the

association’s board of directors (“the Board”), signed the Water
Supply Agreement.

SBRMCOA initiated this action in 2006. Shortly thereafter,
the defendants moved to dismiss, claiming, inter alia, that the

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SBRMCOA, LLC V. Bayside Resort, Inc.
Civil No. 2006–42
Memorandum Opinion
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arbitration clause in the Water Supply Agreement required the
dispute to be arbitrated.

On April 18, 2007, this Court granted the various motions

to dismiss and referred this matter to arbitration. SBRMCOA
appealed. Beachside and TSG filed a cross-appeal.

On February 11, 2013, the United States Court of Appeals

for the Third Circuit vacated this Court’s April 18, 2007,
order, and remanded the matter for a determination of whether
the Board had the authority to enter into the Water Supply
agreement.

SBRMCOA now moves for summary judgment. SBRMCOA argues that

the Board lacked the authority to enter the Water Supply
Agreement. Beachside opposes the motion.
II. DISCUSSION

Summary judgment is appropriate if “the pleadings, the


discovery and disclosure materials on file, and any affidavits
show that there is no genuine issue as to any material fact and
that the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(c); see also Hersh v. Allen Products Co., 789
F.2d 230, 232 (3d Cir. 1986).

The movant has the initial burden of showing there is no
genuine issue of material fact, but once this burden is met it
shifts to the non-moving party to establish specific facts
showing there is a genuine issue for trial. Gans v. Mundy, 762

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SBRMCOA, LLC V. Bayside Resort, Inc.
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F.2d 338, 342 (3d Cir. 1985). The non-moving party “may not rest
upon mere allegations, general denials, or . . . vague
statements . . . .” Quiroga v. Hasbro, Inc., 934 F.2d 497, 500
(3d Cir. 1991). “[T]here is no issue for trial unless there is
sufficient evidence favoring the non-moving party for a jury to
return a verdict for that party.” Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 249 (1986).

not himself to weigh the evidence and determine the truth of the
matter but to determine whether there is a genuine issue for
trial.” Id. In making this determination, this Court draws all
reasonable inferences in favor of the non-moving party. See Bd.
of Educ. v. Earls, 536 U.S. 822, 850 (2002); see also Armbruster
v. Unisys Corp., 32 F.3d 768, 777 (3d Cir. 1994).

“[A]t the summary judgment stage the judge’s function is

ANALYSIS

SBRMCOA’s argument that the agreement was ultra vires must
be decided by the Court. SBRMCOA, LLC v. Bayside Resort, Inc.,
707 F.3d 267, 272 (3d Cir. 2013). This inquiry is limited to
the formation of a binding agreement. Id. If the Board had the
authority to enter the contract, SBRMCOA’s challenges to the
validity of the agreement, in whole are in part, are within the
province of the arbitrator. Id.

The individual who signed the Water Supply Agreement must
have had the authority to do so on behalf of SBRMCOA in order

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for the contract to be binding on the association. See SBRMCOA,
LLC, 707 F.3d at 271; Sandvik AB v. Advent Intern. Corp., 220
F.3d 99, 106-08 (3d Cir. 2000). The Water Supply Agreement in
this case was signed by Poliner, president of the Board. Thus,
in this case, there are two inquiries the Court must make.
First, whether Poliner had the authority to sign a contract on
behalf of the Board. Second, whether the Board itself had the
authority to enter the Water Supply Agreement on behalf of the
association. In order to address these issues, a brief
discussion of the law governing condominium associations is in
order.

The Virgin Islands Condominium Act generally governs

condominium associations. See V.I. CODE ANN., tit. 28, ch. 33.
Pursuant to the Virgin Islands Code, individuals in a
condominium or apartment complex may form an “association of
apartment owners.” See V.I. CODE ANN., tit. 28, §§ 901, 902. An
“’association of apartment owners’ means all of the apartment
owners acting as a group in accordance with the bylaws and
declaration.” V.I. CODE ANN., tit. 28, § 901. All condominium
associations “shall be governed by bylaws . . . which shall be
annexed to the declaration and made a part thereof.” V.I. CODE
ANN., tit. 28, § 917. The bylaws and declaration of condominium
are to be strictly adhered to. V.I. CODE ANN., tit. 28, § 906. As
such, those documents govern this analysis.

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A. Poliner’s Authority to Act for the Board

As the president of the Board of Directors of SBRMCOA,
Poliner had that authority which was delegated to him by the
bylaws and the Board. See Schoonejongen v. Curtiss-Wright Corp.,
143 F.3d 120, 127-28 (3d Cir. 1998)(“In general, an officer's
powers stem from the organic law of the corporation, or a board
delegation of authority which may be express or implied. Express
authority to act on behalf of the corporation is usually
manifested through a statute, the certificate of corporation,
the by-laws, or a board . . . action.”)

Under SBRMCOA’s bylaws, an officer could enter a contract

on behalf of the association where permitted by the Board. (ECF
105-5, Bylaws, IV.8.) The bylaws state, in pertinent part, “All
agreements, contracts, deeds, leases, checks and other
instruments of the Condominium shall be executed . . . by such
other person or persons as may be designated by the Board of
Directors.” (ECF 105-5, Bylaws, IV.8.)

In a resolution dated August 7, 2005, the Board authorized

Poliner to execute the Water Supply Agreement. (ECF 105-3,
Resolution, Bd. of Dirs.) Therefore, to the extent that the
Board had the authority to enter the Water Supply Agreement,
that authority was properly delegated to Poliner per the
association’s bylaws.

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The Court also notes that for purposes of the instant

motions, SBRMCOA concedes that Poliner was duly authorized to
act on behalf of the Board.
B. The Board’s Authority to Bind SBRMCOA

Notwithstanding Poliner’s authority to act on behalf of the

Board, SBRMCOA argues that the Board lacked authority to enter
into the Water Supply Agreement. SBRMCOA asserts that the
Board’s act was ultra vires under the association’s declaration
of condominium (“the Declaration”).

A board of directors of a condominium association is
limited to that authority granted to it by its governing
documents. Waggoner v. Laster, 581 A.2d 1127, 1133-35 (Del.
1990) (cited with approval in SBRMCOA, LLC v. Bayside Resort,
Inc., 707 F.3d 267, 271 (3d Cir. 2013) (stating that the Board’s
authority is narrower than that of the condominium association
as a whole)). As discussed above, the governing documents of a
condominium association are the declaration of condominium and
bylaws. See V.I. CODE ANN., tit. 28, § 901.

Here, the Declaration states that the Board controls and

governs “[a]ll of the affairs, policies, regulations and common
property of the Condominium.” (ECF 105-4., Decl. of Condo. §
4.D) The bylaws state that “[t]he Board of Directors shall have
the powers and duties necessary for the administration of the
affairs of the Condominium and may do all such acts and things

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except those which by law or by the Declaration or by these By-
Laws may not be delegated to the Board of Directors . . . .”
(ECF 105-5, Bylaws, II.2.) As such, the issue is whether the
provision of water constitutes an “affair” of the association,
and thus falls within this broad grant of authority.

The “affairs of the Condominium” are not expressly defined

in the Declaration, and the Court is unaware of any case law
specifically defining the term. In the absence of another
established meaning, courts give text its ordinary meaning.
U.S. v. Geiser, 527 F.3d 288, 294 (3d Cir. 2008). The ordinary
meaning of words may be discovered through the use of “standard
reference works,” such as dictionaries. Id. “Affair” is
defined by the Oxford English Dictionary as: “. . . something to
be done; a piece or item of business; an occupation, a pursuit;
a task, a duty.” Affair, Oxford English Dictionary (3d ed.
2012). Merriam-Webster defines it as a “commercial,
professional, public, or personal business.” A ffair, Webster’s
Third New International Dictionary (Merriam Webster 1993).

Neither dictionary explicitly lists whether provision of
water to condominium unit owners is an “affair.” That said, a
straight-forward reading of the term, considering both
definitions, is that an “affair” of any entity is something
which is a common activity or business of such an entity. The
definitions can also be read to mean that any activity

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undertaken pursuant to an official task or duty is within the
meaning of “affair.”

The association has the “power and duty to obtain, for the
benefit of the Condominium Property, water, electric, and sewage
services . . . .” (ECF 105-4, Decl. of Condo. § 4.B.3.) Not only
is the provision of water something which easily seems to fit
within the usual business of a residential association on St.
Thomas, but it is something which the association is
specifically directed to do. As such, based upon the ordinary
meaning of the word “affair,” the Court finds that contracting
for the provision of water is one of the affairs of the
association. Because the authority to conduct such affairs has
been delegated to the Board, the Court finds that the Board had
the authority to enter the Water Supply Agreement.

While the Court has determined that contracting for the

provision of water is an “affair” of the association, the
Court’s inquiry is not complete. Indeed, the Declaration and
bylaws expressly give the Board the authority to conduct the
affairs of the association only if such duties are not otherwise
prohibited. (ECF 105-4., Decl. of Condo. § 4.D; ECF 105-5,
Bylaws, II.2.) Thus, the Court must now turn its attention to
whether the Declaration, bylaws, or the law prohibit the Board
from entering a contract for water.

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SBRMCOA does not direct the Court’s attention to any

provision of the Declaration or bylaws which prohibits the Board
from entering contracts, and none is apparent to the Court.2
Similarly, there is no provision that restricts affairs
pertaining to water to the exclusive province of the
association. While the Declaration certainly includes obtaining
water among the duties and powers of the association, it does
not purport to exclude delegation of that power. (See ECF 105-4,
Decl. of Condo. § 4.B.3.)


2 Indeed, a review of the Declaration and bylaws indicates that, while not
mentioning so specifically, the bylaws contemplate that the Board will enter
contracts for the association. Article II, section 2, of the bylaws, “Powers
and Duties,” provides in pertinent part:


The Board of Directors shall have the powers and duties
necessary for the administration of the affairs of the
Condominium . . . . Such powers and duties of the Board of
Directors shall include, but shall not be limited to, . .
.


(g) Purchasing or leasing or otherwise acquiring in the
name of the [Board] on behalf of all Unit Owners, Units
offered for sale or surrendered by their owners to the
[Board].
(h) Purchasing of Units at foreclosure or other
judicial sales in the name of the [Board] on behalf of
all Unit owners.
(i) Selling, leasing, mortgaging . . . or otherwise
dealing with Units acquired by the Association . . .
(k) Obtaining insurance for the Condominium Property,
including the Units . . .
(l) Making of repairs, additions and improvements to or
alterations of the Condominium Property . . .



(ECF 105-5, Bylaws, II.2.)(emphasis added)

Exercise of any of these powers of the Board would require the
execution of contracts. The bylaws also implicitly presume that the Board
may enter contracts where the bylaws allow the Board to delegate that
authority to officers. (ECF 105-5, Bylaws, IV.8.)

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Finally, the Court is unaware of any provision of law that

limits the Board’s authority to contract on the association’s
behalf, once the Board has been vested with such authority.

As such, the Board acted within its authority, delegated to

it by the association, when it entered the Water Supply
Agreement.

CONCLUSION



For the foregoing reasons, the Court will deny SBRMCOA’s


motions for partial summary judgment.

In light of the Court’s findings, the parties shall brief,
not later than 3:00 PM on November 8, 2013, whether this matter
should be submitted to arbitration. An appropriate order
follows.





S\









Curtis V. Gómez
District Judge