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Perez v. Government of Virgin Islands Jose Luis Perez

argued: April 19, 1988.

JOSE LUIS PEREZ, JR., LYNN BELTON, JEAN BRILEY, JOSE LUIS PEREZ, SR., ALDA SHALOUT, AND JOSEPH FELIX ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED,
v.
GOVERNMENT OF THE VIRGIN ISLANDS JOSE LUIS PEREZ, JR., JEAN BRILEY, ALDA SHALOUT, ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, APPELLANTS



On Appeal from the United States District Court of the Virgin Islands, St. Croix, D.C. Civil No. 84-273, District Judge: David V. O'Brien.

Seitz, Sloviter, and Becker, Circuit Judges.

Author: Sloviter

Opinion OF THE COURT

SLOVlTER, Circuit Judge.

I.

Appellant Jose Luis Perez, who Purchased an automobile liability insurance policy from the now-defunct Dome Insurance Company, Inc., was one of the plaintiffs who sought to represent a class of similarly-situated policy holders in a suit against the Government of the Virgin Islands. The essence of the claim pressed by Perez was that the Government was negligent in allowing Dome to operate in the Virgin Islands and in failing to enforce the insurance statutes and regulations as to Dome.*fn1 It is alleged that as a result of the Government's negligence, the policies became worthless.*fn2 The district court permitted Perez action to proceed as a test case rather than as a class action.*fn3 Each party moved for summary judgment. Although the second amended complaint sought general, compensatory and special damages as may be proven," App. at 173, in his motion for summary judgment Perez sought $528, the value of the premiums he paid to Dome.

The district court granted the Government's motion for summary judgment. After reviewing the statutory scheme, the court held that Perez could not establish a duty running to him by virtue of the Virgin Islands insurance laws, and thus he could not succeed on his negligence action. Perez appeals, contending that the district court erred as a matter of law. Our review is plenary.

II.

Perez argues that the Government of the Virgin Islands was a responsible sovereignty and should be held responsible for non-regulation of the only domestic insurer in the Territory. Before a sovereign may be sued for negligence, it must first be ascertained if the sovereign has waived its inherent immunity to suit. The Government of the Virgin Islands has waived such immunity. See V.I. Code Ann. tit. 33, § 3408 (Supp. 1986).

However, a waiver of immunity by a sovereign does not automatically create a new liability. Instead, the waiver simply removes one defense which the sovereign may plead against a negligence claim. See, e.g., Cracraft v. City of Saint Louis Park, 279 N.W.2d 801, 808 (Minn. 1979). There still must be a basis to assert liability under either statutory or common law. This appeal hinges on that issue.

The district court in this case stated that when a plaintiff sues the government for breach of a duty which is not explicitly created by statute, "the public duty/special duty distinction is a 'basic tenet of negligence law."' Perez v. Gout of the Virgin Islands, No. 84-273, slip op. at 6 (D.V.l. April 30, 1987) (quoting Cracraft, 279 N.W.2d at 804). Under that general rule, which is still adhered to by a majority of jurisdictions, see Annot., 38 A.L.R. 4th 1194 (1985), a duty owed by the governmental entity to the public in general cannot be the basis of a negligence action although a duty owed to individual members of the public based on a special relationship can be the basis of such an action. See Trianon Park Condominium Ass'n v. City of Hialeah, 468 So. 2d 912 (Fla. 1985) (absent specific legislative intent to the contrary, government's enactment of building code provisions and enforcement thereof did not create duty to individual property owners); Cracraft, 279 N.W.2d at 806 (by enacting an ordinance requiring fire code inspections or by undertaking those inspections city undertook a duty only toward the general public and not to individual members of that public, absent "additional indicia that the municipality has undertaken the responsibility of protecting a particular class of persons from the risks associated with fire code violations").

The Virgin Islands legislature has adopted as "the rules of decision in the courts of the Virgin Islands" the common law as expressed in the American Law Institute's Restatements or, if not expressed in the Restatements, "as generally understood and applied in the United States . . . in the absence of [Virgin Islands] laws to the contrary." V.I. Code Ann. tit. 1, § 4 (1967); see Co-Build Companies v. Virgin Islands Refinery Corp., 15 V.I. 528, 533, 570 F.2d 492, 494 (3d Cir. 1978); Skeoch v. Ottley, 6 V.I. 241, 252, 377 F.2d 804, 810 (3d Cir. 1967).

The Restatement (Second) of Torts treats the issue of governmental tort liability in the sections relating to Standard of Conduct. Section 288 reflects the prevailing rule in the United States that "a legislative enactment . . . whose purpose is found to be exclusively . . . (b) to secure to individuals the enjoyment of rights or privileges to which they are entitled only as members of the public" does not create a standard of conduct to be used to impose tort liability. Restatement (Second) of Torts § 288 (1965) (emphasis added). The Comment on this clause amplifies further as follows:

[Certain] legislative enactments and regulations are intended only for the purpose of securing to individuals the enjoyment of rights and privileges to which they are entitled as members of the public, rather than for the purpose of protecting any individual from harm. Thus a statute may be intended only to secure the public right of unobstructed passage on the public highway, or freedom from excessive noise or immoral conduct in the community. Under some circumstances, where an individual has been interfered with in his exercise of such a public right, and as a result has suffered special harm, distinct from that suffered by the rest of the community, he may be entitled to maintain a tort action for the violation. . . . In the ordinary case, ...


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