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Tamarind Resort Associates v. Government of Virgin Islands

March 09, 1998

TAMARIND RESORT ASSOCIATES, A U.S. VIRGIN ISLANDS JOINT VENTURE CONSISTING OF TAMARIND RESORT CORPORATION, A DELAWARE CORPORATION, CULLIGAN PORSCHE, INC., A NEW YORK CORPORATION
v.
GOVERNMENT OF THE VIRGIN ISLANDS TAMARIND RESORT ASSOCIATES ("TRA"), APPELLANTS



Appeal from the District Court of the Virgin Islands (Division of St. Thomas) (D.C. Civ. No. 95-cv-00010) Argued December 9, 1997

Before: Sloviter, Stapleton and Mansmann, Circuit Judges.

Filed March 9, 1998

OPINION OF THE COURT

MANSMANN, Circuit Judge.

After the Government of the Virgin Islands denied Tamarind Resort Associates ("TRA") a Coastal Zone Management Act ("CZMA") permit in order to develop Hans Lollik Island, TRA brought suit against the Government in the District Court of the Virgin Islands alleging breach of contract, temporary and permanent unconstitutional takings, and violation of TRA's constitutional rights to due process and equal protection. The district court granted summary judgment for the Government on the breach of contract claim and, treating the constitutional claims as an administrative writ of review, affirmed the Board of Land Use Appeals' decision denying TRA a coastal zone permit.

In this appeal, we are asked to determine whether summary judgment was appropriate on TRA's breach of contract claim. In addition, we must examine the extent to which the District Court of the Virgin Islands has jurisdiction to decide writs of review and determine if the district court erred in reviewing TRA's constitutional claims in its appellate capacity.

Because we agree with the district court that the agreement is unambiguous and that the Government did not breach the agreement by applying the CZMA to TRA, we will affirm the district court's grant of summary judgment on the breach of contract claim. With respect to the remaining constitutional claims, however, we find that the district court erred in treating those claims as a writ of review and therefore will remand for the district court to consider TRA's constitutional claims under its original, federal question jurisdiction.

I.

Great Hans Lollik Island is a 500 acre uninhabited island located approximately two miles off the coast of St. Thomas. In 1964, when the Island was owned by Hans Lollik Corporation, the Corporation and the Government of the Virgin Islands entered into an agreement which was enacted into law as Act No. 1145, 1964 V.I. Sess. Laws 120, and amended by Act No. 1327, 1965 V.I. Sess. Laws 47, and Act No. 1883, 1967 V.I. Sess. Laws 53. The agreement contains a provision identifying it as "contractual and proprietary in nature."*fn1 Under the agreement, the Government approved "the use of Hans Lollik Island for the purposes of a Hotel, Marina and Housing Project" and provided for the lease of certain Government land to construct a marina and related facilities. The agreement states that the initial development objective is to construct a hotel "with accommodations for no less than fifty (50) rooms . . . together with a further development plan calling for the construction of approximately one hundred and fifty (150) major residences." The agreement also contains language that mirrors the Contract Clause of Article I, §10, cl. 1 of the United States Constitution which states that "the Government will not adopt any legislation impairing or limiting the obligations of this contract."

In October of 1978, the Government enacted the Virgin Islands Coastal Zone Management Act, V.I. Code Ann. tit. 12, §§ 901-914 (1982 & Supp. 1997) in order to harmonize the goals of environmental protection and economic development. V.I. Code Ann. tit. 12, § 903(b)(1)-(11); see also Virgin Islands Conservation Soc'y, Inc. v. Virgin Islands Bd. of Land Use Appeals, 881 F.2d 28, 29 (3d Cir. 1989). The general purpose of the CZMA was to set up a comprehensive program for the management, conservation, and orderly development of the coastal area. West Indian Co., Ltd. v. Government of the Virgin Islands, 844 F.2d 1007, 1011 (3d Cir. 1988); see also V.I. Code Ann. tit. 12, § 903(b)(4). Under the CZMA, development of the coastal zone may only be accomplished by obtaining a permit from the Coastal Zone Management Commission ("CZMC"). V.I. Code Ann. tit. 12, §§ 904 and 910. The CZMA also provides, however, that "othing herein contained shall be construed to abridge or alter vested rights obtained in a development in the first tier coastal zone prior to the effective date of [this Act]." V.I. Code Ann. tit. 12, § 905(f). Hans Lollik Island is located in the first tier coastal zone and is subject to CZMA restrictions absent a vested right in development obtained prior to February 1, 1979, the effective date of the CZMA.

TRA is a joint venture established in the Virgin Islands comprised of Tamarind Resort Corporation, a Delaware corporation, and Culligan Porsche, Inc., a New York corporation. In 1990, TRA purchased Hans Lollik Island. TRA is the successor-in-interest to the 1964 agreement between the Government and Hans Lollik Corporation.

TRA developed a plan to construct an 800-unit resort on the island including a 150 unit hotel. TRA submitted an application to the CZMC for a permit. The CZMC rejected TRA's application. TRA thereafter submitted a plan for a 675-unit development, including a 150 unit hotel and 525 residences consisting of 160 major residences and 365 villas or condominium-style homes.

The CZMC held public hearings on TRA's revised plan at which many speakers voiced opposition to the development. The CZMC ultimately denied TRA a permit for construction of the 675-unit proposal in a detailed decision setting forth its extensive findings and Conclusions.

TRA appealed the CZMC decision to the Board of Land Use Appeals. The Board affirmed the CZMC's decision rejecting TRA's permit application. TRA then brought this action against the Government in the District Court of the Virgin Islands asserting claims for breach of contract, temporary and permanent unconstitutional takings, and violation of TRA's constitutional rights to due process and equal protection. TRA moved for summary judgment on the breach of contract and the due process and equal protection claims and the Government cross moved for summary judgment on all claims. The district court granted summary judgment in favor of the Government on TRA's breach of contract claim and, treating TRA's ...


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