2012 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

8-15-2012

Grand Union Supermarkets of th v. Lockhart

Realty Inc

Precedential or Non-Precedential: Non-Precedential

Docket No. 11-1963

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Recommended Citation

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NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_____________

No. 11-4645

_____________

GRAND UNION SUPERMARKETS OF THE

VIRGIN ISLANDS, INC; RED APPLE GROUP, INC.

v.

LOCKHART REALTY INC, f/k/a/ H.E. LOCKHART MANAGEMENT, INC.,

 Appellant

_____________

No. 11-1963

_____________

GRAND UNION SUPERMARKETS OF THE

VIRGIN ISLANDS, INC.; RED APPLE GROUP, INC.

v.

LOCKHART REALTY, INC., f/k/a H.E. LOCKHART MANAGEMENT, INC.,

 Appellant

_____________

No. 12-1021

_____________

GRAND UNION SUPERMARKETS OF THE VIRGIN ISLANDS, INC.;

RED APPLE GROUP, INC.

v.
2

LOCKHART REALTY INC.,

f/k/a H.E. LOCKHART MANAGEMENT, Inc.,

 Appellant

_____________

On Appeal from the District Court of the Virgin Islands

(D.C. No. 3-01-cv-00044)

District Judge: Honorable Juan R. Sanchez

_______________

Argued May 11, 2012

Before: CHAGARES, JORDAN, and COWEN, Circuit Judges.

(Filed: August 15, 2012 )

Gregory H. Hodges, Esquire (Argued)

Justin K. Holcombe, Esquire

Michael C. Quinn, Esquire

Dudley, Topper & Feuerzeig

1000 Frederiksberg Gade

P.O. Box 756

St. Thomas, VI 00804

Counsel for Appellant

Henry F. Reichner, Esquire (Argued)

Reed Smith

1650 Market Street

2500 One Liberty Place

Philadelphia, PA 19103

Karin A. Bentz, Esquire

Law Offices of Karin A. Bentz

18 Dronningens Gade

Suite 8

St. Thomas, VI 00802

Counsel for Appellees

_______________

OPINION

_______________
3

CHAGARES, Circuit Judge

Lockhart Realty Inc., formerly H.E. Lockhart Management, (“Lockhart”) appeals

from the District Court’s judgment in favor of, and award of prejudgment interest and 

attorneys’ fees to, the plaintiff, Grand Union Supermarkets of the Virgin Islands, Inc. 

(“Grand Union”).

.

1

I.

 For the reasons discussed below, we will reverse.

Because we write solely for the parties, we recount only the facts that are relevant 

to our disposition. This case, and three related cases involving the same parties, arose out 

of the destruction of a commercial structure in St. Thomas owned by Lockhart (“the 

Building”) during Hurricane Marilyn on September 15, 1995. At the time, Lockhart was 

leasing the Building to Grand Union. Pursuant to its lease from Lockhart for the Building 

(“the Lease”), Grand Union was required to insure the Building and to rebuild promptly 

at its own expense if the Building was damaged. When Hurricane Marilyn struck, Grand 

Union had self-insured the property but had not taken out a separate insurance policy. 

After Hurricane Marilyn destroyed the Building, Grand Union brought suit in the 

Virgin Islands Territorial Court in 1996 against Lockhart seeking, inter alia, a declaratory 

judgment that the Lease was still in force (“Grand Union I

 1

 Grand Union is a wholly owned subsidiary of Red Apple Group, Inc. (“Red 

Apple”). In turn, Red Apple is owned by John Castimatidis. Red Apple was originally a 

plaintiff in this lawsuit but voluntarily dismissed its claims on the first day of trial. 

Hereinafter, Grand Union, Red Apple, and John Castimatidis will be referred to 

collectively as “Grand Union.”

”). In addition, Grand Union 

purchased retroactive insurance coverage from National Union Fire Insurance Co. 
4

(“National Union”) for the period of October 1, 1994 through October 1, 1995. Because 

the Building had already been destroyed at the time the policy was purchased, National 

Union insisted that Grand Union execute a side agreement providing that it would make 

no claims for losses to the Building relating to Hurricane Marilyn and would indemnify 

National Union in the event that the insurance company was compelled to make a 

payment to Lockhart. The insurance policy, therefore, was essentially purchased so that 

Grand Union could prove that it had fulfilled the terms of the Lease. Notwithstanding 

these efforts, in 1997, Lockhart brought suit in the Virgin Islands Territorial Court 

against National Union and Grand Union for breach of the Lease, seeking $2.7 million in 

damages for Grand Union’s failure to rebuild the Building (“Lockhart I

The case at bar arose out of the settlement of 

”). 

Grand Union I and Lockhart I. 

Although National Union and Grand Union originally shared counsel in Lockhart I

We expect to enforce National Union’s rights under the letter of 

undertaking and the indemnity agreement against Red Apple/Grand Union. 

Under those undertakings Red Apple/Grand Union has no claim to any 

insurance proceeds and will be required to indemnify and hold harmless 

National Union from any payments which it may be forced to make to 

[Lockhart] . . . .

, on 

December 16, 1998, National Union notified Grand Union in a letter that it would retain 

its own attorney, negotiate with Lockhart separately, and seek indemnification from 

Grand Union should it be required to pay Lockhart. In relevant part, National Union’s

letter stated: 

This is to advise you that we intend to deal directly with [Lockhart] in 

regard to claims it may have against National Union’s policy proceeds, 

regardless of whether any further action is undertaken by [Lockhart] against 

National Union in the territorial court of the Virgin Islands. . . .
5

In summary, National Union hereby disassociates itself from all previous 

actions taken by Red Apple/Grand Union in connection with its relationship 

with [Lockhart] and/or the territorial court of the Virgin Islands. We reject 

any claim that Red Apple/Grand Union may make to insurance proceeds, 

and advise you that we will take steps to satisfy the claims [Lockhart] has 

against policy proceeds, and we will enforce all aspects of the indemnity 

agreement entered into by Red Apple Group and Grand Union on February 

15, 1996.

Joint Appendix (“JA”) 1143-44. In addition to that clear disassociation, National Union 

never paid any legal fees to Grand Union’s counsel. 

Accordingly, Lockhart and National Union began settlement negotiations and, on 

March 1, 1999, entered into an agreement by which National Union agreed to pay

Lockhart $2.7 million to reconstruct the Building and Lockhart released all claims against 

National Union (“National Union-Lockhart Settlement”). Neither Lockhart nor National 

Union immediately informed Grand Union of their separate settlement. 

Meanwhile, Grand Union and Lockhart engaged in separate settlement 

negotiations and, on March 4, 1999, entered into a “Mediated Settlement Agreement” to 

settle Grand Union I and Lockhart I. The Mediated Settlement Agreement provided that 

(1) mutual releases would be exchanged, (2) Grand Union would pay Lockhart $35,000 

and transfer to Lockhart its unused architectural plans for the Building, and (3) Grand 

Union would surrender its claim to the five years remaining on the Lease. The parties 

executed a formal release the following day in which Grand Union released all claims 

against Lockhart and Lockhart released all claims against both Grand Union and National 

Union.
6

Days after the Mediated Settlement Agreement, National Union brought suit 

against Grand Union in New York (“New York Litigation

While National Union and Grand Union were settling the 

”), seeking indemnification of 

the $2.7 million that it paid to Lockhart pursuant to the National Union-Lockhart 

Settlement. In settlement of that suit, on April 30, 2004, Grand Union paid $1.5 million 

to National Union in exchange for a release of all of National Union’s claims it. 

New York Litigation

On January 3, 2005, the District Court dismissed Grand Union’s fraud and good 

faith claims. The District Court later denied Lockhart’s motion for summary judgment 

on the unjust enrichment claim, however, because “a reasonable juror could determine 

that Lockhart did not disclose to Grand Union that it had agreed to release its claims 

, on 

February 26, 2001, Grand Union filed this lawsuit against Lockhart. In its complaint, 

Grand Union alleged fraud, unjust enrichment, and breach of the covenant of good faith 

and fair dealing. Grand Union’s claims are based on Lockhart’s failure to disclose the 

National Union-Lockhart Settlement to Grand Union during their settlement negotiations.

Because Lockhart had already released all claims against National Union before March 4, 

1999, Lockhart’s release of its claims against National Union in the Mediated Settlement 

Agreement was worthless. Thus, Grand Union maintains that Lockhart was unjustly 

enriched because it obtained Grand Union’s consideration in the Mediated Settlement 

Agreement in exchange for a release that was worth less than Grand Union understood it 

to be. Grand Union claims that it was deceived because it settled under the mistaken 

belief that National Union would be included in the settlement and, as such, National 

Union would not turn to Grand Union for indemnification.
7

against National Union so that Grand Union would confer valuable consideration upon it 

in exchange for the dismissal of those very same claims.” JA 5. On December 13, 2010, 

a jury found in favor of Grand Union on the unjust enrichment claim and awarded it $2.7 

million in restitution. The District Court thereafter denied Lockhart’s renewed motion 

for judgment as a matter of law or, in the alternative, for a new trial, and awarded Grand 

Union prejudgment interest and attorneys’ fees. Lockhart timely filed this appeal.

II.

The District Court of the Virgin Islands had diversity jurisdiction over this case 

pursuant to 48 U.S.C. § 1612(a) and 28 U.S.C. § 1332. See Edwards v. HOVENSA, 

LLC

We review de novo the District Court’s denials of Lockhart’s motion for summary 

judgment and renewed motion for judgment as a matter of law. 

, 497 F.3d 355, 357 (3d Cir. 2007). We have jurisdiction over the appeal pursuant to 

28 U.S.C. § 1291.

Stratechuk v. Bd. of 

Educ., South Orange-Maplewood Sch. Dist., 587 F.3d 597, 603 (3d Cir. 2009); Acumed 

LLC v. Advanced Surgical Servs., Inc., 561 F.3d 199, 211 (3d Cir. 2009). Summary 

judgment should be rendered “if the movant shows 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(a). “In making this determination, we must view the facts in the light most 

favorable to the nonmoving party and draw all inferences in that party’s favor.” 

Stratechuk

There is a similarly high standard for overturning a jury verdict on a renewed

motion for judgment as a matter of law. Legal questions are reviewed de novo and the 

, 587 F.3d at 603 (quotation marks omitted). 
8

jury’s factual findings are reviewed to “determine whether the evidence and justifiable 

inferences most favorable to the prevailing party afford any rational basis for the verdict.” 

Intermilo, Inc. v. I.P. Enters., Inc., 19 F.3d 890, 892 (3d Cir. 1994). A court may grant a 

renewed motion for judgment as a matter of law “only if ‘the record is critically deficient 

of the minimum quantum of evidence’ to sustain the verdict.” Acumed LLC, 561 F.3d at 

211 (quoting Gomez v. Allegheny Health Servs., Inc., 71 F.3d 1079, 1083 (3d Cir. 

1995)). This Court must decide “whether the evidence is sufficient to sustain liability.” 

Id. (quoting Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1166 (3d Cir. 1993)). In 

doing so, the Court “may not weigh the evidence, determine the credibility of witnesses, 

or substitute its version of the facts for the jury’s version.” Id. (quoting Lightning Lube, 

Inc.

III.

, 4 F.3d at 1166).

Lockhart appeals the District Court’s denial of (1) its motion to dismiss or for 

summary judgment on the unjust enrichment claim; (2) its renewed motion for judgment 

as a matter of law pursuant to Federal Rule of Civil Procedure 50(b) or, in the alternative,

for a new trial pursuant to Federal Rule of Civil Procedure 59(a)(1)(A); and (3) its motion 

to strike Grand Union’s jury demand. Lockhart also maintains that Grand Union failed to 

prove damages and challenges the award of attorneys’ fees and prejudgment interest. 

Lockhart first argues that the District Court should have dismissed Grand Union’s 

unjust enrichment claim because it was dependant on proof of the same facts as the fraud 

claim that the District Court dismissed as issue precluded. Because we agree, we will 

reverse the judgment of the District Court.
9

The District Court dismissed Grand Union’s fraud claim in this action on January 

3, 2005. In the order of dismissal, the District Court held that Grand Union was 

collaterally estopped from arguing that Lockhart’s failure to disclose its settlement with 

National Union was fraudulent because Grand Union had raised the same argument in the 

New York Litigation and it had been rejected by the court. In the New York Litigation, 

defendant Grand Union alleged in a counterclaim that National Union had committed 

fraud by intentionally failing “to disclose material aspects of its negotiation and 

settlement of the Lockhart claim to Red Apple/Grand Union.” JA 54. The New York 

Supreme Court analyzed Grand Union’s counterclaim as a fraudulent or tortious

nondisclosure cause of action. Such a claim in New York requires a showing that “(1) 

the defendant made a material false representation, (2) the defendant intended to defraud 

the plaintiffs thereby, (3) the plaintiffs reasonably relied upon the representation, and (4) 

the plaintiffs suffered damage as a result of their reliance.” Swersky v. Dreyer & Traub, 

219 A.D.2d 321, 326 (N.Y. App. Div. 1996) (citation omitted). In addition, the plaintiff 

must prove that the defendant had a duty to disclose material information. Id. A duty to 

disclose arises where there is a fiduciary relationship between the parties. Id. at 327. In 

addition, “[u]nder the ‘special facts’ doctrine, a duty to disclose arises where one party’s 

superior knowledge of essential facts renders a transaction without disclosure inherently 

unfair.” Id.

The New York Supreme Court found that National Union had no duty to disclose,

and Grand Union had no actionable claim for fraud, because there was no fiduciary 

relationship between National Union and Grand Union, and National Union did not have 

(quotation marks and citation omitted). 
10

“‘superior knowledge of the essential facts,’” which would have rendered the transaction 

without disclosure “‘inherently unfair.’” JA 54 (quoting Swersky, 219 A.D.2d at 327). 

National Union did not have superior knowledge because it had advised Grand Union of 

its intention to deal directly with Lockhart “in regard to claims it may have against 

National Union’s policy proceeds” on December 16, 1998, months before the Mediated 

Settlement Agreement. Id.

Although Grand Union’s fraud claim in the 

at 55. Accordingly, Grand Union was on notice that National 

Union would settle separately with Lockhart, and Grand Union did not have an actionable 

fraud claim based on fraudulent nondisclosure. 

New York Litigation was against 

National Union rather than Lockhart, the District Court nonetheless held that Grand 

Union’s fraud claim against Lockhart in this litigation was issue precluded because it

depended on proof of the exact same facts as the fraud claim in the New York Litigation. 

In both cases, Grand Union would have had to prove that National Union or Lockhart had 

knowledge of essential facts that rendered the Mediated Settlement Agreement inherently 

unfair.2

Issue preclusion is appropriately invoked if:

 The question we decide now is whether the dismissal of the fraud claim 

compelled dismissal of the unjust enrichment claim as well. 

(1) the previous determination was necessary to the decision, (2) the 

identical issue was previously litigated, (3) the issue was decided in a 

decision that [was] final, valid, and on the merits, and (4) the party that is 

being precluded from relitigating the issue was adequately represented in 

the previous action.

 2

 Grand Union also argues that the District Court erred in dismissing the fraud 

claim but Grand Union did not appeal that decision and that issue is not before this Court.
11

Gonzalez v. AMR, 549 F.3d 219, 223 (3d Cir. 2008) (quoting Harrilal v. Blackwood, No. 

CIV. 619/1998, 2001 WL 1769735, at *4 (V.I. Terr. Ct. Dec. 13, 2001)). The relevant

elements of tortious nondisclosure in the Virgin Islands are the same as in New York, 

which are set forth above.

3

No Virgin Islands statute provides an unjust enrichment cause of action. Instead, 

pursuant to 1 V.I.C. § 4, “[t]he rules of the common law, as expressed in the restatements 

of the law . . . shall be the rules of decision in the courts of the Virgin Islands . . . in the 

absence of local laws to the contrary.” 

 

See also Hefferman v. U.S.Virgin Islands

 3

 The Restatement (Second) of Torts § 551(1), which is applied in the Virgin 

Islands, defines tortious nondisclosure as follows:

, No. 

2009/0087, 2010 WL 4942160, at *2 (D.V.I. Nov. 30, 2010). Under the Restatement 

One who fails to disclose to another a fact that he knows may justifiably 

induce the other to act or refrain from acting in a business transaction is 

subject to the same liability to the other as though he had represented the 

nonexistence of the matter that he has failed to disclose, if, but only if, he is 

under a duty to the other to exercise reasonable care to disclose the matter 

in question.

In turn, a duty to disclose exists where, inter alia,

(b) matters known to him that he knows to be necessary to prevent his 

partial or ambiguous statement of the facts from being misleading; and

. . . .

(e) facts basic to the transaction, if he knows that the other is about to enter 

into it under a mistake as to them, and that the other, because of the 

relationship between them, the customs of the trade or other objective 

circumstances, would reasonably expect a disclosure of those facts.

Id. § 551(2).
12

(Third) of Restitution § 1 (2011), “[a] person who is unjustly enriched at the expense of 

another is subject to liability in restitution.” The Restatement (Third) of Restitution 

§ 13(1) specifies that the mistake that leads to unjust enrichment can be induced by either 

fraud or material misrepresentation:

A transfer induced by fraud or material misrepresentation is subject to 

rescission and restitution. The transferee is liable in restitution as necessary 

to avoid unjust enrichment.

The comments explain that if the transfer is induced by an “innocent misrepresentation,” 

it “is subject to rescission only if the misrepresentation was material.” Id. cmt c.4

 Thus, 

to prevail on an unjust enrichment claim based on a mistake of fact, a plaintiff must prove 

(1) that a mistake of fact caused the plaintiff to confer a benefit upon another and (2) that 

the mistake was due to either fraud or an innocent but material misrepresentation. In 

addition, the court must conclude that equity requires the defendant to return the unjust 

benefit to the plaintiff. Cruse v. Callwood

 4

 Similarly, the Restatement (First) of Restitution § 28 (1937) provided that:

, D.C. Civ. App. Nos. 2006-71 & 2006-76, 

2010 WL 438173, at *6 (D.V.I. Feb. 3, 2010).

A person who has paid money to another because of a mistake of fact and 

who does not obtain what he expected in return is entitled to restitution 

from the other if the mistake was induced:

(a) by the fraud of the payee, or

(b) by his innocent and material misrepresentation . . . .

Because the Restatement (Third) of Restitution was published after the District Court 

denied Lockhart’s renewed motion for judgment as a matter of law, we mention the 

relevant provisions from both the First and Third Restatements here. As applied to this 

case, there is no material difference between them, however. 
13

Not all of their elements are identical, but tortious nondisclosure and unjust 

enrichment claims share the element of material mistake of fact. In addition, where there 

is no fiduciary relationship, both causes of action require a showing that the defendant’s 

misstatement or omission rendered the transaction unfair or unjust. Although the New 

York Supreme Court did not state it directly, it held that there was no material mistake of 

fact here because National Union’s knowledge of the National Union-Lockhart 

Settlement was not “superior knowledge” of an “essential fact” that rendered the 

transaction inherently unfair. Thus, with respect to the material mistake element of an 

unjust enrichment claim, Grand Union’s claim is barred by issue preclusion by the

Court’s finding in the New York Litigation. As such, the District Court erred in 

declining to dismiss the unjust enrichment claim.5

Our decision in 

 

Steamfitters Local Union No. 420 Welfare Fund v. Philip Morris, 

Inc., 171 F.3d 912 (3d Cir. 1999), is instructive. In Steamfitters

In the tort setting, an unjust enrichment claim is essentially another way of 

stating a traditional tort claim (i.e., if defendant is permitted to keep the 

benefit of his tortious conduct, he will be unjustly enriched). . . . We can 

, the unjust enrichment 

and fraud claims both failed because they shared the element of proximate causation of 

damages and the plaintiffs failed to establish that element. Because the plaintiff could 

not prove its fraud claim, we declined to afford it a roundabout route to recovery by way 

of unjust enrichment. We explained:

 5

 The other requirements for issue preclusion are also satisfied. The New York 

Litigation was a final decision on the merits, the dismissal of the fraud claim was 

essential to the adjudication of Grand Union’s counterclaim, and Grand Union, which 

was a party to the New York Litigation, was adequately represented and had a full and 

fair opportunity to litigate the issue in that case. 
14

find no justification for permitting plaintiffs to proceed on their unjust 

enrichment claim once we have determined that the District Court properly 

dismissed the traditional tort claims because of the remoteness of plaintiffs’ 

injuries from defendants’ wrongdoing.

Id. at 936-37; see also Allegheny Gen. Hosp. v. Philip Morris, Inc., 228 F.3d 429, 447 

(3d Cir. 2000) (adopting the declaration in Steamfitters that “[i]n the tort setting, an 

unjust enrichment claim is essentially another way of stating a traditional tort claim.”).6

Likewise, in this case, Grand Union’s fraud and unjust enrichment claims both 

require proof that Lockhart’s nondisclosure was material, caused Grand Union to enter 

into the Mediated Settlement Agreement, and rendered the settlement unfair or unjust. 

Because the New York Supreme Court decided those questions in the negative, we 

conclude that the unjust enrichment claim should have been dismissed on the same basis 

as the fraud claim. 

 

Moreover, Grand Union’s choice to pursue the unjust enrichment claim on a tortbased theory of nondisclosure meant that its fraud and unjust enrichment claims were one 

and the same. It is generally understood that tortious nondisclosure is a fraud claim based 

on an omission rather than an affirmative misstatement. See Duquesne Light Co. v. 

Westinghouse Elec. Corp., 66 F.3d 604, 612-13 (3d Cir. 1995) (discussing claim for 

tortious nondisclosure as a “fraudulent omission claim”); Lightning Lube, Inc., 4 F.3d at 

1185 (same); Navarro v. Gov’t of the V.I.

 6

 Similarly, in Pirelli Armstrong Tire Corp. Retiree Medical Benefits Trust 

v. Walgreen Co., 631 F.3d 436, 448 (7th Cir. 2011), the Court of Appeals for the Seventh 

Circuit upheld the District Court’s holding that the dismissal of plaintiff’s fraud claim 

“took the unjust enrichment claim with it” because plaintiff failed to separately allege 

facts supporting the unjust enrichment claim. 

, 18 V.I. 473, 476-77 (D.V.I. 1981) (“[I]n 
15

certain circumstances nondisclosure is treated as a fraudulent misrepresentation[.]”);

Bortz v. Noon, 729 A.2d 555, 560 (Pa. 1999) (“The tort of intentional non-disclosure has 

the same elements as intentional misrepresentation except in the case of intentional nondisclosure, the party intentionally conceals a material fact rather than making an 

affirmative misrepresentation.” (quotation marks omitted)). Thus, by instructing the jury 

on tortious nondisclosure, the District Court conflated the fraud and unjust enrichment 

claims and asked the jury to decide a question that was already answered in the New 

York Litigation

We hold, therefore, that Grand Union’s unjust enrichment claim was barred by 

issue preclusion and should have been dismissed. Because we hold in favor of Lockhart 

on the basis of issue preclusion, we need not reach the other arguments that Lockhart 

raised in this appeal.

. This confusion illustrates that the fraud and unjust enrichment claims 

are inseparable and that the unjust enrichment claim was an impermissible attempt at a 

second bite at the apple. 

IV.

In accordance with the foregoing, we will reverse the judgment of the District 

Court and remand for further proceedings consistent with this opinion. 
Grand Union Supermarkets of the Virgin Islands, Inc. and Red Apple Group, Inc. v. 

Lockhart Realty, Inc f/k/a H.E. Lockhart Management, Inc., Nos. 11-1963, 11-4645, 12-

1021

JORDAN, Circuit Judge, concurring.

I agree with the Majority’s conclusion that we should vacate the District Court’s 

December 30, 2011 judgment in favor of Grand Union on Grand Union’s unjust 

enrichment claim. However, I write separately because I believe that the District Court 

should have granted Lockhart’s cross-motion to dismiss Grand Union’s unjust 

enrichment claim based on the parties’ agreement to release all claims arising out of the 

Lease.

As the Majority opinion correctly notes, Grand Union and Lockhart executed a 

formal release on March 5, 1999 (the “Release”). The Release provides, in pertinent part:

Grand Union hereby releases, waives, and forever discharges 

any and all claims for which it and its respective agents, 

affiliates, parent companies, subsidiaries, representatives, 

attorneys, officers, directors, shareholders, employees, 

predecessors, successors, and assigns, ... may have or ever 

had or will have against [Lockhart] and its present and former 

agents, employees, officers, directors, shareholders, attorneys, 

predecessors, successors, and assigns ... arising out of or 

related to the Lease, including any and all claims that were 

asserted or could have been asserted in that certain action 

captioned Grand Union Supermarkets of the Virgin Islands, 

Inc. v. H.E. Lockhart Management, Inc., Civil No. 50/1996, 

Territorial Court of the Virgin Islands, and any claims that 

were asserted or could have been asserted in that certain 

action captioned H.E. Lockhart Management, Inc. v. National 

Union Fire Insurance Company of Pittsburgh, Inc., Red 

Apple Group and Grand Union Supermarket of the Virgin 

Islands, Inc., Civil No. 909/1998, Territorial Court of the 

Virgin Islands.
2

(Joint App. at 511.) Lockhart argues that the Release unambiguously bars all claims 

arising out of or related to the Lease, and, therefore, Grand Union’s unjust enrichment 

claim fails.

1

The Verified Complaint avers that “[Lockhart] fraudulently induced Grand Union 

to give up the Lease by failing to disclose that it had already settled the very same claims 

with [National Union], whom [Lockhart] knew was going to seek indemnification from 

Grand Union and Red Apple for the $2.7 million it paid to [Lockhart].” (Id. at 71 

(emphasis added).) It also alleges that “[Lockhart] – which already had been paid $2.7 

million from National Union – received the benefit it bargained for (the Lease), but 

Grand Union did not receive the benefit it bargained for.” (Id. (emphasis added).) Those 

 I agree.

 1 “The rules of interpretation that apply to contracts generally apply also to 

writings that purport to be releases.” Restatement (Second) of Contracts § 284 cmt. c. In 

interpreting a contract, we attempt to ascertain the parties’ intent as “objectively 

manifested by them” and, to “make a preliminary inquiry as to whether the contract is 

ambiguous.” Sunshine Shopping Ctr., Inc. v. Kmart Corp., 85 F. Supp. 2d 537, 540 

(D.V.I. 2000). We apply the “plain meaning rule,” which “assumes that the intent of the 

parties to [the contract] is embodied in the writing itself.” Id. (internal quotation marks 

omitted) (quoting Hullet v. Towers, Perrin, Forster & Crosby, Inc., 38 F.3d 107, 111 (3d 

Cir. 1994)). Moreover, we interpret “[w]ords and other conduct ... in the light of all the 

circumstances,” and give great weight to “the principal purpose of the parties” if it is 

ascertainable. Restatement (Second) of Contracts § 202(1). 

The party pleading a release as an affirmative defense bears “the burden of 

establishing its existence and meaning.” Eulo v. Deval Aerodynamics, Inc., 430 F.2d 

325, 328 (3d Cir. 1970). Once the party satisfies its burden, the burden then shifts to the 

party seeking to invalidate the release to prove that the release is unenforceable. See 

Lloyd v. Hovensa, LLC, 369 F.3d 263, 274 (3d Cir. 2004) (“The burden of proving a 

generally applicable contract defense lies with the party challenging the contract 

provision.”); cf. Harris v. Green Tree Fin. Corp., 183 F.3d 173, 181 (3d Cir. 1999) (“The 

party challenging a contract provision as unconscionable generally bears the burden of 

proving unconscionability.”).
3

allegations powerfully suggest that Grand Union’s unjust enrichment claim against 

Lockhart relates to, and hence is barred by, the Release. 

Grand Union, however, argues that the Release does not foreclose its unjust 

enrichment claim because the Release is void on public policy grounds. To support that 

argument, it relies on the Restatement (Second) of Contracts § 195, which provides that 

even if a contract unambiguously exempts a party from liability, it is unenforceable on 

public policy grounds if it attempts to “exempt[] a party from tort liability for harm 

caused intentionally or recklessly.” Restatement (Second) of Contracts § 195(1). The 

problem with that argument, however, is that the jury made no factual findings on the 

issue of whether Lockhart acted intentionally or recklessly when it did not disclose its

settlement with National Union. And the lack of findings on that issue is no surprise 

because the District Court did not instruct the jury to address it.

2

 2 None of the District Court’s instructions asked the jury to decide whether 

Lockhart acted intentionally or recklessly when it did not disclose its settlement with 

National Union to Grand Union. In addition, there is no evidence in the appellate record 

demonstrating that Grand Union ever asked the District Court for such an instruction –

indeed, Grand Union’s proposed jury instructions contain no such request and Grand 

Union has not directed us to any evidence that it requested a special interrogatory. Thus, 

because the jury made no finding of fact on the issue of whether Lockhart intentionally or 

recklessly failed to disclose its agreement with National Union, and Grand Union 

provides us with no indication that it asked the District Court to charge the jury on that 

issue, we are left to conclude that Grand Union did not attempt to, and cannot, satisfy its 

burden of demonstrating that the Release is unenforceable. 

 (See Joint App. at 107-

149 (jury instructions).) Instead, the District Court instructed the jury that, in order for 

Grand Union to prevail on its unjust enrichment claim, the jury must find that “(1) 

[Lockhart] was enriched; (2) [Lockhart’s] enrichment was at [Grand Union’s] expense; 
4

and (3) [t]he circumstances were such that in fairness and good conscience [Lockhart] 

should return the value of the enrichment to [Grand Union].” (Id. at 128.) Based on that 

instruction, the jury could find in favor of Grand Union without finding that Lockhart

acted either intentionally or recklessly. 

Therefore, because the plain language of the Release bars Grand Union’s unjust 

enrichment claim, and because the jury made no finding of fact that bears on the issue of 

whether the Release is void for public policy reasons, I would vacate the District Court’s 

December 6, 2010 order denying Lockhart’s cross-motion to dismiss and would reverse 

the judgment in Grand Union’s favor.

3

 3 None of the other arguments Grand Union raises have merit. First, Grand Union

asserts that the Release is void because, under our precedent, “‘a release ... will not be 

construed to bar a claim which had not accrued at the date of its execution or a claim 

which was not known to the party giving the release.’” (Appellees’ Br. at 48 (quoting 

Medtronic AVE, Inc. v. Advanced Cardiovascular Sys., 247 F.3d 44, 58 (3d Cir. 2001) 

(citing Three Rivers Motors Co. v. Ford Motor Co., 522 F.2d 885, 896 (3d Cir. 1975) 

(applying Pennsylvania law))).) But that rule does not apply, when, as here, the plain 

language of a contract demonstrates that the parties intended to bar all unknown, future 

claims. See Three Rivers Motors Co., 522 at 896 (noting that “where ... parties manifest 

an intent to settle all accounts, [a] release will be given full effect even as to unknown 

claims”).

Second, Grand Union claims that its unjust enrichment claim “‘arises out of and 

relates to’ the negotiation of the release and settlement of the litigation between the 

parties and not the Lease itself.” (Appellees’ Br. at 45-46.) That argument is also 

unpersuasive because, as Lockhart correctly notes in its Reply Brief, “Grand Union’s 

entire case hinged on its argument that Grand Union was entitled to restitution for its 

surrender of the Lease to [Lockhart], which, Castimatidis testified, was worth $2.75 

million.” (Appellant’s Reply Br. at 24 (original emphasis removed and new emphasis

added).) Under these conditions, there is no question that Grand Union’s unjust 

enrichment claim “relates to” the Lease.

Third, Grand Union asserts that the Release was the product of fraud by Lockhart. 

(See Appellees’ Br. at 42-43 (“A releaser such as Grand Union can always set up fraud 

... as grounds to ignore a release that would otherwise bar its suit.”); id. at 43 (noting that 

“[w]here there has been a mutual mistake or unilateral mistake by one party and fraud by 
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the other party, the party executing a general release as a result of such mistake may sue 

to reform the release or may avoid the ... release ... .” (citation and internal quotation 

marks omitted)); id. at 44 (“Grand Union presented evidence tending to establish ... fraud 

by [Lockhart] ... .”).) But again, that argument is unavailing because the jury did not 

consider whether Lockhart’s conduct was intentional or fraudulent.

In the end, Grand Union is left with what it bargained for: the waiver of all claims 

that arise out of or relate to the Lease. And, it is that bargain that precludes it from 

succeeding on its unjust enrichment claim.