Court Opinion

ID: 3044786
Source: CourtListenerOpinion
Date Created: 2015-10-13 23:14:39.853531+00
Date Added: 2024-06-11T08:40:03.837420
License: Public Domain

Opinions of the United
2009 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

6-16-2009

Berne Corp v. Govt of the Virgin I
Precedential or Non-Precedential: Precedential

Docket No. 08-3897

Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2009

Recommended Citation
"Berne Corp v. Govt of the Virgin I" (2009). 2009 Decisions. Paper 1101.
http://digitalcommons.law.villanova.edu/thirdcircuit_2009/1101

This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova
University School of Law Digital Repository. It has been accepted for inclusion in 2009 Decisions by an authorized administrator of Villanova
University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.
                              PRECEDENTIAL

     UNITED STATES COURT OF APPEALS
          FOR THE THIRD CIRCUIT

                No. 08-3897

           BERNE CORP.; B&B CORP.;
     TWENTY-ONE QUEENS QUARTER, INC.;
           MILLER PROPERTIES, INC.;
          EQUIVEST ST. THOMAS, INC.;
      ROBERT SCHMIDT; KIM HOLSWORTH;
    ROBERT SCHMIDT DEVELOPMENT CORP.;
                DORI P. DERR;
     CYRIL V. FRANCOIS ASSOCIATES, LLC;
  SHELL SEEKERS, INC.; CHARLES W. CONSOLO;
LINDA B. CONSOLVO; SNEGLE GADE ASSOCIATES;
   YVETTE LEDERBERG; ARTHUR B. CHOATE;
   STEWART LOVELAND; STACY LOVELAND;
       ELISABETH SHARP; LINDON CORP;
   GORDON L. COFFELT; SORAYA D. COFFELT;
                ONE STOP, INC.

                    v.

    GOVERNMENT OF THE VIRGIN ISLANDS;
       ROY MARTIN, IN HIS OFFICIAL
       CAPACITY AS TAX ASSESSOR;
       VIRGIN ISLANDS TAX REVIEW BOARD

                    Government of the Virgin Islands;
                    Roy Martin;
                    Virgin Islands Tax Review Board,
                                                Appellants

   On Appeal from the District Court of the Virgin Islands
            Division of St. Thomas and St. John
   D.C. Civil Action Nos. 3-00-cv-00141, 3-00-cv-00167,
      3-01-cv-00151, 3-01-cv-00155, 3-01-cv-00181,
      3-01-cv-00196, 3-01-cv-00197, 3-01-cv-00228,
                      3-02-cv-00057
               (Honorable Curtis V. Gomez)

                  Argued January 29, 2009

             Before: SCIRICA, Chief Judge,
           AMBRO and SMITH, Circuit Judges.

                   (Filed: June 16, 2009)

TERRYLN M. SMOCK, ESQUIRE (ARGUED)
Office of Attorney General of Virgin Islands
Department of Justice
34-38 Kronprindsens Gade

                             2
GERS Complex, 2nd Floor
Charlotte Amalie, St. Thomas
U.S. Virgin Islands 00802
      Attorney for Appellants

JAMES M. DERR, ESQUIRE (ARGUED)
P.O. Box 664
Charlotte Amalie, St. Thomas
U.S. Virgin Islands 00804
      Attorney for Appellees,
      Berne Corp., Miller Properties, Inc.,
      Robert Schmidt, Kim Holsworth,
      Robert Schmidt Development Corp.,
      Dori P. Derr, Shell Seekers, Inc.,
      Charles W. Consolvo, Linda B. Consolvo,
      Snegle Gade Associates, Yvette Lederberg,
      Arthur B. Choate, Stewart Loveland,
      Stacy Loveland, Elisabeth Sharp

DAVID A. BORNN, ESQUIRE (ARGUED)
The Bornn Firm
5079 Norre Gade, Suite 1
Charlotte Amalie, St. Thomas
U.S. Virgin Islands 00804
      Attorney for Appellees,
      Twenty-One Queens Quarter, Inc.,
      Cyril V. Francois Associates, LLC

                            3
SORAYA D. COFFELT, ESQUIRE
7003 Estate Louisenhoj
St. Thomas
U.S. Virgin Islands 00802
       Attorney for Appellees,
       Lindon Corporation, Gordon L. Coffelt

                  OPINION OF THE COURT

SCIRICA, Chief Judge.
        This appeal, the most recent chapter in a nearly decade-
long legal battle over the assessment of commercial real
property taxes in the United States Virgin Islands, requires us to
reassess the jurisdictional foundations of our previous decisions
in light of intervening congressional action.1
       The Government of the Virgin Islands appeals two
orders, both entered on September 11, 2008, by the Chief Judge
of the District Court of the Virgin Islands. In the first order, the

   1
    Appellants are the Government of the Virgin Islands, Roy
Martin in his official capacity as Tax Assessor, and the Board of
Tax Review. We will refer to them collectively as “the
Government of the Virgin Islands.” Appellees comprise twenty-
three different corporations and private citizens located in the
Virgin Islands. We will refer to them collectively as “Berne.”

                                 4
District Court partially vacated its May 12, 2003 Decree. In the
second order, the District Court found the Government of the
Virgin Islands had violated the non-vacated parts of the May 12,
2003 Decree and held it in contempt. The Government of the
Virgin Islands challenges both the jurisdiction of the District
Court and its contempt order. We will affirm.
                                I.
       The initial suit in this litigation, brought under 42 U.S.C.
§ 1983, was filed in July 2000 by owners of commercial real
estate subject to commercial real property taxes levied by the
Government of the Virgin Islands.2 Plaintiff taxpayers alleged
violations of the 1936 Act, 48 U.S.C. § 1401 (repealed 2007),
which required real estate tax assessments for the territories be

      2
       The plaintiffs in the initial suit were all owners of
commercial real estate. By 2003, plaintiffs consisted of a
mixture of both commercial and private real estate owners. See
Berne Corp. v. Gov’t of the V.I. (Berne II), 262 F. Supp. 2d 540,
572 (D.V.I. 2003) (“[The permanent injunction] extends to all
real property owners and real property in the Virgin Islands,
including vacant land, agricultural land, commercial properties,
residential properties, condominiums, and timeshare units,
because plaintiffs cover the complete spectrum of taxpaying real
property owners who complained . . . .”), aff’d, 105 F. App’x
324 (3d Cir. 2004).

                                5
made at “actual value.”3 They also alleged violations of the
Revised Organic Act of 1954, 48 U.S.C. § 1541,4 as well as
infringements of their procedural and substantive due process
rights under the Fourteenth Amendment of the United States
Constitution. Berne Corp. v. Gov’t of the V.I., 120 F. Supp. 2d
528, 535 n.15 (D.V.I. 2000). Plaintiffs sought to enjoin the
Government of the Virgin Islands from assessing real property
taxes except in accordance with the 1936 Act, which required
assessment by fair market value. The District Court granted a

   3
     The pertinent part of the 1936 Act reads: “For the calendar
year 1936 and for all succeeding years all taxes on real property
in the Virgin Islands shall be computed on the basis of the actual
value of such property and the rate in each municipality of such
islands shall be the same for all real property subject to taxation
in such municipality whether or not such property is in
cultivation and regardless of the use to which such property is
put.” 48 U.S.C. § 1401a. In this litigation, the terms “actual
value” and “fair market value” are synonymous and may be used
interchangeably. Berne II, 262 F. Supp. 2d at 555.
   4
    The Revised Organic Act of 1954 is an amended version of
the 1936 Organic Act of the Virgin Islands (a separate statute
distinct from the 1936 Act, 48 U.S.C. § 1401 (repealed 2007)).
In the Revised Organic Act, Congress exercised its
constitutional authority to regulate and define the government of
the Virgin Islands. United States v. Virgin Islands, 363 F.3d
276, 286 (3d Cir. 2004).

                                6
preliminary injunction against the Government of the Virgin
Islands, finding continuing violations of the 1936 Act and a tax
system that was neither credible nor reliable enough to provide
taxpayers their constitutionally mandated due process rights.
From this earlier litigation emerged the Berne settlement
agreement which was approved by the District Court in
December 2000.
        Under the settlement agreement, the Government of the
Virgin Islands agreed to reform its real property tax assessment
system. The District Court appointed a Special Master to
monitor the Government’s procedures and to report on the level
of achievement. The court granted the Government two years
to bring its assessment system into compliance with
constitutional requirements and the 1936 Act. Berne Corp. v.
Gov’t of the V.I. (Berne II), 262 F. Supp. 2d 540, 549 (D.V.I.
2003), aff’d, 105 F. App’x. 324 (3d Cir. 2004).
        In the intervening years, old and new parties to the
litigation filed motions to compel the Government of the Virgin
Islands to comply with the settlement agreement. On May 12,
2003, the District Court entered a decree (“the May 2003
Decree”) to enforce the Berne settlement agreement. Berne II,
262 F. Supp. 2d at 544. The May 2003 Decree permanently
enjoined the Government of the Virgin Islands from assessing
all real property in the Virgin Islands until the District Court
found (1) the government had established the property tax
system mandated by the 1936 Act, and (2) the Board of Tax
Review was consistently holding hearings and making

                               7
determinations within a reasonable amount of time after an
appeal. Id. at 572. The District Court extended this injunction
to all similarly situated taxpayers in the Virgin Islands5 but
allowed the Government of the Virgin Islands to issue tax bills
to non-party taxpayers based on assessment values for 1998 so
long as it provided a mechanism to retroactively apply those
assessment values. In response, the Virgin Islands legislature
enacted Act 6586 to provide a mechanism to collect taxes from
non-party taxpayers based on a 1998 assessment until the
injunction was dissolved. Accordingly, in August 2003, the
District Court modified the May 2003 Decree to allow the
Government to collect these property taxes. In re Tax Litig.,
276 F. Supp. 2d 435 (D.V.I. 2003).
      On June 29, 2007, Congress repealed the 1936 Act and
made the repeal retroactive to the enactment of the Revised
Organic Act of 1954. Pub. L. No. 110-40, 121 Stat. 232 (2007).
The Senate Committee Report stated “[t]he assessment and

    5
      Under V.I. Code Ann. tit. 5 § 80, Berne has standing to
bring suit on behalf of all similarly situated taxpayers against the
Virgin Islands to “restrain illegal or unauthorized acts by a
territorial officer or employee, or the wrongful disbursement of
territorial funds.” Berne II, 262 F. Supp. 2d at 567. In Smith v.
Government of the Virgin Islands, we held no specific threshold
of interest or minimum amount of taxes paid was required to
bring suit. 329 F.2d 131, 134 (3d Cir. 1964). “If there has been
a violation or evasion of the law . . . [,] damage is presumed to
result to all taxpayers.” Id. at 133 (citation omitted).

                                 8
collection of real property taxes is fundamentally a local
government issue with no Federal impact.” S. Rep. No. 110-19,
at 1 (2007). In response to the repeal, in December 2007, the
Government of the Virgin Islands moved to vacate the May
2003 Decree under Fed. R. Civ. P. 60(b), contending it was
based upon no longer valid law.6
        Before the District Court’s decision on the status of the
May 2003 injunction, the Virgin Islands legislature convened a
special session on March 10, 2008, and passed Act 6991, 2008
V.I. Sess. Laws 6991, which permitted the Governor, John
deJongh, to issue real estate tax bills for 2006 during the 2008
fiscal year, in contravention of the May 2003 Decree.7 Act 6991
was silent with respect to the proper functioning of the Board of
Tax Review, aside from appropriating a sum of money to the
Board to hire administrative assistants and hearing officers and
to pay for stenography services. Id.

   6
       Fed. R. Civ. P. 60(b) provides: “On motion and just terms,
the court may relieve a party or its legal representative from a
final judgment, order, or proceeding for the following reasons:
. . . (4) the judgment is void; (5) the judgment has been satisfied,
released or discharged; it is based on an earlier judgment that
has been reversed or vacated; or applying it prospectively is no
longer equitable; or (6) any other reason that justifies relief.”
       7
     See 2008 V.I. Sess. Laws 6991 (“The Office of the Tax
Assessor may issue real property tax bills for the year 2006
during the fiscal year 2008.”).

                                 9
       While the District Court’s review of the status of the May
2003 injunction, in light of the repealed 1936 Act, was pending,
the District Court held an evidentiary hearing on July 2, 2008,
to determine how the Board of Tax Review was functioning.
Without waiting for the District Court’s determination on the
status of the injunction, the Government of the Virgin Islands
apprised the court on August 19, 2008, via an Informative
Notice, of its intention to issue the 2006 tax bills. Immediately
thereafter, Berne moved for an order to show cause why the
Government of the Virgin Islands should not be held in
contempt. The Government of the Virgin Islands, nevertheless,
sent out its tax bills, even as it filed an opposition to the motion
to show cause for contempt. After a hearing on the motion, the
District Court, on September 11, 2008, found the Government
of the Virgin Islands in contempt of the May 2003 Decree. The
court ordered it to rescind all 2006 tax bills and to establish a
special fund to satisfy any possible payment obligation imposed
by the District Court in connection with this matter.8 The court
also vacated the part of the May 2003 Decree that relied upon
the repealed 1936 Act, but retained jurisdiction over the rest of
the May 2003 Decree, which ordered reform of the operation of
the Board of Tax Review.9

    8
    Berne Corp. v. Gov’t of the V.I., 2008 U.S. Dist. LEXIS
69246 (D.V.I. 2008).
    9
    Berne Corp. v. Gov’t of the V.I., 2008 U.S. Dist. LEXIS
69247 (D.V.I. 2008).

                                10
                              II.
        At the threshold, we must determine whether the District
Court still had jurisdiction over the May 2003 Decree when it
entered the two 2008 orders.10 The Government of the Virgin
Islands contends the District Court was divested of jurisdiction
because its jurisdictional basis for the May 2003 Decree, the
1936 Act, had been repealed. “The presence or absence of
federal-question jurisdiction is governed by the ‘well-pleaded
complaint rule,’ which provides that federal jurisdiction exists
only when a federal question is presented on the face of the
plaintiff’s properly pleaded complaint.” Caterpillar, Inc. v.
Williams, 482 U.S. 386, 392 (1987). In the initial complaint in
this matter, filed July 7, 2000, Berne pleaded, under the second
cause of action, deprivation of its “substantive and procedural
due process [rights] guaranteed by the Fourteenth Amendment.”
       In Bluebeard’s Castle, Inc. v. Government of the Virgin
Islands, a precursor to the present case, we held the District

   10
     We have jurisdiction over this appeal under 28 U.S.C. §
1291. Our review of the jurisdictional issue is plenary. Allied
Signal Recovery Trust v. Allied Signal, Inc., 298 F.3d 263, 266
(3d Cir. 2002). Post-judgment orders of contempt are within an
appellate court’s jurisdiction under 28 U.S.C. § 1291 as final
and appealable orders. See Inmates of Allegheny County Jail v.
Wecht, 874 F.2d 147, 152 (3d Cir. 1989), vacated on other
grounds, 493 U.S. 948 (1989).

                              11
Court had federal subject-matter jurisdiction because taxpayers
“properly pled a federal claim”—namely, violations of the 1936
Act. 321 F.3d 394, 306 (3d Cir. 2003). In Berne Corp. v.
Government of the Virgin Islands, 105 F. App’x 324, 328 (3d
Cir. 2004) (non-precedential), we re-affirmed jurisdiction not
only because of alleged violations of the 1936 Act, but also
because “[t]he record shows that the plaintiffs pleaded in their
complaint that their rights under the Due Process and Equal
Protection Clauses of the United States Constitution were
violated.”11 While the repeal of the 1936 Act removed one of
the bases for federal-question jurisdiction, the District Court
would still retain jurisdiction over this matter because of the
constitutional violations alleged on the face of the initial
complaint.
        The Government of the Virgin Islands challenges the
District Court’s jurisdiction on an alternative ground. It
contends the Senate Report accompanying the repeal of the 1936
Act reveals congressional intent to apply the Tax Injunction Act
to United States territories, the Virgin Islands in particular. See

   11
     Under Third Circuit Internal Operating Procedure 5.7, we
are not bound by non-precedential opinions “because they do
not circulate to the full court before filing.” 3d Cir. IOP 5.7
(July 1, 2002). Nevertheless, we need not rely on Berne Corp.
v. Virgin Islands, 105 F. App’x 324 (3d Cir. 2004). As noted,
plaintiffs pleaded deprivation of due process rights on the face
of their initial complaint, which was one of the bases for the
injunction now being appealed.

                                12
S. Rep. No. 110-19, at 1 (2007) (“The assessment and collection
of real property taxes is fundamentally a local government issue
with no Federal impact.”). The Tax Injunction Act deprives
federal courts of jurisdiction to “enjoin, suspend or restrain the
assessment, levy or collection of any tax under State law where
a plain, speedy and efficient remedy may be had in the courts of
such State.” 28 U.S.C. § 1341.12 In 1972, we held the Tax
Injunction Act does not apply to the Virgin Islands. Pan Am.
World Airways v. Gov’t of the V.I., 459 F.2d 387, 391 (3d Cir.
1972). We generally do not revisit decided issues except under
special circumstances like an intervening change in the law. See
Council of Alternative Political Parties v. Hooks, 179 F.3d 64,
69 (3d Cir. 1999). The Government of the Virgin Islands argues
we should revisit our holding in Pan American World Airways
because “Congress has made it clear that the Virgin Islands
should be treated as a state with respect to property taxation.”
In light of the Government’s contention, we will re-examine the
application of the Tax Injunction Act to the Virgin Islands.
          The statutory repealer of the 1936 Act in its entirety

     12
        We stated in Gass v. County of Allegheny, “The Tax
Injunction Act divests federal courts of jurisdiction only if the
state fails to provide a ‘plain, speedy and efficient’ remedy in its
court.” 371 F.3d 134, 137 (3d Cir. 2004). This sentence should
have stated, “The Tax Injunction Act divests federal courts of
jurisdiction unless the state fails to provide a ‘plain, speedy and
efficient’ remedy in its court,” as the rest of the Gass opinion
makes clear.

                                13
reads: “Sections 1 through 6 of the Act of May 26, 1936
(Chapter 450; 49 Stat. 1372–1373; 48 U.S.C. 1401–1401e) are
repealed.” Pub. L. No. 110-40 (HR 57) (June 29, 2007). The
accompanying Senate Report states: “The assessment and
collection of real property taxes is fundamentally a local
government issue with no Federal impact. No other State,
territorial, or local government is subject to such Federal
restrictions.” S. Rep. No. 110-19, at 1 (2007). The Senate
Report does not specifically reference the Tax Injunction Act,
but it appears to align with our general understanding of the
purpose of the Tax Injunction Act. As the United States
Supreme Court stated in Rosewell v. LaSalle National Bank,
“this legislation [the Tax Injunction Act] was first and foremost
a vehicle to limit drastically federal district court jurisdiction to
interfere with so important a local concern as the collection of
taxes.” 450 U.S. 503, 522 (1981).
        Assuming the Tax Injunction Act applies, federal courts
could still have jurisdiction to decide an otherwise properly
pleaded claim as to whether a territorial government provided a
plain, speedy and efficient remedy. We have held the Tax
Injunction Act “requires [that citizens have] access to the state
courts and an opportunity for meaningful review” in order to
divest the federal courts of jurisdiction to hear a claim. Gass v.
County of Allegheny, 371 F.3d 134, 139 (3d Cir. 2004). In
Gass, we held the Tax Injunction Act barred federal jurisdiction
because Pennsylvania did provide a plain, speedy and efficient
remedy at state law, in part because it “provides for adequate
notice to taxpayers of the appeals procedures.” Id. at 140. We

                                 14
summarized Pennsylvania’s tax system as “a fully-developed
administrative and judicial apparatus through which [taxpayers]
. . . may grieve their claims.” Id. Thus, there was no federal
jurisdiction because the state provided a plain, speedy and
efficient remedy, consisting of proper notice of and ability to
particiate in the appeals procedures.
        The “plain, speedy and efficient” requirement intersects
with constitutionally required procedural due process rights.
“The overall purpose of the Tax Injunction Act is consistent
with the view that the ‘plain, speedy and efficient remedy’
exception to the Act’s prohibition was only designed to require
that the state remedy satisfy certain procedural criteria.”
Rosewell, 450 U.S. at 522. In McKesson Corp. v. Division of
Alcohol Beverages and Tobacco, the Supreme Court held that to
satisfy the Due Process Clause, a state must provide taxpayers
with “a fair opportunity to challenge the accuracy and legal
validity of their tax obligation.” 496 U.S. 18, 39 (1990); see
also id. at 50 (discussing the central role of the Supreme Court’s
due process jurisprudence in determining the applicability of the
Tax Injunction Act); Rosewell, 450 U.S. at 530 n.1 (“On its face,
the ‘plain, speedy and efficient remedy’ exception appears to
require a state-court remedy that meets certain minimal
procedural criteria.”).
         As noted, Berne properly pleaded constitutional due
process violations of the tax assessment system, and in fact the
District Court found taxpayers were not being provided with
adequate notice to participate in the administrative appeal

                               15
process and that the Board was not functioning at
constitutionally required levels. Thus, as the District Court
noted, “[e]ven assuming that the Tax Injunction Act applies to
the Virgin Islands as a consequence of the Repeal Act, it would
not affect the Court’s power to enjoin the Government from
issuing tax bills.” Berne Corp. v. Gov’t of the V.I., 2008 U.S.
Dist. LEXIS 69246, at *11 (D.V.I. 2008). The District Court
had jurisdiction over the May 2003 Decree when it issued the
2008 orders, and we have jurisdiction to review those orders.
                               III.
        The Government of the Virgin Islands contends the
District Court erred in finding the Board of Tax Review non-
functional and therefore erred in continuing to enforce the May
2003 injunction.13 At issue is whether the Board of Tax Review
met constitutionally required due process standards. Procedural
due process, at a minimum, affords each taxpayer a “full hearing
and judicial determination at which she may raise any and all
constitutional objections to the tax.” Rosewell, 450 U.S. at 514
(citation omitted); see also Bell v. Burson, 402 U.S. 535, 542
(1971) (“[D]ue process requires . . . notice and opportunity for
hearing appropriate to the nature of the case.” (internal citations

   13
     We review the District Court’s underlying findings of fact
for clear error. United States v. Bell, 414 F.3d 474, 478 (3d Cir.
2005). We exercise plenary review over the District Court’s
application of law to fact. United States v. Perez, 280 F.3d 318,
336 (3d Cir. 2002).

                                16
omitted)). In other words, procedural due process requires at a
minimum that the taxpayer have both notice of the appeal and
the right to participate.
        In its May 2003 Decree, the District Court made clear
two conditions had to be satisfied before it would lift the
injunction against the Government of the Virgin Islands: The
first was compliance with the now-repealed 1936 Act. The
second condition, however, was “a functioning Board of Tax
Review that consistently holds hearings and reaches
determinations on appeals.” Berne Corp. v. Gov’t of the V.I.,
2008 U.S. Dist. LEXIS 69247, at *7. The second condition
remains applicable even after the repeal of the 1936 Act. After
a hearing on July 2, 2008, to determine the Board’s
functionality, the District Court found the Board of Tax Review,
while functioning to “some degree,” remained in disarray. Id.
at *29.
       The Government of the Virgin Islands called two
witnesses at the evidentiary hearing: the Commissioner of
Finance and the Executive Director of the Board of Tax Review.
Each addressed the number of times the Board of Tax Review
had met since the 2003 Decree (eight—five in 2006, one in
2007, and the last two meetings in May 2008 and June 2008),
the number of appeals still pending before the board (374), and
the regularity of future meetings (to occur on the last Friday of
every month). Disturbingly, however, both witnesses were
uncertain whether the Board of Tax Review was notifying
taxpayers of their appeal dates. Id. at *12. The Commissioner

                               17
of Finance even testified that at the May 2008 meeting no
taxpayers were present to participate in the appeal process. Id.
        In light of this evidence, the District Court found the
Board of Tax Review’s compliance with the May 2003 Decree
to be “sporadic, short-lived, and of recent vintage.” Id. at *33.
The District Court also highlighted the absence in the record of
any evidence “to suggest that the Board of Tax Review is
maintaining reliable records.” Id. at *31. Although mentioning
certain good faith attempts at compliance, the court decided,
given the history of the case, that “good faith commitment is not
enough.” Id. at *33. Based on the evidence presented, the
District Court found the Board of Tax Review was not
functioning at a constitutionally required level. We find no clear
error in the District Court’s underlying findings of fact, and we
agree with the District Court’s application of fact to law—that
the Board of Tax Review’s functionality did not meet
constitutionally required due process standards.
                               IV.
       The second issue on appeal is the contempt order. We
review a contempt order “under an abuse of discretion standard
and will only . . . [disturb it] if there is an error of law or a
clearly erroneous finding of fact.” Harris v. City of
Philadelphia, 47 F.3d 1311, 1321 (3d Cir. 1995). Although the
Government of the Virgin Islands characterizes it as a criminal
contempt order, the District Court, in fact, entered a civil
contempt order. “Significantly, the key distinction between civil
and criminal contempt lies in the court’s purpose. Civil

                               18
contempt sanctions are intended to coerce or to compensate;
criminal contempt sanctions to punish.” Taberer v. Armstrong
World Indus. Inc., 954 F.2d 888, 896 (3d Cir. 1992). The
District Court’s contempt order was designed to coerce
compliance with the May 2003 Decree, not to mete out
punishment for refusing to abide by the prior order. To establish
that a party is liable for civil contempt, three elements must be
proven.: “(1) that a valid order of the court existed; (2) that the
defendant had knowledge of the order; and (3) that the
defendant disobeyed the order.” Roe v. Operation Rescue, 54
F.3d 133, 137 (3d Cir. 1995) (internal citations omitted).
       The Government of the Virgin Islands does not dispute
it had knowledge of the May 2003 Decree or that it disobeyed
the Decree. Instead, the Government of the Virgin Islands
contends the entire injunction is void as a result of the
congressional repeal of the 1936 Act.14 The District Court
agreed that the repealer voided that part of the injunction based
on the 1936 Act, but did not void the section of the injunction

    14
      “[I]t is well settled that the viability of a civil contempt
order entered either to remedy past non-compliance or to coerce
future compliance with a preliminary injunction hinges on the
validity of the underlying injunction.” John T. ex rel. Paul T. v.
Del. County Intermediate Unit, 318 F.3d 545, 559 (3d Cir.
2003); see also United States v. United Mine Workers of Am.,
330 U.S. 258, 295 (1947) (“The right to [a civil contempt
order’s] remedial relief falls with an injunction which events
prove was erroneously issued.”).

                                19
based on the constitutional due process violations. The
contempt order was directed only to the Government’s disregard
for the partially vacated but still intact May 2003 Decree and
injunction. We see no abuse of discretion.
        The Government also raises the defense of impossibility.
It contends it was impossible to comply with both the May 2003
Decree and its own valid law, Act 6991. Impossibility may be
a defense to a contempt order, see United States v. Rylander,
460 U.S. 752, 757 (1983), but a party may not rely on
impossibility if it is a condition of the party’s own making.
“[W]here the contemnor participated in effectuating the change
in the law which it alleged to establish a legal impossibility,
sound policy does not permit the by-passing of the orderly route
to appellate review.” Halderman v. Pennhurst State Sch. &
Hosp., 673 F.2d 628, 639 (3d Cir. 1982). As noted by the
District Court, Act 6991 was created specifically at the behest
of the Governor, who titled the act of the “utmost priority.” The
Act was a condition of the Government of the Virgin Island’s
own making. As a result, the legal defense of impossibility is
unavailable to the Government of the Virgin Islands.
                              V.
      For the reasons expressed, we will affirm the District
Court on both September 11, 2008 orders.

                               20