ROBERT ADDIE, JORGE PEREZ AND JASON TAYLOR, APPELLANTS, V. CHRISTIAN KJAER, HELLE BUNDGAARD, STEEN BUNDGAARD, JOHN KNUD FURST, KIM FURST, NINA FURST AND KEVIN F. D'AMOUR, APPELLEES

Case Nos.: 11-2419, 11-2485 and 11-2527

Date: Dec. 16, 2013

Case type: Real property contract

Court: U.S. Court of Appeals for the Third Circuit

Author of opinion: Judge Jane R. Roth

Lawyers for petitioners: Robert L. Byer, Robert M. Palumbos and John J. Soroko, Duane Morris, Philadelphia

Lawyers for respondents: Maria T. Hodge, Mark D. Hodge and Gaylin Vogel, Hodge & Francois, St. Thomas, U.S. Virgin Islands; Carol G. Hurst, Carol G. Hurst P.C., St. Thomas, U.S. Virgin Islands; and Sherry L. Talton, Campbell, Dille, Barnett & Smith, Dallas

Panel: Judges Roth, D. Brooks Smith and Thomas M. Hardiman

Originating court: U.S. District Court of the Virgin Islands

Jason Taylor and his family vacation in the U.S. Virgin Islands. Perhaps hoping to share the experience with other wealthy travelers, the retired Miami Dolphins star invested in pristine Great St. James Island, aiming to develop it with two partners.

The 157-acre island, a five-minute powerboat ride from St. Thomas, features a palm-dotted beach, grassy nature preserve and sturdy boat launch. A $23.5 million sales price was negotiated with a Danish family that owned the island since 1980.

Now, for reasons still unclear after a decade of litigation, that ship has sailed. Thanks to a federal appellate court and a team of Duane Morris lawyers, however, Taylor finally recovered his $1.5 million down payment.

"We go back and forth as to who was at fault, but it became apparent that neither side was able to perform" its duties under the purchase contracts, said Robert Byer, an appellate lawyer for Taylor and his partners. "The remedy is supposed to be, put the parties back to where they were before the contract, and that's pretty much what the court of appeals decided here."

As the deal failed and the case progressed, Taylor evolved from Dolphins defensive end to ESPN commentator and philanthropist. In 2007, after he and his wife, Katina, established the Jason Taylor Foundation to help needy children in South Florida, Taylor won the Walter Payton NFL Man of the Year Award.

Getting Started

The idea of buying Great St. James Island for development started with Robert Addie, a Florida real estate investor, and Jorge Perez, Taylor's financial adviser. Perez brought Taylor into the mix, according to the appellate court opinion.

On the other side of the table were lawyer Christian Kjaer, five of his relatives and their attorney for the 2004 transaction, Kevin D'Amour, who also owned the escrow agent, Premier Title Co.

Why the closing never happened is debatable.

Taylor and his partners said Kjaer and his family, represented by D'Amour's title firm, delivered expired escrow documents for use of the boat docks, and the title commitment insurance contained several exceptions to the required coverage, which would have left the buyers without a marketable title.

D'Amour said that despite authorizing the release of deposits to the sellers, the buyers failed to come up with the full $23.5 million on the intended closing date, Sept. 14, 2004. Nor did the sellers convey updated permit assignments or a clear title.

Two days later D'Amour sent the buyers a notice of default and gave them 10 days to cure it, but all he got in return was the buyers' demand that he give back the escrow money. He didn't.

The following month the would-be buyers filed suit against the sellers in federal court in the Virgin Islands, claiming breach of contract, unjust enrichment, negligent misrepresentation, fraud and conversion. They also sued D'Amour for fraud and conversion. The sellers countersued for breach of contract and fraud.

Before the 2010 trial, the judge found D'Amour liable for conversion of a $500,000 deposit from Taylor.

Taylor, represented at trial by Charles Papy of Duane Morris' Miami office, did well with jurors—but still lost.

The jury decided that everyone except Taylor breached the contract and awarded him $1.546 million in damages. The judge reduced the sum to $1.5 million, the amount Taylor spent.

Upon reconsideration, the judge cut his award to nothing, reasoning that since both sides defaulted, no one should recover anything.

Tort Or Contract Law?

The torts were the crux of the appeal. The trial judge vacated a $337,517 jury award—against Addie and Perez but not Taylor—on their fraudulent misrepresentation claim. He granted judgment as a matter of law, saying the gist of the action doctrine bars the fraud claim because it "essentially parrots the sellers' breach of contract claim."

Still, the judge upheld the jury's $46,000 award against D'Amour for false representation.

In its ruling Dec. 16, the Third Circuit agreed with Taylor that he should recover his $1.5 million in deposit money by way of restitution and to avoid unjustly enriching the sellers.

The three-judge panel also threw out the torts, vacating the $46,000 damage award against D'Amour and affirming the trial judge's rejection of the $337,517 award to the sellers. The conversion finding against D'Amour morphed into the restitution award for Taylor.

The court sweepingly applied the gist of the action doctrine, explaining its policy basis as "the concern that tort recovery should not be permitted for contractual breaches."

The exception would be independent events giving rise to a tort. It found none here. The court said it was recognizing "the gist of the action doctrine applies under Virgin Islands law."

Byer, the Duane Morris appellate practice chief who argued the case with law firm chairman and CEO Soroko, said he believes the doctrine has already been used there.

"This just reaffirms principles of law that we learned in our first year of law school," he said. "Where both parties breach, you still make the parties whole. You don't punish one side over the other."

Did somebody balk at consummating the deal? Local news media reported residents' displeasure with plans to build 53 luxury units on the island.

"Community leaders and associations have recently raised their voices in protest against this proposed rape of still another Virgin Islands treasure," Sam Sieber, a former Great St. James caretaker and builder, wrote in 2007 for the online St. Thomas Source.

Today, all are invited to book what a website calls "a secluded island getaway" at the five-bedroom Great St. James Villa and resort. Weekly rates are $12,600 to $22,400.