                                                                                                                           Opinions of the United
2004 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


6-25-2004

Govt of VI v. 0.459 Acres of Land
Precedential or Non-Precedential: Non-Precedential

Docket No. 03-4318




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                                                            NOT PRECEDENTIAL

                UNITED STATES COURT OF APPEALS
                     FOR THE THIRD CIRCUIT


                                No. 03-4318


              GOVERNMENT OF THE VIRGIN ISLANDS,

                                                Appellant

                                     v.

   0.459 ACRES OF LAND CONSISTING OF FOLLOW ING; PARCEL NO. 6A
ESTATE THOMAS KINGS QUARTER AND PARCEL NO. 9A ESTATE THOM AS,
                         VIRGIN ISLANDS




            Appeal from the District Court of the Virgin Islands
                   Division of St. Thomas and St. John
                   (D.C. Civil Action No. 99-cv-00064)

               District Judge: Honorable Raymond L. Finch
               District Judge: Honorable Thomas K. Moore
                 Territorial Judge: Daryl Dean Donohue


                Submitted Under Third Circuit LAR 34.1(a)
                              May 6, 2004


           Before: BARRY, AM BRO, and SMITH, Circuit Judges


                      (Opinion filed: June 25, 2004)




                                 OPINION
AM BRO, Circuit Judge

         The Government of the Virgin Islands appeals the District Court’s order affirming

the Territorial Court’s confirmation of the arbitration award given to landowners to

compensate for their condemned property. Because we conclude that the eminent domain

statute of the Virgin Islands, 28 V.I. Code Ann. §§ 411–422, does not bar the parties from

arbitrating the amount of compensation, we affirm.

                                               I.

         In August 1992, the V.I. Government filed an eminent domain action in the

Territorial Court after negotiating for several years with landowners for the taking of their

property. 1 The V.I. Government sought a declaration of taking and an order vesting title

in it,2 and as compensation for the taking claimed that the property was worth

approximately $1.2 million.

         One month later, the landowners removed the action to the District Court of the

Virgin Islands based on diversity jurisdiction, which was granted over the V.I.

Government’s objection. Thereafter, the V.I. Government and the landowners stipulated



  1
   The property was owned by Jolie Stahl and Barry Brown as co-trustees of the Long
Bay Trust. The co-trustees themselves had filed an action for inverse condemnation in
the District Court before V.I. Government’s eminent domain action was filed in the
Territorial Court.
  2
      The Territorial Court entered the order vesting title.

                                                 2
to refer their dispute to arbitration. An Assistant Attorney General signed the stipulation,

which provided that the parties would abide by the award rendered by the arbitrator. In

October 1994, the arbitrator awarded the landowners $2.89 million as compensation.

         In December 1994, after the Attorney General of the Virgin Islands was informed

that the United States Government would not contribute to the arbitration award for

amounts in excess of $1.6 million, the V.I. Government motioned to dismiss the award.

Conversely, the landowners moved to confirm it, and the District Court did so.

         In February 1996, we vacated the District Court’s order confirming the arbitration

award by concluding that the removal of the V.I. Government’s eminent domain action

from the Territorial Court to the District Court was improper because the V.I.

Government could not be considered a citizen for purposes of establishing diversity of

citizenship jurisdiction. Brown v. Francis, 75 F.3d 860 (3d Cir. 1996). We directed the

District Court to remand the eminent domain action to the Territorial Court. Id. at 867.

         The Territorial Court upheld the arbitration award by finding that the V.I.

Government can agree to, and engage in, binding arbitration to determine the amount of

compensation to be awarded the property owners. The District Court’s Appellate

Division affirmed the Territorial Court’s order. The V.I. Government now appeals.3

                                              II.

                                              A.


  3
      We have appellate jurisdiction under 48 U.S.C. § 1613a(c) and § 28 U.S.C. § 1291.

                                               3
       The V.I. Government’s argument essentially is that the Assistant Attorney General

did not have authority to enter into the arbitration agreement because the V.I.’s eminent

domain statute allows only trials and a determination by a commission, and does not

allow any alternative forms of dispute resolution, including arbitration. The V.I.

Government points to § 418 of the statute, which provides that the issue of just

compensation “shall be tried by the court.” 28 V.I. Code Ann. § 418. It makes much of

the fact that the legislature used the word “court” (as opposed to “arbitrator”) throughout

the statute, and the words “judgment” and “action” are used while the word “arbitration”

is absent. It claims that these choices of words clearly show the legislative intent to

preclude arbitration as a form of possible relief. Finally, the V.I. Government points to

Federal Rule of Civil Procedure 71A (which is referred to in one of the provisions in the

V.I. eminent domain statute) and stresses that Rule 71A also provides that the just

compensation issue must be tried “by the court” or determined by a commission.

       We do not agree. To us, all § 418 and Rule 71A do is to provide specific

procedures to follow when compensation for a taking is being litigated. Although the

statute does not specifically recognize arbitration as a remedy, neither does it prohibit

resolution of the compensation dispute through arbitration. In this context, silence is

hardly the legislature’s “clear” intent to preclude arbitration.

       As the District Court noted, arbitration is a voluntary remedy, and the parties may

freely agree to refer their dispute to arbitration. Because arbitrators derive their authority



                                               4
to resolve disputes from the parties’ agreement, they do not need to have an express

statutory provision recognizing arbitration as a remedy to be able to enter a binding

arbitration award. See AT&T Techs., Inc. v. Communications Workers of Am., 475 U.S.

643, 648–49 (1986). 4

       In this case, the V.I. Government does not dispute that it voluntarily entered into

an arbitration agreement. The record also shows that the V.I. Government actively

participated in the arbitration hearing without any objection to arbitrability of the

compensation issue. It is little surprise, then, that we find no reason to invalidate the

parties’ agreement or the resulting arbitration award.

                                              B.

       The V.I. Government next asserts that the compensation awarded by the arbitrator

is not “just” given the financial crisis the V.I. is facing. It claims that the compensation

would be burdensome to the taxpayers and therefore the interest in enforcing the

arbitration agreement is outweighed by public policy considerations. We do not address


  4
    The V.I. Government also claims that the provisions in the statute conferring a right to
appeal should be read as prohibiting arbitration. Relying on Gilyard v. Redevelopment
Auth. of Philadelphia, 780 A.2d 793 (Pa. Commw. Ct. 2001), the V.I. Government argues
that the issue cannot be transferred to an arbitrator because doing so deprives it of its
appeal right. We are not, of course, bound by the Commonwealth Court’s decision
interpreting the Pennsylvania eminent domain statute. In any event, that statute expressly
provides that it was “intended ... to provide a complete and exclusive procedure”
governing the assessment of damages. Id. at 794. The party in Gilyard had appealed the
condemnation award entered by a Board of View to the trial court when it compelled
arbitration over the party’s objection. Id. at 793. Here the parties voluntarily gave up
their right to litigate before there was any judgment or hearing.

                                              5
this issue, however, because it is a question on the merits that was not before the District

Court and is not before us.

                                          C.

       The V.I. Government also claims that, because Brown v. Francis mandated the

action be restored to its pre-removal posture, the arbitration award cannot be enforced.

This issue was not raised before the Territorial Court nor before the District Court. In any

event, the Brown panel stated that “it is possible that if the arbitration award can be

enforced in a jurisdictionally correct proceeding, this entire controversy may be put to rest

without the need for extensive proceedings on the remand.” 75 F.3d at 868. Because the

arbitration award has been enforced on remand by the jurisdictionally correct forum–the

Territorial Court–we conclude that this controversy is resolved.

                                       * * * * *

       We affirm the District Court’s order upholding the Territorial Court’s confirmation

of the arbitration award.




                                               6
