A former V.I. Housing Finance Authority official who filed a whistleblower suit against the agency and two of its top executives in December is a disgruntled employee who was fired because she was not a good fit for the organization, the VIHFA said in a motion to dismiss the complaint filed Monday in V.I. Superior Court.
Former Chief Operating Officer Stephanie Berry alleged in her lawsuit that the authority stands to “lose millions of dollars through recapturing of federal funds due to noncompliance with policies and procedures,” and projects funded by the Federal Emergency Management Agency are at a standstill because of inaction by VIHFA leadership.
After expressing concerns internally, Berry claimed that VIHFA Executive Director Eugene Jones Jr. cautioned that “if she kept putting things in writing, it would be to [her] detriment.” The suit also names Chief Disaster Recovery Officer Dayna Clendinen, who served as the authority’s interim executive director for much of Berry’s tenure.
On Monday, the VIHFA responded forcefully to Berry’s allegations through a combined motion to dismiss and memorandum of law, saying her lawsuit is nothing more than retribution for being fired and lacks the specificity to move forward.
Berry’s complaint “portrays her as a cantankerous and disruptive employee who was terminated because she was not a good fit for the organization. Rather than accept her separation, Berry has returned with a litigation strategy aimed at maligning the Defendants, asserting claims under the Virgin Islands Whistleblower’s Protection Act … tortious interference with contract, defamation, and breach of contract,” the VIHFA said in response.
“These claims, however, largely rest on conclusory allegations without sufficient factual support. Her WPA claim fails to establish any protected activity or retaliation, while her tortious interference with contract and breach of contract claims are flawed, lacking facts demonstrating the existence of a contract,” it said.
Furthermore, the complaint hinges on workplace discussions that fail to satisfy the requisite elements of defamation, according to the motion.
The allegations “as a whole demonstrate an effort to disparage the Defendants rather than present claims supported by sufficient facts,” it says.
Berry began working for VIHFA in January 2023 and had oversight of the authority’s planning and construction, rental properties and homeownership divisions. Many of her allegations pertain to the planning and construction division, which, according to the complaint, “had not facilitated the construction of new homes in over six years, despite having amassed about $14 million from the stamp tax legislation” when she came on board.
Berry further alleged that planning and construction staff participated in procurement evaluation committee panels, allowing them to write the specifications for work to be done — including pricing — and that they “were then allowed to participate in the evaluation of bids for the job and influence who was recommended to be awarded the job.”
According to the complaint, she “repeatedly saw bids coming in on projects that were virtually the same as the supposedly confidential specification numbers for landscaping,” and work was repeatedly awarded to the same contractor.
Berry said she raised concerns about possible conflicts of interest around the awarding of contracts, billing and invoicing issues, and mishandling of federal disaster recovery dollars with Clendinen, the authority’s attorney and Jones and was subsequently fired in October.
The VIHFA alleges that Berry’s complaint fails to establish that she engaged in protected activity under the Whistleblower’s Protection Act. “Instead, her allegations reflect Berry’s personal, internal disagreements and subjective preferences about the practices at VIHFA, which do not meet the WPA’s requirements for protected activity,” it states.
Rather, Virgin Islands courts have held that internal reports or communications prepared as part of an employee’s assigned duties do not qualify as protected conduct under the WPA unless they clearly communicate an intent to report unlawful practices, according to the motion.
For example, “Berry stated that her purpose during her meeting with Jones was to ‘attempt to find a path forward.’ In another conversation, Berry told Jones that if he kept making certain decisions she disagreed with, she would resign and explain her reasons to the Board. These actions lack any indication of an intent to pursue litigation or report outside of VIHFA, further underscoring their routine nature,” the motion states.
While she claimed to have informed a VIHFA board member, the Inspector General and Attorney General offices of her concerns, Berry’s complaint “fails to provide any details about when these communications occurred, to whom they were directed within those offices, or whether they occurred before her termination,” according to the motion, which includes a footnote that the board is “inherently a part of VIHFA’s internal structure,” and any communications with it would be considered internal.
The motion likewise contends that Berry’s claim of breach of contract lacks factual support, and as an at-will public employee, either side was allowed to terminate the relationship at any time, for any reason. The tortious interference claim fails on the same grounds, it says.
“Even if Berry could somehow establish the existence of a contract from the dearth of facts in the Complaint, her claim still fails as a matter of law,” according to the motion, which argues that courts consistently hold that “corporate officers are immune from interfering with the contracts of their corporation, as the officers and the corporation are considered a single entity when the officer is acting within the scope of his employment.”
As COO, Berry was not a regular or career employee, but rather held an exempt position, meaning she could be terminated with or without cause, it says.
As for the defamation allegations, “Berry’s 28-page Complaint dedicates only three vague and factually deficient sentences to support her defamation claim. She alleges that Defendants defamed her by meeting with ‘staff’ after her termination, falsely stating that she had not worked competently or made progress in her position, and by making similar statements to ‘others in the community.’ The lack of specificity in these allegations is striking,” and leaves the defendants unable to mount a defense, according to the motion.
Moreover, binding precedent establishes that internal communications “are not considered publications to a third-party” and do not constitute defamation, it says. As senior executives, Jones and Clendinen also were within their rights to communicate Berry’s termination with other VIHFA staff, the motion states.
“Berry’s defamation claim is revealed for what it is — a baseless attempt to shoehorn an additional cause of action into the Complaint without any factual support,” the motion states, concluding with the request that the court dismiss the lawsuit.
The VIHFA, Jones and Clendinen are represented by Shari N. D’Andrade and Christopher Allen Kroblin of Kellerhals Ferguson Kroblin PLLC. Berry is represented by Lee J. Rohn of Lee J. Rohn and Associates, LLC.
