Goat Island South Condominium Association, Inc et al v. IDC Clambakes, Inc

Filing 52

ORDER granting in part and denying in part 35 Motion to Alter Judgment; The Court hereby orders the Associations to file a calculation of the amount of interest claimed on their $7,290.00 sewer claim on or before 12/11/15; any objection to the Associations calculation of interest must be filed within ten days of the Associations filing. So Ordered by Chief Judge William E. Smith on 11/30/2015. (Jackson, Ryan)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
___________________________________
)
)
)
)
)
)
Appellants,
)
)
v.
)
)
IDC CLAMBAKES, INC.,
)
)
Appellee.
)
___________________________________)
GOAT ISLAND SOUTH CONDOMINIUM
ASSOCIATION, INC., and
CAPELLA SOUTH CONDOMINIUM
ASSOCIATION, INC.,

C.A. No. 14-245 S

ORDER
WILLIAM E. SMITH, Chief Judge.
Appellants, Goat Island South Condominium Association,
Inc. (“GIS”) and Capella South Condominium Association, Inc.
(“Capella” and, collectively with GIS, the “Associations”),
have timely moved to alter or amend the judgment entered on
June 11, 2015.

(ECF No. 35.)

For the reasons that follow,

the Associations’ motion is granted in part and denied in
part.

Specifically, this Court grants the Associations’

motion with respect to the sewer repair claim; denies the
motion with regard to interest on the Court’s $2.6 million
award on the Associations’ quasi-contract claim; and denies
the Associations’ motion for costs.

I.

Sewer Repair Claim
The Associations first move to add $7,290.00 to the

judgment to account for a previously allowed claim for a sewer
repair invoice, plus interest.
35-1.)

(See Ass’ns’ Mot. 4, ECF No.

Although Appellee, IDC Clambakes, Inc. (“Clambakes”),

has filed an opposition (ECF No. 45) and a sur-reply (ECF No.
51-1), Clambakes ostensibly does not oppose the request that
the judgment be amended to reflect the previously allowed
sewer

repair

claim,

nor

does

Clambakes

address

the

Associations’ claim for interest on the sewer repair claim.
The Bankruptcy Court allowed this claim in 2010.

See In re

IDC Clambakes, Inc., 431 B.R. 51, 62-63 (Bankr. D.R.I. 2010)
(“Clambakes I”), vacated in part on other grounds, 484 B.R.
540

(D.R.I.

2012).

Therefore,

this

Court

GRANTS

the

Associations’ motion to amend the judgment to reflect the
$7,290.00 sewer repair claim, plus interest.
II.

Interest on Use-and-Occupancy Claim
The Associations seek pre- and post-petition interest on

their use-and-occupancy claim.
No. 35-1.)

(See Ass’ns’ Mot. 4-7, ECF

In support of this argument, the Associations

note that the Second Amended Plan of Reorganization (the
“Plan”) provides for the payment of a specified percentage of
interest for “Allowed Claims.”

(See Ass’ns’ Mot. 4, ECF No.

35-1; Plan 10-11, ECF No. 35-3.)
2

Clambakes opposes this

request,

arguing

that,

because

the

Associations

did

not

assert the quasi-contract basis for the use-and-occupancy
claim in their Proof of Claim, Clambakes was only on notice
of the Associations’ unsuccessful trespass claim at the time
the Plan was approved.
1.)

(Clambakes’ Opp’n 4-5, ECF No. 45-

Clambakes also argues that the Plan does not define the

term “Claim” in a way that encompasses the quasi-contract
basis for the Associations’ use-and-occupancy claim.
id. at 6-7.)

(See

Finally, Clambakes contends that the equitable

relief ordered by this Court does not constitute an allowance
of the Associations’ failed trespass claim.

(See id. at 7-

11.)
Clambakes is correct that the Associations’ claim for
trespass was unsuccessful.
Associations

contend,

The First Circuit did not, as the

“reverse[]

the

disallowance

of

the

claims.” (Ass’ns’ Reply 4, ECF No. 50.) The bankruptcy court
found that the Associations impliedly consented to Clambakes’
operation of the Regatta Club, and that finding was affirmed
by the First Circuit.

See In re IDC Clambakes, 727 F.3d 58,

65-72 (1st Cir. 2013) (“Clambakes II”).

Because “[c]onsent,

in any form, is fatal to a claim for trespass,” id. at 65,
the finding of implied consent defeated the Associations’
use-and-occupancy claim for trespass.

The First Circuit’s

remand was limited to “the issue whether the implied consent
3

in this circumstance gives rise to an obligation to pay the
fair value for [Clambakes’] use and occupancy and, if so, in
what amount.”

Id. at 72.

Accordingly, this Court’s award of

$2.6 million was grounded in equity, on a theory of unjust
enrichment.
IDC

See Goat Island South Condominium Ass’n, Inc. v.

Clambakes,

Inc.,

533

B.R.

845,

849

(D.R.I.

2015)

(“Clambakes III”) (“To recover on an implied-in-law contract,
a party must prove that the plaintiff conferred a benefit to
the defendant, that the defendant appreciated the benefit,
and that, under the circumstances, it would be inequitable
for the defendant to retain the benefit without payment of
the value of that benefit.

Fondedile, S.A. v. C.E. Maguire,

Inc., 610 A.2d 87, 97 (R.I. 1992).

The Court agrees with the

Bankruptcy Court that these elements fit the circumstances of
this case.”).
It is undisputed that the Associations’ Proof of Claim
identified “Trespass” as the basis for their claim. 1

(See

GIS Proof of Claim, BK No. 05-12267, Claim 16-1; Capella Proof
of Claim, BK No. 05-12267, Claim 17-1; see also Ex. A to GIS
Proof of Claim, BK No. 05-12267, Claim 16-1; Ex. A to Capella

1

Although both GIS and Capella filed separate Proofs of
Claim, the content of each Proof of Claim (and its
accompanying exhibit) are identical. For simplicity’s sake,
this Court refers to the claims asserted by GIS and Capella
as one claim.
4

Proof of Claim, BK No. 05-12267, Claim 17-1 (explaining that
the Associations’ claim “[arose] from [Clambakes’] trespass”
and that the Associations sought “damages caused . . . as a
result of the unlawful trespass”).)
singular

focus

of

the

Proof

of

Consistent with the

Claim,

the

Associations

litigated their claim in the bankruptcy court as one for
trespass.

See Clambakes I, 431 B.R. at 54 (characterizing

the Associations’ claim as one for “damages arising out of
Clambakes’ alleged seven year trespass”).

It was not until

post-trial briefing – when the Associations obliquely noted
that, at a minimum, they were entitled to fair rental value
even if they impliedly consented to Clambakes’ possession –
that the Associations raised a claim based in equity.

(See

Ass’ns’ Post-Trial Mem. 13, BK No. 05-12267, ECF No. 670); 2
see also Clambakes II, 727 F.3d at 72 (finding that the
Associations had not waived their equitable claim because
“the Associations presented their implied-obligation-to-pay
argument in their post-trial motion” (emphasis added)). 3

2

Indeed, the Associations’ Post-Trial Memorandum
started by clearly stating: “The District Court’s remand
order presents this Court with two simple questions. Was IDC
Clambakes’ intentional entry on land that it did not own (or
validly lease from the true owners) a trespass? If so, what
are the Associations’ damages?” (Id. at 1 (emphasis added).)
3

It is disputable whether raising an “equitable claim”
in one paragraph of a post-trial memorandum actually dodges
the waiver bullet, see F.D.I.C. v. World Univ. Inc., 978 F.2d
5

Thus, the question becomes whether a claim that was
asserted in a post-trial brief, long after the Proof of Claim,
can morph into an “Allowed Claim” under the Plan.

Because

“[a] plan of reorganization is a binding contract between the
debtor and the creditors and is subject to the general rules
of

contract

construction

and

interpretation,”

In

re

New

Seabury Co. Ltd. P’ship, 450 F.3d 24, 33 (1st Cir. 2006), the
Court must closely examine the terms of the Plan, to which
the parties are bound.
The Plan specifies that “Allowed Claims . . . shall be
paid in full, plus the Interest Payment.”
35-3.)

(Plan 10, ECF No.

The term “Claim” is defined as:

all claims, as defined in § 101 (5) of the Code, of
whatever nature, whether scheduled or unscheduled,
secured or unsecured, liquidated or unliquidated,
absolute or contingent, matured or un-matured,
disputed or undisputed, legal or equitable,
including, without limitation, all claims arising
from the rejection of executory contracts and
unexpired leases.
(Id. at 3-4.) There is also a separate definition of “Allowed
Claim”:

10, 16 (1st Cir. 1992) (“It is well settled that arguments
made in a perfunctory manner below are deemed waived on
appeal.”); Plouffe v. New Pace, Inc., No. 92-2107, 1993 WL
93131, at *2 n. 5 (1st Cir. Mar. 31, 1993) (treating unjust
enrichment and quasi-contract arguments as waived because
“they were offered for the first time in a perfunctory manner
in a post-trial memorandum”); but the Court of Appeals so
held and remanded the case for determination.
6

a Claim or Equity Security Interest or a portion
thereof: (a) which is scheduled by the Bankruptcy
Schedules of the Debtor prepared and filed by the
Chapter 11 Trustee for which no objection has been
filed by the Debtor as of the Confirmation Hearing
Date; or (b) a Proof of Claim has been timely filed
pursuant to § 501(a) of the Code on or before the
date designated by the Bankruptcy Court as the last
date for filing Proofs of Claim (hereinafter the
“Bar Date”) and with respect to which no objection
to the allowance thereof has been interposed by the
Confirmation Hearing Date; or (c) for which a
scheduled or filed claim, after objection thereto,
has been Allowed, in whole or in part, by a Final
Order.
(Id. at 3.)
Clambakes argues that the Plan’s definition of “Claim”
does not include claims based in equity because “the Plan
defines ‘Claim’ in a manner consistent with [§] 101(5)(A)”
and does not include “any verbiage related to [§] 101(5)(B).” 4
(Clambakes’ Opp’n 7, ECF No. 45-1.)

The problem with this

argument is that the Plan’s definition of “Claim” clearly

4

Section 101(5) of the Bankruptcy Code provides:
The term “claim” means-(A) right to payment, whether or not such right is
reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed,
undisputed,
legal,
equitable,
secured,
or
unsecured; or
(B) right to an equitable remedy for breach of
performance if such breach gives rise to a right to
payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured,
or unsecured.

11 U.S.C. § 101(5).
7

states that “Claim means all claims, as defined in § 101(5)
of the Code, of whatever nature, whether . . . legal or
equitable.”

(Plan 3-4, ECF No. 35-3.)

Thus, this Court is

not persuaded that the Associations’ equitable claim is not
a “Claim” under the Plan; however, this does not necessarily
mean that it fits the narrower definition of an “Allowed
Claim.”
An “Allowed Claim” under the Plan is not merely any
“Claim” that has been allowed; it must meet one of the three
criteria in the Plan’s definition of “Allowed Claim”:
(a) scheduled by the Bankruptcy Schedules of the
Debtor prepared and filed by the Chapter 11 Trustee
for which no objection has been filed . . .
(b) a Proof of Claim has been timely filed pursuant
to § 501(a) of the Code . . . with respect to which
no objection to the allowance thereof has been
interposed . . .
(c) for which a scheduled or filed claim, after
objection thereto, has been Allowed, in whole or in
part, by a Final Order.
(Id. at 3 (emphasis added).)

In this case, an objection was

filed so the only available option is (c). Because (a) refers
to claims “scheduled by the Bankruptcy Schedules of the
Debtor,” and (b) states that “a Proof of Claim has been timely
filed,” it follows logically that a “scheduled or filed claim”
in (c) is a claim that has either been scheduled by the
Bankruptcy Schedules or filed as a Proof of Claim.

8

The Associations are correct that the First Circuit
“allowed” their equitable claim based in implied contract to
proceed, notwithstanding the fact that it was not included in
the Proof of Claim; and, to be sure, this Court is bound by
that ruling.

However, the First Circuit’s remand does not

automatically

make

the

late

minted

“Allowed Claim” under the Plan.

equitable

claim

an

The timing matters: as

explained above, an “Allowed Claim” under the Plan must have
been “scheduled by the Bankruptcy Schedules of the Debtor” or
included in “a Proof of Claim [that was] timely filed.” Here,
the Associations first asserted their equitable claim in a
post-trial brief four years after the Plan was confirmed.
Therefore,

even

Associations’

though

equitable

the

First

claim

based

Circuit
on

allowed

their

the

post-trial

brief, because it was not included in the Proof of Claim, it
is not an “Allowed Claim” under the terms of the Plan.
The Associations argue that, notwithstanding the fact
that their Proof of Claim only listed a trespass claim,
“Clambakes always knew that the Associations’ claim was for
payment related to its use and occupation of the property.”
(Ass’ns’ Reply 5, ECF No. 50.)

This argument conflates an

award for the value of rent as compensatory damages with an
award for unjust enrichment.

Rather, there are two theories

on which Clambakes could be required to pay the Associations
9

rent

for

the

Regatta

Club:

either

the

damage

to

the

Associations (i.e. the amount the Associations could have
earned if they had been renting the Regatta Club that whole
time) or the amount by which Clambakes was unjustly enriched
(i.e. the benefit Clambakes received based on its use and
occupancy of the Regatta Club).

The fact that, in this case,

the two amounts happen to be the same - the fair market value
of rent - does not convert the trespass claim that the
Associations

disclosed

in

the

Proof

of

Claim

into

the

equitable claim that they subsequently raised in their posttrial brief.
Yet the Associations claim that “[t]he label placed on
the legal theory that prevails is not the critical aspect of
a claim; it is the ‘right of payment’ that is the basis for
any claim under the Code.”

(Id.)

If the question were only

whether or not the $2.6 million award qualified as a “Claim,”
this argument might hold water.

However, an “Asserted Claim”

must have been filed in the Proof of Claim, and thus, the
theory on which recovery is based does matter.
In particular, the distinction between a tort claim and
an equity claim is significant here because, as explained
below, Rhode Island law requires that interest be paid on
tort and contract claims, but not necessarily on claims in
equity. While the Associations are correct that “the approval
10

of the plan renders it contractual in nature, and Clambakes
must pay the agreed-upon interest regardless of whether there
is a statutory basis for the interest” (id. at 7 n.5), there
is no evidence that Clambakes actually agreed to pay interest
on any claims other than the trespass claim disclosed in the
Proof of Claim.

Clambakes acknowledges that it “did agree to

pay prejudgment interest on that trespass claim should the
Associations prevail on that argument.”
Reply 5, ECF No. 51-1.)

(Clambakes’ Sur-

However, according to Clambakes:

This represents nothing more than a recognition
that Rhode Island law imposes pre-judgment interest
on tort and contract claims, and that the trespass
claim sounded in tort. . . . Rhode Island law does
not apply pre-judgment interest to awards in
equity, and there is no basis to assert that
Clambakes voluntarily and self-injuriously agreed
to do so.
(Id.)

This Court agrees.

Having found that the Associations’ equitable award was
not an “Allowed Claim” under the Plan, the Court must next
consider whether the Associations are nonetheless entitled to
interest under R.I. Gen. Laws § 9-21-10. Section 9-21-10(a)
provides that:
In any civil action in which a verdict is rendered
or a decision made for pecuniary damages, there
shall be added by the clerk of the court to the
amount of damages interest at the rate of twelve
percent (12%) per annum thereon from the date the
cause of action accrued, which shall be included in
the
judgment
entered
therein.
Post-judgment
interest shall be calculated at the rate of twelve
11

percent (12%) per annum and accrue on both the
principal
amount
of
the
judgment
and
the
prejudgment interest entered therein. This section
shall not apply until entry of judgment or to any
contractual obligation where interest is already
provided.
The Associations argue that “there can be no doubt that the
$2.6 million awarded to the Associations for fair value of
Clambakes’ use and occupancy of the unit owners’ property
qualifies

as

‘pecuniary

damages’

under

the

Rhode

Island

prejudgment interest statute” (Ass’ns’ Reply 7, ECF No. 50);
as support, they note that “Rhode Island courts have held
that damage awards for use and occupancy of property are
‘pecuniary damages’ within the meaning of the Rhode Island
prejudgment interest statute.”

(Id. at 9) While it is true

that in some cases Rhode Island courts have held a damage
award for the use and occupancy of property to be pecuniary
damages, the cases on which the Associations rely were all
founded in either tort or contract, not equity. 5

See Rhode

Island Econ. Dev. Corp. v. The Parking Co., L.P., 909 A.2d

5

The Associations also cite Campbell v. Lederer Theater
Co., 47 R.I. 8, 12 (1925), in which the Rhode Island Supreme
Court did order interest on an equity claim. (See Ass’ns’
Reply 8, ECF No. 50.) However, as Clambakes notes, this “is
a ninety year old case, decided long before the 1958 passage
of § 9-21-10 and fully fifty years before the legislature
amended § 9-21-10 to, as [the Court] explained in Gott,
‘equalize the right of tort and contract litigants to collect
interest on judgments.’” (Clambakes’ Sur-Reply 7 (quoting
Gott v. Norberg, R.I., 417 A.2d 1352 (1980)).)
12

943 (R.I. 2006) (breach of contract and eminent domain case);
Tate v. Peter Charles Reynolds, Inc., 622 A.2d 449 (R.I. 1993)
(trespass case); L.T.F. Fin. Servs., Inc. v. Silva, No. PD
95-1305, 1995 WL 941454, at *1 (R.I. Super. July 20, 1995)
(same). (See also Clambakes’ Sur-Reply 6-7, ECF No. 51-1.)
As explained above, this Court’s award was based on
quasi-contract
enrichment,

—

not

an

equitable

compensatory

claim

damages.

based

unjust

Rhode

The

on

Island

Supreme Court has not squarely addressed the issue of whether
an award based on quasi-contract can qualify as pecuniary
damages; however, in Gott v. Norberg, the Court found that
based on the legislative history of § 9-21-10, the 1976
amendment adding the words “civil action” was “intended to
equalize the right of tort and contract litigants to collect
interest on judgments.” 417 A.2d 1352, 1357 (R.I. 1980)
(emphasis added).

Moreover, several Rhode Island courts and

the First Circuit have declined to award interest under § 921-10 on equitable awards.

See Dennis v. R. I. Hosp. Trust

Nat’l Bank, 744 F.2d 893, 901 (1st Cir. 1984), abrogated on
other grounds by Salve Regina Coll. v. Russell, 499 U.S. 225
(1991)

(noting

that

the

Rhode

Island

Supreme

Court

“construe[s] the statute to apply only to those actions
sounding in tort or contract” and affirming the district
court’s

decision

not

to

award
13

interest

on

action

“traditionally

viewed

as

one

in

equity,

not

in

tort

or

contract” (citing Gott, 417 A.2d at 1357)); Cardillo-Kelsall
v. Cardillo, No. PC 07-620, 2011 R.I. Super. LEXIS 84, at *6
(R.I. Super. June 27, 2011) (“Considering that the nature of
this relief is equitable, not legal, the award does not
constitute ‘pecuniary damages’ for purposes of

§ 9-21-

10.”); Tarpinian v. Daily, No. 95-0104, 1997 WL 838150, at *2
(R.I. Super. Aug. 15, 1997) (“This court declines to broadly
construe the words ‘pecuniary damages’ as used in § 9-21-10
so as to include the equitable remedy of rescission.”).

As

the Court explained in Tarpinian:
An award of interest pursuant to the statute is a
ministerial act to be performed by the clerk
without judicial intervention. . . . Such an award
is not an element of damages, but is purely
statutory and is peremptorily added to the award by
the clerk of the court. . . . However, when
exercising its equitable power of rescission, the
court is concerned with fashioning a remedy that is
fair in light of the particular circumstances. In
this context, an award of prejudgment interest is
part of the judicial function and a component of
the award. Moreover, the statutorily required 12%
interest may not be equitable in all circumstances.
As such, the court finds that § 9-21-10 does not
apply here.
Id. at *3 (citations omitted).
Moreover,

equity

would

not

be

served

by

granting

interest in this case: the Associations did not prevail on
their trespass claim — the only claim of which Clambakes was
aware when it agreed to the Plan — and the Court’s $2.6
14

million

award

was

more

than

Clambakes’ unjust enrichment.
this

case

advance

“encouraging

the

the

early

sufficient

compensation

for

Nor would awarding interest in

intended

purposes

settlement

of

of

§

claims

.

9-21-10:
.

.

and

compensating plaintiffs for waiting for recompense to which
they were legally entitled.”

Martin v. Lumbermen’s Mut. Cas.

Co., 559 A.2d 1028, 1031 (R.I. 1989) (citations omitted); see
also Dennis, 744 F.2d at 901 (finding that the purpose of §
9-21-10 “would not be served by applying the statute here,
for the district court calculated the surcharge in a way that
made plaintiffs whole”).

Thus, this Court finds that § 9-

21-10 does not apply in this case.
III. Costs
The final aspect of the Associations’ Rule 59(e) motion
seeks an award of costs under Rule 54(d)(1) of the Federal
Rules of Civil Procedure and 28 U.S.C. § 1920.
Mot.

7,

ECF

No.

35-1.)

This

Court

has

(See Ass’n’s
discretion

in

determining whether to award costs under Rule 54(d)(1) and §
1920.

See Marx v. Gen. Revenue Corp., 133 S. Ct. 1166, 1172

(2013) (“[T]he decision whether to award costs [under Rule
54(d)(1)] ultimately lies within the sound discretion of the
district court.”); 28 U.S.C. § 1920 (providing that “[a] judge
or clerk of any court of the United States may tax as costs”
certain enumerated items (emphasis added)).
15

In the unique

circumstances

of

this

case,

Associations is unwarranted.

an

award

of

costs

to

the

For starters, it seems likely

that the vast majority of the costs sought stem from the
Associations’ dogged pursuit of their ultimately unsuccessful
trespass claim, which, as mentioned above, the Associations
pursued with near singular focus at the bankruptcy court
level.

Additionally,

because

the

First

Circuit’s

understanding of the Associations’ use-and-occupancy claim as
encompassing
apparently

more
based

than
only

the
on

failed
a

single

trespass

claim

paragraph

of

was
the

Associations’ post-trial filing, it seems apparent that the
Associations have already received more than they bargained
for as a result of the remand and subsequent judgment in their
favor.

Awarding costs in these circumstances would turn the

Associations’ “equitable” award into an inequitable windfall.
IV.

Conclusion
For these reasons, the Associations’ motion to alter or

amend the judgment is GRANTED IN PART and DENIED IN PART.
Specifically, this Court GRANTS the Associations’ motion with
respect to the previously allowed sewer repair claim in the
amount of $7,290.00, plus interest; DENIES the Associations’
motion concerning pre- and post- petition interest on the
use-and-occupancy claim; and DENIES the Associations’ request
for

an

award

of

costs.

The
16

Court

hereby

orders

the

Associations to file a calculation of the amount of interest
claimed on their $7,290.00 sewer claim within ten days of
this Order.

Any objection to the Associations’ calculation

of interest must be filed within ten days of the Associations’
filing.

IT IS SO ORDERED.

William E. Smith
Chief Judge
Date: November 30, 2015

17