The Union Labor Life Insurance Company v. O'Neill

Filing 38

ORDER adopting 34 Report and Recommendations. Plaintiff's 22 Motion for partial summary judgment on liability only on Counts I and II is GRANTED. So Ordered by Senior Judge Mary M. Lisi on 1/3/2017. (Feeley, Susan)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
THE UNION LABOR LIFE INSURANCE
COMPANY,
Plaintiff
v.

C.A. No. 15-152-ML

J. BRIAN O’NEILL,
Defendant

ORDER
This matter is before the Court on review of a Report and
Recommendation (“R&R”) issued by Magistrate Judge Sullivan on
October 25, 2016 (ECF No. 34). Because the Defendant filed a timely
objection to the R&R, the Court reviews de novo those portions of
the R&R to which an objection has been made. See Fed. R. Civ. P.
72(b). The Court has thoroughly reviewed and considered the R&R,
the

Defendant’s

objection

thereto

(ECF

No.

35-1),

and

the

Plaintiff’s response (ECF No. 36). Having done so, the Court now
adopts the R&R in its entirety. Accordingly, the Defendant’s motion
for partial

summary judgment on Counts I and II as to liability is

GRANTED.
I. Factual Background and Procedural Summary
The

Plaintiff,

(“ULLICO”),

seeks

The

payment

Union

Labor

under

a

Life

Guaranty

Insurance
(the

Company

“Guaranty”)

executed by Defendant J. Brian O’Neill (“O’Neill”) in his personal
capacity in connection with a loan agreement (the “Loan Agreement”)
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between ULLICO and two companies (the “O’Neill Companies”) of which
O’Neill is the principal. The Loan Agreement served to refinance
the development and marketing of a condominium high-rise (the
“Property”) in Portsmouth, Rhode Island in 2012.
On April 10, 2014, after the O’Neill Companies defaulted on
the Loan Agreement, ULLICO and O’Neill, together with the O’Neill
Companies and another O’Neill entity (together with the O’Neill
Companies,

the

“O’Neill

Entities”),

executed

a

forbearance

agreement (the “Forbearance Agreement”) to extend the term of the
Loan Agreement and to afford the O’Neill Companies the opportunity
to sell the Property and repay the loan. Shortly thereafter, the
O’Neill Entities failed to make an April 30, 2014 real estate tax
payment as required under the Forbearance Agreement. The failure to
make the tax payment constituted a default. ULLICO took title to
the Property and demanded payment from O’Neill under the Guaranty
and the Forbearance Agreement, which O’Neill refused.
On April 16, 2015, ULLICO brought claims against O’Neill for
breach of guaranty (Count I), breach of the Forbearance Agreement
(Count II), and breach of the covenant of good faith and fair
dealing (Count III). The parties engaged in, at times, contentious
discovery proceedings. On April 15, 2016, the Court granted the
parties’

joint

motion

for

an

extension

of

time

to

complete

discovery, extending factual discovery to August 28, 2016, expert
discovery to December 19, 2016, and re-setting the deadlines for

2

the filing of dispositive motions to January 18, 2017. April 15,
2016 Order (ECF No. 21).
On May 31, 2016, ULLICO filed a motion for partial summary
judgment on liability (ECF No. 22). O’Neill responded with an
objection on July 18, 2016 (ECF No. 24), to which ULLICO filed a
reply on August 9, 2016 (ECF No. 26). On August 22, 2016, the
parties filed a joint motion (ECF No. 30) to stay discovery and
further extend the case management deadlines. The joint motion
states that resolution of Plaintiff’s summary judgment motion would
“determine whether there is any further need for discovery on
liability issues or only potentially Plaintiff’s alleged damages.”
Joint Motion at

2. The Court granted the motion on August 23,

2016. August 23, 2016 Order (ECF No. 31).
Following a hearing on September 21, 2016, Magistrate Judge
Sullivan issued a detailed and well-reasoned R&R, in which she
recommended that ULLICO’s motion for partial summary judgment be
granted. On November 8, 2016, O’Neill filed a timely objection to
the R&R, to which ULLICO filed a response in opposition on November
22, 2016.
II. Standard of Review
The Court, in considering a motion for summary judgment,
reviews the record “in the light most favorable to the non-moving
party, drawing all reasonable inferences in its favor.”

Merchants

Ins. Co. of New Hampshire, Inc. v. U.S. Fidelity and Guar. Co., 143

3

F.3d 5, 7 (1st Cir. 1998)(citing Reich v. John Alden Life Ins. Co.,
126 F.3d 1, 6 (1st Cir. 1997)).
ULLICO, as the party seeking summary judgment, bears the
burden of establishing the lack of a genuine issue of material
fact.

Merchants Ins. Co. of New Hampshire, Inc. v. U.S. Fidelity

and Guar. Co., 143 F.3d at 7. “Once such a showing is made, ‘the
burden shifts to the nonmoving party, who must, with respect to
each issue on which [it] would bear the burden of proof at trial,
demonstrate that a trier of fact could reasonably resolve that
issue in [its] favor.’” Flovac, Inc. v. Airvac, Inc., 817 F.3d 849,
853

(1st

Cir.

2016)

(quoting

Borges

ex

rel.

S.M.B.W.

v.

Serrano–Isern, 605 F.3d 1, 5 (1st Cir.2010)).
Summary judgment is appropriate “if the movant shows that
there is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law.”

Fed. R. Civ. P.

56(a). “A dispute is genuine if the evidence about the fact is such
that a reasonable jury could resolve the point in the favor of the
non-moving party.”

Prescott v. Higgins, 538 F.3d 32, 40 (1st Cir.

2008) (citations omitted).

“A fact is material if it has the

potential of determining the outcome of the litigation.”

Id.

(quoting Maymi v. Puerto Rico Ports Auth., 515 F.3d 20, 25 (1st Cir.
2008)).
III. Discussion
O’Neill’s objections to the R&R echo his arguments opposing

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ULLICO’s motion for partial summary judgment. Specifically, O’Neill
contends that (1) ULLICO waived the O’Neill Entities’s obligation
to pay real estate taxes on April 30, 2014; (2) O’Neill’s request
for additional discovery pursuant to Fed. R. Civ. P. 56(d) should
have been granted; and (3) the Forbearance Agreement did not become
effective until (one day) after the real estate taxes had become
due. The Court will address O’Neill’s arguments in that order.
O’Neill’s waiver argument is based on an e-mail sent by
ULLICO’s counsel on July 28, 2014, noting that “the forbearance
period expired on July 18 [2014].” July 28, 2014 e-mail (ECF 24-1).
The e-mail included an offer to extend the forbearance period to
August 31, 2014, on the condition that “your client pays the March
real estate taxes by August 15.”

Notwithstanding this offer, the

e-mail also explicitly stated that “ULLICO continues to reserve all
rights and remedies.” Id.
Under

Rhode

Island

law1,

a

waiver

is

“‘the

voluntary,

intentional relinquishment of a known right.’” Tidewater Realty,
LLC v. State of Rhode Island and Providence Plantations, 942 A.2d
986, 995 (R.I. 2008)(quoting Lajayi v. Fafiyebi, 860 A.2d 680, 687
(R.I.2004)). An implied waiver of a legal right “must be proved by
a clear, unequivocal, and decisive act of the party who is alleged

1

The Loan Agreement, the Guaranty, and the Forbearance
Agreement are all governed by and construed in accordance with
Rhode Island Law.

5

to have committed waiver.” Sturbridge Home Builders, Inc. v.
Downing Seaport, Inc., 890 A.2d 58, 65 (R.I. 2005)(quoting Ryder v.
Bank of Hickory Hills, 146 Ill.2d 98, 165 Ill.Dec. 650, 585 N.E.2d
46, 49 (1991)). The burden falls on O’Neill, as the party claiming
a waiver, to “produce evidence demonstrating the existence of an
issue of fact concerning the voluntary relinquishment of a known
right.” Sturbridge Home Builders, Inc. v. Downing Seaport, Inc.,
890 A.2d at 65.
The Forebearance Agreement clearly limits waivers and other
modifications to a written agreement signed by all the parties, and
it

explicitly

addresses

the

issue

of

waiver

in

two

separate

sections. Forbearance Agreement at Sections 1.10, 16.2. (ECF No.
22-7). Under the terms of the Forbearance Agreement, neither
ULLICO’s e-mail offering to extend the forbearance period, nor
ULLICO’s delay in recording the Property after termination of the
forbearance period constitute a clear and unequivocal waiver.
Rather, the e-mail expressly reserves all of ULLICO’s rights and
remedies. In the absence of a written, signed agreement by the
parties indicating that ULLICO waived the default after the O’Neill
Entities failed to make the April 30, 2014 real estate tax payment,
O’Neill cannot meet his burden to prove otherwise.
O’Neill’s

second

argument

relates

to

Magistrate

Judge

Sullivan’s rejection of O’Neill’s request for additional discovery
pursuant to Rule 56(d) of the Federal Rules of Civil Procedure,

6

which permits the Court to deny or postpone ruling on a motion for
summary

judgment

“[i]f

a

nonmovant

shows

by

affidavit

or

declaration that, for specified reasons, it cannot present facts
essential to justify its opposition.” Fed. R. Civ. P. 56(d). This
argument, first raised in O’Neill’s objection to ULLICO’s motion
for partial summary judgment filed on July 18, 2016 (ECF No. 24)
appears to be in clear contravention of the parties’ joint motion
to stay discovery filed on August 22, 2016 (ECF No. 30). That joint
motion confirms that (1) the parties “have completed briefing on
[ULLICO’s] motion;” (2) the parties have made “diligent, sustained
and reasonable efforts and progress towards completing discovery;”
and (3) the parties have exchanged initial disclosures, produced
actual documents they identified, answered any written discovery,
and responded to requests for production with “thousands of pages
of responsive documents.” Joint Motion at 2. Although the joint
motion refers to O’Neill’s contention that “discovery is necessary
to support his affirmative defenses,” the motion is not specific as
to what further discovery O’Neill might require, nor does it
clarify

why

O’Neill

would

indicate

his

agreement

that

the

resolution of ULLICO’s motion for partial summary judgment would
“determine whether there is any further need for discovery.” Id.
Rule 56(d) requires the party opposing summary judgment to
make a sufficient proffer. The proffer “‘should be authoritative;
it should be advanced in a timely manner; and it should explain why

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the party is unable currently to adduce the facts essential to
opposing

summary

judgment.’”

In

re

PHC,

Inc.

Shareholder

Litigation, 762 F.3d 138, 143 (1st Cir. 2014)(quoting Resolution
Trust Corp. v. North Bridge Associates, Inc., 22 F.3d 1198, 1203
(1st

Cir.

1994)).

In

connection

with

allegedly

incomplete

discovery, the party’s explanation must “show good cause for the
failure to have discovered the facts sooner; it should set forth a
plausible basis for believing that specified facts, susceptible of
collection within a reasonable time frame, probably exist; and it
should indicate how the emergent facts, if adduced, will influence
the outcome of the pending summary judgment motion.” Resolution
Trust Corp v.

North Bridge Associates, Inc., 22 F.3d at 1203.

The declaration provided by O’Neill’s counsel in support of
his opposition to the summary judgment motion recounts, in some
detail, the discovery process in which the parties engaged. Inter
alia, the declaration acknowledges that ULLICO produced more than
5,000 pages of documents in March 2016. Declaration at 2 (ECF No.
24-2). After the parties filed a joint motion on April 15, 2016 to
extend

case

management

deadlines,

O’Neill’s

previous

counsel

suffered a medical emergency. Six weeks later, ULLICO filed its
motion for partial summary judgment.
Although

the

declaration

broadly

asserts

that

“document

discovery is incomplete,” it offers no further explanations as to
which relevant facts O’Neill believes existed or how such facts

8

would impact the outcome of the pending motion. Moreover, that
assertion is entirely inconsistent with the parties’ subsequent
joint motion to stay all discovery until ULLICO’s motion had been
determined by the Court. As noted by Magistrate Judge Sullivan, R&R
at 22, and by ULLICO in its response to O’Neill’s objection to the
R&R, ULLICO’s Obj. at 2, at the September 21, 2016 hearing,
O’Neill’s counsel was given numerous opportunities to specify which
further discovery he deemed necessary to address ULLICO’s motion.
O’Neill does not dispute that assertion in his objection, nor does
he

offer

any

additional

details

that

would

help

satisfy

the

conditions under which a Rule 56(d) request may be granted.
O’Neill’s final objection to the R&R relates to the date on
which the Forbearance Agreement became effective. According to
O’Neill, effectiveness of the Forbearance Agreement was conditioned
on delivery of three documents to ULLICO that were not provided by
the O’Neill Entities until May 1, 2014, one day after the April 30,
2014 real estate tax payment had become due. Accordingly, O’Neill
argues that failure to make such tax payments could not result in
a default of the Forbearance Agreement prior to its taking effect.
This argument, too, cannot withstand ULLICO’s motion for
partial summary judgment. As O’Neill has conceded, “most of the
documents

required

as

conditions

precedent

were

delivered

to

ULLICO’s counsel on April 29, 2014.” O’Neill Obj. at 9. O’Neill
suggests, however, that the delay in delivering three additional

9

documents also resulted in delaying the effectiveness of the
Forbearance Agreement. Leaving aside the question whether the
O’Neill Entities
delaying

their

could

avoid

making

a

delivery

of

documents

timely
as

tax

required

payment
under

by
the

Forbearance Agreement, the plain language of that agreement does
not bear out O’Neill’s contention.
All documents, delivery of which was required as a condition
precedent before the Forbearance Agreement took effect, are listed
in Section 3.1 therein, which addresses conditions precedent.
Forbearance Agreement at 7. It is undisputed, and O’Neill does not
assert otherwise, that all documents required under Section 3.1
were delivered to ULLICO on April 29, 2014, one day before the real
estate taxes were due. By contrast, the three documents provided on
May 1, 2014, one day after the taxes were due, are specified in
Section

14(a)

and,

while

delivery

of

those

documents

was

a

contractual obligation, it was not a condition precedent to the
Forbearance

Agreement

taking

effect.

It

is

also

noted

that

O’Neill’s current interpretation is inconsistent with the O’Neill
Entities’ April 29, 2014 request to receive a protective advance
from ULLICO, the denial of which O’Neill later characterized as a
breach of the Forbearance Agreement by ULLICO. No support was
provided for such a contention.
In sum, none of O’Neill’s objections can withstand ULLICO’s
motion for partial summary judgment. All conditions precedent for

10

effectiveness of the Forbearance Agreement were met on April 29,
2014. The O’Neill Entities’ failure to make the April 30, 2014 real
estate tax payment was in breach of the Forbearance Agreement,
which breach was not effectively waived by ULLICO. Accordingly,
ULLICO’s motion for partial summary judgment on Counts I and II, on
liability only, is GRANTED.

SO ORDERED.
/s/ Mary M. Lisi
Mary M. Lisi
Senior United States District Judge
January 3, 2017

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