Commerce Park Realty, LLC v. HR2-A Corp.

253 A.3d 868

COMMERCE PARK REALTY, LLC, et al.

v.HR2-A CORP. as General Partner of HR2-A Limited Partnership et al.

No. 2020-33-Appeal.

PB 11-1922

Supreme Court of Rhode Island.

Issued June 30, 2021

Corrected July 6, 2021

Brian LaPlante, Esq., R. Thomas Dunn, Esq., Richard G. Riendeau, Esq., Michael J. Jacobs, Esq., Thomas M. Dickinson, Esq., John O. Mancini, Esq., Nicole M. Matteo, Esq., Matthew J. McGowan, Esq., for Plaintiffs.

Robert D. Wieck, Esq., William J. Delaney, Esq., for Defendants.

Present: Suttell, C.J., Goldberg, Robinson, and Long, JJ.

Justice Goldberg, for the Court.

The case before us involves complex and protracted litigation surrounding usurious loans between commercial borrowers and lenders. This opinion is one of two companion cases issued today.

In the first appeal (No. 19-468-A.) (the RFP defendants’ appeal), defendants HR2-A Corp., HR4-A Corp., MR4A-JV Corp., and Realty Financial Partners (collectively, RFP defendants) appealed from the grant of partial summary judgment in favor of plaintiffs Commerce Park Realty, LLC; Commerce Park Properties, LLC; Commerce Park Commons, LLC; Commerce Park Associates 4, LLC; and Receiver Matthew McGowan—appointed Permanent Receiver on February 20, 2013, for the four above-referenced limited liability companies (collectively, receivership plaintiffs), and also in favor of plaintiffs Commerce Park Associates 11, LLC; Dartmouth Commons, LLC; Warwick Village, LLC; Universal Properties Group, Inc.; Nicholas E. Cambio, individually and as Trustee of the Nicholas E. Cambio, Roney A. Malafronte, and Vincent A. Cambio Trust; and Vincent A. Cambio (collectively, Cambio plaintiffs). That grant of partial summary judgment declared that a series of loans made by the RFP defendants carrying interest rates ranging from 26 percent to 36 percent per annum were usurious and null and void. This Court affirmed the decision of the trial justice and denied and dismissed the RFP defendants’ appeal. See Commerce Park Realty, LLC v. HR2-A Corp. , 253 A.3d 1258 (R.I., 2021).

The second appeal (No. 20-33-A.), addressed herein, flows from the trial justice's grant of summary judgment and is a cross-appeal by the Cambio plaintiffs, seeking review of secondary determinations made by the Superior Court that coincided with the finding that the loans were usurious. For the reasons set forth in this opinion, we affirm the judgment of the Superior Court.

Facts and Travel¹

The genesis of this complex commercial-loan saga is a series of loans issued by RFP defendants HR2-A and HR4-A to receivership plaintiffs and Cambio plaintiffs beginning in 1997.² The loans were secured by mortgages over hundreds of acres of property owned by receivership plaintiffs located in West Greenwich, East Greenwich, and Coventry, Rhode Island.³ The loans were not repaid.

On April 11, 2011, RFP defendants exercised their right to demand payment on the loans. Three days before the demand, however, receivership plaintiffs and Cambio plaintiffs filed a Superior Court verified complaint against RFP defendants, seeking, inter alia , judgment against RFP defendants for violation of G.L. 1956 § 6-26-2, Rhode Island's usury statute.⁴ This litigation has been pending ever since.

In October through December 2014, cross-motions for partial summary judgment on a number of issues were filed by all parties. Primarily, the parties sought a declaration as to whether certain loans at issue were usurious. In conjunction with those motions, RFP defendants sought a declaratory ruling on usury claim entitlement, that, if certain loans were deemed usurious, Cambio plaintiffs were not entitled to disgorgement payments under § 6-26-4(c) —the statute penalizing usurious contracts (the RFP entitlement motion).⁵ Following hearings on the cross-motions for summary judgment and the RFP entitlement motion, the trial justice issued a written decision on June 19, 2019. Judgment entered on September 19, 2019, and Cambio plaintiffs timely appealed.

Additional facts are set forth infra as necessary to the issues relevant to this appeal.

Standard of Review

"[T]his Court reviews a grant of summary judgment de novo ." Ballard v. SVF Foundation , 181 A.3d 27, 34 (R.I. 2018) (quoting Sullo v. Greenberg , 68 A.3d 404, 406 (R.I. 2013) ). "Examining the case from the vantage point of the trial justice who passed on the motion for summary judgment, we view the evidence in the light most favorable to the nonmoving party[.]" Id. (brackets omitted) (quoting Sullo , 68 A.3d at 406 ). If we determine that "there are no genuine issues of material fact and that the moving party is entitled to judgment as a matter of law, we will affirm the judgment." Id. (brackets omitted) (quoting Sullo , 68 A.3d at 407 ). "Although summary judgment is recognized as an extreme remedy, to avoid summary judgment the burden is on the nonmoving party to produce competent evidence that proves the existence of a disputed issue of material fact." Id. (brackets and deletion omitted) (quoting Sullo , 68 A.3d at 407 ). "In the absence of a credible showing of the existence of material facts, summary judgment is warranted." Id.

Analysis

On appeal, Cambio plaintiffs submit four assignments of error: (1) the trial justice erred in concluding that Cambio plaintiffs were not entitled to disgorgement payments on certain usurious loans; (2) the trial justice erred in dismissing Cambio plaintiffs’ claims for punitive damages concerning certain usurious loans; (3) the trial justice erred in allowing RFP defendants to seek and obtain summary judgment on counts that were previously stayed; and (4) the trial justice misapplied the statute of limitations to Cambio plaintiffs’ claims for criminal usury under G.L. 1956 § 9-1-2. We address each contention in turn.

The Loans

On December 11, 2000, RFP defendants, receivership plaintiffs, and Cambio plaintiffs executed loan documents, two of which were backdated to August 1, 2000, for the amounts of $14,320,000 ($14 million loan) and $7,599,333 ($7 million loan), respectively. The Cambio plaintiffs were named borrowers along with receivership plaintiffs on the $14 million loan and were guarantors of the $7 million loan. As of August 1, 2000, RFP defendants began charging a 36-percent effective annual interest rate on the $14 million loan and a 26-percent effective annual interest rate on the $7 million loan. On December 11, 2000, and March 28, 2003, RFP defendants issued additional loans in the principal amounts of $4,300,000 ($4.3 million loan) and $350,000 ($350K loan) and charged interest rates of approximately 23 percent.

The $14 million loan and $7 million loan were declared usurious by the trial justice, and we affirmed that decision today. See Commerce Park Realty, LLC , 253 A.3d at 1261–62. For purposes of Cambio plaintiffs’ appeal of the dismissal of the disgorgement claims, we are concerned only with the $14 million loan.

Disgorgement Under G.L. 1956 § 6-26-4(c)

In November 2014, three years after the commencement of this action, RFP defendants filed the RFP entitlement motion for summary judgment on Cambio plaintiffs’ claims seeking money damages related to the $14 million loan and $7 million loan (the disgorgement claims).⁶

In her June 19, 2019 decision, the trial justice correctly determined that, under the plain and unambiguous language of § 6-26-4(c), only a named borrower who made payments on a usurious loan is entitled to disgorgement payments—i.e. , compensatory damages under the usury statute. The trial justice granted the RFP entitlement motion, in part,⁷ concluding that because Cambio plaintiffs did not make any payments under the $14 million loan and were not listed as borrowers on the $7 million loan, they were not entitled to disgorgement payments.

On appeal, Cambio plaintiffs contend that the trial justice incorrectly interpreted § 6-26-4(c) and, as a result, erroneously dismissed Cambio plaintiffs’ disgorgement claims. We are therefore confronted with a question of statutory interpretation.

Section 6-26-4(c) reads:

"Nothing contained in this section shall affect the rights, duties or liabilities of any persons acting under the provisions of title 19, and if the borrower shall , either before or after suit, make any payment on the contract, either of principal or interest, or of any part of either, and whether to the lender or to any assignee, endorsee, or transferee of the contract, the borrower shall be entitled to recover from the lender the amount so paid in an action of the case . Receipts shall be given whenever payments are made of either principal or interest." (Emphasis added.)

This provision of the usury statute allows for recovery of damages in the event that a contract is found to violate the usury statute.

The Cambio plaintiffs assert that the word "borrower" in § 6-26-4(c) should be read to include all borrowers on a usurious loan and that, upon any payment on a usurious loan, reimbursement is due to "borrowers" generally, not just the borrowers who actually made payment. In other words, Cambio plaintiffs submit that, under § 6-26-4(c), so long as one named borrower makes a payment on a usurious loan, all named borrowers may share in the disgorgement payments. We reject this contention.

This Court conducts de novo review of questions of statutory interpretation. Iselin v. Retirement Board of Employees’ Retirement System of Rhode Island , 943 A.2d 1045, 1049 (R.I. 2008). "It is well settled that when the language of a statute is clear and unambiguous, this Court must interpret the statute literally and must give the words of the statute their plain and ordinary meanings." Accent Store Design, Inc. v. Marathon House, Inc. , 674 A.2d 1223, 1226 (R.I. 1996).⁸ Moreover, "[i]n matters of statutory interpretation our ultimate goal is to give effect to the purpose of the act as intended by the Legislature." Webster v. Perrotta , 774 A.2d 68, 75 (R.I. 2001). "The Legislature is presumed to have intended each word or provision of a statute to...