Allan M. Shine et al.
Charles Moreau et al
Providence County Superior Court. (PB 10-5615). (PC 10-5672). (PB 10-7394). Associate Justice Michael A. Silverstein.
For Plaintiff: Theodore Orson, Esq.
For Defendant: John O. Mancini, Esq.
Present: Suttell, C.J., Flaherty, Robinson, and Indeglia, JJ.
William P. Robinson III, Justice.
These consolidated cases come before this Court on appeal from a decision of the Providence County Superior Court, which contained three distinct holdings. First, the Superior Court granted the Central Falls Receiver's motion for partial summary judgment, holding that the Receiver, who was appointed to Central Falls pursuant to the terms of G.L. 1956 chapter 9 of title 45 (the Financial Stability Act or the Act), was entitled to reimbursement for his attorneys' fees; the Superior Court determined that such reimbursement was to be provided by the Central Falls Mayor Charles Moreau (the Mayor), in his individual capacity, and the members of the City Council for the City of Central Falls (the City Council) (collectively the Appellants), in their individual capacities. The Superior Court, consequently, denied the counter-motion for summary judgment
filed by the Appellants on the same issue. The Superior Court's second holding was to determine that the Mayor was not entitled to indemnification from the Receiver for " all losses, costs, expenses, and damages--including attorney's fees and court costs--arising out of" the instant cases, thus denying the Mayor's motion for partial summary judgment and granting the counter-motion for summary judgment filed by the Receiver on that issue. Lastly, the Superior Court denied a " Motion for Advance Attorney's Fees" filed by Attorney Lawrence L. Goldberg.
On appeal, Appellants contend that the hearing justice's decision was in error for the following reasons: (1) in granting the Receiver's motion for partial summary judgment with respect to reimbursement of the Receiver's attorneys' fees, the hearing justice misapplied the statute at issue, § 45-9-11, and failed to recognize that Appellants were immune under the Anti-SLAPP Act, as codified in G.L. 1956 chapter 33 of title 9, and the " Noerr-Pennington doctrine; "  (2) in denying Appellants' partial motion for summary judgment seeking indemnification for the Mayor, the hearing justice erred in concluding that the Mayor was not acting in his official capacity and was, therefore, not entitled to indemnification for his legal costs under G.L. 1956 § 45-15-16 and, as currently codified, Central Falls Code of Ordinances, Chap. 2, Art. III, Div. 3, § 2-108 (the City Ordinance); and (3) in denying Attorney Goldberg's motion for advance of attorneys' fees, the hearing justice erred because Attorney Goldberg was properly retained by the City Council to represent it in the suit regarding the constitutionality of the Financial Stability Act and, thus, was entitled to remuneration.
For the reasons set forth in this opinion, we reverse the Superior Court's judgment in all respects.
Facts and Travel
The passing of the Financial Stability Act and the appointment of a Receiver for Central Falls has garnered much coverage in the press and much attention from the Rhode Island courts. In fact, this Court
has already had occasion to rule on the constitutionality of the Financial Stability Act, holding that the Act is constitutional. See Moreau v. Flanders, 15 A.3d 565 (R.I. 2011). The issues now before us deal with claims that remained in the consolidated cases after we passed on the Act's constitutionality. Due to the fact that the details of this case have been extensively set forth both in our previous decision and in a previous decision of the Superior Court, we shall limit ourselves to simply relating the specific facts pertinent to the issues now before us. We refer the interested reader to those other opinions for a more detailed recitation of the facts. See Moreau, 15 A.3d at 570-73; Pfeiffer v. Moreau, Nos. PB 10-5615, PB 10-5672, 2010 WL 4156173 (R.I. Super. Oct. 18, 2010).
On July 16, 2010, Mark A. Pfeiffer, a retired Superior Court Justice, was appointed as the first Receiver for the City of Central Falls pursuant to the terms of the Financial Stability Act in order to begin grappling with the woeful financial state of Central Falls. Moreau, 15 A.3d at 569. The Receiver proceeded, quite properly, to invoke the Financial Stability Act so as to assume the function and duties of the Mayor. Id. at 572. Subsequently, the City Council passed a resolution authorizing the hiring of an attorney to provide the City Council with advice and guidance. Id. The next day the Receiver rescinded that resolution. Id. The City Council then passed a resolution which authorized the engagement of legal counsel to file a court action challenging the constitutionality of portions of the Financial Stability Act. Id. The Receiver also rescinded that resolution and sent the City Council a letter which stated that, with respect to the issue of the constitutionality of the Financial Stability Act, the City Council was ordered to serve only in an advisory capacity. Id. Then, on September 23, 2010, the Receiver filed a verified complaint in the Superior Court for Providence County seeking declaratory and injunctive relief against the Mayor and the City Council. Id. at 573. The Mayor and the City Council reacted by filing, on September 27, 2010, their own cause of action in Superior Court. Id. The cases were consolidated in the Superior Court, and it is in those consolidated cases that this Court ultimately opined that the Financial Stability Act was constitutional. Id.
After we handed down our ruling on the Act's constitutionality, there remained several claims yet to be adjudicated. It is the Superior Court's rulings as to those claims which are before this Court in the present appeal. See Flanders v. Moreau, Nos. PB 10-5615, PB 10-5672, PB 10-7394 (R.I. Super. July 22, 2011). As we have indicated, the pertinent remaining claims include a claim by the Receiver for reimbursement of his attorneys' fees pursuant to § 45-9-11 and a claim by the Appellants seeking indemnification for the Mayor's " losses, costs, expenses, and damages--including attorney's fees and court costs" pursuant to § 45-15-16 and the City Ordinance. Additionally, there remains the issue of Attorney Goldberg's attorneys' fees.
Motions Before the Superior Court
The Superior Court, in the case at bar, was presented with the following filings: (1) the Receiver's motion for summary
judgment seeking reimbursement of his attorneys' fees and the Appellants' objection thereto as well as their counter-motion for summary judgment; (2) the motion for summary judgment filed by the Mayor seeking indemnification and the Receiver's counter-motion for summary judgment with respect to that same claim; and (3) a " Motion for Advance Attorney's Fees" for Attorney Goldberg and the Receiver's objection to that motion. We shall discuss the Superior Court's decision on each motion in turn.
The Superior Court Decision
1. Reimbursement of the Receiver
The hearing justice ruled that, in his estimation, " it [was] abundantly clear that the Receiver has satisfied the elements of his § 45-9-11 claims against Mayor Moreau and the City Council."  Focusing on the criteria contained in the just-cited statute, he found that the Mayor and the City Council had " caused" the Receiver to be required to expend unappropriated funds in order to engage outside counsel and pursue his Superior Court action for declaratory and injunctive relief; the hearing justice determined that, as a result, the Appellants were personally liable for the expended funds. He stated: " Mayor Moreau and the City Council have failed to proffer any evidence to contradict the fact that no appropriations were made in the fiscal year 2010-2011 budget for the retention of outside legal counsel by any of the Receiver, Mayor Moreau, and the City Council." The hearing justice also referenced " numerous letters" from the Receiver to the Mayor and the City Council to put them on notice as to the lack of appropriations for the retention of outside counsel. The hearing justice concluded that portion of his analysis with a finding that " Mayor Moreau and the City Council's retention of counsel and pursuit of the instant litigation--despite the Receiver's admonitions--were intentional and in derogation of the Receiver's superior and superseding authority."
Turning next to address the Appellants' invocation of the Anti-SLAPP statute and the " Noerr-Pennington doctrine" as constituting a " shield from liability," the hearing justice found that the Anti-SLAPP statute and the " Noerr-Pennington doctrine" were not applicable to the instant cases. He went on to state that " both Mayor Moreau and the City Council were free to engage counsel or challenge the [Financial Stability Act's] constitutionality in their individual capacities and at their own expense." The hearing justice then concluded his discussion with the following additional words: " Despite numerous admonitions from the Receiver, Mayor Moreau and the City Council proceeded in derogation of [the Receiver's] authority and caused the City to incur expenses not
previously appropriated. As a result, having chosen not to proceed in their individual capacities, the parties must now face the music and pay the price."
2. Indemnification of the Mayor
The hearing justice began his consideration of the issue of the Mayor's asserted entitlement to indemnification by noting that § 45-15-16 authorizes cities to pass ordinances concerning indemnification of public officials for legal fees and further noting that Central Falls had passed such an ordinance--viz., the previously referenced City Ordinance. Under the City Ordinance, in order to be entitled to indemnification, the public official is required to have been acting " within the scope of his official duties or employment" or " from the performance * * * of his public duties" when he or she incurs the attorneys' fees and costs. It was the judgment of the hearing justice that, when the Mayor engaged counsel and proceeded with the litigation, he was " acting beyond the narrow scope of his official or public duties" because the appointment of the Receiver had reduced the Mayor to merely an advisory capacity. The hearing justice stated that, for that reason, the Mayor was not entitled to indemnification under the City Ordinance.
The hearing justice also pointed out that, even if the Mayor were entitled to indemnification, such entitlement would not be absolute in view of the hearing justice's understanding that the Mayor's indemnification required the approval of the City Council; he then stated that, since the Receiver had assumed the role of the City Council, he was free to reject the Mayor's request for indemnification.
3. Attorneys' Fees for Attorney Goldberg
Attorney Goldberg represented the City Council in these consolidated cases and sought the fees incurred in connection with that representation. The Superior Court denied the motion to advance the fees, observing that Attorney Goldberg could not " point to [any] statutory or contractual provision as the basis for his claim for legal fees." The hearing justice stated that, in light of this Court's opinion in Moreau v. Flanders,15 A.3d 565 (R.I. 2011), Attorney Goldberg's representation of the City Council was in contravention of the Financial Stability Act. The hearing justice also pointed out that the Receiver had rescinded the resolution of the City Council hiring Attorney Goldberg; he added that " Attorney Goldberg may now contest the validity of the Receiver's rescission, and may accuse the Receiver of serving as an autocrat, but our Supreme Court has expressly disagreed with that contention" when it upheld the " 'broad and sweeping' powers" of the ...