United States District Court, D. Rhode Island
GOAT ISLAND SOUTH CONDOMINIUM ASSOCIATION, INC., and CAPELLA SOUTH CONDOMINIUM ASSOCIATION, INC., Appellants,
IDC CLAMBAKES, INC., Appellee.
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. (See Ass’ns’ Mot. 4, ECF No. 35-1.) 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. (See Ass’ns’ Mot. 4-7, ECF No. 35-1.) 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.) 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. (Clambakes’ Opp’n 4-5, ECF No. 45-1.) 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. (See id. at 6-7.) 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. The First Circuit did not, as the Associations contend, “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 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. See Goat Island South Condominium Ass’n, Inc. v. IDC 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. (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 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”).) Consistent with the singular focus of the Proof of 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);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)).
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.” (Plan 10, ECF No. 35-3.) 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”:
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 ...