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The Free & Clear Co. v. The Narragansett Bay Commission

Supreme Court of Rhode Island

February 12, 2016

The Free & Clear Company
v.
The Narragansett Bay Commission et al.

Providence County Superior Court (PC 06-6371) Associate Justice Michael A. Silverstein

ATTORNEYS ON APPEAL:

For Plaintiff: Michael T. Eskey, Esq. Stephen A. Izzi, Esq.

For Defendant: Clark W. Yudysky, Esq. Thomas M. Robinson, Esq.

Present: Suttell, C.J., Goldberg, Flaherty, Robinson, and Indeglia, JJ.

OPINION

Maureen McKenna Goldberg Associate Justice

This case came before the Supreme Court on October 27, 2015, on appeal by the defendant, the Narragansett Bay Commission (NBC), from a judgment for the plaintiff, The Free & Clear Company (Free & Clear), in Providence County Superior Court following a jury award in the amount of $680, 277. For the reasons stated below, we deny the appeal and affirm the judgment.

Facts and Travel

Founded in 1993, the J.G. Goff's Pub (J.G. Goff's or pub) was a small tavern overlooking the Providence River and the Point Street Bridge in Providence. The pub was located in a freestanding historic brick building at the Davol Square Complex. Styling itself as "the neighborhood pub that's not in the neighborhood, " J.G. Goff's was a favorite destination among patrons on the way home from their downtown offices and the nearby hospitals, as well as university students and families.

J.G. Goff's was formed, owned, and operated by Free & Clear, an "S" corporation[1] that originally was held jointly by Robert Freeman, Jr. (Freeman) and Stephen Cleary (Cleary). In addition to his ownership interest in Free & Clear, Cleary owned the real estate management company that managed the Davol Square Complex until the late 1990s. Freeman, who sold Cleary his interest in Free & Clear in 1998, was the son of the then-owner of the Davol Square Jewelry Mart, LLC (Davol Square).[2]

The building that housed the pub (Goff Building) was owned by Davol Square.[3] Free & Clear and Davol Square entered into a series of multi-year lease agreements throughout the 1990s. During that time, the liquor license for J.G. Goff's was in the name of Davol Square. This arrangement bred complications when J.G. Goff's attempted to renew its liquor license in 1998, and, due to an unrelated matter involving Davol Square, the pub was forced to close for three weeks until a new license could be procured. The pub encountered a similar problem renewing its liquor license the following year, resulting in an interruption of four months in operations starting in December 1999. To resolve the problem, Davol Square agreed to transfer the liquor license to Free & Clear in exchange for a renegotiation of the lease agreement. The new five-year lease commenced on September 1, 2000, and was set to terminate on August 31, 2005. Unlike the previous lease agreements, which had contained renewal options, the new written agreement contained the following provision: "Lessee has no right to extend the term of this Lease, except as is otherwise agreed upon by the Lessor and Lessee in writing."

Also in 2000, J.G. Goff's expanded to a second location in Bristol, which operated until it was sold for $1.35 million in 2007. Meanwhile, the Providence site continued to operate as usual until the end of 2002, when, according to Free & Clear, NBC's nearby construction project began to interfere with its business. The dispute currently before the Court arises from damages caused by the construction project.

In 2001 NBC, a public corporation, [4] commenced its Combined Sewer Overflow Project (CSO), which was designed to prevent overflow raw sewage from contaminating the Narragansett Bay and its estuaries. As part of the first phase, NBC constructed an underground tunnel below the city of Providence, measuring 16, 000 feet in length and twenty-six feet in width. The construction of the tunnel required contractors for NBC to perform drilling operations near the Davol Square Complex and the site of the Goff Building. Free & Clear claims that NBC began to prepare for the project in the vicinity of the Goff Building in the last few months of 2002; NBC counters that work in that area did not start until April of the following year. Nonetheless, NBC does not dispute that, by June 2003, the construction began to cause at least some disruption to the pub's business. The construction continued throughout the autumn and into the winter.

On December 5, 2003, NBC's engineers were preparing to position pipes underground at Point Street outside of J.G. Goff's. To stabilize the pipes, the engineers would drive thin sheets of steel known as "H-piles" into the ground until the sheets could not descend further. It was during this process that the ground unexpectedly began to shake. Joseph Pratt, the CSO program manager, who was present at the time, later would testify that, in retrospect, it was his belief that the engineers had damaged the foundation and structural integrity of the Goff Building while driving down the H-piles on December 5.

Four days later, just before opening time on December 9, 2003, Cleary received a telephone call from a pub employee, who reported significant damage to the Goff Building. When Cleary arrived at the pub shortly thereafter, he discovered that the front façade of the building had become displaced and was on the verge of collapsing forward. One of the CSO engineers was on the scene and advised Cleary not to open that afternoon until the damage to the structure could be assessed.

The pub did not open for business on December 9, 2003, and it has not served another customer since that date. Two days later, on December 11, the Building Inspector for the City of Providence declared that the building was unsafe for occupancy and use. At that time, NBC advised Davol Square and Cleary in writing that, "until further advisement from [NBC] or the [B]uilding [I]nspector[, ] the J.G. Goff's structure should remain closed to occupation by the public."

On January 30, 2004, the parties reached an agreement (2004 agreement) in which NBC conceded liability for the damage to the Goff Building, promised to make repairs, and agreed to compensate Free & Clear for lost profits "until the [Goff] Building is put back in operation." NBC made an initial lost-profits payment of $15, 000 to Free & Clear. Cleary, representatives for NBC, and representatives for Davol Square communicated at various points in 2004 and 2005 without resolution. NBC did not make additional payments to Free & Clear due to a dispute regarding requested documentation, and the building remained condemned. The Goff Building ultimately was demolished in November 2005. It has not been rebuilt.

On December 8, 2006, Free & Clear filed suit in the Providence County Superior Court, alleging that NBC owed it damages in excess of the $15, 000 initial payment. NBC moved for partial summary judgment, which the trial justice denied. The case proceeded to trial on March 4, 2013. Because NBC had admitted liability, the only issue to be resolved at trial was the amount of damages. Central to the case was the time period for which NBC should be held liable. Free & Clear sought damages from October 1, 2002, when it contended that it began to incur losses as a result of the construction, until November 1, 2007, when Davol Square released it from its obligations under the lease and-in counsel's words-"[J.G.] Goff's essentially was pronounced dead." NBC countered that damages should be limited to the period between June 1, 2003, the date it contends that the construction began to infringe upon the pub's business, ...


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