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Roadepot, LLC v. Home Depot, U.S.A., Inc.

Supreme Court of Rhode Island

June 23, 2017

Roadepot, LLC et al.
v.
Home Depot, U.S.A., Inc.

         Kent County Superior Court Associate Justice Bennett R. Gallo (KC 10-540)

          For Plaintiff: Mark A. Pogue, Esq.

          For Defendant: Jeffrey S. Brenner, Esq.

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

          OPINION

          SUTTELL, CHIEF JUSTICE

         The construction of a sewer line by the Town of Coventry (Coventry) has generated litigation almost as prodigiously as it has carried effluent to the West Warwick sewer treatment plant. In the consolidated appeals now before this Court: (1) Roadepot, LLC and Keyserton, LLC (collectively, Roadepot) appeal from a partial summary judgment in favor of Home Depot, U.S.A., Inc. (Home Depot) obligating Roadepot to pay certain disputed sewer assessment charges; (2) Roadepot appeals from a judgment, following a bench trial on Home Depot's counterclaim, requiring Roadepot to reimburse Home Depot for sewer assessment charges paid by the latter from 2005 through 2014; and (3) Home Depot cross-appeals from the trial justice's decision limiting its request for prejudgment interest and denying its claim for late fees on the sewer assessment charges. For the reasons set forth in this opinion, we affirm the judgments in part and vacate in part, and we remand this case to the Superior Court to conduct further proceedings consistent herewith.

         I

         Facts and Procedural History

         This is a commercial property dispute between a landlord (Roadepot) and a tenant (Home Depot). On July 23, 2004, Commerce Park Associates 3, LLC (Commerce Park) entered into a ground lease agreement with Home Depot (the lease), leasing a portion of the Centre of New England (the property), located in the Town of Coventry, to Home Depot. Nicholas E. Cambio executed the lease for Commerce Park. A year later, in August 2005, Commerce Park sold the property to Roadepot, subject to the lease, thereby rendering Roadepot as Home Depot's landlord.

         Article V of the lease governs taxes. Section 5.1(a) specifies that the tenant is responsible for paying "all [r]eal [e]state [t]axes, on the [p]remises" and defines "[r]eal [e]state [t]axes" as "all real estate taxes and assessments for betterments and improvements that are levied or assessed by any lawful authority on the [p]remises." Section 5.1(b) states in pertinent part:

"Real [e]state [t]axes shall not include the following: "* * *
"(v) any fees or other sums paid to a governmental authority in consideration of obtaining any of the [a]pprovals or utility service, specifically, excluding, impact, loophole and proffer fees. Landlord shall be responsible for paying, without contribution from [t]enant, all taxes and impositions described in clauses (i)-(v)."

         Section 13.2 of Article XIII of the lease provides, in relevant part:

"Remedies Upon Landlord's Default. Landlord shall only be deemed to be in default under the terms of this [l]ease in the event [l]andlord shall violate, neglect, or fail to observe, keep or perform any covenant or agreement required to be performed and observed by [l]andlord hereunder and any such default shall continue for a period of thirty (30) days after written notice to [l]andlord [if such default is by its nature not reasonably susceptible of being cured within such thirty (30) day period, such thirty (30) day period shall be extended as necessary to provide [l]andlord the opportunity to cure the default, provided [l]andlord within said period commences and thereafter diligently proceeds to cure such default without interruption until such cure is completed]."

         In 2005, Coventry sent Commerce Park a sewer assessment bill to pay for the Fast Track Assessment.[1] On September 15, 2005, Commerce Park forwarded the invoice from Coventry to Roadepot and requested Roadepot "make payments directly to * * * Coventry." On October 11, 2005, Commerce Park forwarded the Coventry invoice to Home Depot along with a letter, explaining that the Fast Track Assessment was being challenged. Home Depot then began making payments for the Fast Track Assessment annually.

         On September 17, 2009, Home Depot sent Roadepot a fax, seeking payment for the Fast Track Assessment. The fax was sent by Janet Murray, the senior property tax accountant at Home Depot, and included an attached copy of a 2009 Fast Track Assessment bill. The fax expressed:

"Attached is a copy of the 2009 [s]ewer [a]ssessment [b]ill in which the first installment is due by 09/30/09 according to my conversation with * * * Coventry. Based on my understanding of the lease, this bill is the landlord's responsibility."

         On October 20, 2009, Roadepot sent Home Depot a letter concerning the Fast Track Assessment charges, which Roadepot described as a "municipal sewer assessment on the Coventry property." The letter explained that Home Depot was "required to pay all sewer assessment and annual fees levied by * * * Coventry" under the lease. The letter also explained that "[f]ailure to pay the September 2009 first quarter installment constitutes default on the part of Home Depot." Roadepot's letter concluded that, if Home Depot did not cure the default within thirty days, Roadepot reserved the right to take action under § 13.1 of the lease.[2] On November 16, 2009, Home Depot wrote a responsive letter to Roadepot, asserting that Roadepot is responsible for paying the sewer assessment bill issued by Coventry. Home Depot, however, continued to pay Coventry for the Fast Track Assessment through 2014.

         On April 1, 2010, Roadepot filed a lawsuit against Home Depot seeking a declaratory judgment that Home Depot was responsible under the lease to pay the Fast Track Assessment. Thereafter, Home Depot filed a counterclaim, seeking a declaratory judgment that Roadepot was responsible for payment of the Fast Track Assessment as well as a counterclaim for breach of contract to recover the amounts Home Depot had already paid Coventry for the Fast Track Assessment. On November 21, 2013, Home Depot filed a motion for summary judgment. Roadepot objected to Home Depot's motion for summary judgment; and, on December 30, 2013, filed a cross-motion for summary judgment, to which Home Depot objected.

         On January 27, 2014, the Superior Court heard the parties' motions and determined that there was "a genuine issue of material fact[.]" The hearing justice explained that she was "not satisfied that either party [had] addressed the issue [in] Article 5, [s]ection 5.1(b) of the lease" and reasoned that "[t]he record reflects that neither party ha[d] addressed the meaning of the loophole and proffer fees which are contained in that section." On February 3, 2014, the Superior Court issued an order denying the motions.

         On December 12, 2014, Home Depot filed a renewed motion for summary judgment. Roadepot objected and filed a cross-motion for summary judgment in January 2015. On January 26, 2015, a hearing was held on the motions before a second Superior Court justice.[3]

         At the hearing, the trial justice explained:

"So I think [the contract drafters] were saying that any impact, loophole, or proffer fees, even though that terminology is not utilized in Rhode Island, I think they were saying that those fees, that type of fee, would be the responsibility of the landlord. I think they start with the proposition that if it's not specifically provided for in the lease for payment by the tenant, that it would be the landlord's responsibility.
"In this case, it is clear that the fee in question here, the sewer assessment fee over the years, it is not a tax. It is not an assessment for betterment or improvement, at least for the property in question. It might be an assessment for betterment and improvement of the sewer system, which is for the benefit of all the-well, all the people of Coventry that were tied in.
"* * * "The lease is not ambiguous. I don't have to refer to parol evidence in the form of intent of the parties as expressed by their statements or otherwise."

         In an order entered on February 11, 2015, the Superior Court granted Home Depot's motion for summary judgment and denied Roadepot's cross-motion for summary judgment on the issue of liability for payment of the Fast Track Assessment. The trial justice also denied Home Depot's motion for summary judgment on its counterclaim, finding that there were genuine issues of material fact to be resolved.

         On February 13, 2015, Roadepot appealed from the Superior Court's order.[4] On March 30, 2015, the Superior Court held a nonjury trial on Home Depot's counterclaim for the amounts Home Depot had paid to Coventry for the Fast Track Assessment from 2005 to 2014.

         John Tascione, Home Depot's director of real estate at the time Home Depot signed the lease, was the only witness to testify at trial. He testified that Home Depot's vendor, who made the payments for Home Depot, mistakenly believed that the "sewer infrastructure charges" were for water usage. He further testified that Cambio had sent a bill to Home Depot on October 11, 2005, and that Home Depot paid the Fast Track Assessment "under protest." He explained that it was Home Depot's policy to pay bills, "especially assessments, if they were being billed by the [t]own" because failure to pay such bills "would be a breach of the lease" or could result in liens or eviction.

         On May 4, 2015, the trial justice issued a decision, which was amended on May 11, 2015. The trial justice ruled that Roadepot was responsible for paying the Fast Track Assessment. The trial justice rejected Roadepot's argument seeking application of the voluntary payment doctrine; and, instead, he "employed a different analysis and practical application of the voluntary payment doctrine[, ]" namely, the doctrine of unjust enrichment. The trial justice determined that Home Depot was "only entitled to recover the benefit conferred upon Roadepot, that is, $388, 657.21, representing the value of the Fast Track ...


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