In re: 25 Burnside Avenue, Narragansett, Rhode Island.
Washington County Superior Court (WC 16-208) Associate
Justice Brian P. Stern
Appellant: Eric H. Miller, Esq. Seth A. Perlmutter, Esq.
Appellee: Douglas J. Emanuel, Esq.
Suttell, C.J., Goldberg, Flaherty, Robinson, and Indeglia JJ.
A. Suttell Chief Justice.
Hunt, an interested party in this receivership case, appeals
from a Superior Court decision and order authorizing the
permanent receiver to distribute the proceeds from the sale
of 25 Burnside Avenue in Narragansett in accordance with the
receiver's recommendations. On appeal, Kevin argues that
the Superior Court justice erred by (1) misreading and
misapplying the provisions of a marital settlement agreement
in distributing the proceeds from the sale of the property;
(2) attributing the entire balance of an outstanding mortgage
to Kevin's share of the proceeds; and (3) ordering Kevin
to pay rent retroactively. This case came before the Supreme
Court pursuant to an order directing the parties to appear
and show cause why the issues raised in this appeal should
not be summarily decided. After considering the parties'
written and oral submissions and reviewing the record, we
conclude that cause has not been shown and that this case may
be decided without further briefing or argument. For the
reasons set forth in this opinion, we affirm in part and
vacate in part the order of the Superior Court.
Burnside Avenue in Narragansett, Rhode Island (the property)
is an ocean view, single-family home located approximately
200 to 300 yards from Scarborough State Beach. From 2002 to
2006, Kevin Hunt (Kevin) and the petitioner, Alice Hunt
(Allie),  owned the property as tenants by the
entirety and lived there together with their daughter. On
June 27, 2006, the Family Court entered a final judgment on
the divorce between Kevin and Allie, dissolving their
thirteen-year marriage. Kevin and Allie had entered into a
marriage settlement agreement (the MSA) on January 20, 2006,
which was incorporated but not merged into the final judgment
of divorce. Under the terms of the MSA, Kevin and Allie
agreed that the property had a fair market value of $900, 000
as of the date of the MSA. The MSA also provided that Kevin would
vacate the property and Allie would have its exclusive use no
later than April 15, 2006.
3 of the MSA sets forth Kevin's and Allie's agreement
with respect to the ultimate division and distribution of the
property. Under Subsection 3(C), Kevin was responsible for
certain specified expenses until December 31, 2009, including
mortgage payments, taxes, utilities, assessments, and all
expenses related to maintenance and repair. In consideration
of his making all such payments, contemplated to be
approximately $100, 000 per year, Kevin was to purchase
Allie's interest in the property for 38 percent of the
net equity value as of December 31, 2009 under Subsection
3(D) (the Buyout Provision). In the event, however, that Kevin
was "unable to make all payments as set forth [in the
MSA]," Subsection 3(D) also provided that the property
was to be sold and the net proceeds divided equally (the Sale
Provision). Subsection 3(E) clarifies that Allie "shall
convey to [Kevin] all right, title, and interest in and to
said property contemporaneous with [Kevin's] payment of
the net equity percentage due and owing to [Allie] * *
also states that, at the time of its execution, there was a
$360, 000 outstanding mortgage to Citizens
on the property (the 2004 Mortgage). Both Kevin and Allie
signed the 2004 mortgage deed, but only Kevin signed the
related promissory note (the 2004 Note). The parties agreed
in the MSA, at Subsection 3(A), that, by subtracting the
outstanding mortgage amount from the agreed-upon $900, 000
fair market value, the property's "net equity"
value was $540, 000 at the time of the MSA's execution.
Finally, during the four-year period ending December 31,
2009, neither party was to increase the outstanding mortgage,
nor encumber the property with further liens.
31, 2009 came and went. No conveyances were made, nor was the
property listed and sold. In fact, Allie continued to live at
the property with her and Kevin's daughter until March
2012, when the Family Court granted Allie permission to
temporarily relocate to California with the child. The Family
Court order included a provision stating that Allie would
continue to have exclusive use and possession of the property
"to the exclusion of [Kevin]." Nevertheless, in
violation of the Family Court order, while Allie was away,
Kevin moved in to the property with his two children from
another relationship; he remained there for approximately
to Allie, in 2012, "in connection with an anticipated
sale of the [property]," she learned that Kevin had
executed an additional mortgage on February 23, 2006 (the
2006 Mortgage) and promissory note (the 2006 Note) in favor
of Citizens Bank in the principal amount of $150, 000.
Similar to the 2004 Mortgage and the 2004 Note, both Kevin
and Allie's signatures appear on the 2006 mortgage deed,
but only Kevin's signature appears on the corresponding
note. Allie has maintained throughout the receivership
proceedings that she did not sign the 2006 mortgage deed.
Allie does not dispute, however, that she signed the 2004
early 2016, Allie learned that Citizens Bank had scheduled a
sale of the property to foreclose upon the 2006 Mortgage. On
April 25, 2016, Allie filed a petition for receivership to
protect her equity interests in the property, which she
believed took priority over the 2006 Mortgage.
April 26, 2016, the property was placed into temporary
judicial receivership, and, on the same day, the Superior
Court appointed Stephen Del Sesto as temporary receiver.
Later, on May 23, 2016, the Superior Court appointed Del
Sesto as permanent receiver (the Receiver). Kevin entered the
case as an interested party. At a hearing on his permanency
appointment, the Receiver told the court that he hoped to
rent the property weekly during the summer months and monthly
for the remainder of the year. At that time, Kevin was still
living at the property and paying the property-related
expenses. He was not, however, paying any rent or apparently
making any mortgage payments, given Citizens Bank's
initiation of foreclosure proceedings.
initially requested an additional thirty days before the
Receiver engaged a real estate broker to gather more
information on the loans from Citizens Bank. Allie objected
to this request at a May 31, 2016 hearing, noting that, as
summer quickly approached, "[t]his is the time to be
marketing and selling" the property because it is
"prime beach-front property[.]" Allie suggested to
the court that Kevin pay fair market rent for the valuable
summer months if he was going to further delay the
Superior Court denied Kevin's request for additional time
to gather his loan documents. Kevin next filed a Chapter 13
bankruptcy petition on June 7, 2016, which, in effect,
allowed him to remain at the property. The petition was
eventually dismissed by the Bankruptcy Court on August 25,
September 2016, the Receiver filed a motion for an order
directing Kevin to immediately vacate the property, holding
Kevin in contempt of court, and imposing sanctions against
Kevin. In his motion, the Receiver stated that, at the May
23, 2016 hearing for the appointment of a permanent receiver
as well as immediately after that hearing, he had informed
Kevin that rent was required in order for Kevin to remain at
the property. The Receiver argued that renting the property
weekly during the summer season could have substantially
contributed to the receivership estate.
Superior Court granted the Receiver's motion and ordered
Kevin to vacate the property by October 18, 2016. The order
provided that, if Kevin did not vacate the property by 11:59
p.m. on October 18, 2016, the court would hold a hearing at
9:30 a.m. on October 19, 2016, to consider whether Kevin
should be held in contempt of court. The Superior Court
indeed held a hearing on October 19, as Kevin had not yet
vacated the property. At that hearing, the Superior Court
granted Kevin an additional week to vacate the property;
Kevin substantially complied with the order by removing
himself and the children and most of his belongings.
thereafter, the Receiver sold the property for $577, 500. The
sale closed on February 1, 2017. Citizens Bank had filed a
motion to allow its secured claims related to the 2004
Mortgage and the 2006 Mortgage, which was granted on February
2, 2017. Allie filed a limited objection to the approval of
the 2006 Mortgage, arguing that it should not be deducted
against her interest because, despite what appears to be her
signature on the document, she did not sign the 2006 mortgage
deed, nor is her signature or name on the 2006 Note.
February 17, 2017, the Receiver filed a First and Final
Report (the Final Report) and, on February 19, 2017, he filed
a Recommendation on Allowance of Claims (the Recommendation).
The Recommendation suggested that Kevin's past-due rent,
calculated to be $38, 250,  should be added to the
receivership estate, bringing the total cash-on-hand amount
to $582, 776.97. Next, the Receiver recommended that the
receivership estate be ...