Goat Island South Condominium v. IDC Clambakes, Inc., 1st Cir. (2013)

7/26/2019 Goat Island South Condominium v. IDC Clambakes, Inc., 1st Cir. (2013)

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United States Court of AppealsFor the First Circuit

No. 12- 1710

I N RE: I DC CLAMBAKES, I NC. , d/ b/ a The Newpor t Regat t a Cl ub,

Debt or

GOAT I SLAND SOUTH CONDOMI NI UM ASSOCI ATI ON, I NC. ,AMERI CA CONDOMI NI UM ASSOCI ATI ON, I NC. ,

CAPELLA SOUTH CONDOMI NI UM ASSOCI ATI ON, I NC. ,

Appel l ant s,

HARBOR HOUSES CONDOMI NI UM ASSOCI ATI ON, I NC. ,

Pl ai nt i f f ,

v.

I DC CLAMBAKES, I NC. , d/ b/ a The Newpor t Regat t a Cl ub,

Appel l ee.

APPEAL FROM THE UNI TED STATES DI STRI CT COURTFOR THE DI STRI CT OF RHODE I SLAND

[ Hon. Wi l l i am E. Smi t h, U. S. Di st r i ct J udge]

Bef or e Lynch, Chi ef J udge,

Boudi n, Ci r cui t J udge, *

and Woodl ock, Di st r i ct J udge. **

*J udge Boudi n hear d or al ar gument i n t hi s mat t er andpar t i ci pat ed i n t he sembl e, but he di d not par t i ci pat e i n t hei ssuance of t he panel s opi ni on i n t hi s case. The r emai ni ng t wopanel i st s t her ef or e i ssued t he opi ni on pur suant t o 28 U. S. C. 46( d) .

**Of the District of Massachusetts, sitting by designation.


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Wi l l i am R. Gr i mm and Char l es D. Bl ackman on br i ef f orappel l ant s.

Wi l l i amP. Devereaux, wi t h whomThomas R. Gonnel l a, Mat t hew C.Reeber , Benj ami n L. Rackl i f f e wer e on br i ef f or appel l ee.

August 14, 2013


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WOODLOCK, District Judge. Thi s case ar i ses out of near l y

t went y year s of l i t i gat i on conduct ed al ong mul t i pl e f r ont s bet ween

r eal est ate devel opment ent i t i es on the one hand and the

condomi ni um ent i t i es gener ated by t hi s devel opment on t he other .

Si nce at l east 1994, t he Pl ai nt i f f / Appel l ant Condomi ni um

Associ at i ons and t he I DC devel opment ent i t i es - - I DC, I nc. ; I DC

Pr oper t i es, I nc. ; and I DC Cl ambakes, I nc. , t he Def endant / Appel l ee

i n t hi s mat t er - - have been di sput i ng t he owner shi p and use of

cer t ai n pr oper t y on Goat I sl and i n t he Ci t y of Newpor t , Rhode

I sl and.

The f ocus of t he mat t er now bef or e us i s f r amed by t he

f act t hat I DC Proper t i es const r uct ed and Def endant I DC Cl ambakes

operat ed The Newpor t Regat t a Cl ub on t he cont est ed pr opert y af t er

t he Associ at i ons had asser t ed t hat t he r i ght s of I DC ent i t i es t o

own or devel op t he pr opert y had l apsed. Event ual l y t he Rhode

I sl and Supr eme Cour t f ound i n f avor of t he Associ at i ons. The

Associ at i ons t her eaf t er sought t o evi ct I DC Pr oper t i es f r om t he

l and, and I DC Cl ambakes decl ared bankr upt cy. Thi s case comes t o us

on appeal f r om a bankrupt cy cour t deci si on and concer ns t he

quest i on whet her I DC Cl ambakes t r espassed on t he Associ at i ons

pr oper t y or whet her , t hr ough t hei r act i ons dur i ng t he pendency of

t he l i t i gat i on, t he Associ at i ons i mpl i edl y consent ed t o oper at i on

of t he Regat t a Cl ub by I DC Cl ambakes whi l e t i t l e t o t he l and

r emai ned uncl ear .

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Despi t e ongoi ng f or mal di sput es i n t he st at e and f eder al

cour t s, t he par t i es appar ent l y enj oyed a gener al l y congeni al

r el at i onshi p r egar di ng t he Regat t a Cl ub. The Associ at i ons di d not

chal l enge bui l di ng, l i quor , or oper at i ng per mi t s f or I DC Pr oper t i es

dur i ng const r uct i on ot her t han t o quest i on t he suf f i ci ency of

pl anned parki ng space and zoni ng compl i ance. I nst ead, var i ous

member s of t he Associ at i ons r egul ar l y cont r act ed wi t h the Regat t a

Cl ub f or event space f or annual meet i ngs and pr i vat e event s.

The r ecor d i s mar bl ed wi t h cont r adi ct or y evi dence

r egardi ng mani f est at i ons of consent f or Cl ambakes t o oper at e on t he

pr oper t y. Ul t i mat el y, however , we f i nd t hat t he bankrupt cy cour t s

deci si on as t o i mpl i ed consent i s a pl ausi bl e i nt er pr et at i on of a

pr obl emat i c r ecor d. That deci si on i s f ul l y r easoned and suppor t ed

by t he evi dence. Accor di ngl y, we af f i r m as t o t hat i ssue but

never t hel ess f i nd i t necessar y t o remand as t o t he i ssue of whet her

compensat i on i s owed f or Cl ambakes aut hor i zed use and occupancy.

I .

The mat er i al f act s and hi st or y ar e essent i al l y

undi sput ed. For t he sake of cl ar i t y, we summar i ze onl y t hose f act s

per t i nent t o t hi s appeal . A more compl et e f actual and pr ocedur al

hi st or y under l yi ng t he pr ot r act ed l i t i gat i on may be f ound i n

deci si ons of t he Di st r i ct Cour t , t he Bankrupt cy Cour t , and t he

Rhode I sl and Supr eme Cour t . See, e. g. , I n r e I DC Cl ambakes, I nc. ,

C. A. No. 10- 267 S, 2012 WL 1194122, at *1- 3 ( D. R. I . Apr . 10, 2012) ;

I n r e I DC Cl ambakes, I nc. , 431 B. R. 51, 54- 57 ( Bankr . D. R. I . 2010) ;

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Am. Condo. Ass n. , I nc. v. I DC, I nc. , 844 A. 2d 117, 119- 26 ( R. I .

2004) ( Amer i ca I ) .

I n 1997 and 1998, I DC Propert i es const r uct ed t he Newpor t

Regat t a Cl ub on a pi ece of pr oper t y - - known t hr oughout t hi s

l i t i gat i on as t he Reser ved Ar ea - - i n spi t e of an ongoi ng di sput e

over owner shi p and devel opment r i ght s t o t he l and. I DC Proper t i es

began t hi s devel opment wi t h f ul l knowl edge of pl ai nt i f f s cl ai ms

and af t er t hey vol unt ar i l y ent er ed i nt o [ a] t ol l i ng agr eement . I n

r e I DC Cl ambakes, I nc. , 360 B. R. 24, 26 ( Bankr . D. R. I . 2007) . The

Associ at i ons, I DC Proper t i es, and Thomas Roos ( t he sol e shar ehol der

of each of t he I DC ent i t i es) ent er ed i nt o t hi s t ol l i ng agr eement on

J anuar y 5, 2008, havi ng engaged i n years of di scussi ons and

negot i at i ons r egar di ng t he val i di t y of amendment s t o t he

Condomi ni um Mast er Decl ar at i on pur por t i ng t o gr ant I DC Pr oper t i es

t he r i ght t o devel op t he l and when i t di d. Af t er sever al

ext ensi ons, t he Tol l i ng Agr eement was set t o expi r e on May 31,

1999.

Dur i ng t he pr ocess of const r uct i on and per mi t t i ng f or t he

Regat t a Cl ub, t he Associ at i ons f or mal l y obj ect ed onl y t o t he

par ki ng r equi r ement s. When I DC Pr oper t i es f i l ed f or a bui l di ng

const r uct i on per mi t , t he Amer i ca Condomi ni um Associ at i on r ai sed a

concer n by wr i t i ng t o t he Zoni ng Of f i cer t hat , I t s our

under st andi ng t hat a per mi t appl i cat i on has been f i l ed wi t h your

Of f i ce f or t he pur pose of const r uct i ng a bl dg. . . . Whi l e we don t

have a par t i cul ar obj ect i on as t o t he l and use wi t h r espect t o t he

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bui l di ng i t sel f , we do have a subst ant i al pr obl em wi t h t he par ki ng

r equi r ement s f or t hat bl dg. . . . . The Associ at i ons wer e awar e

t hat Cl ambakes appl i ed f or a l i quor l i cense t r ansf er and sought t o

del ay the t r ansf er , but onl y so t he Zoni ng Boar d of Appeal s coul d

r esol ve t he par ki ng i ssue di sput e. Ul t i mat el y, t he Ci t y Counci l

appr oved t he l i quor l i cense t r ansf er f r om Dor el l , I nc. t o I DC

Cl ambakes, I nc. , t he ent i t y creat ed i n 1996 t o l ease and oper at e

t he Regat t a Cl ub, and t he debt or appel l ee i n t hi s act i on.

Never t hel ess, Mr . Roos has st i pul at ed t hat I DC Pr oper t i es bui l t t he

Regat t a Cl ub at a t i me when he underst ood t hat t he Associ at i ons

wer e t r yi ng t o say t hat Pr oper t i es had no r i ght t o const r uct t he

Regat t a Cl ub.

I DC Cl ambakes was not a par t y t o t he Tol l i ng Agreement ,

and because t he l ease bet ween I DC Pr oper t i es and I DC Cl ambakes was

never r ecor ded and Cl ambakes di d busi ness under t he name Newpor t

Regat t a Cl ub, t he r ecord r emai ns vague r egardi ng t he ext ent t o

whi ch t he Associ at i ons under st ood or wer e awar e of t he pr eci se rol e

Cl ambakes had i n t he devel opment and operat i on of t he Regat t a Cl ub.

On May 29, 1999, about si x mont hs af t er t he use and

occupancy cer t i f i cat e was approved, Cl ambakes began operat i ng t he

Regat t a Cl ub and t hr ee days bef ore t he Tol l i ng Agreement expi r ed,

t he Associ at i ons f i l ed a seven- count st at e cour t act i on agai nst Mr .

Roos, I DC Proper t i es, and I DC, I nc. , seeki ng damages and a

decl ar at i on t hat t he vot i ng scheme t hat pur por t ed to extend

devel opment r i ght s t o I DC at t he t i me i t bui l t t he Regat t a Cl ub was

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i nval i d. Thi s act i on di d not i nvol ve any cl ai ms of t r espass, or

appear t o i nvol ve any i ssues r el at ed t o t r espass or damages f l owi ng

t her ef r om. Goat I sl and S. Condo. Ass n. , I nc. v. I DC Cl ambakes,

I nc. , 382 B. R. 178, 180 ( D. R. I . 2008) ; see al so Amer i ca I , 844 A. 2d

at 125, 125 n. 13. Over t he next si x year s, t he par t i es l i t i gat ed

owner shi p of t he Reserved Ar ea i n t he Rhode I sl and st ate cour t s

unt i l Apr i l 8, 2005 when t he Rhode I sl and Supr eme Cour t decl ared

t hat t i t l e [ t o t he Reser ved Ar ea] r est ed wi t h t he uni t owner s i n

common owner shi p and not wi t h I DC. Am. Condo. Ass n. , I nc. v.

I DC, I nc. , 870 A. 2d 434, 443 ( R. I . 2005) ( Amer i ca I I ) .

Meanwhi l e, dur i ng t hi s pr ot r act ed and cont ent i ous

l i t i gat i on over owner shi p of t he pr oper t y, t he Har bor Houses

Condomi ni umAssoci at i on, a pl ai nt i f f bel ow but not an appel l ant i n

t hi s appeal , cont r act ed wi t h Cl ambakes t o use t he Regat t a Cl ub f or

i t s annual meet i ngs and var i ous condomi ni um uni t owner s r egul ar l y

cont r act ed wi t h Cl ambakes t o host pr i vat e event s at t he Regat t a

Cl ub. None of t he Associ at i ons made any ef f or t t o enj oi n Cl ambakes

or t o evi ct i t f r omt he pr oper t y. I t was not unt i l af t er t he Rhode

I sl and Supr eme Cour t s deci si on i n Amer i ca I I t hat t he Associ at i ons

f i l ed f or Wr i t s of Execut i on and Ej ect ment .

Fol l owi ng the Rhode I sl and Supr eme Cour t s deci si on i n

Amer i ca I I , Cl ambakes t r i ed a var i et y of i ni t i at i ves t o avoi d t he

seemi ngl y i nevi t abl e consequences of t he Cour t s rul i ng. One week

af t er t he deci si on i n Amer i ca I I , Cl ambakes f i l ed a ci vi l act i on i n

Rhode I sl and Super i or Cour t , ar gui ng among ot her t hi ngs t hat i t

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owned t he cont est ed proper t y by adver se possessi on. Two mont hs

l at er , on J une 16, 2005, Cl ambakes f i l ed t he cur r ent Chapt er 11

case to t r i gger t he aut omat i c st ay, see 11 U. S. C. 362, and st ave

of f enf or cement of t he st at e cour t j udgment whi l e rel i t i gat i ng some

of t he i ssues t hat t he st at e cour t s had al r eady addr essed. These

st r at egi es pr oved unsuccessf ul . Event ual l y, a bankrupt cy pl an was

conf i r med f or Cl ambakes.

The di st r i ct cour t vacat ed t he bankr upt cy cour t s i ni t i al

deci si on, see Goat I sl and S. Condo. Ass n. , I nc. , 382 B. R. at

179- 80, and remanded t he case f or a mor e t hor ough devel opment of

t he f act s and compl i ance wi t h due pr ocess. 1 On r emand, t he

bankrupt cy cour t hel d a ni ne- day t r i al and, r el evant t o t hi s

appeal , hel d that Cl ambakes was not l i abl e f or t r espass bet ween

March 1, 1998 and Apr i l 8, 2005 because t he Associ at i ons i mpl i edl y

consent ed t o Cl ambake s oper at i on of t he Regat t a Cl ub. The

bankr upt cy cour t deni ed any award of damages f or t hi s per i od.

1 The bankrupt cy cour t s i ni t i al deci si on hel d t hat I DCCl ambakes had been a t r espasser but t hat t he Associ at i ons were notent i t l ed t o damages f or t he t r espass because t he st at e cour t sawar d of damages ( unr el at ed t o t r espass) i n t he Amer i ca l i t i gat i onhad pr ecl usi ve ef f ect on the bankrupt cy cour t cl ai ms and,addi t i onal l y, t hat damages woul d r esul t i n unj ust enr i chment basedon t he t ot al i t y of ci r cumst ances. I n r e Cl ambakes, I nc. , 360

B. R. 24 ( Bankr . D. R. I . 2007) . The di st r i ct cour t hel d t hat t hebankr upt cy cour t mi sappl i ed Rhode I sl and t r espass l aw, t hatt ot al i t y of t he ci r cumst ances i s not a pr oper gr ound t o deny anaward of damages, and that pr ecl usi on was i nappr opr i ate bothbecause t he Amer i ca l i t i gat i on di d not addr ess t r espass and becauset he par t i es had not f i l ed any mot i on f or summary j udgment r egardi ngt r espass as t he bankr upt cy cour t cl ai med. Goat I sl and S. Condo.Ass n. , I nc. 382 B. R. 178.

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Bot h par t i es appeal ed t o t he di st r i ct cour t . The

di st r i ct cour t af f i r med, see I n r e I DC Cl ambakes, I nc. , 2012 WL

1194122, and thi s appeal f ol l owed.

I I .

We r evi ew t he bankr upt cy cour t s deci si on wi t hout

def er ence t o t he di st r i ct cour t s rul i ng. The cour t of appeal s

under t akes an i ndependent r evi ew of [ a] bankr upt cy cour t order ,

ut i l i zi ng t he same appel l at e st andar ds gover ni ng t he di st r i ct cour t

r evi ew. I n r e LaRoche, 969 F. 2d 1299, 1301 ( 1st Ci r . 1992) .

Thus, we r evi ew t he bankr upt cy cour t s f act ual f i ndi ngs f or cl ear

er r or and i t s concl usi ons of l aw de novo. J ef f r ey v. Desmond, 70

F. 3d 183, 185 ( 1st Ci r . 1995) ; I n r e G. S. F. Cor p. , 938 F. 2d 1467,

1474 ( 1st Ci r . 1991) .

[ A f act ual ] f i ndi ng i s cl ear l y er r oneous when al t hough

t her e i s evi dence t o suppor t i t , t he r evi ewi ng cour t on t he ent i r e

evi dence i s l ef t wi t h t he def i ni t e and f i r m convi cti on t hat a

mi st ake has been commi t t ed. I n r e t he Bi bl e Speaks, 869 F. 2d 628,

630 ( 1st Ci r . 1989) . I f t he bankrupt cy cour t s account of t he

evi dence i s pl ausi bl e i n l i ght of t he r ecor d vi ewed i n i t s

ent i r et y, [ we] may not rever se. I d. at 630. However , we may

af f i r m t he deci si on of t he bankrupt cy cour t on any gr ound

suppor t ed by t he r ecor d. I n r e Car p, 340 F. 3d 15, 21 ( 1st Ci r .

2003) .

Mi xed quest i ons of l aw and f act i nvok[ e] a sl i di ng

st andar d of r evi ew . . . . Br aunst ei n v. McCabe, 571 F. 3d 108,

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124 ( 1st Ci r . 2009) . The mor e f act i nt ensi ve t he quest i on, t he

mor e def er ent i al t he l evel of r evi ew ( t hough never mor e def er ent i al

t han t he cl ear er r or st andar d) ; t he mor e l aw i nt ensi ve t he

quest i on, t he l ess def er ent i al t he l evel of r evi ew. See Si er r a

Fri a Cor p. v. Donal d J . Evans, P. C. , 127 F. 3d 175, 181 ( 1st Ci r .

1997) .

I I I .

Rhode I sl and l aw, whi ch gover ns t hi s t r espass act i on,

def i nes a t r espasser as [ o] ne who i nt ent i onal l y and wi t hout

consent or pr i vi l ege ent er s anot her s pr oper t y. Bennet t v.

Napol i t ano, 746 A. 3d 138, 141 ( R. I . 2000) . Ther e i s no quest i on

t hat t he Associ at i ons have made out t wo of t he basi c el ement s f or

a t r espass cl ai m: Cl ambakes i nt ent i onal l y and vol unt ar i l y ent er ed

t he l and and t he l and was i n t he Associ at i ons r i ght f ul possessi on.

Cl ambakes does not di sput e t hi s. The r el evant quest i on on appeal

i s whet her t he bankrupt cy cour t appr opr i atel y f ound i mpl i ed

consent .

- A -

We addr ess t wo pr el i mi nar y i ssues bef or e t ur ni ng to t he

subst ance of t he bankrupt cy cour t s deci si on. I n doi ng so, we

conf r ont t wo argument s mount ed by the Associ at i ons whi ch, whi l e

t echni cal l y accur at e as st at ement s of l egal pr i nci pl e, have no

bear i ng on t hi s case.

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1. Mi st ake as t o Owner shi p

The Associ at i ons f i r st ar gument - t hat a mi st ake as t o

owner shi p i s not a def ense t o t r espass - mi sses t he poi nt . Mi st ake

as t o owner shi p pl ayed no rol e i n t he bankrupt cy cour t s

det er mi nat i on, and t her ef or e was not t he sour ce of any er r or .

Fur t her , any mi st aken bel i ef by Cl ambakes t hat I DC Proper t i es owned

t he l and does not have t he pr ecl usi ve ef f ect Appel l ant s suggest .

The f act t hat Cl ambakes enter ed i nt o a l ease wi t h I DC Pr oper t i es,

whi ch was under t he mi st aken bel i ef t hat i t owned t he di sput ed

pr opert y, does not pr ecl ude a f i ndi ng t hat Cl ambakes may have

t hought i t had t he Associ at i ons i mpl i ed consent t o oper at e. The

t wo f or ms of per mi ssi on ar e not mut ual l y excl usi ve, par t i cul ar l y i n

a si t uat i on wher e al l par t i es i nvol ved under st ood t hat t i t l e was i n

di sput e. Nei t her of t he Associ at i ons ci t ed cases, Campbel l v.

Leder er Real t y Cor p. , 129 A. 732, 733 ( R. I . 1925) ; Rhode I sl and

Economi c Devel opment Corp. v. The Par ki ng Co. , L. P. , 909 A. 2d 943,

945 ( R. I . 2006) , can suppor t t he pr oposi t i on t hat an ent i t y

ent er i ng i nt o a l ease f or cont est ed pr oper t y wi t h t he appar ent

l andowner i s t her eby pr ohi bi t ed f r om al so seeki ng or r ecei vi ng

per mi ssi on f r om anot her par t y cl ai mi ng owner shi p.

2. Reasonabl e Rel i ance

The Associ at i ons next ar gument - t hat t here can be no

appar ent consent wi t hout a f i ndi ng of r easonabl e r el i ance - f i nds

no appl i cat i on i n t hi s appeal . Appel l ant s appear t o cont end t hat

t he bankr upt cy cour t made no f i ndi ng of r easonabl e r el i ance,

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despi t e t he cour t s speci f i c stat ement t hat [ t he Associ at i ons ]

conduct demonst r ates a cont i nui ng unequi vocal expr essi on of consent

. . . , upon which Clambakes reasonably relied. I n r e I DC

Cl ambakes, I nc. , 431 B. R. at 60 ( emphasi s added) . The pr opr i et y of

t hi s f i ndi ng pr esent s a separ at e i ssue, di scussed i n mor e det ai l

bel ow, but t he ar gument t hat t hi s case war r ant s r ever sal f or

f ai l ur e t o f i nd r easonabl e r el i ance cannot wi t hst and even t he most

cur sory gl ance.

Wi t h t hose pr el i mi nary i ssues r esol ved, we move on t o t he

subst ant i ve i ssues under l yi ng t he cent r al quest i on of i mpl i ed

consent .

- B -

Consent , i n any f or m, i s f at al t o a cl ai m f or t r espass. 2

Consent can be spoken or unspoken, expr ess or i mpl i ed, and t here i s

no r equi r ement t hat i t be communi cat ed t o t he act or . Rest at ement

( Second) of Tor t s 892 ( 1970) . Appar ent consent ar i ses f r om t he

par t i es conduct and f r om cont ext . Gr i ggs- Ryan v. Smi t h, 904 F. 2d

112, 117 ( 1st Ci r . 1990) . I t i s suf f i ci ent t hat a par t y r easonabl y

under st ands words or conduct as conveyi ng consent . Rest at ement

2 Begi nni ng wi t h t he bankr upt cy cour t s opi ni on on r emand, t heopi ni ons and br i ef s i n t hi s case - - f r om post - t r i al mot i on t hr ought hi s appeal - - use t he t er ms i mpl i ed consent and apparentconsent i nt er changeabl y. Al t hough t he t er ms ar e not necessar i l ysynonyms, any di st i nct i ons are not r el evant t o thi s case and wet her ef or e t r eat t hem as i nt er changeabl e i n t hei r phr aseol ogy andappl i cat i on her e.

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( Second) of Tor t s 892. 3 Thi s i s t r ue [ e] ven when t he per son

concer ned does not i n f act agr ee t o the conduct of t he ot her as

l ong as hi s wor ds or act s or even hi s i nact i on . . . j ust i f y t he

ot her i n act i ng i n r el i ance upon t hem. I d. at 892 cmt . c.

However , t her e i s no consent i f a reasonabl e per son woul d not

under st and f r om t he wor ds or conduct t hat consent i s gi ven . . .

even t hough he honest l y so bel i eves . . . . I d.

We f i r st addr ess whet her t he bankr upt cy cour t

appr opr i at el y f ound t hat act i ons by t he Associ at i ons r easonabl y

conveyed appar ent consent . We t hen t urn t o t he quest i on whet her

t he bankrupt cy cour t pr oper l y f ound t hat Cl ambakes di d, i n f act ,

r easonabl y r el y on t hose act i ons.

1. Mani f est at i on of Apparent Consent

The bankr upt cy cour t s deter mi nat i on t hat t he

Associ at i ons act i ons mani f est ed consent f or Cl ambakes oper at i on

of t he Regat t a Cl ub f al l s wi t hi n t hat cour t s aut hor i t y as f act

f i nder . To be sur e, t he evi dence i s not one si ded. Ther e i s

evi dence i n t he r ecor d suf f i ci ent t o suppor t ei t her a f i ndi ng of

consent or a f i ndi ng of no consent as wel l as evi dence

i r r econci l abl y i nconsi st ent wi t h ei t her al t er nat i ve out come. Yet

det er mi nat i ons of t he character and wei ght of t he evi dence are best

l ef t t o t he f i nder of f act . Uni t ed St at es v. Young, 105 F. 3d 1, 5

3 The Rhode I sl and Supr eme Cour t l ooks t o t he Rest at ement ofTor t s i n deci di ng t r espass cl ai ms. E. g. , Mesol el l a v. Ci t y ofProvi dence, 508 A. 2d 661, 667 n. 8 ( R. I . 1986) .

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( 1st Ci r . 1997) ( [ T] he t r i al j udge, who hear s t he t est i mony,

observes t he wi t nesses demeanor and eval uat es t he f act s f i r st

hand, si t s i n t he best posi t i on t o det er mi ne what act ual l y

happened. ) . And [ w] her e t her e are t wo per mi ssi bl e vi ews of t he

evi dence, a f act f i nder s choi ce bet ween t hem cannot be cl ear l y

er r oneous. I n r e The Bi bl e Speaks, 869 F. 2d at 630.

The Associ at i ons r el y on t he par t i es l ong hi st or y of

bi t t er l y cont ent i ous di sput es over owner shi p of t he pr oper t y,

ar gui ng t hat t hei r own act i ons f or ecl ose t he possi bi l i t y of any

mani f est at i on of consent when underst ood i n t he cont ext of t he

spect er of t he par t i es var i ous l egal st r uggl es. The Associ at i ons

ent er ed i nt o t he Tol l i ng Agr eement wi t h I DC, I nc. , I DC Pr oper t i es,

and Mr . Roos bef ore I DC Proper t i es began bui l di ng t he Regat t a Cl ub,

i n or der t o pr eser ve t hei r cl ai ms t hat t he vot i ng scheme pur por t i ng

t o ext end devel opment r i ght s f or I DC was i nval i d. Thus, f r om t he

ver y out set - - and bef or e t he Regat t a Cl ub was bui l t , l et al one

oper at i ng at f ul l scal e under Cl ambakes management - t he

Associ at i ons mani f est ed some opposi t i on t o devel opment on t he

di sput ed pr oper t y. The Associ at i ons al so opposed cer t ai n per mi t s

and l i censes r equi r ed f or t he const r uct i on of t he Regat t a Cl ub,

t hough never on gr ounds of t r espass. They opposed t he bui l di ng

per mi t , st at i ng, [ w] hi l e we don t have a par t i cul ar obj ect i on as

t o t he l and use wi t h r espect t o t he bui l di ng i t sel f , we do have a

subst ant i al pr obl em wi t h t he par ki ng r equi r ement s f or t hat bl dg. ,

as wel l as f or ot her commer ci al par ki ng on and ar ound t hat si t e.

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The Associ at i ons al so del ayed t he l i quor l i cense t r ansf er based on

t he par ki ng concer ns but di d not r ai se any ot her obj ect i on and t he

Ci t y Counci l ul t i mat el y appr oved t he t r ansf er .

Havi ng f ai l ed t o pr event t he construction of t he Regat t a

Cl ub, t he Associ at i ons not abl y decl i ned t o t ake act i on agai nst t he

Cl ub s operation unt i l af t er r esol ut i on of t he st at e cour t

l i t i gat i on. As t he bankrupt cy cour t not ed, Cl ambakes cont i nued t o

operat e t he Regat t a Cl ub f or more t han seven years, wi t h no

wr i t t en or ver bal not i ce, si gnage, or any ot her t ype of cl ai m made

agai nst Cl ambakes t o qui t t he pr emi ses. I n r e I DC Cl ambakes,

I nc. , 431 B. R. at 60. The onl y evi dence i n t he r ecor d of a post -

const r uct i on ef f or t opposi ng Cl ambakes oper at i ons i s a l et t er f r om

Dani el Ki nder , an i ndi vi dual uni t owner , t o t he Newpor t Ci t y

Counci l opposi ng Cl ambakes appl i cat i on to expand i t s out door

ent er t ai nment l i cense. Mr . Ki nder st at es t hat I DC appl i es f or a

l i cense t o whi ch i t had no r i ght . I DC does not own t he pr oper t y i n

quest i on. However , t hi s l et t er i s dat ed May 7, 2003, after t he

Rhode I sl and Super i or Cour t s deci si on i n f avor of t he

Associ at i ons, al bei t bef or e the Rhode I sl and Supr eme Cour t s f i nal

deci si on. The Associ at i ons al so l ean heavi l y on a l et t er f r om t he

Amer i can Condomi ni um Associ at i on t o t he Mayor of t he Ci t y of

Newpor t , dat ed J une 17, 2000 - more than a year af t er Cl ambakes

began oper at i ng t he Regat t a Cl ub - - whi ch seeks t o enf orce an

unheeded November 1999 Cease and Desi st l et t er agai nst I DC

Pr oper t i es or der i ng i t t o hal t const r uct i on of a gazebo or pavi l i on

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at t he Regat t a Cl ub. Thi s l et t er cannot suppor t t he wei ght t he

Associ at i ons seek t o pl ace on i t . Read i n cont ext , t he l et t er does

not seek t o ej ect Cl ambakes oper at i on, but r at her t o ensur e t hat

I DC does not , i n any way, use or occupy [ t he st r uct ur e] prior to

the resolution of the Zoning issues ( emphasi s added) . Thi s,

t hen, i s not an ef f or t t o hal t t he Regat t a Cl ub s oper at i on

per manent l y, but apparent l y onl y t o enf orce t he zoni ng ordi nances

gover ni ng par ki ng and l i quor . 4 Moreover , t here does not appear t o

be any evi dence i n the recor d t hat Cl ambakes or Mr . Roos ever saw

t hi s l et t er , and i t t her ef or e does not bear on t he Associ at i ons

mani f est at i on of consent one way or t he ot her .

The compl et i on of t he Regat t a Cl ub di d not , of cour se,

mar k t he end of host i l i t i es bet ween t he par t i es. I n May 1999, j ust

bef or e t he expi r at i on of t he Tol l i ng Agr eement , t he Associ at i ons

f i l ed a st at e cour t act i on t hat dr agged out f or mor e t han si x year s

r egardi ng owner shi p of t he l and. I n Oct ober 1999, t hey r ecorded a

Not i ce of Li s Pendens. However , t hese di sput es over owner shi p of

t he l and ar e not necessari l y equi val ent t o di sput es over oper at i ons

t aki ng pl ace on t he l and dur i ng t he pendency of t he owner shi p i ssue

l i t i gat i on. As the Associ at i ons poi nt out , Mr . Roos has test i f i ed

t hat [ t he Associ at i ons] wer e chal l engi ng ever y si ngl e r i ght t hat

t hey coul d possi bl y t hi nk of . But , i n t hat s t at ement , he was

4 The Amer i can Condomi ni um l et t er does not expr essl y st at ewhi ch zoni ng or di nances t he C&D r ef erenced, and t he r ecor d does notappear t o i ncl ude a copy of t he C&D.

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comment i ng on t he t i me f r ame i n 1997 when I DC Pr oper t i es was

begi nni ng const r uct i on, not t he post - const r uct i on t i me f r ame whi ch

r eveal ed t he Associ at i ons appar ent di si ncl i nat i on t o chal l enge t he

act ual oper at i on of t he Regat t a Cl ub. I n f act , i n t he swi r l i ng f og

of t he l i t i gi ous war bet ween t he par t i es, t hi s smal l but

di scer ni bl e ar ea of cal m and cl ar i t y i s especi al l y str i ki ng. As

t he bankrupt cy cour t suppor t abl y f ound, i t i s cl ear t hat t he

Associ at i ons and t he Roos ent i t i es have f ought over and l i t i gat ed

ever y concei vabl e i ssue except Cl ambakes occupancy and oper at i on

of t he Regat t a Cl ub . . . . I n r e I DC Cl ambakes, I nc. , 431 B. R.

at 60- 61 ( emphasi s i n or i gi nal ) .

For t hese r easons, t he Associ at i ons act i ons and

i nacti ons do not necessar i l y f or ecl ose t he possi bi l i t y that i t

r easonabl y mani f est ed apparent consent f or Cl ambakes oper at i ons.

And i n suppor t of i t s hol di ng, t he bankrupt cy cour t r el i ed on a

number of ot her f act or s af f i r mat i vel y i ndi cat i ng consent .

First, t he bankrupt cy cour t put par t i cul ar emphasi s on

t he f act t hat t he Associ at i ons speci f i cal l y omi t t ed Cl ambakes f r om

t he Tol l i ng Agr eement , al l subsequent ext ensi ons, and t he Amer i ca

l i t i gat i on. I d. at 60 ( From t he out set , Cl ambakes was never

i ncl uded as a par t y t o t he . . . Tol l i ng Agr eement . . . . Dur i ng

t he const r uct i on and even af t er i t commenced operat i ons, Cl ambakes

st i l l was not added as a par t y t o t he Tol l i ng Agr eement . . . .

Cl ambakes was not a par t y i n [ t he Amer i ca] l i t i gat i on. ) . On

appeal , t he Associ at i ons cont end t hat t he bankrupt cy cour t

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commi t t ed cl ear er r or because [ t ] her e i s no evi dence i n t he r ecor d

t hat suppor t s t he concl usi on t hat t he Associ at i ons knew t hat

Cl ambakes ( as opposed t o I DC Pr oper t i es or I DC, I nc. ) was

oper at i ng t he Regat t a Cl ub . . . .

The evi dence i n t he r ecor d on t hi s i ssue i s a j umbl e of

cont r adi cti ons: On the one hand, I DC Pr oper t i es hel d i t sel f out as

t he oper at or of t he Regat t a Cl ub i n i t s answer s t o i nt er r ogat or i es;

l et t er s f r om t he Regat t a Cl ub t o t he Associ at i ons f r equent l y came

f r omI DC, I nc. ; t he l ease bet ween I DC Proper t i es and Cl ambakes was

not r ecor ded; al l of t he event cont r act s f or t he Regat t a Cl ub wer e

i n t he name of I DC, I nc. ; and Cl ambakes has descr i bed i t sel f as a

bookkeepi ng ent i t y. On the other hand, a newspaper r epor t ed

Cl ambakes as t he owner of t he Regat t a Cl ub when t he l i quor l i cense

was gr ant ed; l et t er s f r om Raymond Mor r i sset t e, Pr esi dent of t he

Amer i can Condomi ni um Associ at i on, and Mr . Ki nder bot h acknowl edge

Cl ambakes appl i cat i ons f or var i ous l i censes t o oper at e t he Regat t a

Cl ub; and t he Associ at i ons asked f or a l i st of Cl ambakes

shar ehol der s dur i ng t he st at e cour t l i t i gat i on. Resol ut i on of t hi s

evi dence based on i t s char act er , wei ght , and credi bi l i t y i nvol ves

det er mi nat i ons of f act by t he t r i al cour t t o whi ch we def er , absent

cl ear er r or . See I n r e The Bi bl e Speaks, 869 F. 2d at 630; Young,

105 F. 3d at 5. The bankr upt cy cour t s det er mi nat i on f i nds

r easonabl e suppor t i n t he r ecor d, and we t her ef or e f i nd no cl ear

er r or i n t he bankrupt cy cour t s r el i ance on t hi s det er mi nat i on.

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Second, dur i ng const r uct i on of t he Regat t a Cl ub, t he

Associ at i ons speci f i cal l y st at ed we don t have a par t i cul ar

obj ect i on as t o t he l and use wi t h r espect t o t he bui l di ng i t sel f ,

we do have a subst ant i al pr obl em wi t h t he parki ng r equi r ement s f or

t hat bl dg. . . . . SeeI n r e I DC Cl ambakes, I nc. , 431 B. R. at 60.

The Associ at i ons suggest t hi s l et t er i s t aken out of cont ext and

mer el y asser t s no di sagr eement as t o t he i mpact of t he bui l di ng s

zoni ng on t he number of r equi r ed parki ng spaces. A r evi ew of t he

f ul l er cont ext of t he l et t er bel i es t he Associ at i ons ar gument and

i ndi cat es t hat t he l et t er means pr eci sel y what i t says.

Third, t he Har bor Houses Condomi ni um Associ at i on

cont r acted wi t h Cl ambakes t o use t he Regat t a Cl ub f or i t s annual

meet i ngs and var i ous condomi ni um uni t owner s r egul ar l y cont r acted

wi t h Cl ambakes t o host pr i vat e event s. See i d. I t i s t r ue t hat

t he i ndi vi dual uni t owner s do not have t he power t o bi nd t he

Associ at i ons, cf . R. I . Gen. Laws 34- 36. 1- 3. 02( a) ( 9) ( gr ant i ng t he

uni t owner s associ at i on t he r i ght t o ent er i nt o l eases, l i censes

and concessi ons over t he common el ement s) , and t hat t he

Associ at i ons cur r ent l y mai nt ai n t hat t hey di d not , i n f act , consent

t o Cl ambakes oper at i on of t he Regat t a Cl ub. However , t he act i ons

of i ndi vi dual owner s and one of t he Associ at i ons t hemsel ves, f r eel y

cont r act i ng at market r ates f or meet i ng and event space wi t hout

obj ect i on, ar e t he ki nds of act i ons t hat mani f est consent and

j ust i f y r easonabl e r el i ance [ e] ven when t he [ Associ at i ons] do[ ]

not i n f act agr ee t o t he conduct of t he ot her . Rest at ement

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( Second) of Tor t s at 892 cmt . c. The Associ at i ons shoul d have

under st ood t hat t hei r r epeat ed, publ i c pat r onage of t he Regat t a

Cl ub ( and t hat of t hei r member s) r easonabl y cont r i but ed t o a

mani f est at i on of appar ent consent .

Fourth, t he bankrupt cy cour t consi der ed t hat , unt i l t he

Amer i ca I I deci si on i n 2005, t he negot i at i ons and l i t i gat i on

concer ned owner shi p of t he l and onl y, not t he oper at i on of t he

busi ness, and never i ncl uded a cl ai m f or t r espass, ej ect ment , or

evi ct i on. The bankrupt cy cour t st at ed t hat t hi s appar ent l y

consensual r el at i onshi p bet ween Cl ambakes and t he Associ at i ons

cont i nued f or more t han seven years, wi t h no wr i t t en or ver bal

not i ce, si gnage, or any ot her t ype of cl ai m made agai nst Cl ambakes

t o qui t t he pr emi ses. I n r e I DC Cl ambakes, I nc. , 431 B. R. at 60.

The Associ at i ons ar gue t hat t hi s f our t h f act or ( a) i s

i nconsi st ent wi t h t he st at ut e of l i mi t at i ons and ( b) woul d

i mper mi ssi bl y r equi r e t hem t o move f or a pr el i mi nar y i nj unct i on

r at her t han al l ow t hem t o r est on t hei r cl ai ms f or l egal and

equi t abl e r emedi es at f i nal j udgment . Bot h argument s mi sunder st and

t he bankrupt cy cour t s r ul i ng.

A par t y may br i ng a cl ai mf or t r espass unt i l t he l ast day

passes f or det er mi ni ng when t he st at ut e of l i mi t at i ons r uns. But

i f t he par t y consent s t o t he use of t he pr oper t y, no t r espass

exi st s t o whi ch t he st at ut e of l i mi t at i ons woul d appl y. The

bankrupt cy cour t di d not hol d that t he Associ at i ons wai t ed too l ong

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t o br i ng t hei r val i d cl ai m. I t hel d t hat t hey had no cl ai m i n t he

f i r st i nst ance due t o t hei r appar ent consent . I d. at 61.

Fur t her more, t he bankr upt cy cour t di d not suggest t hat

t he Associ at i ons must move f or a pr el i mi nar y i nj unct i on pr event i ng

Cl ambakes encr oachment on t he pr oper t y or el se r i sk mani f est i ng

consent . A par t y can choose t he r el i ef i t seeks, but i t must

act ual l y seek t he r el i ef i t want s. The bankrupt cy cour t gr ounded

i t s f i ndi ng t hat t he Associ at i ons mani f est ed consent on t he f act

t hat t hey speci f i cal l y di d not seek t o hol d any I DC ent i t y l i abl e

f or t r espass or t o ej ect or evi ct t hem, but r at her f ocused t hei r

cl ai ms excl usi vel y on l and owner shi p. The Associ at i ons now say

t hey want ed al l of t he I DC ent i t i es t o cease oper at i ons on t he

di sput ed pr oper t y, but t hey di d not meani ngf ul l y pur sue such r el i ef

unt i l af t er t he deci si on i n Amer i ca I I . To be sur e, t he

Associ at i ons di d i dent i f y t hi s ki nd of r el i ef i n t he pr ayer s of

t hei r st ate cour t compl ai nt , wher e t hey demanded j udgment f or a

pr el i mi nar y and per manent i nj unct i on r equi r i ng r est or at i on of t he

[ pr oper t y] t o t hei r condi t i on as of December 31, 1994 [ bef or e

const r uct i on of t he Regat t a Cl ub] as wel l as f or a mandat or y

i nj unct i on r equi r i ng Decl ar ant t o rest or e the easement t o i t s

condi t i on pr i or t o Decl ar ant s wr ongf ul conver si on. However , t he

Associ at i ons al so submi t t ed i n t hei r compl ai nt t hat t hey woul d

accept an awar d of compensat or y damages i n an amount t o be

det er mi ned at t r i al . The Associ at i ons subsequent act i ons i n

l i t i gat i ng t he compl ai nt i ndi cat e a di si ncl i nat i on t o st op

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Cl ambakes f r om oper at i ng i n f avor of compensat i on f or use of t he

l and.

Assur edl y, t he Associ at i ons act i ons over t he cour se of

t hi s per i od have been f ar f r om consi st ent , but t he r ecor d cont ai ns

subst ant i al , cr edi bl e evi dence f r om whi ch t he bankrupt cy cour t

r easonabl y f ound that t he Associ at i ons mani f est ed appar ent consent .

2. Reasonabl e Rel i ance

The bankr upt cy cour t s f i ndi ng t hat Cl ambakes act ual l y

and r easonabl y rel i ed on t he Associ at i ons mani f est at i ons of

appar ent consent , I n r e I DC Cl ambakes, I nc. , 431 B. R. at 60, al so

f al l s wi t hi n t he Cour t s aut hor i t y as f act f i nder . We come t o t hat

concl usi on r ecogni zi ng t hat t he Associ at i ons poi nt t o consi der abl e

evi dence t hat t hey cl ai m i s i nconsi st ent wi t h a f i ndi ng of

r easonabl e r el i ance.

The Associ at i ons cl ai m i s t hat Cl ambakes di d not

act ual l y bel i eve t hat t he Associ at i ons had pr ovi ded consent and

t her ef or e coul d not have r easonabl y rel i ed on any mani f est at i ons of

consent . Chi ef among t he par ade of f act or s t hat t he Associ at i ons

emphasi ze i s Mr . Roos st i pul at i on t hat [ I DC] Pr oper t i es

const r uct ed t he Regat t a Cl ub at a t i me when Roos underst ood t he

Condomi ni um Associ at i ons r epr esent at i ves wer e t r yi ng t o say t hat

Pr oper t i es had no r i ght t o const r uct t he Regat t a Cl ub. Thi s i s

i mpor t ant evi dence of Mr . Roos under st andi ng of consent - - or l ack

t her eof - - at a cr i t i cal t i me i n t hi s case, but i t i s not , al one,

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di sposi t i ve on t he i ssue of r easonabl e r el i ance as t he Associ at i ons

ar gue.

Thi s cour t t r eat s Mr . Roos st at ement - - as a st i pul at ed

f act - - t o be t r ue, Mor al es Fel i ci ano v. Rul l an, 303 F. 3d 1, 8 ( 1st

Ci r . 2002) ( A par t y s st i pul at i ons ar e bi ndi ng on t hat par t y and

may not be cont r adi ct ed by hi m at t r i al or on appeal . ) , but t hat

does not guar ant ee t hat t he f act i s by i t sel f di sposi t i ve. The

st i pul at i on must be wei ghed agai nst ot her evi dence i n t he r ecor d i n

order t o determi ne whether t he bankr upt cy cour t commi t t ed cl ear

er r or . For i nst ance, t he st i pul at ed under st andi ng of Mr . Roos must

be wei ghed agai nst t he f act t hat t he Associ at i ons onl y obj ect ed t o

t he par ki ng aspect s of Cl ambakes appl i cat i on f or a bui l di ng per mi t

and t he Zoni ng Boar d event ual l y appr oved Cl ambakes l i quor l i cense

t r ansf er . Mor eover , Mr . Roos st i pul ated onl y t hat he knew t he

Associ at i ons wer e opposed t o construction of t he Regat t a Cl ub,

whi ch, as di scussed above, i s consi st ent wi t h t he Associ at i ons

pur sui ng cl ai ms of l and owner shi p onl y, and does not necessar i l y

cont r adi ct consent f or operation of t he Regat t a Cl ub once

const r uct ed. Fi nal l y, t he st i pul at i on speaks onl y t o Mr . Roos

under st andi ng at t he t i me of const r uct i on. As di scussed above,

many of t he Associ at i ons mani f est at i ons of consent ( such as

cont r act i ng wi t h t he Regat t a Cl ub, onl y pur sui ng l and owner shi p

cl ai ms, and not j oi ni ng Cl ambakes i n t he tol l i ng agr eement or

Amer i ca l i t i gat i on) arose af t er t he t i me of const r uct i on. Thus,

even i f Mr . Roos had under st ood at t he t i me of const r uct i on t hat

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t he Associ at i ons woul d not have consent ed to Cl ambakes oper at i on

of t he Regat t a Cl ub, subsequent event s coul d r easonabl y be f ound t o

have changed hi s under st andi ng. A t r i al cour t mi ght per mi ssi bl y

f i nd t hat Mr . Roos st i pul at i on wei ghs agai nst a f i ndi ng of

r easonabl e r el i ance, t hough i t does not necessari l y car r y as heavy

a wei ght as t he Associ at i ons cont end.

Si mi l ar l y, t he Associ at i ons ar gue t hat Cl ambakes admi t t ed

t hat i t di d not have t hei r consent t o oper at e the Regat t a Cl ub when

i t f i l ed a st ate cour t compl ai nt on December 28, 2006 al l egi ng

adver se possessi on, whi ch necessari l y i ncl udes t he al l egat i on t hat

possessi on was host i l e and wi t hout consent . See Rei t sma v. Pascoag

Reservoi r & Dam, LLC, 7724 A. 2d 826, 834- 35 ( R. I . 2001) . Thi s

pr oves t oo much. Cl ambakes ar gued i n t he al t er nat i ve t hat t he

Associ at i ons consent ed t o, agr eed, per mi t t ed, and al l owed

Cl ambakes use and occupancy of t he Reser ved Ar ea. As mere

al l egat i ons i n t he al t er nat i ve, nei t her posi t i on i s a bi ndi ng

r epr esent at i on and nei t her demands gr eater consi der at i on t han t he

ot her . Nor di d t he st at e cour t r esol ve ei t her of t hese ar gument s

such t hat Cl ambakes woul d be bound by j udi ci al est oppel . We

t her ef or e decl i ne t o consi der t he al l egat i ons i n Cl ambakes st at e

cour t compl ai nt as under cut t i ng t o t he bankrupt cy cour t s

det er mi nat i on.

The Associ at i ons al so cont end t hat Cl ambakes coul d not

have r easonabl y r el i ed on any mani f est at i ons of consent because i t

r el i ed, not on consent , but on Mr . Roos l evel of conf i dence t hat

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t he I DC ent i t i es had a r i ght t o t he pr oper t y. Thi s i s a

t r oubl esome aspect of t he r easonabl e r el i ance anal ysi s. The

bankrupt cy cour t s f i ndi ng of r easonabl e r el i ance - - i ndeed, any

f i ndi ng of r easonabl e r el i ance i n t hi s case - - necessar i l y r est s on

t he not i on t hat Cl ambakes r el i ed on a bel i ef t hat i t had per mi ssi on

f r om bot h part i es cl ai mi ng t o own t he l and. As di scussed above,

Cl ambakes ent er ed i nt o i t s l ease wi t h I DC Pr oper t i es under t he

mi st aken bel i ef t hat I DC Pr oper t i es owned t he l and. Thi s does not

necessar i l y pr ecl ude the possi bi l i t y t hat Cl ambakes may have

bel i eved i t al so had t he Associ at i ons consent , but t he gr eat er t he

degr ee of conf i dence i n I DC Pr oper t i es owner shi p of t he l and, t he

weaker t he per mi ssi bl e i nf er ence t hat Cl ambakes actual l y rel i ed on

t he Associ at i ons mani f est at i ons of appar ent consent i n choosi ng t o

cont i nue to oper ate t he Regat t a Cl ub.

Some of t he evi dence r egardi ng Mr . Roos conf i dence may

amount t o post ur i ng or l i t i gat i on st r at egy, such as t he ear l y

t hr eat s t o sue t he Associ at i ons f or sl ander of t i t l e, and t he

var i ous l egal posi t i ons t aken t hr oughout t he Amer i ca l i t i gat i on.

Ot her evi dence, however , appear s t o show t hat Mr . Roos had l i t t l e

quest i on i n hi s mi nd as t o t he val i di t y of t he amendment s t o t he

Condomi ni umagr eement conf err i ng ownershi p on I DC Propert i es. When

asked you bel i eved that I DC Pr oper t i es, I nc. owned [ t he Reserved

Ar ea] , Mr . Roos r esponded: I knew we owned i t , and when asked i f

he bel i eved t he si xt h amendment t o t he condomi ni um agr eement gave

hi m t i t l e, he r esponded: The 6t h amended di d gi ve me t i t l e. The

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f act t hat t he I DC ent i t i es bui l t and oper at ed a mul t i - mi l l i on

dol l ar banquet hal l and busi ness on l and t hey knew t he Associ at i ons

al so cl ai med t o own equal l y under scores t hei r conf i dence i n t hei r

own t i t l e t o t he l and.

Ul t i mat el y, t hese f act s may r ef l ect a di sput e whet her

Cl ambakes t r ul y r el i ed upon any appar ent consent f r om t he

Associ at i ons, whet her i t si mpl y bel i eved I DC Pr oper t i es cl ai m t o

t he l and was beyond r epr oach, or whether i t si mpl y pr essed on,

bui l di ng and oper at i ng the Regat t a Cl ub on the gambl e t hat event s

woul d r esol ve i n i t s f avor . However , t he f act of a di sput e i s not

suf f i ci ent t o j ust i f y reversal .

Reasonabl e rel i ance pr esent s a mi xed quest i on of l aw and

f act , and i t i s cl ear f r omt he bankr upt cy cour t s deci si on t hat t he

r easonabl e r el i ance anal ysi s was deepl y f act i nt ensi ve. The

bankrupt cy cour t f ocused, i n par t i cul ar , on evi dence t hat Cl ambakes

mai nt ai ned year s- l ong cont r act ual r el at i onshi ps wi t h t he

Associ at i ons and i ndi vi dual owner s, pr esumabl y expect i ng cont i nued

busi ness r egar dl ess of t he out come of t he Amer i ca l i t i gat i on. The

bankrupt cy cour t al so f ocused on the evi dence of t he st r i ki ng

absence of t r espass cl ai ms or cl ai ms agai nst Cl ambakes i n t he

ot her wi se compr ehensi ve l i t i gat i on.

Whi l e t hi s may be a di sput abl e quest i on, and t he r ecord

cont ai ns evi dence i n suppor t of and i r r econci l abl y cont r adi ct i ng

bot h si des, r esol ut i on ul t i mat el y depends on det er mi nat i ons as t o

t he char act er and wei ght of t he evi dence. I t i s cl ear t hat t he

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bankrupt cy cour t s r ul i ng r est ed, not on any par t i cul ar pi ece of

evi dence, but on i t s assessment of t he whol e f act ual r ecor d. Thus,

on t he sl i di ng scal e, t he st andar d of r evi ew appr oaches cl ear

er r or , see Br aunst ei n, 571 F. 3d at 124. Her e, an al t er nat i ve

r eadi ng of t he recor d does not amount t o a st r ong, unyi el di ng

bel i ef t hat a mi st ake has been made. I n r e Carp, 340 F. 3d at 22.

We t her ef or e uphol d t he bankrupt cy cour t s f i ndi ng of r easonabl e

r el i ance.

I V.

Havi ng f ound t hat t he Associ at i ons i mpl i edl y consent ed t o

Cl ambakes oper at i on of t he Regat t a Cl ub f r om t he t i me of i t s

const r uct i on t hr ough t he end of t he Amer i ca l i t i gat i on, we t ur n t o

t he Associ at i ons ar gument t hat i mpl i ed consent necessar i l y gi ves

r i se t o an i mpl i ed obl i gat i on t o pay. The Associ at i ons essent i al l y

argue t hat , even i f t hey di d consent t o Cl ambakes occupyi ng and

oper at i ng on t he Reser ved Ar ea, t hei r conduct coul d not r easonabl y

have been under st ood t o conf er permi ssi on t o do so f r ee of charge.

The r ecor d r eveal s col or abl e suppor t f or t he

Associ at i ons posi t i on. Cl ambakes ent er ed i nt o a l ease f or t he

l and, payi ng I DC Pr oper t i es. Thus, Cl ambakes under st ood t hat i t

owed money t o the pr opert y owner ( whi ch i t mi st akenl y bel i eved t o

be I DC Pr oper t i es) f or use of t he l and. And al t hough t he Amer i ca

compl ai nt br ought no cl ai m f or t r espass, i t di d seek ei t her t o

f or ce t he I DC ent i t i es t o r et ur n t he l and t o i t s condi t i on bef or e

devel opment or t o pay compensat ory damages. The Associ at i ons

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act i ons mani f est ed apparent consent f or Cl ambakes t o use t he

pr oper t y, but not necessari l y t o do so r ent f r ee. The Amer i ca

l i t i gat i on made abundant l y cl ear t hat even i f t he Associ at i ons

consent ed t o the oper at i on of t he Regat t a Cl ub, t hey woul d pur sue

t hei r r i ght s t o owner shi p of t he l and and t hei r r i ght t o

compensat i on f or t he l and s use.

I n t hei r br i ef on appeal , t he Associ at i ons ci t e t hr ee

cases, whi ch t hey cl ai m st and f or t he pr oposi t i on t hat i mpl i ed

consent under t hese condi t i ons gi ves r i se t o an i mpl i ed obl i gat i on

t o pay: Nar r aganset t El ec. Co. v. Car bone, 898 A. 2d 87 ( R. I . 2006) ;

R&B El ec. Co. , I nc. v. Amco Const r . Co, I nc. , 471 A. 2d 1351 ( R. I .

1984) ; Bai l ey v. West , 249 A. 2d 414 ( R. I . 1969) . Al l ar e i mpl i ed

cont r act cases. Cl ambakes cont ends t hat t he Associ at i ons wai ved

t hi s ar gument by f ai l i ng t o r ai se i t at t he t r i al ( bankr upt cy)

cour t l evel . The Di st r i ct Cour t , on appeal , agr eed. See I DC

Cl ambakes, I nc. , 2012 WL 1194122, at *8 n. 4 ( The Associ at i ons

ar gue . . . i mpl i ed consent necessar i l y gi ves r i se t o an i mpl i ed

obl i gat i on t o pay f ai r val ue of t he benef i t r ecei ved. . . . [ T] hi s

argument was not r ai sed bef ore the bankr upt cy cour t bel ow and i s,

accor di ngl y, not pr oper l y bef or e t hi s Cour t on appeal . ) . Thi s

r ef l ect s a cl ear l y er r oneous vi ew of t he r ecor d. Al t hough t he

bankrupt cy cour t never addr essed t he i ssue, t he Associ at i ons di d

r ai se t he ar gument . I n a post - t r i al mot i on f i l ed December 4, 2008,

j ust over a week af t er t he t r i al and 18 mont hs bef or e t he

bankrupt cy cour t i ssued i t s deci si on, t he Associ at i ons ar gued t hat

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[ e] ver y t heor y of i mpl i ed consent gi ves r i se t o a cor r espondi ng

i mpl i ed obl i gat i on t o pay f or t he val ue of what was r ecei ved.

Debt or shoul d not . . . be per mi t t ed t o r et ai n t he benef i t . . .

but pay . . . not hi ng. I n f act , bef or e t he bankrupt cy cour t , t he

Associ at i ons grounded thi s ar gument on pr eci sel y t he same thr ee

cases whi ch wer e ci t ed i n i t s br i ef i ng bef or e t hi s cour t .

Despi t e t he f act t hat t he Associ at i ons pr esent ed t hei r

i mpl i ed- obl i gat i on- t o- pay ar gument i n t hei r post - t r i al mot i on, t he

bankrupt cy cour t di d not deci de, or even ment i on, t he i ssue. See

I DC Cl ambakes, I nc. , 431 B. R. 51. The i ssue i s i nsuf f i ci ent l y

devel oped f or pr oper adj udi cat i on on appeal , see Gr eenpack of P. R. ,

I nc. v. Am. Pr esi dent Li nes, 684 F. 3d 20, 30 ( 1st Ci r . 2012) ; Baki a

v. Cnt y. of Los Angel es, 687 F. 2d 299, 301 ( 9t h Ci r . 1982)

( r emandi ng wher e appeal s cour t di d not have benef i t of t r i al

j udge s eval uat i on of t he ar guments) , and i s mor e appr opr i at el y

di r ected t o t he t r i al cour t i n t he f i r st i nst ance f or det er mi nat i on

whet her t he f act s i n t hi s case and t he l aw of Rhode I sl and support

a f i ndi ng of consent t o oper at e f r ee of char ge or whet her t he

Associ at i ons condi t i oned t hei r i mpl i ed consent on an i mpl i ed

obl i gat i on t o pay. We t her ef ore r emand as t o t he quest i on whet her

i mpl i ed consent i n t hi s case al so gi ves r i se t o an i mpl i ed

obl i gat i on t o pay t he f ai r val ue f or use and occupancy of t he

pr oper t y. 5

5 We not e t hat as par t of i t s bankrupt cy r esponsi bi l i t i es, I DCCl ambakes has pl aced suf f i ci ent f unds . . . i n escr ow t o pay t heAssoci at i ons i n f ul l , i f t hei r cl ai ms ar e al l owed. That f und

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We af f i r mas t o i mpl i ed consent f or t he use and occupancy

of t he pr oper t y but r emand f or f ur t her pr oceedi ngs consi st ent wi t h

t hi s opi ni on r egar di ng t he i ssue whet her t he i mpl i ed consent i n

t hi s ci r cumst ance gi ves r i se t o an obl i gat i on t o pay t he f ai r val ue

f or such use and occupancy and, i f so, i n what amount . Each part y

shal l bear t hei r own cost s.

r emai ns i nt act . I n r e I DC Cl ambakes, I nc. , 431 B. R. at 57.

Goat Island South Condominium v. IDC Clambakes, Inc., 1st Cir. (2013)

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Transcript of Goat Island South Condominium v. IDC Clambakes, Inc., 1st Cir. (2013)