Social Media Use and Other Complex Jury Issues

On Friday, February 27, 2105, I had the privilege of presenting on Social Media Use and Other Complex Jury Issues as part of the National Business Institute’s CLE program titled “Voir Dire and Jury Selection: How Research, Precise Juror Questions and Strategic Use of Challenges Can Help You Win at Trial.” The slides from my seminar appear below and focus on the following: (1) mining social media for information about jurors; (2) uncovering juror misconduct and what to do about it and (3) efforts to control juror social media use – prevention and penalties.

Happy New Year!

Image courtesy of Supertrooper at FreeDigitialPhotos.net

Image courtesy of Supertrooper at FreeDigitalPhotos.net

As you prepare to ring in the New Year, the Fast Five on Rhode Island Appellate Practice reflects on some of the more significant decisions issued by the Rhode Island Supreme Court in civil cases this year.  The Year-in-Review posts that follow recap the Supreme Court’s pronouncements in the following areas:

Best wishes for continued success in 2015,

Nicole

2014 Year in Review – Admiralty Law

It comes as a surprise that the Ocean State with its 384 miles of tidal shoreline has a dearth of admiralty jurisprudence. Nevertheless, a federal maritime action that came before the Rhode Island Supreme Court this year left the high court wading through salty waters as it analyzed claims for maintenance and cure, negligence under the federal Jones Act and breach of the warranty of seaworthiness. The decision, which marks the rare occasion when the Supreme Court is called upon to address maritime claims, is noteworthy not only for its holdings but also its extensive articulation and interpretation of three bodies of maritime law. King v. Huntress, 94 A.3d 467 (R.I. 2014).

Image courtesy of mapichai at Freedigitalphotos.net

Image courtesy of mapichai at Freedigitalphotos.net

In its wake, the following points are clear:
(1) Rhode Island state courts have jurisdiction over federal maritime actions pursuant to the “savings to suitors” clause set forth in 28 U.S.C. § 1331(1);
(2) unearned wages are available on a maintenance claim only from the time seaman becomes unfit for his or her duties until the balance of the voyage, unless the seaman has a employment contract providing him or her with the right to employment for a fixed period of time;
(3) The Jones Act creates a statutory negligence cause of action which enables a seaman injured during the course of his or her employment to elect to bring a civil action at law, with the right of trial by jury, against the employer;
(4) Proof of negligence is not necessary to prevail on a claim for breach of the warranty of seaworthiness but the breach must be the proximate cause of the injuries sustained; and
(5) in a federal maritime action pending in state court, prejudgment interest must be applied in accordance with federal maritime law.

In King, the plaintiff, a deckhand on a commercial fishing vessel, fell from a ladder while painting an area on the ceiling of the ship’s fish hold deck. As a result of the fall, the plaintiff sustained a large rotator cuff tear. The plaintiff brought suit against the vessel’s owner and asserted claims for maintenance and cure, negligence under the federal Jones Act and breach of the warranty of seaworthiness. After a seven day trial, the jury returned a verdict in favor of the plaintiff for $257,500 on plaintiff’s maintenance and cure claim and found in favor of the defendant on plaintiff’s Jones Act and breach of the warranty of seaworthiness claims. After the trial court denied the defendant’s motion for a new trial on the maintenance and cure claim and granted the plaintiff’s motion for a new trial on plaintiff’s Jones Act and breach of the warranty of seaworthiness claims, both parties appealed.

A. Jurisdiction

“Although the law of the sea is essential federal in nature, the Rhode Island state courts have jurisdiction over . . . federal maritime action[s] pursuant to the ‘savings to suitors’ clause set forth in 28 U.S.C. § 1331(1).”

B. Maintenance and Cure

As the United States Court of Appeals for the First Circuit has recognized, “‘[f]rom time immemorial, the law of the sea has required shipowners to ensure the maintenance and cure of seamen who fall ill or become injured while in service of the ship.’” (quoting Ferrara v. A. & V. Fishing, Inc., 99 F.3d 449, 454 (1st Cir. 1996)). Maintenance and cure, which are akin to workers’ compensation benefits, are provided to a seaman, without regard to the negligence of the employer or the unseaworthiness of the ship.

Maintenance and cure are curative remedies. Maintenance is the “provision of, or payment for, food and lodging,” while cure is the payment of “any necessary health-care expenses . . . incurred during the period of recovery from an injury or malady.” Unearned wages may also be recovered on a maintenance and cure claim.

A seaman will only forfeit his entitlement to maintenance and cure if he engages in gross misconduct. Seamen have a right to receive maintenance and cure until such time as he reaches “maximum medical recovery.” “[M]aximum medical recover occurs when the seaman is ‘so far cured as possible’ – meaning that the seaman is either fit to work or his or her ‘condition has stabilized and further progress ended short of a full recovery.’”

In King, the trial justice instructed the jury that if the jury awarded the plaintiff maintenance and cure, it should also award the plaintiff unearned wages when the plaintiff was serving the ship. The defendant claimed the instruction was in error because the trial justice did not explain that the plaintiff was serving the ship only if he was on a voyage or had an employment contract for a specified duration. On appeal, the Supreme Court agreed.

After a review of federal case law, the Supreme Court held that unearned wages are available on a maintenance claim only from the time seaman becomes unfit for his or her duties until the balance of the voyage, unless the seaman has a employment contract providing him or her with the right to employment for a fixed period of time.
The trial justice’s jury instructions, which did not make that limitation clear, where therefore erroneous. Consequently, the Supreme Court remanded the case to the trial court for a new trial on the plaintiff’s claim for maintenance and cure.

C. The Jones Act

The Jones Act creates a statutory negligence cause of action which enables a seaman injured during the course of his or her employment to “elect to bring a civil action at law, with the right of trial by jury, against the employer.” (quoting 46 U.S.C. § 30104(a)). To prevail on a negligence claim under the Jones Act, the injured seaman must demonstrate that the employer failed to exercise reasonable care, which contributed even in the slightest way to his or her injury. Under the Jones Act, the employer’s negligence does not need to render the ship unseaworthy.

D. Warranty of Seaworthiness

The United States Supreme Court has “‘undeviatingly reflected an understanding that the owner’s duty to furnish a seaworthy ship is absolute and completely independent of his duty under the Jones Act to exercise reasonable care.’” (quoting Mitchell v. Trawler Racer, Inc., 362 U.S. 539, 549 (1960)). Unlike a claim under the Jones Act, claims for breach of the warranty of seaworthiness do not involve an analysis of negligence. See Mitchell, 362 U.S. at 549 (recognizing that the question of seaworthiness of a vessel has been “complete[ly] divorce[d] . . . from the concepts of negligence.”). Nevertheless, as the United States Supreme Court has recognized:

[I]t is a duty only to furnish a vessel and appurtenances reasonably fit for their intended use. The standard is not perfection, but reasonable fitness; not a ship that will weather every conceivable storm or withstand every imaginable peril of the sea, but a vessel reasonably suitable for her intended service.

Id. at 550. Thus, a seaman must prove that the unseaworthy condition is the proximate cause of his or her injuries.

E. Federal Maritime Prejudgment Interest

In King, the trial justice applied Rhode Island’s prejudgment interest statute, R.I. Gen. Laws § 9-21-10(a), which requires that the clerk of the court add to the damages interest at the rate of 12 percent per year from the date the cause of action accrued. The defendant argued that the trial court erred in doing so because prejudgment interest is substantive in nature, therefore, it must be awarded in accordance with federal maritime law. The Supreme Court agreed.

Unlike Rhode Island’s prejudgment interest statute, under federal maritime law, the decision to award prejudgment interest is left to the discretion of the jury. Thus, the law applicable to an award of such interest can have a significant impact on the defendant’s liability.

In treading these new waters, the Supreme Court began by recognizing that the “‘savings to suitors clause,’ which gives state court jurisdiction (albeit not exclusive jurisdiction) over a federal maritime claim, ‘allows state courts to entertain in personam maritime causes of action, but in such cases the extent to which state law may be used to remedy maritime injuries is constrained by a so-called reverse-Erie doctrine which requires that the substantive remedies afforded by the States conform to governing federal maritime standards.’” (quoting Offshore Logistics, Inc. v. Tallentire, 477 U.S. 207, 222-23 (1986)). Thus, issues that are substantive in nature will be governed by federal maritime law.

In evaluating whether prejudgment interest is substantive in nature, the Court looked to non-maritime decisions, including its decision in L.A. Ray Realty v. Town Council of Cumberland, 698 A.2d 202, 213-14 (R.I. 1997), in which it recognized that when application of the state’s law would result in a different outcome, the issue is likely substantive in nature. Having already observed that Rhode Island’s prejudgment interest statute differed dramatically from federal maritime law, which leaves the decision to award prejudgment interest to the discretion of the jury, the Court concluded that prejudgment interest is necessarily substantive in nature. Consequently, the trial justice erred in applying Rhode Island’s prejudgment interest statute.

2014 Year in Review – Appeal and Error

A. Amicus Curiae

Bucci v. Hurd Buick Pontiac GMC Truck, LLC, 85 A.3d 1160 (R.I. 2014): In Bucci, the Supreme Court refused to consider an argument made only by amicus curiae. In doing so, the Supreme Court made clear that it “will not consider arguments that have made by an amicus curiae but that were not advanced by a party.” (citing Lane v. First Nat’l Bank of Boston, 871 F.2d 166, 175 (1st Cir. 1989) (“We know of no authority which allows an amicus to interject into a case issues which the litigants, whatever their reasons, might be, have chosen to ignore.”).

B. Bonds

Rose v. Cariello, 85 A.3d 618 (R.I. 2014): In Rose, after the Superior Court granted the plaintiff’s motion for additur or, alternatively, a new trial on damages in a personal injury case, the defendant filed a motion in the Supreme Court to stay the judgment. The Supreme Court granted the stay but conditioned it upon the filing of a supersedeas bond in the Superior Court.

Banville v. Brennan, 84 A.3d 421 (R.I. 2014): In Banville, the Rhode Island Supreme Court granted the defendants’ motion to stay an injunction requiring them to remove a building from the plaintiff’s land during the pendency of the defendants’ appeal on the condition that the defendants post a $50,000 bond.

C. Certiorari

1. Grant of Certiorari

Woodruff v. Gitlow, 91 A.3d 805 (R.I. 2014).

In a rare case, the Rhode Island Supreme Court granted a petition for writ of certiorari to review the trial justice’s denial of a defendant’s motion for summary judgment. The Court did not provide any rationale for its decision to grant the defendant’s petition for writ of certiorari, however, the case presented two discrete issues of first impression, which likely factored into the Court’s decision to grant the petition for writ of certiorari.

D. Cross-Appeals

Miller v. Metropolitan Property and Casualty Ins. Co., 88 A.3d 1157 (R.I. 2014): A party that has prevailed in the trial court must file a cross-appeal if he or she intends to ask the Supreme Court to overturn one of the trial court’s rulings. (citing David A. Wollin, Rhode Island Appellate Procedure § 4:5, 4-11 (West 2004)). However, “‘[a] cross appeal is not necessary when the [party that has prevailed in the trial court] simply wants to defend the judgment obtained below, even if it was on grounds different from those on which the judgment was based.’” (quoting Wollin § 4:5, 4-11).

E. Motion to Dismiss Untimely Appeal

Miller v. Metropolitan Property and Casualty Ins. Co., 88 A.3d 1157 (R.I. 2014): When a party maintains that a notice of appeal is untimely and the Supreme Court has not yet docketed the appeal, the trial court has jurisdiction to dismiss the appeal for failure to comply with the Supreme Court’s Rules of Appellate Procedure. See R.I. Sup. Ct. R. App. P. 11. In Miller, Metropolitan filed its motion to dismiss Miller’s cross-appeal as untimely with the Superior Court. When the Superior Court denied Metropolitan’s motion to dismiss, Metropolitan filed an appeal to the Supreme Court from that order.

F. Notice of Appeal

Miller v. Metropolitan Property and Casualty Ins. Co., 88 A.3d 1157 (R.I. 2014): As a general matter, a notice of appeal must be filed within 20 days of “the date of the entry of the judgment, order, or decree appealed from.” R.I. Sup. Ct. R. App. P. 4(a). The notice must be filed with the trial court’s clerk’s office, not the Supreme Court’s clerk’s office. Id. The form for filing a notice of appeal may be found in the trial court’s clerk’s office. If there is information that does not fit within the allocated space on the form, it is common practice to attach an addendum to the notice form. In Miller, the appellant attached an exhibit to its notice of appeal identifying additional parties.

National Refrigeration, Inc. v. Capital Properties, Inc., 88 A.3d 1150 (R.I. 2014): In National Refrigeration, after judgment had entered and after the plaintiff had filed its notice of appeal, the plaintiff filed a motion to increase the amount of a bond. On appeal, the plaintiff argued that the Superior Court erred in denying its motion to increase the bond. On appeal, the Supreme Court concluded that the issue of the amount of the bond was not properly before it. In so holding, the Supreme Court noted that while “a notice of appeal that designates the final judgment encompasses not only the judgment, but also all earlier interlocutory orders that merge in the judgment,” there is no basis for the Court to review an order entered subsequent to the judgment on appeal.

G. Sanctions

Fiorenzano v. Lima, 84 A.3d 811 (R.I. 2014): Although it is well settled that an appeal may be dismissed when it has not been perfected, the Rhode Island Supreme Court has made clear that sanctions should not be imposed for mere failure to perfect an appeal.

In Fiorenzano, when the plaintiff failed to perfect his appeal, the trial justice granted the defendant’s motion to dismiss plaintiff’s appeal and, in addition, ordered that plaintiff pay defendant $1,500 as compensation for defendant’s attorney obtaining dismissal of the appeal.

On appeal, the Supreme Court held that the imposition of a sanction for the plaintiff’s failure to perfect his appeal was in error. According to the Court, “[n]o statute or rule calls for any further sanctions for the failure to perfect an appeal.”

H. Transcripts

Process Engineers & Constructors, Inc. v. DiGregorio, Inc., 93 A.3d 1047 (R.I. 2014):  In Process Engineers, the Rhode Island Supreme Court again reminded litigants that it is the responsibility of the parties to ensure that all proper transcripts are ultimately filed with the Court. To that end, “Article I, Rule 10(b)(1) of the Supreme Court Rules of Appellate Procedure leaves it to the appellant to ‘order from the reporter a transcript of such parts of the proceedings not already on file as the appellant deems necessary for inclusion in the record.’” Thereafter, “[t]he appellee may . . . request additional transcripts if he or she thinks they are necessary.”

I. Show Cause Calendar

Ho-Rath v. Rhode Island Hospital, 89 A.3d 806 (R.I. 2014):  Cases that come before the Rhode Island Supreme Court typically are assigned to either the Court’s full argument or show cause calendar. In full cases, each side is permitted 30 minutes for oral argument and the appellant may reserve 10 minutes for rebuttal. Unless otherwise specified by the Court, parties in full cases may submit briefs 50 pages in length and reply briefs 25 pages in length. See R.I. R. App. P. 16(f). In show cause cases, each side is permitted 10 minutes for oral argument and the appellant may reserve two minutes for rebuttal. Unless otherwise specified by the Court, parties in show cause cases by submit supplemental papers no longer than 10 pages in length. See R.I. R. App. P. 12A(4).

Most often, when cases are assigned to the show cause calendar, the Supreme Court concludes that cause has not been shown and decides the case on the basis of the papers and arguments before it. Occasionally, however, the Court will conclude that cause has been show and will order that the case be assigned to the Court’s full argument calendar and that the parties be permitted full briefing and argument.

That was the case this term in Ho-Rath, a decision in which the Supreme Court concluded that two issues of first impression warranted full briefing and argument. Accordingly, the Court assigned the following two questions to the Court’s full argument calendar: (1) whether, in accordance with R.I. Gen. Laws § 9-1-14.1(1), medical malpractice claims may be brought on a child’s behalf at any time before the minor reaches the age of majority, and thereafter by the child within three years after attaining the age of majority and (2) whether parents may bring their derivative claims at whatever time the minor’s medical negligence claims are pursued. It is anticipated that these important and novel issues will be the subject of a decision next term.

2014 Year in Review – Appellate Briefs

Image courtesy of khunaspix at freedigitalphotos.net

Image courtesy of khunaspix at freedigitalphotos.net

A. Brief Writing and Citations

Process Engineers & Constructors, Inc. v. DiGregorio, Inc., 93 A.3d 1047 (R.I. 2014): In a rare passage, the Rhode Island Supreme Court provided valuable advice to appellate practitioners on drafting appellate briefs. In Process Engineers, the Court noted that it “greatly appreciates clear and concise writing. However, it is also essential that the parties support their factual representations to this Court with citation to the record.”

It is sometimes difficult, and especially so in complex matters with multiple grounds for appeal, to fully brief an argument within the page limits set by the Court. Nevertheless, the Process Engineers & Constructors, Inc. decision reminds practitioners that citations to the record are just as important as the substance of the arguments made.

B. Default for Failure to File

National Refrigeration, Inc. v. Capital Properties, Inc., 88 A.3d 1150 (R.I. 2014): In National Refrigeration, Inc., a defendant/appellee was defaulted for failure to file a brief on appeal.

C. Failure to Adequately Brief

Bucci v. Hurd Buick Pontiac GMC Truck, LLC, 85 A.3d 1160 (R.I. 2014): In Bucci, the Supreme Court declined to review a claim made by the appellant on appeal because, apart from identifying the issue, the appellant did not develop the argument. The Supreme Court reminded practitioners that it “will consider an issue to be waived when a party ‘[s]imply stat[es] an issue for appellate review, without a meaningful discussion thereof or legal briefing of the issues.’” (quoting State v. Chase, 9 A.3d 1248, 1256 (R.I. 2010)).

D. Pre-briefing Statements

Carrozza v. Voccola, 90 A.3d 142 (R.I. 2014): Arguments raised in a pre-briefing statement but not reiterated in the full brief are waived. (citing State v. Rolon, 45 A.3d 518, 519 n.1 (R.I. 2012); Bowen Court Associates v. Ernst & Young LLP, 818 A.2d 721, 728-29 (R.I. 2003)). However, the failure to raise an issue in a pre-briefing statement does not waive that issue for full briefing. Id. Moreover, a concession of a point by a party in his or her pre-briefing statement does not preclude that party from raising the issue at the time of full briefing.

2014 Year in Review – Attorneys

A. Character and Fitness

In re Application of Carlton Vose, 93 A.3d 33 (R.I. 2014): In Vose, the Supreme Court addressed a petition in opposition to the recommendation of the Supreme Court’s Committee on Character and Fitness (the “Committee”) that the petitioner be denied admission to the Rhode Island bar. After numerous meetings with the Committee – during some of which petitioner was represented by counsel – the Committee submitted a Recommendation of Denial of Admission to the Rhode Island Bar supported by ten specific findings of fact. Among those many findings was reference the Florida Board of Bar Examiners’ denial of the petitioner’s application for admission to that state’s bar. In his petition in opposition to that recommendation, the petitioner claimed that the Committee failed to meet its burden of inquiring into the findings concerning his previous denial of admission to the Florida bar.

Image courtesy of suphakit73 at Freedigitalphotos.net

Image courtesy of suphakit73 at Freedigitalphotos.net

The Supreme Court disagreed, noting that the petitioner “appears to fundamentally misunderstand the nature of the application process laid out in Rule 3 [of the Supreme Court Rules of Admission of Attorneys and Others to Practice Law],” which makes clear that “the onus was on [the petitioner], not the committee, to present clear and convincing evidence of his good moral character.”

Additionally, in passing on an issue of first impression, the Supreme Court concluded that it was proper for the Committee to consider the findings of the Florida board in determining whether the petitioner possessed the requisite character and fitness to be admitted to the Rhode Island bar. The Supreme Court’s conclusion is consistent with that of other jurisdictions that recognize “the propriety of considering an applicant’s denial from the bar of another state.” (citing Hawai’I Board of Bar Examiners Rules of Procedure Pt. 2, § 2.6(c)(10); Minnesota Rules for Admission to the Bar 5(B)(3)(1); New Mexico Rules Governing Admission to the Bar 15-103(C)(3)(k); In re Bar Admission of Vanderperren, 661 N.W.2d 27, 41 (Wisc. 2003)).
B. Sanctions

Burns v. Moorland Farm Condominium Association, 87 A.3d 392 (R.I. 2014): “Rule 11 requires attorneys to ‘make [a] reasonable inquiry to assure that all pleadings, motions and papers filed with the court are factually well-grounded, legally tenable and not interposed for any improper purpose.’ Pleasant Management, LLC v. Carrasco, 918 A.2d 123, 218 (R.I. 2007) (quoting Mariani v. Doctors Associates, Inc., 983 F.2d 5, 7 (1st Cir. 1993)). According to Rule 11, such improper purposes may include efforts ‘to harass or to cause unnecessary delay or needless increase in the cost of litigation.’ The rule allows a trial justice ‘to formulate what he or she considers to be an appropriate sanction, but he or she must do so in accordance with the articulated purpose of the rule: “to deter repetition of the harm, and to remedy the harm caused.’” In re Briggs, 62 A.3d at 1098 (quoting Pleasant Management, LLC, 918 A.2d at 217).”

2014 Year in Review – Contract Law

JPL Livery Services v. R.I. Dep’t of Admin., 88 A.3d 1134 (R.I. 2014): As the Rhode Island Supreme Court recognized this term, “it is a fundamental principle of contract law that a bilateral contract requires mutuality of obligation.” JPL Livery Services v. R.I. Dep’t of Admin., 88 A.3d 1134, 1143-44 (R.I. 2014) (citing Centerville Builders, Inc. v. Wynne, 683 A.2d 1340, 1341 (R.I. 1996)). A mutuality of obligation exists when “both parties are ‘legally bound through the making of reciprocal promises.’” Id. (quoting Centerville Builders, Inc., 683 A.2d at 1341). Conversely, “[t]he words of a promise ‘are illusory if they are conditional on some fact or event that is wholly under the promisor’s control and bringing it about is left wholly to the promisor’s own will and discretion,’ such that ‘the words used do not in fact purport to limit future action in any way.’” Id. (quoting 2 Corbin on Contracts, § 5.32 at 175, 176 (1995)). If a termination clause allows a party to terminate at any time at will without more, the promise is illusory. Id. (citing Holliston Mills, Inc. v. Citizens Trust Co., 604 A.2d 331, 335 (R.I. 1992)).

2014 Year in Review – Commercial Law

A. Usury

Image courtesy of  401(K) 2012 and http://401kcalculator.org at Flickr.com

Image courtesy of 401(K) 2012 and http://401kcalculator.org at Flickr.com

NV One, LLC v. Potomac Realty Capital, LLC, 84 A.3d 800 (R.I. 2014): In a case of first impression that has important implications for lenders in Rhode Island, in NV One, LLC the Rhode Island Supreme Court held that a usury savings clause in a commercial loan document does not validate an otherwise usurious contract.

As a result of the Court’s decision, loan documents that impose an interest rate in excess of 21 percent per annum and do not fall within a statutory exception are usurious and void as a matter of law, regardless of whether they contain a usury savings clause. When a usurious loan document is declared void, the borrower is entitled to recover all amounts paid on the loan. A lender has no right to collect either principal or interest on a usurious loan. See Colonial Plan Co. v. Tartaglione, 50 R.I. 342, 147 A. 880, 881 (1929).
Pursuant to Rhode Island statutory law, the maximum allowable interest rate for most loans is 21 percent per annum. (citing R.I. Gen. Laws § 6-26-2(a)). Contracts that purport to impose an interest rate in excess of 21 percent per annum are usurious and void. Id. (citing R.I. Gen. Laws § 6-26-4). The lender’s subjective intent to comply with the usury laws is irrelevant. Id. However, if the lender willfully and knowingly violates § 6-26-2, it can be found guilty of criminal usury, punishable by up to five years’ imprisonment. R.I. Gen. Laws § 6-26-3.

Through the passage of such statutes, the Rhode Island General Assembly has manifested an intention to protect borrowers by ensuring that lenders do not charge interest in excess of the maximum rate. As the Supreme Court recognized, “the Legislature intended an inflexible, hardline approach to usury that is tantamount to strict liability.”
Since their enactment, Rhode Island has strictly enforced its usury laws, but until the Supreme Court’s decision in NV One, LLC, it had not addressed whether a usury savings clause could save an otherwise usurious loan.

In concluding that usury savings clauses violate public policy, the Supreme Court reasoned that “enforcement of usury savings clauses would entirely obviate any responsibility on the part of the lender to abide by the usury statute, and would, in essence, swallow the rule.” The Court expressed concern that “the inclusion of usury savings clauses in loan contracts would lead to results that are injurious to the money-borrowing public, as well as potentially unconscionable or tending towards injustice or oppression.” Indeed, “[i]f lenders could circumvent the maximum interest rate by including a boilerplate usury savings clause, lenders could charge excessive rates without recourse.”
In the wake of the Supreme Court’s decision, lenders should carefully scrutinize their loan documents to ensure full compliance with Rhode Island’s usury laws, bearing in mind that a usury savings clause will not save an otherwise usurious loan agreement.

Labonte v. New England Development R.I., LLC, 93 A.3d 537 (R.I. 2014): Months after the Supreme Court decided NV One, LLC, it held in LaBonte that a commercial loan commitment fee could be included in the calculation of interest. The loan at issue was for $275,000. Pursuant to its terms, the borrower was required to repay the loan in the amount of $325,000, plus interest within 30 days. The $325,000 repayment amount included a $50,000 loan commitment fee.

The parties did not dispute that if the loan commitment fee was considered interest, it would render the loan usurious. However, the lender argued that under Rhode Island law, a commercial loan commitment fee shall not constitute interest. See R.I. Gen. Laws § 6-26-2.

In considering the lender’s argument, the Supreme Court recognized that the statute defines a commercial loan commitment fee as a charge imposed by lenders “to assure the availability of a specified amount of credit for a specified period of time or, at the borrower’s option, compensating balances in lieu of the fees.” Id. However, because the $50,000 fee did not provide any assurance as to the availability of the $275,000 principal loan, the Court concluded that the loan commitment fee did not fall within the statutory exemption and, therefore, must be treated as interest.

Based on that conclusion, the Supreme Court held that the loan was usurious and void pursuant to R.I. Gen. Laws § 6-26-2(a).

B.  Deceptive Trade Practices

See Long v. Dell, Inc.: http://www.riappeals.com/trial/5-know-3/

 

 

2014 Year in Review – Construction of the Rules of Civil Procedure

Miller v. Metropolitan Property and Casualty Ins. Co., 88 A.3d 1157 (R.I. 2014): In Miller, the Supreme Court made two important pronouncements about the construction of the Rhode Island Rules of Civil Procedure. First, the Court noted that it will look to the federal courts for guidance when interpreting a state rule of procedure that is substantially similar to a federal rule of procedure. Second, the Court emphasized that “procedural rules, like statutes and ordinances, should not be understood in a manner that can only be described as ‘myopic literalism.’” (quoting Peloquin v. Haven Health Center of Greenville, LLC, 61 A.3d 419, 425 (R.I. 2013)). Therefore, the rules must be “read in [their] proper context, not viewed in isolation.”

2014 Year in Review – Declaratory Judgments

Burns v. Moorland Farm Condominium Association, 87 A.3d 392 (R.I. 2014): In Burns, the Rhode Island Supreme Court reaffirmed its prior holdings and held that the failure to join indispensable parties pursuant to the Declaratory Judgment Act rendered the Superior Court’s judgment “null and void.”

Under Rhode Island’s Declaratory Judgment Act, “all persons shall be made parties who have or claim any interest which would be affected by the declaration, and no declaration shall prejudice the rights of persons not parties to the proceeding.” R.I. Gen. Laws § 9-30-11. Persons who have or claim any interest that would be affected by the declaration are indispensable parties. This provision is mandatory. Abbatematteo v. State, 694 A.2d 738, 740 (R.I. 1997). Thus, “the Superior Court should not assert jurisdiction” unless all persons who have a direct interest in the dispute are made parties. Id.; see also Sullivan v. Chafee, 703 A.2d 748, 751 (R.I. 1997) (“A court may not assume subject-matter jurisdiction over a declaratory-judgment action when a plaintiff fails to join all those necessary and indispensable parties who have an actual and essential interest that would be affected by the declaration.”). “‘Failure to join all persons who have an interest that would be affected by the declaration’ is fatal.” Id. (quoting Thompson v. Town Council of Westerly, 487 A.2d 498, 499 (R.I. 1985)).

In accordance with this case law, in Burns the Supreme Court held that condominium unit owners who must share in the cost of a judgment should have been joined in the action because they were parties whose interests could be affected by the judgment. Consequently, the plaintiffs’ failure to join the condominium owners was fatal and made the judgment null and void.

Rosano v. Mortgage Electronic Registration Systems, 91 A.3d 336 (R.I. 2014): Relying on its decision in Burns v. Moorland Farm Condominium Association, 87 A.3d 392 (R.I. 2014), the Supreme Court again emphasized in Rosano that ordinarily, in an action brought under Rhode Island’s Declaratory Judgment Act, “failure to join all persons who have an interest that would be affected by the declaration is fatal.” Consistent with that authority, the Court held that in a foreclosure action, the plaintiff’s failure to name the current title holder of the property was fatal to the plaintiff’s action. The plaintiff argued that the current title holder of the property was sufficiently on notice of the action because it had an “incestuous relationship” with one of the defendants named in the action. The Supreme Court disagreed, concluding that such notice was insufficient under the Declaratory Judgment Act, which requires that all parties who have an interest that would be affected by the declaration be joined in the action.