119 A.3d 1
R.I.2015Background
- In 2010 Rhode Island appointed a Receiver over Central Falls under the Financial Stability Act (G.L. ch. 45-9). The Receiver assumed mayoral powers and rescinded City Council resolutions to hire outside counsel to challenge the Act.
- Receiver filed suit for declaratory and injunctive relief; the Mayor and City Council filed competing suits; the cases were consolidated and this Court later held the Act constitutional in Moreau v. Flanders.
- After the constitutional ruling, remaining claims included: Receiver’s claim for reimbursement of his attorneys’ fees under § 45-9-11; the Mayor’s claim for indemnification of his legal costs under § 45-15-16 and the Central Falls ordinance; and Attorney Goldberg’s request for advance payment of fees for representing the City Council.
- The Superior Court awarded the Receiver attorneys’ fees under § 45-9-11, denied indemnification to the Mayor (finding his acts beyond official duties), and denied Goldberg’s fee request. Appellants appealed.
- The Supreme Court reviewed statutory construction and summary-judgment de novo and reversed the Superior Court in all respects: (1) § 45-9-11 does not authorize attorneys’ fees; (2) Mayor entitled to indemnification under § 45-15-16 and city ordinance given the unique facts; (3) Attorney Goldberg entitled to fees for the City Council’s retained counsel under the exceptional circumstances.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 45-9-11 authorizes reimbursement of Receiver’s attorneys’ fees | Receiver: § 45-9-11 makes officials personally liable for expenditures in excess of appropriations, so Receiver may recover fees paid from city funds | Appellants: statute does not expressly authorize attorneys’ fees; Anti‑SLAPP/Noerr‑Pennington protections apply | Court: § 45-9-11 is silent on attorneys’ fees and must be strictly construed—no fee award under § 45-9-11 (reversed) |
| Whether Mayor is entitled to indemnification for legal costs under § 45-15-16 and city ordinance | Mayor/Appellants: Mayor acted within official duties in challenging constitutionality of a new, sweeping statute and thus is entitled to mandatory indemnification | Receiver: Receiver’s appointment superseded officials’ powers; Mayor acted only in advisory capacity and exceeded authority, so no indemnification | Court: Given unique, unprecedented circumstances and the Mayor’s standing to challenge the Act, his litigation was within scope of official duties; mandatory indemnification applies (reversed) |
| Whether City Council’s retention of outside counsel (Attorney Goldberg) is compensable despite Receiver’s rescission | City Council: had duty to challenge novel statute; conflict with city solicitor justified hiring counsel; fees should be paid | Receiver: Act gives Receiver power to rescind council resolutions; council’s hiring after rescission exceeded authority | Court: Exceptional facts and council’s duty to challenge untested Act support fee recovery for Goldberg; rescinded resolutions given effect here (reversed) |
| Whether Anti‑SLAPP or Noerr‑Pennington doctrines preclude fee allocation to Receiver | Appellants: anti‑SLAPP and Noerr‑Pennington immunities shield council/mayor from liability for petitioning | Receiver: such doctrines inapplicable where statute (§ 45-9-11) governs expenditures and appropriations | Court: Did not reach anti‑SLAPP/Noerr‑Pennington issues because it resolved fee question on statutory grounds (no fee under § 45-9-11) |
Key Cases Cited
- Moreau v. Flanders, 15 A.3d 565 (R.I. 2011) (held Financial Stability Act constitutional; confirmed mayor and council had standing to challenge Act)
- Moore v. Ballard, 914 A.2d 487 (R.I. 2007) (affirmed American Rule; statutes awarding fees are in derogation of common law and must be strictly construed)
- Eleazer v. Ted Reed Thermal, Inc., 576 A.2d 1217 (R.I. 1990) (courts may not imply statutory authority for attorneys’ fees when statute is silent)
- Blue Cross & Blue Shield of Rhode Island v. Najarian, 911 A.2d 706 (R.I. 2006) (review of attorneys’ fees entitlement is legal question; actual award reviewed for abuse of discretion)
- DeMarco v. Travelers Ins. Co., 26 A.3d 585 (R.I. 2011) (summary-judgment standard and de novo review guidance)