253 A.3d 868
R.I.2021Background
- Beginning in 1997–2003, HR2‑A and HR4‑A (RFP defendants) made secured commercial loans for the Centre of New England project; key loans at issue were a $14,320,000 loan and a $7,599,333 loan (backdated to Aug. 1, 2000).
- Effective interest rates charged: approximately 36% on the $14M loan and 26% on the $7M loan; other smaller loans charged ~23%.
- Receivership plaintiffs were record title owners and made payments (often via third‑party land sale/financing transactions) that reduced indebtedness; Cambio plaintiffs were co‑borrowers on the $14M loan but did not make payments and were guarantors on the $7M loan.
- Plaintiffs sued in 2011 alleging usury under R.I. Gen. Laws ch. 6‑26; the Superior Court found the $14M and $7M loans usurious and void.
- Cambio plaintiffs appealed limited rulings: (1) entitlement to disgorgement under §6‑26‑4(c); (2) punitive damages; (3) trial court ruling on certain stayed counts (constructive trust, unlawful foreclosure); and (4) whether §9‑1‑2 criminal‑usury claims were timely.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Entitlement to disgorgement under §6‑26‑4(c) | "Borrower" should cover all named co‑borrowers; if any borrower paid, all named borrowers may share disgorgement | §6‑26‑4(c) entitles only a named borrower who actually "make[s] any payment" to recover that amount | Court: statute unambiguous; Cambio plaintiffs not entitled because they made no payments on $14M loan |
| Punitive damages under usury statute | Punitive damages available even if Cambio plaintiffs did not obtain disgorgement | Punitive damages require an underlying award of compensatory (disgorgement) damages | Court: punitive claims dismissed as a matter of law because no compensatory recovery under §6‑26‑4(c) |
| Trial court ruling on stayed counts (constructive trust; unlawful foreclosure) | Trial justice erred by ruling on counts that had been stayed | Stayed counts fail on the merits because they depend on disgorgement or ownership/transfer of property | Court: any procedural error harmless; affirm summary judgment because claims fail as a matter of law (no payments; Cambio plaintiffs lack title) |
| §9‑1‑2 criminal‑usury civil claims—statute of limitations / continuing tort | Usury was ongoing (continuing tort); later acts (e.g., 2011 demand) tolled or reset accrual | Cause of action accrued at execution/backdating (Dec. 2000); 10‑year statute bars the April 2011 complaint | Court: argument not preserved below; in any event cause accrued Dec. 2000 and claims are time‑barred under 10‑year rule |
Key Cases Cited
- Ballard v. SVF Found., 181 A.3d 27 (R.I. 2018) (standard of review for summary judgment)
- Iselin v. Retirement Bd., 943 A.2d 1045 (R.I. 2008) (statutory interpretation reviewed de novo)
- Accent Store Design, Inc. v. Marathon House, Inc., 674 A.2d 1223 (R.I. 1996) (when statute is unambiguous, apply plain meaning)
- NV One, LLC v. Potomac Realty Capital, LLC, 84 A.3d 800 (R.I. 2014) (describing public policy behind Rhode Island usury law)
- Mark v. Congregation Mishkon Tefiloh, 745 A.2d 777 (R.I. 2000) (rigorous standard for punitive damages)
- Dellagrotta v. Dellagrotta, 873 A.2d 101 (R.I. 2005) (constructive trust remedy requires unjust enrichment or wrongful acquisition of title)
- Bucci v. Lehman Bros. Bank, FSB, 68 A.3d 1069 (R.I. 2013) (legal title‑holder rights in foreclosure context)
- Rohena v. City of Providence, 154 A.3d 935 (R.I. 2017) ("raise‑or‑waive" rule on appellate review)
- Riley v. Stone, 900 A.2d 1087 (R.I. 2006) (appellant must supply record parts relied upon on appeal)