498 F.3d 58
1st Cir.2013Background
- IDC Properties built the Newport Regatta Club (the "Regatta Club") on the disputed "Reserved Area" on Goat Island while ownership was vigorously contested by the condominium Associations; construction began in 1997–1998.
- The Associations and IDC entities entered a tolling agreement before construction; IDC Clambakes (the operator) was not a party to that agreement and its lease to IDC Properties was unrecorded.
- Clambakes began operating the Regatta Club in May 1999; the Associations objected to certain permits (notably parking) but did not seek ejectment or trespass relief while the ownership litigation proceeded.
- In April 2005 the Rhode Island Supreme Court held title rested with the unit owners (America II); thereafter the Associations sought ejectment and Clambakes filed bankruptcy and later a Chapter 11 plan was confirmed.
- On remand from the district court, the bankruptcy court held (and the First Circuit affirmed) that the Associations impliedly consented to Clambakes’ use from construction through April 8, 2005, but the question whether implied consent created an obligation to pay for use was remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Clambakes trespassed or had implied/apparent consent to occupy and operate the Regatta Club | Associations: long-running ownership disputes and Tolling Agreement show no consent to operation; Clambakes was a trespasser | Clambakes: Associations’ conduct (omitting Clambakes from tolling/litigation, contracting with Clambakes, failing to eject) manifested apparent consent | Court: Affirmed bankruptcy court — factual record plausibly supports implied/apparent consent; no trespass liability for period at issue |
| Whether Clambakes reasonably relied on the Associations’ conduct | Associations: evidence shows Clambakes knew ownership was disputed; Roos’s stipulation indicates lack of belief in consent | Clambakes: continued contracts with Associations and patrons, lack of trespass claims, and other conduct supported reasonable reliance | Court: Affirmed — reasonable reliance is a fact-intensive mixed question; bankruptcy court’s finding not clearly erroneous |
| Significance of omitting Clambakes from the Tolling Agreement and litigation | Associations: omission irrelevant because they did not know Clambakes was the operator | Clambakes: omission and failure to join it in litigation support inference Associations acquiesced to its operation | Court: Omission is a permissible basis for finding manifestation of consent; factual contradictions did not render court’s finding clearly erroneous |
| Whether implied consent also implies an obligation to pay fair value for use and occupancy | Associations: even if they consented to occupation, consent was not free — implied contract requires payment | Clambakes: (argued waiver below; also disputed) | Court: Remanded — issue was raised post-trial but unaddressed by bankruptcy court; on remand trial court must decide whether implied consent carried an obligation to pay and, if so, amount |
Key Cases Cited
- In re LaRoche, 969 F.2d 1299 (1st Cir.) (appellate standard for reviewing bankruptcy court)
- Griggs-Ryan v. Smith, 904 F.2d 112 (1st Cir.) (apparent consent arises from conduct and context)
- In re Carp, 340 F.3d 15 (1st Cir.) (affirm on any ground supported by the record)
- Braunstein v. McCabe, 571 F.3d 108 (1st Cir.) (sliding standard for mixed questions of law and fact)
- Jeffrey v. Desmond, 70 F.3d 183 (1st Cir.) (review standards: clear error for facts, de novo for law)
- In re G.S.F. Corp., 938 F.2d 1467 (1st Cir.) (appellate review of bankruptcy decisions)
- Mesolella v. City of Providence, 508 A.2d 661 (R.I.) (Rhode Island looks to Restatement of Torts on trespass questions)
- Am. Condo. Ass’n, Inc. v. IDC, Inc., 844 A.2d 117 (R.I.) (America I — prior litigation in same dispute)
- Am. Condo. Ass’n, Inc. v. IDC, Inc., 870 A.2d 434 (R.I.) (America II — Rhode Island Supreme Court holding title with unit owners)