In re IDC Clambakes, Inc.

484 B.R. 540, 2012 U.S. Dist. LEXIS 49981, 2012 WL 1194122
CourtDistrict Court, D. Rhode Island
DecidedApril 10, 2012
DocketC.A. No. 10-267 S
StatusPublished
Cited by4 cases

This text of 484 B.R. 540 (In re IDC Clambakes, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Rhode Island primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re IDC Clambakes, Inc., 484 B.R. 540, 2012 U.S. Dist. LEXIS 49981, 2012 WL 1194122 (D.R.I. 2012).

Opinion

OPINION AND ORDER

WILLIAM E. SMITH, District Judge.

This cross-appeal from the Bankruptcy Court’s Decision and Order begins the end of the protracted, litigious relationship of the parties concerning an area of Goat Island, on a portion of Goat Island South Condominium, known as the “Reserved Area” in Newport, Rhode Island. The Appellants/Cross-Appellees are Goat Island South Condominium Association, America Condominium Association, Capella South Condominium Association, and Harbor Houses Condominium Association (collectively, the “Associations”), and the Appellee/Cross-Appellant is Debtor IDC Clambakes, Inc. (“Clambakes”). Thomas Roos is the sole shareholder of Clambakes, IDC Properties, Inc. (“Properties”), and IDC, Inc.

I. Background

To understand the issues in this cross-appeal, a brief overview of the underlying facts and procedural history is warranted. The following, largely undisputed, narrative of the relevant events is derived from the Bankruptcy Court’s opinion:

IDC, Inc. and Properties are the successors in interest to Globe Manufacturing Co., the declarant of a Newport, Rhode Island, condominium complex situated on Goat Island, consisting of approximately twenty-three acres. The master declaration reserved to the de-clarant the right to convert, inter alia, the Reserved Area (also referred to as the North Unit) to a master unit and to construct improvements thereon, until December 31,1994.... Properties failed to timely exercise said development rights, but instead attempted to extend the development rights deadline through a series of amendments to the master declaration.
Between 1996 and 1998, meetings, discussions, and negotiations took place between IDC, Inc., Properties, Roos, and the Associations and their attorneys concerning, inter alia, the validity of the amendments, fee assessments and voting schemes. On January 5, 1998, the Associations, Properties, IDC, Inc., and Roos, entered into a Tolling Agreement which preserved the Associations’ claims relative to the amendments, development rights, the Rhode Island Condominium Act, construction, repair and improvements, and the allocation of common element expenses. This agreement was extended several times and remained in effect through May 31, 1999. Clambakes was not a party to the original Tolling Agreement, nor to any of its extensions.
Clambakes [came] into existence [on] April 18, 1996.... It is agreed that [542]*542Clambakes is a separate and distinct corporation with separate assets and liabilities, and that Roos is the sole shareholder and President of both Clambakes and Properties.
In late 1997 and throughout 1998, while the Tolling Agreement was in effect, Properties made plans and preparations to construct an opulent banquet facility on the Reserved Area. Prior to the start of construction, in October 1997, the America Condominium Association raised concerns with the City of Newport Zoning Officer about the issue of parking on Goat Island to handle the proposed Clambakes operation. The Zoning Officer’s response was “that the proposal is allowed under the zoning code of the City of Newport.” See Debtor’s Exhibit 21. Approximately four months later, upon the filing of the building permit for the construction of the facility, the America Condominium Association again raised the parking issue with the Newport Building Inspector. “It’s our understanding that a permit application has been filed with your Office for the purpose of constructing a bldg, [sic] that would, among other uses, be used for clambakes. While we don’t have a particular objection as to the land use with respect to the building itself, we do have a substantial problem with the parking requirements for that bldg., [sic ] as well as for other commercial parking on and around that site.” Debtor’s Exhibit 63 (emphasis added).
On March 1, 1998, while the facility was still under construction, Properties entered into a twenty year lease with Clambakes, doing business as The Newport Regatta Club (“Regatta Club”).... In July 1998, an application was filed with the Board of License Commissioners to transfer the liquor license of Do-rell, Inc. to IDC Clambakes, Inc., d/b/a The Newport Regatta Club. The issuance of the liquor license was delayed for several months at the request of, and pending the America Condominium’s Zoning Board appeal, but the liquor license was ultimately approved. There is no evidence that any of the individual unit owners or the plaintiff Associations opposed the liquor license transfer to Clambakes. See Debtor Exhibits 66, 67. The only question raised by the Associations during the construction of the facility concerned the adequacy and/or logistics of parking.
On December 16, 1998, the Regatta Club’s use and occupancy certificate was issued,1 and wedding reception and banquet operations began. Thereafter, from mid-December 1998 until April 8, 2005, Clambakes operated the Regatta Club and paid rent to Properties pursuant to the terms of their lease. During this seven year period the Associations made no protest nor took any action to enjoin Clambakes’ operation of its business or to express objection—overtly or otherwise—to Clambakes’ possession and/or operation of the Regatta Club.
Approximately six months after Clambakes began operating the Regatta Club, on May 28, 1999—-three days be[543]*543fore the expiration of the Tolling Agreement, the Associations filed a state court action against IDC, Inc., Properties and Roos individually, alleging, inter alia, violations of the Rhode Island Condominium Act, R.I. Gen. Laws § 34-36.1-1.01, et seq. (1956), and that the voting scheme used in amending and extending the development rights in the Reserved Area was contrary to law and was therefore ineffective.... [Ojmitted from this lawsuit was Clambakes, ... and Clambakes was never added as a party during the entire six year period that the America litigation wound its way through the Rhode Island Superior and Supreme Courts.
[AJlthough the Associations were suing Clambakes’ lessor, they never contested Clambakes’ right to possess and operate, nor ever objected to its operation, as lessee, of the Regatta Club. To the contrary, during the entire time in question, unit owners contracted with Clambakes to host private events at the Regatta Club under standard business terms and rates, and the Harbor Houses Condominium Association similarly used the Regatta Club to conduct its annual meetings. At no time did any unit owners, or the Harbor Houses Association, or the Associations notify Clambakes that it was operating without the consent of the owner, or assert any claims of trespass or unauthorized occupancy against it. Instead, they used and enjoyed the Club for seven years.
On October 15, 1999, nearly one year after Clambakes took possession of and began operating the Regatta Club, the Associations recorded a Notice of Lis Pendens in the land records for the City of Newport against “IDC Properties, Inc., the present declarant and the record owner of the North Development Unit, the West Development Unit, and the South Development Unit,” referencing the state court complaint seeking declaratory relief and money damages, see

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Bluebook (online)
484 B.R. 540, 2012 U.S. Dist. LEXIS 49981, 2012 WL 1194122, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-idc-clambakes-inc-rid-2012.