Cambio v. Commerce Park Realty, LLC, 121820 RISUP, PM-2013-0350

Docket NºC.A. PM-2013-0350, PM-2013-5001
Opinion JudgeTAFT-CARTER, J.
Party NameNICHOLAS E. CAMBIO, Trustee, The Nichola E. Cambio, Roney A. Malafronte, and Vincent A Cambio Trust, Petitioners v. COMMERCE PARK REALTY, LLC; COMMERCE PARK PROPERTIES, LLC; COMMERCE PARK COMMONS, LLC; COMMERCE PARK ASSOCIATES 4, LLC; and CATAPULT REALTY, LLC, Respondents MATTHEW J. MCGOWAN, as and only as Receiver for Commerce Park Realty, LLC...
Case DateDecember 18, 2020
CourtSuperior Court of Rhode Island

NICHOLAS E. CAMBIO, Trustee, The Nichola E. Cambio, Roney A. Malafronte, and Vincent A Cambio Trust, Petitioners

v.

COMMERCE PARK REALTY, LLC; COMMERCE PARK PROPERTIES, LLC; COMMERCE PARK COMMONS, LLC; COMMERCE PARK ASSOCIATES 4, LLC; and CATAPULT REALTY, LLC, Respondents

MATTHEW J. MCGOWAN, as and only as Receiver for Commerce Park Realty, LLC, Commerce Park Properties, LLC, Commerce Park Commons, LLC, Commerce Park Associates 4, LLC, and Catapult Realty, LLC, Petitioners

v.

COMMERCE PARK MANAGEMENT, LLC Respondent

C.A. Nos. PM-2013-0350, PM-2013-5001

Superior Court of Rhode Island, Providence

December 18, 2020

DECISION

TAFT-CARTER, J.

Before this Court for decision is a Motion for Order Requiring Return of Fees brought by Defendants HR2-A Corp. as General Partner of HR2-A Limited Partnership; HR4-A Corp., as General Partner of HR4-A Limited Partnership; MR4A-JV Corp., as General Partner of MR4A-JV Limited Partnership; and Realty Financial Partners' (collectively, the RFP Defendants). The Receiver, Matthew J. McGowan, as Receiver for Commerce Park Realty, LLC, Commerce Park Properties, LLC, Commerce Park Commons, LLC, Commerce Park Associates 4, LLC, and Catapult Realty, LLC, objects. A hearing was held remotely via WebEx on October 28, 2020.1 This Court exercises jurisdiction pursuant to G.L. 1956 § 8-2-13.

I

Facts and Travel

From 2013 to present, this Court has issued five "Report Orders," all of which authorized and approved disbursement of various fees requested by Mathew J. McGowan (Receiver) and his special counsel, Pierce Atwood, LLP (Pierce). (RFP Defs.' Mot. for Order Requiring Return of Fees (Mot. to Return Fees) at 2-7.) The first four Report Orders were issued between December of 2013 and October of 2016. Id. at 2. Each of these Report Orders contained a paragraph, which the RFP Defendants refer to as a "Disgorgement Clause," which stated: "Nothing in this Order is or shall be considered to be a final or binding allocation of fees against any creditors, parties, or their collateral in these proceedings." Id. As a result of these first four Report Orders, a total of $1, 177, 159.48 was disbursed to the Receiver and a total of $416, 948.91 was disbursed to Pierce. Id. at 2-3.

The Fifth Report Order was issued on January 4, 2019, and, as a result, on December 23, 2019, $145, 000 was disbursed to the Receiver and $70, 000 disbursed to Pierce (collectively, the "December 2019 Disbursements"). Id. at 5. The Fifth Report Order contained the "Disgorgement Clause" as well as an additional preceding paragraph stating: "The Receiver is authorized to pay the amounts set forth in this Order as, when and to the extent that funds on hand shall be available with which to do so." Id. at 4.

On November 22, 2019, this Court entered an order entitled "ORDER GRANTING RECEIVER'S MOTION TO SELL PROPERTY FREE AND CLEAR OF LIENS, CLAIMS, AND ENCUMBRANCES (87 Centre of New England Boulevard-"Commercial Condo Building")" (the 87 CNE Order). This Order authorized the sale of certain real estate at 87 Centre of New England Boulevard (87 CNE) in Coventry, Rhode Island. (87 CNE Order ¶ 3.) Paragraph 2 of the 87 CNE Order stated, in pertinent part, that "the Property shall be sold to the Purchaser, or its designee or assignee, free and clear of all interests, claims, liens and encumbrances, including but not limited to any and all mortgages, statutory liens of the State of Rhode Island and any other municipal authorities or quasi-governmental authorities, with all such interests, claims, mortgages, statutory liens and other liens and encumbrances attaching and being transferred to the proceeds of such sale in the same order of priority as existed prior to the sale."

On June 4, 2020, the RFP Defendants requested a "Cash Ledger" from the Receiver. (Mot. to Return Fees at 6.) The Cash Ledger revealed that the December 2019 Disbursements were made from the proceeds of the sale of 87 CNE. Id. at 7. The RFP Defendants then brought this current motion on September 23, 2020. The Court now renders its decision.

II

Analysis

In their motion, the RFP Defendants ask for three things. First, they request that this Court issue an order directing the Receiver and Pierce to return the December 2019 Disbursements. Id. at 2. Second, the RFP Defendants ask for "disgorgement" of other previously-disbursed fees from the first four Report Orders. Id. at 9. Finally, the RFP Defendants request an injunction stating that "this Court should enjoin any further fee disbursements to Receiver and/or Pierce until further Order of this Court." Id.

In turn, the Receiver asserts three reasons as to why this Court should deny the RFP Defendants' motion. The Receiver's first reason is that, based on a previous decision by this Court, "[t]he RFP Defendants have no collateral in these receivership proceedings." (Receiver's Obj. to Mot. to Return Fees at 2-3.) Second, the Receiver argues that the RFP Defendants' interpretations of the Report Orders and the 87 CNE Order are "illogical and internally irreconcilable." Id. at 2. Finally, the Receiver argues that the current motion is really a disguised request for injunctive relief. Id. at 8.

A

December 2019 Disbursements

The RFP Defendants argue that the December 2019 Disbursements should be returned to the Receivership Estate because these disbursements were made "in contravention to the Fifth Report Order and the 87 CNE Order." (Mot. to Return Fees at 9.) Specifically, they assert that the December 2019 Disbursements are in contravention of the Fifth Report Order because the RFP Defendants interpret Paragraphs 8 and 9 of the Fifth Report Order to mean that the December 2019 Disbursements could only be disbursed if "(a) cash from the proceeds of the RFP Collateral were on hand; and (b) if those cash proceeds were charged with fees pursuant to a Court Order." I...

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