Epic Enters. LLC v. Bard Grp., LLC

• Decision Date: 20 June 2018
• Docket Number: No. 2017–334–Appeal.,NC 16–487,2017–334–Appeal.
• Citation: 186 A.3d 587
• Parties: EPIC ENTERPRISES LLC, et al. v. The BARD GROUP, LLC
• Court: Rhode Island Supreme Court

186 A.3d 587

EPIC ENTERPRISES LLC, et al.

v.The BARD GROUP, LLC

No. 2017–334–Appeal.

NC 16–487

Supreme Court of Rhode Island.

June 20, 2018

For Plaintiffs: Turner C. Scott, Esq., Roland F. Chase, Esq., Newport.

For Defendant: Michael J. Richards, Esq.

Present: Suttell, C.J., Goldberg, Flaherty, Robinson, and Indeglia, JJ.

Justice Goldberg, for the Court.

This case came before the Supreme Court on May 9, 2018, pursuant to an order directing the parties to appear and show cause why the issues raised in this appeal should not be summarily decided. The defendant, The Bard Group, LLC (defendant), appeals from a final judgment granting summary judgment in favor of the plaintiffs, Epic Enterprises LLC, Donna R. Morvillo, Kurt Rauschenbach, and Kristin Rauschenbach (collectively plaintiffs). After hearing the arguments of counsel and examining the memoranda submitted by the parties, we are of the opinion that cause has not been shown and that this case should be decided without further briefing or argument. We affirm the judgment of the Superior Court.

Facts and Travel

This dispute concerns a thirteen-unit condominium complex known as "10 Brown & Howard Wharf Condominium" (the condominium) located near Thames Street in Newport, Rhode Island. The condominium was created by declaration dated August 12, 2014, and recorded on August 29, 2014, in the Newport land evidence records. The defendant owns nine of the thirteen condominium units and is therefore the majority owner with 70.8 percent of the voting share. The plaintiffs own the remaining four units and have 29.2 percent of the voting share. The original declaration permitted only "Retail/Office," "Office," or "Residential" uses in the condominium. Specifically, Article 2.2(ff) expressly prohibited a restaurant use: "NO commercial kitchens or the preparation of or the service of food for consumption onsite shall be allowed."

However, on December 23, 2016, defendant, as the majority-interest holder, unilaterally adopted and recorded a "second amendment" to the declaration that removed the language in Article 2.2(ff) that prohibited commercial kitchens and food service. In doing so, the second amendment expressly included "Restaurant Use" as a new permitted use relative to the units owned by defendant. The second amendment, in relevant part, stated: "Notwithstanding anything to the contrary contained herein or in this Declaration, Units 103, 104, 105, 106 and 107 may have commercial kitchens and be used for the purpose of Restaurant Use." The defendant also applied to the Newport City Council for a victualing license and to transfer a Class BV alcoholic beverage license for a restaurant that it intended to establish in its units.

The plaintiffs, in opposition to the second amendment, filed this declaratory judgment action in the Superior Court seeking a declaration that the second amendment was invalid and that to be valid, the adoption of the second amendment required unanimous consent of all the owners pursuant to G.L. 1956 § 34– 36.1–2.17(d). The parties filed cross-motions for summary judgment. The defendant argued that, because § 34–36.1–2.17(d) deals only with the restriction of uses, and because the second amendment in this case did not restrict the use or occupancy of any unit, the second amendment was valid.

On May 1, 2017, a hearing was held on the motions; the hearing justice ruled that there were no genuine issues of material fact in the case. The hearing justice acknowledged that the original declaration expressly prohibited the use of restaurants and that the second amendment changed that use to specifically allow for restaurant service. The hearing justice reviewed § 34–36.1–2.17(d) and concluded that the statute was clear and unambiguous. The hearing justice held that the statute required a change in use to be approved by the unanimous consent of all unit owners. Accordingly, the hearing justice granted plaintiffs' motion for summary judgment and declared that the second amendment was invalid because unanimous consent from all unit owners was required to adopt the amendment and that no condominium units could be converted into a restaurant and bar without the unanimous consent of all unit owners. The defendant filed a timely notice of appeal.

Standard of Review

This Court "review[s] a ruling on a motion for summary judgment de novo ." Pimentel v. Deutsche Bank National Trust Co. , 174 A.3d 740, 743 (R.I. 2017). "We will affirm a [trial] court's [summary judgment] decision only if, after reviewing the admissible evidence in the light most favorable to the nonmoving party, we conclude that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law." Newstone Development, LLC v. East Pacific, LLC , 140 A.3d 100, 103 (R.I. 2016). A matter that hinges on statutory interpretation is ripe for summary judgment. Progressive Casualty Insurance Co. v. Dias , 151 A.3d 308, 312 n.6 (R.I. 2017). Furthermore, when reviewing the applicability of a statute, this Court interprets the statute de novo . Id. at 311.

Analysis

Before this Court, defendant contends that the second amendment to the declaration does not require unanimous approval by all unit owners because it does not prohibit or materially restrict the use, occupancy, or behavior within individually-owned units, nor does it deprive minority-interest unit owners of any property rights. The defendant further argues that the declaration always allowed a restaurant use because "[t]he [d]eclaration plainly and unambiguously provides that ‘uses as may be allowed by the Zoning Ordinance of the City of Newport * * * shall also be allowed * * *.’ "

In response, plaintiffs argue that § 34–36.1–2.17(d) unambiguously requires unanimous approval of all condominium unit owners for an amendment to a declaration that changes a prior restricted use of any unit. The plaintiffs argue that the second amendment changed the use of the units and therefore required unanimous approval. Lastly, plaintiffs contend that the language in the declaration under the definition of retail use, which permits...