W.H.I., Inc. v. Courter

• Decision Date: 01 May 2018
• Docket Number: C.A. No. WC-2015-0463
• Parties: W.H.I., INC., Plaintiff, Defendant in Counterclaim, v. JAMES COURTER; SORGENFREI, LLC, Defendants, Plaintiffs in Counterclaim, and Third Party Plaintiffs, - and - JVLV REALTY, INC.; HOWARD L. HARONIAN, M.D.; HJM LLC; JAMES & LYNN VALLIDES; and SALLY MERRY, Involuntary Plaintiffs in Counterclaim, - and - JVLV REALTY, INC.; HOWARD L. HARONIAN, M.D.; HJM LLC; JAMES & LYNN VALLIDES; and SALLY MERRY, Involuntary Third Party Plaintiffs - and - MERRILL LYNCH CREDIT CORPORATION; DIME BANK; Parties-In-Interest, v. PETER V. CATALANO; WATCH HILL INN HOTEL CONDOMINIUM ASSOCIATION (a.k.a. WATCH HILL INN CONDOMINIUM ASSOCIATION); WATCH HILL PROPERTIES, LLC; and WHI PARKING, LLC. Third Party Defendants.
• Court: Rhode Island Superior Court

W.H.I., INC., Plaintiff, Defendant in Counterclaim, v. JAMES COURTER; SORGENFREI, LLC, Defendants, Plaintiffs in Counterclaim, and Third Party Plaintiffs,

- and -

JVLV REALTY, INC.; HOWARD L. HARONIAN, M.D.; HJM LLC; JAMES &

LYNN VALLIDES; and SALLY MERRY, Involuntary Plaintiffs in Counterclaim,

- and -

JVLV REALTY, INC.; HOWARD L. HARONIAN, M.D.; HJM LLC; JAMES &

LYNN VALLIDES; and SALLY MERRY, Involuntary Third Party Plaintiffs

- and -

MERRILL LYNCH CREDIT CORPORATION; DIME BANK; Parties-In-Interest, v. PETER V. CATALANO; WATCH HILL INN HOTEL CONDOMINIUM ASSOCIATION

(a.k.a. WATCH HILL INN CONDOMINIUM ASSOCIATION); WATCH HILL PROPERTIES, LLC;

and WHI PARKING, LLC. Third Party Defendants.

C.A. No. WC-2015-0463

STATE OF RHODE ISLAND AND PROVIDENCE PLANTATIONS WASHINGTON, SC. SUPERIOR COURT

May 1, 2018

DECISION

STERN, J. Defendants/Plaintiffs in Counterclaim/Third Party Plaintiffs James Courter (Courter) and Sorgenfrei, LLC (Sorgenfrei), together with Involuntary Plaintiffs in Counterclaim/Involuntary Third Party Plaintiffs JVLV Realty, Inc. (JVLV), Howard L. Haronian, M.D. (Dr. Haronian), James and Lynn Vallides (the Vallideses), and Sally Merry (Merry) (collectively, the Unit Owners), move for partial summary judgment against Plaintiff/Counterclaim-Defendant W.H.I., Inc. (WHI or Declarant), Third Party Defendant Peter V. Catalano (Catalano), and Third Party Defendant WHI Parking, LLC (WHI Parking), a wholly owned subsidiary of WHI (collectively, Plaintiffs). Specifically, the Unit Owners claim that there are no genuine issues of material fact with respect to parking-related issues raised in their memorandum. In response, Plaintiffs object to the Unit Owners' motion and also move for summary judgment, seeking a declaration that the Parking Management Agreement (the PMA) and the Cross Easement are valid and binding, and that all claims asserted against Catalano in his individual capacity be dismissed. Jurisdiction is pursuant to Super. R. Civ. P. 56(c) and G.L. 1956 §§ 9-30-1 et seq.

IFacts and Travel

The underlying facts of this case have been set forth in this Court's July 24, 2017 Decision. See W.H.I., Inc. v. Courter, No. WC-2015-0463, 2017 WL 3209052 (R.I. Super. July 24, 2017). Relevant to this Decision are the facts surrounding the parking and easement-related issues in the present motion.

On December 23, 1985, WHI formally purchased the property in dispute, located at 38 Bay Street in Westerly, Rhode Island, and created the Watch Hill Inn Condominium (WHIC). Catalano Aff. ¶ 4, Oct. 26, 2017. WHI is the declarant of that certain Declaration of Condominium recorded in the Land Evidence Records of the Town of Westerly on February 17, 2006 in Book 1504, at Page 176 (the Declaration), the same which was amended on July 7, 2006 and recorded in the Land Evidence Records in Book 1550, at Page 187 (the First Amended Declaration). Id. at ¶ 2. WHI currently owns—and has owned since the Declaration's inception—five units at WHIC: W201, W202, W203, W402, and W501. Id. at ¶ 3. The Watch Hill Inn Condominium Association (WHICA) is a condominium association that was created by the Declaration and governs the units located at WHIC. Id. at ¶ 4.

From 1986 to 2005, Watch Hill Inn was renovated and upgraded to include sixteen efficiency hotel units, one residential apartment, a banquet facility for 200 persons, and an indoor/outdoor restaurant for 180 patrons. Id. at ¶ 5. After the Watch Hill Inn was cited for sixty-five violations under the Rhode Island Fire Codes, it was forced to shut down to conform to the new regulations. Catalano Aff. ¶ 9, June 1, 2017. WHI appealed to the State of Rhode Island Rehab Board and was eventually approved for a continued, nonconforming "mixed-use status." Id. at ¶ 10. RGB Architects (RGB) then prepared the condominium plans and specifications, which were subsequently filed with the Town of Westerly Building and Zoning Departments, the Department of Environmental Management (DEM), Historic Landmark Preservations, and Coastal Resources. Catalano Aff. ¶ 6, Oct. 26, 2017. Due to these new regulations, WHI was approved for eleven units consisting of ten residential dwelling units and one restaurant. Id.

The Town of Westerly adopted Article XI, § 260-77—a parking regulation zoning ordinance—on October 16, 1998 in Chapter Number 1242, and readopted on May 12, 2003 in Chapter Number 1439 (the Zoning Ordinance). Specifically, the Zoning Ordinance states:

"A. Parking required. Any structure or use, erected or developed after the date of passage of this chapter, must provide off-street parking facilities . . . in accordance with the following regulations:

"(1) Residential dwelling: two car spaces for each dwelling unit.

"(2) Hotels/motels and inns: one space per room plus one for every three employees on the largest shift, plus one space per four seats capacity of all meeting/assembly rooms and associated restaurants.

. . . .

"B. Plans and specifications for parking facilities. Plans and specifications for the required parking facility and its access drives shall be submitted at the time of application for a permit for the main use. In allocating area for off-street parking facilities, each parking space shall have a minimum width of nine feet, a minimum length of 18 feet and shall be served by suitable aisles to permit access into all parking spaces. In no case shall the gross area per parking space be less than 270 square feet. Such plans and specifications shall include planted islands and buffers as well as a lighting plan." Unit Owners' Mem. in Supp. of Mot. for Partial Summ. J. (Unit Owners' Mot.), Ex. F.

On March 15, 2005, RGB prepared a site plan for Declarant with respect to the WHIC property (the RGB Parking Plan). The RGB Parking Plan identified twenty-three total spaces on the WHIC property, which were two handicapped spaces, three non-valet spaces, and eighteen valet spaces. Unit Owners' Mot., Ex. G. The RGB Parking Plan further regulated the non-handicapped parking spaces as follows: ten parking spaces were assigned to ten hotel units (one parking space per one hotel unit), eight parking spaces were designated for patrons at the restaurant (one parking space per four seats in a thirty-seat restaurant), and three parking spaces were designated for the restaurant's employees (one parking space per three employees in a nine-employee restaurant). Id. Essentially, the RGB Parking Plan complied with § 260-77(A)(2) of the Zoning Ordinance, thus recognizing the WHIC property at the time as a hotel, motel, or inn. See Unit Owners' Mot., Ex. F. The RGB Parking Plan predated the formation of the WHICA byseveral months. See Unit Owners' Mot., Ex. G; Pls.' Mem. in Obj. to Partial Summ. J. and in Supp. of Mot. for Summ. J. (WHI's Mot.), Ex. 1.

Additionally, WHI submitted a separate site plan for approval by the Town of Westerly dated October 12, 2005 relating to the WHIC property; this plan was approved by the Westerly Zoning Officer on November 4, 2005. This plan contained a parking plan which identified sixteen parking spaces on the WHIC property (the Town-Approved Parking Plan). Unit Owners' Mot., Ex. H. According to Declarant, these sixteen on-site compact "stacked" parking spaces were used primarily for the restaurant staff and also contained three required handicap spaces. Catalano Aff. ¶ 5, Oct. 26, 2017. The Town-Approved Parking Plan was in effect until July 21, 2006, when a subsequent plan was required with the First Amended Declaration. Id. at 7. According to the Unit Owners, however, a subsequent plan for parking was never filed.

Then, on January 15, 2006, WHI, along with the Operator, WHI Parking, negotiated with BSI, Inc. (BSI)—a corporation that owned an adjacent property to the WHIC property to which the Bayside Inn Motel Condominium Association (BSA) was located—to share parking spaces. Id. at ¶ 8. Their agreement was memorialized into the PMA. WHI's Mot., Ex. 1. Catalano, the Vice President of WHI, is also the President of BSI; WHI Parking is a wholly owned subsidiary company of WHI. Catalano Aff. ¶ 1, Oct. 26, 2017; WHI's Mot., Ex. 1. As stated in the PMA, the purpose of entering into such a transaction was for WHI Parking to "operate and manage the parking for the [WHI and BSI] Properties." WHI's Mot., Ex. 1, at 1. Furthermore, even though the PMA was entered into before both the WHICA and BSA had been created, the PMA nonetheless bound the Associations. As articulated therein,

"Whereas, the parking lot areas will be Common Elements of the Associations and while the land is owned by the Association, the parking operation will be managed by the Operator under this 'Parking Management Agreement', (the 'Agreement'), and. . . .

"Whereas, WHI and BSI intend to file their respective condominium documents with the State of Rhode Island and subsequently record the documents with the Town of Westerly, at which time WHI and BSI will transfer their property rights and ownership to their respective Association. Consequently, the Associations will replace WHI and BSI, and this Agreement will become binding between the Associations and the Operator at the time of the recordings . . . . All the obligations of the Parties contained herein will be preserved." Id. at 2.

The PMA is a lease with an initial term of forty-nine years with unlimited five-year options. With respect to the parking management services, the PMA stated in part:

"a. Management Services - In exchange for the Agreement, Operator will provide management services to operate the Properties parking lots, both assigned and non-assigned parking spaces, control the flow of traffic and maintain the fire lanes, direct delivery, screen unauthorized vehicles, and coordinate the reasonable parking needs of occupants, guests, deliveries, employees and renters during the periods of operation on an [sic] year round basis.

"b. Parking Spaces - The Parties agree Operator will take possession of all parking spaces . . . Operator may rent for profit the balance of

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