Opinion
PB-2011-2488
02-18-2022
CASHMAN EQUIPMENT CORPORATION, INC., Plaintiff, v. CARDI CORPORATION, INC.; SAFECO INSURANCE CO., INC.; RT GROUP, INC.; JAMES RUSSELL; STEVEN OTTEN; CARDI MATERIALS, LLC; SPECIALTY DIVING SERVICES, INC.; HALEY & ALDRICH, INC. Defendants, v. WESTERN SURETY COMPANY; RHODE ISLAND DEPARTMENT OF TRANSPORTATION, Third-Party Defendants.
Cashman Equipment Corporation, Inc. Michael A. Kelly, Esq. Cardi Corporation, Inc.; Safeco Insurance Co., Inc. Cardi Materials, LLC Jeremy Ritzenberg, Esq. RT Group, Inc.; James Russell; Steven Otten Mark P. Dolan, Esq. Specialty Diving Services, Inc. Moshe S. Berman, Esq. William M. Russo, Esq. Haley & Aldrich, Inc. Brian C. Newberry, Esq. Western Surety Company Michael A. Kelly, Esq. State, Department of Transportation Myles C. Beltram, Esq. Maxford O. Foster, Esq.
Providence County Superior Court
ATTORNEYS:
Cashman Equipment Corporation, Inc.
Michael A. Kelly, Esq.
Cardi Corporation, Inc.; Safeco Insurance Co., Inc. Cardi Materials, LLC
Jeremy Ritzenberg, Esq.
RT Group, Inc.;
James Russell; Steven Otten
Mark P. Dolan, Esq.
Specialty Diving Services, Inc.
Moshe S. Berman, Esq.
William M. Russo, Esq.
Haley & Aldrich, Inc.
Brian C. Newberry, Esq.
Western Surety Company
Michael A. Kelly, Esq.
State, Department of Transportation
Myles C. Beltram, Esq.
Maxford O. Foster, Esq.
DECISION
TAFT-CARTER, JUSTICE/MAGISTRATE
Before the Court for decision is Defendant Specialty Diving Services, Inc.'s (SDS) Motion for Final Judgment Pursuant to Rule 54(b) of the Superior Court Rules of Civil Procedure. Plaintiff Cashman Equipment Corporation, Inc. (Cashman) has filed an Objection to SDS's Motion. Jurisdiction is pursuant to G.L. 1956 § 8-2-14.
I
Facts and Travel
This case arises from the replacement of the Sakonnet River Bridge, which spans the Sakonnet River between the Towns of Tiverton and Portsmouth, Rhode Island (Project). See Cashman Equipment Corp., Inc. v. Cardi Corp., Inc., No. PB-2011-2488, 2021 WL 4398192, at *1 (R.I. Super. Sept. 20, 2021). In May 2011, Cashman, a subcontractor on the Project, filed an action for breach of contract and related claims against the Project's contractor, Defendant Cardi Corporation, Inc. (Cardi). Id. In turn, Cardi asserted multiple counterclaims against Cashman. Id.
In June 2014, Cashman filed its Fourth Amended Complaint in this case, adding SDS as a Defendant and bringing claims against SDS for breach of contract and indemnity and contribution. (Fourth Am. Compl. ¶¶ 478, 480.) In Count XXXIII of the Fourth Amended Complaint, Cashman asserted a breach of contract claim against SDS in connection with the parties' agreement that SDS would "perform all underwater aspects of the Marine Cofferdam installation" on the Project. Id. ¶ 472. Cardi alleged that the construction of the marine cofferdams was deficient in multiple respects and sought to hold Cashman liable for substantial repairs to the underwater portions of the marine cofferdams. Id. ¶¶ 473-77. Cashman charged that, if those allegations were proven true, SDS had materially breached its contract with Cashman by failing to properly construct the underwater components of the marine cofferdams and failing to notify Cashman of the obvious underwater deficiencies. Id. ¶ 478. In Count XXXIV of the Fourth Amended Complaint, Cashman sought indemnity from SDS if Cashman was found liable to Cardi for the costs of rectifying the issues set forth in Count XXXIII. Id. ¶ 480.
"A marine cofferdam is a temporary, watertight enclosure built in the water for specialized construction." Cashman Equipment Corp., Inc. v. Cardi Corp., Inc., No. PB-2011-2488, 2021 WL 4398192, at *2 (R.I. Super. Sept. 20, 2021) (citations omitted). The design and construction of marine cofferdams were "key portion[s]" of the Project. Id.
On June 9, 2017, Cashman filed a voluntary petition in the United States Bankruptcy Court for the District of Massachusetts (the Bankruptcy Court) for relief under Chapter 11 of Title 11 of the United States Code (the Bankruptcy Code). See Suggestion of Bankruptcy 1. Pursuant to 11 U.S.C. § 362(a), Cashman's bankruptcy petition operated as an automatic stay in the instant case. On June 4, 2018, the Bankruptcy Court granted Cardi's Motion for Relief from the Automatic Stay to Pursue Pending Litigation. See Pl.'s Obj. to Specialty Diving Services, Inc.'s Mot. for Final J. Pursuant to Rule 54(b) Ex. D, 2. "Specifically, Cardi [was] granted relief from the automatic stay to pursue" its claims against Cashman in this action. Id. On December 14, 2018, the Bankruptcy Court entered a Confirmation Order confirming Cashman's Plan of Reorganization; subject to 11 U.S.C. § 1141 and the terms of the Plan, the Confirmation Order thereby discharged any and all of Cashman's debts that arose before the Effective Date of the Plan. See Pl.'s Obj. to Specialty Diving Services, Inc.'s Mot. for Final J. Pursuant to Rule 54(b) Ex. F, 15-16.
On April 30, 2019, SDS filed a Motion for Summary Judgment as to Counts XXXIII and XXXIV of Cashman's Fourth Amended Complaint. (Def. SDS's Mot. Summ. J. 1.) On May 17, 2019, Cashman filed an Opposition to SDS's Motion for Summary Judgment. (Cashman's Opp'n Def. SDS's Mot. Summ. J. 1.) On July 1, 2019, this Court denied SDS's Motion for Summary Judgment. (Order, filed July 1, 2019 (Taft-Carter, J.) 8.) In September 2019, Cashman filed its Fifth Amended Complaint. In Counts XXXIII and XXXIV of the Fifth Amended Complaint, Cashman reasserted the identical breach of contract and indemnification claims against SDS raised in the Fourth Amended Complaint. See Fifth Am. Compl. ¶¶ 451-59.
In October 2019, Cashman proceeded to a non-jury trial against Cardi and SDS. Cashman Equipment Corp., Inc., 2021 WL 4398192, at *1. The trial proceeded for forty-three days, through February 2020, and the evidence at trial included hundreds of exhibits and testimony from eighteen witnesses. Id. After Cashman had presented its case-in-chief, SDS filed a Motion for Judgment as a Matter of Law pursuant to Rule 52(c) of the Superior Court Rules of Civil Procedure. Id. at *2.
On February 18, 2020, this Court granted SDS's Motion for Judgment as a Matter of Law. (Trial Tr. 13:4-10, Feb. 18, 2020.) Cashman's claims against SDS for breach of contract and indemnification and contribution rested on four factual allegations:
"One, the cofferdam tremie floor placement was defective in that it did not achieve the two-foot tremie thickness called for in the design; two, the cofferdam tremie placement was defective in that concrete bags were thrown into the tremie well at each 72-inch pile; three, that certain unauthorized modifications, such as flange section removals, were made to the steel frame after it was placed underwater; and, four, other defective work regarding various components of the steel frame, such as missing bolts and nuts, loose nuts and bolts, and missing washers, and missing shims between the precast panels and steel beams." Id. at 3:2-13.
On Cashman's first factual allegation, this Court found that the "record of [the] trial [was] clear, with credible evidence, indicating that SDS played no role in ensuring the thickness of the tremie concrete." Id. at 7:13-16. On the second allegation, "Cashman [had] conceded that there was no evidence demonstrating that SDS threw concrete bags into the marine cofferdams to seal gaps as alleged in paragraph 453 of its Fifth Amended Complaint." Id. at 8:21-24. On the third allegation, this Court found that there was "no evidence showing, in any way, shape, or form, that SDS made any unauthorized modification to the steel frame after it was placed in the water." Id. at 9:19-21.
With respect to the fourth allegation, SDS performed underwater inspections of the marine cofferdams in October 2010 and December 2010; because only the December inspection revealed the deficiencies at issue, Cashman had alleged that SDS breached its contractual obligation to inspect for those deficiencies in October. See id. at 10:3-6, 12:25-13:3. However, the evidence at trial showed that, "[u]nlike the December 2010 dives, no one instructed" SDS as "to the specifics of what to inspect" in October 2010. Id. at 11:10-15. Moreover, "[b]ased on the credible trial evidence, . . . Cashman had notice of the underwater deficiencies before the dive took place." Id. at 12:15-17. Accordingly, the Court found that in October 2010, "SDS did not have a contractual obligation to inspect for those underwater deficiencies that were later discovered . . . ." Id. at 12:25-13:3. As a result, Cashman failed to establish that SDS had breached any obligations owed to Cashman, and SDS was entitled to judgment as a matter of law on Cashman's claims for breach of contract and indemnification and contribution. Id. at 13:4-10.
On March 6, 2020, SDS filed a Motion for an Award of Attorneys' Fees and Recovery of Costs. (Def. SDS's Mot. Award Att'ys' Fees Recovery Costs 1.) SDS sought attorneys' fees under G.L. 1956 § 9-1-45, which provides that "[t]he court may award a reasonable attorney's fee to the prevailing party in any civil action arising from a breach of contract in which the court . . . [f]inds that there was a complete absence of a justiciable issue of either law or fact raised by the losing party[.]" Section 9-1-45. On March 6, 2020, SDS also filed a Motion for Entry of Separate Judgment on the Order granting SDS's Rule 52(c) motion. (Def. SDS's Mot. Separate J. Pursuant to Rules 54(b) and 52(c) 1.) On May 29, 2020, Cashman filed an Opposition to SDS's Motion for Attorneys' Fees and Costs. (Pl.'s Opp'n Def. SDS's Mot. Att'ys' Fees and Costs 1.)
On September 14, 2020, this Court granted SDS's Motion for Attorneys' Fees based on the finding that "Cashman failed to provide any 'validly raised and amply supported questions of fact and law' in its claims against SDS." (Order, filed Sept. 14, 2020 (Taft-Carter, J.) 4) (quoting ADP Marshall, Inc. v. Noresco, LLC, 710 F.Supp.2d 197, 241 (D.R.I. 2010)). The Court reserved the issue of the amount and reasonableness of the awarded fees and directed the parties to mediation to attempt to resolve that issue. Id. at 4-5.
In October 2020, Cashman filed a Motion for this Court to Reconsider its Decision to grant SDS's Motion for Judgment as a Matter of Law. (Pl.'s Mot. for Court to Reconsider Decision Granting SDS's Mot. J. as a Matter of Law 1.) In November 2020, Cashman filed a Motion for this Court to Reconsider its Decision to Grant SDS's Motion for Attorneys' Fees. (Pl.'s Mot. for Court to Reconsider Decision Awarding SDS's Mot. Att'ys' Fees 1.) On March 17, 2021, this Court denied Cashman's Motions for Reconsideration. (Order, filed Mar. 17, 2021 (Taft-Carter, J.) 1.)
On June 11, 2021, Cashman and SDS filed a Joint Stipulation Regarding the Reasonableness of Attorneys' Fees and Costs. See Def. SDS's Reply Supp. Mot. Final J. Pursuant to Rule 54(b) Ex. A. The Joint Stipulation separately identified the "Pre-Trial Fees" that SDS incurred from June 17, 2014 through October 29, 2019 and the "Trial Fees" that SDS incurred from October 30, 2019 through February 18, 2020. Id. at Ex. A, 1-2. The parties also agreed that, apart from the issue of the reasonableness of the fees and costs awarded, Cashman reserved the right to appeal this Court's decisions to grant SDS's Rule 52(c) Motion and award SDS attorneys' fees under § 9-1-45. See id. at Ex. A, 2-3. On August 6, 2021, this Court entered an Order awarding SDS fees and costs in the total amount stipulated. (Order, filed Aug. 6, 2021 (Taft-Carter, J.) 1.)
On August 16, 2021, SDS filed the present Motion for Final Judgment Pursuant to Rule 54(b). (Def. SDS's Mot. Final J. Pursuant to Rule 54(b) 1.) Cashman filed an Objection on October 25, 2021. (Pl.'s Obj. SDS's Mot. Final J. Pursuant to Rule 54(b) 1.) On October 27, 2021, SDS submitted a Reply to Cashman's Objection. (Def. SDS's Reply Supp. Mot. Final J. Pursuant to Rule 54(b) 1.) Cashman then filed a Reply on December 9, 2021. (Pl.'s Reply in Further Supp. Obj. SDS's Mot. Final J. Pursuant to Rule 54(b) 1.)
On September 20, 2021, this Court issued its decision with respect to liability on Cashman's marine cofferdam claims against Cardi and Cardi's counterclaims. See Cashman Equipment Corp., Inc., 2021 WL 4398192, at *1, *47. The damages phase of the marine cofferdam trial is currently scheduled to begin on May 2, 2022. (Order, filed Jan. 24, 2022 (Taft-Carter, J.)
1.) That trial will also address the liability and damages issues of the parties' "Type F" claims, which do not implicate SDS. Id.
II Standard of Review
Under Rule 54(b) of the Superior Court Rules of Civil Procedure,
"[w]hen more than one (1) claim for relief is presented in an action, whether as a claim, counterclaim, cross-claim, or third party claim, or when multiple parties are involved, the court may direct the entry of a final judgment as to one (1) or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment." Super. R. Civ. P. 54(b).
Consideration of a motion for the entry of final judgment under Rule 54(b) entails a "two-part inquiry." Cathay Cathay, Inc. v. Vindalu, LLC (Cathay Cathay II), 136 A.3d 1113, 1118 (R.I. 2016) (citing Metro Properties, Inc. v. National Union Fire Insurance Co. of Pittsburgh, Pa., 934 A.2d 204, 207 (R.I. 2007)). First, the Court must confirm that the action "'involved either multiple parties or multiple claims'" and that the Court has "'adjudicated one or more but fewer than all of the claims'" at issue. Id. at 1118-19 (quoting Metro Properties, Inc., 934 A.2d at 207). "Adjudication requires the final, deliberate resolution of a dispute." Id. at 1119 (first citing Black's Law Dictionary 50 (10th ed. 2014); then citing Kalven v. City of Chicago, 7 N.E.3d 741, 745 (Ill.App.Ct. 2014)).
Second, the Court must determine whether "there [is] no just reason to delay entry of final judgment" on the adjudicated claims. Astro-Med, Inc. v. R. Moroz, Ltd., 811 A.2d 1154, 1157 (R.I. 2002). In performing this inquiry, the Court "'must take into account judicial administrative interests as well as the equities involved.'" Id. at 1156 (quoting Curtiss-Wright Corp. v. General Electric Co., 446 U.S. 1, 8 (1980)). "Thus, a motion justice should consider any 'transactional relationship between a remaining unadjudicated claim and a claim that has been disposed of,' as well as the possibility of overlapping appeals, and uneconomic use of judicial resources." Metro Properties, Inc., 934 A.2d at 207 (quoting Astro-Med, Inc., 811 A.2d at 1156-57). Ultimately, "[a] hearing justice should enter final judgment under Rule 54(b) only in 'unusual and compelling circumstances.'" Astro-Med, Inc., 811 A.2d at 1158 (quoting Spiegel v. Trustees of Tufts College, 843 F.2d 38, 45 (1st Cir. 1988)).
III
Analysis
A
Rule 54(b): Adjudicated Claims
In its Motion for Final Judgment, SDS submits that this Court's previous Orders have fully resolved all issues between SDS and Cashman. (Def. SDS's Mot. Final J. Pursuant to Rule 54(b) 1.) SDS also notes that multiple issues remain unresolved between Cashman and other parties to this case. Id. Cashman does not dispute either contention. See Pl.'s Reply in Further Supp. Obj. SDS's Mot. Final J. Pursuant to Rule 54(b); Pl.'s Obj. SDS's Mot. Final J. Pursuant to Rule 54(b).
As previously noted, the present case involves multiple parties and multiple claims. See Cashman Equipment Corp., Inc., 2021 WL 4398192, at *1. In granting SDS's Motion for Judgment as a Matter of Law on both counts of Cashman's claims against SDS, this Court "adjudicated one or more but fewer than all of the claims" in this case and set out factual findings and conclusions of law in support of that decision. Metro Properties, Inc., 934 A.2d at 207 (citing Westinghouse Broadcasting Co. v. Dial Media, Inc., 122 R.I. 571, 577, 410 A.2d 986, 989 (1980)); cf. Cathay II, 136 A.3d at 1119 ("[F]or a judicial determination to constitute a partial final judgment in a nonjury trial[, ] . . . it must contain, at the very minimum, a factual finding and a conclusion of law on each cause of action adjudicated[.]" (citing Cathay Cathay, Inc. v. Vindalu, LLC, 962 A.2d 740, 747-48 (R.I. 2009))).
This Court has also granted SDS's Motion for an Award of Attorneys' Fees and Recovery of Costs and entered an Order awarding attorneys' fees and costs to SDS in the amount stipulated to by SDS and Cashman. See Order, filed Aug. 6, 2021 (Taft-Carter, J.); Order, filed Sept. 14, 2020 (Taft-Carter, J.). Trial is currently scheduled to begin on May 2, 2022 on the damages phase of the marine cofferdam trial and the liability and damages issues of the parties' "Type F" claims. (Order, filed Jan. 24, 2022 (Taft-Carter, J.) 1.) Accordingly, the first prong of the Rule 54(b) inquiry is satisfied as this Court has finally and deliberately resolved Cashman's claims against SDS, which only comprise a subset of the multiple claims in this case. See Cathay Cathay II, 136 A.3d at 1118-19.
B
Rule 54(b): Just Reasons for Delay
SDS also submits that, because the remaining litigants in this case still plan to proceed to trial on multiple issues, there is no just reason to delay entry of final judgment under Rule 54(b) on the claims specific to SDS. Def. SDS's Mot. Separate J. Pursuant to Rules 54(b) and 52(c) 3; Def. SDS's Mot. Final J. Pursuant to Rule 54(b) 1. Objecting, Cashman argues that any claims SDS could assert against Cashman in connection with this case were discharged by the Bankruptcy Court's December 2018 confirmation of Cashman's Plan of Reorganization because SDS failed to file a proof of claim in Cashman's bankruptcy proceedings. (Pl.'s Obj. SDS's Mot. Final J. Pursuant to Rule 54(b) 2-6) (citing 11 U.S.C. §§ 524(a), 1141(d)(1)(A)). As a result, Cashman argues that entry of final judgment under Rule 54(b) is precluded because any judgment establishing Cashman's liability to SDS for attorneys' fees and costs would be void as a matter of law. Id. at 7.
SDS replies to Cashman's bankruptcy discharge argument by noting that, under federal law, confirmation of a plan of reorganization does not discharge claims which arise after the date of confirmation. (Def. SDS's Reply Supp. Mot. Final J. Pursuant to Rule 54(b) ¶¶ 2-3) (first citing 11 U.S.C. § 1141(d)(1)(A); then citing Holywell Corp v. Smith, 503 U.S. 47, 58-59 (1992)). According to SDS, the claim against Cashman for attorneys' fees is a non-discharged, post-confirmation claim that only arose when Cashman put its case against SDS into the record before this Court at trial. Id. ¶ 1. SDS also contends that Cashman has waived the bankruptcy discharge argument by failing to previously raise that issue and notes that Cashman entered into a Joint Stipulation resolving the issue of the reasonableness of the fees sought by SDS and preserving Cashman's right to appeal SDS's entitlement to those fees. Id. ¶¶ 5-6.
Cashman responds by arguing that SDS knew or should have known of the "contingent claim" for attorneys' fees under § 9-1-45 when Cashman filed for bankruptcy after having already asserted claims against SDS in the instant case. (Pl.'s Reply in Further Supp. Obj. SDS's Mot. Final J. Pursuant to Rule 54(b) 4.) Accordingly, Cashman argues that SDS's § 9-1-45 claim arose prior to the confirmation of Cashman's Plan of Reorganization and was discharged due to SDS's failure to preserve the claim through the bankruptcy proceedings. Id. In support, Cashman cites the broad definition of "claim" given at 11 U.S.C. § 101(5) and two First Circuit bankruptcy cases applying that definition. Id. at 2-4 (first citing In re Hemingway Transport, Inc., 954 F.2d 1 (1st Cir. 1992); then citing In re CD Realty Partners, 205 B.R. 651 (Bankr. D. Mass. 1997)). Cashman also argues that discharge in bankruptcy is an "'absolute, nonwaivable defense.'" Id. at 5 (quoting Lone Star Security & Video, Inc. v. Gurrola, 328 B.R. 158, 170 (B.A.P. 9th Cir. 2005)).
Pursuant to 11 U.S.C. § 524(a), a discharge in bankruptcy
"voids any judgment at any time obtained, to the extent that such judgment is a determination of the personal liability of the debtor with respect to any debt discharged under section 727, 944, 1141, 1192, 1228, or 1328 of this title, whether or not discharge of such debt is waived[.]" 11 U.S.C. § 524(a).
State courts possess concurrent jurisdiction over the question of whether a particular debt has been discharged. See Taggart v. Lorenzen, 139 S.Ct. 1795, 1803 (2019). However, the no-waiver provision of § 524(a) "suggest[s] that a state-court judgment that modifies a bankruptcy court's discharge order is void ab initio[.]" In re Hamilton, 540 F.3d 367, 375 (6th Cir. 2008). Under the Bankruptcy Code, "the confirmation of a plan of reorganization 'discharges the debtor from any debt that arose before the date of such confirmation.'" In re CD Realty Partners, 205 B.R. at 655 (quoting 11 U.S.C. § 1141(d)(1)(A)). In turn, "[a]s defined and used in the Bankruptcy Code, 'debt' means 'liability on a claim[.]'" Id. (quoting 11 U.S.C. § 101(12)). A "claim" is a "right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured[.]" 11 U.S.C. § 101(5)(A). "Congress deliberately included contingent claims in the definition . . . to permit 'the broadest possible relief in the bankruptcy court[.]'" In re CD Realty Partners, 205 B.R. at 656 (quoting In re Hemingway Transport, Inc., 954 F.2d at 8).
Although "'every future event and right to payment is to some extent contingent on some preconfirmation state of affairs, . . . not every postconfirmation right to payment was, prior to confirmation, a contingent claim.'" In re Reardon, 566 B.R. 119, 127 (Bankr. D. Mass. 2017) (quoting In re CD Realty Partners, 205 B.R. at 656). "'[T]o be a contingent claim, a postconfirmation right to payment must have some significant root in the preconfirmation past.'" Id. (quoting In re CD Realty Partners, 205 B.R. at 656). One commonly used test "essentially involves two prongs: 'the Court must determine first what event or series of events 'triggers' [the] liability and then whether the occurrence of that event either was or could fairly have been contemplated by the parties before confirmation of the plan.'" Reyes v. Standard Parking Corp., 461 B.R. 153, 159 (D.R.I. 2011) (quoting In re CD Realty Partners, 205 B.R. at 657); cf. In re Hemingway Transport, Inc., 954 F.2d at 9 (finding "a right to payment contingent on a future occurrence reasonably within the contemplation of the parties as evidenced by the terms of [their] indemnification agreement"). Also relevant in this context is "'the general principle that only liabilities arising from pre-petition acts are discharged in bankruptcy.'" In re Ruben, 774 F.3d 1138, 1141 (7th Cir. 2014) (quoting In re Hadden, 57 B.R. 187, 190 (Bankr. W.D. Wis. 1986)).
On the specific issue of claims for attorneys' fees, multiple federal courts have "endorsed the notion that by voluntarily continuing to pursue litigation post-petition that had been initiated pre-petition, a debtor may be held personally liable for attorney fees and costs that result from that litigation." In re Ybarra, 424 F.3d 1018, 1024 (9th Cir. 2005); cf. In re Ruben, 774 F.3d at 1140-41; In re Sure-Snap Corp., 983 F.2d 1015, 1018 (11th Cir. 1993). The rationale is the distinction between situations where the question of "whether actual liability would attach to [the debtor] was contingent upon what others might do" and situations where the debtor "chose to return to the fray" by pursuing litigation. Siegel v. Federal Home Loan Mortgage Corp., 143 F.3d 525, 533 (9th Cir. 1998). As a result, even when attorneys' fees are awarded pursuant to a preexisting contract between a creditor and a debtor, those fees "will not always [have been] in the 'fair contemplation' of the parties" before the confirmation of a plan of reorganization. In re Castellino Villas, A. K. F. LLC, 836 F.3d 1028, 1034 (9th Cir. 2016) (citations omitted). "No doubt the future is always contingent, but that does not mean that a bankrupt is discharged regarding everything [it] might do in the future." Siegel, 143 F.3d at 532.
Here, Cashman argues that SDS's "contingent claim" for fees pursuant to § 9-1-45 was discharged through Cashman's bankruptcy proceedings because "SDS was well aware of the details, nature and merits of [Cashman]'s claims against SDS, and SDS knew, or should have known, that it had a claim against [Cashman] under . . . § 9-1-45" when Cashman filed for bankruptcy. (Pl.'s Reply Further Supp. Obj. SDS's Mot. Final J. Pursuant Rule 54(b) 4.) Cashman also contends that "at least part of SDS' claim for attorney's fees was not contingent when [Cashman] filed bankruptcy," as SDS had already incurred a portion of its attorneys' fees in this case, and concludes that the "situation here is no different than the situation in both Hemingway Transport and CD Realty[.]" Id.
This Court cannot agree. The Rhode Island Supreme Court has continually reaffirmed its "staunch adherence to the 'American rule' that requires each litigant to pay its own attorney's fees absent statutory authority or contractual liability." Moore v. Ballard, 914 A.2d 487, 489 (R.I. 2007) (footnote omitted) (citing Eleazer v. Ted Reed Thermal, Inc., 576 A.2d 1217, 1221 (R.I. 1990)); cf. Travelers Casualty & Surety Co. of America v. Pacific Gas & Electric Co., 549 U.S. 443, 450- 51 (2007) (noting that state law generally governs the substance of claims in bankruptcy cases). SDS's award of attorneys' fees rests on statutory authority rather than any prior contractual arrangement between SDS and Cashman. Cf. In re Hemingway Transport, Inc., 954 F.2d at 4 (discussing award of attorneys' fees pursuant to litigants' preexisting indemnification agreement). The statute in question conditions the Court's ability to award attorneys' fees to a prevailing party in a breach of contract case on the "complete absence of a justiciable issue of either law or fact raised by the losing party[.]" Section 9-1-45; see Greensleeves, Inc. v. Smiley, 942 A.2d 284, 287 n.3 (R.I. 2007) (noting that fees were awarded pursuant to § 9-1-45 for "frivolous" appeal). For that reason, Cashman's liability for SDS's fees-in any amount-was not "triggered" until SDS prevailed on its Motion for Judgment as a Matter of Law at trial and this Court subsequently determined that Cashman had failed to raise a justiciable issue of law or fact on the claims against SDS. Reyes, 461 B.R. at 159.
Under the "fair contemplation" test, SDS's § 9-1-45 claim was discharged by Cashman's bankruptcy proceedings only if the triggering events "'could fairly have been contemplated by the parties before confirmation'" of the Plan of Reorganization. Id. (quoting In re CD Realty Partners, 205 B.R. at 657); see In re Castellino Villas, A. K. F. LLC, 836 F.3d at 1037 ("The pertinent question is whether the right to obtain attorneys' fees in the litigation is within the fair contemplation of the parties[.]"). In other words, at the time of Cashman's bankruptcy petition, SDS would have had to foresee that Cashman would ultimately fail to raise any justiciable issues of law or fact in support of the claims against SDS. Given Cashman's control over its own conduct in pursuing the claims against SDS through trial, SDS could not fairly and reasonably have contemplated that outcome. See In re Castellino Villas, A. K. F. LLC, 836 F.3d at 1034-35.
Besides the existence of an "adequate legal basis" for attorneys' fees, from that vantage point SDS would also have had to forecast how the Court would exercise its "considerable discretion" in deciding whether to award fees under § 9-1-45. Danforth v. More, 129 A.3d 63, 72 (R.I. 2016); cf. In re Water Valley Finishing, Inc., 139 F.3d 325, 329 (2d Cir. 1998) (finding that prevailing party could not "have contemplated the sua sponte imposition of sanctions in its favor" by federal district court "over a year before the award was made"). "At some point . . . a right to payment becomes so contingent that it cannot fairly be deemed a right to payment at all." In re CD Realty Partners, 205 B.R. at 656.
Cashman's argument to the contrary-that SDS should have anticipated its eventual § 9-1-45 claim because SDS was "well aware of the details, nature and merits of [Cashman]'s claims" when Cashman filed for bankruptcy-would effectively penalize SDS for having failed to preemptively call Cashman's bluff. (Pl.'s Reply in Further Supp. Obj. SDS's Mot. Final J. Pursuant to Rule 54(b) 4.) Putting the onus on creditors to predict a debtor's "'post-petition pursuit of dubious claims'" would run contrary to the purposes of both § 9-1-45 and the Bankruptcy Code, which aims to "'provide the debtor with reasonable exemptions and a fresh start.'" In re Ruben, 774 F.3d at 1141 (quoting In re Hadden, 57 B.R. at 190). "Even if a cause of action arose pre-petition, the discharge shield cannot be used as a sword that enables a debtor to undertake risk-free litigation at others' expense." In re Ybarra, 424 F.3d at 1026 (citing Siegel, 143 F.3d at 533-34).
In that respect, and without holding that Cashman has waived the discharge in bankruptcy argument, the Court also notes that Cashman opted not to raise that argument in its Opposition to SDS's Motion for Attorneys' Fees and Costs, its Motion for this Court to Reconsider its Decision to Grant SDS's Motion for Attorneys' Fees, or the parties' Joint Stipulation Regarding the Reasonableness of Attorneys' Fees and Costs.
Consequently, the Court does not agree with Cashman that any entry of final judgment on SDS's § 9-1-45 award would necessarily be void as a violation of the Bankruptcy Court's discharge order. In any event, although Cashman primarily relies on the discharge in bankruptcy argument to oppose SDS's Motion for Final Judgment, this Court's entry of a separate judgment would have legal effect beyond SDS's ability to collect fees and costs. "[A] judgment entered as to one of several claims" under Rule 54(b) "is a final judgment and is immediately subject to appeal; the time for claiming such an appeal commences to run upon the entry of judgment pursuant to the separate document requirement in Rule 58(a)." Robert B. Kent et al., Rhode Island Civil and Appellate Procedure, § 54:3 (2018) (footnote omitted); see also Metro Properties, Inc., 934 A.2d at 207 ("Pursuant to G.L. 1956 § 9-24-1, an appeal may be taken only from a 'final judgment, decree, or order of the superior court.'") (internal quotation omitted). The entry of judgment would start the clock on Cashman's opportunity to appeal both this Court's ruling in favor of SDS on the Motion for Judgment as a Matter of Law on Counts XXXIII and XXXIV of Cashman's Fifth Amended Complaint and this Court's decision to award SDS attorneys' fees pursuant to § 9-1-45.
Nevertheless, after "'tak[ing] into account judicial administrative interests as well as the equities involved[, ]'" the Court cannot conclude that there is no just reason for delay under Rule 54(b). Metro Properties, Inc., 934 A.2d at 207 (quoting Astro-Med, Inc., 811 A.2d at 1156). This portion of the Rule 54(b) inquiry requires the Court to consider "any 'transactional relationship between a remaining unadjudicated claim and a claim that has been disposed of,' as well as the possibility of overlapping appeals, and uneconomic use of judicial resources." Id. (quoting Astro- Med, Inc., 811 A.2d at 1156-57).
Here, the "true crux" of this Court's September 2021 decision involved Cashman and Cardi's "competing contract claims stemming from the provision of engineering plans for the marine cofferdams at Piers 4, 5, and 6" of the Sakonnet River Bridge "and the deviation from those plans." Cashman Equipment Corp., 2021 WL 4398192, at *20. In turn, Cashman's claims against SDS implicated many of the same factual issues at the heart of Cashman and Cardi's dispute over the marine cofferdams. Compare id. at *11-*13 (discussing Cashman's deviation from marine cofferdam plans and December 2010 dive inspections of marine cofferdams), *15-*17 (discussing issues with marine cofferdams' steel frames), and *16 (discussing issues with tremie concrete), with Trial Tr. 3:1-13, Feb. 18, 2020 (discussing Cashman's "factual allegations against SDS[, ]" including defects in cofferdam tremie floor, unauthorized modifications to cofferdams' steel frames, and defective work on steel frames). Although this Court's September 2021 decision marked the end of the liability phase of the marine cofferdam trial, multiple issues still must be adjudicated between Cashman, Cardi, and the other remaining parties before final judgment can enter on all marine cofferdam claims. See Cashman Equipment Corp., 2021 WL 4398192, at *47; Order, filed Jan. 24, 2022 (Taft-Carter, J.) 1 (scheduling damages phase of the marine cofferdam trial, and liability and damages phases of the parties' "Type F" claims, for trial on May 2, 2022).
As a result, the entry of separate judgment on Cashman's marine cofferdam claims against SDS "'raises the spectre of overlapping appeals and the attendant possibility of an uneconomical use of judicial resources.'" Astro-Med, Inc., 811 A.2d at 1157 (quoting Westinghouse Broadcasting Co., 122 R.I. at 578, 410 A.2d at 990). In Astro-Med, Inc., the Rhode Island Supreme Court upheld an entry of separate judgment under Rule 54(b) where the adjudicated and unadjudicated claims were "factually and legally distinct" and "any effort spent learning the facts in [the] case would not be duplicated if [the Supreme Court] later reviewed [the unadjudicated] counterclaims." Id. By contrast, Cashman's marine cofferdam claims against SDS are firmly embedded in the larger context of this case, which is technically complex and involves multiple disputed issues of fact. See Cashman Equipment Corp., 2021 WL 4398192, at *1-*19 (discussing liability phase of marine cofferdam trial and making findings of fact); cf. Westinghouse Broadcasting Co., 122 R.I. at 578, 410 A.2d at 990 ("The facts underlying each claim, however, are uncomplicated and little contested. Thus, we attach little significance to the transactional relationship[.]").
The Court recognizes that the equities involved weigh in favor of SDS, which incurred substantial attorneys' fees in successfully defending against a breach of contract claim that lacked any justiciable issues of fact or law. However, the interests of sound judicial administration provide a just reason to delay the entry of final judgment. The Rhode Island Supreme Court has expressed a "strong preference for 'avoid[ing] piecemeal appellate review by delaying entry of judgment until all claims involving all parties are ripe for disposition and entering judgment as to all only when that time arrives.'" Cathay Cathay II, 136 A.3d at 1121 (quoting Metro Properties, Inc., 934 A.2d at 207). Postponing the entry of final judgment until the "complete and final resolution of the case" will promote the efficient use of judicial resources and allow the Supreme
Court "to avoid the unnecessarily tedious and inefficient task of 'having to keep relearning the facts of a case on successive appeals.'" Id. (quoting Astro-Med, Inc., 811 A.2d at 1156).
The Court also notes that this case has already reached the Rhode Island Supreme Court in connection with a dispute over expert witness disclosures pursuant to Rule 26(b)(4)(A) of the Superior Court Rules of Civil Procedure. See Cashman Equipment Corp., Inc. v. Cardi Corp., Inc., 139 A.3d 379, 382-83 (R.I. 2016).
IV Conclusion
For the foregoing reasons, Defendant SDS's Motion for Final Judgment Pursuant to Rule 54(b) is denied. Counsel shall prepare the appropriate order for entry.