Opinion
WC-2020-0346 WC-2020-0471 WD-2021-0065
01-14-2022
GREEN DEVELOPMENT, LLC, d/b/a WIND ENERGY DEVELOPMENT, LLC v. EXETER REAL ESTATE HOLDINGS, LLC, d/b/a EREH, LLC; KEVIN CASEY, individually and as Manager of EREH, LLC; REVITY ENERGY LLC; and RALPH A. PALUMBO, individually and as Manager of REVITY ENERGY LLC GREEN DEVELOPMENT, LLC, d/b/a WIND ENERGY DEVELOPMENT, LLC v. EXETER REAL ESTATE HOLDINGS, LLC, d/b/a EREH, LLC KEVIN CASEY, individually and as Manager of EREH, LLC; REVITY ENERGY LLC; and RALPH A. PALUMBO, individually and as Manager of REVITY ENERGY, LLC, EXETER REAL ESTATE HOLDINGS, LLC d/b/a EREH, LLC; v. GREEN DEVELOPMENT, LLC d/b/a WIND ENERGY DEVELOPMENT, LLC
For Plaintiffs: John O. Mancini, Esq.; Michael L. Mineau, Esq.; Thomas E. Carlotto, Esq. For Defendants: James G. Atchinson, Esq.; Joelle C. Rocha, Esq.; Thomas E. Carlotto, Esq.; Michael L. Mineau, Esq.; John O. Mancini, Esq.
Washington County Superior Court
For Plaintiffs: John O. Mancini, Esq.; Michael L. Mineau, Esq.; Thomas E. Carlotto, Esq.
For Defendants: James G. Atchinson, Esq.; Joelle C. Rocha, Esq.; Thomas E. Carlotto, Esq.; Michael L. Mineau, Esq.; John O. Mancini, Esq.
DECISION
LICHT, J.
This Decision in these consolidated cases is rendered following a three-day bench trial which occurred on November 22-24, 2021.
I
DEFINED TERMS
Defined terms are used throughout this Decision, and the short form of each term is contained in parentheses after the first time the term appears in the Decision. Because so many different terms are used in this opinion on multiple occasions, the Court provides the following list of defined terms in order to better enable the reader to find a definition without having to search the entire document.
1. The Parties, Key Individuals and Witnesses
"Brusini" refers to Stephen M Brusini, Esq., general legal counsel to Green Development, LLC.
"Casey" refers to Kevin Casey, the managing member of EREH.
"Darrow" refers to Zachary Darrow, Esq., a partner at DarrowEverett, LLC and licensed real estate broker in the State of Rhode Island.
"DarrowEverett" refers to the law firm DarrowEverett, LLC, which, at various times, represented the interests of EREH, Casey and Revity. "DePasquale" refers to Mark DePasquale, the managing member of Green Development, LLC.
"DiPrete" refers to DiPrete Engineering, a Providence-based, civil engineering firm with expertise in utility-grade solar development projects.
"EREH" refers to Defendant Exeter Real Estate Holdings, LLC, a Delaware limited liability company registered with the Rhode Island Secretary of State as a foreign limited liability company.
"Everett" refers to Eric Everett, Esq., a partner at DarrowEverett, LLC.
"Green" refers to Plaintiff Green Development, LLC, a Delaware limited liability company registered with the Rhode Island Secretary of State as a foreign limited liability company.
"Palumbo" refers to Ralph Palumbo, one of the principals of Revity Energy, LLC.
"Revity" refers to Defendant Revity Energy, LLC, a Delaware limited liability company registered with the Rhode Island Secretary of State as a foreign limited liability company.
"Town" refers to the Town of Exeter, Rhode Island.
2. Key Assets or Properties
"Large Parcel" refers to EREH's 118-acre parcel less the Small Parcel as contemplated by the Green Option and subsequent amendments.
"Property" means a 118-acre parcel of vacant land in Exeter, Rhode Island, held by EREH.
"Small Parcel" refers to four to six acres of EREH's 118-acre parcel as contemplated by the Solar Lease and subsequent amendment.
3. Key Projects
"Replacement Combined Project" refers to Green's resubmission of the WED Ridge Project, along with three additional property applications, to the Town of Exeter's Planning Board on November 19, 2018.
"Revity Solar Project" refers to Revity and EREH's application for a solar project to the Town of Exeter.
"WED Ridge Project" refers to the 20+ MW solar project (inclusive of both the Small Parcel and Large Parcel) originally submitted by Green to the Town of Exeter's Planning Board on August 9, 2017.
4. Key Documents
"Darrow Everett Trilogy" refers to letters from DarrowEverett to Green or its attorneys dated July 20, 2020, August 20, 2020, and October 30, 2020. (Tr. Exs. 4-6.)
"First Amendment to Option" refers to an amendment to the Green Option specifying Green's tax obligations dated August 31, 2018. (Tr. Ex. 18.)
"First Amendment to Solar Lease" refers to the lone amendment to the Solar Lease dated September 10, 2018. (Tr. Ex. 3.)
"Green Option" refers to an option agreement between EREH and Green to lease the Large Parcel dated May 10, 2017. (Tr. Ex. 17.)
"Revity Option" refers to an option to purchase the entirety of the Property, entered into by EREH and Revity, dated June 19, 2020. (Tr. Ex. 50.)
"Second Amendment to Option" refers to a contested, additional extension of the Green Option that existed in draft form from May 5, 2020 onward. (See Tr. Ex. 44.)
"Solar Lease" refers to the Small Parcel lease agreement between EREH and Green dated May 10, 2017. (Tr. Ex. 2.) "Tr. Ex." Refers to the 59 exhibits which the parties stipulated were admissible.
5. Miscellaneous
"Planning Board" refers to the Planning Board for the Town of Exeter.
"Zoning Board" refers to the Zoning Board for the Town of Exeter.
II
INTRODUCTION
On May 10, 2017, Mark DePasquale (DePasquale), as managing member of Green Development, LLC (Green) and Kevin Casey (Casey), as managing member of Exeter Real Estate Holdings, LLC (EREH) executed the "SOLAR ENERGY LEASE" (Solar Lease) (Tr. Ex. 2). The leased premises in the Solar Lease is four to six acres (Small Parcel) of EREH's 118-acre parcel of vacant land (Property), located off Ten Rod Road in the Town of Exeter (Town). The Solar Lease required the parties, within thirty days of its execution, to mutually identify the exact boundaries of the Small Parcel and it required Green to then identify the location of certain operation and access easements on the Property. The Solar Lease was for an initial term of twenty years, with three five-year renewal terms. On the leased premises, Green was to construct, operate, and manage a solar renewable energy project.
The Lease identifies the "general area" of the Small Parcel in an attached exhibit to the Lease. See Parties Statement of Stipulated Material Facts Tf 13.
EREH explicitly retained the right to relocate these easements as needed for its potential other development plans.
Green elected to exercise its 12-month extension on May 10, 2019, and the Option was to expire on May 10, 2020. (Tr. Ex. 17, Section 4). Commencing in August 2017, Green began the process of permitting a 20+ MW solar project to be situated on both the Small Parcel and Large Parcel ("Original Combined Project" or "WED Ridge Project") as well as permitting other solar projects in Exeter. While no one has disputed that Green diligently pursued obtaining permits, its efforts were unsuccessful because of various enactments by the Exeter Town Council. Green unsuccessfully challenged the actions of the Town in the Superior Court. See Green Development, LLC, a/k/a Wind Development, LLC v. Town of Exeter, WC-2018-0636. Green appealed this decision and the matter is now before the Supreme Court. The Stipulated Agreed Statement of Facts, which the Court adopts, is attached hereto as Exhibit A, and provides a detailed history of the actions of the Town and the litigation.
Notwithstanding the Green Option, the actual words of the Solar Lease for the Small Parcel provided that EREH retained the ability, in its sole discretion, to develop the Large Parcel into its own solar energy project: "Notwithstanding anything contained herein to the contrary, the parties hereto acknowledge that all of the Lessor's Property, except for the Property, has been reserved to Lessor for Lessor's use, without restriction of any kind whatsoever (the "Lessor's Reserved Property"). (Tr. Ex. 2, Section 1) (emphasis in original).
In April 2020, roughly one month before the Green Option was set to expire on May 10, 2020, DePasquale began negotiations with Casey and EREH's counsel for an additional extension of the Green Option. However, the parties did not reach an agreement by May 10 and Green did not exercise its option. Nevertheless, the parties continued to negotiate an extension. The nature and extent of these negotiations will be discussed in greater detail below.
On May 30, 2020, Casey emailed a draft of the Second Amendment to the Green Option to DePasquale. (Second Amendment to Option) (Tr. Ex. 44). The Second Amendment to Option featured a "DRAFT" watermark on each page and contained the following:
"The parties now agree and acknowledge that the Extended Term shall be extended for an additional Twenty-Four (24) months, and therefore shall expire on May 10, 2022. [Green] agrees to pay an additional Deposit of Twenty-Five Thousand Dollars ($25,000.00), by wire transfer to [EREH], with the execution of this Second Amendment."Id. Section 1. In response, DePasquale sent a text message to Casey informing him that he should deal directly with Green's Attorney, Stephen Brusini, Esq. (Brusini) (Tr. Ex. 49, Bates No. EREH-000046).
On Monday, June 1, 2020, Brusini emailed the Second Amendment to Option back to Casey, having changed the word "Deposit" to "payment." In the email, Brusini stated: "Please let me know if these two documents are good to go and If [sic] so I'll arrange to get Mark's signature later today or tomorrow morning. If you could also email me your wire transfer instructions for the $25,000 payment, I'll have Green's accounting department prepare the wire." (Tr. Ex. 15.)
Casey never responded. On June 8, 2020, Brusini again emailed Casey regarding the wiring instructions. (Tr Ex. 16.) Casey replied later that day by email stating the following:
Atty Brusini,
"We are in the process of hiring new counsel and expect to have formalized that in the next few days. As soon as we do, we'll let you know and continue our correspondence accordingly. Thanks Kevin." (Tr. Ex. 59).
Sometime before May 10, 2020, Revity Energy, LLC (Revity), who expressed interest in the Property in 2016 but could not reach agreement with EREH, discovered through its attorneys, DarrowEverett (who were also EREH's attorneys at the time), that the Property might be available. Revity soon began negotiations with Casey. On May 12, 2020, Revity and EREH signed a conflict waiver with the effect that DarrowEverett would represent Revity in the negotiations of an agreement with EREH. For its part, EREH would seek new counsel. On June 19, 2020, Revity and EREH executed an OPTION AGREEMENT to purchase the entirety of the Property, which included both the Large Parcel and the Small Parcel (the "Revity Option"), with the latter parcel ultimately subject to the Solar Lease. (Tr. Ex. 50).
Finally, on June 25, 2020, Green was advised by EREH that it was no longer interested in exercising any second amendment to the Green Option. (Tr. Ex. 14).
As it relates to the Solar Lease for the Small Parcel, on July 20, 2020, DarrowEverett, who by then had resumed representing EREH, sent the first of three letters ("Darrow Everett Trilogy"), a demand letter to Green asking them to identify the exact location of the Small Parcel and the precise locations of the access and operations easements as per the recitals section of the Solar Lease. (Demand Letter) (Tr. Ex. 4.) Having received no response from Green, counsel for EREH sent a Notice of Default for the Lease on August 20, 2020, providing Green with a cure period of thirty (30) days pursuant to the Solar Lease terms in which to identify the exact locations of the Small Parcel and easements. ("Notice of Default") (Tr. Ex. 5). Having received no response to the Notice of Default, on October 30, 2020, EREH sent a Notice of Termination and to Quit letter regarding the Lease, terminating the same and demanding possession by November 5, 2020. (Notice of Termination) (Tr. Ex. 6.) When Green did not quit the Property, EREH commenced eviction proceedings in the District Court, which matter was appealed to the Superior Court.
DarrowEverett had never ceased representing Revity throughout this entire transaction.
On January 6, 2021, Revity and EREH applied for pre-application review with the Town for a solar project to be located on the Large Parcel (the "Revity Solar Project") (Tr. Ex. 9, DiPrete Letter to Town of Exeter, Jan. 6, 2021). The application specifically excludes the development of the Small Parcel and seeks to amend Exeter's current zoning map to rezone the Large Parcel to allow utility-grade solar use by special permit.
Ill
A
Pleadings
These consolidated matters involve three (3) actions: WC-2020-0346 filed on August 24, 2020 (Large Parcel Litigation); WC-2020-0471 filed on November 9, 2020 (Small Parcel Litigation); and WD-2021-0065, an appeal of a District Court action for possession of the Small Parcel 4CA-2020-00923 (Eviction). Only the Large Parcel Litigation and Small Parcel Litigation feature claims against Revity.
After filing the Large Parcel Litigation against EREH, Green motioned to add Revity and Palumbo to the action on April 14, 2021. This Court granted the motion on June 2, 2021, and the amended complaint (the "Second Amended Complaint") was filed that same day. The Second Amended Complaint contained ten (10) counts, two of which were subsequently dismissed by agreement of the parties (Count III, Beach of Implied Covenant of Good Faith and Fair Dealing; and Count VI, Temporary Restraining Order and Preliminary Injunction) following hearing on Revity's Partial Motion to Dismiss on October 18, 2021. Of the remaining charges, Counts I and VII seek a declaration from this Court against all defendants that: 1) the Green Option is a valid enforceable contract; 2) the Green Option did not terminate; 3) EREH is the party in breach of the Green Option; 4) Green is entitled to specific performance of the Green Option; 5) all agreements between EREH and Revity are void ab initio or otherwise unenforceable; and 6) Green is entitled to specific performance of the Green Option.
Count II is a breach of contract claim against EREH predicated on this Court's finding that Green, despite EREH's failure to exercise the Green Option, still possessed a valid option after the contract's stated expiration date, May 10, 2020. Likewise, Counts IV (specific performance against EREH) and V (equitable reformation against EREH) are premised upon the same assertions as Counts I, II, and VI. Finally, Counts VIII and IX against EREH are for intentional and negligent misrepresentation, respectively, and Count X is a claim for tortious interference against Revity.
Palumbo was dismissed as a defendant in his individual capacity in both the Large Parcel Litigation and Small Parcel Litigation following the October 18, 2021 hearing.
After filing the Small Parcel Litigation against EREH, Green likewise motioned to add Revity and Palumbo to the litigation. The amended Small Parcel complaint (the "First Amended Complaint") was filed on May 26, 2021 and contained six (6) counts against defendants. As with the Large Parcel Litigation, two of these counts were subsequently dismissed following the hearing on October 18, 2021. Of the remaining claims, Counts I and V seek a declaration from this Court against all defendants that: 1) both the Solar Lease as well as the First Amendment to Solar Lease are valid and enforceable contracts; 2) Green is not in default of the Solar Lease; 3) the Notice of Default sent by EREH has no legal effect; 4) the Solar Lease as amended did not terminate as a result of the Notice of Termination; 5) Green is entitled to damages, reasonable attorneys' fees, and specific performance; 6) any subsequent agreements entered into and featuring the Small Parcel are void ab initio; and 7) EREH is enjoined from selling, leasing, refinancing, transferring, alienating, conveying, and/or otherwise encumbering the Small Parcel.
Namely, Count III, a claim for breach of the implied covenant of good faith and fair dealing against EREH, and Count IV, a claim for injunctive relief against EREH, were both dismissed by agreement of the parties.
Count II of the First Amended Complaint is a breach of contract claim against EREH predicated upon Green's contention that there was not a breach of the Solar Lease. Finally, Count VI is a claim for tortious interference with the Solar Lease as against Revity and Palumbo. These are the counts which survived to be tried in this consolidated matter.
B
Trial
After extensive discovery, the consolidated case was tried without a jury from November 22 through November 24, 2021. Plaintiff Green called the following witnesses: Casey, Palumbo, Brusini, Eric Everett, Esq., (Everett) who was counsel for EREH and participated in communications with Green's attorneys in discussing and negotiating an extension of the Green Option, DePasquale, and Darrow. Because of the truncated schedule for this bench trial, the Court generally allowed the parties, when necessary, to deviate from the usual subject constraints of cross-examination for the sake of witness economy. As such, Defendants EREH and Revity were content letting Green call the majority of witnesses and soliciting their material points through more permissive cross-examination. Revity did, however, call one witness, Kevin Morin, an engineer for Green who was involved in their efforts for permitting and approvals necessary to develop the Property into a solar energy facility.
The Court will not engage in the exercise of providing a detailed summary of each witness's testimony. Rather, the Court will weave essential testimony and the important documents into this Decision where it is necessary to support its findings of fact and conclusions of law.
The parties jointly submitted a list of fifty-nine stipulated full exhibits in advance of trial. (Stipulated Joint Exhibits for Trial.) Closing argument was done ad hoc by the parties and took place on November 24, 2021.
IV
STANDARD OF REVIEW
In a non-jury trial, "[t]he trial justice sits as a trier of fact as well as of law." Hood v. Hawkins, 478 A.2d 181, 184 (R.I. 1984). "Consequently, he weighs and considers the evidence, passes upon the credibility of the witnesses, and draws proper inferences." Id. "The task of determining the credibility of witnesses is peculiarly the function of the trial justice when sitting without ajury." Walton v. Baird, 433 A.2d 963, 964 (R.I. 1981). "It is also the province of the trial justice ... to draw inferences from the testimony of witnesses . . . ." Id. See also Rodriques v. Santos, 466 A.2d 306, 312 (R.I. 1983) Pursuant to Rule 52(a) of the Superior Court Rules of Civil Procedure, the Court will proceed to make the following findings of fact and conclusions of law.
V
FINDINGS OF FACT AND CONCLUSIONS OF LAW
A
Joint Statement of Agreed Facts
The Court incorporates into its Findings the parties' Joint Statement of Agreed Facts which are attached as Exhibit A. In this Decision, the Court will refer to those facts as it deems necessary.
B
Credibility of Witnesses
It is not necessary for the Court to comment on the credibility of each testifying witness. However, brief mention should be made concerning the courtroom testimonies of Casey, Palumbo, and DePasquale, the principals for EREH, Revity, and Green, respectfully.
Generally, all three principals demonstrated not unexpected memory lapses when testifying to a very compact and busy period featuring several important dates. However, while both Palumbo and DePasquale showed a lack of precision regarding certain dates, they were both candid and the Court found their testimony, with some exceptions, to be reliable. Casey's testimony generated notably more inconsistencies and unconvincing explanations than either of the other two. The Court will expand further on the specific testimony it found to be not credible when addressing various important issues in the Decision.
In particular, the heavily contested period from early May 2020 to the end of June 2020, which saw the proposed second amendment to the Green Option fall through and the Revity Option be signed.
C
The Eviction and the Solar Lease
In his July 20, 2020 demand letter to Green's counsel, counsel for EREH asserts that Green, pursuant to the terms of the Solar Lease, "[n]aturally" bore sole responsibility for proposing the exact location of the Small Parcel plot within the larger 118 acres. He wrote, "Pursuant to the terms of the Solar Energy Lease your client was to make that proposal, and the parties were to reasonably agree upon such locations, within thirty (30) days from the date of the Solar [Lease], but your client never sent the proposal." (Tr. Ex. 4, Demand Letter to Green.) On August 20, 2020, EREH's attorney notified Green that it was in default because of Green's failure to "comply with its obligations" to provide a reasonable proposal for the exact location of the Small Parcel and accompanying easements. (Tr. Ex 5, Default Letter). This default was repeated in the letter dated October 30, 2020, officially terminating the Solar Lease. (Tr. Ex. 6, Termination Letter).
As it stands, however, neither the structure of the Solar Lease, the plain language therein, or the subsequent conduct of the parties in the months and years following the execution of the Solar Lease could lead this Court to reasonably side with EREH's interpretation of Green's responsibilities under the lease. As became abundantly clear during trial, EREH's reasons for terminating the Solar Lease were pretextual.
For the Court to divine whether a material provision of the Solar Lease was breached by Green, the analysis must start with the plain language of the contract. See Cathay Cathay, Inc. v. Vindalu, LLC, 962 A.2d 740, 746 (R.I. 2009) ("The language employed by the parties to a contract is the best expression of their contractual intent, and when the language is 'clear and unambiguous, words contained therein will be given their usual and ordinary meaning and the parties will be bound by such meaning[.]'") (quoting Singer v. Singer, 692 A.2d 691, 692 (R.I. 1997) (mem.)). Green's alleged default emanates from the following clause in the recitals section of the Solar Lease and reads as follows:
"WHEREAS, [Green] desires to construct, operate, and maintain or sell a renewable energy project consisting of solar photovoltaic panels . . . capable of producing electricity and associated appurtenances, equipment, facilities and roadways ... on a portion of [EREH]'s Property that is still to be determined by reasonable agreement between the Parties within the next thirty (30) days, but shall be approximately four (4) to (6) acres, and shall be in the general area described on [a map of the Property]. Once the Parties have determined the exact size and configuration of the Property, they shall amend this Lease to replace the site plan that is currently attached . . . with a more specific site plan showing the exact size and configuration of the Property[.]" (Tr. Ex. 2, at 1) (emphasis added.)
In its search for whether rights and obligations can, under Rhode Island law, be created in the recital clause(s) of a contract, this Court admittingly came up empty. There is some guidance, albeit conflicting, from our neighbors to the north and south.
The only First Circuit case law directly addressing this issue is Hochendoner v. Genzyme Corp., 95 F.Supp.3d 15, 28-29 (D. Mass. 2015), aff'd in part, vacated in part on other grounds, remanded, 823 F.3d 724 (1st Cir. 2016), wherein a Massachusetts Federal District Judge, in applying New York law, stated "[A]lthough a statement in a 'whereas' clause may be useful in interpreting an ambiguous operative clause in a contract, it cannot create any right beyond those arising from the operative terms of the document." See also RSL Communications, PLC v. BildiricUNo. 04 Civ. 5217(RJS), 2010 WL 846551, at *4 (S.D.N.Y.2010) ("New York law holds that a 'whereas' clause can be used to clarify the meaning of an ambiguous contract, but cannot be used to modify or create substantive rights not found in the contract's operative clauses.")
Conversely, in a negligence action hinging on whether a charter boat agreement contract constituted a "demise contract," a different Massachusetts Federal District Judge found no ambiguity in the contract but nevertheless concluded that the third "whereas" clause of the Services Agreement created obligations for the parties, not merely clarifying the obligations instantiated in later, operative clauses of the contract. Wills v. One Off, Inc., Civil Action No. 08-11086-JLT, 2010 WL 1427502, at *2 (D. Mass. 2010).
If this Court adopted the New York rule, there would be no contract whatsoever. If the Whereas clause did not impose an obligation on the parties, then there would be no description of the leased premises which is an essential term in any lease. Since neither party asserted that the parties failed to enter into an agreement, then, at least for purposes of this case, the Court must reject the New York rule.
In fact, the testimony from all witnesses was that the Solar Lease was a valid agreement, and that position was supported by the email to Brusini on June 25, 2020 (Tr. Ex. 14), the Revity Option, and the DarrowEverett Trilogy.
EREH's interpretation is that Green had the "obligation" to provide a reasonable proposal regarding the exact location of the Small Parcel and the Easement Area. But a plain reading of the third recital clause finds no such obligation. The obligation is on the parties-plural, not on a single party.
For over three years, EREH never asked Green for a proposal. In fact, on direct examination, Casey was asked: (1) whether EREH made Green aware of their supposed failure to identify the specific acreage of the Small Parcel immediately after the 30-day grace period; (2) whether EREH had eve?' brought up Green's failure to identify prior to the July 20, 2020 Demand Letter; and (3) whether there was any reason for alleging default other than Green's failure to identify. Casey answered all three questions in the negative.
At this point the Court interjected and inquired about the apparent mutuality of obligations between the parties in deciding on the Small Parcel location per the language of the Solar Lease ("that is still to be determined by reasonable agreement between the Parties . . .[.]" "Once the parties have determined the exact size and configuration of the Property . . . [.]"). On being asked by the Court whether EREH could have simply proposed a spot for the Small Parcel, Casey equivocated before conceding that he never suggested to Green a location for the Small Parcel.
In the "absence of ambiguity, the interpretation of a contract is a question of law." Andrukiewicz v. Andrukiewicz, 860 A.2d 235, 238 (R.1.2004). It is well settled under Rhode Island law that "[w]hen contract language is clear and unambiguous, words contained therein will be given their usual and ordinary meaning and the parties will be bound by such meaning." Singer, 692 A.2d at 692 (citing Aetna Casualty & Surety Co. v. Graziano, 587 A.2d 916, 917 (R.I. 1991)). Despite EREH's assertions to the contrary, there are simply no grounds for reading the third recital of the Solar Lease as creating a dependent obligation for Green to unilaterally propose the four to six-acre location for the Small Parcel. Rather, the use of the plural "parties" clearly denotes that it was incumbent upon both EREH and Green to work together to mutually situate the Small Parcel within the larger Property. Casey concedes, however, that prior to the issuance of the 'shot across the bow' Demand Letter by EREH's lawyers, no attempt was made, by either party, to remedy the defaulted-upon recital and propose a location for the Small Parcel.
EREH had every right and ability, especially since it could tap into Revity's expertise, to suggest a location for the Small Parcel and Easement Area. The Court does not find credible Palumbo's testimony that Revity would have been better off with Green developing the .75-Megawatt solar array in the Small Parcel because it would not have had to pay for the access road. When each of the DarrowEverett Trilogy were sent, DarrowEverett was representing both EREH and Revity. It is inconceivable that DarrowEverett would not have made Palumbo aware of what action it was taking on behalf of EREH with respect to the Solar Lease. If it was in Revity's interest to have Green develop the Small Parcel, then EREH could have proposed a location to Green and worked with it so that both the Revity and the smaller Green project could proceed to development. The Court can only infer the opposite. Once EREH entered into the Revity Option and Mancini took the position that the Green Option was extended and posed the specter of litigation, (Tr. Ex. 8), EREH wanted to be rid of Green, so it needed to terminate the Solar Lease and needed a pretext to do so. Since Green had paid all rent due and complied with all the other terms of the Solar lease, EREH seized on the third recital and concocted this unilateral obligation on Green.
The Court finds that the third Whereas clause does not impose an obligation on Green to propose the location of the Small Parcel and Easement Area. It finds that either Green or EREH could have proposed the location and then it was incumbent on the parties to work in good faith to finalize that location. Thus, Green did not fail to perform any covenant, condition or term of the Solar Lease and is not in default.
Yet even if the at-issue "whereas" clause created a unilateral, dependent obligation for Green to satisfy, EREH was still erroneous in finding Green to be in breach of the Solar Lease because, as the evidentiary record demonstrates, the Small Parcel location had been identified on the Property since at least 2018.
The reason why there was a lease for the Smaller Parcel while only an option for the Large Parcel was Green had already acquired an Interservice Agreement for a .75-Megawatt solar array which Green intended to locate on the Smaller Parcel. At the time the Solar Lease and the Green Option were entered, Green had no interservice agreement for a larger project. When DePasquale was asked why he thought the location of the four to six acres never came up prior to the July 20, 2020 Demand Letter, he bluntly answered that his submittal to the Town already made it very clear where the Small Parcel was located. (Tr. Ex. 10(a)).
An examination of the WED Ridge Solar Project Master Plan Submission discloses a proposed "Solar Layout" for the utility-scale solar project to be located on the Property. See Ex. 10, at 5. At the southern terminus of the Property is a small, purplish-blue section labelled: PROPOSED SOLAR FIELD SOUTHARRA YPANELS (the "Proposed Solar Field South"). Id. The Plan indicates that the South Array will be for 749 Kilowatts which equates with .75 Megawatt. The access to Ten Rod Road as shown are the paths through the South Array to the rest of the Property. According to DePasquale, this Proposed Solar Field South had always been understood by the parties as the location of the Small Parcel, at least so far as the Small Parcel's physical location was necessary relative to the development of the Property as a whole.
The Court finds Mr. DePasquale's testimony regarding the relationship between the Proposed Solar Field South and the location of the Small Parcel to be credible. To be sure, Green could have, and probably should have, responded to the DarrowEverett Trilogy of late-summer, early-fall 2020 by reaffirming the Proposed Solar Field South as the true location of the Small Parcel. However, this court also recognizes that (i) EREH's initial Demand Letter was hardly worded to be read as litigation-adverse (or even in "good faith"), and that (ii) EREH's counsel was facially incorrect in their assertion that Green had "never sent [a] proposal" regarding the exact location of the Small Parcel. (Tr. Ex. 4, at 4; see also Tr. Ex. 5, Tr. Ex. 6). Not only does sheet #5 of the January 12, 2018 Master Plan Submission constitute such a proposal by Green but, crucially, EREH itself signed off on the proposed solar layouts (through Casey) as a component of Green's 2018 pre-application plan to the Town. As such, EREH either was, or should have been, materially aware of Green's prior proposed location for the Small Parcel.
Weighing the evidence, this Court finds that Green was not in breach of the Solar Lease for failure to identify a proposed four to six-acre location for the Small Parcel.
Finally, a brief note on the equities of EREH's purported reason for terminating the Solar Lease. EREH has consistently conceded, in both depositions and at trial, that Green complied with all prepayment and tax obligations as stipulated by both the Solar Lease and First Amendment to Solar Lease. Simply put, Green timely met all its financial covenants concerning the Small Parcel as defined in the First Amendment to Solar Lease. While this Court need not factor equitable considerations into its analysis considering its determination that the Solar Lease was not validly terminated, it would appear patently inequitable for this Court to offer EREH legal approbation for terminating a fully paid-for commercial lease. See Banco do Brasil, S.A. v. 275 Washington Street Corp., 750 F.Supp.2d 279, 292 (D. Mass. 2010) (Despite absence of right to cure default for late payment of rent, termination provision of commercial lease was found to be unenforceable for equitable reasons where tenant's failure to pay rent in a timely manner was inadvertent and insignificant, tenant paid both the rent and late charges immediately upon learning of its failure to pay rent, and lessor was not harmed by the delay.).
Inclusive of a first, second, and third rent payment, totaling $180,000.00 ($90,000.00 + $30,000.00 + $60,000.00, respectfully).
See, e.g., In re Players1 Pub, Inc., 45 B.R. 387, 394 (Bankr. D. Mass. 1985) ("[E]quitable considerations do not play a part where a lease has been validly terminated.").
EREH was in no immediate financial danger from Green's supposed failure to specify the Small Parcel location, indeed, rather than acknowledge the six-figure sum already paid by Green for the Small Parcel and work amiably to find a mutual solution to the location issue, EREH instead scoured the four corners of the Solar Lease for any clause with the potential to trigger default. Once EREH thought it had found such a clause, it quite literally wasted no time between demand, default, and termination letters, despite having repeatedly waived the Small Parcel location clause -both explicitly and tacitly-over the prior three years. Considering that '"virtually every contract"' in Rhode Island '"contains an implied covenant of good faith and fair dealing between the parties, "' it would certainly offend longstanding notions of equity and fair play to recognize EREH's flimsy-and all-too-convenient-reason for terminating the Solar Lease. Centerville Builders, Inc. v. Wynne, 683 A.2d 1340, 1342 (R.I. 19966) (quoting Crellin Technologies, Inc. v. Equipmentlease Corp., 18 F.3d 1, 10 (1st Cir. 1994)).
D
Tortious Interference with Contract
1
Introduction
During trial, counsel for Green attempted to tie the failure to extend the Green Option, as well as EREH's subsequent unilateral termination of the Solar Lease, to illicit tortious interference on the part of Defendant Revity. This culminated in an extended and contentious line of questioning between counsel for Green and Revity's principal and sole testifying witness, Palumbo. Not for any lack of trying, however, counsel for Green failed to elicit testimony establishing that Revity intentionally interfered with either contract, much less that they did so with the requisite legal malice prescribed by Rhode Island law. See Jolicoeur Furniture Co. v. Baldelli, 653 A.2d 740, 753 (R.I. 1995) (quotations omitted) (As an additional requirement for establishing a claim for tortious interference with a contractual relationship, the plaintiff must also prove that the defendant(s) acted with legal malice defined as "an intent to do harm without justification.").
In order to "establish a claim for tortious interference with a contractual relationship, plaintiffs must establish the following four elements: (1) [T]he existence of a contract; (2) the alleged wrongdoer's knowledge of the contract; (3) his [or her] intentional interference; and (4) damages resulting therefrom." Coccoli v. Town of Scituate Town Council, 184 A.3d 1113, 1120 (R.I. 2018) (internal citations omitted). Further, the plaintiff must also prove that the defendant(s) acted with legal malice defined as "an intent to do harm without justification." Jolicoeur Furniture Ca, 653 A.2d at 753.
2
The Solar Lease
As there is no disagreement by the parties that the Solar Lease was operative during the period of alleged tortious interference, the Court will quickly deal with the interference claims over the Small Parcel before moving on to the knottier factual and legal issues involved in resolving the Green Option.
Palumbo testified to the following: (1) that Revity and its attorneys were aware of the Solar Lease; (2) that Revity and its attorneys were aware of provisions in the Solar Lease which allowed EREH (or any subsequent lessor in privity) to "piggyback" off of any solar infrastructure improvements made by Green; (3) that the Revity Option was drafted so as to accommodate the four to six acres that would necessarily be carved out of the Property pursuant to the Solar Lease; and (4) that the termination of the Solar Lease, while freeing up the remaining four to six acres of the Property, would provide "no real sizing benefit" for the Revity Solar Project as contemplated.
Section 1 of the Solar Lease expressly contemplates a scenario in which EREH determines to develop the "Lessor's Reserved Property," i.e., the Property minus the Small Parcel, in the event that Green allows the Option to expire and full alienability reverts to EREH. See Solar Lease (Tr. Ex. 2, Section 1) ("Without limiting the foregoing, in the event Lessor determines, in its sole discretion, to develop the Lessor's Reserved Property (or any portion thereof) into a renewable energy project consisting of solar photovoltaic panels similar to the [Solar Lease project], and such project can be integrated into the [improvements . .. being constructed or installed by [Green] in connection with the Project without materially interfering with the same, then [Green] shall permit Lessor to utilize the same, at no material additional cost to [Green]."
Id
While the Court has previously expressed some incredulity over Palumbo's assertion that termination of the Solar Lease "probably would create a detriment" to the Revity Solar Project, it ultimately credits Palumbo's above-referenced testimony. The Revity Option, as written, does expressly provide for Green's Solar Lease in its operative sections. See Revity Option, Section 7.1(k) ("The provisions of Section 7.1(h) shall remain in Ml force and effect for the duration of the Green Lease and continue for one (1) year thereafter.") (emphasis in original). Additionally, it makes facial economic sense that Palumbo, consistent with his testimony, was "ready to move forward" despite the existence of the Solar Option.
Ultimately, Revity's willing execution of a binding option agreement, which expressly accommodates and ties them to a tenant-competitor for a quarter century, provides circumstantial proof that it did not tortiously interfere with the Solar Lease.
However, this set of factual circumstances matters far less to the determination than the simple fact that Green offered no substantive proof at trial of element three of a tortious interference analysis: evidence of intentional interference by the defendant. See Coccoli, 184 A.3d at 1120. To be sure, Revity knew of the existence of the Solar Lease as evidenced by their express reference to it in the Revity Option. See Tr. Ex. 50. While the Court has previously inferred that because DarrowEverett represented both EREH and Revity, Palumbo was undoubtedly aware of the DarrowEverett Trilogy. Yet, between Revity's awareness of the Solar Lease and EREH's July 20, 2020 Demand Letter, there is an evidentiary gap which sinks Green's intentional interference claim. Green offers nothing to fill that gap other than hollow conjecture that some shady horse trading must have occurred. Palumbo's examination on the stand offered nothing to fill that gap. There is no there there when it comes to proving, by a preponderance of the evidence, that Revity, as the interloping third party, tortiously interfered with the Solar Lease. Green's claims against Revity for tortious interference with the Solar Lease fail as both a matter of fact and law.
As well as Palumbo's admission during trial that he was, at all times material, aware of the Solar Lease between EREH and Green. This satisfies the first two components of a. tortious interference analysis.
3
The Green Option
Green's claims against Revity for tortious interference with the Green Option likewise fail for lack of an evidentiary foundation substantiating actual interference. Even assuming, arguendo, that the Green Option survived its May 10, 2020 expiration date, Green has still failed to establish that any malicious actions by Revity were the proximate cause of the option's breach. See Belliveau Building Corp. v. O'Coin, 763 A.2d 622, 627 (R.I. 2000) (to prove intentional interference, "[m]alice, in the sense of spite or ill will, is not required; rather legal malice-an intent to do harm without justification-will suffice.").
On direct, counsel for Green made numerous attempts to establish precisely when Palumbo came to know of (1) Green's plans to develop the Property in accordance with the WED Ridge Project; and (2) when or whether he came to know that Green and EREH were actively negotiating on terms for the proposed Second Amendment to Option. Green attempted to conflate Palumbo's knowledge of the precarious state of the Green Option from spring 2020-onward with the likelihood that he would desire to place his finger on the scale against Green to make the second extension fall through. This knowledge goes to the issue of motive, which our Supreme Court has clarified is not sufficient in-and-of-itself to demonstrate improper interference. See Greensleeves, Inc. v. Smiley, 68 A.3d 425, 437 (R.L 2013) ("Although motive in and of itself is insufficient to demonstrate an improper interference, motivation to interfere cannot be ignored."); see, e.g., Avilla v. Newport Grand Jai AM LLC, 935 A.2d 91, 99 (R.I. 2007) (Citing a decision of the Alabama Supreme Court for the proposition that "motive," in most instances, is not enough to send tortious interference cases to a jury; there must be something "improper," if not "illegal," about the means employed in the alleged interference).
Counsel for Green attempted a similar tactic during his questioning on Revity's work with DiPrete Engineering (DiPrete). DiPrete is a Providence based civil engineering firm and is, according to Palumbo, the "biggest player in solar [development] in this area." As part of their due diligence for the WED Ridge Project, DiPrete had been contracted by Green to perform a useable acreage analysis on the Property. During this time, DiPrete was also Revity's go-to civil engineering consulting firm for their solar projects. Based on this overlap, counsel for Green attempted to establish whether Revity (1) knew of this acreage analysis, and (2) ultimately got possession of the (presumably favorable) acreage analysis, ultimately prompting Revity to pursue their eventual Revity Solar Project with questionable business ethics. When asked directly by counsel for Green whether Revity was "ahead of the curve on usable acreage" based on Green's DiPrete analysis, Palumbo responded that "[Revity] used our own analysis" for the Property. Further, that analysis took no more than "a couple days." Id. Green has offered no material evidence showing that Revity or Palumbo had any knowledge-much less a copy-of the Green-DiPrete's acreage analysis of the Property. In short, Green has established no basis for concluding that Revity had "inside information" from DiPrete concerning the Property.
More importantly, however, nothing in the trial or evidentiary record suggests that Palumbo did anything more than rely on information from his counsel, DarrowEverett, that the Green Option either expired or would soon expire. Indeed, Section VII of the Revity Option conditions the entire Revity-EREH deal on the final expiration of the Green Option, and Palumbo testified as much that he materially relied upon that representation in executing his option. Revity Option, Tr. Ex. 50 ("The Green Option Agreement is either temiinated or fully expired and is no longer in effect.") (Tr. Ex. 50, Section 7.1(h)).
Green, at trial, strenuously contended that Revity acted through its counsel DarrowEverett to undermine and interfere with Green's efforts to reach agreement on a second option. It asserted that, as Revity's agent, it undermined the negotiations between Casey and DePasquale. Green continually shouted from the rooftops that DarrowEverett represented both EREH and Revity and that Mr. Darrow was a principal in Acropolis Commercial Advisors, which was to receive a 7.5% commission if Revity exercised its option. (Tr. Ex. 50, Section 11.5). While Green may have identified some smoke, it produced no evidence of a fire.
The ethical obligation of DarrowEverett to its clients in the representation of both clients after a contract between the parties had been executed but was still executory in a transaction in which one of its partners had a financial interest in the outcome is not a matter before this Court and one in which the Court will offer no comment.
On May 12, 2020, DarrowEverett ceased to represent EREH and obtained a conflict waiver from both Revity and EREH. While it resumed representation of EREH immediately after the Revity Option was executed (and it was undoubtedly aware that Casey and DePasquale were negotiating because of the May 30 email exchange between Brusini and DarrowEverett), there is no evidence that DarrowEverett was aware of the details of the negotiations between Casey and DePasquale from May 10, 2020 to June 1, 2020.
See Tr. Ex. 45, wherein Casey states what terms he wants to reach an agreement with Revity in order to abandon Green. "The only reason we would be willing to change course, from someone [i.e., Green] who has invested so much and who would be willing to pay a higher price . .. ."
Based on all testimony, the Court believes that Casey did the negotiation of the business terms for the Revity Option on his own and only later brought in counsel to review the legal terms of the agreement.
According to the evidence, DarrowEverett's only action was to advise Revity, who in 2016 had shown interest in the Property. The Court cannot see how it can punish Revity for simply trying to improve its financial position by engaging in lucrative business talks. See Ocean State Physicians Health Plan, Inc. v. Blue Cross & Blue Shield of Rhode Island, 883 F.2d 1101, 1113 (1st Cir. 1989) (Conduct in furtherance of business competition is generally held to justify interference with others' contracts, so long as the conduct involves neither "wrongful means" nor "unlawful restraint of trade.") (quoting Restatement (Second) of Torts § 768 at 39 (1979)). At trial, Green formulated several "motives," and pointed to many opportunities, for Revity to tortiously interfere. It did not, however, establish any evidence that Revity had improperly done so. Therefore, Green's claims against Revity for tortious interference with the Green Option and negotiations for a Second Amendment to Option fail as both a matter of fact and law.
E The Second Amendment to the Lease Option Agreement
1
The Four Questions
In his My 1, 2020 letter to EREH's counsel, Green's counsel urged Casey to heed Abraham Lincoln's advice and "not . . . change horses when crossing a stream." At the time, however, Green's counsel was unaware that he had the wrong metaphor. Casey was-in fact- riding two horses at the same time.
Green contends that on May 30, 2020, Casey made an offer for a second amendment to the Green Option which was accepted by Green through its agent Brusini on June 1, 2020. To prevail, Green must establish the following:
1. That the Green Option remained in existence after May 10, 2020, notwithstanding Section 7 which states:
"If Grantee [Green] fails to exercise the Option within the Term, then this Option Agreement and the rights of Grantee granted hereunder shall automatically and immediately terminate without notice or any liability whatsoever to Grantor [EREH] or Grantee and the Parties shall have no further rights or obligations hereunder."
Thus, the Court must ask: can the time for exercising an option be extended orally?
2. That a document that has a watermark stating "DRAFT" constitutes an offer.
3. That an agreement which states that it can only be amended in writing may nevertheless be amended orally.
4. Finally, that the Statute of Frauds does not apply.
The Court will now proceed to review the law and the evidence to determine if Green has met its burden.
2
Question 1 - Oral Extension of Option Contract Termination Date
All parties agree and the documentary evidence establishes that DePasquale and Casey began negotiations for a proposed second extension to the Green Option on or around April 20, 2020. Likewise, all parties agree that those negotiations carried on past May 10, 2020, the Option's express date of termination. (See Tr. Ex. 17, Section 7).
Counsel for EREH, however, contends that the calendar's turn from May 10 to May 11 terminated the Option outright. As one might expect, counsel for Green does not view the matter quite so linearly, instead arguing that negotiations past May 10 constitute an oral agreement to extend the expiration date of the Green Option. As to whether such a modification of an express expiration provision is permissible-let alone what occurred in this matter-the Court must turn to relevant appellate case law for the answer.
As it relates to option contracts in Rhode Island, it is generally held that "time is of the essence" where the expiration date for the option is "definite and unconditional[.]" Moulson v. Iannuccilli, 84 R.I. 85, 89, 121 A.2d 662, 664 (1956). However, in line with other jurisdictions, our Supreme Court has rejected the notion that "expiration provision[s] in an option contract" are, by their very essence, "impervious to oral modification." Haydon v. Stamas, 900 A.2d 1104, 1112 (R.I. 2006). This is particularly the case when the optionee's delay in exercising their option is "attributable to . . . [the] optionor's oral representations." Id. (emphasis added); see, e.g., Wilson v. Bidwell, 199 P.2d 439, 441-42 (Cai. Dist. Ct. App. 1948) (holding that the optionor's statement that "a few more days would not make any difference," excused the optionee's delay in exercising); see also Lusco v. Tavitian, 296 S.W.2d 14, 17 (Mo. 1956) ("Notwithstanding that time is of the essence, the optionor by his words, acts or conduct may waive the requirement of acceptance or exercise of the option within the time stipulated.").
The fact that a contract concerns the sale or lease of real estate does not affect the alterability of express expiration provisions if evidenced by competent parol: "Waiver that results from a party's actions may be expressed in the actions themselves or implied from them." Haydon, 900 A.2d at 1112-13. Finally, waiver of timeliness in an option contract '"may arise where a person against whom the waiver is asserted has pursued such a course of conduct as to sufficiently evidence an intention to waive a right or where his [or her] conduct is inconsistent with any other intention than to waive it."' Sturbridge Home Builders, Inc. v. Downing Seaport, Inc., 890 A.2d 58, 65 (R.I. 2005) (emphasis added) (quoting Ryder v. Bank of Hickory Hills, 585 N.E.2d 46, 49 (1991), modified on denial ofreh 'g (Feb. 3, 1992)).
In Haydon, the Supreme Court determined that optionor's actions (which included allowing optionee to fax her a proposed purchase-and-sales agreement on the expiration date as well as representing that her attorney would review said agreement before she would sign it) provided clear evidence of her "intent to extend the deadline and operate to excuse [optioneej's delay in exercising his option." Haydon, 900 A.2d at 1113. In the present matter, DePasquale's and Casey's pre-May 10, 2020 email chain likewise evidences a similar intent on the part of optionor Casey to "extend the deadline" by: (1) manifesting that he is indeed open to doing so (See Tr. Ex. 38, Email from Casey to DePasquale Re: Extension, Apr. 20, 2020) ("So we're thinking about how we could be compensated for [any extension to the Option]. I have some thoughts -let's plan to talk it through in the next day or two. Thanks"); and (2) continuing to finalize an Option extension well past the May 10, 2020 expiration date. See id, Email from Casey to DePasquale Re: Extension, May 26, 2020) ("Mark . . . Here's the summary of our discussion on Friday; 1. 25k now for 2-year extension on the Option, you can cancel at any time."). Indeed, Casey (and EREH by extension) had every opportunity before May 10, 2020 to foreclose on the possibility of extending or otherwise altering the Option's express expiration date. That did not happen.
Unlike DePasquale-who's May 1, 2020 email to Casey indicated a pessimistic tone at the chances of a second Option extension before the deadline-nothing in the evidentiary or trial record suggests that Casey put any consequence or finality on the actual date of expiration. See Stwbridge Home Builders, Inc., 890 A.2d at 65 (A waiver of timeliness in an option contract "may arise where a person against whom the waiver is asserted has pursued such a course of conduct as to sufficiently evidence an intention to waive a right or where his [or her] conduct is inconsistent with any other intention than to waive it."). Instead, the parties' emails demonstrate DePasquale as the one with the requisite urgency (Tr. Ex. 38, Email from DePasquale to Casey Re: Extension, May 1, 2020) ("I would like to come up with an agreement by the end of the day."), and Casey who started texting DePasquale on May 21, 2020 seeking to speak to him (Tr. Ex. 49), which led to the discussions which were referred to in his email dated May 26, 2020 (Tr. Ex. 38), all of which occurred after the May 10, 2020 option expiration date.
Defendants argue strenuously that DePasquale's May 1, 2020 which stated "I cannot accept your counter proposal... I will send you formal notice next week that we are pulling out of the option on the [Large] parcel" demonstrated that negotiations for a second extension on the Green Option had terminated. However, the apparent finality of this email is illusory. No such notice was ever sent. Furthermore, the email exchange from May 5 to May 8 between counsel for Green and EREH contains an acknowledgement by Everett that negotiations were continuing. (Tr. Ex. 38.)
Moreover, any contention that these discussions were an attempt to create a new solar lease option agreement ring hollow. Casey, on May 30, 2020, did not send an entirely new agreement. Rather, he sent a document entitled "SECOND AMENDMENT TO LEASE OPTION AGREEMENT" which in paragraph CB' of the recitals section states: "Grantor and Grantee desire to further amend the Option Agreement." (Tr. Ex. 44). Section 1 of the document reads in part, "The parties hereto agree and acknowledge that... the Extended Term ... was to expire on May 10, 2020. The parties now agree and acknowledge that the Extended Term shall be extended for an additional Twenty-Four (24) months, and therefore, shall expire on May 10, 2022." Id. (Emphasis added.) In neither of those quoted paragraphs is there any mention that the Option had expired and the parties wished to renew it. Indeed, the conditional language framing the extended term of the Option ("the Extended Term . .. was to expire on May 10, 2020") offers further proof that EREH considered that the Extended Term had not expired. If Casey thought the Extended Term had expired, he would have used the word "did" in lieu of "was to."
Taken together, Casey's above-discussed course of conduct and representations clearly constitute a waiver of the Option's otherwise definite expiration provision. See Haydon, 900 A.2d at 1112-13 ("Waiver that results from a party's actions may be expressed in the actions themselves or implied from them.").
3
Question 2 - Document with a Watermark Stating "DRAFT" as an Offer
Between May 26, 2020 and May 29, 2020, evidence in the form of an email exchange between Casey and DePasquale demonstrates that the parties were in the process of finalizing material terms for a proposed second extension of the Green Option. See Tr. Ex. 38. On May 30, 2020, Casey emailed a "draft" SECOND AMENDMENT TO LEASE OPTION AGREEMENT to DePasquale. See Tr. Ex. 44. This watermarked "draft" reflected all of the clarifications DePasquale had made in his final May 29, 2020 email ("I think we may have had a miscommunication when we last spoke . . . [h]ere is a summary of what I'm willing to do."), inclusive of DePasquale's refusal to commit to "pursuing] approval of [the Large Parcel] independent of the others" in writing, as "there is a common interconnection for all of the parcels." Id. at Ex. 38.
An extensive search of Rhode Island and First Circuit case law has turned up no precedent on whether a "draft" watermark obviates a finalized contract's ability to function as an offer. Rather, in determining whether parties have indeed formed a valid contract, Rhode Island steadfastly adheres to a case-by-case, objective intent of the parties analysis to be supplemented (when necessary) by instances demonstrating subjective intent: "For any contract to be enforceable, however, the parties must manifest their objective intent to be bound to the agreement." Weaver v. American Power Conversion Corp., 863 A.2d 193, 198 (R.I. 2004). See, e.g., Smith v. Boyd, 553 A.2d 131, 133 (R.I. 1989) ("Thus, although it is objective intent that controls in contract formation, subjective intent may be one of the factors which comprises objective intent."). However, as it is generally "a party's objective intent that will be considered as creating ... an offer", the court "shall look to an external interpretation of the party's or parties' intent as manifested by [their] action." Id. (emphasis added).
Looking objectively at EREH's actions in the final week of May 2020, the Court recognizes that Casey, after over a month of negotiations lasting well beyond the Option's expiration date, sent an email to DePasquale on May 26 listing four important terms for a proposed second extension to the Green Option. Namely, payment, tax considerations, a warranty on strategy for securing zoning approval, and clarification on the "call" option. Tr. Ex. 38. In response to DePasquale's May 29, 2020 reply email (which declined the third term while generally accepting the fourth "call" option term, albeit with a slight caveat), Casey sent DePasquale a "draft" SECOND AMENDMENT TO LEASE OPTION AGREEMENT the next day. Tr. Exs. 38, 44. This draft second amendment comported with DePasquale's May 29, 2020 proposed terms and did not materially deviate from any prior extension terms the parties had discussed. Indeed, Brusini's June 1, 2020 email to Casey reflects as much, noting that he "ma[d]e only one minor change" to the document substituting the capitalized term "Deposit" with the word "payment" because there was no Deposit as EREH was entitled to the money unconditionally and immediately. Tr. Ex. 15.
If "[a] binding offer is made when the offeror leads the offeree [to] reasonably ... believe [an offer] has been made [J" than it is difficult to conceive of how the watermarked draft second amendment does not constitute an offer on the part of EREH. Boleman v. Congdon & Carpenter Co., 638 F.2d 2, 4 (1st Cir. 1981). The document itself (1) incorporates all of the offeree's proposed changes and red lines; (2) is the product of over a month of negotiation; and (3) appears one day after the distilled, material parts of the second extension had been reduced to writing in the form of emails. As such, the Court is not dealing with the commonly encountered problem of an oral contract that was never transcribed into print. See Salem Laundry Co. v. New England Teamsters & Trucking Industry Pension Fund, 829 F.2d 278, 280 (1 st Cir. 1987) ("Parties can agree on every term in a contract, yet not be bound until they sign a written agreement, if they so indicate."). Here, there was an agreement reduced to writing. Moreover, the proposed second extension agreement incorporated the parties' material provisions (including payment) and was sent with notable alacrity after both parties presented their respective lines in the sand. This objective intent to make an offer, as manifested in the attached draft to Casey's May 30, 2020 email, more than counterbalances the "DRAFT" watermark as well as any subjective intent on the part of Casey for this document to double as some sort of space holder to, essentially, "buy time." Further, a "hard copy" draft memorializing all the extension's material terms certainly demonstrates a more sincere intent to be bound than any oral modification, no matter how unequivocal. See J.R.P. Associates v. Bess Eaton Donut Flour Co., Inc., No. PC 94-0210, 1998 WL 356896, at *2 (R.I. Super. June 22, 1998) ("The words and actions of the parties demonstrate that the lease agreement was both orally and implicitly modified.").
Casey did not respond to Brusini's June 1 email by articulating that the document he had sent just two days before was not something to which he agreed or that he had changed his mind. Nor did Casey do so in response to Brusini's June 8 reminder email. It is, therefore, apparent to the Court that Casey wanted to stall Green and keep his agreement with DePasquale alive as a contingency plan until he reached a satisfactory agreement with Revity. He was going to ride both horses until he obtained the deal he wanted.
At trial, Casey maintained that the "draft" status of the proposed second amendment is reflected in his text message sent to DePasquale that same day: "[Mr. DePasquale, ] [w]e sent you an email draft extension but need to discuss a few things with you. Please call. Monday is the deadline. Thanks." Tr. Ex. 49, Bates No. EREH-000046. More specifically, Casey maintained that the "few things" to be discussed were two of the four bullet point provisions proposed by DePasquale in his May 29, 2020 email. See Tr. Ex. 38. Casey testified that he did not agree to DePasquale's proposed outline of two of the four material terms and wished to further negotiate. The Court finds Casey's testimony not credible in this matter. The Court comes to this conclusion if for no other reason than Casey clearly acceded to DePasquale's May 29 terms in the form of the May 30 second amendment "draft." If, as he testified, Casey was still insisting about the other two items, he could have included them in his draft or alternatively not sent a document at all. Instead, the document he sent comports perfectly with DePasquale's final version of the terms, not Casey's. See Tr. Exs. 38, 44. It appears to be a peculiar business habit of Casey's to want to speak to the other party after agreeing to all material terms. See Tr. Ex. 48, Email from Casey to Darrow Re: Exeter, RI - Option Agreement, June 18, 2020, "Zach [Darrow, then attorney for Revity and its principal, Pammbo] - the terms of the agreement appear to be acceptable. Before we execute, however, I will need to speak with Ralph one on one. If this is agreeable, I would like to do so today, we can execute either later today or tomorrow."
In short, under Rhode Island law, objective intent outweighs subjective intent in contract formation. The Court finds that when Casey sent the document on May 30, his intent was to make an offer to Green to extend the option. See Smith, 553 A.2dat 133 ("[O]bjective intent... controls in contract formation [.]").
4
Question 3 - Oral Amendment of Agreement Despite "No Oral Amendment" Provision
This Court, having above determined that: (1) the time for exercising the Green Option was orally extended (i. e., the Green Option remained valid after May 10, 2020), and (2) the watermark "DRAFT" Second Amendment to Option constituted a binding offer by EREH-now turns to answer the third question: can an agreement that states that it "shall not be amended or modified in any way except by an instrument signed by Grantor and Grantee" (Tr. Ex. 17, Section 15) nevertheless be modified by an instrument to which the parties have agreed but have not signed and, if so, did this happen in the instant matter? After much analysis, the Court answers both questions in the affirmative.
To answer the first question the Court looks to Rhode Island law on oral modification to an agreement despite the presence of a "no oral modification" clause. If a purely oral modification is permitted despite the clause, then certainly an unsigned written amendment, where there can be no dispute as to its terms, is permissible. Fondedile, S.A. v. C.E. Maguire, Inc. is further illustrative of the answer.
In Fondedile, the Supreme Court noted that "[u]nder [common law contract] principles[, ] parties to a contract can mutually assent to modify a contract if the modification does not violate the law or public policy and if the modification is supported by adequate consideration. Furthermore, under certain circumstances, parties can modify a contract's written terms by subsequent oral agreement even if the contract requires that modifications be made in writing." 610 A.2d 87, 92 (R.I. 1992) (emphasis added) (internal citations omitted).
Second, as to how the party alleging an oral modification of a nominally "unmodifiable" contract goes about evidencing such a modification, our Supreme Court gives the following guidance:
A modification to an enforceable contract requires that the parties assent to the essential terms of their obligations and that an agreement embrace these terms. The modification can be written, oral, or implied, but the burden of proving the existence of the modification rests with the party alleging the new contract. To satisfy this burden, the party alleging the modification must show that the parties demonstrated both subjective and objective intent to be bound by the new contract's terms. Fondedile, 610 A.2d at 92 (emphasis added) (internal citations omitted).
In short, the party alleging modification must show that both parties subjectively and objectively manifested their assent to be bound to the essential terms of the contract in line with the above-discussed Smith standard. See also Allstate Interiors & Exteriors, Inc. v. Stonesfreet Construction, LLC, 907 F.Supp.2d 216, 242 (D.R.I. 2012), aff'd, 730 F.3d 67 (1st Cir. 2013) ("It is well established Rhode Island law that parties to a contract can mutually assent to modify a contract if the modification does not violate the law or public policy and if the modification is supported by adequate consideration[] . . . [t]o satisfy this burden, the party alleging the modification must show that the parties demonstrated both subjective and objective intent to be bound by the new contract's terms.") (internal citations omitted); GBM Acquisitions, Inc. v. Adams, 823 A.2d 1121, 1124 (R.L 2003) ("The trial justice denied the motion, finding that it was reasonable for the jury to find defendant credible and to conclude that an oral modification of the lease allowed defendant to pay a discounted rent, because of the additional expense that she had incurred."). In doing so, the party alleging modification will have ipso facto demonstrated that both parties waived their contractual rights with respect to any "no oral modification" express condition in the contract.
Under question #2 above, the Court has already ruled that EREH, both objectively and subjectively, manifested their assent to be bound by the modified terms of the contract by sending DePasquale the "draft" SECOND AMENDMENT TO LEASE OPTION AGREEMENT. In other words, EREH and Casey made a binding offer on May 30, 2020. Therefore, since Rhode Island law allows for an oral modification of such an agreement, the sole question that remains to be answered is whether Green objectively accepted the essential terms of the Second Amendment to Option, thus modifying the Option. As with seemingly every question and sub-question dealing with the Large Parcel, the answer is murky but ultimately tilts in favor of the Plaintiff.
On May 30, 2020, DePasquale sent a text message to Casey deputizing his attorney, Brusini, to handle all matters related to the draft extension, including acceptance. Tr. Ex. 49, Bates No. EREH-000046 ("I will send you [Brusini's] contact information he[sic] has full authority to come up with a settlement with you[.]"). On June 1, 2020, Brusini wrote Casey the following email:
"Hi Kevin: Thanks for sending the draft Second Amendment to Lease Option Agreement for your Exeter property. I reviewed it and make only one minor change per the attached redline (I don't think that 'Deposit' was a defined term, so I just called it a 'payment'). I've also attached a simple First Amendment to Memo of Option Agreement to be recorded so that the extension period appears of record. Please let me know if these two documents are good to go and If[sic] so I'll arrange to get Mark's signature later today or tomorrow morning. If you could also email me your wire transfer instructions for the $25,000 payment, I'll have Green's accounting department prepare the wire. Thanks and feel free to all[sic] my cell (401-480-4086) with any questions at all. Steve." (Tr. Ex. 15, Email from S. Brusini to K. Casey, June 1, 2020) (emphasis added).
Weighing against the above email manifesting subjective acceptance are (i) the conditional language of the email ("Please let me know if these two documents are good to go and If so I'll arrange . . .") and (ii) the fact that it still seemingly required any attorney review. Weighing in favor of acceptance is the fact that the only modification to the second amendment was demonstrably nonmaterial (the swapping out of "payment" for "Deposit," as discussed above) and, more persuasively, the request for the wire transfer logistics so as to affect payment.
Under Rhode Island law, an "acceptance may be valid despite conditional language if the acceptance is clearly independent of the condition." Ardente v. Horan, 117 R.I. 254, 260, 366 A.2d 162, 165 (1976). Here, the condition is presumably whether Casey is "good to go" with a single non-material change and/or Casey approves of (largely) the same document he himself drafted. As such, Green's acceptance is "clearly independent" of EREH's final approval of its own offer. See 1 Williston, Contracts § 79 at 261-62 (3d ed. 1957) ("Frequently an offeree, while making a positive acceptance of the offer, also makes a request or suggestion that some addition or modification be made. So long as it is clear that the meaning of the acceptance is positively and unequivocally to accept the offer whether such request is granted or not, a contract is formed.") (emphasis added). This Court interprets Brusini's use of conditional language Q'Please let me know if these two documents are good to go and If [sic] so ...") as an obvious instance of civility, rather than attaching any sort of material condition to the acceptance. Similarly, there is no reasonable danger that EREH would, in essence, "blow up the deal" over one grammatical, non-substantive change by Green. Finally, DePasquale credibly testified that he had reached an agreement with Casey and because he was occupied with other matters, turned fmalization over to his agent as a matter of convenience.
Cognizant of the case law which states that the determination of an "absolute acceptance," as opposed to a "conditional acceptance" (or counter offer), is "not always easy to answer... [but] must be determined by the same common-sense process of interpretation . . . applied in so many other cases," this Court elects to utilize its common sense and interpret Brusini's June 1, 2020 email as an absolute acceptance of a binding offer. Ardente, 117 R.I. at 260, 366 A.2d at 166 (quoting Corbin, 1 Corbin on Contracts § 82). As such, this Court finds that both parties have objectively and subjectively acquiesced to a valid modification of the Green Option, in addition to an implicit, conduct-based waiver on EREH's part that the May 10, 2020 expiration date terminated the Option.
5
Question 4 - The Statute of Frauds
The Rhode Island Statute of Frauds provides that no action shall be brought "(1) [w]hereby to charge any person upon any contract for the sale of lands, tenements, ... or the making of any lease thereof for a longer time than one year . . . unless the promise or agreement upon which the action shall be brought.. . shall be in writing, and signed by the party to be charged therewith[]" G.L. 1956 § 9-1-4. Neither Green nor EREH dispute that the original Green Option, which provided for a lease long enough in duration to accommodate construction and operation of a solar photovoltaic project, was subject to the above provision of the Statute of Frauds. See Tr. Ex. 17. However, when it comes to classifying the proposed Second Amendment to Option for the purposes of the Statute of Frauds, Green and EREH offer vastly different takes on the function of the document; with the former offering the proposed second amendment as the mere memorialization of an oral "extension of time to perform the [Green Option]," and the latter characterizing it as "effectively ... an entirely new option agreement."
See Def. EREH's Am. Pre-Trial Mem. at 7 ("Rather, the evidence will show that the parties were negotiating a potential amendment to the Green Option that went well beyond a limited extension of time for performance and would effectively constitute an entirely new option agreement.").
Mindful of the Supreme Court's guidance that "[a] court's proper role in interpreting a contract is to divine 'the intent that is expressed in the language of the contract[, ]'" this Court finds EREH's categorization of the proposed second amendment as retroactively self-serving and plainly wrong. Young v. Warwick Rollermagic Skating Center, Inc., 973 A.2d 553, 560 n.ll (R.I. 2009) (quoting Westinghouse Broadcasting Co. v. Dial Media, Inc., 122 R.I. 571, 581 n.10, 410 A.2d 986, 991 n.10. (1980)). There is no evidence whatsoever that the parties' intent was to create a new amendment. As discussed above extensively, the document which Casey sent on May 30 was not a new agreement and it specifically so stated. "Grantor and Grantee desire to further amend the [original] Option Agreement." See also Tr. Ex.44, Section 3. EREH cannot now be allowed to argue that, contrary to its own carefully drafted words, both parties somehow were under the impression that they were negotiating a new or "essentially" new option agreement. The only substantive items were to provide for a 24-month extension of the Green Option in exchange for a Twenty-Five Thousand Dollar payment. It leaves every other term and condition of the original Green Option untouched. While the parties may have considered other changes in their negotiations, they apparently never had on a meeting of the minds on those issues.
However, the second amendment does concern the "making of a[] lease . . . for a longer time than one year" and, as such, does implicate subsection 1 of our Statute of Frauds. See § 9-1-4. With that in mind, the question for the Court becomes: does an amendment to an option contract that originally fell within the Statute of Frauds (and was so satisfied) need to, essentially, "re-satisfy" the Statute.
Massachusetts law answers this question squarely in the affirmative: "[A]mendments to a contract that is within the Statute of Frauds are themselves within the Statute of Frauds." Rex LumberCo. v. Acton Block Company, Inc., 562 N.E.2d 845, 848 (Mass. App. Ct. 1990). However, an ancient defensive exception to the rule exists in Massachusetts where a contract within the Statute is orally modified (and evidenced) with regard to the time or manner of performance rather than the material substance of the contract. See Cummings v. Arnold, 44 Mass. 486, 494 (Mass. 1842). The First Circuit found the test "is whether the parol modification becomes so extensive and significant that it is not a mere substituted performance" but "[i]t becomes a new contract and that contract must be proved in writing." Johnston v. Holiday Inns, Inc., 565 F.2d 790, 796 (1st Cir. 1977). The Massachusetts Court of Appeals illustratively applied this test in McKinley Investments, Inc. v. Middleborough Land, Inc., holding that oral contract modifications, which affect the contract's time, tolling, and price established a substitute performance rather than a substitute (i.e., new) contract:
"It is to be observed in the present case, that the oral agreements, offered to be proved by the defendants, did not vary the terms of the written contract as to its performance on their part; the only alteration was as to the time of payment by the plaintiffs. Such an alteration, made on a good consideration, and before any breach of the contract, may, we think, be proved, without any infringement of the statute of frauds or any principle of law." Id., at 494.
"In this case the modifications regard both the time for performance (the twelve-month extension and the substitution of a definite time period for a tolling period) and the payment of additional money. While the payment appears to us, in the circumstances, as consideration for the contract modification, we do not consider it relevant on summary judgment that the parties contest whether the additional payment is consideration or an increase in the sale price. In either case, the fact of payment is not sufficient to render the oral modification invalid. We hold that it was error for the judge to have ruled that the identified modifications rendered the contract, as amended, unenforceable. Summary judgment was improperly granted." 818 N.E.2d 627, 630 (Mass. App. Ct 2004).
As such, the Statute of Frauds did not render the orally amended contract unenforceable.
While the Court has found no Rhode Island case law concerning Statute-qualifying amendments to a contract originally falling under § 9-1-4, the logic of the Massachusetts case law is persuasive. Further the Court cannot help but notice that two of the three oral contract modifications held to be "non-material" in McKinley Investments (i.e., the extension of a year or more in time to perform as well as payment in consideration for said additional time) are present in the instant matter. See McKinley Investments,, 818 N.E.2d at 629 ("However, upon closer examination, the identified modifications are, as matter of law, most fairly described as modes of performance . . . varied by a subsequent oral agreement based upon a valid consideration, which our cases have permitted.") (internal citations omitted). The Green-EREH modifications have additional gravitas to those in McKinley Investments because they are evidenced by a writing, admittedly unsigned, and not just oral conversations. Further, as in McKinley Investments, all the substantive aspects of the original agreement remain unaffected, i.e., the contracting parties, the subject matter of the contract, the rent and other lease terms, the permitting and zoning requirements, etc.
In the absence of any Rhode Island case law to the contrary, this Court reasons that oral modifications to a lease option agreement affecting time and price constitute a substitute performance rather than a substitute contract. As such, the two modifications specified in the Second Amendment to Option do not implicate the Statute of Frauds, as the modifications were discrete, performance-based, and not required to be in writing.
6
Good Faith & Dealing During Option Extension Period
Having determined that Green and EREH entered into a valid amendment to the Green Option extending the time for exercising this option, the Court could conclude its Decision. However, the Court believes a complete analysis of the evidence requires it to address the issue of the common law duty of good faith and fair dealing concerning the negotiations of the second amendment.
Under Rhode Island law, it is well established that '"virtually every contract contain[s] an implied covenant of good faith and fair dealing between the parties.'" Centerville Builders, Inc., 683 A.2d at 1342 (quoting Crellin Technologies, Inc., 18 F.3d at 10). However, the requirement that parties deal fairly with one another only applies after a binding contract is formed. Id; see also Ide Farm & Stable, Inc. v. Cardi, 110 R.I. 735, 739, 297 A.2d 643, 645 (1972). Our Supreme Court has further clarified that "a claim for breach of the implied covenant of good faith and fair dealing does not create an independent cause of action separate and apart from a claim for breach of covenant." McNultyv. Chip, 116 A.3d 173, 185 (R.I. 2015).
The Court has already determined that the expiration date on the Green Option was implicitly extended by the Optionor's conduct. As such, the Green Option certainly remained valid through June 8, 2020, when Casey emailed Brusini "We are in the process of hiring new counsel and expect to have formalized that in the next few days. As soon as we do, we'll let you know and continue our correspondence accordingly. Thanks." (Tr. Ex. 59). It was not until June 26, 2020 that negotiations for an extension of the Lease Option Agreement were finally put to an end. (Tr. Ex. 14.)
Because the implied covenant of good faith and fair dealing is designed to ensure "that contractual objectives may be achieved," neither party to the agreement "shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract." McNuity, 116 A.3d at 185 (internal citations omitted). Green's "fruits" under the extended Green Option were two in number. He could either (1) exercise the Option he paid for and enter into the Lease, or (2) leverage the goodwill and time spent performing his side of the Option in order to attempt to persuade EREH to further extend the expiration date. Both courses of action were permissible. What was not permissible, however, was any attempt by Casey to offer Green's "fruits" to a third party while continuing to engage in a course of conduct suggesting that the May 20, 2020 expiration date remained waived. That, however, is exactly what happened in the present matter, as demonstrated by competent exhibitory and testimonial evidence.
On May 11, 2020, Casey could have advised DePasquale that the Green Option had terminated but EREH was willing to negotiate a new option agreement. Under such circumstances, the duty of good faith and fair dealing would not be applicable because any agreement between the parties had terminated. Instead, as discussed above, Casey acted as if the option was in effect, and continued to negotiate the terms of the extension. Under such circumstances, good faith and fair dealing required-at the minimum-disclosure by EREH to Green that it had another offer. It did not need to disclose the offeror or the terms. However, EREH, even before May 10, 2020, concealed from Green the fact that it was negotiating with another party.
To reach this conclusion, the Court points out that Everett testified that in early May, prior to May 10, 2020, Revity, who was also a client of DarrowEverett, was made aware that the Property would soon be available. In fact, Everett admitted that prior to May 10, 2020, he had communicated with Revity's in-house counsel who, by May 12, 2020, produced a first draft of the Revity Option. From May 5 to May 8, 2020, there was an odd email exchange between Everett and Jonathan Whaley, attorney for Green. The exchange began on May 5, 2020 with Whaley sending a recently negotiated Second Amendment to Lease Option Agreement. It then proceeds as follows:
"Everett: May 8, 9:43 a.m. 'Jonathan-for now, we will do an extension to May 13, 2020, 6 pm. Can you draft something up and send? Thanks
Wlialey: May 8, 11:28 a.m. T don't understand the need for a 5 day extension on a simple amendment that has already been agreed to. The agreement was already made by [Casey] and [DePasquale], and the amendment I sent over was just documenting it. It's a very simple extension of time with everything else remaining the status quo."
Everett May 8, 11:56 a.m. 'Jonathan-I don't understand-there is no agreement without a writing.'" (Tr. Ex. 39, Bates No. EREH- 000008-09.)
Later, at 2:06 p.m. on May 8, Everett writes that Casey needs to talk to his partner but he does acknowledge that there have been oral discussions and "that agreement might be what you sent me or it might not." Id. at Bates No. EREH-000007.
The Court reads this exchange and can only conclude that Everett was in the unfortunate position of having to stall for time. Despite being sent a document entitled "Second Amendment to Lease Option Agreement," Everett cryptically responds with the following: "[Whaley]-I don't understand-there is no agreement without a writing." When asked at trial, by the Court, why he would respond that there was no "writing" to an email containing an attached writing, his answer was insufficient at best, and intentionally opaque at worst. His email reference to Casey's partner is the only reference in the entire trial to such an individual. While there may have been a partner, Casey's testimony leads to the conclusion that he called the shots. Moreover, since Everett wrote that Casey needed the assent of his partner, it is apparent that Everett talked to Casey sometime between 11:56 and 2:06 on May 8 and, if so, he could have found out if the document sent by Whaley reflected Casey's and DePasquale's discussions. Instead, Everett responded that it might or might not be their agreement. This exchange reinforces the Court's conclusion that EREH was attempting to ride two horses at the same time.
Everett was again put in an awkward position on May 30, 2020. Casey had sent a Second Amendment of Lease Option Agreement to DePasquale who forwarded it to Brusini with instructions to deal directly with him. Brusini, still believing that EREH was represented by DarrowEverett, asked Everett for permission to work directly with Casey (as required by the Canon of Ethics). At this point, Everett knew that his firm no longer represented EREH because it was representing Revity in its negotiations with EREH. As such, Everett simply responded "Zach and Jon [two of his partners] are handling this now." Darrow responded later in the day that "DarrowEverett LLP no longer represents" EREH. (Tr. Ex. 13.)
On June 1, 2020, Brusini wrote to Casey, the substance of which will be discussed below, and received no response. (Tr. Ex. 15.) He emailed again on June 8, 2020, when Casey responded that he was in the process of hiring new counsel, that it would be done in the next few days and discussions would continue. (Tr. Ex. 59.) From June 1 to June 26, after Casey sent what Green believed to be an acceptable offer, EREH never terminated the Green Option nor communicated with any representative of Green that the offer Casey sent was not agreeable. Thus, while EREH and its counsel continued to ride the Green horse through its stalling tactics, they were finalizing the Revity Option.
In sum, uncontested evidence points to Casey attempting to sell the largest "fruit" of the Green Option to a third party while at the same time manifesting to Green that its Option was still very much valid and in the process of being extended or altered vis-a-vis mutual negotiation. Since Casey could-and did-attempt to deprive DePasquale of the option to lease the Large Parcel, his actions constituted a black letter violation of the implied covenant of good faith and fair dealing. See McNulty, 116A.3datl85 (The implied covenant of good faith and fair dealing "ensures that contractual objectives may be achieved, and that neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract.") (internal citations and references omitted).
This violation of the covenant buttresses the Court's findings that the Green Option was extended and the relief granted below is appropriate.
VI
CONCLUSION
A
WC-2020-0471 - Large Parcel Litigation
1
Findings and Declaration
In summary, based on the foregoing findings of fact and conclusions of law, the Court finds and declares as follows:
1. The Green Option did not terminate on May 10, 2020.
2. EREH violated its covenant of good faith and fair dealing with Green.
3. Green and EREH agreed to extend the Green Option for two (2) years upon payment by Green of Twenty-Five Thousand ($25,000) Dollars.
4. Because it had agreed to extend the Green Option, EREH had no authority to enter into the Revity Option.
5. Revity did not tortiously interfere with Green's contractual relations and business expectancy regarding the Green Option.
2
Relief
1. The Green Option shall be extended for two (2) years from the date of the entry of judgment, provided Green pays EREH twenty-five thousand ($25,000) dollars within three (3) business days of such entry.
2.Green shall be restrained and enjoined from performing any of its obligations under the Revity Option and from selling, leasing or otherwise transferring any interest whatsoever in the Large Parcel to Revity or anyone else until the Green Option has terminated or expires without Green having exercised its option.
3.Because Green has no permits to develop a solar project and had not exercised the Green Option, the Court declines to award Green any damages.
4.The Court declines to award attorneys' fees and costs to any party.
B
WC-2020-0346 - Small Parcel Litigation
1
Findings and Declaration
In summary, based on the foregoing findings of fact and conclusions of law, the Court finds and declares as follows:
1. The Solar Lease, as amended by the First Amendment to Solar Lease and the Escrow Agreement, are valid and enforceable contracts.
2.Green is not, and has not been, in default of the Solar Lease, as amended.
3. The Solar Lease, as amended, did not terminate as a result of Defendant EREH's issuance of a Notice of Termination.
4. Revity did not tortiously interfere with Green's contractual relations and business expectancy regarding the Solar Lease.
2
Relief
1. The parties, within thirty days of the entry of judgment, shall meet and define the boundaries of the Small Parcel. If they fail to agree, the Court will retain jurisdiction for the purposes of defining the Small Parcel.
2.The Court declines to award attorneys' fees and costs to any party.
C
WD-2021-0065 Appeal of Eviction
1.The Court finds that the Solar Lease is a valid and enforceable contract, as amended.
2.Green is not in violation or default of the Solar Lease.
3. The Court declines to award possession of the Small Parcel to Defendants EREH and Casey.
4. Green's appeal is granted, and the decision of the District Court entered on February 8, 2021 is reversed.
5.The Court declines to award attorneys' fees and costs.
Counsel shall draft the appropriate Order and Judgment in conformance with this Decision.
EXHIBIT A OMITTED.
STATEMENT OF STIPULATED MATERIAL FACTS
1. Exeter Real Estate Holdings, LLC d/b/a EREH, LLC ("EREH") is a Delaware limited liability company registered with the Rhode Island Secretary of State as a foreign limited liability company.
2. Kevin Casey ("Casey") is a member of EREH.
3. Green Development, LLC d/b/a Wind Energy Development, LLC is a domestic limited liability company.
4. Mark DePasquale ("DePasquale") is a member of Green Development, LLC.
5. Revity Energy, LLC ("Revity") is a Delaware limited liability company registered with the Rhode Island Secretary of State as a foreign limited liability company.
6. In 2015, Exeter passed an ordinance permitting the development of solar facilities under certain conditions. Under the 2015 Ordinance, utility-scale, ground-mounted solar photovoltaic facilities were permitted by special use permit in the RU-4 rural district ("Original Solar Ordinance"). EREH is the record owner of land located off Ten Rod Road at Assessor's Map 22, Block 3, Lot 3 in the Town of Exeter ("Property").
7. The Property was at all material times, and is, located in an RU-4 zoning district ("RU-4 Zone").
8. The Property comprises a total of approximately 118 acres.
9. In 2015, Exeter passed an ordinance permitting the development of solar facilities under certain conditions. Under the 2015 Ordinance ("Original Solar Ordinance"), utility-scale, ground-mounted solar photovoltaic facilities were permitted by special use permit in an RU-4 Zone.
10. On May 10, 2017, Green entered into an Option to Lease ("Green Option") a portion of property ("Large Parcel") owned by EREH in conjunction with Green's plans to develop a utility-scale solar project at the Large Parcel.
11. The Green Option was for a period of two (2) years, with a right to extend for one additional period of twelve (12) months.
12. On May 10, 2017, Green and EREH entered into a lease agreement ("Lease") which provides for Green to lease a separate four (4) to six (6) acre portion ("Small Parcel") of the Property.
13. The Lease identifies the general area of the Small Parcel as depicted on Exhibit B to the Lease.
14. As of the date of the commencement of the Lease and the Green Option on May 10, 2017, the Original Solar Ordinance was in place.
15. On August 9, 2017, Green filed a pre-application with the Town of Exeter ("Town") Planning Board ("Planning Board") for a 20+ MW solar project to be sited on the Property. The instant project was known as the WED Ridge Project.
16. The August 9, 2017 pre-application was submitted under the Original Solar Ordinance; therefore, required major land development review and approval by the Planning Board and a special use permit from the Town Zoning Board ("Zoning Board").
17. On January 18, 2018, Green submitted a master plan application for the WED Ridge Project.
18. On February 1, 2018, WED Ridge Project master plan application was certified complete by the Town, along with 3 other master plan applications submitted by Green for projects known as 84 Exeter Road, Queens Fort Solar/99 Ten Rod Road, and 22 Tripps Road.
19. On February 26, 2018, Green, by and through its counsel, requested a stay on three of the applications it submitted: WED Ridge Project, Queens Fort Solar and 22 Tripps Road.
20. On June 26, 2018, the Planning Board denied the master plan application for Green's 84 Exeter Road Project.
21. Green appealed the denial of 84 Exeter Road by and through C. A. No. WC-2018-0519, which culminated in a decision upholding the denial on April 20, 2019.
22. On July 16, 2018, the Town amended the solar ordinance, passing what was known as the "Green Ordinance" which provided that utility-scale ground mounted solar photovoltaic facilities were now a permitted use in an RU-4 Zone, but still subject to major land development review and approval.
23. The passage of the Green Ordinance was appealed by and through WC-2018-0407, which remains pending.
24. On August 31, 2018, EREH and Green entered into a First Amendment to Solar Option Agreement (the "First Amendment to Option").
25. On September 4, 2018, the Town passed another amended solar ordinance, known as the "Solar 8 Ordinance."
26. The Solar 8 Ordinance did not allow utility-scale ground-mounted solar photovoltaic facilities in an RU-4 Zone.
27. On September 10, 2018, EREH and Green amended the Lease by executing a First Amendment to Solar Energy Lease (the "First Amendment to Lease").
28. As of the date of the First Amendment to Lease, the Solar 8 Ordinance was in place.
29. The Town Council voted to rescind the Solar 8 Ordinance on October 15, 2018.
30. The recession of the Solar 8 ordinance was appealed by WC-2018-0590 and remains pending.
31. At the time the Solar 8 Ordinance was rescinded, the WED Ridge Project had not been heard for master plan review, by the Town of Exeter Planning Board.
32. On October 15, 2018, EREH and Green entered into an Escrow Agreement regarding the Lease.
33. On November 19, 2018, Green resubmitted its application and plans for the WED Ridge Project. Green also filed 3 other new applications for 84 Exeter Road, Tripps Corner Road and 99 Ten Rod Road.
34. The November 19, 2018, submission by Green to the Town was for a utility-scale ground-mounted solar facility at the Property.
35. On December 10, 2018, the Town of Exeter passed a moratorium staying all solar projects in the Town of Exeter ("Moratorium").
36. As of the date of the Moratorium, Green had submitted the following projects to the Town which had not been certified complete:
October 16, 2018
Ten Rod Road (R. Whitford)
Sodom Trail
Stamp Farm
November 19, 2018
84 Exeter Road
WED Ridge Project
Tripps Corner Road
99 Ten Rod Road (Andrews)
(Collectively "Green's Projects").
37. On December 11, 2018, Green filed a lawsuit by and through WC-2018-0636 challenging the legality of the Moratorium.
38. On February 4, 2019, the Town Council further amended the solar ordinance ("Current Solar Ordinance" or "Solar 9 Ordinance") which ordinance remains in effect.
39. The Current Solar Ordinance designated ground mounted utility scale solar photovoltaic facilities a prohibited use on the properties proposed for Green's Projects.
40. As of February 4, 2019, ground-mounted utility-scale solar photovoltaic facilities are prohibited in an RU-4 Zone under the Current Zoning Ordinance.
41. Green's Projects submitted to the Town, including WED Ridge Project, are not developable under the Current Solar Ordinance.
42. On March 21, 2019, after several days of hearings and testimony in January 2019, the Court denied Green's request for injunctive relief, and rejected Green's arguments with respect to the validity of the Moratorium in a written decision in WC-2018-0636.
43. On or before May 10, 2019, Green exercised its 12-month extension for the Lease Option.
44. On June 19, 2020, Revity and EREH entered into an option to purchase the entirety of the Property which included both the Large Parcel and the Small Parcel ("Revity Option").
45. Notice of Revity Option was recorded at book 552, page 327 in the Town of Exeter Land Evidence Records on June 19, 2020.
46. On July 20, 2020, Judgment entered in WC-2018-0636 in favor of the Defendants. An appeal notice was filed one week later and remains pending by and through SU-2020-0244-A.
47. On July 20, 2020, counsel for EREH sent a demand letter to Green to identify its proposal for the exact location of the Small Parcel and the precise locations of the proposed access and operations easements Green needed for the Small Parcel.
48. Green did not respond to the July 20, 2020, demand letter.
49. EREH sent a "Notice of Default" for the Lease on August 20, 2020, providing Green with a cure period of thirty (30) days pursuant to the Lease terms, in which to make its proposals for the exact location of the Small Parcel and the precise location of the access and operations easements.
50. Green filed its complaint in WC-2020-0346 on August 24, 2020, asserting claims regarding the Large Parcel and Green Option ("Large Parcel Litigation").
51. On October 30, 2020, EREH sent a "Notice of Termination and to Quit" letter regarding the Lease demanding possession by November 5, 2020.
52. On November 10, 2020, EREH filed an action for possession of the Small Parcel, by and through 4CA-2020-00923 (the "District Court Litigation"); and Green filed its Complaint in WC-2020-0471, asserting claims to the Small Parcel under the Lease, as amended (the "Small Parcel Litigation").
53. The District Court Litigation is the subject of a de novo appeal to Superior Court under C.A.No.:WD-2021-0065.
54. On November 18, 2020, an Interconnection Study for the Green Projects was completed.
55. On January 6, 2021, Revity and EREH applied for pre-application review for a Solar Project to be located on the Large Parcel ("Revity Solar Project").
56. The plans submitted to the Town for the Revity Solar Project specifically exclude the development of the Small Parcel.
57. The note in the Small Parcel area on the plans submitted by Revity for the Revity Solar Project provides that such area is "Not Part of Project Area."
58. On March 29, 2021, National Grid's Distribution Planning Document Interconnection Study for the Green Projects was completed.
59. On March 23, 2021, and April 27, 2021, Revity appeared before the Town Planning Board for pre-application review for the Revity Solar Project.
60. On April 14, 2021, a Motion to Amend was filed in the Large Parcel Litigation to add the Revity and Palumbo to the lawsuit.
61. Revity was subsequently added as a party-Defendant in both the Large Parcel Litigation and the Small Parcel Litigation.
62. On May 21, 2021, Revity submitted petitions for a zoning ordinance amendment and a comprehensive plan amendment for the Property to the Town Council.
63. On that same date, Revity submitted its application for master plan review for the Revity Solar Project.
64. Green and National Grid entered into Interconnection Agreements on July 13, 2021, for the Green Projects.
65. Revity received master plan approval on July 27, 2021.
66. Green appealed Revity's master plan approval on August 31, 2021.
67. All submissions to the Town by Green for the Property were for utility-scale ground-mounted solar photovoltaic facilities.
68. Green never applied for a zoning ordinance amendment for the Property.
69. Green has not obtained any master plan approvals for the Property.
70. Green has not obtained any preliminary plan approvals for the Property.
71. Green has not obtained any final plan approvals for the Property.
72. Green never submitted an application for a special use permit for the Property.
73. Green never submitted a stand-alone application to the Town for the development of the Small Parcel.