Allan M. Shine v. Charles Moreau Charles D. Moreau v. Allan M. Shine Charles Moreau v. Allan M. Shine ( 2020 )

January 9, 2020
Supreme Court
Allan M. Shine :
v. : No. 2018-84-Appeal.
(PB 10-5615)
Charles Moreau et al. :
Charles D. Moreau et al. :
v. : No. 2018-85-Appeal.
(PC 10-5672)
Allan M. Shine et al. :
Charles Moreau :
v. : No. 2018-86-Appeal.
(PB 10-7394)
Allan M. Shine. :
NOTICE: This opinion is subject to formal revision before
publication in the Rhode Island Reporter. Readers are requested to
notify the Opinion Analyst, Supreme Court of Rhode Island, 250
Benefit Street, Providence, Rhode Island 02903, at Telephone 222-
3258 of any typographical or other formal errors in order that
corrections may be made before the opinion is published.
Supreme Court
Allan M. Shine :
v. : No. 2018-84-Appeal.
(PB 10-5615)
Charles Moreau et al. :
Charles D. Moreau et al. :
v. : No. 2018-85-Appeal.
(PC 10-5672)
Allan M. Shine et al. :
Charles Moreau :
v. : No. 2018-86-Appeal.
(PB 10-7394)
Allan M. Shine. :
Present: Suttell, C.J., Flaherty, Robinson, and Indeglia, JJ.
OPINION
Justice Robinson, for the Court. These consolidated cases come before this Court on
appeal from an April 20, 2017 order of the Providence County Superior Court denying the
motions for entry of judgment filed by former Central Falls Mayor Charles Moreau and former
members of the Central Falls City Council (the City Council) (collectively, the elected
officials).1 The rationale for said denial was set forth in a February 21, 2017 decision of the
1
No doubt due to their importance and complexity, these consolidated cases have
remained pending for nearly ten years. However, in that time, many of the elected officials
involved in the case no longer hold political office or have moved on to different political
offices. For the purposes of the issue currently before us, we need not engage in specifying the
ever-changing parties in this case. It suffices to say that, on appeal, the appellants represent that
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Superior Court; specifically, that decision held that the elected officials were not entitled to
indemnification from the State of Rhode Island2 for attorneys’ fees and legal costs that they
incurred over the course of this action. On appeal, the elected officials contend that the hearing
justice erred in holding that the elected officials were not entitled to indemnification from the
state because, in the view of the elected officials, this Court’s previous opinion in Shine v.
Moreau, 119 A.3d 1 (R.I. 2015) (Shine I), provided for such an award of attorneys’ fees and
costs. The elected officials further contend that a suit against a receiver appointed pursuant to
the terms of G.L. 1956 chapter 9 of title 45 (the Financial Stability Act)3 is a suit against the
state, and that fact, in their opinion, entitles them to indemnification from the state.
These cases came before the Supreme Court for oral argument pursuant to an order
directing the parties to show cause why the issues raised in these appeals should not be
summarily decided. After considering the written and oral submissions of the parties and after a
the appealing parties are former Mayor Charles Moreau and numerous former members of the
Central Falls City Council (William Benson, Jr.; Richard Aubin, Jr.; Eunice DeLaHoz; and
Patrick J. Szlastha), as well as an interested party—Attorney Lawrence Goldberg, the attorney
for the City Council. We refer to those parties collectively as “the elected officials.” For a more
detailed recitation of the parties to this case and its procedural history, we refer the interested
reader to our opinion in Shine v. Moreau, 119 A.3d 1 (R.I. 2015) (Shine I).
2
The appellee in this action is the Department of Revenue for the State of Rhode Island,
by and through its Director, Mark A. Furcolo. The Court notes that the caption lists Allan M.
Shine. For the purpose of clarity, we deem it necessary to explain that Mr. Shine was the trustee
appointed for Central Falls in bankruptcy pursuant to the terms of Article IV, Section S of the
“Fourth Amended Plan for the Adjustment of Debts of the City of Central Falls, Rhode Island.”
However, that bankruptcy proceeding has since come to an end.
We need not detail any of the remaining parties to this case, but we once again refer the
interested reader to our opinion in Shine I.
3
We note that there were several individuals who served as receiver for the City of Central
Falls during the period of time preceding the filing of these cases and during the pendency of the
cases. For the purposes of this opinion, we shall simply make a generic reference to “the
receiver.”
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thorough review of the record, we are of the opinion that cause has not been shown and that the
appeals may be resolved at this time without further briefing or argument.
For the reasons set forth in this opinion, we affirm the order of the Superior Court.
I
Facts and Travel
The background of these cases is well-known to this Court, in that this is the third time
that we have been asked to opine with respect to an issue relevant to these cases. For that reason,
we need not and, indeed, will not recite the complicated and lengthy facts. We refer the
interested reader to our previous opinions in this action—Moreau v. Flanders, 15 A.3d 565 (R.I.
2011) (Flanders) and Shine I. All that is necessary to the resolution of these appeals is a brief
recitation of the procedural posture of the cases. In so doing, we rely primarily on our previous
opinions and various documents from the record.
In July of 2010, a receiver was appointed for the fiscally-troubled City of Central Falls
(the City) pursuant to the then-new Financial Stability Act. These cases arose out of conflicts
between the receiver on the one hand and the Mayor and City Council on the other. Essentially,
these cases required a determination as to the constitutionality of the Financial Stability Act
under which the receiver was appointed. This Court ultimately held the Financial Stability Act
to be constitutional in our opinion in Flanders. Flanders, 15 A.3d at 574-89.
Thereafter, the parties continued to litigate about the issues of attorneys’ fees and
indemnification. The cases returned to this Court, and we then opined that the receiver was not
entitled to recover attorneys’ fees, that Mayor Moreau was entitled to indemnification for his
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legal fees and costs, and that the attorney for the City Council was entitled to recover his fees.4
Shine I, 119 A.3d at 8-19.
The parties come before us now with respect to a dispute as to who is required to
indemnify the elected officials for their legal fees and costs—does the liability rest solely with
the City, or the City and the state?
This Court is aware that the City was engaged in a proceeding in bankruptcy court, but
what transpired there has no bearing on the issue before us. Based on the record and exhibits
before this Court on appeal, it is clear that, in conjunction with that proceeding, the elected
officials entered into a settlement with the City with respect to indemnification and released all
their remaining claims against the City. Therefore, any claims for indemnity against the City are
not before us. We are concerned only with determining whether the elected officials are also
entitled to indemnification from the state.
In June of 2016, the elected officials filed separate motions for entry of judgment in
Superior Court, contending, for what seems to this Court to have been the first time, that they
were also entitled to indemnification from the state. The Department of Revenue, on behalf of
the state, opposed the motions. On February 21, 2017, the hearing justice issued a written
decision on the elected officials’ motions for entry of judgment. He denied the motions for entry
of judgment, holding that “[a] plain reading of the statute and City Ordinance [at issue] require
the City of Central Falls, not the State, to indemnify the Mayor and the City Council members
4
Our specific mandate reads as follows:
“These cases may be remanded to [the Superior Court] for: (1) the
entry of summary judgment in accordance with this opinion; (2) a
determination of the amount of indemnification that the Mayor is
entitled to receive; and, (3) the amount of attorneys’ fees that
Attorney Goldberg is entitled to receive.” Shine I, 119 A.3d at 19.
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who brought this lawsuit in their official capacities.” An order entered to that effect on April 20,
2017.5 The elected officials filed a timely notice of appeal.
II
Standard of Review
We begin by noting that there do not appear to be any factual issues in dispute in these
cases. We are primarily tasked with a pure question of law—i.e., explicating our previous
decision in Shine I and the legal authorities on which it was based. When this Court is presented
with a pure question of law, this Court conducts a de novo review. Waterman v. Caprio, 983
A.2d 841, 844 (R.I. 2009) (“This Court * * * uses a de novo standard to review a trial justice’s
rulings on questions of law.”).
III
Analysis
The elected officials contend that this Court’s previous decision in Shine I provided for
indemnification for the elected officials from the state, as well as from the City. It is their claim
that the mandate in that case remanded the matter for, among other things, entry of summary
judgment against the state with respect to the indemnity issue. Consequently, they rely on the
“mandate rule,” which requires the lower court to follow the specific mandate of this Court and
not to “vary it, or examine it for any other purpose than execution; or give any other or further
5
We note that the April 20, 2017 order denying the motions for entry of judgment was not
in so many words styled as a final judgment. However, in this Court’s opinion, the order clearly
has such an element of finality as to be appealable, since it represents the final decision on the
issue of the elected officials’ alleged right to be indemnified by the state. See Town of Lincoln v.
Cournoyer, 118 R.I. 644, 648, 375 A.2d 410, 412-13 (1977) (“[W]e will review an order or
decree which, although in a strict sense interlocutory, does possess such an element of finality
that action is called for before the case is finally terminated in order to prevent clearly imminent
and irreparable harm.”). What is more, the order effectively ended the cases; once the order
issued, there was nothing that remained to be done in the cases.
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relief; or review it, even for apparent error, upon any matter decided on appeal; or intermeddle
with it, further than to settle so much as has been remanded * * *.” Pleasant Management, LLC
v. Carrasco, 960 A.2d 216, 223 (R.I. 2008) (internal quotation marks omitted).
In addressing the elected officials’ contentions on appeal, our analysis can begin and end
with a review of our opinion in Shine I. In the judgment of this Court, that opinion is abundantly
clear and leaves no room for doubt—the elected officials are entitled to indemnification from the
City but not from the state.
In reaching our final determination in Shine I with respect to the legal fees and costs
accrued by Mayor Moreau and Attorney Goldberg, we relied primarily on one statutory section
and three City Ordinances. We deem it instructive to review those sources in more detail.
First, the Court relied upon G.L. 1956 § 45-15-16, which provides in pertinent part as
follows:
“All * * * city council[s] * * * shall * * * indemnify any and all
* * * public employees * * * [and] officials * * * from all loss,
cost, expense, and damage, including legal fees and court costs, if
any, arising out of any * * * action * * * by reason of any
intentional tort or by reason of any alleged error or misstatement or
action or omission, or neglect or violation of the rights of any
person under any federal or state law, including misfeasance,
malfeasance, or nonfeasance * * * if the elected or appointed * * *
official * * * at the time of the intentional tort or act, omission or
neglect, was acting within the scope of his or her official duties or
employment. The municipality * * * may decline to indemnify any
elected or appointed * * * official * * * for any misstatement,
error, act, omission, or neglect if it resulted from willful, wanton,
or malicious conduct on the part of the * * * official * * *. The
indemnity shall be provided by the city * * * council * * * on a
case by case basis or by ordinance of general application. The
ordinance or agreement to indemnify shall include, among other
things, the provision of legal counsel at the expense of the city or
town and/or the reimbursement for attorneys’ fees and other
expenses incurred in connection with the conduct of the defense,
including payment of the judgment.” (Emphasis added.)
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This Court further relied upon the Central Falls Code of Ordinances, Chap. 2, Art. III, Div.
3, § 2-108 (City Ordinance) which provided as follows:
“The city shall indemnify any and all public employees [and]
officials * * * from all loss, cost, expense and damage, including
legal fees and court costs, if any, arising out of any * * * action
* * * by reason of any intentional tort or by reason of any alleged
error or misstatement or action or omission, or neglect or violation
of the rights of any person under any federal or state law, including
misfeasance, malfeasance or nonfeasance * * * if such employee
[or] official * * * at the time of such intentional tort or act,
omission or neglect, was acting within the scope of his official
duties or employment.” (Emphasis added.)
City Ordinance § 2-109 provided as follows:
“The city shall decline to indemnify any such employee [or]
official * * * for any misstatement, error, act, omission or neglect
if the same resulted from willful, wanton or malicious conduct on
the part of such employee [or] official * * *. The city council shall
decide, on a case-by-case basis, whether indemnification should be
allowed or declined.” (Emphasis added.)
Lastly, City Ordinance 2-110(b) states that, “[t]he city council shall have the authority to approve
or deny any and all requests for outside legal counsel on a case-by-case basis.” (Emphasis
added.)
It is clear beyond peradventure to any reader that every just-quoted statutory or ordinance
section applied specifically to the city, the town, the municipality, or the city council.
Absolutely nowhere in those legislative provisions is there any language that could even
remotely lead to a rational conclusion that indemnification for the elected officials should come
from the state as well as the municipality or the City Council. To so conclude would fly in the
face of the sources relied upon by this Court in Shine I. Nor have we been able to locate any
other language in Shine I that would lead to a conclusion that the elected officials were entitled
to indemnification from the state. This Court’s opinion in Shine I is plainly restricted to the City.
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For that reason, the elected officials’ argument that this Court in Shine I mandated
indemnification from the state and that the Superior Court defied this Court’s mandate in not so
holding is unavailing.
The elected officials further aver as follows: (1) “[t]he Receiver, who was at all times an
instrumentality of the State in the relevant litigation below [having been appointed by the state’s
Director of Revenue], precipitated the litigation against the Appellants, and the State was directly
responsible for the costs and expenses incurred by the Appellants for which they seek
indemnification;” (2) pursuant to the Financial Stability Act, “[Mayor] Moreau was effectively
stripped of his elected Mayoral position * * * and became relegated to an advisor to the Receiver
and, therefore, also an instrumentality of the State;” (3) “the Mayor’s and City Council’s actions
in challenging the [Financial Stability Act] were, in substantial part, in furtherance of and
required pursuant to their sworn duties and obligations to uphold the laws and the Constitution of
this State, in addition to their duties to the City of Central Falls;” and (4) “the exceptionally
unique and unprecedented circumstances and complex legal issues presented by this litigation
warrant the indemnification sought by the Appellants pursuant to the Supreme Court’s inherent
equitable authority to fashion an appropriate remedy.”
We do not find any of those arguments convincing given the clear language of this
Court’s opinion in Shine I. What is more, we note that the receiver, even though he was
appointed by the state, essentially stood in the shoes of the Mayor and City Council. See
§ 45-9-7(c) (“Upon the appointment of a receiver, the receiver shall have the right to exercise the
powers of the elected officials * * *; provided, further, that the powers of the receiver shall be
superior to and supersede the powers of the elected officials of the city, town, or fire district shall
continue to be elected in accordance with the city or town or fire district charter, and shall serve
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in an advisory capacity to the receiver. * * * In the event a conflict arises between the chief
elected official or city or town council or fire district governing body and the receiver, the
receiver’s decision shall prevail.”); see also Francis v. Buttonwood Realty Co., 765 A.2d 437,
443 (R.I. 2001) (“[T]he status of a receiver has been described as that of one who stands in the
shoes of the person over whose estate he has been appointed, and is clothed with only such rights
of action as might have been maintained by such person.”) (internal quotation marks omitted).
The receiver was, for all intents and purposes, the City.6 Thus, the elected officials’ arguments
that the receiver was somehow de facto acting on behalf of the state or as an instrumentality of
the state certainly do not carry the day. Additionally, we perceive no basis for acceding to the
elected officials’ invitation to invoke our inherent equitable authority to fashion an appropriate
remedy in this instance.
Accordingly, in our judgment, it is abundantly clear that this Court’s opinion in Shine I
provided for indemnification to the elected officials from the City but not from the state. As
such, we affirm the order of the Superior Court denying the elected officials’ motions for entry
of judgment.
This case represents the third time that this Court has been asked to opine on issues which
arose in the context of this lengthy disagreement over the constitutionality of the Financial
Stability Act and the indemnification of Mayor Moreau and members of the City Council for
challenging the constitutionality of that act in court. While we commend all parties for their
zealous and helpful advocacy throughout the pendency of this case, we are hopeful that this
opinion provides an ending to this action. See Arena v. City of Providence, 919 A.2d 379, 396
6
What is more, we note that the Financial Stability Act specifically states that “[n]othing
in this chapter shall be construed to pledge the credit and assets of the state to pay the obligations
or indebtedness, including bonded indebtedness, of any municipality or fire district.” G.L. 1956
§ 45-9-14.
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(R.I. 2007) (“It is time for this litigation to end.”); Northern Trust Co. v. Zoning Board of Review
of Town of Westerly, 899 A.2d 517, 520 (R.I. 2006) (mem.) (“We are more than persuaded that
the instant plaintiffs have had their day in court—and then some. The time has come for this
litigation to end.”).
IV
Conclusion
For the reasons set forth herein, we affirm the order of the Superior Court. We remand
the record to that tribunal.
Justice Goldberg did not participate.
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STATE OF RHODE ISLAND AND PROVIDENCE PLANTATIONS
SUPREME COURT – CLERK’S OFFICE
OPINION COVER SHEET
Allan M. Shine v. Charles Moreau et al.
Title of Case Charles D. Moreau et al. v. Allan M. Shine et al.
Charles Moreau v. Allan M. Shine.
No. 2018-84-Appeal.
(PB 10-5615)
No. 2018-85-Appeal.
Case Number
(PC 10-5672)
No. 2018-86-Appeal.
(PB 10-7394)
Date Opinion Filed January 9, 2020
Justices Suttell, C.J., Flaherty, Robinson, and Indeglia, JJ.
Written By Associate Justice William P. Robinson III
Source of Appeal Providence County Superior Court
Judicial Officer From Lower Court Associate Justice Michael A. Silverstein
For Plaintiffs:
Theodore Orson, Esq.
Harmony Conti Bodurtha, Esq.
For Defendants:
Attorney(s) on Appeal
John O. Mancini, Esq.
Lawrence L. Goldberg, Esq.
Matthew T. Jerzyk, Esq.
Michael L. Mineau, Esq.
SU‐CMS‐02A (revised June 2016)