The First Circuit upheld a finding in a bankruptcy adversary proceeding that plaintiff property owners had impliedly consented to a trespass on their property by defendants. However, the Court remanded for a determination of whether the implied consent gave rise to an implied obligation to pay for the fair market value of the use of the land.
In 1997 and 1998, the defendants constructed The Newport Regatta Club on the disputed piece of property. During the construction, the property owners objected only the Club’s parking requirments. In 1999, after defendants completed and began operating the Club, the property owners filed suit in Superior Court against the club owners seeking a declaration as to title to the property, however, they did not sue the club’s operators. The Superior Court action did not include a trespass claim. In 2005, the Rhode Island Supreme Court declared that the property owners had title to the property, not the Club owners. The property owners did not seek to eject the Club operators until after the Supreme Court decision. The Club operator then filed a Chapter 11 bankruptcy petition. After more proceedings in the Bankruptcy Court and the District Court, the Bankruptcy Court held that the property owners had implied consented to the Club operators trespass. It denied any damages for the trespass.
The First Circuit noted that consent in any form is fatal to a trespass claim. Consent can be express or implied, spoken or unspoken, and there is no requirement that it be communicated to the alleged trespasser. Apparent consent arises from the parties’ conduct and the context. It is sufficient if the trespasser understands the words or conduct as conveying consent.
The Circuit Court observed that while the property owner had vigorously opposed the construction of the Club it did nothing for seven years to attempt to stop the operation of the club. None of the parties’ various negotiations, agreements or litigation before the Supreme Court decision included the Club’s operators, just the owners. In addition, the property owners stated they did not object to the Club itself, just its parking requirements. Also, the property owners several times contracted with the Club operators to use the Club for their private events. The First Circuit said there was sufficient evidence in the record for the Bankruptcy Court to find implied consent to operation of the Club. The Court also upheld the finding that the Club operators had reasonably relied on this consent.
However, the Court remanded the case for a determination of whether the property owners were entitled to receive compensation for the use of the property. The Court said the owners had raised the issue in the bankruptcy court in post-trial memoranda but the bankruptcy court had failed to address it.
In re IDC Clambakes, Inc., d/b/a The Newport Regatta Club, No. 12-1710, 2013 WL 4081901 (1st Cir. Aug. 14, 2013)
For information about our bankruptcy practice, please see: /Practice-Areas/Bankruptcy-Law.shtml