[co-author: Sam Johnston]

On April 1, 2022, the Superior Court of Rhode Island, Providence County, granted partial summary judgment in favor of receivership plaintiffs for statutory damages related to usurious loans in an amount equal to all payments paid on the loans. The decision stems from extensive litigation regarding a series of loans funded by the defendant lenders, which were previously found void under the Rhode Island usury statute. In awarding over $26 million in penalties—equal to the statutorily prescribed amount of all payments made in connection with two notes (with an aggregate principal amount of $21 million) at issue, the court rejected the lenders’ defenses of equitable estoppel and fraud on the court—arising from a plaintiff representative’s affidavit regarding procurement of a pro forma analysis that would have precluded application of the usury statute—as barred by res judicata under state law because those issues had been fully litigated and adjudicated against the defendants.

The court also held that imposition of the statutory penalties did “not warrant an award of pre-judgment or post-judgment interest” under Rhode Island law because the plaintiffs had not sought pecuniary damages. The court interpreted pecuniary damages to mean “any additional loss, deprivation, or injury beyond the fact that they made payments” on the loans. In other words, no pre- or post-judgment interest is available for usury penalty claims under Rhode Island law unless additional harm or injury is found beyond the statutorily prescribed penalty under R.I. Gen. Laws § 6-24-4(c).

The case is Commerce Park Realty, LLC v. HR-2 A Corp, C.A. No. PB-2011-1922 (R.I. Super. Ct. Apr. 1, 2022). The plaintiffs are represented by Pierce Atwood LLP. The defendants are represented by Wieck, Deluca, & Gemma, LLP. The order is available here.