Torrado Architects v. Rhode Island Department of Human Services , 102 A.3d 655 ( 2014 )

Supreme Court
No. 2013-274-Appeal.
(PM 13-1644)
Torrado Architects :
v. :
Rhode Island Department of :
Human Services.
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
No. 2013-274-Appeal.
(PM 13-1644)
Torrado Architects :
v. :
Rhode Island Department of :
Human Services.
Present: Suttell, C.J., Goldberg, Flaherty, Robinson, and Indeglia, JJ.
OPINION
Justice Goldberg, for the Court. This case came before the Supreme Court on
October 30, 2014, pursuant to an order directing the parties to appear and show cause why the
issues raised in this appeal should not summarily be decided. The plaintiff, Torrado Architects
(Torrado), appeals from a Superior Court judgment in favor of the defendant, Rhode Island
Department of Human Services (DHS), denying the plaintiff’s successive petition to compel
arbitration filed after the first arbitration proceeding in this matter was concluded and confirmed.
After considering the arguments advanced by counsel, we are satisfied that cause has not been
shown and that the appeal may be decided at this time. For the reasons set forth below, we
affirm the judgment of the Superior Court.
Facts and Travel
On July 1, 2008, Torrado signed an agreement to perform architectural, engineering, and
design services, for a fee of $61,500, for renovations at a state-owned property located at
480 Metacom Avenue in Bristol, Rhode Island—commonly known as the Rhode Island Veterans
Home. A document referred to as a Blanket Purchase Agreement (BPA) was issued to Torrado
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on April 17, 2009, and signed by the state purchasing agent. The BPA referenced the agreement
dated July 1, 2008. The BPA explicitly stated that the compensation was “NOT TO EXCEED”
$61,500. This fee was calculated as a percentage of the overall expected construction costs.
Torrado claims that the administrator of the home, General Richard Baccus (Baccus),
assured its representatives that additional services, outside the scope of the BPA, needed to be
performed and that Torrado would be compensated for those services. By letter dated April 27,
2010, Torrado communicated with Baccus the need for additional compensation based on the
design changes. Specifically, Torrado asserted that the anticipated construction costs for the
project had nearly doubled and that, therefore, their fee—which was based on a percentage of the
total construction costs—had also increased significantly.
On January 24, 2012, Baccus submitted an “EOHHS Critical Expense Request Form”
and a “Single Source Justification Form” to the Division of Purchases, seeking the funds
necessary to pay Torrado’s increased fees. This request was denied on March 30, 2012. On
June 11, 2012, Torrado submitted a contract dispute claim to State Purchasing Agent Lorraine
Hynes (Hynes), pursuant to the State of Rhode Island Procurement Regulations section 1.5.2.1
Hynes denied the claim on July 16, 2012. Torrado appealed Hynes’ determination to the Chief
Purchasing Officer (CPO) pursuant to Procurement Regulations sections 1.5.6 2 and 1.6. The
CPO denied Torrado’s appeal by memorandum dated September 10, 2012. Torrado then filed a
1
Section 1.5.2 of the State of Rhode Island Procurement Regulations provides: “The Purchasing
Agent is authorized to resolve contract disputes between contractors and user agencies upon the
submission of a request in writing from either party * * *.”
2
Section 1.5.6 provides that “[a]ny appeal from the Purchasing Agent’s determination of a
contract dispute * * * must be filed with the Chief Purchasing Officer within fourteen (14)
calendar days and in accordance with the ‘bid protest’ procedures set forth in Section 1.6 of these
regulations entitled ‘Resolution of Protest.’”
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complaint 3 in the Superior Court seeking relief pursuant to an Administrative Appeals Procedure
and the Administrative Procedures Act. In the prayer for relief, Torrado asked the court to (1)
reverse the decision of the CPO; (2) award Torrado a revised contract amount of $156,000; and
(3) award “[a]ny other relief as this [c]ourt deems just.”
The parties, on October 15, 2012, stipulated that the matter would be held in abeyance
while a statutory arbitration procedure was under way. 4 The arbitrator issued a “Decision and
Award” on December 17, 2012. The arbitrator indicated in his decision that, although he
sympathized with Torrado because he believed that plaintiff rendered additional services to
DHS, he concluded that the additional work was not authorized under the procurement
regulations. Accordingly, the arbitrator concluded that Torrado was entitled to recover only the
outstanding amount owed pursuant to the BPA. Finally, after previously denying a request by
Torrado to expand the scope of the arbitration by considering claims that were equitable in
nature, and not set forth in the Superior Court complaint, the arbitrator declared that he:
“makes no determination as to what, if any, other remedies
Torrado may have, including but not limited to the pleading causes
of action against the State sounding in quantum meruit, unjust
enrichment, promissory estoppel and/or negligence in allowing
Administrator Baccus to wrongfully procure additional work,
thereby leading to potential recovery of the monies sought.”
Torrado then filed a motion requesting that the arbitrator reconsider his decision. The basis of
the motion to reconsider was Torrado’s position that the arbitrator refused to consider Torrado’s
alternative remedies. Torrado later withdrew its motion. By agreement of the parties, the
arbitrator’s award was confirmed on January 7, 2013. No appeal from this award was taken.
3
Torrado Architects v. Richard A. Licht, Director of the Department of Administration, in his
official capacity as the Chief Purchasing Officer for the State of Rhode Island and Providence
Plantations, C.A. No. PB 12-4922.
4
See G.L. 1956 § 37-2-48 and G.L. 1956 chapter 16 of title 37.
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Thereafter, on April 5, 2013, Torrado filed a petition to compel arbitration in the Superior
Court against DHS. Torrado had previously demanded, and DHS had refused, to arbitrate
equitable claims that the arbitrator declined to consider in the first arbitration. Torrado’s motion
to compel was heard on May 7, 2013. The trial justice rendered a bench decision on June 24,
2013, declaring that Torrado’s claims were barred by the doctrine of res judicata. In denying the
requested relief, the trial justice expressed surprise that the arbitrator did not stay the arbitration
and encourage Torrado to amend its complaint. The trial justice suggested that Torrado could
have amended its complaint, even after arbitration concluded, and that its failure to do so was
fatal. Judgment entered on June 25, 2013, in favor of DHS on Torrado’s petition to compel
arbitration. Torrado filed a notice of appeal from this judgment on June 26, 2013.
Standard of Review
“[W]hether a dispute is arbitrable is a question of law that this Court reviews de novo.”
Weeks v. 735 Putnam Pike Operations, LLC, 85 A.3d 1147, 1151 (R.I. 2014) (quoting State
Department of Corrections v. Rhode Island Brotherhood of Correctional Officers, 866 A.2d
1241, 1247 (R.I. 2005)). “[A] duty to arbitrate a dispute arises only when a party agrees to
arbitration in clear and unequivocal language; and, even then, the party is only obligated to
arbitrate issues that it explicitly agreed to arbitrate.” Id. at 1152 (quoting State Department of
Corrections, 866 A.2d at 1247).
Issue Presented
There is no dispute that questions related to Torrado’s performance of its contract with
DHS are arbitrable under the Public Works Arbitration Act. See G.L. 1956 § 37-16-2. The sole
issue before the Court is whether the original arbitration award—which ripened into a judgment
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when it was confirmed by the Superior Court—has res judicata effect on Torrado’s petition to
compel arbitration.
Analysis
“The doctrine of res judicata bars the relitigation of all issues that ‘were tried or might
have been tried’ in an earlier action.” Huntley v. State, 63 A.3d 526, 531 (R.I. 2013) (quoting
Bossian v. Anderson, 991 A.2d 1025, 1027 (R.I. 2010)). The doctrine serves as a bar to a second
cause of action where there exists: (1) “identity of parties”; (2) “identity of issues”; and (3)
“finality of judgment in an earlier action.” Id. (quoting Bossian, 991 A.2d at 1027).
There is no dispute that both identity of parties and finality of judgment exist. Rather,
Torrado challenges the existence of the second element—identity of issues. Torrado argues that
the trial justice erred with respect to identity of issues for two reasons. First, Torrado asserts that
its equitable claims could not have been asserted in the first complaint because they were not part
of the administrative appeal that was referred to arbitration. Torrado argues that once the
arbitration commenced, the arbitrator was vested with the authority to decide procedural matters,
including whether Torrado could add counts to be arbitrated. Torrado contends that, because the
arbitrator refused to allow the amendment, an identity of issues is not present. Second, Torrado
argues that, by objecting to the motion to amend the scope of the arbitration proceeding, DHS
acquiesced to split the issues such that the arbitrator later “carved out” the claims from the
arbitration award.
In determining whether a claim is barred because of identity of issues, this Court has
adopted the transactional rule set forth in § 24 of the Restatement (Second) Judgments. See
Plunkett v. State, 869 A.2d 1185, 1188-89 (R.I. 2005) (citing ElGabri v. Lekas, 681 A.2d 271,
276 (R.I. 1996)). Section 24(1) of the Restatement (Second) Judgments at 196 (1982) provides
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that a claim that is extinguished by a final judgment “includes all rights of the plaintiff to
remedies against the defendant with respect to all or any part of the transaction, or series of
connected transactions, out of which the action arose.” In order to determine whether a claim
arose out of the same transaction, the Court will look to “whether the facts are related in time,
space, origin, or motivation, whether they form a convenient trial unit, and whether their
treatment as a unit conforms to the parties’ expectations or business understanding or usage.”
Id. at § 24(2); see also Plunkett, 869 A.2d at 1189.
However, even if the transactional test is satisfied, there are several exceptions that could
preclude the application of the doctrine. One such exception exists when “‘formal barriers in
fact exist[] and [are] operative against a plaintiff in the first action,’ preventing full presentation
of his or her claim.” Plunkett, 869 A.2d at 1190 (quoting Restatement (Second) Judgments § 26
at cmt. c). This Court has recognized another exception, stating that the rule against splitting
claims is “not applicable where the defendant consents, in express words or otherwise, to the
splitting of the claim.” ElGabri, 681 A.2d at 277 (quoting Restatement (Second) Judgments § 26
at cmt. a). Additionally, the Restatement provides that, when “[t]he court in the first action has
expressly reserved the plaintiff’s right to maintain the second action[,]” the rule against splitting
claims will not apply. Restatement (Second) Judgments § 26(1)(b) at 233.
“The principle underlying the rule of [res judicata] * * * is that a party who once has had
a chance to litigate a claim before an appropriate tribunal usually ought not to have another
chance to do so.” Huntley, 63 A.3d at 532 (quoting Restatement (Second) Judgments ch. 1 at 6).
Here, Torrado had ample opportunity to bring its equitable claims but failed to do so. The
equitable claims that Torrado seeks to assert arise out of the same set of facts that were the basis
of the administrative appeal—that Baccus induced Torrado to perform additional work that was
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not part of the original contract. When claims arise from the same set of factual circumstances,
the identity-of-issues prong is satisfied. See Plunkett, 869 A.2d at 1189.
Additionally, there are no exceptions to the res judicata doctrine present in this case that
would serve to negate the finality of the judgment confirming the arbitration award. First, formal
barriers were not present that would have prevented Torrado from asserting its equitable claims
in the original complaint or by way of an amended complaint filed before the arbitrator’s award
ripened into a final judgment. In fact, it appears that Torrado was aware of this possibility when
it argued in its motion to reconsider the decision of the arbitrator: “Torrado’s further position is
that in the sake of ‘judicial economy,’ this Arbitrator should hear Torrado’s further actions
against the State rather than Torrado amending its complaint and alleging those causes of action
against the State.” Nonetheless, the parties stipulated to an order confirming the arbitrator’s
decision.
Similarly, we cannot agree with Torrado’s contention that the arbitrator “carved out” the
equitable claims in his decision—thereby creating an exception to the prohibition against
splitting claims—when he declared that he:
“makes no determination as to what, if any, other remedies
Torrado may have, including but not limited to the pleading causes
of action against the State sounding in quantum meruit, unjust
enrichment, promissory estoppel and/or negligence in allowing
Administrator Baccus to wrongfully procure additional work,
thereby leading to potential recovery of monies sought. * * * Such
causes of action that might be pled, if any, are outside of the
purview of this Arbitration[.]” (Emphases added.)
The arbitrator did not “carve out” the equitable claims as Torrado contends, but simply decided
not to make any determination about them as they were outside the scope of the arbitration.
Although the arbitrator mentioned the possibility of pleading these claims in the future, the
award did not provide the right to do so after judgment entered. Rather, his decision was
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tempered by the hypothetical verbs of “may” and “might.” The arbitrator recognized the
possibility of Torrado bringing additional equitable claims, but certainly his decision did not
guarantee that possibility or “carve out” the equitable claims for a future complaint. The
availability of an avenue to litigate additional equitable claims was extinguished when the
arbitrator’s decision was confirmed by the parties on January 7, 2013. 5 After that, the res
judicata effect of the judgment defeats any future claims arising out of the same transaction.
Conclusion
For the reasons set forth above, we affirm the judgment of the Superior Court. The
papers in this case may be returned to the Superior Court.
5
There is no evidence that DHS acquiesced to the splitting of the claims “in express words or
otherwise.” ElGabri v. Lekas, 681 A.2d 271, 277 (R.I. 1996). Certainly, DHS did not consent
by objecting to the arbitrator hearing the equitable claims, as Torrado argues. Without any
evidence of DHS giving its explicit consent to the splitting of the claims, Torrado’s assertion of
this exception applying is without merit. Accordingly, we decline to address it substantively.
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RHODE ISLAND SUPREME COURT CLERK’S OFFICE
Clerk’s Office Order/Opinion Cover Sheet
TITLE OF CASE: Torrado Architects v. Rhode Island Department of Human
Services.
CASE NO: No. 2013-274-Appeal.
(PM 13-1644)
COURT: Supreme Court
DATE OPINION FILED: November 25, 2014
JUSTICES: Suttell, C.J., Goldberg, Flaherty, Robinson, and Indeglia, JJ.
WRITTEN BY: Associate Justice Maureen McKenna Goldberg
SOURCE OF APPEAL: Providence County Superior Court
JUDGE FROM LOWER COURT:
Associate Justice Daniel A. Procaccini
ATTORNEYS ON APPEAL:
For Plaintiff: Girard R. Visconti, Esq.
For Defendant: Michael D. Mitchell, Esq.