Statutory Exception Doesn’t Save Loans from Usury Claim: Tom Dunn Quoted in Rhode Island Lawyers Weekly

The case, Commerce Park Realty, LLC, et al. v. HR2-A Corp., et al., focuses on whether the defendant commercial lenders satisfied the statutory exception to the usury law, allowing them to charge the plaintiff borrowers interest rates in excess of 21% per year. Justice Melissa A. Long of the Rhode Island Supreme Court said that the evidence did not demonstrate that the lenders complied with the statutory prerequisite of a pro forma methods analysis by a Rhode Island-licensed CPA.

Pierce Atwood litigation partner R. Thomas Dunn, representing the receivership estate of one group of plaintiff borrowers, stated, “this decision is notable in that it’s the first time that our Supreme Court has analyzed the exception to the usury law. Primarily, it reaffirms Rhode Island’s strong public policy against usurious transactions and says that lenders have the sole obligation to ensure compliance with the exception.”

The court’s ruling stated that it was up to the lenders to “do more than just have the borrowers sign a statement saying that it had satisfied the statute.” Tom added, “From the perspective of an attorney representing parties in these commercial transactions, a lender would be very wise to ensure that they have a copy of the pro forma methods analysis obtained by the borrower and to also make sure the other nuances of the statute are there, for example, that a Rhode Island CPA issued it. It’s a strict interpretation, and a lender has to comply with those requirements even though it’s the borrower that initially obtains that analysis.”

Excerpted from Barry Bridges’ article in Rhode Island Lawyers Weekly dated August 6, 2021.