Background
Reagan Marine Construction, LLC was the general contractor for the expansion of Church Street Marina in Bristol, Rhode Island. In November 2021, Reagan entered into a subcontract with Costa Companies, Inc. — signed by Victor Costa as CEO — for electrical work on the project. The subcontract required timely written notice of delays and included a broad indemnification clause covering attorney’s fees. Reagan alleges that Costa Companies delayed commencement, failed to meet an agreed completion schedule for an expanded scope of work, and never provided written notices of delay. After the Town of Bristol threatened to terminate the general contract, Reagan terminated the subcontract, hired a replacement, and filed suit in Providence County Superior Court alleging breach of contract, negligent misrepresentation, fraud, and conversion.
Litigation quickly devolved into a discovery dispute. After a court order compelled production, defense counsel moved to withdraw. The trial justice granted the withdrawal in July 2023, stayed discovery for twenty days to allow defendants to find new counsel, and then issued a follow-on order in October 2023 giving further time to comply and to retain representation. Defendants did neither. After defendants failed to appear at a hearing on Reagan’s motion for conditional default, the trial court entered a conditional order of default in March 2024, giving defendants twenty more days to cure. They again did not comply and did not file any objection.
Costa appeared pro se at subsequent hearings and raised, for the first time, an argument that service of the default-related motions was defective because Reagan had not served Costa Companies’ registered corporate agent. The trial justice repeatedly explained that the proper vehicle to raise that argument was a Rule 60(b) motion to vacate, and Costa acknowledged understanding. No such motion was ever filed. On October 1, 2024, the trial court entered default judgment against defendants in the total amount of $716,001.83, comprising $535,357.53 in adjusted damages, $133,766.05 in prejudgment interest, $46,697.50 in attorney’s fees, and $180.75 in costs. Defendants appealed.
The Court’s Holding
The Rhode Island Supreme Court affirmed the default judgment in full. On the notice and service issue, the Court held that defendants waived the argument under the state’s raise-or-waive rule. Because defendants never filed a Rule 60(b) motion to vacate — the procedurally required vehicle to present a notice challenge after a default order — the trial justice was never given the opportunity to rule on the issue, and it was therefore not preserved for appellate review. The Court emphasized that the trial justice had clearly and repeatedly told Costa exactly what needed to be done, and Costa had confirmed his understanding.
On the merits of the default judgment itself, the Court found no abuse of discretion. The record showed that defendants ignored multiple court orders over more than a year — to produce discovery, to retain counsel for the corporate defendant, and to comply with the conditional default order — without filing any appropriate objections. While acknowledging the difficulties facing pro se litigants, the Court reiterated that self-represented parties are not exempt from established procedural rules. The trial justice had been patient and had afforded defendants ample opportunities to come into compliance before resorting to default.
The Court also rejected defendants’ due-process challenge to this Court’s earlier requirement that defendants post a cash bond of $716,001.83 as a condition of a remand to pursue a Rule 60 motion. The Court held that Article I, Rule 2 of the Supreme Court Rules of Appellate Procedure authorizes the Court to impose such conditions in the interest of expediting decision or for good cause, and that doing so did not violate defendants’ due-process rights.
Key Takeaways
- Rhode Island’s raise-or-waive rule bars appellate review of a notice or service defect in default proceedings when the defaulted party failed to file a Rule 60(b) motion to vacate — even where the party raised the issue informally at hearings and the trial court explicitly directed them to use that procedural vehicle.
- A corporate defendant that loses counsel during litigation must retain replacement counsel; its failure to do so, combined with repeated noncompliance with discovery orders, supports entry of default judgment without an abuse of discretion, even when the individual principal appears pro se.
- The Rhode Island Supreme Court may condition a remand — including one sought to pursue a Rule 60 motion — on the posting of a cash bond equal to the full judgment amount, without violating due process, under Article I, Rule 2 of the Supreme Court Rules of Appellate Procedure.
- Subcontracts with indemnification clauses covering attorney’s fees can expose subcontractors to significant fee awards when litigation results from the subcontractor’s breach and discovery misconduct.
Why It Matters
This decision is a sharp reminder that procedural missteps — not just substantive defenses — determine litigation outcomes. A party that believes it was improperly served with default-related motions cannot simply raise that grievance orally at a hearing or on appeal; it must file the correct motion in the trial court or the argument is lost. The ruling underscores that the raise-or-waive rule applies with full force even to pro se litigants who were personally instructed by the trial judge on the proper procedure.
For construction lawyers, the case also illustrates the compounding risk of discovery noncompliance by subcontractors: a failure to produce documents cascaded into lost counsel, multiple ignored court orders, a default judgment exceeding $716,000, and an appellate record that offered defendants no viable path to reversal. The indemnification clause — standard in many subcontracts — meant that attorney’s fees were added to the judgment, further amplifying the financial consequences of the underlying dispute.