As Chairman of the Board of the Directors of the Rhode Island Commerce Corporation (RICC), Governor Lincoln D. Chafee announced today that a proposed settlement between the RICC and Antonio Afonso, Jr. and Moses Afonso Ryan Ltd. was filed today in the Rhode Island Superior Court. The proposed settlement is contingent upon approval by the Superior Court in the pending litigation.
The settlement provides for payment to the RICC of the gross sum of $4,370,000. This sum represents the full amount remaining of these settling defendants’ insurance coverage, less a sum of $200,000 set aside to pay the legal fees of these individual settling defendants in the pending action and related lawsuits or proceedings. Although the original coverage limits on this insurance policy were $5,000,000, the insurance policy provides that all defense costs are deducted from the coverage limits. Defense costs to date have been approximately $430,000.
The settling defendants have not acknowledged or admitted any liability or wrongdoing in connection with the matters on which the pending litigation is based. To the contrary, they maintain their original position that they have no liability and committed no wrongdoing. The settlement agreement states that the RICC and the settling defendants are mindful of the inherent uncertainty of litigation, and the financial costs associated with the ongoing prosecution and/or defense of same.
Under these circumstances, the RICC and the above-named settling defendants have agreed that this settlement is reasonable. The RICC’s litigation is still going forward against other defendants who are not included in this settlement.
“The proposed settlement is a step in the right direction, and I hope this is the beginning of a positive resolution to the 38 Studios saga,” Governor Chafee said.
Governor Lincoln D. Chafee today said: "The FY 2015 budget passed by the General Assembly, which I intend to sign into law, presents many of my initiatives and some modifications that are encouraging.
"First and foremost, I was pleased that the debate on whether to pay the 38 Studios moral obligation bond ended with the right decision for Rhode Island. I have been unequivocal in my belief that we must honor our debts, however painful. Second, the General Assembly’s FY 2015 budget has a plan to eliminate the toll on the Sakonnet River Bridge by charging a 1-cent gas tax. I have been adamant that absent tolling a reasonable alternative be reached. The reality is we cannot afford to see another bridge completely replaced – at great cost to taxpayers – because of a lack of maintenance.
"I am heartened and commend the legislature for investing in education and our public schools. The budget retains the education aid formula and a tuition freeze for Community College of Rhode Island, Rhode Island College and University of Rhode Island. The $125 million voter bond to enhance URI’s College of Engineering complex will attract and retain talent and is another commendable investment in the future. With the approval of the lease for the Nursing Education Center, which will be headquartered in the former South Street Power Station, the budget buoys my long-term strategy to strengthen the “meds and eds” and grow our Knowledge District. In addition, the $1.5 million for workforce development is a meaningful commitment to worker training and closing the skills gap.
"I was pleased that the voter bonds I had proposed were included in this year’s ballot. The bonds reflect important strategies to grow our economy through improving infrastructure and higher education; enlarging our arts and cultural economy; and protecting Rhode Island’s environment. By maintaining my proposed aid to cities and towns, we continue our work with the municipalities to reverse the damage caused by the previous administration.
"Since taking office, I have proposed reducing the state’s corporate tax rate from 9 percent to 7 percent. I applaud the General Assembly for taking this step through combined reporting to make us more competitive. We need to be mindful that with any budget we put forth, it must be focused on priorities and strategies that send a clear and consistent message far beyond our borders that we honor our commitments, and that the leaders in our state are doing all they can to make Rhode Island a great place to live and work."
Governor Chafee today defended the necessity of paying the 38 Studios debt as essential for Rhode Island to continue its recovery from the recession and recoup taxpayers’ money through legal efforts.
Governor Chafee said, “The candidates who can’t understand these two obvious truths are unfit to be Governor. The consequences of default would place Rhode Island as one of the lowest state bond ratings in the nation, and the industry would reduce Rhode Island to ‘junk bond’ status. We have been told in no uncertain terms that the reaction to not paying our debt obligations will be severe and have an adverse impact on Rhode Island. In addition, failure to honor our obligations could have harmful effects on the pending lawsuit.”
Governor Chafee added, “The push by Allan Fung and Ken Block to default is disheartening. We hear from them populist rhetoric that lacks any empirical research or credible support. Common sense dictates that you pay your debts however distasteful.
“From the beginning, I have been the most vocal and strongest opponent of the 38 Studios deal. In the summer of 2010, I was denied access to a Rhode Island Economic Development Corporation (now called Commerce RI) meeting where I hoped to speak and state the case on behalf of Rhode Islanders on why this was a bad investment.”
Governor Chafee also pointed out that default may undo all our hard work to recover from 2008’s major economic downturn. With the latest employment metrics showing an increase in the number of employed Rhode Island residents and the largest one month drop of unemployed in 30 years, Rhode Island’s current approach to economic development is paying dividends. Through investments in education, infrastructure and workforce development, we are building our state’s economy and reputation in the right manner and creating a solid foundation for years and decades to come.
“As we look to continue this positive momentum, candidates for Governor should be espousing positions that take into account our state’s long-term future, not the instant gratification of appealing to primary voters.”
Governor Lincoln D. Chafee said: “I wish to thank members of the General Assembly for their swift passage of this bill. I am grateful for their assistance, as this legislation will enable us to pursue our legal options to the best of our ability. The Governor’s Joint Tortfeasor Bill is geared toward facilitating a settlement of claims arising out of 38 Studios.In general, this kind of legislation addresses legal cases where there are multiple defendants. Similar measures were passed to deal with resolution of the Station Fire lawsuits, as well as claims made by DEPCO arising out of the RISDIC scandal. The statute is also consistent with the way the federal government handles the settlement of toxic tort cases.”
