Canney v. City of ChelseaCanney v. City of Chelsea
MEMORANDUM AND DECISION
I. Introduction
This is а rather unique lawsuit, a case of first impression within this Circuit — or any other Circuit nationwide, for all I can tell. It comes before this Court courtesy of the Plaintiff, Edward A. Canney (“Canney”), a former Director of Inspectional Services for the City of Chelsea. Canney has filed a wrongful termination suit against the City of Chelsea (“Chelsea”) and three city officials who have been named in their individual and official capacities: Lewis H. Spence (“Spence”), Receiver of the City of Chelsea; Steven McGoldrick (“McGoldrick”), Spence’s Chief of Staff; and Carol Gladstone (“Gladstone”), the Deputy Receiver of the City of Chelsea. 1 His sixteen-count complaint lists numerous violations of Massachusetts contract, tort, and civil rights statutes as well as violations of 42 U.S.C. §§ 1983, 1985, and 1986. 2 As relief for his alleged wrongful discharge, Canney seeks reinstatement by Chelsea and monetary damages.
Chelsea moved to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted, and the Co-Defendants moved to dismiss under Fed.R.Civ.P. 12(b)(3) and 12(b)(6) for lack of subject matter jurisdiction and failure to state a claim. At a motion session held on January 11, 1996, this Court ruled that Chelsea was not liable for the Co-Defendants’ actions, and granted Chelsea’s Motion to Dismiss. The Court also granted in part and denied in part the Co-Defendants’ Motion to Dismiss. This opinion explains why.
II. Background and Statement of Facts
At the time of the alleged events, Chelsea was operating in a state of receivership pursuant to “An Act Establishing a Receivership for the City of Chelsea,” codified in Chapter 200 of the Acts and Resolves of 1991 (the “Receivership Act”). To the best оf the Court’s knowledge, the state legislature has not had to resort to this extraordinary remedy for a city or town within the Commonwealth in more than fifty years. The story behind the passage of the Receivership Act is as follows: By August, 1991, Chelsea was in
Canney’s sixteen-count complaint is lengthy and detailed. 5 Distilled to their essence, the facts alleged are as follows: Early in 1992, after Chelsea had been placed in receivership, Chelsea advertised in local newspapers for the position of Director of Inspectional Services (“Director”). Complaint ¶ 16. Canney interviewed for this position and was ultimately hired in June, 1992. Comрlaint ¶¶ 17-22. At his final interview, Canney was told by Spence that if he was offered and accepted the position, Canney would be employed for the life of the Receivership (“three to four years”) and that he would receive Civil Service protection for his position upon permanent hiring. 6 Although the previous Director was protected under state civil service laws, Canney was informed that his position was not similarly protected. Complaint ¶ 24. He was told earlier, however, that civil service protection would be provided for employees hired after the term of the receivership, when a new city charter was written. Complaint ¶ 20.
The three events which, Canney claims, ultimately led to his dismissal began approximately one year after his appointment. First, during September of 1993 Canney became concerned about various issues involving a Chelsea landlord. After a difference of opinion between Canney and the Co-Defendants regarding the illegality of the landlord’s conduct, Canney alleges that he was told by Gladstone to adopt another inspector’s report as his own. He declined to do so and that inspector’s report was rescinded. Complaint ¶ 29(a). Second, in October of 1993, Canney believed that a prohibition on building parking facilities in Chelsea issued by Spence and Gladstone violated a local developer’s due process rights. After expressing his concern to Spence and Gladstone, Canney claims his misgivings were “dismissed out of hand.” Complaint ¶ 29(b). The next month, Canney and MeGoldrick had a disagreement concerning the proper building permit requirements for City Hall reno
Following these three events, Canney was summoned to Spence’s office on December 3, 1993, and terminated. Complaint ¶ 30. Although Spence did not state a reason for his termination, Canney was told that Gladstone, the Deputy Receiver, did not believe that he had been “a team player.” Id. Canney claims that he was discharged without “proper cause, notice, or hearing” in violation of statutory protections which were available to him under the Massachusetts Civil Service laws. Complaint ¶32. He also claims that during the period from November to Decembеr 1993, the Co-Defendants and their agents made various false and misleading statements to members of the public and the press concerning his performance. Complaint ¶33. As a consequence of Chelsea’s and the Co-Defendants’ actions, Canney contends that he sustained damages for which he seeks compensatory and punitive relief totalling $152,000,000.00. Canney also desires to be reimbursed for attorneys’ fees and other costs associated with this suit.
III. Standard of Review
A motion to dismiss tests the legal sufficiency of the complaint, not the plaintiffs likelihood of ultimate success.
Scheuer v. Rhodes,
The crucial inquiry on a motion to dismiss is whether, based on the allegations of the complaint at issue, the plaintiff is entitled to offer evidence in support of his claims.
Siniscalchi v. Shop-Rite Supermarkets, Inc.,
IV. Analysis
A. Chelsea’s Motion to Dismiss
The twelve counts of the complaint asserted against Chelsea can be grouped into two broad categories: common-law tort and contract claims arising out of Canney’s termination (Counts I through VI and VIII through X), and statе and federal civil rights and conspiracy claims (Counts XI, XII, and XVI). Each category will be examined seria-tim below.
1. Tort and Contract Claims
This case presents the novel question whether a municipal receiver, who has been granted certain exclusive powers pursuant to an act of receivership passed by a state legislature, is an agent of the municipal government or of the Commonwealth for the purpose of determining which entity bears ultimate liability for the receiver’s torts.
The crux of Chelsea’s motion to dismiss the tort and contract claims revolves around Chelsea’s assertion that the Co-Defendants were not its agents, servants, or employees at the time of their alleged tortious conduct. Memorandum of Law of Defendant, City of Chelsea, in Support of its Motion to Dismiss Plaintiffs Complaint (“Chelsea Memоrandum”) at 4. Instead, Chelsea contends that the named Co-Defendants were selected by the receiver and under his supervision, pursuant to the Receivership Act. In turn, the receiver was controlled by a state official, the Secretary of the Executive Office of Adminis
This Court agrees. Section 7 of the Receivership Act provides, in pertinent part:
Notwithstanding the provisions of the charter or any city ordinance to the contrary, the receiver shall be the appointing authority and have supervision and control over all city employees and all personnel matters; the receiver shall hold all existing powers to hire and fire and set the terms and conditions of employment held by other employees or officers of the city, whether or not elected; ... no city employee or officer shall hire, fire, transfer or alter the compensation or benefits of any employee except with the written approval of the receiver. The receiver may delegate or otherwise assign these powers with the approval of the [Secretary.
1991 Mass. Acts 200, § 7. Likewise, section 8(2) of the Receivership Act grants the receiver the power to set the “compensation, terms, аnd conditions of employment” of his employees, subject “to the approval of the [Secretary.” 1991 Mass. Acts 200, § 8(2). The last sentence of section 8(2) specifically states:
All personnel hired under the authority of this paragraph, except such employees as the receiver formally designates independent contractors, shall be deemed employees of the Commonwealth....
1991 Mass. Acts 200, § 8(2).
According to the express language of these sections of the Receivership Act, it is clear that the Massachusetts legislature, in conferring various powers upon the receiver, granted him the power to hire and fire, made those hired by the receiver employees of the Commonwealth and, most importantly, vested a controlling interest in the receiver’s decisiоns in the executive branch of the government of the Commonwealth by making his actions subject to “the approval of the [Secretary.” 1991 Mass. Acts 200, §§ 7, 8(2).
Exactly who, if anyone, had control over the receiver’s actions is an issue crucial to this analysis, and an examination of common-law agency principles provides a suitable point of departure. The Restatement (Second) of Agency, portions of which have been incorporated into Massachusetts law, defines an agency relationship as having three essential characteristics: (1) the power of the agent to alter the legal relationships between the principal and third parties and the principal and himself; 2) the existence of a fiduciary relationship toward the principal with resрect to matters within the scope of the agency; and 3) the right of the principal to control the agent’s conduct with respect to matters within the scope of the agency. Restatement (Second) of Agency §§ 12-14 (1958)
cited in Sabel v. Mead Johnson & Co.,
In the present case, there has been no evidence proffered either in Canney’s complaint or in pleadings submitted by any of the parties that Spence and his employees acted either specifically on Chelsea’s behalf or at the behest of Chelsea’s elected city officials. Furthermore, it is clear that control over the receiver’s actions lay not in the hands of Chelsea, but in the hands of the Commonwealth. In fact, a close analysis of the Receivership Act indicates that the city receiver operated subject to the authority of the Secretary, who had “authority to reappoint the receiver for additional one-year terms ... [and who could] also terminate the receiver for cause at any time.” 1991 Mass. Acts 200, § 3(5). In addition, the Receivership Act expressly mandated that the receiver be neither an elected nor an appointed official of Chelsea.
Id.
at § 3(3). The Receivership Act effectively eliminated the elected office of Mayor of Chelsea, and vested in the receiver all of the official acts and duties of that office,
The law of receivership lends further support to the Court’s conclusion that Chelsea did not have sufficient control over Spence’s actions to create an agency relationship between the two. It is well established at common law that “a receiver is not the exclusive agent or representative of either pariy to the suit in which he is appoint-ed_” 65 Am.Jur.2d Receivers § 138 (1972) (citation omitted). In fact, courts tend to impute an agency-type relationship between receivers and the courts which appointed them, although not explicitly label-ling it as such. See generally Id. at § 136 (“A receiver is an officer, the creature, hand, or arm of, and a temporary occupant and caretaker of the property for, the court. He represents the court appointing him, and ... derives his authority from such court.”) (citations omitted); but see 75 C.J.S. Receivers § 142 (1952) (“While the acts of a receiver are the acts of the court for which he acts, the relationship of principаl and agent does not exist between them.”) (citations omitted).
This basic principle—that appointing courts have a certain amount of control over receivers, whether referred to specifically as an agency relationship or not—has been restated by courts around the country.
See, e.g., Consolidated Rail Corp. v. Fore River Ry.,
Massachusetts courts also appear to embrace the above-stated principle, holding generally that courts have the power to appoint a receiver, who is then subject to the court’s control.
Spence v. Reeder,
Appointment of a receiver in any situation is an extraordinary remedy, one that ought be sparingly invoked.
See Lopez v. Medford Community Center, Inc.,
Accordingly, this Court holds that Spence is an agent of the executive branch of the Massachusetts government, not the City of Chelsea, and Chelsea is not liable under a theory of agency nor under any derivative legal theory for Spence’s allegedly tortious acts. 8 Counts I through VI and VIII through X of Canney’s Complaint are therefore DISMISSED.
2. Federal and State Civil Rights Claims
While Canney’s civil rights claims against Chelsea are not dependant on the respondeat superior analysis employed above, they fan-no better.
In
Monell v. Department of Social Services,
Chelsea argues that Monell prevents Can-ney from obtaining relief since his complaint fails to allege that “his constitutional rights were denied by an official policy or custom of [Chelsea].” Chelsea Memorandum at 10. In response, Canney asserts that Chelsea did in fact adhere to specific policies and courses of action during his tenure. The specific “policies” were: (1) Spence’s representation to Canney that he had an employment contract “for the life' of the receivership”; (2) “a poliсy of removing certain employees despite and/or because of Civil Service protections available to them”; (3) “a policy of withholding from and/or actively misrepresenting to [Canney] (and others) that Civil Service protection was available to him and others”; (4) “a policy of terminating employees, such as Mr. Canney, despite previous representations and agreements and/or statutory protections to which they are due”; (5) “a policy of terminating [Canney] for exercising his constitutional rights of free speech and/or attempting to enforce the law and/or his concern for the rights of others”; and (6) “a policy of interfering with [Canney’s] privacy and/or of causing his termination by false information.” Plaintiffs Opposition to and Memorandum of Law in Opposition tо Defendants’ Motions to Dismiss Plaintiffs Complaint (“Plaintiffs Opposition”) at 10-15.
What Canney refers to as “policies” of Chelsea, however, appear to be nothing more than facts unique to the saga of his case. The Oxford English Dictionary defines “policy” as “[a] course of action adopted and
The Supreme Court has attempted. precisely to define when a decision on a single occasion may be enough to establish an unconstitutional municipal policy in violation of § 1983.
See City of St. Louis v. Praprotnik,
Here, the Receivership Act indicates that the receiver was the ultimate municipal authority in Chelsea. 1991 Mass. Acts 200, § 3(6). The Receivership Act required Chelsea’s elected officials to “serve in an advisory capacity” to the receiver.
Id.
Assuming
arguendo
that all of Canney’s allegations
Massachusetts state courts have not yet decided whether the official policy or custom standard established in
Monell
applies to claims submitted under the Massachusetts Civil Rights Act (the “Civil Rights Act”), Mass.Gen.L. ch. 12 §§ 11H, 111.
See Broderick v. Roache,
Finally, Chelsea alleges that Canney fails to state actionable claims under either 42 U.S.C. §§ 1985 or 1986 since section 1985 was originally designed to furnish relief for interference with a plaintiffs rights where the interference was based on racial or class-based invidious discrimination claims, and section 1986 is derivative of section 1985.
See Briley v. California,
Because Chelsea has shown that, even if all of Canney’s factual allegations are true,
B. Co-Defendants’ Motion to Dismiss
1. Federal and State Claims Against Co-Defendants in Their Official Capacities
The Co-Defendants first argue that all claims against them in their official capacities should be dismissed under 42 U.S.C. § 1983 and the Eleventh Amendment. Since (1) a suit against an official in his or her official capacity is treated as a suit against the state,
Kentucky v. Graham,
Resolution of this issue depends upon whether the Co-Defendants are to be considered state employees or municipal employees for the purposes of section 1983. Here, Co-Defendants Gladstone and McGoldrick were on the receiver’s staff and were compensated with monies from the state treasury. Spence, the official who appointed them, was himself appointed by the Governor, and had to report to the Secretary of Administration and Finance for the Commonwealth. The Secretary ultimately had termination authority over Spence’s receivership.
Having earlier concluded that the Co-Defendants are not agents or employees of Chelsea, the Court holds that Spence, and by derivation the other Co-Defendants, are protected аs public officials under the language of the Receivership Act and Massachusetts decisional law concerning the personal liability of a receiver for actions performed within the scope of the receivership. First, section 3(8) of the Receivership Act states that “[t]he receiver shall be immune from civil liability arising from the exercise of his duties.” 1991 Mass. Acts 200, § 3(8). This Court has already determined that Spence had the authority to hire and fire city employees, and there is no need to revisit the issue here. Second, Massachusetts cases have adopted the well-established precept from the law of receivership that “actions against receivers growing out of the performance by them of their duties within the scope of their powers under the valid ordеrs of the court appointing them do not bind them personally.”
Wood v. Comins,
The state law counts against Spence’s Co-Defendants in their official capacities are also dismissed under similar reasoning, since Gladstone and McGoldrick are state employees appointed by Spence. Under the provisions of Mass.Gen.L. ch. 258 § 2, a public employee shall not be found liable for a negligent or wrongful act if the employee was acting within the scope of the employment and the employee was under the direction and control of the public employer.
Doe v. Town of Blandford,
In addition, Count VII warrants dismissal because, as matter of law, an employer cannot be held hable for interference with advantageous relations “in its own affairs any more than an employer is hable for tortious interference between itself and an employee.”
Saint Louis v. Baystate Medical Center, Inc.,
2. State Law Claims Against Co-Defendants in Their Personal Capacities
The remaining state law claims
13
are dismissed for failure to state a claim as matter of state law. Procedurahy, the slander and hbel claims (Counts VIII and IX) are meritless because Canney’s complaint does not give evidence of any specific oral statements as made by the Co-Defendants which would give rise to slander or any newspaper articles (although two articles are referred to) which could be considered hbelous. Above and beyond Canney’s neglect of basic pleading requirements, the slander and hbel claims must also fail as matter of substantive law. In a defamation action, a threshold issue is whether the statement described is reasonably susceptible of defamatory meaning, which is a question of law for the court to decide and involves examining the statement in its totahty and in the context in which it was pubhshed.
Foley v. Lowell Sun Pub. Co.,
The invasion of privacy claim (Count X) fails to allege the “unreasonable, substantial, or serious interference with” Canney’s privacy as required by Mass.Gen.L. ch. 214 § IB. In particular, there is no evidence of any private facts, if any, that were disclosed about him by any of the defendants. In addition, “false light privacy” is not recognized in Massachusetts.
ELM Medical Laboratory, Inc. v. RKO General, Inc.,
The civil rights claim against the Co-defendants as individuals (Count XI) is faulty since the mere statement of a claim under the federal civil rights statute does not automatically result in a valid claim arising under Mass.Gen.L. ch. 12, § 111 unless the plaintiff “alleges a deprivation of ... rights by threats, intimidation, or coercion.”
Curran v. City of Boston,
The civil conspiracy claim (Count XII) must be DISMISSED on these grounds.
3. Fedora! Law Claims Against Co-Defendants in Their Individual Capacities
The counts against the Co-Defendants in their personal capacities, however, must remain. The Co-Defendants allege that the section 1983 claims must be dismissed for failure to establish any deprivation of a constitutionally protected right. Canney claims that he has set forth three different bases for a section 1983 cause of action, namely (1) exercise of a fundamental right, (2) substantive due process, and (3) procedural due process.
See Zinermon v. Burch,
The section 1985 and section 1986 claims are another story. Echoing the protests raised by Chelsea, the Co-Defendants argue that Canney’s claims under 42 U.S.C. §§ 1985 and 1986 should be dismissed for failure to allege any discriminatory animus. This argument has been canvassed supra and the counts against the Co-Defendants should be dismissed for the same reasons.
Y. Conclusion
For the foregoing reasоns, Chelsea’s Motion to Dismiss is GRANTED in its entirety. The Co-Defendants’ Motion to Dismiss is GRANTED in part and DENIED in part as detailed above.
SO ORDERED.
Notes
. For the sake of simplicity, Co-Defendant City of Chelsea will be referred to as "Chelsea” and the individual Co-Defendants will be referred to as "the Co-Defendants” throughout this opinion.
. Specifically, Canney claims breaches of contract and of the covenant of good faith and fair dealing (Counts X and II), tortious misrepresentation (Count III), wrongful discharge (Count IV), retaliatory discharge (Count V), negligence (Count VI), malicious interference with contractual relations (Count VII), slander and libel (Counts VIII and IX), invasion of the right to privacy under Mass.Gen.L. ch. 214, § IB (Count X), violation of the Massachusetts civil rights statute, Mass.Gen.L. ch. 12 § 111, (Count XI), civil conspiracy (Count XII), and violations of 42 U.S.C. §§ 1983, 1985, and 1986 (Counts XIII through XVI). Counts I, II, and XVI are against Chelseа only. Counts IV and V are against Spence and Chelsea. The remaining counts are against certain of the Co-Defendants and Chelsea.
. For the sake of simplicity, the Massachusetts legislature, also known as the General Court, shall be referred to only as the legislature. All references to 'court' refer only to a judicial court.
. Seven months after the imposition of receivership over Chelsea, the Supreme Judicial Court unanimously ruled that the legislature acted within its powers in passing the Receivership Act.
Powers v. Secretary of Administration,
. After reading Canney’s 28 page, single-spaced complaint (replete with thirteen lengthy exhibits), this Cotut reminds Canney of Local Rule 5.1(a)(2) (requiring all documents, with the exception of discovery requests, filed in the District of Massachusetts to be typed double-spaced).
. At the time of the interview, Spence was the Deputy Receiver for Chelsea. Complaint ¶ 20. In September, 1992, Spence was appointed as Chelsea’s Receiver, replacing the individual originally appointed to fill that post. Complaint ¶ 25.
. The plaintiff in the case cited above is the same Lewis H. Spence who is a Co-Defendant in this present case. At the time of the earlier suit, Spence was acting as the court-appointed receiver of the Boston Housing Authority, which had been placed in receivership in part to remedy the deplorable housing conditions affecting needy Boston residents.
See Perez
v.
Boston Housing Auth.,
. Given the Court's conclusion that Spence and Chelsea did not share a principal-agent relationship, Canney’s alternative claim that Chelsea is liable under a theory of ratification since it “[chose] to do nothing to rectify any of the wrongs done to Canney,” Complaint ¶¶51, 57, 62, 80, 85, and 90, is without merit. It is impossible to argue that Chelsea — acting as a purported principal where it had neither the statutory nor administrative authority to do so — could have rectified or ratified Spence's conduct, since a purported or intended principal cannot ratify an act which the principal could not have authorized in the first place.
See
Restatement (Second) of Agency § 84(2) (1957);
see also Reeve v. Folly Hill Ltd. Partnership,
. The Supreme Court in
Pembaur
first articulated four guiding principles establishing when a municipality may be exposed to liability under § 1983: liability could attach (1) for acts which the municipality itself is actually responsible; (2) for acts ordered by officials who have “final policymaking authority;” (3) the existence of such authority being a question of state law; and (4) for acts taken pursuant to a policy adopted by officials responsible under state law for making policy in
that area
of the city’s business.
Pembaur,
. The civil service commission apparently declined to hear the appeal because the plaintiff had not suffered a reduction in pay or grade.
Id.
at 116,
. The court also noted with interest that the plaintiff never attempted to prove that the retaliation to which plaintiff was subjected was ever directed at anyone other than himself.
Id.
at 128,
. Having concluded that there is no evidence of a policy or custom that can be asserted against Chelsea, it is unnecessaiy to examine here the issue of causation or whether Canney was deprived of a constitutional right under the § 1983 three-part analytical framework identified by this Court in Holland v. Breen, supra. Analysis of a possible deprivation of Canney's constitutional rights, however, is appropriate with respect to the § 1983 claims against the Co-Defendants. For such an analysis, see infra parts IV.B.l, 3.
. Counts VIII (slander), DC (libel), X (invasion of privacy), XI (violation of civil rights), and XII (civil conspiracy).