925 F.Supp. 58 (D.Mass. 1996), Civ. A. 95-11015, Canney v. City of Chelsea

Docket Nº:Civ. A. 95-11015
Citation:925 F.Supp. 58
Party Name:Canney v. City of Chelsea
Case Date:May 07, 1996
Court:United States District Courts, 1st Circuit, District of Massachusetts

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925 F.Supp. 58 (D.Mass. 1996)

Edward A. CANNEY, Plaintiff,


CITY OF CHELSEA; Lewis H. Spence, Individually and as Deputy Receiver and Receiver of the City of Chelsea; Steven McGoldrick, Individually and as Chief of Staff of the Receiver of the City of Chelsea; and Carol Gladstone, Individually and as Deputy Receiver of the City of Chelsea, Defendants.

Civ. A. No. 95-11015-WGY.

United States District Court, D. Massachusetts.

May 7, 1996.

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        John J. Washburn, John J. Washburn, North Reading, MA, for Plaintiff.

        Kristen Reasoner Apgar, City Solicitor, Chelsea, MA, Kara M. Lucciola, Attorney General's Office, Boston, MA, John J. Davis, Todd M. Reed, Morrison, Mahoney & Miller, Boston, MA, for Defendants.


        YOUNG, District Judge.

        I. Introduction

        This is a 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 of 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

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dire economic trouble. The city faced a projected structural deficit of $9,600,000.00, the tax base was virtually nonexistent, and state funding had been cut. State Committee Urges Receivership for Chelsea, Massachusetts, Wall St.J., August 29, 1991, at A4. Subsequently, the Massachusetts state legislature 3 declared that Chelsea was "unable to make annual contracts to provide essential services," "unable to collect property taxes," "unable to obtain reasonable access to credit markets," and concluded that a "fiscal crisis pose [d] an imminent danger to the safety of the citizens of [Chelsea]." 1991 MassachusettsActs 200, § 1. On September 11, 1991, responding to a recommendation from the Governor, the legislature passed the Receivership Act, which was signed into law the next day. The Receivership Act authorized the Governor to appoint a receiver to an initial a one-year term, 1991 MassachusettsActs 200, § 3(4), and provided, inter alia, that the receiver would be "the chief executive officer of the city ... responsible for the overall operation and administration of [Chelsea]." 1991 MassachusettsActs 200, § 3(2). 4

        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. Complaint pp 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 McGoldrick had a disagreement concerning the proper building permit requirements for City Hall renovations.

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Although Canney believed that the renovations were being undertaken contrary to the specifications, his suggestions were again "dismissed out of hand" by McGoldrick. Complaint ¶ 29(c).

        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 December 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 plaintiff's likelihood of ultimate success. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974). In assessing a motion to dismiss, the Court must take all allegations contained in the complaint as true and must draw all inferences in favor of the non-moving party. Deren v. Digital Equip. Corp., 61 F.3d 1, 1 (1st Cir. 1995); Watterson v. Page, 987 F.2d 1, 3 (1st Cir. 1993); Monahan v. Dorchester Counseling Center, Inc., 961 F.2d 987, 988 (1st Cir. 1992). A complaint should not be dismissed "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957) (citations omitted).

         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., 903 F.Supp. 182, 186 (D.Massachusetts1995) (citing Scheuer, 416 U.S. at 236, 94 S.Ct. at 1686). If the complaint is sufficient to state a cause of action in accordance with the law under any theory, the court must deny a motion to dismiss. Wehringer v. Powers & Hall, P.C., 874 F.Supp. 425, 427 (D.Massachusetts1995) (quoting Knight v. Mills, 836 F.2d 659, 665 [1st Cir. 1987]). Because of the various independent legal arguments addressed by Chelsea and the Co-Defendants, each party's motion will be treated separately in this discussion.

        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 state and federal civil rights and conspiracy claims (Counts XI, XII, and XVI). Each category will be examined seriatim 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...

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