Randall v. Haddad

• Decision Date: 12 June 2014
• Docket Number: SJC–11402.
• Parties: Robert J. RANDALL & another v. Marion HADDAD & others.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

468 Mass. 347
10 N.E.3d 1099

Robert J. RANDALL & another¹
v.
Marion HADDAD & others.²

SJC–11402.

Supreme Judicial Court of Massachusetts,
Suffolk.

Argued Feb. 3, 2014.
Decided June 12, 2014.

[10 N.E.3d 1100]

Michael J. Walsh, Mendon, for the plaintiffs.

Daniel G. Cromack, Assistant Attorney General, for Attorney General & another.

Gerald W. Mead, Jr., for Marion Haddad, was present but did not argue.

Present: IRELAND, C.J., SPINA, CORDY, BOTSFORD, GANTS, & DUFFLY, JJ.

BOTSFORD, J.

In this case, the plaintiffs, a monk of the Greek Orthodox church and the monastery where he is currently a resident,

[10 N.E.3d 1101]

seek to satisfy a judgment they obtained in a separate action in the Superior Court in Middlesex County against the defendants Marion Haddad and The Holy Annunciation Monastery Church of the Golden Hills (Holy Annunciation). The amount of the judgment represents the proceeds from the sale of property in Melrose on which stands a monastery and a church, title to which at the time of sale stood in the name of Holy Annunciation. Despite a court order requiring Haddad and Holy Annunciation to hold the proceeds from the sale of this property in escrow, Haddad deposited $40,000 of those proceeds in her retirement account with the State Board of Retirement (board). Having received no payment on the judgment in that action, the plaintiffs brought this case in part to name the board as trustee for the $40,000 Haddad had deposited with it. The board and the Attorney General, both named as defendants, moved to dismiss on grounds that Haddad's funds held by the board were not subject to attachment and, in any event, principles of sovereign immunity barred the suit against the board. A Superior Court judge (motion judge) agreed and allowed the motion to dismiss. On the plaintiffs' appeal, a panel of the Appeals Court also agreed with the Commonwealth in an unpublished memorandum and order pursuant to Appeals Court rule 1:28. See Randall v. Haddad, 82 Mass.App.Ct. 1119, 2012 WL 5289533 (2012). We granted the plaintiffs' application for further appellate review, and we reverse the Superior Court order dismissing the board and the Attorney General.³

1. Background. We summarize the facts as set forth in the plaintiffs' complaint, accepting them as true.⁴ See Sullivan v. Chief Justice for Admin. & Mgt. of the Trial Court, 448 Mass. 15, 20–21, 858 N.E.2d 699 (2006). The plaintiff Robert J. Randall is an Orthodox monk of and resides at the plaintiff Saint Nectarios Monastery, an association of Orthodox monks of the Greek Orthodox Missionary Diocese of America. Holy Annunciation is a charitable corporation organized under G.L. c. 180 in 1983; at all times relevant to this case, Haddad has been its sole officer and director. On April 16, 2004, the plaintiffs filed an action against Haddad and Holy Annunciation in the Superior Court in Middlesex County (Middlesex action; see note 4, supra ) to determine (among other claims) the proper disposition of the proceeds of what was alleged to be an impending sale of the monastery and church building located on real property in Melrose, title to which stood in the name

[10 N.E.3d 1102]

of Holy Annunciation.⁵ The monastery and church building were sold on February 3, 2006, to Haddad's sister, and Holy Annunciation received $105,700.17 in net proceeds. This sum was deposited in Holy Annunciation's corporate account at Sovereign Bank.⁶

On March 2, 2006, at the conclusion of a hearing in the Middlesex action at which Haddad was present, a Superior Court judge ordered the defendants to hold the proceeds of the Melrose property's sale in escrow. ⁷ Nevertheless, that same day, Haddad withdrew $98,771 from Holy Annunciation's corporate account, leaving a balance of $6,755.69. Using the money withdrawn, again on the same day, Haddad caused to be issued multiple bank checks to Richard Campana totaling $30,901, and on the next day, March 3, obtained a bank check in the amount of $40,000 and deposited the funds with the board in her State employees' retirement system account.⁸ The parties agree that the $40,000 deposited in Haddad's State retirement account was used to “buy back” creditable years of employment for purposes of calculating her retirement benefits upon retirement.^9,10

On March 21, 2008, default judgment entered for the plaintiffs in the Middlesex action due to Haddad's and Holy Annunciation's failure to provide discovery. Thereafter, a Superior Court judge held an evidentiary hearing on damages, and on August 6, judgment entered in the amount of $105,000 in favor of the plaintiffs. On October 21, 2008, execution issued in the amount of $163,506.62—an amount that included interest and costs—against both Haddad and Holy Annunciation. To date, the plaintiffs have not recovered anything on the judgment against either defendant.

In November of 2008, the plaintiffs learned that Haddad had filed a request

[10 N.E.3d 1103]

with the board to remove the $40,000 she had deposited in her retirement account. The plaintiffs then filed this case in the Superior Court in Suffolk County (Suffolk action) seeking (1) a declaration that under G.L. c. 109A, the transfers through bank checks to Campana and the board were fraudulent and therefore null and void, and an order that the funds be paid to the plaintiffs in partial satisfaction of their judgment against Haddad and Holy Annunciation; (2) an injunction prohibiting the release of the $40,000 from Haddad's retirement account until the issues concerning the proper disposition of the proceeds were resolved; and (3) issuance of a trustee process summons to the board in relation to the $40,000 in Haddad's retirement account.

The board and the Attorney General (collectively, the Commonwealth) moved to dismiss the complaint pursuant to Mass. R. Civ. P. 12(b)(1), 365 Mass. 754 (1974), contending that Haddad's retirement account was exempt from attachment pursuant to G.L. c. 32, § 19, and that the Commonwealth had not waived its sovereign immunity to be sued as a trustee.¹¹ After a hearing, the motion judge agreed, and dismissed the plaintiffs' complaint against the Commonwealth.¹² As indicated previously, the plaintiffs appealed, a panel of the Appeals Court affirmed the order of dismissal, ¹³ and this court granted the plaintiffs' application for further appellate review.

2. Discussion. We consider the two grounds advanced by the Commonwealth and accepted by the motion judge for dismissing the plaintiffs' complaint.

a. G.L. c. 32, § 19. The Commonwealth contends that Haddad's retirement account cannot be attached because a public employee's retirement account is exempt from attachment (and from being taken on execution) pursuant to G.L. c. 32, § 19 (§ 19). Although the plaintiffs acknowledge that the language of § 19 so states, they urge the court to create an equitable exception to § 19's exemption. In Utley v. Utley, 355 Mass. 469, 471, 245 N.E.2d 435 (1969), this court suggested that the judicial creation of an equitable exception to § 19 was not possible. We find it unnecessary to consider the applicability of Utley to this case, however, because we conclude that the $40,000 deposited by Haddad into her retirement account does not fit within § 19's prohibition against attachment.

Section 19 provides in pertinent part:

“The rights of a member to an annuity, pension or retirement allowance, such annuity, pension or retirement allowance itself, and all his rights in the funds of any system established under the provisions of such sections, shall be exempt from taxation ... and from the operation of any law relating to bankruptcy or insolvency and shall not be attached or

[10 N.E.3d 1104]

taken upon execution or other process ” (emphasis added).¹⁴

As the quoted language indicates, the bar against attachment applies to a member's “rights” in the funds of a particular retirement system. By definition, for a member to have “rights” in the funds, the member must have a rightful claim to or ownership interest in those funds. See Black's Law Dictionary 1436 (9th ed. 2009) (defining “right” as “[t]he interest, claim, or ownership that one has in tangible or intangible property”). Accord Webster's Third New International Dictionary 1955 (1993) (“right” means “having proper title or right” or “something to which one has a just claim”). Here, however, Haddad, apparently a member of the State employees' retirement system, see G.L. c. 32, § 1, lacked an ownership interest in the $40,000 she deposited with the board, or any rightful claim to these funds. Rather, the funds, part of the proceeds from the sale of Holy Annunciation's monastery and church property in Melrose,¹⁵ were solely the property of Holy Annunciation, a charitable corporation, on deposit in Holy Annunciation's own bank account,¹⁶ and nothing in the record suggests that Haddad had any right to take and use these funds for her own purposes—namely, to increase her retirement benefits from the Commonwealth. In the circumstances, because the $40,000 at issue constituted funds of a separate corporate entity that Haddad misappropriated to herself in violation of her legal and fiduciary obligations as an officer and director of Holy Annunciation as well as an order of the Superior Court, Haddad did not, and does not, have “rights” to the $40,000 at issue within the meaning of § 19. Accordingly, § 19's bar against attachment of a retirement board member's “rights” in the funds does not apply in this case.¹⁷

b. Sovereign immunity. The Commonwealth argues that even if the $40,000 Haddad deposited in her retirement account is subject to attachment under § 19, principles of sovereign immunity still bar the plaintiffs from bringing a trustee process claim against the board.

[10 N.E.3d 1105]

The general rule of sovereign immunity provides that “[t]he Commonwealth ‘cannot be impleaded into its own courts except with its consent, and, when that consent is granted, it can be impleaded only in the manner and to the...