| Date: | 02/14/1983 |
|---|---|
| Organization: | State Ethics Commission |
| Docket Number: | 153 |
The Petitioner initiated these adjudicatory proceedings on April 27,1982 by filing an Order to Show Cause pursuant to the Commission's Rules of Practice and Procedure, 930 CMR 1.01 (5)(a). The Order alleged that the Respondent, Michael W. C. Emerson, while employed as a consultant by the City of Leominster (city) in connection with a wastewater treatment plant construction project (Project), had violated M.G.L. c. 268A, s.19, by participating as a municipal employee in particular matters in which his business partner, Thomas Crabtree, a sole officer, director and stockholder of UTS of Massachusetts, Inc. (UTS of Mass.), had a financial interest.
Specifically, Mr. Emerson was alleged to have participated in 1) the hiring of UTS of Mass. as a contractor to do testing on the Project; 2) the review and/or approval of reports submitted to the City by UTS of Mass.; and 3) the review and/or approval of invoices for payment submitted by UTS of Mass. to the City. The Petitioner also alleged that Mr. Emerson used his official position to secure an unwarranted privilege for UTS of Mass. and Mr. Crabtree by recommending that the City contract with UTS of Mass., and that the Respondent pursued a course of conduct giving reasonable basis for the impression that Mr. Crabtree, his business partner and associate in other firms, could improperly influence or unduly enjoy his favor in the performance of his official duties in violation of M.G.L. c. 268A, s.s.23(d) and (e) respectively.
The Respondent's Answer denied these allegations and asserted three affirmative defenses. Only one of these, that the Respondent was not a municipal employee within the meaning of the definition of that term in M.G.L. c. 268A, s.1(g), was subsequently pursued by the Respondent.
Following approximately two months of discovery, the adjudicatory hearing commenced on August 5, 1982 before Commissioner Joseph I. Mulligan, Jr., the Presiding Officer designated pursuant to M.G.L. c. 268B, s.4(c), and was completed on September 3, 1982 after six days of testimony. The parties thereafter filed briefs with the Commission and presented oral arguments before the three Commissioners participating in the case on December 20, 1982.[1] In Rendering this Decision and Order, each of the participating Commissioners has read and/or heard the evidence and arguments presented by the parties.
1. The Respondent is a consulting engineer with a doctorate in civil engineering and is currently in his third year of law school.
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2. On August 13, 1974, the Respondent, Mr. Crabtree and Donald Jones formed a partnership named Richardson Properties (Partnership) for the purpose of buying and managing property. The Partnership Agreement (Agreement) provided that any partner could withdraw six months after notifying the other parties of his intent to do so. The Agreement did not provide that the Partnership was established for a specific period of time or to accomplish a particular objective.
3. The Partnership purchased two buildings; one located at One Richardson Lane in Stoneham, Massachusetts, and the other at 20 Lomasney Way in Boston. Both properties, at least in part, were leased as office space by various tenants, including UTS of Mass., during the time the Partnership was in existence.
4. By letter of January 16,1980, Mr. Jones offered to sell his interest in the Partnership to Mr. Crabtree and the Respondent. This offer was rejected.
5. On. February 1, 1980, Mr. Jones gave notice that he was withdrawing from the Partnership six months from that date, in accordance with the terms of the Agreement.
6. On August 1, 1980, Mr. Jones's withdrawal from the Partnership became effective. Mr. Crabtree and the Respondent continued to let and manage the properties owned by the Partnership until their disposition in early 1982. During 1981, the Partnership grossed $23,399.00 in rental income from the two properties.
7. In addition to the Partnership, Respondent and Mr. Crabtree were associated with two other business entities, Yale Survey, Inc. and Universal Testing Services, Inc., the latter being the corporate predecessor of UTS of Mass. Respondent owned stock in each of these corporations and also served as a director. These firms conducted no significant business activity after 1979.
8. During all times relevant, the City was proceeding with the design and/or construction of the Project, Wastewater Treatment Plant Project No. C250336-03. Actual construction began in the fall of 1980. The City was to be reimbursed with federal and state funds for up to 90 percent of the costs associated with the Project, provided that construction was conducted in compliance with certain regulations and guidelines. The Environmental Protection Agency (EPA) and the Division of Water Pollution Control (DWPC) were the federal and state agencies, respectively, overseeing the Project.
9. During all times relevant, Metcalf & Eddy (M & E) was the firm acting as Resident Engineer on the Project, assigned to oversee all phases of the construction.
10. Raymond D. Harper was elected Mayor of the City in 1979 and commenced a two-year term in January of 1980. As the City's chief executive officer, Mayor Harper was responsible for the Project, and his approval was required before any invoices were paid by the City.
11. During all relevant times, Mr. Crabtree was the sole officer, director and stockholder of UTS of Mass. and that firm leased office space from the Partnership.
12. On November 4, 1980, Mr. Crabtree met with Mayor Harper at the Leominster City Hall to discuss the hiring of UTS of Mass. to perform testing and inspection work on the Project. After this meeting, Mr. Crabtree believed that UTS of Mass. would be hired by the City. [2]
13. Within weeks of the commencement of construction of the Project, invoices submitted by contractors were not being processed and approved by Mayor Harper in accordance with EPA procedures because of Mayor Harper's distrust of M & E and his lack of technical knowledge upon which to base his approvals of these invoices. The City's Director of Public Works had refused to aid Mayor Harper in connection with the Project, claiming that his other duties precluded such assistance.
14. On December 31,1980, Mayor Harper and the Respondent executed an "Engineering Agreement" stating, in material part, that the "City. . . retains the services of Dr. Michael W. Emerson P.E. as agent and liaison engineer to coordinate efforts, make recommendations, approve or disapprove work, oversee and advise on all work in connection with the [Project], sewer improvements, solid waste disposal program
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and any other administrative engineering services required. . ."The Engineering Agreement further provided that the Respondent was to be paid $30.00 per hour plus expenses.
15. Mayor Harper did not have City funds in his budget to pay the Respondent, nor had he complied with EPA regulations requiring prior approval before hiring an administrator/engineer who would be compensated from Project funds.
16. The Respondent began performing services for the City on January 2, 1981 and last performed work pursuant to the Engineering Agreement on March 26,1981. The Respondent submitted for payment detailed descriptions of his services rendered to the City. On February 2, 1981, the Respondent billed the City for $3,240.00 for services rendered during January, 1981 and received that compensation. On April 9, 1981, Respondent submitted a bill for $4,365.00 for the months of February and March. The latter bill has never been paid and is the subject of litigation between the Respondent and the City.
17. On January 6, 1981, the Respondent established a procedure for reviewing and approving pay estimates submitted to the City by M & E. These pay estimates related to work performed by M & E and the general contractor on the Project. The five steps in this procedure were:
1) Monthly pay estimates prepared by M & E;
2) Pay estimate checked and approved or disapproved by the Respondent;
3) City Department of Public Works approval based on Respondent's approval;
4) Approval of Mayor's Office; and
5) Payment by City accounting office.
18. On January 8, 1981, Mayor Harper, the Respondent, James F. Connors, who was the City Solicitor, and others met regarding the Project. Among the topics discussed was the hiring of testing firms. The Respondent stated at this meeting that the firms being discussed, including UTS of Mass., were technically qualified to perform the work for which they applied. The Respondent used as a point of reference the fact that he and Mr. Crabtree had been associated in the past with two corporations and certain real estate dealings. The Respondent did not disclose any ongoing business relationship in existence between himself and Mr. Crabtree.
19. On January 14, 1981, Mr. Crabtree was interviewed at City Hall in connection with the UTS of Mass. proposal to perform testing services on the Project. Mayor Harper and the Respondent were present at this interview.
20. On or about January 27, 1981, UTS of Mass. was hired by Mayor Harper and began to perform testing services on the Project. UTS of Mass. invoices for payment were submitted directly to the Mayor's office. During the three months that the Respondent performed services for the City, Mayor Harper approved UTS of Mass. invoices upon the advice and recommendation of the Respondent following Respondent's review and approval.[3]
21. On February 17,1981, the Respondent drafted a letter to the EPA, signed by Mayor Harper, detailing the scope of the Respondent's responsibilities as a consultant to the City. Among these responsibilities was included the management of the City's cash flow to meet all pay requirements connected with the Project.
22. On March 1,1981, UTS of Mass. submitted an invoice for $1 ,297 00 for services rendered from January 30,1981 to February 29,1981. Mayor Harper approved that invoice authorizing payment by the City on March 6,1981.
23. In late March or early April of 1981, following the Respondent's resignation from his position with the City, a meeting was held by the Leominster City Council in connection with the payment of invoices submitted by contractors working on the Project. Mr. Crabtree, other contractors on the Project and representatives of M & E were among those present. At this meeting, it was agreed that from then on Mr. Crabtree would send UTS of Mass. invoices to M & E, which would approve and submit them to the City's Director of Public Works, rather than continuing to send UTS of Mass. Invoices directly to the City.
24. From January, 1981 through March, 1981, UTS of Mass. had a contract for services with the Chelsea Jewish Nursing Home. The Respondent was employed by UTS of Mass. as a consultant in connection with this contract and received at least $2,759.30 as payment for his services
The Respondent has been charged with violations of M.G.L. c. 268A, s.s.19,23(d) and 23(e).
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Before considering these substantive allegations, the Commission will address a procedural matter raised by the Respondent.
The Respondent alleges that the Petitioner has failed to produce discoverable documents and, as a result, that Respondent has been denied a full and fair hearing in this case. For the reasons set out below, the Commission concludes otherwise.
On July 16, 1982, Respondent served upon the Petitioner an Amended Request for Production and Inspection of Documents. Among the list of documents specifically requested were:
"Copies of all sworn and unsworn statements made by potential Hearing witnesses taken as a result of the Commission's investigation of the Respondent." Following conclusion of the hearing in the case, Respondent, on October 26,1982, made a motion to compel production of documents pursuant to the above-quoted request, citing certain hearing testimony as indicating that such a statement by Mayor Harper was in the possession of the Petitioner and had not been produced. Petitioner responded that the statement referred to by Mayor Harper in his testimony was a compilation of notes taken by an investigator which Mayor Harper had subsequently refused to sign and adopt as his statement, Petitioner urged that the Commission utilize the definition of "statements" found in Rule 26 of the Massachusetts Rules of Civil Procedure:
(A) [A] written statement signed or otherwise adopted or approved by the person making it, or (B) a stenographic, mechanical, electrical or other recording, or a transcription thereof, which is a substantially verbatim recital of an oral statement by the person making it and contemporaneously recorded.
The Presiding Officer on November 1, 1982 allowed the motion to compel production to the extent that Petitioner possessed "statements" as defined in MRCP Rule 26.[4] Petitioner responded that no such "statements" were in his possession, all having been provided to the Respondent on or before August 16,1982.
On November 24, 1982, Respondent moved for an independent examination of Petitioner's documents by the legal advisor to the Presiding Officer, in order to ascertain whether Petitioner had complied with the orders of the Presiding Officer, That motion was denied on that date. In a supplementary document filed on December 31, 1982, Respondent requested that the Commission set forth its reasons for denying this independent investigation.
The Commission denial of the motion for such an independent examination is based on two factors:
1) the Commission does not believe that Petitioner has in his possession any "statement" as contemplated by MRCP Rule 26; and
2) Respondent was not prejudiced by this denial.
The definition of "statement" in Rule 26 (see p. 10) narrowly limits the scope of that term for discovery purposes. That definition was explicitly adopted by the Presiding Officer in this case.
Respondent at no time alleges that the document sought is one signed or otherwise adopted by the Mayor. Mayor Harper specifically states that he did not comply with the Commission's request that he sign and adopt it as his statement, bringing the evidentiary value of the document into question regardless of its origin. Further, Mayor Harper's characterization of the document in his testimony as a "recorded statement" not only was in response to Respondent counsel's suggestion that it was a "recorded statement," but, also, does not require the conclusion that the interview was mechanically or electronically recorded, Absent additional evidence that Petitioner possessed a "statement" as defined in MRCP Rule 26, the Commission accepts Petitioner's declarations that the interview transcript described by Mayor Harper was a compilation of notes of an investigator and not a transcription of a stenographic, mechanical, electrical or other recording. Such a compilation does not satisfy the definition in MRCP Rule 26.7 Mass. Practice 211 (Smith and Zobel 1975). The fact that the Petitioner sought Mayor Harper's verification of the contents of the document supports this conclusion.
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Moreover, Respondent was not prejudiced by his inability to obtain a copy of this document. Respondent was made aware of its existence during the hearing on August 6,1982 while cross-examining Mayor Harper. On the next hearing day, Respondent attempted to impeach Mayor Harper's direct testimony with the contents of the document which the Mayor had refused to sign. At this time, Respondent's counsel refused the Presiding Officer's offer to have the document marked for identification. Respondent, therefore, was aware of the existence of the document, its source and, at least in part, its contents, yet made no demand for its production at that time, nor during the three days of hearing which followed.
The only testimony of Mayor Harper which is part of the evidence in this case is that elicited under oath at the hearing. The proper way for Respondent to attempt to impeach that testimony is on cross-examination or through rebuttal testimony during the hearing. The record reflects no effort by Respondent to obtain this document at a time when it could have been used for these purposes. Respondent was not prejudiced by being unable to obtain, after the closing of the hearing, an unsworn document which is not a part of the record in the case. Therefore, the refusal to grant Respondent's request for an independent examination of Petitioner's documents did not deny Respondent a full and fair hearing. See, NLRB v. Interhoro Contractors, Inc., 432 F.2d 854, 860 (2nd Cir. 1970), cert. denied 402 U.S. 915(1971); also Vermont Board of Health v. Town of Waterbury, 129 VT. 168,274 A.2d 495, 499 (1970); also 4 Mezines, Stein, Gruff, Administrative Law, s.23.01 [1] (1982).
The Commission concludes that the Respondent participated as a municipal employee of the City of Leominster in a particular matter in which his business partner, Mr. Crabtree, had a financial interest, in violation of M.G.L. c. 268A, s.19. Specifically, the Commission finds by a preponderance of the evidence in the record that Mr. Emerson, in his role as administrator/engineer for the City, made or recommended approval of payment of an invoice for $1,297.00 submitted to the City by UTS of Mass. and that Mr. Crabtree, Respondent's partner in the Partnership, had a financial interest in those approvals as sole officer, director and stockholder of UTS of Mass. Section 19 states, in relevant part,
that a municipal employee who participates as such an employee in a particular matter in which to his knowledge [his] partner. .,has a financial interest [violates this section]... It shall not be a violation of this section (1) if the municipal employee first advises the official responsible for appointment to his position of the nature and circumstances of the particular matter and makes full disclosure of such financial interest, and receives a written determination made by that official that the interest is not so substantial as to be deemed likely to affect the integrity of the services which the municipality may expect from the employee...
The Commission finds that the Respondent was a municipal employee for the purposes of s.19 during the time that he was providing services to the City from January to March of 1981. "Municipal employee" is defined, in relevant part, as a person performing services for a municipal agency,[5] whether by election, appointment, contract of hire or engagement, whether serving with or without compensation, on a full, regular, part-time, intermittent or consultant basis. M.G.L. c. 268A, s.1(g). Because the term is specifically defined in the conflict of interest law, that definition supersedes any other definition which might he used for other purposes. Compare M.G.L. c. 32, s.1 (definition of "employee" for state retirement law); also M.G.L. c. 150E, s.1 (definition of "employee" for state labor relations law). Respondent does not deny performing services for the Mayor and the City. The definition
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above does not require a contract, does not require payment for services and imposes no requirement that a municipal employee's hiring be in accord with federal EPA procedures, municipal budget requirements or municipal law, as asserted by Respondent in his affirmative defense. The performance of services for a municipal agency makes one a municipal employee and, as a result, subject to M.G.L. c. 268A, s.19. Admittedly broad in scope, this definition assures protection of citizens from malfeasance by persons performing services in municipal government who might cloud their employment relationship in order to escape liability for unlawful acts.
Participation for purposes of M.G.L. c. 268A, s.19 is defined as participation in agency action or in a particular matter personally and substantially as a municipal employee, through approval, disapproval, decision, recommendation, the rendering of advice, investigation or otherwise. M.G.L. c. 268A, s.1(j) emphasis added). A particular matter is any judicial or other proceeding, application, submission, request for a ruling or other determination, contract, claim, controversy, charge, accusation, arrest, decision, determination, finding, but excluding enactment of general legislation by the general court. M.G.L. c. 268A, s.1(k).
The Commission finds that the approval for payment of a UTS of Mass. invoice constitutes a decision and, therefore, a particular matter. The Commission also finds that the Respondent participated in this particular matter personally and substantially by recommending or advising that Mayor Harper give his required approval.
The Respondent contends that he had no power to approve payment of invoices for the Project and, as a result, did not participate as contemplated in s.19. That Respondent did not "approve" the invoices may, in one sense, be technically true, since the legally significant approval on each invoice was that of Mayor Harper. The evidence, however, supports the finding that any approval made by Mayor Harper during the tenure of Respondent's City employment was predicated on the assurance by the Respondent that such approval was proper,
Mayor Harper and Mr. Connors, the City Solicitor, agree in their testimony that pay vouchers related to the Project were accumulating prior to Respondent's hiring because Mayor Harper did not feel qualified to assess their validity. The Mayor testified that resolving this back-up problem was the first task for the Respondent to undertake, and Mr. Emerson testified that this was, in fact, his first project. Prior to the hiring of UTS of Mass., the Respondent set up the procedure for reviewing and approving M & E pay estimates which clearly establishes his role in reviewing and approving or disapproving those submissions. The letter of February 17, 1982, describing Respondent's responsibilities in connection with the Project, includes the management of the City's cash flow to meet all pay requirements connected with the Project. And, while the Respondent was performing services for the City, UTS of Mass, invoices were sent directly to the Mayor's office for approval. One such invoice, submitted by UTS of Mass. on March 1, 1981, was approved by Mayor Harper on March 6,1981. These facts combine to create the inference that, pursuant to his duty to approve invoices submitted to the City by contractors on the Project, Mr. Emerson acted on the UTS of Mass. invoice submitted March 1, 1981. The evidence also supports a finding that the Mayor's approval of this invoice was based on the recommendation and advice of the Respondent that such approval should be made.
Petitioner alleged additional violations of M.G.L. c. 268A, s.19, based on Respondent's participation in 1) the hiring of UTS of Mass. by the City, and 2) the review and approval of testing reports made by UTS of Mass. The Commission finds that there is insufficient evidence to support these allegations.
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The Commission finds that Mr. Emerson knew that Mr. Crabtree was his partner and that, as sole officer, director and stockholder of UTS of Mass. Mr. Crabtree had a financial interest in the approval of the invoices submitted to the City.
The Respondent has maintained throughout these proceedings that upon Mr. Jones's withdrawal in August, 1980 the Partnership was dissolved. Therefore, he asserts, he and Mr. Crabtree were no longer partners after that time, even though the Partnership business continued for over a year.
In Massachusetts, partnerships are governed by M.G.L. c. 108A. Partnerships not created for a definite term or for a particular undertaking are partnerships at will and may be dissolved simply by the withdrawal of any one of the partners. M.G.L. c. 108A, s.31(1)(b). Dissolution of a partnership is the change in the relation of the partners caused by a partner's withdrawal. M.G.L. c. 108A, s.29. Dissolution is followed by winding-up of partnership affairs in which the business or property interests of the partnership are transferred or otherwise disposed of. However, the partnership does not terminate its existence during the winding-up period. The partnership itself continues to exist until its affairs are completely wound-up -- then it is terminated. M.G.L. c. 108A, s.30.
The Partnership created by the Respondent, Mr. Crabtree and Mr. Jones was dissolved in accordance with M.G.L. c. 108A, s.29 on August 1, 1980, the effective date of the withdrawal of Mr. Jones. The Partnership did not terminate at that time. The Respondent and Mr. Crabtree remained partners throughout the period that the Partnership's business continued, including the period in which the Respondent was employed by the City.
The evidence amply supports a finding that the Respondent knew he was a partner in the Partnership with Mr. Crabtree during the relevant period. The Partnership business was continuing, even renting office space to UTS of Mass. in its Stoneham property. The Partnership grossed over $23,000.00 in income during 1981. The Respondent admits receipt of a Federal income tax statement reflecting his share of the Partnership's income earned in 1981. Each of these unambiguous facts indicates that, after the withdrawal of Mr. Jones, the Partnership continued. It is unreasonable to believe that Respondent ignored all these factors and relied on an incorrect reading of a single section of state law to conclude that the Partnership no longer existed.[7]
Mr. Crabtree's financial interest in the approval of UTS of Mass. is not contested. As sole officer, director and stockholder of UTS of Mass., he had a financial interest in invoices submitted for payment by the firm.
The Commission finds that Respondent's reference to past business associations with Mr. Crabtree at the January 8, 1981 meeting with Mayor Harper and Mr. Connors was not a "full disclosure" as called for by the second paragraph of M.G.L. c. 268A, s.19.
Mr. Connors's testimony under oath established that the Respondent did not disclose any ongoing business relationships with Mr. Crabtree.[8] Not only was the existence of the Partnership not disclosed, but, neither was the Respondent's consulting arrangement with UTS of Mass. or that firm's tenancy in the Partnership's Stoneham property. Absent full disclosure of relationships, like the Partnership, which implicate the provisions of M.G.L. c. 268A, s.19, no valid exemption can be granted by an appointing official. Assuming arguendo that the Respondent related his past relationships with Mr. Crabtree in order to ascertain whether a conflict of interest existed and Mayor Harper, on the advice of Mr. Connors, determined that a conflict was not present, any exemption granted would be invalid because of the incomplete disclosure. Moreover, Respondent at no time claims that he received the written determination called for in s.19.
The provisions of s.19 are logical and clear. A public employee should not take official action in matters wherein those associated with him in the ways listed in s.19 have a financial interest.
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See, In the Matter of James J. Craven, Jr., Commission Adjudicatory Docket No, 110, Decision and Order, pp. 13-14, (June 18, 1980), aff'd. sub nom. Craven v. Vorenberg et al, Suffolk Superior Civil Action No. 49269 (1981), appeal pending (re: M.G.L. c. 268A, s.6).
The objective is plain: Decisions and actions of a public employee should be made exclusive of the private financial interests of those to whom he is related by blood or in business. Exemption is available, but should be judiciously granted, and only in strict compliance with the procedure described, in order to protect the public interest. See, In the Matter of William G. McLean, Commission Adjudicatory Docket No. 143, Decision and Order, p. 11, (January 8,1982). No such exemption was granted in this case.
In the Order to Show Cause initiating these proceedings, Petitioner alleged that the Respondent violated s.s.29(d) and 29(e) of M.G.L. c. 268A. in addition to s.19. Following the close of the adjudicatory hearing, Petitioner chose not to pursue the alleged violation of s.29(d).
Subsection 29(e) provides that no officer or employee of a municipal agency shall:
by his conduct give reasonable basis for the impression that any person can improperly influence or unduly enjoy his favor in the performance of his official duties, or that he is unduly affected by the kinship, rank, position or influence of any party or person.
The Commission concludes that the facts on which a finding of a violation of 29(e) would be based primarily are those which comprise the s.19 violation. Those additional facts which Petitioner would contend justify a separate violation of s.29(e), i.e. Respondent's failure to disclose his consulting arrangement with UTS of Mass. and that firm's rental of Partnership office space, are neither distinct enough nor sufficient in and of themselves to support a separate and non-cumulative violation of s.29(e).
On the basis of the foregoing, the Commission concludes that Mr. Michael W. C. Emerson violated M.G.L. c. 268A, s.19. Pursuant to its authority under M.G.L. c. 268B, s. 4(d), the Commission hereby orders Mr., Emerson to:
Pay $500 (five hundred dollars) to the Commission as a civil penalty for participating as a municipal employee of the City of Leominster in a particular matter in which to his knowledge his partner, Mr. Thomas Crabtree, had a financial interest. The Commission orders Mr. Emerson to pay this penalty of $500 (five hundred dollars) to the Commission within thirty days of the receipt of this Decision and Order.
