Settlement  In the Matter of Richard Burgess

Date:	03/24/1992
Organization:	State Ethics Commission
Docket Number:	417

Disposition Agreement

This Disposition Agreement (Agreement) is entered into between  the State Ethics Commission (Commission) and Richard Burgess (Mr.  Burgess) pursuant to s. 5 of the Commission's Enforcement  Procedures. This Agreement constitutes a consented to final  Commission order enforceable in the Superior Court pursuant to G.  L. c. 268B, s. 4(j). 

On January 24, 1990, the Commission initiated, pursuant to  G.L. c. 268B, s. 4(a), a Preliminary Inquiry into possible  violations of the conflict of interest law, G.L. c. 268A, by Mr.  Burgess. The Commission has concluded that inquiry and, on November  14, 1990, found reasonable cause to believe that Mr. Burgess  violated G.L. c. 268A, s. 19.   

The Commission and Mr. Burgess now agree to the following  facts and conclusions of law: 

1. At all times material herein, Mr. Burgess was a member of  the Swansea Planning Board, and its chairman since 1985. As such,  he was a municipal employee within the meaning of G.L. c. 268A, s.  1. 

2. Among his responsibilities as a planning board member was  the review and approval of subdivision plans pursuant to G.L. c.  41, s. 81. That process involved the planning board first accepting  the plan (which set in motion certain time periods for approval),  having a public hearing, approving or disapproving the plan, and  ultimately endorsing the plan with respect to the question of  whether the construction of roads and installation of utilities was  adequately secured by an appropriate surety or bond. The planning  board would also be called on to review and approve certain so  called "approval not   

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required" (ANR) plans where the only role of the board was to  determine that each lot shown on the plan had adequate frontage on  an approved way.   

3. Beginning in or about April 1986, Mr. Burgess became  associated as a real estate agent with Michael McNally (McNally),  the sole proprietor of M.J. McNally and Associates of Fall River.  McNally did not compensate Burgess as a conventional employee,  rather he treated him as an independent contractor. Under this  arrangement, McNally's agency would receive the sales commissions  for those sales made by Burgess, and then compensate Burgess with  50% of those commissions. McNally lists and sells real estate in  the Swansea, Fall River, Freetown, and Berkeley areas.[1]

I. Cheryl Drive

4. On February 23, 1987, McNally sold a certain piece of raw  land in Swansea to Dillon Lane Construction.

5. Mr. Burgess was aware of the above sale. He also knew that  under normal trade practice whenever a realtor sold raw land to a  developer, if that land was later developed as a subdivision, it  was reasonably foreseeable the realtor would be the broker  regarding the sale of the individual lots.

6. On April 21, 1987, Dillon Lane Construction filed a  subdivision plan (Cheryl Drive Subdivision) regarding the foregoing  raw land.

7. McNally had Cheryl Drive Subdivision lots under purchase  and sale agreements as follows: two of the lots on May 22, 1987,  and one additional lot on May 26, 1987; June 16, 1987; August 6,  1987; and August 21, 1987. Each lot sold for approximately  $50,000. According to the purchase and sales agreements, McNally  would receive a total of $23,200 in commissions for the sales of  these lots. All purchase and sale agreements were contingent upon  the approval of the subdivision plan by the planning board. (Mr.  Burgess did not act as an agent for the Cheryl Drive Subdivision  and received no commissions for the sales of the subdivision's  lots).

8. On June 8, 1987, Mr. Burgess, as a planning board member,  along with two other planning board members, conducted the required  public hearing regarding the Cheryl Drive Subdivision plan. On June  15, 1987 and on July 20, 1987, respectively, Mr. Burgess with two  other members voted to approve and then endorse the Cheryl Drive  Subdivision plan. (A quorum of three members is required to vote on  planning board business.) At this time, there were four active  members on the planning board.[2] One active member, Steven Torres,  was not present for the June 8, 1987 and July 20, 1987 meetings.[3]  (No board member, present or absent, ever sought to disqualify  himself from the Cheryl Drive matters).

9. Section 19 of G.L. c. 268A provides in relevant part that  except as otherwise permitted in that section,[4] a municipal  employee is prohibited from participating[5] in a particular  matter[6] in which a business organization by which he is employed  has a financial interest.[7]

10. The decisions to approve and endorse the Cheryl Drive  Subdivision plan were particular matters.

11. Mr. Burgess participated in these particular matters by  conducting the June 8, 1987 public hearing and by voting to approve  and then endorse the plan on June 15, 1987 and July 20, 1987,  respectively.

12. When he acted as described above, Mr. Burgess knew that  McNally had a financial interest in those particular matters  inasmuch as he knew that McNally would be selling the lots in the  subdivision which was the subject of those particular matters, and  that their sale was contingent on planning board approval. Indeed,  by the June 8, 1987 public hearing, McNally already had several  lots under agreement.

13. McNally, as a sole proprietor, is a business organization  for purposes of s. 19.

14. By participating in these various Cheryl Drive Subdivision  decisions in which he knew McNally had a financial interest, Mr.  Burgess participated in particular matters in which he knew a  business organization by which he was employed[8] had a financial  interest, thereby violating s. 19.

II. Warhurst Park

15. On June 27, 1986, Mr. Burgess, as McNally's agent, sold  certain raw land known as Warhurst Park to P&H, Inc. Mr. Burgess  knew that P&H's owners intended to develop the land for a  subdivision. He also knew that being the real estate agent who sold the raw   

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property to P&H, it was reasonably foreseeable he would have the  opportunity to sell the individual lots if and when they were  developed as part of the subdivision.

16. On June 15, 1987, P&H filed a subdivision plan for  Warhurst Park with the planning board. Mr. Burgess abstained at  that meeting from the vote to accept the filing of the plan because  of his financial interest in the eventual sale of the lots in that  proposed subdivision.[9]

17. Ultimately, Mr. Burgess did sell 15 of the 16 lots in the  Warhurst Park Subdivision, earning $24,984.00 in commissions.

18. The purchase and sale agreements were contingent on  planning board approval.

19. On July 20, 1987, Mr. Burgess, along with two other  planning board members, conducted the required public hearing as to  the Warhurst Park Subdivision. Thereafter, on October 26, 1987, Mr.  Burgess voted as a planning board member to approve modifications to  the Warhurst Park plan. (Absent the board's October 26, 1987 vote,  it is likely the Warhurst subdivision plan would have been  constructively approved on October 28, 1987[10].

20. The decision to approve the Warhurst Park Subdivision  modifications was a particular matter.

21. Mr. Burgess participated in this particular matter by  attending the public hearing and by voting to approve the plan  modifications.

22. Mr. Burgess knew that he had a personal financial interest  as the real estate agent regarding these lots when he so  participated, in that the purchase and sales agreements were  contingent on planning board approval. (At the July 20, 1987  hearing, Mr. Burgess disclosed this financial interest).

23. By participating as a planning board member in decisions  affecting the Warhurst Park Subdivision at a time when he knew he  was likely to receive a future financial interest from those  decisions, Mr. Burgess participated in particular matters in which  he had a financial interest, thereby violating s. 19.

24. By way of defense, Mr. Burgess contends that the Rule of  Necessity should apply to his participating in the Cheryl Drive and  Warhurst Park particular matters. He contends that at the time he  took each of the actions described above, there were only three  planning board members present. Consequently, in order to create  the required quorum of three so that the board could act, he  invoked the Rule of Necessity which, in his view, allows a board  member who has a conflict to participate if his participation is  necessary to create a quorum. Moreover, Assistant Town Counsel,  Kevin Waldron, was present at the July 20, 1987 meeting and did not  object to Burgess' participation.

25. Two responses are in order. First, Mr. Burgess did not, in  fact, explicitly invoke the necessity rule on any of the  above-described occasions, except as to his July 20, 1987  participation in the public hearing on the Warhurst Park  subdivision matter. Second, Mr. Burgess' basic premise - that the  Rule of Necessity may be invoked to create a quorum - is not  correct as applied to these facts. The rule cannot be invoked where  the mere absence of a member prevents a quorum. See, Graham v.  McGrail, 370 Mass. 133, 138 (1976); Commission Fact Sheet, Rule of  Necessity. Efforts must be made to reschedule the matter so that a  quorum of members (without conflicts) can be obtained.[11]

26. In participating in the Cheryl Drive and Warhurst Park  matters, Mr. Burgess' purpose appears to have been to facilitate  town business by providing a quorum. Thus, the evidence suggests  Mr. Burgess' violation of G.L. c. 268A, s. 19 was  unintentional.[12]

III. ANR Plan

27. On August 21, 1986, McNally and Charles Baldwin entered  into a purchase and sale agreement to buy a certain parcel of  property on Route 6 and Old Fall River Road, Swansea. They arranged  this purchase using Charles Baldwin's spouse, Patricia Baldwin, as  the nominal purchaser.

28. On November 17, 1986, an ANR plan was submitted to the  planning board by which the above parcel would be divided into  three separate lots. On that same date, the planning board, with  Burgess participating, voted to approve the ANR plan.

29. The division of the parcel into three lots would make the  parcel more valuable.

30. Mr. Burgess knew that McNally and Charles Baldwin had this  property under agreement at the time he so voted.   

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31. The decision to approve the ANR plan was a particular  matter.

32. Mr. Burgess participated in the above ANR decision by  voting to approve the application.

33. When he so voted, he knew that McNally had a financial  interest in the vote in that McNally, along with Baldwin, had  signed a purchase and sale agreement to buy the property.

34. By approving the ANR plan at a time when he knew McNally  had a financial interest in the decision, Mr. Burgess participated  in a particular matter in which he knew a business organization by  which he was associated had a financial interest, thereby violating  s. 19.

Based on the foregoing, the Commission has determined that the  public interest would be served by the disposition of this matter  without further Commission enforcement proceedings on the basis of  the following terms, to which Mr. Burgess has agreed:

1. that he pay the Commission a sum of five hundred dollars  ($500.00)[13] forthwith for violating G.L. c. 268A, s. 19; and

2. that he waive all rights to contest the findings of fact,  conclusions of law, and conditions contained in the agreement in  this or any related administrative or judicial proceeding to which  the Commission is a party. 

 [1] Before joining McNally Associates, Burgess sought advice  on potential employment conflicts with his planning board duties  from assistant town counsel, Kevin Waldron. Waldron orally advised  Burgess to avoid participating in planning board matters that  affected his financial interest, his family's financial interest,  and the financial interest of businesses he owned or managed. Only  written legal advice, however, made a matter of public record and  filed with the Commission constitutes a valid conflict of interest  defense. See, G.L. c. 268A, s. 22; In re Lavoie, 1987 SEC 286; In  re Deleire, 1985 SEC 236.   

[2] After March 24, 1986, a fifth member, Brian Gingras,  rarely attended meetings.   

[3] Torres attended meetings on June 15, 1987, June 22, 1987,  June 29, 1987, July 7, 1987 and July 13, 1987.   

[4] None of the exceptions apply here.   

[5] "Participate," participate in agency action or in a  particular matter personally and substantially as a state, county  or municipal employee, through approval, disapproval, decision,  recommendation, the rendering of advice, investigation or  otherwise. G.L. c. 268A, s. 1(j).   

[6] "Particular matter," 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 and petitions of  cities, towns, counties and districts for special laws related to  their governmental organizations, powers, duties, finances and  property. G.L. c. 268A, s. 1(k).   

[7] The term "financial interest" means any economic interest  of a particular individual that is not shared with a substantial  segment of the population of the municipality. See, Graham v.  McGrail, 379 Mass. 133, 138-39 (1976). This definition has embraced  private interests, no matter how small, which are direct, immediate  or reasonably foreseeable. See, EC-COI-8498. The interest can be  affected in either a positive or a negative way. See, EC-COI-84-86.  Burgess was unaware of Graham.   

[8] Mr. Burgess argued that on these facts he was not employed  by McNally, rather his relationship was that of an independent  contractor. The Commission, however, will construe the term  "employed" broadly so as to include independent contractor  relationships where a significant portion of the subject's annual  compensation as an independent contractor is derived from that  relationship. See, EC-COI-83-34 (portion of income earned from  business organization and time spent serving organization  determining factors whether official is "employee"). Here,  virtually all of Mr. Burgess' annual income was received from  McNally.   

[9] As of June 15, 1987, Mr. Burgess, through McNally, had 10  such lots under purchase and sale agreements.   

[10] G.L. c. 41, s. 8U provides in relevant part, "the failure  of a planning board either to take final action or to file with the  city or town clerk a certificate of such action regarding the  definitive plan submitted by an applicant   

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within one hundred thirty-five days after such submission, or such  further time as may be agreed upon at the written request of the  applicant, shall be deemed to be an approval thereof. n The  Warhurst Subdivision plan was submitted on June 15, 1987.   

[11] In fact, Burgess need only have waited less than forty  minutes for the tardy Torres to appear on June 15, 1988 to have  obtained a quorum of members without conflicts to vote on the  Cheryl Drive Subdivision. At that time, Burgess did not know when  Torres would arrive.   

In the case of the October 26, 1988 meeting, an effort to  reschedule would have been futile due to public meeting notice  requirements and the imminent constructive approval on October 28,  1987.    

[12] Ignorance of the law is no defense to the conflict of  interest law. In re Doyle, 1980 SEC 11, 13, See also, Scola v.  Scola, 318 Mass. 1, 7 (1945).    [13] Pursuant to G.L. c. 268B, s. 3, the Commission is  authorized to impose a fine of up to $2,000 for each violation of  G.L. c. 268A. Here, the Commission has imposed only $500 because it  found substantially mitigating Mr. Burgess' assertions that in the  majority of the instances where he participated, he believed his  involvement was necessary in order to establish a quorum so the  board could act, and that before starting as a real estate agent he  sought advice from town counsel in an attempt to avoid violations. 

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