Court Opinion

ID: 9895211
Source: CourtListenerOpinion
Date Created: 2023-11-06 15:12:17.916044+00
Date Added: 2024-06-11T09:11:43.306679
License: Public Domain

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SJC-13412

   FAIRHAVEN HOUSING AUTHORITY & others1   vs.   COMMONWEALTH &
                            another.2

         Suffolk.     October 2, 2023. - November 6, 2023.

    Present:    Budd, C.J., Gaziano, Lowy, Kafker, Wendlandt,
                           & Georges, JJ.

Department of Housing and Community Development. Housing
     Authority. Contract, Employment. Statute, Construction,
     Amendment. Declaratory Relief. Practice, Civil,
     Declaratory proceeding, Motion to dismiss. Administrative
     Law, Agency's authority.

     Civil action commenced in the Superior Court Department on
January 9, 2020.

    A motion to dismiss was heard by Rosemary Connolly, J.

     The Supreme Judicial Court on its own initiative
transferred the case from the Appeals Court.

    1  Lawrence Housing Authority, Medford Housing Authority,
Nantucket Housing Authority, Provincetown Housing Authority,
Stoneham Housing Authority, Sudbury Housing Authority, Renee H.
Ceely, Kristin Hatch, Efrain Rolon, Sharon Wilkins, Brian
Costello, and the Massachusetts Chapter of the National
Association of Housing and Redevelopment Officials.

    2   Department of Housing and Community Development.
                                                                    2

     Michele Randazzo for the plaintiffs.
     Eric A. Haskell, Assistant Attorney General, for the
defendants.
     Frank A. Flynn, for Southeastern Massachusetts Executive
Directors Association & others, amici curiae, submitted a brief.

     WENDLANDT, J.   This case presents the question whether

G. L. c. 121B, § 7A, grants the Department of Housing and

Community Development (DHCD)3 the authority to decline to approve

employment contracts between local housing authorities (LHAs)

and their executive directors where those contracts fail to

conform to DHCD's guidelines.    Concluding that it does, we

affirm the well-reasoned decision of the Superior Court judge

dismissing the declaratory judgment complaint.4

     1.   Background.   "We summarize the factual allegations set

forth in the complaint and in the undisputed documents

incorporated by reference in the complaint."   Osborne-Trussell

v. Children's Hosp. Corp., 488 Mass. 248, 250 (2021).     We

"accept[] as true all well-pleaded facts alleged in the

     3 In 2023, DHCD changed its name to the Executive Office of
Housing and Livable Communities and became a cabinet-level
secretariat. In the past DHCD was referred to as the Department
of Community Affairs. In keeping with the complaint and briefs,
we refer to the agency as DHCD.

     4 We acknowledge the brief of amici curiae Southeastern
Massachusetts Executive Directors Association, Central Executive
Directors Association, North Shore Executive Directors
Association, Small Housing Authority Directors Organization, and
Western Massachusetts Housing Authority Executive Directors
Association.
                                                                    3

complaint."   Id. at 253, quoting Ryan v. Mary Ann Morse

Healthcare Corp., 483 Mass. 612, 614 (2019).

     The plaintiffs are LHAs of various cities and towns in the

Commonwealth, current and former executive directors of LHAs,

and the Massachusetts chapter of the National Association of

Housing and Redevelopment Officials, a membership association of

LHAs, community development agencies, and housing and

redevelopment officials.   At the time of the complaint, DHCD was

a department within the Commonwealth's Executive Office of

Housing and Economic Development and, as "supervisor" of LHAs,

had the "power to oversee most phases of the operations of"

them.   West Broadway Task Force, Inc. v. Commissioner of the

Dep't of Community Affairs, 363 Mass. 745, 748 (1973).

     The plaintiffs allege that DHCD has exceeded its authority

under G. L. c. 121B, § 7A, by promulgating guidelines, referred

to as public housing notices (PHNs), that govern contracts

between an LHA and its executive director in a manner that

interferes with the authority of the LHA to "determine [the]

qualifications, duties and compensation" of its executive

directors as provided by G. L. c. 121B, § 7. Among other things,

DHCD's guidelines require that contracts between an LHA and an

executive director be in writing and be approved by DHCD.    See

Department of Housing and Community Development, PHN No. 2017-21

at 2-3 (Sept. 7, 2017).    The guidelines set forth an executive
                                                                    4

director's maximum allowable salary based on a formula and a

schedule for executive director salary, including a capped

maximum salary amount.5   See Department of Housing and Community

Development, PHN No. 2019-21 at 3-4 (Sept. 16, 2019).

     The guidelines also include a template agreement6 and

require use of a cover sheet.   See Department of Housing and

Community Development, PHN No. 2017-25 at 2-4 (Oct. 31, 2017).

DHCD's guidelines require contracts to include limitations on

the numbers of hours for which the executive director may be

compensated, a provision for binding arbitration for dispute

resolution, and a "for cause" termination7 provision.   Id. at 8,

10, 13.   An LHA executive director's benefits must be governed

     5 Four versions of the schedule have been published since
the passage of G. L. c. 121B, § 7A. See Department of Housing
and Community Development, PHN No. 2015-17 (July 1, 2015);
Department of Housing and Community Development, PHN No. 2018-
01; Department of Housing and Community Development, PHN No.
2019-21 (Sept. 16, 2019); Department of Housing and Community,
PHN No. 2022-02 (Jan. 26, 2022).

     6 While DHCD does not make the template agreement mandatory,
it "highly recommends use of this contract template in order to
facilitate its prompt review and approval, and will provide
expedited review for housing authorities utilizing the contract
template." Department of Housing and Community Development, PHN
No. 2017-25 at 2 (Oct. 31, 2017). According to the plaintiff's
complaint, DHCD has rejected "virtually all" contracts that do
not follow its template agreement.

     7 Under this provision, the LHA "may and, under certain
circumstances . . . , shall terminate" the employment contract
of its executive director for "any lawful reason in good faith
relied upon by the [LHA]." PHN No. 2017-25, supra at 10.
                                                                   5

by an LHA personnel policy approved by DHCD.8   Department of

Housing and Community Development, PHN No. 2019-29 at 1 (Dec.

11, 2019).   The guidelines prohibit contracts that include

provisions for longevity payments,9 automatic contract renewals

or extensions, or indemnification of the executive director.

PHN No. 2017-25, supra at 15.

     DHCD has withheld funding and budget approvals when

contracts depart from the guidelines.   Several executive

directors have accepted reduced compensation as a result of

DHCD's approval process.

     2.   Procedural history.   The plaintiffs filed a complaint

pursuant to G. L. c. 231A, § 1, seeking a judgment declaring

that DHCD exceeded its authority by promulgating guidelines for

contracts between LHAs and executive directors and making

     8 DHCD's guidelines require that executive director benefits
may not exceed the "benefits available to DHCD's administrative
union . . . employees." Department of Housing and Community
Development, PHN No. 2019-29 at 1 (Dec. 11, 2019). However,
"DHCD will review and consider a request for deviation from
[state employee union benefit] standards so long as it can be
demonstrated that the deviation is reasonable . . . and that the
contract terms will not negatively impact either the financial
condition of the [L]HA or the [L]HA's staff and coverage
availability." Id. at 2.

     9 Longevity payments refer to "increased compensation on the
basis of increased years of service." PHN No. 2017-25, supra at
15. DHCD began allowing such payments as "bonuses" in 2022, but
the bonus cannot be used in calculating an executive director's
retirement benefits. Department of Housing and Community
Development, PHN No. 2022-16 (Sept. 21, 2022) at 3.
                                                                    6

compliance with the guidelines a requirement to obtain

contractual approval from DHCD.    A Superior Court judge allowed

DHCD's motion to dismiss the complaint under Mass. R. Civ. P.

12 (b) (6), 365 Mass. 754 (1974).10    The plaintiffs timely

appealed, and we transferred the case to this court on our own

motion.

     3.   Discussion.   "We review the allowance of a motion to

dismiss de novo, accepting as true all well-pleaded facts

alleged in the complaint."   Osborne-Trussell, 488 Mass. at 253,

quoting Ryan, 483 Mass. at 614.   "We draw all reasonable

inferences in the plaintiff's favor, and determine whether the

allegations plausibly suggest that the plaintiff is entitled to

relief on that legal claim" (quotations omitted).    Osborne-

Trussell, supra, quoting Buffalo-Water 1, LLC v. Fidelity Real

Estate Co., 481 Mass. 13, 17 (2018).    See Iannacchino v. Ford

Motor Co., 451 Mass. 623, 636 (2008).    "To survive a motion to

dismiss, the 'factual allegations must be enough to raise a

right to relief above the speculative level based on the

assumption that all the allegations in the complaint are true

     10Contrary to the plaintiffs' contention, the judge did not
convert the motion to dismiss into a motion for summary judgment
by considering DHCD's guidelines referenced in the complaint.
See Ryan, 483 Mass. at 614 n.5 (where "the complaint makes clear
reference" to document and "neither party disputes [its]
existence or terms," it may be considered in connection with
motion to dismiss).
                                                                     7

(even if doubtful in fact)'" (alterations omitted).   Osborne-

Trussell, supra, quoting Sudbury v. Massachusetts Bay Transp.

Auth., 485 Mass. 774, 779 (2020).   "The facts alleged must

plausibly suggest (not merely be consistent with) an entitlement

to relief" (quotation, citation, and alteration omitted).

Osborne-Trussell, supra.

    The complaint seeks a declaratory judgment regarding the

scope of DHCD's authority under G. L. c. 121B, § 7A -- a

question of statutory interpretation, which we review de novo.

See Armstrong v. Secretary of Energy & Envtl. Affairs, 490 Mass.

243, 247 (2022).   In deciding whether an agency is acting within

its statutory authority, we use "conventional tools of statutory

interpretation" to determine "whether the Legislature has spoken

with certainty on the topic in question"; if the statute is

unambiguous, "we give effect to the Legislature's intent."    Id.,

quoting Goldberg v. Board of Health of Granby, 444 Mass. 627,

632-633 (2005).

    "[T]he general and familiar rule is that a statute must be
    interpreted according to the intent of the Legislature
    ascertained from all its words construed by the ordinary
    and approved usage of the language, considered in
    connection with the cause of its enactment, the mischief or
    imperfection to be remedied and the main object to be
    accomplished, to the end that the purpose of its framers
    may be effectuated."

Reagan v. Commissioner of Revenue, 491 Mass. 446, 451 (2023),

quoting Oracle USA, Inc. v. Commissioner of Revenue, 487 Mass.
                                                                   8

518, 522 (2021).   Accordingly, we begin our analysis with the

words of the statute.   "[O]rdinarily, where the language of a

statute is plain and unambiguous, it is conclusive as to

legislative intent" (citation omitted).   Osborne-Trussell, 488

Mass. at 254.

     Adopted in the wake of a public scandal involving the

executive director of a local housing authority,11 G. L. c. 121B,

§ 7A, provides that:

     "[DHCD] shall promulgate guidelines for contracts to be
     executed by the housing authority and an executive
     director. [DHCD] may review all contracts between the
     housing authorities and executive directors and all terms
     for payments or monetary remuneration relevant to state
     payments; provided, however, that [DHCD] shall review all
     contracts and all terms for payments or monetary
     remuneration worth more than $100,000 per annum. [DHCD]
     may strike contract provisions that do not conform to the
     guidelines." (Emphases added.)

The complaint alleges that DHCD has exceeded its authority to

issue "guidelines" by requiring contracts between LHAs and

executive directors to comply with the guidelines.

Specifically, the plaintiffs maintain that the Legislature's use

of the term "guidelines" evinces an intent that DHCD issue broad

parameters that lack the force of a mandate.   The term

"guideline" does not support the plaintiffs' argument.    A

"guideline" is "an indication or outline of policy or conduct."

     11See Chelsea Hous. Auth. v. McLaughlin, 482 Mass. 579, 582
(2019) (involving unreported compensation of executive director
of Chelsea Housing Authority).
                                                                        9

Merriam Webster Collegiate Dictionary 555 (11th ed. 2020).       This

definition does not preclude such rules from being mandatory.

Any ambiguity in this regard is clarified by the Legislature's

granting DHCD the authority to "strike contract provisions that

do not conform to the guidelines."   See Malloy v. Department of

Correction, 487 Mass. 482, 496 (2021), quoting Pentucket Manor

Chronic Hosp., Inc. v. Rate Setting Comm'n, 394 Mass. 233, 240

(1985) ("we look not only to the specific words at issue but

also to other sections [of the statute], and 'construe them

together . . . so as to constitute an harmonious whole

consistent with legislative purpose'").

    We disagree with the plaintiffs' contention that this

construction is at odds with the authority of LHAs, pursuant to

G. L. c. 121B, § 7, to "determine [executive directors']

qualifications, duties and compensation."   "We assume that, when

it enacts legislation, the Legislature is . . . aware of

existing statutes."   Suliveres v. Commonwealth, 449 Mass. 112,

116 (2007).   Pursuant to the statutory scheme governing the

relationship between DHCD and LHAs, DHCD operates as "the

administrative superior" of LHAs.    West Broadway Task Force,

Inc., 363 Mass. at 748 & n.4, citing G. L. c. 121B, §§ 1, 11,

29, 30-32, 34, 35, 37.   DHCD has the "power to oversee most

phases of the operations of the local housing authorities, and

to that end it is given various powers of approval and veto of
                                                                  10

the activities of those authorities together with rule making

power and power to demand reports and other information."12    West

Broadway Task Force, Inc., supra at 748.

     Subject to DHCD's supervision, LHAs retain "operating

responsibility and corresponding powers regarding the finances,

construction, maintenance, and day-to-day management of housing

projects in [their municipalities]."   Id.   In view of this

framework, and against the backdrop of a public scandal, see

note 11, supra, the Legislature enacted G. L. c. 121B, § 7A, to

give DHCD further authority and oversight regarding the terms of

executive director contracts with LHAs.13    Within those

constraints and consistent with the oversight allowed to DHCD by

G. L. c. 121B, § 7A, LHAs continue to have authority to hire

     12See, e.g., G. L. c. 121B, § 3 (DHCD shall certify
dissolution of housing authority), § 5 (DHCD shall appoint one
member of each housing authority), § 26 (j) (renovation of
existing housing project "shall be undertaken in accordance with
rules and regulations promulgated by [DHCD]"), § 26 (k) (DHCD
must approve demolition of existing project), § 26B (DHCD must
establish performance-based monitoring program for all LHAs),
§ 28A ("Each housing authority shall submit to [DHCD] an annual
plan"), § 29 ("[DHCD] shall investigate the budgets, finances
and other affairs of housing authorities and the housing
authority's dealings, transactions and relationships"), § 31 ("A
housing authority shall not undertake a low-rent housing project
until it has submitted to [DHCD] the plans and description of
the project . . .").

     13Section 7A was passed alongside G. L. c. 121B, § 26B,
which requires LHAs to participate in a performance-based
monitoring program established by DHCD and allows DHCD to
designate a housing authority as "chronically poor performing."
See St. 2014, c. 235, §§ 7, 8.
                                                                  11

executive directors and "determine their qualifications, duties

and compensation."14   G. L. c. 121B, § 7.

                                    Judgment affirmed.

     14The plaintiffs also contend that DHCD's use of
"guidelines" to mandate material terms of an executive
director's contract effectively renders them "regulations"
subject to the rulemaking provisions of the Administrative
Procedure Act (APA), G. L. c. 30A, § 5, which require, inter
alia, that proposed regulations be published and considered at a
public hearing. We disagree. The term "regulation" as used in
the APA excludes "regulations concerning only the internal
management or discipline of the adopting agency or any other
agency . . . not substantially affecting the rights of or the
procedures available to the public or that portion of the public
affected by the agency's activities." G. L. c. 30A, § 1 (5).
The guidelines promulgated pursuant to G. L. c. 121B, § 7A,
concern the internal management of LHAs under the oversight of
their supervisor, DHCD; they "do not purport directly to
regulate public conduct." Commonwealth v. Trumble, 396 Mass.
81, 89 (1985). Cf. Harborview Residents' Comm., Inc. v. Quincy
Hous. Auth., 368 Mass. 425, 426-427 (1975) (concerning
regulations governing public housing tenant leases and grievance
procedures); Commissioner of the Dep't of Community Affairs v.
Medford Hous. Auth., 363 Mass. 826, 828 (1973) (concerning
regulations governing LHA's interaction with public housing
tenants).