For nonprofit, battle with state over land comes at a huge cost

Massachusetts Lawyers Weekly – July 20, 2015

SJC: Legislature’s inclusion of 600 acres in bill a mistake

by Kris Olson
Photos by Merrill Shea

Tom Frain stands in front of the Fernald Developmental Center
Thomas J. Frain at the now-closed Fernald Developmental Center in Waltham

The meeting in Thomas J. Frain’s Bolton office in spring 2007 would have been a pleasant one. Representatives of the Walter E. Fernald Corp., an all-volunteer nonprofit serving the developmentally disabled, had gathered with officials from the state’s Department of Conservation and Recreation to hash out a win-win deal.

The corporation would sell to the state some 600 acres off Route 202 in Templeton that it had acquired over the years. The sale of the “Norcross Hill property,” as it was known, not only would bolster the corporation’s support of Massachusetts’ intellectually disabled population, including residents of the now-shuttered Fernald Developmental Center in Waltham, but it also would ensure that the property – a mix of farmland and unspoiled woodlands – would remain pristine.

The meeting would come to an abrupt end, however, when an appraiser retained by the corporation arrived with bad news: There was a lien on the property.

Unbeknownst to anyone in the room, Gov. Jane M. Swift, some five years earlier, had signed into law a bill that, ironically, had a similar end goal as the proposed sale: ensuring that the land would be used only for “forest and open space protection, management and conservation; environmental education, environmental research and public access for passive recreation and enjoyment.”

Eight expensive years later, the supreme Judicial Court has affirmed that a Land Court judge correctly concluded the Templeton parcels were mistakenly included in the bill, clearing the title to the land – and granting the right to determine its future – to the Fernald Corp.

Painstaking inquiry

To reach his decision, Land Court Judge Keith C. Long traced the history of what became the Walter E. Fernald Corp. back to its founding in 1850 as “the Massachusetts School for Idiotic and Feeble-minded Youth.”

The case, Long wrote, turned on whether the corporation acquired the land in its private capacity or, as the commonwealth contended, as an agent or agency of the state, “making the property state-owned.”

That that would be a source of considerable confusion is hardly remarkable. Not only had the corporation benefited from state aid throughout much of its existence, but what became the Walter E. Fernald Developmental Center on a state-owned parcel in Waltham had been run under the ambit of the Department of Mental Retardation (later the Department of Developmental Services) from 1987 until the last resident left the facility last November. At the behest of the corporation, the Legislature had also purchased approximately 1,660 acres of other land in Templeton in the late 1800s.

To further cloud the issue, the corporation had taken steps to strengthen its ties to the state prior to acquiring the Templeton land. In 1917, the Massachusetts Constitution was amended to prohibit public money from “maintaining or aiding any school… which is not publicly owned and under the exclusive control, order and superintendence of public officers or public agents authorized by the commonwealth.”

Not wanting to see its flow of state aid dry up, the corporation petitioned the Legislature to amend its charter to grant the governor and Governor’s Council the power to confirm the school’s trustees, thereby sidestepping the so-called “anti-aid amendment.”

Yet the corporation had used its private funds – $4,500 in all – to buy the land at issue in the case. The acquisitions began in 1923 and continued in 1929, with the largest portion, a 366-acre parcel formerly owned by Gardner Savings Bank, added in 1939. Another half-acre would complete the parcel 30 years later.

Making matters worse, the deeds identified the purchaser of the properties in four different ways: “Massachusetts School for the Feeble-Minded, a corporation”; “Walter E. Fernald State School, a Massachusetts corporation”; “Walter E. Fernald State School”; and, in one case, the “Commonwealth of Massachusetts.”

Judge Long ultimately concluded – and the SJC agreed – that the words on the deed were less important than the source of the funds. However, the funding source may have been moot, had Long or the SJC endorsed the state’s contention that the organization, while once a private corporation, had “morphed over time into a public one.”

Long acknowledged that the corporation’s board of trustees and that of the state-run school were one and the same but concluded they “wore two hats,” able to act as public officers as well as in a separate private capacity. The 1850 act establishing the corporation had never repealed, and the state had never appropriated any money to purchase the corporation’s assets, making any such taking unconstitutional, Long wrote. Long leaned heavily on the corporation’s annual reports, which consistently distinguished its assets from the state’s and showed that the corporation had its own treasurer.

“If the corporation was truly part of the state, its accounts would have been audited by the states auditor’s office,” Long wrote. “Instead, they were audited by an outside, private accounting firm.”

Long also declined to accept the state’s alternate argument that, around 1921, the corporation “effectively ceased to exist, and was only reconstituted in 1987 following the reform of the Department of Mental Health.” Nor did he agree that the state was the “intended grantee” of the deeds, simply because the school’s publicly appointed board had decided to purchase the land.

In the end, Long even gave the Fernald Corp. more than it had requested, granting it title “free and clear” of any of the state’s claims, including to the parcel that had been deeded to the commonwealth, the “attendant circumstances” indicating that deeding the property to the state was “clearly a mistake.”
In its opinion, the SJC endorsed Long’s findings while also ruling that Long had not erred in rejecting the commonwealth’s sovereign immunity defense.

Should it have come to this?

While the litigation began around 2010, the corporation had put the state on notice that it was interested in resolving the issue of who owned the land decades earlier. Long’s opinion references a letter from now-deceased Fitchburg attorney Robert L. Ware on April 15 1993, “finally addressing the issue of title to real estate in Templeton owned by the private corporation named above.”

A May 30, 2001, letter from Belmont lawyer Anne Hanford, who remains a Fernald trustee, includes the paragraph: “As the Corporation has been waiting several years now to resolve the title to the Norcross Hill property, and is anxious to develop a plan for that property that will benefit the retarded people of Massachusetts, please confirm that title does stand in the name of the Walter E. Fernald State School Corporation.”

By the time that letter was written, two title reports had been prepared – one in 1998, the other in 1999, the latter commissioned by the state – each reaching a similar conclusion: the Walter E. Fernald Corp. owned the parcels.

While the state report dealt with only one of the contiguous properties, Frain believes the report should have convinced the state of the corporation’s claim to all the land or at least promoted further investigation.

Nonetheless, the parcels made it into the 2002 legislation, which former state Sen. Stephen Brewer, D-Barre, says was designed to stop the state form exploiting a wide swath of “incredibly scenic and agricultural land.”

That the Department of Mental Retardation might not control all the land was apparently never considered. Certainly, the Fernald Corp. was never put on notice that the bill was pending, only discovering its passage several years later.

The Department of Developmental Services “stonewalled the corporation for years and encumbered land they absolutely knew they did not own,” Frain says, adding that the corporation was forced into suing.

He says the ensuing battle has cost the Fernald Corp. approximately $259,000 in legal fees since 2010 – a sizable figure given that tax returns show the corporation ended Fiscal Year 2013 with about $185,000 in net assets.

“Unfortunately, the positions of the prior attorney general [Martha Coakley] and DDS in this action have nearly drained the resources of one of the commonwealth’s most venerable charities,” says Frain, who worked on the case with colleagues Frank E. Bonanni and C. Alex Hahn.

When asked for comment, a spokesman for the AG’s Office referred inquiries to the defendant Department of Developmental Services and Division of Capital Asset Management and Maintenance.

Brendan Moss, spokesman for the Executive Office for Administration & Finance, the agency that oversees the Division of Capital Asset Management and Maintenance, says the state’s decision to challenge the Land Court decision was a “typical appeal” and that the state simply thought the law was on its side.

DDS officials echoed that sentiment, stating in an email: “as the decision indicates, there was a very complicated history of the acquisition and ownership of the land in question turning upon not simply and analysis of the title documents, but also an interpretation of the statutory enactments concerning the corporation and its relationship to the state. As a result, the commonwealth agencies, in conjunction with the [AG’s Office], determined that an appeal from the decision was appropriate.”

A personal mission

For Frain, 53, the case has been a personal battle. He has a mentally disabled brother who was abused in a group home, which Frain says has fueled decades of volunteer work and advocacy. He has a long affiliation with the Massachusetts Coalition of Families and Advocates, or COFAR, which led him to the Fernald Corp., where he serves as vice president of the board of trustees.

Both organizations attend to a long-suffering population, according to Frain.

“Most of it goes on in the shadows, out of earshot and away from the often helpful role of government oversight and regulation,” he says.

While the Department of Developmental Services occupies a $1.8 billion line item in the state budget, the legal battle with the Fernald Corp. is but one example of an agency that is “recalcitrant and unresponsive, leaving it to the few that have the means to hold them accountable,” Frain says.

The Bolton lawyer says the corporation’s priority remains safeguarding the parcel’s natural beauty, which now may mean selling it to the Mount Grace Land Conservation Trust.

Jim Staton, president of the Fernald trustees, estimates that proceeds from such a sale would likely top the $2 million to $3 million range. “Various and sundry lawyers tried over the years to clarify the title, but it was the persistence of Mr. Frain and his associates that finally pulled it off,” Staton says.


MA Lawyer's Weekly July 20