MASSACHUSETTS ELECTRIC COMPANY vs. ATHOL ONE, INC. & another. [Note 1]

LIACOS, J. Massachusetts Electric Company (company) appealed from the judgment of a Superior Court judge dismissing the company's complaint against the Commissioner of Public Welfare (Commissioner). We transferred the case to this court on our own motion. We conclude that the Superior Court judge

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properly dismissed the company's complaint for failing to state a claim on which relief could be granted. Mass. R. Civ. P. 12 (b) (6), 365 Mass. 754 (1974). We affirm the judgment.

In an appeal from a dismissal of an action pursuant to rule 12 (b) (6), "we assume as true the facts alleged" by the complaint. See Morash & Sons v. Commonwealth, 363 Mass. 612, 613 (1973). The company is a public utility doing business in the Commonwealth. It supplies electricity and related electrical services to Athol One, Inc., doing business as Fleetwood Nursing Home (Athol One). The company brought suit pursuant to G. L. c. 214, Section 3, against Athol One for failing to pay for electricity provided to the nursing home, and sought a judgment in the sum of $9,948.74, together with interest and costs. [Note 2] The Commissioner was joined as a defendant in the suit. The company sought to enjoin the payment of monies owed by the Commonwealth through its Department of Public Welfare (department) to Athol One under the Massachusetts medical care and assistance program, and to reach and apply such funds to Athol One's indebtedness to the company. [Note 3] See G. L. c. 118E, Section 5. The department's motion to dismiss the complaint set forth that sovereign immunity barred the company's action to reach and apply funds held by the Department.

The company contends that the Commonwealth has waived its sovereign immunity by virtue of G. L. c. 258, Section 12, and is subject to an action to reach and apply, since the company's

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claim arose from, and is sufficiently related to, the contractual relationship between the department and Athol One. See First Nat'l Ins. Co. v. Commonwealth, 376 Mass. 248 (1978).

General Laws c. 258, Section 12, inserted by St. 1979, c. 1, Section 1, provides that "[c]laims against the commonwealth, except as otherwise expressly provided in this chapter or by any general or special provision of law, may be enforced in the superior court." The common law sovereign immunity waiver granted by Section 12 and its predecessors has been interpreted primarily as applicable in actions of contract against the Commonwealth. See Glickman v. Commonwealth, 244 Mass. 148, 150 (1923); Nash v. Commonwealth, 174 Mass. 335, 338-339 (1899) (construing St. 1887, c. 246). However, "[t]he rules of construction governing statutory waivers of sovereign immunity are stringent. The Commonwealth `cannot be impleaded in its own courts except with its consent, and, when that consent is granted, it can be impleaded only in the manner and to the extent expressed . . . [by] statute.'" Woodbridge v. Worcester State Hosp., 384 Mass. 38, 42 (1981), quoting Broadhurst v. Director of the Div. of Employment Sec., 373 Mass. 720, 722 (1977). See Perkins School for the Blind v. Rate Setting Comm'n, 383 Mass. 825, 829 (1981) (Section 12 does not authorize governmental departments to settle claims brought against them, since the statute neither expressly grants such power nor is it necessarily implied). Cf. Morash & Sons v. Commonwealth, supra at 619. Compare Sargeant v. Commissioner of Pub. Welfare, 383 Mass. 808, 820 (1981) (in contract actions instituted pursuant to Medical Care and Assistance Program, Commissioner has authority to prosecute, defend, and satisfy monetary claims).

The company's suit to reach and apply is not a contract action against the Commonwealth. The suit, pursuant to G. L. c. 214, Section 3 (6), is a two-step proceeding wherein the plaintiff, in the first step, must show the existence of a debt owed the company by Athol One, the principal defendant. See Stockbridge v. Mixer, 215 Mass. 415, 418 (1913). The second step involves the process of satisfying the debt out of property held by one who owes a debt to the principal defendant. Id.

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The plaintiff must show that this property, by its nature, is incapable of attachment or of taking on execution in a legal action. Id. Furthermore, the holder of this property must be joined as a party defendant in an action to reach and apply, given his interest in the issue of his indebtedness to the principal defendant and in the disposition of the property in his possession. See William J. McCarthy Co. v. Rendle, 222 Mass. 405, 406 (1916).

We have concluded previously that, absent a statute expressly or impliedly authorizing the action, the Commonwealth cannot be impleaded as a party defendant in a suit to reach and apply property in its possession, which is due and payable to the principal defendant. See William J. McCarthy Co. v. Rendle, supra (Commonwealth cannot be impleaded in trustee process action or bill to reach and apply since no statute permits these actions). Cf. MacQuarrie v. Balch, 362 Mass. 151, 152 (1972) (plaintiff cannot maintain trustee process action to attach AFDC monies prior to disbursement to recipients since Commonwealth cannot be summoned as trustee without statutory authorization).

The company's reliance on Nash v. Commonwealth, supra, and First Nat'l Ins. Co. v. Commonwealth, supra, is misplaced. Neither of these decisions applies to the instant action. In Nash v. Commonwealth, supra, we decided that, under a predecessor statute to Section 12, the Commonwealth could be made a party to a suit to enforce payment of the petitioner's claim for materials furnished under a State subsidized construction contract. Id. at 338, citing St. 1887, c. 246 (providing that Superior Court "shall have jurisdiction of all claims against the Commonwealth, whether at law or in equity"). We reasoned that the Commonwealth's amenability to process was implied in a statute which required the Commonwealth to retain sufficient security for the payment of materials furnished to contractors engaged in State subsidized contracts. Id. at 337, citing Pub. Sts. (1882) c. 16, Section 64. There is no comparable statute applicable to this case.

The company also cannot find support for its position in First Nat'l Ins. Co. v. Commonwealth, supra at 251, where

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we stated that "we do not think that a direct contractual relationship is a prerequisite to maintaining a suit against the Commonwealth. Rather, a claim arising in a contractual setting, although not involving a direct contract between the plaintiff and the Commonwealth, is contemplated by the waiver of immunity under G. L. c. 258, [Section 12]" (court construed predecessor statute to Section 12, G. L. c. 258, Section 1, as amended by St. 1973, c. 1114, Section 337, which provided that "[t]he superior court, except as otherwise expressly provided, shall have jurisdiction of all claims against the commonwealth").

First Nat'l Ins. Co. v. Commonwealth, 376 Mass. 248 (1978), involved a claim of a surety company which had issued payment bonds to a State contractor. Id. at 249. We held that the surety's complaint, which alleged that the Commonwealth made payments to the contractor after notice of default, stated a cause of action against the Commonwealth. Id. at 248-249. It was in this factual context that we decided that, although the surety was not a party to a contract with the Commonwealth, its claim derived from the legal consequences of the contractual relationship between the contractor and the Commonwealth so as to fall within the statutory waiver of immunity contemplated by G. L. c. 258, Section 12. See id. at 251. The company's contract claim against Athol One for the nonpayment of its electric bills bears no relation to Athol One's claims for reimbursement from the Commonwealth pursuant to their contract under G. L. c. 118E. The company's claim against Athol One does not derive from the legal consequences of the contractual relationship between the nursing home and the Commonwealth so as to permit a claim under the waiver of immunity rule granted by Section 12.

The company's complaint, seeking to reach and apply funds held by the Commonwealth, thus failed to set forth a claim on which relief could be granted. In its complaint, the company also sought an injunction against the Commonwealth's disbursing monies owed to Athol One. We note that a claim for injunctive relief against the Commonwealth cannot be sustained

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pursuant to G. L. c. 258, Section 12. See Executive Air Serv., Inc. v. Division of Fisheries & Game, 342 Mass. 356, 359 (1961) (construing G. L. c. 258, Section 1, predecessor to present Section 12).

Judgment affirmed.