author: MILKEY, J.

text:
    COMMONWEALTH v. Onaxis BARRETO.
    No. 17-P-1045
    Appeals Court of Massachusetts, Suffolk..
    Argued May 11, 2018. Decided October 29, 2018.
    Eduardo Masferrer, Boston, for the defendant.
    Kathleen Celio, Assistant District Attorney, for the Commonwealth.
    Present: Milkey, Hanlon, & Singh, JJ.
   MILKEY, J.

In August, 2014, a grand jury indicted the defendant for trafficking in 200 grams or more of cocaine. G. L. c. 94C, § 32E (b ) (4). The charge was based on evidence found during a warrantless search of the defendant's motor vehicle. Following an evidentiary hearing, a Superior Court judge denied the defendant's motion to suppress that evidence. On the defendant's interlocutory appeal, we reverse.

Standard of review. "When reviewing a decision on a motion to suppress, we accept the judge's findings of fact absent clear error, but make an independent determination whether the judge correctly applied constitutional principles to the facts as found." Commonwealth v. Evans, 87 Mass. App. Ct. 687, 688, 34 N.E.3d 772 (2015). The judge made careful, detailed findings, all of which are supported by the record and therefore are binding on us. Notably, the judge rejected some of the police witnesses' claims about what they were able to observe from a distance, and the specific factual claims that the judge did credit were qualified. The factual recitation that follows is drawn from the judge's findings.

Background. 1. The tip provided to police. The Boston police focused on the defendant's vehicle because of a tip they had received from an undisclosed source. Specifically, on or before June 9, 2014, the police received information that a green Volvo station wagon containing a "large" amount of drugs would be near a certain intersection in the Roxbury section of Boston. No other information regarding the tip was provided at the evidentiary hearing. Thus, for example, there was no evidence that the tipster provided the license plate number of the vehicle, what time it would arrive, or any information whatsoever about the vehicle's occupants, if any. Similarly, there was no evidence about who the tipster was, how he or she purportedly came into possession of the alleged information, how that information was passed along to police, or whether the police had any reason to trust it.

It was not happenstance that so little evidence was presented about the tip, and none about the tipster. At the beginning of the evidentiary hearing, the prosecutor made it clear that she did not intend to go into such issues because she did not want to risk identifying the informant. Thus, in an effort to head off any inquiry into the tip, the prosecutor expressly disavowed trying to establish the tip's reliability pursuant to applicable case law, and she made it clear that she would be "objecting to any sort of [cross-examination] questions regarding the ... source of that information that the police had." Defense counsel responded that he was content with this arrangement based on his understanding of how the informant's alleged information would be treated. Specifically, he stated as follows: "It's a statement for context only that's not being used because it doesn't satisfy [the standard set forth in Aguilar v. Texas, 378 U.S. 108, 84 S.Ct. 1509, 12 L.Ed.2d 723 (1964), and Spinelli v. United States, 393 U.S. 410, 89 S.Ct. 584, 21 L.Ed.2d 637 (1969) ]. For those purposes, I've agreed to not go into the -- who the source is, how is it that it came about, what were the exact details of the tip because we're [sic ] not using it under Aguilar- Spinelli to suppor[t] the stop or search." The judge responded by stating, "Okay. Fair enough." The prosecutor made no effort to disabuse defense counsel of his understanding.

2. Police observations. Upon receiving the tip, four police officers set up surveillance at the intersection mentioned by the informant. At about 5:15 P.M. on June 9, 2014, they saw a green Volvo station wagon turn at the intersection without the driver using his turn signal. The vehicle then parked approximately fifty feet away. Shortly thereafter, one of the officers observed the vehicle's operator, subsequently identified as the defendant, lean down toward his right side "as if he [were] reaching toward the floor of the passenger side with both hands." According to the judge's findings, the officer could not see the defendant's hands or what the defendant might have been doing with them. Observing from a distance, the officers saw a man approach the parked vehicle from an adjacent building and interact with the defendant at the driver's side window for approximately half a minute. While the judge found that the police observed the unidentified man who had approached the defendant's vehicle lean toward it "in a manner consistent with that man placing his hands on the Volvo door or reaching inside the Volvo," he also found that the police did not observe the defendant and the unidentified man actually "reach their hands toward each other, bring their hands together, or exchange any object." Furthermore, the judge found that the police did not see anything in the pedestrian's hands as he was walking away from the vehicle, nor did they see him put anything into his pocket, or move his arm in a manner suggesting that he had just put anything there. Despite the absence of any observation of an item being exchanged between the men, the judge found that their interaction was "consistent with the two men exchanging something."

After the man walked away, the defendant drove his vehicle to an adjacent street, where the police pulled his vehicle over. Although the defendant appeared nervous, he produced his driver's license and vehicle registration when requested to do so. At this point, there were at least four officers at the scene, and one of them ordered the defendant out of the vehicle. As the defendant was stepping out of the vehicle, the officer saw a roll of cash in a clear plastic bag on the inside of the driver's door. After further questioning of the defendant proved fruitless and a patfrisk of him revealed nothing, the police initiated a thorough search of the vehicle, subsequently aided by a drug-sniffing dog. They eventually uncovered a metal box underneath the passenger seat, inside of which was a large amount of cocaine and additional cash.

The defendant moved to suppress all the evidence the police collected pursuant to the stop and search of his vehicle, including the cocaine, its packaging, the money (which totaled $11,050), the defendant's cellular telephones, and a magnet that police believed was used to access a "hide" inside the vehicle. The judge ruled in the Commonwealth's favor. In doing so, he did not rely on the informant's tip in any fashion. In fact, with regard to that tip, the judge found that "[t]he Commonwealth did not present any evidence to demonstrate the basis for the informant's knowledge, that the police had any reason to believe that the informant was truthful, or that the police had corroborated the source's information that the [defendant's vehicle] would contain illegal drugs." Instead, the judge concluded that the police had reasonable suspicion to stop the vehicle and to order the defendant out of it based on the brief interaction that the police had observed between the defendant and the unidentified man who had approached his vehicle. Then, according to the judge, once the police observed the wad of bills in the driver's door while the exit order was being executed, they gained probable cause that justified their subsequent search of the vehicle.

Discussion. 1. Introduction. The dispute before us is relatively narrow. It is uncontested that the police found the cocaine and other incriminating evidence during an investigatory search of the defendant's vehicle. It follows that this search was valid only if the Commonwealth at that point had probable cause to conduct the search. Commonwealth v. Eggleston, 453 Mass. 554, 557, 903 N.E.2d 1087 (2009). Moreover, the Commonwealth acknowledges that its claim that it had probable cause depends on the police having observed the roll of bills in the door of the vehicle while they were executing the exit order. Therefore, if the exit order was not valid, the Commonwealth's claim that it had probable cause to search the vehicle falls short.

While the police could have stopped the vehicle for the civil traffic violation they observed, this would not have justified the exit order that led to the discovery of the roll of bills. Rather, in the particular circumstances of this case, the validity of the exit order -- and hence the Commonwealth's claim that it obtained probable cause once it found the wad of bills -- depends on the police having gained reasonable suspicion that the defendant was engaged in illegal drug activity. See Commonwealth v. Bostock, 450 Mass. 616, 621-622, 880 N.E.2d 759 (2008) (exit order justified when police have reasonable suspicion that operator engaged in criminal activity). The key question, then, is whether, by the time the police ordered the defendant out of his vehicle, they had "reasonable suspicion, based on specific, articulable facts and reasonable inferences therefrom, that an occupant of the ... motor vehicle had committed, was committing, or was about to commit a crime." Commonwealth v. Anderson, 461 Mass. 616, 621, 963 N.E.2d 704, cert. denied, 568 U.S. 946, 133 S.Ct. 433, 184 L.Ed.2d 265 (2012), quoting Commonwealth v. Alvarado, 423 Mass. 266, 268, 667 N.E.2d 856 (1996). We turn to that question and begin by examining the grounds on which the judge relied.

2. Reasonable suspicion. a. Police observations. The motion judge found, without referring to the tip, that the police had reasonable suspicion to believe the defendant was selling illegal drugs based on the defendant's brief interaction with the unidentified pedestrian (after the defendant stopped his vehicle on a public street and reached toward the floor of the vehicle). We disagree.

As noted, the police did not observe any item being exchanged between the defendant and the person who approached and leaned toward his vehicle. As the Commonwealth highlights, testimony of an observed hand-to-hand exchange in some circumstances can establish the requisite degree of suspicion that an illegal narcotics sale has occurred even where the police do not "actually see an object exchanged." Commonwealth v. Kennedy, 426 Mass. 703, 710, 690 N.E.2d 436 (1998). However, in those narcotics sale cases in which reasonable suspicion has been found in the absence of police observing an item being exchanged, there were significantly more suspicious circumstances than those encountered here. For example, in Commonwealth v. Stewart, 469 Mass. 257, 261, 13 N.E.3d 981 (2014), the court found reasonable suspicion for police to stop the defendant where -- knowing that he previously had been arrested for drug dealing -- they observed that "three persons followed [him] down a narrow street often used by drug users, with [a] woman counting currency as she walked, and then all four huddled briefly together in a doorway, before they dispersed." See Commonwealth v. Gomes, 453 Mass. 506, 511-512, 903 N.E.2d 567 (2009) ; Commonwealth v. Moses, 408 Mass. 136, 140, 557 N.E.2d 14 (1990).

Here, as a police witness acknowledged, neither the defendant nor the putative buyer was known to the police.

Furthermore, the judge found that the police had no reason, based on past experience, to expect a drug transaction to occur in this particular area, which was made up of "relatively quiet residential streets." All the police observed was an unknown driver stop his vehicle in a residential neighborhood, lean down toward the passenger-side floor, and subsequently have a brief interaction with an unknown pedestrian during which the pedestrian leaned toward the vehicle (as if to place his hands on or in it). As far as it goes, the judge's finding that what the police saw was "consistent with" a hand-to-hand exchange of illegal drugs is unassailable. However, the defendant's observed actions would also be "consistent with" a broad range of other interactions. These would include, as mere examples, the driver's saying a quick hello to an acquaintance he passed on the street, the driver's asking for directions after looking for a map, or the driver's stopping to drop off tickets to a sporting event or another item to a friend he had arranged to meet. Even if there were sufficient evidence to establish reasonable suspicion that an exchange had taken place, there was not enough to establish that the exchange was of illegal drugs. Put otherwise, if the looming presence of the unsubstantiated tip is truly disregarded, then the specific actions that the police observed -- even when seen through the eyes of experienced officers -- created at most a "hunch" that a drug transaction had just occurred. As the Supreme Judicial Court has long held, a "mere 'hunch' is not enough" to establish reasonable suspicion. Commonwealth v. Silva, 366 Mass. 402, 406, 318 N.E.2d 895 (1974).

The Commonwealth seeks to justify the stop by having us add to the mix the undisclosed informant's tip about a green Volvo station wagon containing drugs. Although the judge himself placed no reliance on the tip, it is plain from one of the arresting officer's testimony that, unsurprisingly, such information played a major part in leading him "to believe that a possible drug transaction [had] occurred." Because we can affirm the denial of the motion to suppress on any ground fairly supported by the record, see Commonwealth v. Va Meng Joe, 425 Mass. 99, 102, 682 N.E.2d 586 (1997), we must evaluate whether considering the tip here makes a difference.

b. The import of the tip. The Supreme Judicial Court has made it clear that the Commonwealth cannot rely on an informant's tip unless the reliability of that tip has been demonstrated pursuant to the two-pronged Aguilar- Spinelli test (in which courts are to assess the extent to which the informant's veracity and basis of knowledge have been shown). See Commonwealth v. Upton, 394 Mass. 363, 375, 476 N.E.2d 548 (1985), citing Aguilar v. Texas, 378 U.S. 108, 84 S.Ct. 1509, 12 L.Ed.2d 723 (1964), and Spinelli v. United States, 393 U.S. 410, 89 S.Ct. 584, 21 L.Ed.2d 637 (1969). In continuing to adhere to the Aguilar- Spinelli test in the context of challenges brought pursuant to art. 14 of the Massachusetts Declaration of Rights, the court on multiple occasions has rejected calls that it adopt the less demanding "totality of the circumstances" test employed by the United States Supreme Court in challenges brought pursuant to the Fourth Amendment to the United States Constitution. See Upton, 394 Mass. at 371-375, 476 N.E.2d 548 (rejecting the rule adopted in Illinois v. Gates, 462 U.S. 213, 103 S.Ct. 2317, 76 L.Ed.2d 527 [1983] ). See also Commonwealth v. Lyons, 409 Mass. 16, 18, 564 N.E.2d 390 (1990) (declining to follow the rule stated in Alabama v. White, 496 U.S. 325, 328, 110 S.Ct. 2412, 110 L.Ed.2d 301 [1990] ); Commonwealth v. Mubdi, 456 Mass. 385, 395-396, 923 N.E.2d 1004 (2010).

In its brief, the Commonwealth appears to maintain that where, as here, the tip is not the sole basis for the police action, the Aguilar- Spinelli test does not apply. Rather, the Commonwealth seems to suggest, the information received from the informant can be considered as one factor among others that collectively tip the scales. In this manner, the Commonwealth effectively advocates for a "totality of the circumstances" test that the Supreme Judicial Court has time and again rejected. Under existing case law, if the requisite level of suspicion depends on an informant's tip, that tip must satisfy Aguilar- Spinelli.

Here, nothing in the record establishes the informant's basis of knowledge or his or her veracity. Indeed, although the Commonwealth refers to the information the undisclosed informant provided as an "anonymous tip," this actually overstates its force. An anonymous tip -- such as one made by an unidentified caller to 911 -- typically includes some information that is helpful to assessing the caller's basis of knowledge or reliability. See Commonwealth v. Depiero, 473 Mass. 450, 452-453, 42 N.E.3d 1123 (2016) (anonymous 911 caller reported seeing drunk driving in Cambridge, with the vehicle "swerving all over the road"). The Commonwealth not only failed to make any evidentiary showing with regard to these issues, but also expressly foreswore attempting to do so when the evidentiary hearing began.

That said, the cases have long recognized that while the Commonwealth will need to demonstrate a tip's reliability based on "the informant's reliability and his or her basis of knowledge[, i]ndependent police corroboration may make up for deficiencies in one or both of these factors." Commonwealth v. Lyons, supra at 19, 564 N.E.2d 390. Thus, while the Aguilar- Spinelli test must be satisfied, there is more than one way of doing so. Moreover, in the context of reasonable suspicion, the demonstrated reliability of an informant's tip need not be as robust as what is needed to demonstrate probable cause. Lyons, supra. The question then is whether the observations the police made at the scene provided sufficient corroboration of the tip to establish its reliability for purposes of assessing reasonable suspicion.

At most, the police observations corroborated the unexceptional fact that at some undisclosed point in time, a green Volvo station wagon would be in the identified neighborhood. As the Supreme Judicial Court recently observed, "Corroboration of purely innocent details that are observable by any bystander, such as the description of a vehicle and its location, provides only limited enhancement to the reasonable suspicion determination." Commonwealth v. Pinto, 476 Mass. 361, 365, 67 N.E.3d 713 (2017). To the extent the Commonwealth argues that the brief curbside interaction between the defendant and the unidentified pedestrian corroborated the tip that there were drugs inside of a green Volvo station wagon, we are unpersuaded. See Commonwealth v. Mubdi, 456 Mass. at 387, 398-399, 923 N.E.2d 1004 (fact that a person was observed interacting with defendant and other occupant of defendant's vehicle and started to walk away from the vehicle after seeing approaching police officers held insufficient to corroborate informant's tip about a purportedly illegal sale of a firearm). Compare Commonwealth v. Dasilva, 66 Mass. App. Ct. 556, 560, 849 N.E.2d 249 (2006) (anonymous tip that defendant illegally possessed a firearm was corroborated by police observations that, "[a]fter looking directly at the marked police cruiser, the defendant moved his right hand toward his waistband, fled up the stairs of the building where he was standing, and continued to flee even after [a police officer] ordered him to stop"). Without a sufficient showing that the informant's tip should be considered reliable, it cannot be relied upon to demonstrate reasonable suspicion.

Conclusion. The judge was correct not to rely on the informant's tip. However, without such reliance, his ruling that the police had reasonable suspicion to order the defendant out of his vehicle cannot stand. In turn, without a valid exit order, the police cannot rely on their discovery of the wad of money in the driver's door, and the police therefore lacked probable cause to search his vehicle. "Because the evidence in issue was traceable to ... the illegal order[ ] that the defendant[ ] leave the car, it must in these circumstances be suppressed as the 'fruit of the poisonous tree.' " Commonwealth v. Loughlin, 385 Mass. 60, 63, 430 N.E.2d 823 (1982). The order denying the defendant's motion to suppress is reversed.

So ordered.

I agree with much of the majority's thoughtful decision. Respectfully, however, I dissent on the crucial issue -- whether, at the time that the officers told the defendant to get out of the vehicle, they had a reasonable suspicion to believe that he had engaged in an illegal drug transaction. The stop itself clearly was justified by the earlier traffic violation, a conclusion that the defendant does not really dispute. The motion judge explicitly credited the officers' testimony "that [the defendant] made [a] turn [from Copeland Street through the intersection at Warren Street and onto Waverly Street] without using any turn signal."

Background. As the majority notes, the judge's findings were careful and thorough. First, he found that, at the time of the encounter, the two lead officers, Fabiano and Gero, "were both experienced narcotics investigators." They were assisted by officers from the District B-2 anti-crime unit. "That afternoon they were looking to intercept and stop a green Volvo station wagon because an unidentified informant had told Fabiano that he could find such a vehicle in the area of Waverly and Copeland Streets in Boston and that the vehicle would contain a large amount of illegal narcotics."

When the officers stopped the defendant driving a green Volvo station wagon, they knew: first, the defendant had stopped his vehicle on Waverly Street, in front of the first building on the left, "a residential building." Second, "a second man immediately left the nearest building and walked to the driver's door of [the defendant's] vehicle[. A]s the second man approached[, the defendant] leaned down to his right as if he were reaching toward the floor by the front passenger seat," using both hands. Third, the defendant then sat back up and interacted for no more than thirty seconds with the second man, who stood immediately outside the driver's door of the defendant's vehicle. During this interaction, the second man leaned toward the vehicle as if he were placing his hands on the vehicle's door or reaching into the vehicle; he "was moving one or both of his arms while he was standing next to the Volvo and facing [the defendant], in a manner consistent with the two men exchanging something." Fourth, after approximately thirty seconds, the defendant drove away and the second man walked back into the building he had emerged from a moment earlier. The motion judge found that, "[b]ased on their training and experience with hand-to-hand drug transactions, [the officers] both suspected that the pedestrian had purchased some kind of illegal drugs from [the defendant]."

At the time that the officers ordered the defendant out of the vehicle, they had some additional information. They had asked for his license and registration, noting that the defendant "seemed to be nervous ... [and] that [he] seemed to be breathing heavily, was looking in his rear view and side view mirrors at the various police officers and vehicles that had pulled up behind him, and was not making eye contact" with either of the officers who were speaking with him. Finally, while the judge declined to use the talismanic words "high crime area" and, in fact, specifically found that, as of this date, "the Boston police had no reason based on past experience to expect to see a drug transaction take place on Waverly Street or Copeland Street, which are both relatively quiet residential streets," he also "credit[ed] Of[ficer] Gero's testimony that over the years he ha[d] made numerous arrests for possession or distribution of illegal narcotics in this general neighborhood."

Discussion. 1. Exit order. The law is clear that a police officer may order a driver to get out of a vehicle when he has a reasonable suspicion that the driver has committed a crime. See Commonwealth v. Bostock, 450 Mass. 616, 621-622, 880 N.E.2d 759 (2008). Therefore, as noted, the issue is whether the officer had reasonable suspicion when he ordered the defendant out of the vehicle.

"[R]easonable suspicion is a lower standard than probable cause." Commonwealth v. Smigliano, 427 Mass. 490, 492, 694 N.E.2d 341 (1998). See Commonwealth v. Hill, 49 Mass. App. Ct. 58, 63, 726 N.E.2d 422 (2000) :

"The specific facts on which the police based their stop of the defendant have been described as follows: '(1) a vehicle pulled up and an interaction occurred between someone in the vehicle and someone [in the parking lot], who apparently retrieved something before concluding the interaction with the vehicle's occupant; (2) [the interaction occurred] in a place known by the police officer[s] as a place of high incidence of drug traffic; and (3) [the interaction was] witnessed by an experienced officer, who had made numerous drug arrests [although not necessarily in the neighborhood] and considered the event as [suggesting] a drug sale.' Commonwealth v. Kennedy, 426 Mass. [703], 708 [690 N.E.2d 436 (1998) ]. Moreover, 'the quickness of the interaction between [the other
party and the defendant] reasonably could be interpreted by the officer as suspicious conduct, similar to the suspicious conduct of the "furtive" transaction observed in [ Commonwealth v. Santaliz, 413 Mass. 238, 241, 596 N.E.2d 337 (1992) ].' Commonwealth v. Kennedy, supra at 708-709 [690 N.E.2d 436]. We are mindful that in Kennedy the seller had been arrested previously for narcotics sales and was the subject of complaints from people in the neighborhood, id. at 704 [690 N.E.2d 436] ; that in Santaliz, there was an obvious exchange of an object and money, supra at 240 [596 N.E.2d 337] ; and that in both Kennedy and Santaliz the officers had had considerable experience with drug transactions in the same location. However, in each of those cases the facts were deemed sufficient to establish probable cause for arrest. If the facts set out in Kennedy and Santaliz were sufficient to support a finding of probable cause, the facts established here were sufficient to establish reasonable suspicion" (emphasis supplied).

See also Commonwealth v. Santiago, 470 Mass. 574, 579, 24 N.E.3d 560 (2015) ("Although [the officer] did not see any item actually exchanged, the defendant's extended arm and [the recipient's] corresponding gesture in relation to his shirt pocket provided some basis for [the officer's] belief that a drug transaction between the two men had just taken place").

I also suggest that art. 14 of the Massachusetts Declaration of Rights does not require us to ignore completely the fact that the officers made their observations after receiving a tip that a green Volvo station wagon containing a "large" amount of drugs would be in the area of Waverly and Copeland Streets. Certainly, the tip by itself did not satisfy either prong required by the teaching of Aguilar- Spinelli. However, viewing the tip as one of a number of factors contributing to reasonable suspicion does not, as the majority fears, impermissibly weaken the standard to a mere "totality of the circumstances." See Commonwealth v. Depiero, 473 Mass. 450, 452, 42 N.E.3d 1123 (2016) ("[T]he information gleaned from the anonymous call in the present case, corroborated by other information, was sufficiently reliable to warrant a finding that the officer had reasonable suspicion to stop the defendant's vehicle"). In this case, the tip was corroborated by the fact that someone driving a green Volvo station wagon engaged in what the officers reasonably suspected was a drug transaction some fifty feet up Waverly Street from the intersection of Waverly, Copeland, and Warren Streets.

The majority does not cite to any case holding that such a tip must be disregarded completely, and there are a number of other cases that hold otherwise. See, e.g., Commonwealth v. Anderson, 461 Mass. 616, 623, 963 N.E.2d 704, cert. denied, 568 U.S. 946, 133 S.Ct. 433, 184 L.Ed.2d 265 (2012) ("Where the caller is anonymous, there are at least two ways to establish the caller's reliability. The first is through independent corroboration by police observation or investigation of the details of the information provided by the caller. See ... Florida v. J.L., 529 U.S. 266, 270 [120 S.Ct. 1375, 146 L.Ed.2d 254 (2000) ], quoting Alabama v. White, 496 U.S. 325, 327 [110 S.Ct. 2412, 110 L.Ed.2d 301 (1990) ] [anonymous tip, suitably corroborated, may exhibit 'sufficient indicia of reliability to provide reasonable suspicion to make the investigatory stop']"); Commonwealth v. Wilson, 441 Mass. 390, 395-396, 805 N.E.2d 968 (2004) ("Independent police corroboration of the details in the telephone call by [the t]rooper ... when he arrived at the location identified by the caller and saw a group of nine men establishes that the caller's information was also reliable. Commonwealth v. Willis, 415 Mass. 814, 819 [616 N.E.2d 62 (1993) ]").

Finally, the fact that the tip predicted a future event (the Volvo would arrive at the particular intersection containing drugs) also buttresses its credibility. See Commonwealth v. Va Meng Joe, 425 Mass. 99, 104, 682 N.E.2d 586 (1997) ("Corroboration of future behavior, which goes beyond 'readily available information,' has a special significance when determining the reliability of an informant").

"For more than seventy-five years, we have avoided an overly formulaic approach to the determination of whether there is [reasonable suspicion to detain] a person who is suspected of participation in a street-level drug transaction." Commonwealth v. Sanders, 90 Mass. App. Ct. 660, 660, 63 N.E.3d 54 (2016). " 'A police officer may make an investigatory stop "where suspicious conduct gives the officer reasonable ground to suspect that a person is committing, has committed, or is about to commit a crime." ... The action of the officer "must be based on specific and articulable facts and reasonable inferences therefrom, in light of the officer's experience." ' Commonwealth v. Gomes, 453 Mass. 506, 510-511 [903 N.E.2d 567] (2009), quoting Commonwealth v. Wilson, 441 Mass. [at] 394 [805 N.E.2d 968]." Commonwealth v. Stewart, 469 Mass. 257, 261, 13 N.E.3d 981 (2014).

While certainly, as the majority observes, there are many possible explanations for each of the facts individually (yes, the defendant could have been dropping off Celtics tickets, and yes, the defendant likely was nervous because there were several police officers), police officers do "not have to exclude all the possible innocent explanations for the facts in order to form a reasonable suspicion." Commonwealth v. Isaiah I., 450 Mass. 818, 823, 882 N.E.2d 328 (2008). "Although nervous or furtive movements do not supply reasonable suspicion when considered in isolation, they are properly considered together with other details to find reasonable suspicion." Commonwealth v. DePeiza, 449 Mass. 367, 372, 868 N.E.2d 90 (2007). "We view the 'facts and inferences underlying the officer's suspicion ... as a whole when assessing the reasonableness of his acts.' Commonwealth v. Thibeau, 384 Mass. 762, 764 [429 N.E.2d 1009] (1981). 'Seemingly innocent activities taken together can give rise to reasonable suspicion justifying a threshold inquiry.' Commonwealth v. Watson, 430 Mass. 725, 729 [723 N.E.2d 501] (2000)." Commonwealth v. Gomes, 453 Mass. at 511, 903 N.E.2d 567. "We do not examine each fact known to [police] at the time of the stop in isolation; instead we view the 'facts and inferences underlying the officer's suspicion ... as a whole when assessing the reasonableness of his acts.' " Commonwealth v. Isaiah I., supra, quoting Commonwealth v. Thibeau, supra. I am satisfied that, in the case before us, all the facts together support the judge's conclusion that the exit order was properly grounded in reasonable suspicion.

2. Search. After the defendant got out of the Volvo, one of the police officers observed in plain view a roll of money packaged in a clear plastic bag and tucked into the compartment on the inside of the driver's door. This observation -- a large sum of cash -- together with the officers' reasonable suspicion that the defendant had just engaged in a drug transaction gave them probable cause to believe that the vehicle would contain evidence of the drug transaction, as well as evidence that the defendant was in possession of illegal drugs, intending to distribute them. Compare Commonwealth v. Stephens, 451 Mass. 370, 385, 885 N.E.2d 785 (2008). The police could then search the Volvo without a warrant under the motor vehicle exception. See Commonwealth v. Johnson, 461 Mass. 44, 49-50, 958 N.E.2d 25 (2011).

I believe that the judge's order denying the motion to suppress should be affirmed.

      The defendant filed a motion to reconsider that ruling, which also was denied.

      In reciting an interchange between the judge and counsel at the motion hearing, we of necessity rely on the transcript of that hearing.

      The record does not contain any recording of the tip, or other memorialization of what words the informant used to convey his or her thoughts. Instead, one of the testifying officers simply stated that the police had "received information from a source that a green Volvo station wagon that had a large amount of narcotics was in [the] area of [three streets in Roxbury]."

      At one point, the prosecutor -- when pressed by the judge on whether she would be "attempting in any way to rely upon information from th[e] confidential source" -- hedged slightly by stating her view that "stuff can be corroborated."

      The police questioned the defendant in English. Although the defendant supplied his license and registration, he told the police that he did not speak English and therefore did not understand their further inquiries.

      Because of the so-called "automobile exception," a warrant was not required so long as the police had probable cause. See Commonwealth v. Eggleston, 453 Mass. at 557, 903 N.E.2d 1087, quoting Commonwealth v. Cast, 407 Mass. 891, 901, 556 N.E.2d 69 (1990) ("[A] warrant is not required to search an automobile 'when police have probable cause to believe that a motor vehicle on a public way contains contraband or evidence of a crime, and exigent circumstances make obtaining a warrant impracticable' ").

      The fact that the traffic violation was not the actual reason the police stopped the defendant's vehicle would not matter. See Commonwealth v. Buckley, 478 Mass. 861, 872-873, 90 N.E.3d 767 (2018). For purposes of our review, we have assumed that the length of time between the observed traffic violation and the stop was short enough that the initial stop could be justified on this basis.

      The defendant cooperated with the police after the stop, and the Commonwealth makes no claim that the exit order independently was justified for safety reasons. See Commonwealth v. Gonsalves, 429 Mass. 658, 665 n.5, 666-668, 711 N.E.2d 108 (1999).

      Kennedy involved probable cause. Ipso facto, there is no per se rule requiring that police see an object exchanged in cases where, as here, the less rigorous standard of reasonable suspicion applies.

      In Commonwealth v. Gomes, the court held that the police officer had reasonable suspicion to stop the defendant in a high crime area at around 4 a.m. , where the defendant was known to previously have been arrested on drug charges and was observed "displaying items in his hand[, which the officers could not see,] and then appearing to swallow those items as the [police] approached." 453 Mass. at 511, 903 N.E.2d 567. In Commonwealth v. Moses, the court held that the police officer "had reason to suspect that a drug transaction was taking place" where he saw four individuals who were "standing near an automobile parked next to the sidewalk with its motor running [and] appeared to be interacting in some way with three ... men who sat in the automobile[, and then, o]n making eye contact with [the officer,] all four [men on the sidewalk] quickly dispersed in two different directions[, and] [o]ne of the occupants of the automobile, on making eye contact with [the officer], immediately ducked under the dashboard, completely out of [the officer's]'s sight." 408 Mass. at 140, 557 N.E.2d 14.

      In its appellate brief, the Commonwealth repeatedly refers to the person who approached the vehicle as "Hispanic," even though his ethnicity has no relevance here. We point this out only to alert the parties to the issue of implicit bias, from which no one is immune. See Commonwealth v. Buckley, 478 Mass. at 878 n.4, 90 N.E.3d 767 (Budd, J., concurring) (discussing implicit bias). We acknowledge that in their testimony, the witnesses described the pedestrian they had observed as Hispanic, and that the Commonwealth's appellate counsel apparently borrowed such references in their brief. It is not difficult, however, to avoid unnecessary references that may implicate such bias whether it be present or not. The motion judge did so in this case. Relying on the same testimony as appellate counsel, the judge referred to the unknown parties by their roles (the pedestrian and the driver) and thereby focused his analysis on the relevant facts, the conduct of the individuals.

      Our dissenting colleague highlights that the judge credited the testimony of a police witness that over a ten-year period, "he ha[d] made numerous arrests for possession or distribution of illegal narcotics in [that] general neighborhood." Post at ----, 113 N.E.3d at 439. In our view, such general background information added little, if anything, to the reasonable suspicion calculus. See Commonwealth v. Johnson, 454 Mass. 159, 163, 908 N.E.2d 729 (2009) (urging that judges consider presence in a high crime area "with caution" given "that so-called high crime areas are inhabited and frequented by many law-abiding citizens who are entitled to be protected against being stopped and frisked just because of the neighborhood where they live, work, or visit"). "The term 'high crime area' is itself a general and conclusory term that should not be used to justify a stop or a frisk, or both, without requiring the articulation of specific facts demonstrating the reasonableness of the intrusion." Ibid.

      To be sure, as our dissenting colleague accurately points out, the police observed the defendant exhibit nervous behavior once they pulled over his vehicle. However, the fact that someone became anxious after being stopped by at least four armed police officers has negligible force (particularly to the extent that the defendant did not speak English, a factual issue the judge did not resolve). See Commonwealth v. Cruz, 459 Mass. 459, 468, 945 N.E.2d 899 (2011) ("It is common, and not necessarily indicative of criminality, to appear nervous during even a mundane encounter with police").

      The defendant has not argued that the statements the prosecutor made at the evidentiary hearing should estop the Commonwealth from trying to rely on the tip on appeal. We assume arguendo that the Commonwealth's arguments based on the tip are properly before us.

      The fact that the record does not even memorialize what words the informant allegedly spoke itself impedes the Commonwealth's efforts to establish the indicia of reliability of information the police received. See Commonwealth v. Mubdi, 456 Mass. at 396, 923 N.E.2d 1004 ("By failing to introduce the 911 call in evidence, the Commonwealth has made difficult what otherwise might have been a straightforward assessment of the caller's source of information").

      As noted, the informant provided no information about the vehicle's registration number or about the vehicle's occupants, if any. It is far from clear that the informant's tip satisfied the separate particularity requirement. Compare Commonwealth v. Lopes, 455 Mass. 147, 155, 157-158, 914 N.E.2d 78 (2009). We do not resolve this issue, as the defendant has not raised it and we reverse on other grounds.

      In this regard, we note that it stands to reason that the extent to which police corroboration can fill in the gaps of demonstrating an informant's basis of knowledge and veracity will vary depending on how great those gaps are. If the evidence regarding the tip itself comes close to meeting the Aguilar-Spinelli test on its own, then presumably a lesser amount of corroboration is needed. Where, however, as here, there has been no direct showing of the informant's veracity and basis of knowledge, significant corroboration of that tip would be needed.

      Contrary to the suggestion made by our dissenting colleague, there are no cases that hold that a tip as unsubstantiated and uncorroborated as the one before us can be relied upon -- in whole or in part -- to establish reasonable suspicion. Indeed, it is difficult to find examples in the case law of where the Commonwealth put forward so little evidence to try to establish that a tip was reliable. Of course, it is possible that the actual circumstances of the tip provided police solid grounds for believing that the defendant was engaged in illegal drug activities (with or without the subsequent observations that police made). But in the context of a motion to suppress, the Commonwealth can rely only on what it puts in evidence. While the Commonwealth has substantial leeway to protect its confidential sources, see Commonwealth v. D.M., 480 Mass. 1004, 1005, 100 N.E.3d 347 (2018), and cases cited, it must live with the litigation risks of doing so.

      "[T]he authority to conduct a traffic stop where a traffic violation has occurred is not limited by '[t]he fact that the [police] may have believed that the [driver was] engaging in illegal drug activity.' " Commonwealth v. Buckley, 478 Mass. 861, 866, 90 N.E.3d 767 (2018), quoting Commonwealth v. Santana, 420 Mass. 205, 208, 649 N.E.2d 717 (1995).

      Specifically, Gero testified, "In that specific area of Warren and Copeland is a -- Warren Garden is across the street. That area -- I've participated in numerous search warrants of the surrounding streets. I've made firearm arrests, drug arrests, arrests for breaking and [entering,] warrant arrests in that general area of the past [ten] years."

      See Aguilar v. Texas, 378 U.S. 108, 84 S.Ct. 1509, 12 L.Ed.2d 723 (1964) ; Spinelli v. United States, 393 U.S. 410, 89 S.Ct. 584, 21 L.Ed.2d 637 (1969).


source: Caselaw Access Project

author: MALDONADO, J.

license: Public Domain

text:
    In the MATTER OF A.M.
    No. 16-P-1182
    Appeals Court of Massachusetts, Suffolk..
    Argued October 6, 2017 Decided November 2, 2018
    Jessica C. Gallagher, Committee for Public Counsel Services, for the respondent.
    Present: Wolohojian, Maldonado, & Wendlandt, JJ.
   MALDONADO, J.

Fearful that her adult son, the respondent A.M., faced grave harm due to his drug addiction, A.M.'s mother filed a petition in the District Court requesting that the court order his involuntary commitment to a treatment facility, pursuant to G. L. c. 123, § 35 ( § 35 ). On June 6, 2016, after an evidentiary hearing that included expert testimony, a judge issued a commitment order based on a finding that A.M. suffered from a substance use disorder that was likely to cause serious harm. A.M. appealed to the Appellate Division of the District Court, which affirmed the § 35 commitment order. Concluding that the evidence does not support a finding of imminent risk of serious harm, we reverse the decision and order of the Appellate Division. A new order shall enter vacating the § 35 commitment order.

1. Statutory framework and standard of proof. Section 35 authorizes a "blood relative," among others, to file a written petition requesting the involuntary "commitment of a person whom [the petitioner] has reason to believe" has a "substance use disorder." G. L. c. 123, § 35, second par. If, after due notice to the respondent and an evidentiary hearing with expert testimony, a judge finds that the respondent "is an individual with [a] ... substance use disorder and there is a likelihood of serious harm as a result of the [respondent's] ... substance use disorder," the judge may order the individual involuntarily committed for up to, but not more than, ninety days, to a facility licensed or otherwise approved by the Department of Public Health. G. L. c. 123, § 35, third par.

To protect the fundamental liberty interests of an individual in a civil commitment proceeding, see Addington v. Texas, 441 U.S. 418, 425-426, 99 S.Ct. 1804, 60 L.Ed.2d 323 (1979), a judge's order of involuntary commitment under § 35 must be based on clear and convincing evidence. Matter of G.P., 473 Mass. 112, 120, 40 N.E.3d 989 (2015). See Mass. G. Evid. § 1118 (a) (2018). "Clear and convincing evidence involves a degree of belief greater than the usually imposed burden of proof by a fair preponderance of the evidence, but less than the burden of proof beyond a reasonable doubt imposed in criminal cases." Callahan v. Westinghouse Broadcasting Co., 372 Mass. 582, 584, 363 N.E.2d 240 (1977). This heightened evidentiary standard not only demonstrates the importance of the decision ordering the involuntary commitment, but it also safeguards against the chance of inappropriate commitments. It is necessary to ensure that a respondent's "potential for doing harm, to himself or to others, is great enough to justify such a massive curtailment of liberty." Commonwealth v. Nassar, 380 Mass. 908, 917, 406 N.E.2d 1286 (1980), quoting Lessard v. Schmidt, 349 F.Supp. 1078, 1093 (E.D. Wis. 1972), vacated and remanded on other grounds, 414 U.S. 473, 94 S.Ct. 713, 38 L.Ed.2d 661 (1974).

2. Standard of review. In this case, A.M. does not challenge the judge's subsidiary findings. Rather, he challenges the sufficiency of the evidence in support of the judge's conclusion that A.M. suffered from a substance use disorder that resulted in the "likelihood of serious harm." G. L. c. 123, § 35, third par.

It is within the purview of the judge to weigh evidence, assess the credibility of witnesses, and make findings of fact, which we must accept unless clearly erroneous. See G.E.B. v. S.R.W., 422 Mass. 158, 172, 661 N.E.2d 646 (1996), and cases collected. However, we generally "scrutinize without deference the propriety of the legal criteria employed by the trial judge and the manner in which those criteria were applied to the facts." Iamele v. Asselin, 444 Mass. 734, 741, 831 N.E.2d 324 (2005), quoting C.O. v. M.M., 442 Mass. 648, 655, 815 N.E.2d 582 (2004). This standard of review has been previously applied in the context of § 35 commitments. See Matter of G.P., 473 Mass. at 129-130, 40 N.E.3d 989. See also Greenberg v. Commonwealth, 442 Mass. 1024, 1024, 814 N.E.2d 729 (2004) ("expert's affidavit supporting the commitment petition was wholly insufficient"). Accordingly, it is the standard we employ in our review here of the judge's order under § 35.

3. Likelihood of serious harm. In the context of § 35, the "likelihood of serious harm" means, among other definitions not applicable here, "a very substantial risk of physical impairment or injury to the [respondent] himself as manifested by evidence that [the respondent's] judgment is so affected that he is unable to protect himself in the community and that reasonable provision for his protection is not available in the community." G. L. c. 123, § 1.

Both the court clinician and A.M.'s mother testified to A.M.'s long-standing battle with an addiction to crystal methamphetamine. However, chronic substance abuse, "by itself, is insufficient to establish a 'very substantial risk' of harm." Matter of G.P., 473 Mass. at 128, 40 N.E.3d 989.

Instead, there must be an element of imminent risk of serious harm. Id. at 127, 40 N.E.3d 989. The evidence must support a conclusion that the imminent harm will materialize "in the reasonably short term -- in days or weeks rather than in months." Id. at 128, 40 N.E.3d 989. "We may accept ... that in the degree that the anticipated physical harm is serious -- approaches death -- some lessening of a requirement of 'imminence' seems justified." Id., quoting Nassar, 380 Mass. at 917, 406 N.E.2d 1286.

Here, A.M.'s mother reported rescuing A.M., while he was living on his own in New York, from unhealthy and unsanitary conditions that resulted from his substance use disorder. She also reported that A.M.'s drug use induced lethargy, hyperactivity, and hallucinations. On the question of the likelihood of serious harm, the court clinician opined only that

"[A.M. has a] very serious medical condition and his mother's report that when he's using, which has been -- she's reporting almost daily -- that he's not taking care of himself.... [and] although he's taking the medication for the serious medical condition, that that combination can be potentially life-threatening as well ...."

However, neither A.M.'s failure to take his prescribed medication consistently nor the possibility that his illicit drug use in combination with an unspecified prescribed medication regimen that has mere potential to be life threatening rises to "imminent serious harm." Accordingly, the evidence before the judge did not justify A.M.'s involuntary commitment under § 35. See Matter of G.P., 473 Mass. at 129, 40 N.E.3d 989.

4. Conclusion. We sympathize with a mother's concern over her child's substance use disorder, and we recognize that risk factors in cases under § 35 are fluid and can change over time. These cases are not amenable to bright lines. Cf. Commonwealth v. Boucher, 438 Mass. 274, 276, 780 N.E.2d 47 (2002) (assessing risk of reoffending under G. L. c. 123A is determined "case-by-case"). Nevertheless, we cannot conclude that the evidence here justified A.M.'s involuntary commitment under the statute. Accordingly, we reverse the decision and order of the Appellate Division, and a new order shall enter vacating the order of involuntary commitment pursuant to G. L. c. 123, § 35.

So ordered.

      For rules implementing § 35, see Uniform Trial Court Rules for Civil Commitment Proceedings for Alcohol and Substance Abuse Disorders (2016).

      Because A.M. is no longer committed, his challenge to the commitment order is technically moot. Matter of G.P., 473 Mass. 112, 113, 40 N.E.3d 989 (2015). "Nevertheless, we decide the case because it raises important issues concerning" appellate review of § 35 commitments, "and these issues are likely to evade review on account of the relatively short duration of the involuntary commitment under § 35." Id. Cf. Matter of F.C., 479 Mass. 1029, 1029-1030, 97 N.E.3d 333 (2018), quoting Seney v. Morhy, 467 Mass. 58, 62, 3 N.E.3d 577 (2014) ("a person who has been wrongfully committed or treated involuntarily has 'a surviving interest in establishing that the orders were not lawfully issued, thereby, to a limited extent, removing a stigma from his name and record' ").

      "Any police officer, physician, spouse, blood relative, guardian or court official" may file a § 35 petition for a civil commitment order. G. L. c. 123, § 35, second par.

      "The function of a standard of proof, as that concept is embodied in the Due Process Clause [of the Fourteenth Amendment to the United States Constitution] and in the realm of factfinding, is to 'instruct the factfinder concerning the degree of confidence our society thinks he [or she] should have in the correctness of factual conclusions for a particular type of adjudication." Addington, 441 U.S. at 423, 99 S.Ct. 1804, quoting In re Winship, 397 U.S. 358, 370, 90 S.Ct. 1068, 25 L.Ed.2d 368 (1970) (Harlan, J., concurring).

      A finding of fact is clearly erroneous "when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." Marlow v. New Bedford, 369 Mass. 501, 508, 340 N.E.2d 494 (1976), quoting United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 92 L.Ed. 746 (1948). See Haskell v. Versyss Liquidating Trust, 75 Mass. App. Ct. 120, 125, 912 N.E.2d 481 (2009). The hearing judge's explicit (or implicit) assessment of the evidence is entitled to considerable deference because "it is the trial judge who, by virtue of his [or her] firsthand view of the presentation of evidence, is in the best position to judge the weight" and materiality of the evidence and credibility of the witnesses at trial. New England Canteen Serv., Inc. v. Ashley, 372 Mass. 671, 675, 363 N.E.2d 526 (1977).

      "Likelihood of serious harm" is also defined as "(1) a substantial risk of physical harm to the person himself as manifested by evidence of, threats of, or attempts at, suicide or serious bodily harm; [or] (2) a substantial risk of physical harm to other persons as manifested by evidence of homicidal or other violent behavior or evidence that others are placed in reasonable fear of violent behavior and serious physical harm to them ...." G. L. c. 123, § 1.

      The judge appears to have also found that A.M.'s substance use disorder could present a likelihood of serious harm to others. We discern no evidence in the record that supports this alternative basis for commitment.


author: French, J.

text:
    BOYD et al. v. KINGDOM TRUST COMPANY et al.
    No. 2017-1336
    Supreme Court of Ohio.
    Submitted May 22, 2018 Decided August 9, 2018.
    Sebaly, Shillito & Dyer, Toby K. Henderson, and Scott S. Davies, Dayton, for petitioners.
    Ulmer & Berne, L.L.P., Frances Floriano Goins, and Daniela Paez, Cleveland, for respondent Kingdom Trust Company.
    Porter, Wright, Morris & Arthur, L.L.P., and Caroline H. Gentry, Dayton; and Shartsis Friese, L.L.P., Jahan P. Raissi, and Roey Z. Rahmil, for respondent PENSCO Trust Company, L.L.C.
    Womble Bond Dickinson, L.L.P., Katrina L.S. Caseldine, Kevin A. Hall, and M. Todd Carroll, in support of respondents for amicus curiae Retirement Industry Trust Association.
    Meyer Wilson Co., L.P.A., and David P. Meyer, Columbus, in support of neither party for amicus curiae Public Investors Arbitration Bar Association.
   French, J.

{¶ 1} The United States Court of Appeals for the Sixth Circuit has certified a question of Ohio law that asks whether R.C. 1707.43, a provision of the Ohio Securities Act, imposes joint and several liability on persons who aided in the purchase of illegal securities but did not participate or aid in the sale of the illegal securities. We answer the question in the negative.

FACTS AND PROCEDURAL HISTORY

{¶ 2} Ohio residents Cynthia Boyd and Thomas Flanders, the plaintiffs-petitioners in this matter, are the alleged victims of a Ponzi scheme operated by William Apostelos. According to petitioners, Apostelos and his associates formed Midwest Green Resources, L.L.C., and WMA Enterprises, L.L.C., as the vehicles for offering illegal securities to investors. Apostelos is not a party to this case.

{¶ 3} Apostelos allegedly persuaded Boyd, Flanders, and others to open self-directed individual retirement accounts ("IRAs") to invest in equity interests in Midwest Green Securities and promissory notes issued by WMA Enterprises. Boyd opened a self-directed IRA account with defendant-respondent Kingdom Trust Company. Flanders opened a self-directed IRA account with defendant-respondent PENSCO Trust Company, L.L.C. Once the accounts were established, Apostelos asked investors to direct the trust companies to purchase his securities or to execute powers-of-attorney giving him the ability to direct the trust companies to purchase his securities using the investors' IRA assets. Apostelos allegedly used the money raised from these investors to pay earlier investors and promoters and to fund his own personal expenses.

{¶ 4} After the Ponzi scheme unraveled, Boyd and Flanders filed a class-action lawsuit in the United States District Court for the Southern District of Ohio, Western Division, seeking to hold Kingdom Trust and PENSCO Trust liable under the Ohio Securities Act, R.C. 1707.01 et seq., for their alleged roles in the scheme. The complaint does not allege that the trust companies had any role in Apostelos's Ponzi scheme aside from purchasing the unlawful securities at the investors' direction. Nor does it allege that the trust companies knew or had reason to know that Apostelos was perpetrating a fraud.

{¶ 5} Kingdom Trust and PENSCO Trust filed motions to dismiss for failure to state a claim. The district court granted the motions. In the absence of any allegation that the trust companies acted outside the scope of routine banking activities, the district court held that their mere involvement in the transactions is insufficient to impose liability on them under the Ohio Securities Act. Boyd v. Kingdom Trust Co. , 221 F.Supp.3d 975, 979 (S.D.Ohio 2016).

{¶ 6} On appeal, the United States Court of Appeals for the Sixth Circuit noted that this court had not addressed whether the Ohio Securities Act extends joint and several liability to persons who aided in the purchase of illegal securities. We agreed to answer the following question, which the Sixth Circuit certified pursuant to S.Ct.Prac.R. 9.05:

Does [R.C.] 1707.43 impose joint and several liability on a person who, acting as the custodian of a self-directed IRA, purchased-on behalf and at the direction of the owner of the self-directed IRA-illegal securities?

151 Ohio St.3d 1451, 2017-Ohio-8842, 87 N.E.3d 220.

ANALYSIS

{¶ 7} The Ohio Securities Act, R.C. 1707.01 et seq., governs the sale and purchase of securities in Ohio. The act requires securities to be registered ( R.C. 1707.08 through 1707.13 ), imposes licensing requirements on dealers and salespersons ( R.C. 1707.14 through 1707.19 ), and proscribes fraudulent conduct ( R.C. 1707.44 ). R.C. 1707.43(A), the provision at issue here, allows the purchaser to void an unlawful sale or contract for sale made in violation of R.C. Chapter 1707. The statute also provides that

[t]he person making such sale or contract for sale, and every person that has participated in or aided the seller in any way in making such sale or contract for sale, are jointly and severally liable to the purchaser * * * for the full amount paid by the purchaser and for all taxable court costs * * *.

R.C. 1707.43(A) ; see also R.C. 1707.01(D) (defining "person" for purposes of the Ohio Securities Act as including a limited-liability company).

{¶ 8} The certified question asks whether R.C. 1707.43(A) imposes joint and several liability on the custodian of a self-directed IRA-here, respondents, Kingdom Trust and PENSCO Trust-that purchased illegal securities on behalf and at the direction of the IRA account holders-here, petitioners, Boyd and Flanders. We hold that it does not.

{¶ 9} We start with the plain language of R.C. 1707.43(A) to determine legislative intent. Christe v. GMS Mgt. Co. , 88 Ohio St.3d 376, 377, 726 N.E.2d 497 (2000). The statute imposes joint and several liability on three types of "persons": (1) the person making a sale or contract for sale of illegal securities, (2) "every person that has participated in * * * such sale or contract for sale," and (3) "every person that has * * * aided the seller in any way in making such sale or contract for sale." R.C. 1707.43(A). The plain language of R.C. 1707.43(A) requires a person to have some nexus with the sale of illegal securities. The statute does not extend liability to persons whose only involvement in a transaction is the purchase of illegal securities.

{¶ 10} The General Assembly has demonstrated its intent to treat the "sale" and "purchase" of securities as two distinct acts by defining the two terms separately in the Ohio Securities Act. A "sale" includes "every disposition, or attempt to dispose, of a security." R.C. 1707.01(C)(1). A "purchase" includes "every acquisition of, or attempt to acquire, a security." R.C. 1707.01(GG)(1). At the same time, when the General Assembly intended to include both purchases and sales in one of the act's prohibitions, it has expressly done so. For example, the act defines "fraud" as including "any fictitious or pretended purchase or sale of securities." R.C. 1707.01(J). R.C. 1707.44(N) prohibits misleading statements from being used in the "purchase or sale of securities." While there are various provisions in the Ohio Securities Act in which the General Assembly included both purchases and sales within the statute's ambit, R.C. 1707.43(A) is not one of them.

{¶ 11} Boyd and Flanders argue that R.C. 1707.43(A)'s use of the phrase "in any way" indicates the General Assembly's intent to impose liability on anyone participating in a transaction, even if the individual or entity was not involved in and did not induce the particular sale at issue. Their selective reading of the statute, however, omits the words that follow the phrase "in any way." The sentence in its entirety imposes liability on a person who "aided the seller in any way in making such sale or contract for sale ." (Emphasis added.)

R.C. 1707.43(A). The statute does not create liability absent some conduct that aided a seller in a sale of illegal securities.

{¶ 12} The weight of Ohio authority offers no support for petitioners' reading of the statute. To the contrary, Ohio courts have consistently construed R.C. 1707.43(A) as imposing liability only on persons who played a role in the sale of unlawful securities, such as acting in concert with the seller of an unlawful investment. See, e.g. , Federated Mgt. Co. v. Coopers & Lybrand , 137 Ohio App.3d 366, 392-393, 738 N.E.2d 842 (10th Dist.2000) (bank that directly participated in underwriting of investment and acted as financial adviser to issuer can be held liable under R.C. 1707.43 ); Boland v. Hammond , 144 Ohio App.3d 89, 94, 759 N.E.2d 789 (4th Dist.2001) (defendant who relayed proposed terms of sale to investors, arranged meetings between seller and investors, and distributed promissory notes to investors can be held liable under R.C. 1707.43 ).

{¶ 13} And Ohio courts have held that a financial institution's mere participation in a transaction, absent any aid or participation in the sale of illegal securities, does not give rise to liability under R.C. 1707.43(A). " '[T]he willingness of a bank to become the depository of funds does not amount to a personal participation or aid in the making of a sale.' " Wells Fargo Bank v. Smith , 12th Dist. Brown No. CA2012-04-006, 2013-Ohio-855, 2013 WL 938069, ¶ 29, quoting Hild v. Woodcrest Assn. , 59 Ohio Misc. 13, 30, 391 N.E.2d 1047 (C.P.1977) ; see also Boomershine v. Lifetime Capital , Inc. , 2d Dist. Montgomery No. 22179, 2008-Ohio-14, 2008 WL 54803, ¶ 15 (plaintiffs failed to show that bank serving as escrow agent aided in the sale of investments).

{¶ 14} Nevertheless, with the plain language of the statute and the weight of Ohio authority against them, petitioners argue that in any event, their complaint contains allegations that the trust companies worked in concert with Apostelos to effectuate the sale of his illegal securities. Nothing in our holding today would insulate from liability a self-directed IRA custodian who colludes with the seller in an unlawful sale of securities or actively participates or aids in the sale of illegal securities. But the certified question before us is limited to the liability of a self-directed IRA custodian whose only alleged participatory conduct was the purchase of illegal securities on behalf and at the direction of the owner of a self-directed IRA. We leave it for the Sixth Circuit to decide whether the facts as alleged in petitioners' complaint are sufficient to survive dismissal at the pleading stage under the legal standard we announce today.

CONCLUSION

{¶ 15} We answer the certified question in the negative and conclude that R.C. 1707.43 does not impose joint and several liability on a person who, acting as the custodian of a self-directed IRA, purchased-on behalf and at the direction of the owner of the self-directed IRA-illegal securities.

So answered.

O'Connor, C.J., and O'Donnell, Kennedy, Fischer, DeWine, and DeGenaro, JJ., concur.


author: DeGenaro, J.

text:
    EAST MANUFACTURING CORPORATION, Appellant and Cross-Appellee, v. TESTA, TAX COMMR., Appellee and Cross-Appellant.
    No. 2017-0666
    Supreme Court of Ohio.
    Submitted April 24, 2018 Decided July 26, 2018.
    Buckingham, Doolittle & Burroughs, L.L.C., Steven A. Dimengo, Matthew R. Duncan, and Richard B. Fry III, for appellant and cross-appellee.
    Michael DeWine, Attorney General, and Sophia Hussain, Assistant Attorney General, for appellee and cross-appellant.
   DeGenaro, J.

{¶ 1} In this direct appeal, we consider whether the Board of Tax Appeals ("BTA") correctly upheld a use-tax assessment on the natural-gas purchases of appellant and cross-appellee, East Manufacturing Corporation ("East"). East contends that the ambient heat provided by the natural gas was necessary for its manufacturing process and that the BTA erred by not granting an exemption under R.C. 5739.011(B)(4), (B)(8), or (C)(5). We disagree and affirm the decision of the BTA.

Relevant Facts and Procedural History

{¶ 2} East manufactures custom aluminum truck trailers. The trailers are fabricated in six buildings, some of which are devoted to specialized steps in the manufacturing process. Only Building A has interior walls; administrative offices are separated by a wall from manufacturing areas. The other five buildings have open internal spaces to better accommodate the large truck attachments being fabricated and facilitate movement from station to station during the manufacturing process.

{¶ 3} Appellee and cross-appellant, tax commissioner, audited East's purchases for the period January 1, 2003, through December 31, 2006. Neither of East's two natural-gas suppliers collected use tax during this period. On February 27, 2009, the commissioner issued a use-tax assessment for East's natural-gas purchases during the audit period, exempting only the portion of natural gas used in painting operations, which took place in Building D, and welding systems. The remaining natural gas was deemed to have been used to heat the plant's six buildings, which together total roughly 382,240 square feet. This portion of East's natural gas, the commissioner determined, was taxable. East appealed to the BTA.

{¶ 4} At the hearing before the BTA, East conceded that the natural gas used to heat the administrative areas in Building A, which comprised 8.11 percent of the assessed natural gas, was nonexempt, but it contended that the remaining 91.89 percent of the assessed natural gas was exempt because maintaining the temperature at 50 degrees Fahrenheit or higher in the plant's buildings was essential to its manufacturing process. Emphasizing the extensive use of welding in its manufacturing process, East's manager for research and development testified about the high specifications the plant adhered to and their importance to the solidity of the welds, and he noted that welding at temperatures of 50 degrees or higher prevents condensation from accumulating on the aluminum and infecting the welds, steadies the hands of the welders, and is important in bending aluminum.

{¶ 5} Citing the manual that East uses as a guide for aluminum welding, the tax commissioner countered at the BTA hearing that condensation arises as a result of three interacting factors: ambient air temperature, relative humidity, and temperature of the metal to be processed. According to the manual (which was admitted into evidence at the BTA hearing), depending on the relative humidity, a difference of a certain number of degrees between the ambient air temperature and the temperature of the aluminum may result in condensation. But, so long as the aluminum temperature matches the ambient air temperature, condensation will not occur at any humidity level. The commissioner contends that this evidence negated East's argument and showed that no particular ambient temperature-such as 50 degrees-is required by industrial needs.

{¶ 6} The BTA affirmed the tax commissioner's assessment on the portion of the natural gas that East used to heat the plant. The BTA held that "East has failed to establish how the affected manufacturing area, which consists of all or portions of all of the buildings within the facility, could qualify as a 'special and limited area' " as required for exemption under R.C. 5739.011(C)(5). BTA No. 2015-2111, 2017 WL 1443845, *3 (Apr. 17, 2017).

{¶ 7} With respect to East's claim that the gas was generally "used during the manufacturing operation" under R.C. 5739.011(B)(4) and also qualified under the more specific exemption for gas "used in the manufacturing operation" under R.C. 5739.011(B)(8), the BTA concluded that the heating constituted a type of "quality control function" rather than a necessity for the manufacturing operation. 2017 WL 1443845 at *4. The BTA elaborated by stating that instead of being "necessary for the * * * continuation of the manufacturing process" under R.C. 5739.011(B)(4), "some of the issues raised by failure to regulate temperature in the manufacturing areas were cosmetic in nature, e.g., trailers were not as 'shiny' and therefore not as 'attractive,' " a consideration that brought East's products " 'within [a] margin of acceptable quality.' " 2017 WL 1443845 at *4, quoting the hearing transcript.

{¶ 8} The BTA denied East's claim for exemption in its entirety. East has appealed, and the tax commissioner has cross-appealed.

"Thing Transferred" Exemption

{¶ 9} We review BTA decisions to determine whether they are reasonable and lawful. R.C. 5717.04. Factual findings will be affirmed if supported by reliable and probative evidence, while legal issues will be reviewed de novo. Accel, Inc. v. Testa , 152 Ohio St.3d 262, 2017-Ohio-8798, 95 N.E.3d 345, ¶ 11, 16. Although the BTA recited East's contentions that temperature maintenance was essential to its ability to perform welding and painting operations, the BTA made no finding that those assertions were correct. See id. at ¶ 35-37 (BTA's recitation of taxpayer's argument did not constitute a finding by the BTA that that argument was correct). Instead, the BTA focused on how the relevant statutes and administrative rules should be construed and applied assuming that East's factual contentions were true. Thus, this case primarily presents a question of law.

{¶ 10} Under the sales- and use-tax statutes, every sale or use of tangible personal property is presumed to be taxable. R.C. 5739.02(C) ("all sales made in this state are subject to the [sales] tax until the contrary is established"); R.C. 5741.02(G) ("it shall be presumed that any use * * * of tangible personal property in this state is subject to the [use] tax until the contrary is established"). Thus, East bears the burden of proving that it is entitled to an exemption under R.C. 5739.011.

{¶ 11} R.C. 5739.02(B)(42)(g) states that the use tax does not apply "where the purpose of the purchaser is * * * [t]o use the thing transferred, as described in section 5739.011 of the Revised Code, primarily in a manufacturing operation to produce tangible personal property for sale."

{¶ 12} Throughout the proceedings before the tax commissioner, the BTA, and this court, East has claimed that it is entitled to the R.C. 5739.011"thing transferred" exemption under three theories. First, it claims that the natural gas is "tangible personal property used during the manufacturing operation that control[s], physically support[s], produce[s] power for, lubricate[s], or [is] otherwise necessary for the functioning of production machinery and equipment and the continuation of the manufacturing operation," R.C. 5739.011(B)(4) ; Ohio Adm.Code 5703-9-21(C)(4) ; second, that it is "gas * * * used in the manufacturing operation," R.C. 5739.011(B)(8) ; Ohio Adm.Code 5703-9-21(C)(8) ; and third, that it is "tangible personal property that totally regulates the environment in a special and limited area of the manufacturing facility where the regulation is essential for production to occur," R.C. 5739.011(C)(5), an exception that applies to a "clean room or paint booth," Ohio Adm.Code 5703-9-21(D)(6).

{¶ 13} East's first two propositions of law assert that it is entitled to an exemption because the gas is used for regulating the environment in a special and limited area under R.C. 5739.011(C)(5). The statute provides that for purposes of R.C. 5739.02(B)(42)(g), the "thing transferred" does not include

[m]achinery, equipment and other tangible personal property used for ventilation, dust or gas collection, humidity or temperature regulation, or similar environmental control, except machinery, equipment, and other tangible personal property that totally regulates the environment in a special and limited area of the manufacturing facility where the regulation is essential for production to occur .

(Emphasis added.) R.C. 5739.011(C)(5). Thus, under R.C. 5739.011(C)(5), gas used for temperature regulation generally is not exempt from taxation unless the gas qualifies under the "special and limited area" exception.

{¶ 14} Ohio Adm.Code 5703-9-21(D)(6) elaborates as follows:

All equipment and supplies that monitor, regulate, or improve the environmental conditions in the manufacturing facility are taxable . This includes all lighting, heaters, air conditioning equipment, fans, heat exhaust equipment, air make up equipment, dust control or collection equipment, and gas detection, collection, and exhaust equipment.
This should not be read to change the traditional classification of real and personal property .
The only exception to the taxing of these items is equipment which totally regulates the environment in a special and limited area of the facility, such as a clean room or paint booth , where such total regulation is essential for production to occur. Even in such a special area, things that do not provide essential environmental regulation, such as safety or communication equipment, are taxable.

(Emphasis added.)

{¶ 15} To qualify for an exemption under this exception, East must satisfy a three-prong test: "(1) the * * * tangible personal property must be used to totally regulate the environment, (2) the regulation must be in a special and limited area of the manufacturing facility, and (3) the regulation must be essential for production to occur." Ellwood Engineered Castings Co. v. Zaino , 98 Ohio St.3d 424, 2003-Ohio-1812, 786 N.E.2d 458, ¶ 36. The failure to satisfy any prong of the test defeats the exemption claim.

{¶ 16} The meaning of a "clean room or paint booth" is explained in Ohio Adm. Code 5703-9-21, Example 7, which discusses the process of applying coating on specialized paper for full-color photocopying. The process must be done in a dust- and pollution-free environment separated from the rest of the plant. The example further explains:

Three of the walls and the ceiling are free standing and not part of the walls and ceiling of the building itself; the fourth wall, however, is a section of a wall of the larger structure. Employees can only enter the clean room through two airlocks, which prevent dirty air from entering. All air is filtered and regulated as to temperature and humidity by heat pumps, electric heaters, dehumidifiers, and exhaust fans that serve only the clean room and maintain a positive air pressure in the room. This equipment is automatically controlled by a small computer using data from air monitoring sensors in the room. Employees must wear disposable paper coveralls, overshoes, and caps. The room has an intercom to minimize personnel traffic in and out of the room. Lighting in the room is by normal fluorescent fixtures attached to the ceiling.

Id .

{¶ 17} Under this scenario, "[s]ince the clean room provides environmental regulation in a special and limited area, and such regulation is essential for the manufacturing to occur, it is not taxable." Id. Conversely, Ohio Adm. Code 5703-9-21, Example 48 posits a candy-cane maker that needs to regulate temperature and humidity to fabricate the product, but no exemption is available because the regulation occurs throughout the factory.

{¶ 18} The BTA concluded that because East's entire plant is heated, the temperature control is not focused on a "special and limited area." 2017 WL 1443845 at *3. The BTA then deemed it unnecessary to consider the other prongs of the test for applying the "special and limited area" exception because East's failure to satisfy the second prong defeated its exemption claim.

{¶ 19} East advances two contentions in challenging the BTA's conclusion. First, it argues that its natural gas heats a "special and limited area" inasmuch as only its buildings-not all the contiguous property under East's ownership that is part of the facility-are heated. But equating "special and limited area" with "indoors" would result in the exception swallowing the general rule that the "thing transferred" for temperature regulation is taxable and would defeat the restrictive effect of the statutory language. Second, East equates "subareas" in the buildings where the manufacturing occurs with "special and limited area." This argument fails because the heating permeates the entirety of the buildings, even if it is most important at particular places within the plant. Ohio Adm.Code 5703-9-21 describes a clean room as an area that is physically separated from the rest of the facility and where the environmental conditions are more fully regulated than in other areas.

{¶ 20} The stated purpose of R.C. 5739.011(C)(5) is to establish that the concept of "use[ ] in the manufacturing operation" under R.C. 5739.011(B) does not extend generally to the function of regulating the environment within which manufacturing occurs. See Ellwood Engineered Castings , 98 Ohio St.3d 424, 2003-Ohio-1812, 786 N.E.2d 458, at ¶ 35 (the "first part" of R.C. 5739.011(C)(5)"specifically exclude[s] as a 'thing transferred' * * * tangible personal property used for * * * environmental control"). And the "special and limited area" exception of R.C. 5739.011(C)(5) evinces the legislative decision to allow exemption in a very limited circumstance. Ellwood Engineered Castings at ¶ 35 (the "second part" of R.C. 5739.011(C)(5)"provide[s] a limited exception from the general exclusion"); see Ohio Adm.Code 5703-9-21(D)(6). The legislative creation of a narrow scope of exemption for particular items or transactions should not be circumvented by an expansive interpretation of other, more general tax exemptions. See Columbus City School Dist. Bd. of Edn. v. Testa , 130 Ohio St.3d 344, 2011-Ohio-5534, 958 N.E.2d 557, ¶ 28 ; Innkeeper Ministries, Inc. v. Testa , 148 Ohio St.3d 43, 2016-Ohio-5104, 68 N.E.3d 765, ¶ 19.

{¶ 21} Here, the only way the disputed 91.89 percent of the assessed natural gas could arguably contribute to the manufacturing process is by regulating the environment of East's entire plant. Thus, while East in essence likens its facility's configuration and use of the natural gas to the color-paper manufacturer described in Ohio Adm.Code 5703-9-21, Example 7, the record demonstrates that it is the equivalent of the candy-cane manufacturer described in Example 48 of that provision.

{¶ 22} East's argument in support of a more expansive interpretation of the "special and limited area" exception is contrary to the strict construction we must apply when considering exemption statutes and regulations generally. Personal property used to regulate temperature is specifically excluded from exemption by R.C. 5739.011(C)(5), and because of that exclusion, it cannot be deemed to be "used in the manufacturing operation" for purposes of applying R.C. 5739.011(B). That is the very function of R.C. 5739.011(C)(5) in the legislative scheme. The statute in clear terms requires making a distinction between East's use of natural gas directly to operate welding and painting equipment, which was exempted, and its use of gas to control the environment within which the manufacturing operation occurs, which R.C. 5739.011(C)(5) excludes from exemption. Thus, the BTA's rejection of East's "clean room" arguments under R.C. 5739.011(C)(5) was reasonable and lawful.

{¶ 23} We turn next to East's third proposition of law, which asserts that its purchase of natural gas is exempt because it qualifies as a "thing transferred" under R.C. 5739.011(B)(4), which generally exempts items used in a manufacturing operation, and under R.C. 5739.011(B)(8), which specifically exempts gas that is used in a manufacturing operation. {¶ 24} As noted, because heating East's buildings constitutes "temperature regulation," it falls within the items excluded from the definition of "thing transferred" for use in manufacturing under R.C. 5739.011(C)(5). As a result, gas used for heating cannot also qualify as being "used in the manufacturing operation" for purposes of R.C. 5739.011(B)(4) and (B)(8). R.C. 5739.011(C)(5) is a more specific provision that excludes from exempt status those items that are used for temperature control even if those items would otherwise fall under the more general exempting language of R.C. 5739.011(B).

{¶ 25} This reading relies on the "familiar rule of statutory construction that when there is a conflict between a general provision and a more specific provision in a statute, the specific provision controls." MacDonald v. Cleveland Income Tax Bd. of Rev ., 151 Ohio St.3d 114, 2017-Ohio-7798, 86 N.E.3d 314, ¶ 27, citing Scalia & Garner, Reading Law: The Interpretation of Legal Texts 183 (2012) and R.C. 1.51. Just as the more specific exclusion of pension income controlled over a more general definition of taxable income in MacDonald , the more specific exclusion of temperature regulation from the manufacturing exemption controls here.

{¶ 26} East directs our attention to Q3 Stamped Metal, Inc. v. Zaino , 92 Ohio St.3d 493, 751 N.E.2d 1001 (2001), but that case is inapposite. In Q3 , we affirmed a finding by the BTA that goggles worn by welders while they worked were exempt from the use tax because the goggles were "used in the manufacturing operation" pursuant to R.C. 5739.011(B)(4), despite the fact that the goggles also functioned as safety equipment, which is explicitly excluded from exemption by R.C. 5739.011(C)(6).

{¶ 27} Here, there is only one function that the assessed natural gas performs: controlling the manufacturing environment by heating it, a function that is fully removed from the division (B) exemptions pursuant to R.C. 5739.011(C)(5). By contrast, the goggles in Q3 performed two distinct functions: protecting the welder's eyes-a safety, nonexempt function-and allowing the welder to see and perform welding tasks, thus being used in the manufacturing operation, an exempt function. Id. at 496, 751 N.E.2d 1001. Here, East argues only that the heating function itself, which is nonexempt, is important to manufacturing. Q3 is therefore inapposite.

{¶ 28} Although the BTA rejected East's claims under R.C. 5739.011(B) on different grounds than we apply here, the tax commissioner's cross-appeal explicitly places the statutory-construction point-namely, that the more specific statutory provision in R.C. 5739.011(C)(5) controls over the more general statutory provisions described in R.C. 5739.011(B)(4) and (B)(8) -at issue. See Internatl. Paper Co. v. Testa , 150 Ohio St.3d 348, 2016-Ohio-7454, 81 N.E.3d 1225, ¶ 30-34 (discussing circumstances under which a protective cross-appeal must be filed in order to preserve an issue). We are free to consider that point first, and because it is dispositive, we need not consider the validity of the other grounds relied on by the BTA when it rejected East's claims under R.C. 5739.011(B), especially because the failure to satisfy any of the three prongs of the Ellwood test defeats the exemption claim. See Ellwood Engineered Castings , 98 Ohio St.3d 424, 2003-Ohio-1812, 786 N.E.2d 458, at ¶ 36. {¶ 29} Thus, the BTA's rejection of East's arguments under R.C. 5739.011(B)(4) and (B)(8) was reasonable and lawful for the reasons we articulate here rather than the finding relied upon by the BTA.

{¶ 30} In light of our disposition of East's propositions of law, the arguments raised in the tax commissioner's six propositions of law need not be addressed.

Conclusion

{¶ 31} The BTA's decision is reasonable and lawful. The BTA correctly determined that East does not qualify for an exemption from the use tax under R.C. 5739.011(C)(5)'s exception for total environmental regulation of a "special and limited area" of the facility. The BTA also correctly determined that East does not qualify for R.C. 5739.011(B)(4)'s general exemption for items used in a manufacturing operation or for R.C. 5739.011(B)(8)'s specific exemption for gas used in a manufacturing operation, although for the reasons stated herein rather than the BTA's rationale. For the foregoing reasons, we affirm the decision of the BTA.

Decision affirmed.

O'Connor, C.J., and O'Donnell, Kennedy, French, and DeWine, JJ., concur.

Fischer, J., concurs in judgment only.

      East also contends that maintaining a temperature of at least 50 degrees is necessary for painting steel, which it performs in Building D. The tax commissioner argues that because East mentioned only welding in its petition for reassessment and notice of appeal to the BTA, East has waived the argument. Because of our disposition of the appeal, we will not address this issue.