Undoubtedly, the two land use cases decided by the Supreme Court this term will have far-reaching and long-term effects on land use development procedures in the state by limiting the extent to which developers can be compelled to shoulder anything more than their proportionate share of off-tract improvements.
By far, the most significant case decided by the Supreme Court this term for the local government, To ll Bros., Inc. and Laurel Creek L.P. v. Board of Chosen Freeholders of the County of Burlington, et al., 194 N.J. 223 (2008), where the Court determined that a developer cannot voluntarily contract to pay more than its pro-rata share for off-tract improvements and that the terms and conditions of a developer’s agreement impose no independent obligation unless that obligation is consistent with the Municipal Land Use Law and is established as a condition of approval of the development. Developers obtained a second victory in Amerada Hess Corporation n/k/a Hess Corporation v. Burlington County Planning Board, 2008 WL 2764781 (N.J.), wherein the Court found that a developer was entitled to default approval by a county planning board if the county planning board failed to act within the statutory time period.
The balance of the Supreme Court’s decisions during this term as related to municipal law covered a variety of topics. The Court issued several rulings regarding public employees and public officials, the taxation of real property and exemptions related thereto, and the always interesting and sometimes counterintuititive law of dedication of land for public use and its acceptance by the governmental entity. (For further discussion of the latter two cases, see Robert Alter, Tax Law 193 N.J.L.J 694 and Lewis Goldshore, Environmental Law, 193 N.J.L.J. 697). The court addressed issues involving partisan municipal elections and referendum elections. Finally, the Court addressed issues arising under the Open Public Records Act (“OPRA”).
Two Key Land Use Cases
For years, municipalities and developers have engaged in an unsettling repartee when dealing with contributions for both on-tract and off-tract improvements. The line between a voluntary contribution and an illegal exaction is always a fine one and has formed the subject matter for several court decisions which attempted to analyze the activities on a fact-specific basis and then determine whether there was implicit or explicit coercion or undue influence exercised by the approving entity over the developer sufficient to transform a voluntary contribution into an illegal exaction. In a landmark decision, the Supreme Court in Toll Bros., Inc. and Laurel Creek L.P. v. Board of Chosen Freeholders of the County of Burlington, determined that a developer cannot contract to pay more than its pro-rata share for off-tract improvements if those improvements could not have been required by resolution under the Municipal Land Use Law (“MLUL”).
The Court further determined that if the scope of a developer’s project materially changes, the developer is entitled to an opportunity to demonstrate before the planning board that a recalculation of its off-tract contribution is warranted and that the memorialization of the original off-tract improvement by the planning board in a developer’s agreement, even if then appropriate, did not immunize such a condition from a subsequent application for a change based upon a changed circumstances analysis. The Court confirmed that developers’ agreements were merely an implementation of requirements imposed by the planning board and obligations set forth in developers’ agreements that were not “tethered” to the approved plan enjoyed no independent significance.
While developers have hailed this decision, on the basis that it prohibits a planning board from over-reaching in conjunction with any development application before it, planning boards have been placed in a compromising position because, among other things, a proportional share analysis under the operative cases is not necessarily formulaic and methodological with mathematical certainty. Thus, a planning board and a municipality will always be at risk that the developer will contend that off-tract improvement is excessive, even after the developer has entered into an agreement memorializing the same. It is not until the off-tract improvement is built and the development is completed that a municipality can exhale and be reasonably assured that no subsequent challenge will be recognized by a court.
The Tolls Bros. case involved a 540-acre site located in Burlington County, 499.25 acres of which were located in Moorestown Township and 31.06 acres located in Mount Laurel Township. The bulk of the property was to be a multi-use development named Laurel Creek, consisting of 1.2 million square feet of office space, 47,000 square feet of retail space, 460 residential units, and an 18-hole golf course with a 25,000-30,000-square-foot country club. Most of this development was located in Moorestown Township, with only the country club and retail property located in Mount Laurel Township. The second parcel, owned by TRW, was located exclusively in Mount Laurel Township and was approved for the construction of a 500,000-square-foot office park to be known as Laurel Creek Corporate Center.
In the late 1980s Moorestown Township and Mount Laurel Township granted certain variances and waivers for the development of the parcels. Because the surrounding area was essentially rural and undeveloped, and the roads surrounding the property were primarily two-lane minor arteries, particular concern was raised regarding increased traffic caused by the massive development. To address the potential traffic problems generated by the development, traffic engineering studies were completed which concluded that certain intersections would be unable to accommodate the potential increased traffic to be generated by the two projects at completion and that a major roadway would have to be realigned to decrease congestion. Moreover, certain other road widening, physical barriers, and signalization were suggested.
The approvals were granted by the local planning boards conditioned on the developer’s willingness to make certain off-tract improvements. In fact, the Mount Laurel Planning Board made its approval conditional on the completion of the intersection relocation and prohibited any building permit to be issued beyond 18 percent of build-out until the same was done. Subsequently, the Moorestown Planning Board granted conditional preliminary major subdivision approval on the basis that the two developers would be responsible for all the improvements to the intersection of the relocated roads.
The Burlington County Planning Board likewise required roadway improvements and the developers again jointly assured the County Planning Board of their agreement to undertake the approximately $2.1 million in county road work with a specific recognition that they were contributing more than their fair share to the improvement. In the 1990s, when the real estate market experienced a severe downturn, only the golf course and a 24,000-square-foot country club had been constructed. The balance of the plans was abandoned by the developer. TRW, the developer in Mount Laurel Township for the Corporate Center of 500,000 square feet, never sought final approval for its plans, and the project would lie dormant for 10 years. Despite the fact that the larger developer had constructed the golf course and the Country Club building, no off-tract improvements had been installed. Nevertheless, both developers continued to acknowledge in writing their commitments to construct the necessary off-tract improvements.
Toll took over the larger project in Moorestown Township, including all the prior approvals. Burlington County required that Toll execute a developer’s agreement for its improvements. On July 12, 1995, Toll Bros. did so and memorialized the responsibilities for completing the off-tract improvements as required by the County Planning Board. In a subsequent letter in 1998, Toll was again advised that it was obligated to make substantial improvements in order to offset the impact on the county roads beyond the percentage impact that may have otherwise been applicable to the development. During this time period Toll continually reiterated its commitment to the roadway improvements. Toll went on to build its first phase of development. The County Planning Board repeated its requirements for intersection and other work.
Then, when Toll was ready to construct the bulk of the commercial development for this project (approximately 870,000 square feet of office space), it decided to relocate the same on another property Toll had agreed to purchase directly across the street from the original development. Thus, although the volume of commercial space would remain the same, the location of the building shifted to a different site. Toll then substituted a 122-unit senior citizen residential community known as Laurel Mews for the commercial development on the original lot, thereby increasing the scope of the overall project. By late 2001, Toll had received conditional approval for the Laurel Mews senior project and the Winner Farm commercial project across the street. Toll sought to delay construction of the third phase of its original residential development and to focus on the commercial development in an attempt to lure Lockhead Martin as the tenant. In 2001, Toll requested leniency from the county on the timeline for the road improvements in order to allow Toll to pursue the Lockhead Martin lease.
In 2002, a principal of the developer that had originally proposed the Laurel Creek Corporate Center on the smaller tract in Mount Laurel submitted an application to develop four office buildings on that site totalling only 400,000 square feet, as opposed to the original 500,000 square feet. Ironically, that developer was also competing with Toll to lure Lockhead Martin for a self-contained office building on its site. The approvals obtained by this second developer from the Mount Laurel Township Planning Board contained a condition that the developer was responsible for the pro-rata contribution for off-site road improvements and further noted that the county had jurisdiction with respect to certain of the road improvements. The county, in turn, calculated that developer’s estimated impact on the improvement to be approximately 7.7 percent of the overall cost of the improvement.
The county then insisted that Toll construct the entire improvement, subject to a contribution of 7.7 percent from the smaller developer, Whitesell. The county’s requirement that Toll pay the entire off-tract improvement cost as a condition of site plan approval, subject only to a 7.7 percent reimbursement from Whitesell, caused Toll to initiate three separate lawsuits within a span of 60 days.
Six months later, Toll brought the action which is the subject matter of this Supreme Court determination, seeking declaratory relief invalidating a 1995 Agreement between the county and Toll, or in the alternative, seeking a declaration that the conditions of approval should be modified to reflect the significant changes from the original development scheme. Toll focused its attention on constructing its age restricted development in Moorestown. When the Moorestown Planning Board included as a condition of approval the obligation for Toll to construct its roadway improvements in accordance with their original 2001 Developer’s Agreement, Toll filed another complaint on March 21, 2003, against the Moorestown Planning Board, claiming that Toll should be granted relief because the plan upon which the 2001 Developer’s Agreement was based had been largely abandoned. Meanwhile, subsequent to the filing of this fifth lawsuit, the County Planning Board denied Toll’s application, reiterating that Toll had to comply with its 1995 Developer’s Agreement and realign the county roads prior to any site plan approvals from the county. Subsequently, the County acquired the Winner Farm property for open space and thus Toll had permanently abandoned its project there. With 870,000 square feet of office space not being constructed, the focus of Toll’s complaint was the need to recalculate its off-tract requirements due to the significant downsizing of its project.
Thus, instead of constructing 1.2 million square feet of office space, 47,000 square feet of retail space, 460 residential units, an 18-hole golf course with a 25,000 to 30,000-square-foot country club, all as originally proposed, the project now consisted of an aggregate 330,416 square feet of office space, 460 residential units, an 18-hole golf course, a 24,000-square-foot club house and a 122-unit age-restricted project. The Court characterized this project as “a fraction of what had been projected” and noted that despite this reduction in scope, all roadway improvements, now estimated at $5 million were to be constructed by Toll. Toll sought a reformation of the conditions and of the Developer’s Agreement with the County to reflect the reduced size of the project and Toll’s pro-rata share of the cost of the improvements necessitated thereby.
The trial judge consolidated the pending cases and ruled in favor of the county and Moorestown, finding that the terms of the Developer’s Agreements were clear and unambiguous and that Toll reaped the benefits of those agreements until it was time to absorb the burdens of the improvements. The Court rejected Toll’s claim that it should be allowed to move before the County Planning Board to modify its obligations due to changes in circumstances on the basis that Toll had committed itself by contract to construct the improvements. The Appellate Division found that although the county’s requirements were beyond the Developer’s pro-rata share, the MLUL limitations are inapplicable to voluntary agreements. However, the Appellate Division found that the agreement between Toll Brothers and Moorestown Township required staged improvements that were linked to the original development plan and reversed the trial judge. Toll filed a Petition for Certification limited solely to the enforceability of the Developer’s Agreement with the County, which resulted in the instant opinion.
The Supreme Court analyzed the issues raised by Toll in this case against the backdrop of well-known and accepted provisions of the MLUL and its predecessor, the Municipal Planning Act, as well as common law. The Court noted that a municipality’s ability to regulate land use is derived from the legislative allowance and that power must be exercised ” . . . in strict conformity with the delegating enactment, the MLUL.” The Court acknowledged the power of a municipality to impose off-tract improvement requirements by citing N.J.S.A. 40:55D-42, which allows the imposition of the requirement that a developer pay its pro-rata share of the cost of providing reasonable and necessary off-tract improvements, which have some nexus to the project
Justice Long, writing for a unanimous Court (Justice Hoens did not participate), characterized the “nexus” requirement as “. . . a strong, almost but-for causal nexus between off-site public facilities and private development in order to justify exactions.” In fact, the Court in an important footnote analogized the “rational nexus”/but-for causal nexus” as the equivalent of the “essential nexus” between a state interest and the exact condition in order to survive a claim under the takings clause of the Fifth Amendment of the United States Constitution. The Court went on further to find that the New Jersey standard is consistent with the “rough proportionality” test mandated by the United States Supreme Court in Dolan v. City of Tigard, 512 U.S. 374, 391, (1994). The Court went back to the Divan Builders, Inc. v. Planning Board of Wayne case, 66 N.J. 582, 598 (1975), which set forth the manner in which municipalities could impose off-tract conditions, i.e., as a general improvement, as a special assessment, or by the developer with or without a formula for reimbursement. In the end, however, the Court found that the ultimate result must be fair and equitable and that there must be a causal nexus between the conditions imposed and the needs created by the development and the apportionment of those costs.
The Court then examined Toll’s primary claim that it is entitled to appear before the County Planning Board to request a recalculation of its off-tract improvement obligations due to the downsizing of its original Plan. In clear and unambiguous terms, the Court found that Toll did have such a right, both as a result of the change in the “rational nexus/but-for” analysis due to the changed condition and the recognition of such a right in the MLUL. N.J.S.A. 40:55D-12(a). In analyzing the county’s defense that Toll was barred from filing such an application based upon changed circumstances because of the terms and conditions of the Developer’s Agreement as an independent and irrevocable source of obligation, the Court rejected the county’s position in its entirety.
First, the Court found that the Developer’s Agreement is merely the implementation of the conditions of approval, setting forth the details regarding the manner in which the conditions of approval will be fulfilled. The Court found that while an agreement offers the developer an opportunity to negotiate with the municipalities, it viewed that right solely on the basis of enabling the developer “. . . to lower the cost of development and to allow developers to plan well in advance of final approval.” Second, the Court found that a Developer’s Agreement was not an independent contractual source of obligation, but is merely there to assist in carrying out the conditions imposed by the Board. The Court found such language in the body of the Developer’s Agreement in this case between the county and Toll.
The Court determined that for it to hold otherwise would be to encourage “voluntary” agreements in violation of the specific provisions of the MLUL, suggesting that the negotiation of these “voluntary” agreements would likely result in imposing obligations greater than the pro-rata requirements of the MLUL. The Court found that contributions made by a developer beyond its pro-rata share ” . . . through the guise of volunteerism is problematic from many perspectives.” The Court analogized these voluntary contributions to a “ pay-to-play system” where developers are rewarded for their philanthropic gifts. Finding that even if these requirements beyond a developer’s pro-rata share are indeed purely voluntary, they would be unenforceable because of their violation of the nexus and proportionality requirements in the MLUL which underlies the municipality’s ability to enter into the agreement in the first place. The Court rejected the county’s argument that the only time an application can be made on the basis of changed circumstances is if the project is fully abandoned; again finding that such a position would offend the nexus and proportionality requirements set forth in the MLUL.
Finally, the Court rejected the county’s position that Toll should be barred from advancing a changed circumstances claim because the county relied to its detriment on Toll’s obligations in later dealings with other developers. Viewing that argument from the perspective of promissory estoppel, the Court found that the County could not have reasonably relied upon the Developer’s Agreement because ” . . . in these circumstances, the element of reasonable reliance must be tethered to the underlying authorizing resolution, and not to the developer’s agreement. . . . ” The Court found that both Toll Bros. and the county knew or should have known that the conditions of approval were subject to change if the facts changed and therefore that the developer’s agreement was not a stand-alone obligation, ignoring the fact that this immutable tenet was only acknowledged by our Supreme Court in this very case. It is difficult to understand how the county should have known that when the Court has never so held until this case. Perhaps implicitly recognizing that fact, the Court went on to suggest that the County was not prohibited from advancing an equitable fraud argument based upon misrepresentations by Toll. However, the Court found that the county did not appear to be advancing such an argument and was of the view that Toll would be bound by the conditions so long as it was proceeding with the original project, and thus that there was no indication that Toll continued to seek approvals and make promises that it never intended to keep.
In remanding the case to the Planning Board, the Court then established the directions for further proceedings before the Board where Toll will have the burden of proving that the off-tract conditions of approval should be modified. The Court voiced some skepticism as to whether the County’s requirements could be sustained given the fact that the current Toll Bros. project ” . . . is only a fraction of what was on the drawing board when the conditions were originally imposed” and whether other developers should enjoy a “ free ride.” The Court went on to indicate that if either party were dissatisfied with the County Planning Board’s determination that party could return to the trial court and attempt to overcome the presumption of validity of the County Planning Board’s determination.
Three and a half months after Toll Bros., the Supreme Court decided a second land use case, Amerada Hess Corporation n/k/a Hess Corporation v. Burlington County Planning Board, 2008 WL 2764781 (N.J.), in which they strictly interpreted statutory language and found that a developer was entitled to default approval by a county planning board as a result of the county planning board’s failure to act within the time period set forth in N.J.S.A. 40:27-6.7, that is within 30 days, or within 60 days if both the municipal planning board and the applicant consent after a complete application has been submitted. In arriving at its decision, the Court relied upon the seminal decision regarding default approvals, Manalapan Holding Co. v. Planning Board of Hamilton, 92 N.J. 466 (1983), and its progeny. In Manalapan, the Supreme Court found that a municipal planning board could not defer action while awaiting county approval, attempting to unilaterally extend the statutory period for municipal action. However, there the Court tempered its strict reading of the statute by declining to confirm the default or automatic approval because the Board had relied on a reasonable, albeit incorrect, interpretation of the statutes by “. . . operating under the mistaken view that it was not required to begin to consider an application until the County Board had acted.” The Supreme Court found that the delay was unintentional and therefore outside of the focus of the Legislature’s intention to grant automatic approvals.
However, the Court pointed out that its ruling was generally prospective and that in the future, the end result might not be the same. The Court then reviewed subsequent Appellate Division cases related to default approvals, commenting that those cases have ” . . . added meat to the bones of that [Manalapan] decision.” For example, in Allied Realty LTD v. Borough of Upper Saddle River, 221 N.J. Super. 407 (App. Div. 1987), certif. den’d, 110 N.J. 304 (1988), while finding that a claim of res judicata did not bar review of a new application and that the planning board should have provided the applicant with an opportunity to demonstrate a change in circumstances, because the Board’s mistaken belief was entirely reasonable, the Board’s failure to act was unintentional and therefore should not trigger an automatic approval. The Court then cited to other cases where default approval was not granted where there was no evidence of intentional delay by the board, or where there was a mistaken belief that the application was incomplete, or where a substitute planning board clerk lost the resubmitted plans. In summary, the Supreme Court acknowledged that where delay is caused by ordinary mishaps or mistakes, or an innocent misfiling of an application, or where delay is caused by a reasonable misapprehension regarding whether applications are complete, or whether the board was barred by res judicata, default approval would not take place. Stated differently, the Supreme Court found that in the absence of mistake, inadvertence or other unintentional delay, courts should have no hesitancy in affirming the automatic approval remedy
Turning to the application at hand, the Court found that the County Planning Board was required to act within 30 days of August 10, 2005, or within 30 days of September 12, 2005, if an extension from the municipal planning board and the applicant were obtained (60 days from the date the application is deemed complete, if both the municipal planning board and applicant consent). The Court found that the County Planning Board did not request an extension from the municipal planning board and that because the statute requires both the municipal planning board and the applicant to consent to an extension, Hess could not unilaterally extend the time for the County Board to act. Accordingly, the applicant was subject to a default approval. The Supreme Court then addressed whether the County Board was permitted to postpone its final decision until it examined all information it deemed relevant and was entitled to delay a decision until it received requested additional information and revisions, irrespective of the provisions of the statute. Although, the Supreme Court acknowledged that the County Planning Board was well within its rights to seek the additional information, it was nonetheless required to act within the statutory period. If the materials requested were not forthcoming, the application could have been granted or denied without them. If the applicant unreasonably refused to furnish the additional information, the Board had the right to cite the failure to submit that information as a basis for denial. However, the Court emphasized: “What was not an option was doing nothing. That is what occurred here.”
Finally, the Supreme Court addressed the County Board’s contention that there is an exception to automatic approvals when there is a public health, welfare, or safety concern. To support its position, the county cited, among other cases, D’Anna v. Planning Board of Washington, 256 N.J. Super. 78 (App. Div.), certif. den’d 130 N.J. 18 (1992), where the Court rejected an automatic approval where matters related to health and welfare such as drainage, sewer disposal and waste supply must be resolved before preliminary approval is granted. The Supreme Court found that the County’s reliance upon D’Anna was overstated and would result effectively in eliminating any automatic approval
While the Supreme Court did not completely close the door where an issue of safety or welfare is not captured by some other level of government regulations, it found that in this application, such was not the case.
Public Employees and Elected Officials
The Supreme Court decided four cases dealing with actions of public employees or officials related to collective bargaining agreements and lifetime health benefits, work place discrimination in the Sheriff’s Office, conflicts of interests of elected school board members, and a particularly unusual case where an attorney for a Board of Education was found to be covered under an insurance policy and indemnification provision for certain actions taken at a meeting.
First, in Middletown Township P.B.A. Local 124 v. Township of Middletown, 193 N.J. 1 (2007), the Supreme Court in a unanimous opinion found that the Township of Middletown was required to provide lifetime health benefits to three police officers who had retired, having 25 years accrued in the Police and Firemen’s Retirement System (“PFRS”), but not 25 years of service in the Middletown Police Department. The Court rejected Middletown’s argument that a resolution or ordinance had to be enacted before a governing body may grant lifetime health benefits coverage to retirees who have served less than 25 years in their municipality. The Court found that only if the municipality chooses to require a particular period of service within its borders will a resolution or ordinance be required. Because the case derived from an Arbitrator’s award making that same finding, the Supreme Court also had to determine whether the decision of the Arbitrator met the “reasonably debatable” standard. They found that the Arbitrator’s decision was properly confirmed by the trial court and subsequently the Appellate Division as the Arbitrator’s award did not violate any laws.
In coming to its conclusion on the substantive issue, the Court reviewed the legislative history of N.J.S.A. 40A:10-23 related to lifetime health benefits for retirees. Prior to its amendment in 1995, N.J.S.A. 40A:10-23 required in pertinent part that an employer may assume the entire cost of premiums for health benefits coverage for retirees who have retired after 25 years or more service with the employer. Thus, municipalities could elect to provide lifetime health benefits only where the retiree had 25 years of service with the municipality in question. Interestingly, in Middletown, the past practice going back to the 1970s was to provide lifetime health benefits for all police officers who earned PFRS retirement, regardless of the years of actual service with the Township, despite the fact that the statute at that time required 25 years of service with the municipality. Also, interestingly, the contracts with the blue- and white-collar bargaining units in the Township at that same time specified that the retiree must have been employed by the Township for 25 years in order to receive lifetime health benefits. The Arbitrator had found that the failure to provide similar language in the P.B.A. Contract and the superior officers’ Contract was problematic for the Township and that all parties understood that retirees from the Police Department would obtain lifetime health benefits so long as they had accrued 25 years in the PFRS.
The Court pointed out that in a previous ruling also involving Middletown Township it had determined that the statute, prior to 1995, clearly required that the retiree have 25 years of service in the municipality, noting, however, that in that case, it required the Township to provide lifetime health benefits to the retiring police officer on the basis of equitable estoppel. See Middletown Policemen’s Benev. v. Twp. of Middletown, 162 N.J. 361 (2000).
In 1995, the statute was amended to allow the employer to set forth any period of service which would have to be served with the employer at the time that the retirement took place. The amendment, however, was not one of absolute clarity, prompting Middletown Township to argue that its failure to adopt a resolution or ordinance setting forth a period of service to be with the employer at the time of retirement prohibited the Township from providing such benefits. The Supreme Court rejected that contention and instead determined that only if a municipality desires to establish a minimum amount of service with it as a condition for the payment of lifetime health benefits would that municipality have to adopt an ordinance setting forth that period of time.
Finally, as abovementioned, because the determination on appeal to the Court derived from an Arbitrator’s determination, the Supreme Court turned to the application of the “reasonably debatable” standard to the Arbitrator’s conclusion that the Police Agreements in question provided health benefits for all retirees, regardless of whether they worked for the Township for 25 years. After carefully “canvassing” the record, the Supreme Court agreed with the Appellate Division that the Arbitrator’s interpretation of the Agreements was “reasonably debatable” and therefore affirmed the Appellate Division’s determination which had affirmed the Arbitrator’s award and required Middletown to provide lifetime health benefits for the three officers who retired.
Based on the Court’s definitive ruling, if a municipality desires to set forth a minimum number of years of service with that municipality as a condition of providing lifetime health benefits, it can do so by the adoption of an appropriate ordinance. Obviously, this type of condition protects a municipality from shouldering the cost burden of lifetime health benefits to an employee who perhaps only worked for that municipality for a year or two, but had accrued the requisite number of years in the PFRS to be eligible for such retirement. Taking no such action will represent the municipality’s acquiescence that it is responsible for lifetime health benefits (assuming that it made the initial determination that it is providing the same for employees), irrespective of the number of years the employee provided services on behalf of that municipality.
The second case involved a claim of hostile work environment and discrimination. In Cicchetti v. Morris County Sheriff’s Office, 194 N.J. 563 (2008), the Supreme Court found that while a law enforcement employee’s failure to disclose an expunged conviction does not prohibit that employee from pursuing his hostile work environment claim, evidence of the expunged conviction can be used to limit or eliminate the employee’s economic damages, but not damages for emotional distress or potentially punitive damages. In addition, the Court found that individual supervisors in this case could not bear any personal liability because the record did not reveal that the individual supervisors undertook acts that constituted aiding or abetting the discrimination and/or hostile work environment. (See Rosemary Alito, Employment Law 193 N.J. L.J. 656).
The third case, Board of Education of the City of Sea Isle City, Cape May County v. Kennedy, 2008 WL 2787886 (N.J.), involved the removal from office of a School Board member because his petitions to the School Board on behalf of his son constituted an impermissible interest in a claim against the Board. Justice Jaynee LaVecchia, writing for a unanimous Court, opined that while not all controversies and disputes between a local Board of Education and a parent who is also sitting as a Board of Education member regarding Special Education Programs for the member’s own child should require removal from office, under these particular facts, removal was necessary and appropriate because of the clear and uncontroverted pecuniary aspects to the dispute between the parties.
The case, while not directly bearing on municipalities, offers a glimpse into the thinking of the Supreme Court in not only conflict issues, but incompatibility issues. The Supreme Court had to decide whether a provision of the School Ethics Act (“SEA”), N.J.S.A. 18A:12-21 to -34, which is similar to the Local Government Ethics Law (“LGEL”), N.J.S.A. 40A:9-22.1, effectively trumped a specific more stringent provision unique to the School Board, N.J.S.A. 18A:12-2, which prohibits Board of Education members from having a direct or indirect interest in any claim against their Board. There is no companion statute in the local government field equivalent to the more stringent prohibitions in the School Board Law. The Supreme Court found that the adoption of the more liberal SEA did not impliedly repeal the more stringent prohibition contained in N.J.S.A. 18A:12-2 barring Board of Education members from having a direct or indirect interest in any claim brought against their Board.
Nevertheless, the Supreme Court tempered that determination by essentially finding that N.J.S.A. 18A:12-2 was not an absolute prohibition against a member of a School Board having a claim against the Board, but instead that “[a] more nuanced analysis must be undertaken when a board member’s removal is sought for having pursued his or her child’s due process rights to an appropriate special education program,” explaining, “[o]therwise, an important and vital group of citizens – parents of special education pupils – might be effectively precluded from participation on local boards of education for fear that they must give up the ability to address educational issues that may arise in connection with their children’s specialized programs.” In this case, when applying that “nuanced analysis,” the Court found that the Commissioner’s determination to remove the Board Member was necessary and appropriate ” . . . because of the concrete, pecuniary aspects to the dispute between the parties.”
The facts in the case were undisputed. During a second stint on the Board of Education, while serving as the Board’s President, the defendant and his wife filed virtually identical applications requesting a due process hearing and an emergent hearing with the State Director of the Office of Special Education Programs, claiming that the Board had materially breached the terms of a 2004 Settlement Agreement resulting from litigation filed and concluded before the defendant was elected to a second (but not consecutive) term on the Board. The application also included a claim for payments for the services that defendant’s wife had provided, along with attorneys’ fees, expert fees, costs and disbursements. Defendant specifically advised that he would recuse himself from all matters before the Board that related to the School District and his son. The Board immediately sought from the Commissioner of Education a declaratory ruling that the filing of the application created a conflict of interest that was incompatible with the Defendant’s continued Board membership.
The matter was transferred to the Office of Administrative Law (“OAL”) and the Administrative Law Judge (“ALJ”) found that the Defendant’s conduct was permissible under the SEA, which allowed a school official to represent himself in negotiations or proceedings concerning his own interests. The Education Commissioner, however, rejected the ALJ’s recommendation and determined instead that the defendant’s action created a disqualifying interest under N.J.S.A. 18A:12-2. The Appellate Division affirmed the decision and the Supreme Court came to the same conclusion.
To its credit, the Court did acknowledge that read broadly, the later enacted SEA could be read to contradict N.J.S.A. 18A:12-2′s interest in prohibiting substantial conflicting claims that pit a Board Member’s interest in a claim against the interests of the Board. Nevertheless, since the Court found that implied repealers are not favored, they determined that the two statutes can be readily harmonized by viewing the SEA’s exemption as “. . . a legislative expansion of that previously recognized, limited case-law exception to the rule against inconsistent claims.” The Court found that the
. . . reconciliation of the two statutes will unfold based on fact-sensitive analyses for substantial and deep antagonistic interests that would call into question a board member’s ability to perform public duties and the public’s confidence in that ability of the member to perform his or her office, notwithstanding the advancement of a personal interest through negotiations or a “proceeding.”
Applying that standard, the Supreme Court found, for example, that a disagreement between a parent and a school board requiring multiple meetings with a Child Study Team is not the type of substantial conflict that the more stringent N.J.S.A. 18A:12-2 is intended to prevent, noting that the court would not presume that every due process claim to resolve specific issues regarding a child’s classification would rise to the level of being an automatic disqualification of a board member. The Court, however, drew the line at the point where a due process claim includes a request for specific monetary relief. In that situation, the Court found that a substantial conflict between the board member and the board can be found to exist. Specifically for that reason, the Court had no hesitancy in confirming the relief ordered. In an attempt to provide prospective board members a set of guidelines, the Supreme Court commended to the Commissioner ” . . . whether a set of guidelines could be developed so that parents of students would be better able to understand the limits imposed upon them should they choose to run for office at their local boards of education.”
As above stated, there is no statute similar to N.J.S.A. 18A:12-2 in the municipal field. Instead, we are left with the more general subjective language of N.J.S.A. 40A:9-22.5k, which provides that nothing in the LGEL shall prohibit any local government officer or employee, or members of his immediate family from representing himself or themselves in negotiations or proceedings concerning his or their own interests. It would therefore appear that such language provides greater leeway to local government officers in representing themselves or their families in matters before the entities on which they serve.
In the fourth and final case involving public officials or public employees, the Supreme Court found that a School Board attorney was entitled to indemnification in defense of a civil action under N.J.S.A. 18A:16-6 to the extent of his conduct as Secretary pro tem to the Woodbine Board of Education (“Board”). Sahli v. Woodbine Board of Education,193 N.J. 309 (2008). The Court similarly found that the insurance policy at issue provided coverage to the attorney while volunteering to act as Secretary to the Board. However, neither the indemnification statute nor the insurance policy would provide coverage to the extent that the Board attorney was performing his function as Board Solicitor.
The somewhat unique set of facts disclosed that plaintiff Ronald W. Sahli was the solicitor for the Board and performed the usual functions He received no health benefits or pension benefits, nor were any income tax withholdings deducted from his fees. In August 2000, an employee of the Board accused the District Superintendent of violating federal and state laws regarding the special education program. After the employee appeared before the Board and publicly expressed her concerns, she requested an opportunity to discuss her grievances with the District Superintendent and the entire Board. That discussion took place during an executive session at which Board members requested that the Board’s regular secretary be excluded from the meeting. The Board then appointed plaintiff Sahli as secretary pro tem for the session. After the employee was excused, Board members discussed their concerns, during which time the attorney provided legal advice as to the Board’s options. The attorney, in his capacity as secretary pro tem, prepared minutes of the executive session that described the employee’s behavior in detail.
A second meeting with the employee and the Board took place and again plaintiff Sahli was appointed secretary pro tem, undertaking the same functions as he did during the first meeting, including the preparation of minutes of the executive session. After the second meeting, the District Superintendent recommended that the employee be placed on administrative leave, pending the results of physical and psychiatric evaluations. Several weeks after being so informed, the employee resigned. Subsequently, the employee filed a civil complaint against the Board and the District Superintendent alleging that they retaliated against her in violation of the Conscientious Employee Protection Act (“CEPA”).
During discovery, the confidential minutes of the Board’s executive sessions were provided, prompting the filing of an amended complaint alleging that Sahli, while engaged in the course and scope of his duties as solicitor and while serving as secretary pro tem, committed wrongful acts, including the alleged failure to faithfully reflect in the minutes what actually occurred and in drafting the minutes to make the employee appear mentally unstable. Sahli demanded insurance coverage from the Joint Insurance Fund (“JIF”) representing the Board and further requested that the Board indemnify him pursuant to N.J.S.A. 18A:16-6, which affords indemnity to any person holding any office, position or employment under the jurisdiction of any Board of Education. The JIF denied coverage on the grounds that Sahli was an independent contractor hired by the Board, rather than an insured under the policy. The Board denied indemnification and defense on the grounds that N.J.S.A. 18A:16-6 applies to officers and employees, not independent contractors such as the School Board Solicitor.
Sahli filed this action to compel the Board and JIF to reimburse him for the amounts spent in defense of the claim. The trial court concluded that N.J.S.A. 18A:16-6 provided indemnification for the attorney, but the JIF policy excluded coverage. The Appellate Division held that the Board’s attorney was not entitled to indemnification and rejected Sahli’s argument that the claims arose out of his service as secretary pro tem. The Appellate Division also concluded that the JIF was not required to provide representation because Sahli was acting as the Board’s solicitor, rather than the Board’s secretary.
The Supreme Court first evaluated plaintiff’s contention that as the Board’s Solicitor he is entitled to indemnification pursuant to N.J.S.A. 18A:16-6. The Supreme Court adopted the reasoning of the Appellate Division which had extensively recounted the legislative and decisional history of N.J.S.A. 18A:16-6 insofar as the Appellate Division found that the Legislature’s focus in enacting N.J.S.A. 18A:16-6 was to “focus . . . solely upon school board members and school employees, and those preparing for teaching careers” and that the statute did not include a Board Solicitor as a “person holding any office, position or employment of a school board.” The Supreme Court concurred that a solicitor of a school Board is not entitled to indemnification under the statute. However, in his capacity as secretary pro tem, the Supreme Court found that the Plaintiff was entitled to indemnification and a defense under the statute insofar as he undertook the duties of secretary pro tem. The logic of the Supreme Court was simple:
It is not disputed that if the regular secretary of the Board had been sued because of the manner in which the minutes were drafted, the secretary would be covered by the statute as a person holding a ‘position’ of the Board. (Citations omitted). Plaintiff was appointed to take the place of and perform the role of secretary for the executive session. Although a temporary position, it was nevertheless a position of the Board. We find no justification to avoid the application of the statute merely because the position was temporary. If plaintiff were sued in part because of his temporary position as secretary to the Board, then to the extent he was sued in that capacity, he is entitled to indemnification under N.J.S.A. 18A:16-6.
The Court went on to state that the complaint made other allegations against the plaintiff in his capacity as Board solicitor and made it clear that the plaintiff was not entitled to indemnification in his capacity as Solicitor of the Board.
As to Plaintiff’s contention that JIF is required to reimburse him for counsel fees, Justice Wallace, writing for the majority, followed a similar course. After reviewing the general principals that apply to the interpretation of an insurance policy, the Court found that the definition of “insured” under the JIF policy provided that an insured included “. . . all persons who were, now are, or shall be elected during the Coverage Period or appointed or employed members of the Board of Education” and “all employees and volunteers while acting within the scope of their duties for a member.” (Emphasis added.)
Finding that the exclusion for any independent contractor was applicable to the extent that plaintiff was acting as a solicitor to the Board, the Supreme Court also found that when plaintiff Sahli volunteered and was appointed to serve as secretary pro tem, the same was outside his normal responsibilities as Solicitor and constituted a “volunteer” acting within the scope of his duties. The Court remanded the matter to the trial court to determine the proper allocation of fees that the Board and JIF should reimburse plaintiff for his expenses arising out of the defense of claims made against him as secretary pro tem.
Justice Albin concurred with the majority that Sahli’s actions as secretary pro tem qualified him for indemnification, both under the statute and under the Board’s insurance policy and agreed that Sahli was not covered under the Board’s insurance policy in his position as solicitor. However, Justice Albin departed from the majority by opining that the statutory section, N.J.S.A. 18A:16-6 does in fact contemplate indemnification for a school Board attorney who, in Justice Albin’s view, holds an office or a position under the statute. Justice Albin found that the indemnification statute was applicable to office and position holders irrespective of whether they were employees of the School District. Justice Long joined in Justice Albin’s concurring and dissenting opinion.
Justice Rivera-Soto also concurred and dissented in part, but in a different way. Justice Rivera-Soto agreed that neither the indemnification statute nor the insurance policy applied to protect plaintiff Sahli when acting as Board Solicitor. However, Justice Rivera-Soto also concluded that Sahli was not entitled to indemnification nor insurance coverage for his conduct as secretary pro tem to the Board.
During this term, the Supreme Court decided two election cases, one case involving the election of a mayor and the second involving a referendum election. In the first case, two years after a mayoral election in Parsippany, the Supreme Court granted the losing candidate the opportunity to present evidence contesting the election to the trial court. If nothing else, In Re The Contest of the November 8, 2005 General Election for the Office of Mayor of the Township of Parsippany-Troy Hills, 192 N.J. 546 (2007), demonstrates that the current process for hearing election contests is completely unrealistic and that the Supreme Court should establish specific accelerated proceedings so that the apparent successful candidate to an office does not remain in limbo for nearly three-quarters of the term to which the official is elected.
The case in question grew out of the November 8, 2005, mayoral election in the Township of Parsippany-Troy Hills, where Michael Luther was declared the victor by a 41-vote margin. A recount by his challenger, Rosemarie Agostini, resulted in the victory margin being reduced by one vote to 40 votes. Agostini then filed a verified petition to challenge the election results on a number of statutory grounds. While a motion to dismiss was pending, 15 additional absentee ballots were found by the Administrator of the Board of Elections and, after a Court ordered recount, Luther’s victory was narrowed to 39 votes.
The trial court granted the motion to dismiss, concluding that the traditionally liberal pleading rules do not apply to a petition in an election contest, citing to two Supreme Court decisions, the first decided in 1891 and the second in 1938. Following the dismissal, Luther was sworn in as Mayor and continued to serve throughout the proceedings. Agostini appealed and the Appellate Division reversed, 388 N.J. Super. 663 (App. Div. 2006), finding that the election contest statute must be interpreted in light of modern rules of pleadings and the case should go forward. The Supreme Court granted Luther’s petition for Certification and affirmed the Appellate Division, finding that the election contest petition filed by Agostini was sufficient to withstand a motion to dismiss for failure to state a claim.
In making its ruling, the Supreme Court first determined that the petition should not have been dismissed after its unverified amendment, since the original petition had in fact been verified and Agostini argued that the failure to verify the amended petition was merely inadvertent, citing Perri v. Kisselbach, 34 N.J. 84, 86 (1961), which generally held that election contests “should be determined upon the merits and not upon technical artistry in pleading.” The Supreme Court analyzed Agostini’s petition contesting the election, focusing on her allegation that illegal votes had been received, or legal votes had not been counted, which are permitted grounds for an election contest under N.J.S.A. 19:29-1(e).
The Court then looked to three other provisions of the statute central to their consideration of the issues “. . . because they give content to the particular ground for the challenge asserted here and inform our analysis of the requirements for the petition to proceed and to be considered. First, was the provision setting forth general requirements for the contest petition and specific requirements if the petition asserts that illegal votes were cast or legal votes rejected (N.J.S.A. 19:29-2). The second was the provision that sets forth the scope of the Court’s authority to order amendments to the petition (N.J.S.A. 19:29-5). The third was the provision which established the manner in which the trial on the petition is to be conducted and more particularly, the ability of the Court to order voters to give testimony (N.J.S.A. 19:29-7).
With regard to the first factor, the Court initially observed the change in the statutory language from its original form in 1876 to the amended version in 1920. In 1876 the petition had to set forth the particular circumstance giving rise to the challenge verified by two electors. In contrast, the 1920 amendment deleted the requirement that the petition set forth the particular circumstance and instead that the verification be made on “information and belief.” Moreover, the Court emphasized that the statute always required that if the petition involves the reception of illegal voters or the rejection of legal voters, the petition should identify by name the voters in question “. . . if known,” implying that the identity of the voters for the purpose of the petition was not mandatory.
With regard to the second provision involving the Judge’s authority to order amendments to the petition, the Supreme Court noted that the statute, N.J.S.A. 19:29-5, changed over time. While the original 1876 Act limited the Judge’s power to permit an amendment only as to form, the language of the current statute, derived from the 1930 Act, is “far less restrictive” permitting amendments as to both form and substance. With regard to the third factor, authorizing the Court in an election contest to compel a voter whose vote has been cast illegally to reveal how he or she voted, the Supreme Court recognized the significance of the provision to the extent that the sole power to compel a voter to reveal a vote is held by, and reserved to, the Court. The Supreme Court emphasized that since 1876 no petitioner contesting an election had the ability to require that voters reveal how they voted and therefore that no petitioner, without a trial on the merits, can prove that the outcome would have been different.
In viewing the issues within the above framework, and reviewing the two primary cases relied upon by the trial court to dismiss the Complaint, Lehlbach v. Haynes, 54 N.J.L. 77 (Sup.Ct. 1891), and In re Clee, 119 N.J.L. 310 (Sup.Ct. 1938), the Court found that while In re Clee dealt with a subsequently amended Statute which deleted the requirement that the Petition set forth certain facts with particularity, the Clee pleading would fail for vagueness even under modern statutes. The Supreme Court rejected the Appellate Division’s position that modern pleading rules can be engrafted onto the election contest statutory requirements so as to permit a petition to be equated to a complaint and therefore to be tested against liberal notice pleading concepts. Instead, the Court relied upon the language of the applicable statutes themselves and the changes in the language from the period that the Lehlbach and Clee cases were decided, in 1891 and 1938, respectively, which supported their conclusion as to the sufficiency of the petition. In affirming the Appellate Division decision as modified, the Supreme Court remanded the matter to the trial court for further proceedings consistent with the opinion.
In a concurring and dissenting opinion, almost as lengthy as the majority opinion, Justice Rivera-Soto, while concurring that modern pleading rules cannot be engrafted upon an election contest’s statutory requirements, rejected the result of the majority’s position and would have sustained the trial court’s dismissal of the petition because, in his view, the majority incorrectly impeached prior precedents. He noted in his dissent:
One cannot dispute the high sounding notions that frame the majority’s views. Of course, ‘[f]ree and fair elections are the foundation on which our democracy rests’. Of course, ‘[t]he right to vote and to have one’s vote counted is both cherished and fundamental to our way of life.’ Of course, ‘[w]e rely on our election laws and on the fair conduct of elections to ensure that the people may be heard through the ballot and that there will, as expressed through their votes, may be effectuated’. Of course, ‘[w]e can only be certain that the true will of the people has been expressed if we can be confident in the election process itself’ and, of course, ‘[t]he right of a defeated candidate to contest the outcome of an election, while carefully circumscribed, is an important means to ensure that the true will of the people is indeed heard through the ballot box’.
At the same time, however, elections must bring finality, and the election contest procedure cannot be used as an adjunct to a political campaign. That is why election contest petitions must be verified; that is why election contest petitions must particularly describe the election’s shortcomings; and that is why election contests must be adjudicated without delay.” (Internal citations omitted).
Justice Rivera-Soto would have reversed the judgment of the Appellate Division and reinstated “. . . the reasoned judgment of the Law Division dismissing Agostini’s election contest petition.” Justice Wallace joined in Justice Rivera-Soto’s consenting and dissenting opinion.
Ironically, the result espoused by the minority prevailed in the end. In early 2008, the lower court conducted a trial on the merits and declared Luther the winner. Agostini announced that she would not appeal the determination, the successful and unsuccessful candidates hugged, and Michael Luther was able to go about his mayoral duties for the last 22 months of his 48 month term without a cloud hanging over his every decision. While the Township of Parsippany-Troy Hills continued to function during the 26 month ordeal of not knowing whether the current Mayor was actually going to be the Mayor, it is a situation that must be remedied by the Supreme Court’s taking control of the situation and establishing abbreviated and aggressive timetables to have election results finally decided, at least through the New Jersey judicial system, in a matter of a few months. To do otherwise does the same disservice to the very voters whose rights the Legislature and judicial system have given the highest priority and regard.
In In Re Referendum Petition to Repeal Ordinance 04-75, 192 N.J. 446 (2007), a unanimous Supreme Court eliminated the legislative/administrative dichotomy engrafted upon the Faulkner Act referendum provisions and held that all ordinances are subject to the referendum provisions in the Faulkner Act unless the Legislature specifically excepted the particular type of ordinance from the referendum process. Justice Albin, writing for a unanimous court, finally put to rest a conflict among various lower court decisions that were issued over the last 40 years. The Court made its determination based upon the plain language interpretation of the relevant Faulkner Act provision, N.J.S.A. 40:69A-185, but supplemented its determination with a review of extrinsic sources supporting the Court’s determination.
The case began when the Trenton City Council, on September 2, 2004, enacted Ordinance 04-75, setting forth the restructuring plan for the City’s Police Department. The Ordinance provided that a Police Director shall head the Police Department with the assistance of a Chief of Administrative Services. In addition to outlining the Police Department’s command hierarchy, it established a salary range for the Chief of Administrative Services, providing that both the Chief of Administrative Services and the Police Director were eligible for annual stipends at the Mayor’s discretion. The Ordinance further authorized the Police Director to structure the Department in accordance with the organizational table set forth in the Ordinance by, inter alia, eliminating the position of three Deputy Chiefs, which forced those individuals to either resign or be demoted to a position of Captain.
Within 20 days of the adoption of the Ordinance, a referendum petition was filed. The Clerk certified the Petition on or about October 7, 2004. In accordance with N.J.S.A. 40:69A-185 – 191, the Clerk advised the Council that he would place it on the ballot unless the Council repealed the Ordinance within 20 days. The City Council and the Mayor filed an Order to Show Cause and Verified Complaint seeking a declaratory judgment that the referendum petition was void on the basis that the Ordinance is not subject to recall under the referendum statutes in the Faulkner Act. The trial court, in a written opinion, determined that that part of the Ordinance that organized a chain of command for the Police Department and undertook other actions related to the structure of the Department represented an administrative and not a legislative decision and therefore was not subject to referendum, relying upon a series of cases beginning with Cuprowski v. City of Jersey City, 101 N.J. Super. 15, 23 (Law Div.), affirmed o.b., 103 N.J. Super. 217 (App. Div.) Certif. Den’d 53 N.J. 80 (1968), which held that only legislative ordinances are subject to referendum. However, the trial Court found that that portion of the Ordinance increasing salary ranges for the various Trenton police personnel had to be submitted to the voters for ratification pursuant to another statute, N.J.S.A. 40A:9-165, which requires that an Ordinance increasing the salary of a managerial municipal employee must be submitted to the voters for approval if a Petition containing the signatures of at least 5 percent of the municipality’s registered voters protesting the Ordinance is properly filed (the Faulkner Act provision requires 15 percent of the number of voters who voted in the last General Election at which members of the General Assembly were elected).
An appeal was taken by the Committee on Petitioners and the Appellate Division reversed. It did not eliminate the dichotomy between legislative and administrative ordinances, but instead found that there is difficulty in characterizing an ordinance as either legislative or administrative. The Court found that the right of referendum should be liberally construed to further the legislative policy of encouraging citizen interest and participation in local government and established a default rule for the purposes of bringing “some predictability” in classifying ordinances. As enunciated, the default rule requires that when it is difficult to determine whether an ordinance is legislative or administrative, the ordinance must be declared to be a legislative one, subjecting the ordinance to referendum. The Appellate Division cited approvingly from its decision in Menendez v. City of Union City, 21l N.J. Super. 169 (App. Div. 1986) wherein the Court attempted to articulate the different characteristics of a legislative decision and an administrative decision, determining in part:
When a municipal governing body has latitude within its discretion in adopting the specific provisions of an ordinance, its enactment is legislative and subject to referendum, even though its authority to legislate on that subject has been delegated to it by state law. When a municipal governing body is merely complying with and putting into execution a state or local legislative mandate in adopting an ordinance, in effect exercising a ministerial function, its enactment is administrative and not subject to referendum. In re Referendum Petition to Repeal Ordinance 04-75, 388 N.J. Super. 405, 414, quoting Menendez, supra, 211 N.J. Super. at 172.
The Appellate Division found that the City Council had exercised discretion in establishing ranks and the number of officers to serve in each rank and consequently that the Ordinance was “legislative” in nature and subject to referendum. The City then filed a Petition for Certification which was granted by the Supreme Court.
The City’s contention consisted of five reasons in support of the Ordinance being declared “administrative” as opposed to “legislative.” First, the City contended that the Ordinance was a temporary expedient and not permanent or general. Second, it argued that the Ordinance simply put into final execution previously enacted laws to better integrate the Director of Police into the mainstream organization. Third, the City contended that the matter is “. . . so complex and technical that they are beyond the public’s competence.” Fourth, the City contended that these matters require prompt and efficient executive action without the need for popular approval which might undermine the successful administration of the municipality’s affairs. Finally, the City argued that this is an outgrowth of a comprehensive statutory scheme as to how a municipality should operate its police force .
In short, the City argued that if this type of Ordinance is subject to referendum, a municipality’s ability to restructure a police department will be significantly restricted.
In contrast, the Committee on Petitioners argued that the actions of the City were legislative in nature based upon N.J.S.A. 40A:14-118. Moreover, the Committee on Petitioners argued that in the earlier Appellate Division decision, D’Ercole v. Mayor and Council of Norwood, 198 N.J. Super. 531 (App. Div. 1984), it was determined that an Ordinance authorizing the lease of a firehouse was not subject to referendum, was implicitly overruled by another case, Tumpson v. Farina, 120 N.J. 55 (1990). The apparent inconsistency of the City in approaching these issues was not lost on the Committee on Petitioners who argued that in 1999 the City itself initiated a referendum to decide whether the Police Department’s organizational structure should eliminate the position of Chief of Police and replace it with a Civilian Police Director, but now were challenging the public’s right to participate in a referendum on what they termed to be an “equally important policy decision.”
Justice Albin began his analysis by reviewing the purposes of the Faulkner Act referendum statute, its text and legislative history, and its place in the larger statutory scheme. Dealing first with the purpose of the Faulkner Act’s referendum statute, Justice Albin found that the power of referendum is a check on the exercise of local legislative power and that the Faulkner Act referendum provision should be “liberally construed and applied” to promote the beneficial effects of voter participation. Noting that the Petition met the statutory requirements by having the names and signatures of more than 1,600 voters, which equalled, or was greater than 15 percent of the total votes cast in the last election at which members of the General Assembly were elected, the Court found that the referendum petition met the statutory requirement for suspending ordinances and requiring that the same be placed on the ballot if not repealed by the Council. The Court then focused on the statutory language as being the best indicator of the Legislature’s intent which had to be divined from the language in the statute.
The Court cited the operative statute, N.J.S.A. 40:69A-185 which provides in pertinent part:
The voters shall also have the power of referendum which is the power to approve or reject at the polls any ordinance submitted by the council to the voters or any ordinance passed by the council, against which a referendum petition has been filed as herein provided. N.J.S.A. 40:69A-185. (emphasis added).
Justice Albin noted that the words ” . . . any ordinance passed by the council. . . .” do not suggest that any category of ordinance be exempt from the referendum requirements. Language could have been crafted had the Legislature so intended by stating that only legislative ordinances are subject to voter approval. The absence of such language was telling according to the Supreme Court. Citing well-known statutory construction principles requiring that the Court “ . . . ascribe to the statutory words their ordinary meaning and significance,” the Court found that the word “any” clearly is synonymous with the word “all.” Citing a variety of definitions of the term “any,” the Court found that the term “. . . ‘any ordinance’ does not lend itself to subdividing ordinances into various classes, such as administrative and legislative,” to reviewing those cases that established a distinction between legislative acts and administrative acts.
Examining Cuprowski v. City of Jersey City, supra, the Court found that the protesting residents contended that the City budget should have been adopted by ordinance as opposed to resolution and that it was subject to referendum under N.J.S.A. 40:69A-185. Sidestepping the question of whether the budget should have been passed by ordinance or resolution, the Law Division in Cuprowski found that the Legislature did not intend for budgets in Faulkner Act municipalities to be subject to referendum, based essentially on the proposition that the budget ordinances would take effect immediately and the 20-day estoppel period would not apply. Thus, there would be no time to file a referendum petition after the ordinance was adopted since it would take effect immediately upon adoption.
The Supreme Court noted that the Law Division could have stopped there, but instead went on to distinguish legislative ordinances from administrative ordinances, finding that to “. . . give a small group of the electorate the right to demand a vote of the people upon every administrative act of the governing body would place municipal governments in a straight jacket and make it impossible for the city’s officers to carry out the public’s business.” Following the Cuprowski case, the legislative/administrative distinction took hold and courts began to narrow the field of ordinances subject to referendum in Faulkner Act municipalities. To counter that analysis, the Supreme Court reviewed the legislative history of the Faulkner Act referendum provision. It found that an earlier rejected version of the referendum bill in Faulkner Act towns had carved out an exception to the voter’s right to seek ballot approval, excepting ordinances authorizing an improvement or the incurring of indebtedness, other than for current expenses.
The Supreme Court put significant weight on the fact that the final version of the bill as adopted excised these exceptions and concluded that the Legislature “. . . obviously considered and rejected writing in the qualification to the right of referendum contained in the earlier bill.” The Court then inferred from that action that the Legislature knew the breadth of the statute they were creating and also how to expand or contract voter participation. The Supreme Court was further impressed with the fact that the referendum provision in the Faulkner Act contains a partial, if not total exception to the referendum rule for municipal budgets, not directly, but instead by virtue of other sections of the Faulkner Act providing that all ordinances, except the local budget ordinance, shall take effect 20 days after its final passage by Council and approval by the Mayor where such approval is required. Since the budget ordinance is statutorily exempt from the 20-day waiting period, the Court found that the Cuprowski Court correctly determined that the Legislature excluded budgets from the referendum provisions because the budget ordinance would take effect immediately upon adoption.
In further support of its position that the Legislature well knew how to exclude ordinances from the referendum provisions, the Supreme Court noted that zoning ordinances are not subject to initiative or referendum nor are ordinances authorizing the sale, lease or conveyance of real or personal property to a Commission, or to a municipal authority for the purposes of operating a utility system, or to a solid waste management authority, or to a port authority, or to a municipal port authority. Moreover, the Court found that N.J.S.A. 40A:2-18 exempts from referendum certain bond ordinances. As such, the Court found that because the Legislature specifically had made exceptions to the referendum provisions, they could find no support for the judicial exception of precluding administrative type ordinances from being subject to referendum. Moreover, the Court found:
It is the function of the Legislature, not the courts, to determine how much direct democracy through referendum should be conferred on the voters of a municipality. Our role is to construe the statute, not to impose our policy preferences, particularly when to do so inhibits voter participation.
The Court referred to the Legislature:
We are required to vindicate that valued judgment made by the Legislature, which is the proper body to decide whether exceptions should be made to N.J.S.A. 40:69A-185.
Voicing its concern that the legislative/administrative distinction has spawned conflicting approaches among various appellate panels, it then attempted to note that in its earlier decision in Tumpson v. Farina, 120 N.J. 55 (1990), it worked “uneasily” within the general legislative/administrative distinction. The Supreme Court noted that the Appellate Division in Menendez v. City of Union City, supra, the Appellate Division had narrowed the definition of the administrative ordinance exception, stating:
When a municipal governing body is merely complying with and putting into execution a State or local legislative mandate in adopting an ordinance, in effect exercising a ministerial function, its enactment is administrative and not subject to referendum. 211 N.J. Super. 172.
Noting that the Supreme Court’s analytical approach is “in step” with the Menendez Court, the Court found that a municipal referendum cannot be the vehicle to override a state mandate embodying a legislative enactment.
Taking it a step further, the Supreme Court stated:
If a statute, for instance, required a municipality to have a police department with a chief of police as its head, an ordinance carrying out that mandate would not be subject to referendum because the voters of a municipality cannot repeal a legislative enactment. A state mandate that does not allow for the exercise of municipal discretion cannot be overridden by a referendum. With that caveat, our interpretative approach is consonant with Menendez and the appellate panel here.
In summary, therefore, the Supreme Court found that in Faulkner Act municipalities, all ordinances are subject to referendum unless specifically and articulately excepted from referendum provisions or if the ordinance were one that carried out a mandated state policy. It is submitted, however, that the Supreme Court’s attempt to justify its plain language basis for its decision creates a variety of further issues that would have been eliminated had it simply ended its opinion with its finding that all ordinances are subject to referendum under the Faulkner Act. For example, the Supreme Court notes that the original Faulkner Act bill created an exception for ordinances creating debt and ordinances authorizing local improvements, but that the final version no longer contained those exceptions. The implication that the Supreme Court divines from such action is that the Legislature no longer wanted to exclude those local enactments from referendum. What the Supreme Court fails to point out is that both those ordinance enactments have their own separate referendum provisions. See N.J.S.A. 40:49-27 and 40:49-9.
In fact, there has been debate as to whether such ordinances must follow the criteria for a referendum under the specific statutes authorizing referendum on debt authorization ordinances or local improvement ordinances in Faulkner Act municipalities or whether the different Faulkner Act requirements apply. The general consensus is that the more specific statutes would apply, but the point is that the Supreme Court’s implication that the Legislature eliminated the carving out of these two types of ordinances evinced the legislative intent to include them, is suspect. The legislature could just as well have concluded that the carve-out was unnecessary because both of those enactment had their own separate and independent referendum provisions which apply in all municipalities, not just Faulkner Act municipalities.
Moreover, the Court adds another generic exception by stating that ordinances which carry out mandated state policy are not subject to referendum. Mandated state policy is sometimes not so easily discerned. It is submitted that the Supreme Court would have done better in this case to simply end its analysis based upon the plain language of the statute, and leave it at that. Its attempt to go on to further explain its decision and its attempts to coordinate them with some past decisions has only served to create different ambiguities. Thus, while the Supreme Court eliminated one ambiguity consisting of the legislative/administrative dichotomy, it may have inadvertently created another ambiguity by establishing a more generic exception of mandated state policy. This is clearly a case where a shorter opinion would have served the purpose.
The final cases reviewed for this article deal with, the Open Public Records Act (“OPRA”).
In answering two specific questions regarding the Open Public Records Act (“OPRA”), the Supreme Court addressed several issues that have been raised since OPRA’s adoption and reviewed its requirements in the context of the previous “Right to Know Law” (“RTKL”). Specifically, Chief Justice Rabner, writing for a unanimous court in Mason v. City of Hoboken, (2008); 2008 WL 2927594 (N.J.), opined that OPRA actions filed in Superior Court have a 45-day “Statute of Limitations,” the same as the previous RTKL. Further, he wrote that requests for attorneys’ fees as authorized under OPRA and under the common law would be granted if it could be shown that the lawsuit was causally related to the relief obtained and the relief had a basis in law. The Court provided that the burden of proof shifts to the agency if it failed to respond to a request under OPRA within seven days, in accordance with its terms.
The facts disclose that in just under a year’s time, plaintiff filed 125 separate requests for public records from the City of Hoboken. Two lawsuits derived from the City’s response involving 17 of those requests. The first lawsuit stemmed from a request on February 9, 2004, for copies of the City’s general ledgers for Years 2003 and 2004. Eleven days thereafter, on February 20, 2004, the City responded that the ledgers were not immediately available because they were in the process of being corrected and that they should be available within two weeks. On or about March 4, 2004, plaintiff filed a Verified Complaint seeking access under OPRA and the common law.
The second lawsuit related to 15 of the OPRA requests that were made in September, 2003, through September, 2004. On September 27, 2004, Plaintiff filed a 30-count Verified Complaint seeking access to all the records sought and attorneys’ fees. The Complaint was equally divided into claims under OPRA and similar claims under the common law. The OPRA requests related to the fact that requests were not timely produced under the statute and were not produced in the format requested. The trial court concluded that the actions were essentially prerogative writ matters and subject to the 45-day rule pursuant to R.4:69-6(a). The Court dismissed 26 of the 30 counts of the second lawsuit because they were not timely filed and dismissed the remaining four counts as moot since the City had provided the records sought, either during or before the litigation. The lower court denied plaintiff’s requests for attorneys’ fees in both lawsuits, rejecting the “catalyst theory” which requires plaintiff to establish that her lawsuit brought about the desired result and had a basis in law and found simply that Mason was not a prevailing party under the OPRA statute. The Appellate Division affirmed, explaining that OPRA matters should proceed expeditiously, but not necessarily in summary proceedings under R.4:67.
With regard to attorneys’ fees, the panel noted that it had recently decided Teeters v. Division of Youth & Family Services, 387 N.J. Super. 423 (App. Div. 2006), which had adopted the “catalyst theory,” but that decision came after the trial court’s decision in this case. However, in applying the “catalyst theory,” the Court distinguished the instant matter from Teeters on the basis that there was no settlement below and because the plaintiff failed to establish that the City would not have acted in the same way absent a lawsuit. Plaintiff petitioned the Supreme Court which granted certification.
In determining that OPRA Complaints were actions in lieu of prerogative writ, Chief Justice Rabner first noted that while the predecessor RTKL specifically stated that requestors could seek relief by way of actions in lieu of prerogative writs, OPRA does not refer specifically to such action and instead defers to the Court to establish whatever Rules it deems appropriate to effectuate OPRA’s purposes. However, since the legislature stated that OPRA actions are to proceed in a summary manner and further, since it deferred to the Supreme Court to adopt Court Rules “. . . necessary to effectuate the purposes of this act,” the Chief Justice found that the Statute, on its face, “. . . unambiguously left this court the task of fixing the proper statute of limitations for OPRA actions.” In establishing that policy, the Supreme Court first examined the variety of matters that are subject to the 45-day Statute of Limitations and prerogative writ Rule such as the previous RTKL, challenges to municipal and municipal agency actions, challenges to state agency actions and violations under the Open Public Meetings Act.
Furthermore, the Court acknowledged OPRA’s framework for quick action in a number of areas and found that both the public and governmental bodies are logically entitled to have any disputes brought and addressed in a similar rapid manner. The Court found that requestors should be required, therefore, to make a prompt decision on whether to file a lawsuit which would then provide certainty and repose to public bodies and determined that requestors choosing to file an OPRA or common-law right of access complaint (not a RTKL action, which is now repealed), must do so within 45 days. The Court noted that “. . . under OPRA, requestors have the additional option of seeking mediation before the GRC in an informal setting with no statute of limitations.” (Emphasis added). The Court stopped short of declaring that proceedings under OPRA are to be treated as actions in lieu of prerogative writs under R.4:69 in all respects.
Having determined the Statute of Limitations issue, the Court turned its attention to the award of attorneys’ fees, noting that both the trial court and Appellate Division declined to grant Plaintiff reimbursement for attorneys’ fees. Under OPRA, a requestor who “prevails” in a proceeding is entitled to reasonable attorneys’ fees. The parties in the litigation took diametrically opposed positions on the definition of “prevails.” Plaintiff argued that if the agency produces the records for whatever reason after the filing of the OPRA action, the requestor has prevailed and thus is entitled to legal fees. Defendant took the position that unless the plaintiff obtains a judgment or an enforceable consent decree, it is not a prevailing party. Chief Justice Rabner noted that New Jersey followed neither of those “polar” positions, but instead has long recognized the “catalyst theory,” which was reduced to a two-part test in Singer v. State, 95 N.J. 487, 495, Cert. Den’d, N.J. v. Singer, 469 U.S. 832, 105 S.Ct. 121, 83 L.Ed. 2d 64 (1984): “. . . (1) there must be a ‘factual causal nexus between plaintiff’s litigation and the relief ultimately achieved;’ in other words, plaintiff’s efforts must be a ‘necessary and important factor in obtaining relief’; and (2) ‘it must be shown that the relief ultimately secured by plaintiff had a basis in law.’” (Internal citations omitted.) Chief Justice Rabner further acknowledged that New Jersey’s Court decisions support a more indulgent view of claims for attorneys’ fees, citing Teeters v. Div. of Youth & Family Servs., 387 N.J. Super. 423, 431 (App. Div. 2006).
In applying the two-prong test to general situations arising under OPRA, the Supreme Court determined that the alleged prevailing party had to establish a factual causal nexus between their litigation and the result achieved, and that the relief they obtained had a basis in law. The Court then stated that if the public agency failed to provide any form of response within seven business days of the request (in accordance with the OPRA statute) “[w]e shift the traditional burden of proof to the responding agency . . . .” In applying the “catalyst theory,” the Court rejected the Plaintiff’s position that a rebuttable presumption should be created that the requestor prevailed whenever the Defendant discloses records after the Complaint is filed, emphasizing that OPRA “. . . is designed both to promote access to government records and to encourage requestors and agencies to work together toward that end by accommodating one another,” fearing that creating a rebuttable presumption “. . . might well upend the cooperative balance OPRA strives to attain.”
Having established the ground rules, the Court then turned to the specific facts in this case and concluded that the plaintiff was not entitled to attorneys’ fees in either lawsuit. In the first case, the City responded in eight days, rather than seven, and thus the burden would have shifted to the City. The Supreme Court found that the City carried their burden of proving that plaintiff’s lawsuit was not the catalyst for the relief since the records were not immediately available because (i) they were being corrected; (ii) the Business Administrator was attending to his critically ill mother; and (iii) the Business Administrator certified that the records would have been provided on the same day, absent any lawsuit.
With regard to the second lawsuit, the Court found that the City immediately supplied plaintiff with a paper copy of the requested Budget and advised that an electronic copy would be placed on the Internet at a future date, in accordance with a City Ordinance adopted one month before Plaintiff even requested the electronic copy of the Budget. Thus, there was no causal relationship between plaintiff’s Complaint and the Internet posting. Moreover, within two days of Plaintiff’s request, the parties made arrangements for Plaintiff to review all OPRA requests for 2002, 2003 and 2004, which plaintiff began reviewing before the second lawsuit was filed, and concluded 18 days after filing suit. Again, because the City acceded to plaintiff’s requests before the lawsuit was filed, plaintiff could not establish that the lawsuit established a factual causal nexus with the production of the documents.
This case provides answers to key questions that have arisen under OPRA since its enactment and emphasizes the intended cooperative nature of the requests made by the public with the demands imposed on the agency. Unfortunately, that cooperativeness seems to exist more on paper than in practice. Because of the demands made by the public in many cases, coupled with the demands already on the custodian of the records to accomplish other objectives in their primary role as the municipal clerk, an unfortunate tension results and rather than a cooperative effort existing, it typically becomes a confrontational one, particularly when the OPRA requests are multifaceted or are being made for ulterior motives. While under OPRA “motive” is not a factor in the statutory analysis, in the real world, it unfortunately influences and affects reactions which should otherwise be mechanical and objective. Because the law’s lofty goals must be implemented by human beings, it will always be difficult to ensure that the reaction to an OPRA request is devoid of emotionalism.
Undoubtedly, the two land use cases decided by the Supreme Court this term will have far-reaching and long-term effects on land use development procedures in the state by limiting the extent to which developers can be compelled to shoulder anything more than their proportionate share of off-tract improvements. Unfortunately, because the Municipal Land Use Law limits those off-tract improvements to specified areas, the secondary impacts of development that are necessarily borne by the municipality, such as increased fire service, police service, educational facilities, recreational facilities, and so forth, will have to be shouldered by the existing taxpayers. It may well be time for the Legislature to dust off impact fee legislation and begin to re-evaluate whether existing taxpayers should be obligated to absorb the costs of expanded recreational and educational facilities, as well as infrastructure for fire fighting and protective services which are necessitated by the increased development in a municipality.
A few years ago, impact fee legislation did pass one house in the Legislature but was stalled in the second, and died a natural death. It has not been revived since then, but given the state of the economy and the continuing increase of burdens on the taxpayers, it may well be time to transfer the entire burden created by new development on that new development. ¦
Buzak is the founding member of The Buzak Law Group in Montville and is the former president of the New Jersey Institute of Local Government Attorneys and serves on the Municipal Land Use Law Technical Drafting Committee.