SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
A-3196-01T3
BOROUGH OF HALEDON,
Plaintiff-Appellant,
v.
BOROUGH OF NORTH HALEDON, and
BOROUGH OF HAWTHORNE,
Defendants-Respondents,
and
K. HOVNANIAN NORTH CENTRAL
ACQUISITIONS, LLC, and SUMMIT
POINT DEVELOPERS, LLC,
Defendants-Intervenors-
Respondents.
and
NEW JERSEY BOARD OF PUBLIC UTILITIES
Intervenor-Defendant-
Respondent.
___________________________________
Argued February 10, 2003 - Decided March 17,
2003
Before Judges Petrella, Braithwaite and
Lintner.
On appeal from Superior Court of New Jersey,
Chancery Division, Passaic County, Docket
Number C-89-01.
Casey Anne Cordes argued the cause for
appellant (Piro, Zinna, Cifelli & Paris,
attorneys; Ms. Cordes and James M. Piro, on
the brief).
Edward J. Buzak argued the cause for
respondent Borough of North Haledon (Mr.
Buzak, attorney; Mr. Buzak, on the brief).
Michael J. Pasquale argued the cause for
respondent Borough of Hawthorne.
James J. Shrager argued the cause for
respondent K. Hovnanian North Central
Acquisitions, L.L.C., and Walter G. Reinhard
argued the cause on the Board of Public
Utilities issue only (Norris, McLaughlin &
Marcus, attorneys; Mr. Shrager and Mr.
Reinhard, of counsel; Mr. Reinhard, on the
brief).
Paul M. Schneider argued the cause for
intervenor-respondent Summit Pointe
Developers, L.L.C. (Giordano, Halleran &
Ciesla, attorneys; Mr. Schneider, on the
brief).
Alex Moreau, Deputy Attorney General, argued
the cause for intervenor-respondent New
Jersey Board of Public Utilities (David
Samson, Attorney General, attorney; Andrea M.
Silkowitz, Assistant Attorney General, of
counsel; Mr. Moreau, on the brief).
The opinion of the court was delivered by
PETRELLA, P.J.A.D.
Plaintiff Borough of Haledon appeals from summary judgment
orders entered in favor of the Boroughs of North Haledon and
Hawthorne, and certain developers, the intervenors K. Hovnanian
North Central Acquisitions, LLC (Hovnanian), and Summit Point
Developers, LLC (Summit), requesting enforcement of claimed
exclusive water supply rights with North Haledon for three
development projects and alleging breach of contract and estoppel
remedies. The lawsuit sought to prevent Hawthorne from supplying
water to three planned residential developments in North Haledon
pursuant to an Interlocal Services Agreement for Water Supply
entered into among Hawthorne and North Haledon, and three
developers.
While the summary judgment motion was pending, on September
13, 2001, plaintiff Haledon and Hovnanian executed a settlement
agreement that resolved the dispute concerning the water supply
to the three new residential developments in North Haledon.
Haledon appealed from the January 15, 2002 final judgment.
Thereafter, the Board of Public Utilities (BPU) successfully
moved to intervene in the pending appeal. The BPU asserts that
the franchise issue and any ancillary franchise issues should be
remanded to it for determination.
Summit is developing a fifty-six unit townhouse community in
North Haledon. Hovnanian is developing an adjoining parcel with
287 condominium units and fourteen single-family homes.See footnote 11 Anjo
Realty, LLC (Anjo) plans to build twenty-five single-family homes
on a nearby third site. Purportedly, those developments satisfy
North Haledon's affordable housing obligation as established by
the New Jersey Council on Affordable Housing (COAH), and
presumably without undue burden on the limited resources in the
overdeveloped northern area of the State.
North Haledon is not equipped to supply potable water to its
residents. Haledon currently supplies water to approximately
1,180 housing units in North Haledon, less than one-half of the
town's 2,675 housing units. There are eight housing units in
North Haledon already connected to the Hawthorne water system.
The remaining North Haledon housing units receive water from
private wells. Haledon has never supplied water to the new
developments in North Haledon, and previously the new
developments had no potable water supply or connection.
Pursuant to a resolution adopted by North Haledon in 1907,
Haledon has provided water services for parts of North Haledon
where its lines run. The 1907 resolution provided for the laying
of pipes in specified areas of North Haledon. As a result of
this agreement Haledon became subject to the jurisdiction of
reviewing agencies such as the BPU and the New Jersey Department
of Environmental Protection (DEP).
Hovnanian claims that of those housing units in North
Haledon that obtain water service from Haledon,See footnote 22 none receives
adequate water that satisfies the BPU's regulations and that the
quality of Haledon's water has fallen short of acceptable
standards. The BPU and the DEP ordered Haledon to install a
chloramination treatment system to correct the presence of
trihalomethanes (a carcinogen), install additional water storage
tanks, and rehabilitate or replace many components of its water
distribution system.
Ten years after the 1907 agreement, the then Department of
Conservation and DevelopmentSee footnote 33 approved Haledon's request to
extend its water mains further into North Haledon and to build a
reservoir and filter plant. On July 6, 1917, North Haledon
adopted a resolution supporting Haledon's application to the
Board of Conservation and Development based upon public
necessity. In addition, the document provided that "all rights
and privileges conveyed by this approval are given to the Boro of
Haledon alone..." except that if North Haledon should choose to
maintain its own plant, then it had the right to provide a
distribution system of its own and purchase the existing system
from Haledon.
In the Spring of 2001, representatives of North Haledon and
Hawthorne negotiated an agreement for Hawthorne's supply of water
to the new residential developments. On May 29, 2001, the
Borough Council of Hawthorne voted to approve an Interlocal
Service Agreement with North Haledon. The following month, the
Borough Council of North Haledon voted to approve the Interlocal
Services Agreement for Hawthorne to supply water to approximately
382 homes in the three planned developments. The agreement set
forth the parameters under which Hawthorne and North Haledon
would construct certain improvements to and expand the existing
Hawthorne water system into North Haledon to serve Hovnanian's
development, other existing homes adjacent to the new mains
within a limited area of North Haledon and to improve service in
nearby areas of Hawthorne.
The applicable excerpts set forth Hawthorne and North
Haledon's agreement for the water supply to the new residential
developments as well as Hovnanian's obligation to indemnify the
municipalities against Haledon's potential claim and the right to
control the defense against that claim state:
4. WATER SUPPLY BY HAWTHORNE TO NORTH
HALEDON.
A. Upon the completion of the System
Improvements and approval thereof by
Hawthorne prior to the issuance of the first
Certificate of Occupancy, Hawthorne agrees to
provide public potable water supply service
to all users within North Haledon, as set
forth in Section 6 below.
B. For the purposes of this Agreement North
Haledon grants to Hawthorne the right and
privilege to construct or have constructed on
its behalf by the Developers herein, the
System Improvements in the public roads and
ways of North Haledon and the right,
privilege, and obligation to maintain, repair
and reconstruct the same. In addition, North
Haledon grants to Hawthorne the right and
privilege to service customers in North
Haledon, including those in the Proposed
Residential Communities and the residential
units along the route of the water mains to
be constructed as part of the System
Improvements and other additional customers
as specifically approved by North Haledon.
5. RATES AND SERVICE BY HAWTHORNE
A. Hawthorne agrees to provide water supply
service within North Haledon identical to the
service that it provides within Hawthorne.
Except as otherwise provided herein, all
rates, rules, regulations, conditions and
terms of service which apply in Hawthorne
shall also apply within North Haledon.
16. INDEMNIFICATION
A(iii) In the specific event of a claim by
the Borough of Haledon concerning the rights
of North Haledon and/or Hawthorne to enter
into this Agreement or fulfill its
obligations under this Agreement, for which
North Haledon and/or Hawthorne seek
indemnification as set forth in Subsection
A(i) above ... Hovnanian shall be lead
counsel and direct the defense of any such
claims...
Haledon objected to the Interlocal Services Agreement and
asserted that it had expended monies to build and upgrade the
water system infrastructure in order to meet its contractual
obligation to supply water to North Haledon housing units and
pending projects were under construction in North Haledon to
improve service. Hovnanian maintains that these improvements
have been dedicated to the area of town where Haledon already
provides service, and are for the sole benefit of existing
customers, not the new developments contemplated by the
developers. Hovnanian, Hawthorne and North Haledon proposed to
construct (and have apparently already constructed) a new water
main from Hawthorne's Fairview Avenue water tank, along
Manchester Avenue, through the Summit Pointe site into the
Hovnanian Property.
Under the Interlocal Services Agreement, Hovnanian was
authorized to act as lead counsel and to direct the defense,
adjudicate or settle the matter, so long as the settlement in no
way affected the other defendants' rights or obligations.
Accordingly, Hovnanian and Haledon entered into a settlement
agreement on September 13, 2001, resolving the issues between
them. The settlement provided that Haledon would withdraw all
objections to the Interlocal Services Agreement as it pertained
to the three residential communities at issue in the litigation,
and would not contest any aspect of the project, thereby enabling
Hovnanian and the other two developers to proceed with the
construction. In consideration, Hovnanian agreed to pay $500,000
to Haledon if various conditions set forth in the agreement were
satisfied, including prompt judicial approval. Both North
Haledon and Hawthorne objected to the settlement, claiming that
Hovnanian did not have the right to settle because they would be
adversely affected.
After argument on the motions, the judge concluded that the
settlement amount offered by Hovnanian was an attempt to
circumvent proper adjudication of the issues between the
municipalities and was "arbitrary, capricious, and subversive of
law." The judge set aside the settlement agreement and ordered
the return of any monies paid to Haledon by Hovnanian.
In ruling on the summary judgment motions, the judge also
held that there was no language in any of the resolutions that
established an exclusive franchise agreement between Haledon and
North Haledon. The judge said that all Haledon demonstrated in
support of the exclusivity claim was the fact that it maintained
an ongoing relationship with North Haledon to supply water to a
limited area of the Borough. The judge granted North Haledon's
motion to amend its counterclaim to add a thirteenth count and
granted summary judgment on the issue of exclusivity. The judge
dismissed the complaint and the counterclaims in their entirety.
The judge also ruled that the Interlocal Services Agreement was
valid, and that construction on the new developments could
immediately commence, with the water to be supplied by Hawthorne.
Thus, among other things, the final judgment permanently
restrained Haledon from interfering with North Haledon's right to
enter into a water supply agreement with persons or entities
other than Haledon in areas not already served by Haledon; ruled
that Haledon does not have an exclusive franchise or right to
furnish water to North Haledon; and validated the Interlocal
Services Agreement dated May 29, 2001, by and among North
Haledon, Hawthorne, Hovnanian, Summit, and Anjo.
The BPU is responsible for supervising and regulating public utilities in the State and has the power to set "just and reasonable standards, classifications, regulations, practices, measurements or service to be furnished, imposed, observed, and followed" by a public utility. N.J.S.A. 48:2-13; N.J.S.A. 48:2- 25(a). The determination of whether an administrative agency has jurisdiction over a particular matter "is one of statutory construction, that is, determining the legislative intent." Hinfey v. Matawan Reg'l Bd. of Educ., 77 N.J. 514, 529 (1978).
The BPU relies upon N.J.S.A. 48:2-13(a) for its general jurisdiction over this matter. It states:
The board shall have general supervision and
regulation of and jurisdiction and control
over public utilities as defined in this
section and their property, property rights,
equipment, facilities and franchises so far
as may be necessary for the purpose of
carrying out the provisions of this Title.
It is conceded that Haledon is subject to the BPU's jurisdiction
under N.J.S.A. 40A:31-23(d), which provides:
(1) Subject to the terms of any agreement
entered into by participating local units or
between a supplying and receiving local unit
or units and the provisions of this act, a
local unit or local units owning and
operating water supply facilities in
accordance with the provisions of N.J.S.
40A:31-4, which supply water to more than
1,000 billed customers within another local
unit, shall be subject to the jurisdiction,
regulation and control of the Board of Public
Utilities in accordance with the provisions
of Title 48 of the Revised Statutes. The
provisions of this subsection shall not apply
whenever water is supplied to customers in
another local unit at bulk rates...
Because Haledon services over 1,000 customers within another
local unit, it is not disputed that they are subject to the BPU's
jurisdiction. The BPU maintains that its jurisdiction over
Haledon is extended by N.J.S.A. 48:2-13(a) to Haledon's "property
rights, equipment, facilities, and franchises" located in North
Haledon.
The sweeping grant of power to the BPU is "intended to
delegate the widest range of regulatory power over utilities to
the [BPU]." Township of Deptford v. Woodbury Terrace Sewerage
Corp.,
54 N.J. 418, 424 (1969). Furthermore, the BPU's authority
over utilities extends beyond powers expressly granted by statute
to include incidental powers that the agency needs to fulfill its
statutory mandate. A.A. Mastrangelo, Inc. v. Comm'r of Dept. of
Envtl. Prot.,
90 N.J. 666, 683-684 (1982); New Jersey Guild of
Hearing Aid Dispensers v. Long,
75 N.J. 544, 562 (1978).
More specifically, the BPU is empowered to direct utilities
to "furnish safe, adequate and proper service" and to that end it
may fix just and reasonable standards and practices. N.J.S.A.
48:2-23; N.J.S.A. 48:2-25; In re Pub. Serv. Elec. and Gas Co.,
35 N.J. 358, 371 (1961). For example, the BPU may ensure that a
public utility charges "just and reasonable rates." N.J.S.A.
48:2-21. N.J.S.A. 48:2-14 expressly provides that in granting
approval for franchises, the BPU may impose conditions as to its
construction and maintenance as the public convenience may
reasonably require.
North Haledon argues that when there is a water supply
consent resolution between two municipalities, N.J.S.A. 40A:31-
23(d) gives the BPU control over only the supplying municipality,
which in this case would be Haledon and Hawthorne. In allowing
the BPU to make a determination on the scope of Haledon's water
supply franchise, North Haledon contends, the BPU affects North
Haledon's ability to sign water supply agreements which involve
third parties. Relying on the introductory clause of N.J.S.A.
40A:31-23(d), which states that the BPU's regulation of a
supplying municipality such as Haledon is "subject to the terms
of any agreement entered into by participating local units or
between a supplying and receiving local unit..." North Haledon
and Summit argue that any regulatory control which the BPU has
over Haledon is preempted by the 1907 and the 1917 consent
resolution agreements between Haledon and North Haledon. Because
these resolutions must be analyzed in determining the nature of
Haledon's water supply rights, North Haledon concludes that the
Superior Court appropriately examined these resolutions.
Relying on In re Complaint By Eugene Rotella,
92 N.J.A.R.2d 48 (BRC November 19, 1991), and I/M/O Complaint of Morris Tp. v.
The Town of Morristown,
49 N.J. 194 (1967), the BPU argues that
N.J.S.A. 40A:31-23(d)See footnote 44 has been construed to give it jurisdiction
to oversee municipal water companies servicing more than 1,000
customers outside their municipal borders.
Rotella, supra (
92 N.J.A.R.2d 48), involved the owner of
commercial properties in North Haledon, who challenged the
Haledon Water Department's billing policy that property owners,
and not their tenants, be responsible for payment of the water
bills. The Board of Regulatory CommissionersSee footnote 55 agreed with the
owner and ordered the Haledon Water Department to change its
billing policy. The Board found that it had jurisdiction over
Haledon with respect to the discharge of a statutory obligation
to promote water conservation. The Board noted that, "N.J.S.A.
40A:31-23(d) states that the Water Department is under the
jurisdiction of the Board in regard to the adjoining
municipalities. As such, the State has preempted the area of
water service." Id. (citing N.J.S.A. 40A:31-23(d); Little Falls
Tp. v. Bardin,
173 N.J. Super. 397 (App. Div. 1979); and Petition
of Hackensack Water Co.,
196 N.J. Super. 162, 169-170 (App. Div.
1984)).
In Morris, supra (
49 N.J. 194) the Court considered whether
the BPU had regulatory power over a municipally owned and
operated waterworks and distribution system which furnished water
in adjoining municipalities. Id. at 196. It was uncontested
that Morristown had an exclusive franchise to supply water to the
residents of adjoining municipalities. Id. at 197. The Court
limited its holding to the specific issue in the case, and found
that "when water is supplied to the inhabitants of an adjoining
municipality, the BPU has jurisdiction over the terms and
conditions under which it is supplied, including the rates
charged to such extra-territorial consumers." Id. at 209-210.
These cases do not support the BPU's argument that it had
primary jurisdiction to determine the franchise issue. The BPU
had jurisdiction in Rotella because that case dealt with how the
Haledon Water Department should bill an owner of commercial
properties in North Haledon. Similarly, Morris granted the BPU
jurisdiction over the terms and conditions of an existing
franchise. The BPU's jurisdiction over billing procedures and
the regulating of conditions are statutorily granted. See
N.J.S.A. 48:2-21; N.J.S.A. 48:2-13. These cases consider the
BPU's jurisdiction to supervise and regulate public utilities in
the State and its power to set "just and reasonable standards,
classifications, regulations, practices, measurements or service
to be furnished, imposed, observed, and followed." N.J.S.A.
48:2-25(a).
Under the statutory scheme of Title 48, the BPU is charged
with supervisory functions. However, the present case does not
involve a dispute relating to the quality of Haledon's service or
the rates that it charges. Rather, the issue is the scope of
Haledon's water supply rights in North Haledon, which the BPU
does not have jurisdiction to decide.
Primary jurisdiction is defined as the circumstance in which
a "court declines original jurisdiction and refers to the
appropriate body those issues which, under a regulatory scheme,
have been placed within the special competence of an
administrative body." Muise v. GPU, Inc.,
332 N.J. Super. 140,
158 (App. Div. 2000) (quoting Daaleman v. Elizabethtown Gas Co.,
77 N.J. 267, 269 n. 1, (1978)). See Hackensack v. Winner,
82 N.J. 1, 30 (1980). In primary jurisdiction, "the case is
properly before the court, but agency expertise is required to
resolve the questions presented"; by contrast, when a court
relies on exhaustion, it "is saying that the case ought to have
been brought before the administrative agency in the first
place." Id. at 83-84. See Village of Ridgefield Park v. New York,
S & W Ry. Corp.,
318 N.J. Super. 385, 405-407 (App. Div. 1999),
modified,
163 N.J. 446 (2000). One purpose of primary
jurisdiction is to allow an agency to apply its expertise to
questions which require interpretation of its regulations.
Muise, supra (332 N.J. Super. at 126) (citing IPCO Safety Corp.
v. WorldCom, Inc.,
944 F.Supp. 352, 357 (D.N.J. 1996) and
Campione v. Adamar of N.J.,
155 N.J. 245, 264 (1998)). The other
main purpose is to preserve uniformity in the interpretation and
application of an agency's regulations. Id. at 160.
In Muise, supra (
332 N.J. Super. 140), we held that a court
should defer to an agency's primary jurisdiction only if "to deny
the agency's power to resolve the issues in question" would be
inconsistent with the "statutory scheme" which vested the agency
"with the authority to regulate [the] industry or activity" it
oversees. Id. at 160. We outlined a four prong test:
(1) Whether the matter at issue is within
the conventional experience of judges;
(2) Whether the matter is peculiarly within
the agency's discretion, or requires agency
expertise;
(3) Whether inconsistent rulings might pose
the danger of disrupting the expertise; and
(4) Whether prior application has been made
to the agency.
Ibid. (citing Boldt, supra (320 N.J. Super. at 85)). However,
the primary jurisdiction doctrine is not invoked when the claim
is outside the agency's jurisdiction, or when the remedy for such
a claim is outside the agency's power. Id. at 160. Muise noted
that:
[w]hether a claim presents some issues that
are within an agency's special expertise and
others which are not, proper course is for
the court to refer the former to the agency,
and then to apply the agency's findings or
conclusions to its determination of the
remaining issues. [Id. at 161]
The BPU relies upon Boss v. Rockland Electric Co.,
95 N.J. 33, 40 (1983), which concerned a longstanding utility easement
where a utility company sought to cut down certain trees on
residential property, rather than trim and prune them, as it had
done in the past. Id. at 36-37. To fully understand the terms
of the easement originally granted to the utility, it was
necessary to interpret the provision in the easement that granted
the utility the right to "cut and keep cut" the trees. Id. at
38. The utility argued that this meant to cut down entirely,
while the plaintiffs maintained the language meant to trim and
prune the trees. Id. at 38-39. The Chancery Judge made a site
inspection and conducted a plenary trial in an attempt to
ascertain the parties' intent based upon the language of the
easement and its conflicting provisions.
The Court acknowledged that "[w]hen the legal rights of
parties are clear, it is unjust and unfair to burden them with an
administrative proceeding to vindicate their rights." Id. at 40.
However, where evidence is to be taken, and findings of fact to
be made, the Court considered that the administrative body
statutorily charged with that function should perform that
function. Id. at 40-41. The Court remanded for the trial court
to refer the factual questions "as to what is reasonably
necessary for the proper maintenance of the utility system." Id.
at 41-42. These findings and recommendations were then to be
submitted to the trial court to apply the BPU's findings against
the legal issues to be resolved. Id. at 42. The Court held:
that where the resolution of a contested
legal issue properly brought before a court
necessarily turns on factual issues within
the special province of an administrative
agency, the court should refer the factual
issues to that agency. The trial court should
accept the factual determinations of the
agency and lay them against the legal issues
to be resolved and enter its final judgment
resolving the mixed questions of law and fact
based upon the agency fact finding.
Ibid.
This case is distinguishable because Boss required
administrative expertise regarding conflicting terms of the
easement and the grant. Here, unlike Boss, there are no
conflicting provisions in the language of the 1907 and 1917
consent resolutions. There is a clear legal issue. No
regulatory issue is presented here which involves the BPU's
statutory charge to ensure that a utility provides safe,
adequate, proper and environmentally sound service or which
requires agency expertise. The four prong test from Boldt, supra
(320 N.J. Super. at 85), has not been satisfied. This case
raises only questions about whether the 1907 and 1917 resolutions
granted Haledon an exclusive right to provide water in North
Haledon. The interpretation of these resolutions was well within
the province of the Chancery Judge here and does not require
agency expertise. Although this question was raised before the
BPU in February 2001, it was neither argued before the BPU, nor
addressed in the BPU's decision. There has been no ruling by the
BPU concerning this issue, and thus, there is no danger of
inconsistent rulings. Therefore, the issue was properly before
the court.
The settlement agreement provides that in return for a payment of $500,000 to Haledon by Hovnanian, Haledon agrees to withdraw its assertion of a right of exclusivity. In setting aside the settlement agreement, the judge determined that the exaction of a $500,000 payment in exchange for the dismissal of a lawsuit was a prohibited quid pro quo.
There is a strong public policy favoring settlement of litigation. Nolan v. Lee Ho, 120 N.J. 465, 472 (1990) (citing Jannarone v. W.T. Co., 65 N.J. Super. 472, 476 (App. Div.), certif. denied, 35 N.J. 61 (1961)). Absent compelling circumstances, settlement agreements are enforced by our courts. Ibid. In Pascarella v. Bruck, 190 N.J. Super. 118, 124 (App. Div.), certif. denied, 94 N.J. 600 (1983)), we noted that "an agreement to settle a lawsuit is a contract which, like all contracts, may be freely entered into and which a court, absent a demonstration of fraud or other compelling circumstances, should honor and enforce as it does other contracts." Id. at 124-125. Before vacating a settlement agreement, our courts require "clear and convincing proof" that the agreement should be vacated. DeCaro v. DeCaro, 13 N.J. 36, 97 (1953).
"An agreement is against public policy if it is injurious to the interest of the public, contravenes some established interest of society, violates some public statute, is against good morals, tends to interfere with the public welfare or safety, or, as it is sometimes put, if it is at war with the interests of society and is in conflict with public morals." Odatalla v. Odatalla, 355 N.J. Super. 305, 314 (Ch. Div. 2002) (citing Garlinger v. Garlinger, 129 N.J. Super. 37, 40 (Ch. Div. 1974), modified, 137 N.J. Super. 56 (App. Div. 1975).
The motion judge relied upon Nunziato v. Planning Bd. of the Borough of Edgewater, 225 N.J. Super. 124 (App. Div. 1988) and Township of Marlboro v. Planning Bd. of the Township of Holmdel, 279 N.J. Super. 638 (App. Div.), certif. denied, 141 N.J. 98 (1995), in determining that the exaction of a $500,000 payment in exchange for the dismissal of a lawsuit was a prohibited quid pro quo.
In Nunziato, supra ( 225 N.J. Super. 124), we overturned a site plan and variance grant made by the Planning Board of Edgewater Borough on grounds that the Board, in granting the approvals, had illegally considered a cash payment offered by the developer-applicant to the Borough's affordable housing fund. Id. at 130. The Board's actions were arbitrary and capricious because they involved negotiations for exactions which were "unsupported by statute, ordinance or regulation." Ibid. If the agreement to pay money to the borough for its affordable housing fund was entered into by the applicant to induce the Planning BPU to grant approval, we reasoned, such action could not be other than arbitrary and capricious. Id. at 133. We ultimately concluded that such action is grossly inimical to the goals of sound land use regulation and had to be set aside. Ibid.
Likewise, in Marlboro, supra ( 279 N.J. Super. 638), we considered the consequences of illegal exactions obtained by a municipal land use planning agency from a developer during the application approval process. Id. at 640. However, although the contributions were illegal, because the parties acted in good faith, and the contributions bore a reasonable relationship to the municipal burdens created by the development, we concluded that it was not arbitrary. Id. at 646. We distinguished Nunziato on the basis that the illegal exaction constituted a "...blatant quid pro quo for the approval ... in which ... the amount thereof is entirely arbitrary." Id. at 643.
Haledon argues that these cases are inapplicable to the instant litigation because they are land use approval cases and the judge erred in relying upon these cases for the "quid pro quo" standard to support her decision to vacate the settlement agreement.
The motion judge considered that she was asked to determine whether the settlement constituted an exaction or a quid pro quo. Relying on Marlboro and Nunziato she set aside the settlement, and stated:
[t]his attempt by Hovnanian and the Borough of Haledon to circumvent proper adjudication or full resolution of the issues between the two municipalities is clearly arbitrary, capricious, and subversive of law. The payment does not reflect compensation for any legitimate concern that the Borough of Haledon may have because the monies are not directed to address any of the needs of the water utility at issue. There is no nexus between the payment of the settlement funds and the resolution of any of the issues here.
Here, under the settlement agreement, in exchange for a payment of $500,000, Haledon temporarily, and in a limited area, relinquished its alleged right of exclusivity under the Interlocal Services Agreement, so Hovnanian and the other developers could proceed to complete the developments. The developer defendants intervened because the outcome of the case would affect the developments at issue. Hovnanian also filed a counterclaim against Haledon for tortious interference with contractual relations, violating the New Jersey Constitution and frivolous litigation.
We reverse the order vacating the settlement of $500,000. There is no basis to vacate such a settlement. The cases relied upon by the motion judge do not support such a conclusion. This is not a case where a developer is before a planning board for an approval and the board seeks to extract certain off-tract improvements or money for off-tract improvements as a quid pro quo for the approval. Here, there was a claim by Haledon that it had an exclusive right to provide water to North Haledon. Haledon's complaint sought compensatory damages. This clearly meant that Haledon claimed it would lose money if it did not continue to provide all the water services to the residents of North Haledon. The claims included one for money damages. The settlement, by payment of $500,000 by Hovnanian in settlement of the disputed issue as between them was amenable to compromise and settlement. Moreover, that settlement would not preclude the court from resolving the issue of exclusivity.
Haledon's primary contention is that the 1907 resolution grants it an exclusive right to provide water to the residents of North Haledon. "[T]he rules of construction which apply to statutes and municipal ordinances apply equally to municipal resolutions." Levine v. Mayor of the City of Passaic, 233 N.J. Super. 559, 564 (Law Div. 1988) (quoting McGonnell v. Comm'rs of Orange, 98 N.J.L. 642 (E & A 1923)). Those principles require that an resolution should be interpreted to "'effectuate the legislative intent in light of the language used and the objects sought to be achieved.'" Merin v. Maglaki, 126 N.J. 430, 435 (1992)(citation omitted). The first step of statutory construction requires an examination of the language of the resolution. Bergen Comm'l Bank v. Sisler, 157 N.J. 188, 202 (1999). The meaning derived from that language controls if it is clear and unambiguous. Ibid. If the text, however, is susceptible to different interpretations, the court considers extrinsic factors, such as its purpose, legislative history, and context to ascertain the legislature's intent. Wingate v. Estate of Ryan, 149 N.J. 227, 236 (1997); Lesniak v. Budzash, 133 N.J. 1, 8 (1993). Thus, the resolutions are to be interpreted and read according to their plain meaning without addition or embellishment. Levine, supra (233 N.J. Super. at 563-564).
The 1907 resolution states that North Haledon granted to Haledon (then known as the Township of Manchester):
...the privilege and the right of laying mains, pipes, and conduits, with necessary attachments, through that part of the High Mountain Road or Belmont Avenue in the Borough of North Haledon, beginning at the Dolberry Farm on said road, South to the dividing line between the Township of Manchester and the Borough of North Haledon, and also the right of laying pipes, mains and conduits with necessary attachments, in, under, and across Jackson Street in said Borough, be granted to the Township of Manchester ... under the following conditions ...
Six conditions followed this paragraph.
This agreement does not mention an exclusive right to provide water to the entire Borough of North Haledon. Instead, Haledon was granted permission to place water lines beneath specifically named streets. In addition, the language of this agreement shows that North Haledon's consent was contingent upon Haledon satisfying the six specified conditions.
The 1917 consent resolution is also geographically limited and does not mention an exclusive franchise. The 1917 resolution allowed Haledon to lay water mains in another portion of North Haledon, specifically:
... in the High Mountain Road, the Old High Mountain Road, and Squaw Brook Road, to connect with its water main now laid within said Borough of Haledon, upon obtaining consent of the Board of Chosen Freeholders of the County of Passaic for that purpose, said roads being county Roads.
Again, Haledon was granted permission by this resolution to place water lines beneath specific named streets, not an exclusive right within the entire Borough.
In denying Haledon's claim of exclusivity, the judge found:
With the exception of the use of the word franchise, at one point in the various enabling ordinances between Haledon and North Haledon and the Public Utilities Commission of the State of New Jersey, the Court sees no language in any of the agreements that establishes an exclusive relationship between Haledon and North Haledon. This Court has reviewed the agreement that all the parties are relying upon and finds nothing which gives that kind of control to Haledon with regard to the Borough of North Haledon.
In fact, there are provisions in that agreement for what will happen if North Haledon decides to take over its own water supply, indicating a contemplation by the defendants that the relationship of the parties has the probability -- not just the possibility, but the probability for change.
In granting summary judgment on Count XIII of North Haledon's counterclaim, the judge stated:
Haledon, as the party with the burden of proof, [h]as failed to provide this Court with substantial facts to establish their claim or even raise an issue for trial. All they have told this Court is that there has been an ongoing relationship pursuant to this 1907 agreement, and that they have always provided North Haledon's water. It has always been that way, and that is the way it should continue.
In all same breath, however, they say that they will allow North Haledon to get water from somebody else if they can control the circumstances. Haledon's position is inconsistent with the argument of exclusivity.
We are satisfied that the motion judge properly granted summary judgment to North Haledon on Count XIII of its counterclaim because there is no provision in either resolution between the boroughs that provides for the exclusive supply of water by Haledon to North Haledon, and such a provision cannot be inferred. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). In view of our determination that the motion judge properly granted summary judgment on this ground, we need not address respondents' additional arguments supporting the contention that Haledon does not have an exclusive franchise.
We reverse the vacation of the settlement agreement. In all other respects, we affirm the balance of the order granting summary judgment.
Footnote: 1 1 We were informed at oral argument that all of these units have been constructed and connected to Hawthorne's water supply lines. A number of units are under contract of sale to residential purchasers. All that is required is that water supply valves be turned on. An earlier appeal entitled In the Matter of Petition of Haledon for Permission to Install a Water Main in the Borough of North Haledon, docket number A-3791-00, was dismissed as moot on March 19, 2002, because a disputed water pipe had already been installed. Footnote: 2 2 We were also advised at oral argument that Haledon purchases the water it uses, and which it seeks to supply to the new developments in North Haledon, from the Passaic Valley Water Supply District. Hence, Haledon acts as a middleman or broker of water. Footnote: 3 3 Now the DEP. See Transfer of Functions, Powers and Duties, N.J.S.A. 13:1D. Footnote: 4 4 As amended by L. 2002, c. 47. At oral argument the BPU argued that the recent amendment to this statute gave it jurisdiction in other cases, including whenever water is delivered outside municipal boundaries. We do not read this statute as so providing, and reject the BPU's argument. Footnote: 5 5 Now the Board of Public Utilities. See Transfer of Functions, Powers and Duties, N.J.S.A. 13:1B.