Opinion
DOCKET NO. A-0617-15T4
02-02-2017
TIMBER RIDGE, LLC, LYNNEBROOK GARDENS, LLC, EAST COAST PINES AT ARBORWOOD, LLC, and LINDENWOLD PH, LP, Plaintiffs-Appellants, v. BOROUGH OF LINDENWOLD, BOROUGH OF LINDENWOLD SOLID WASTE MANAGEMENT UTILITY, and MAYOR AND COUNCIL OF THE BOROUGH OF LINDENWOLD, Defendants-Respondents.
Gary D. Gordon argued the cause for appellants (Feinstein, Raiss, Kelin & Booker, L.L.C., attorneys; Mr. Gordon, on the briefs). David A. Capozzi argued the cause for respondents.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R.1:36-3. Before Judges Sabatino, Nugent and Haas. On appeal from Superior Court of New Jersey, Chancery Division, General Equity Part, Camden County, Docket No. C-84-14. Gary D. Gordon argued the cause for appellants (Feinstein, Raiss, Kelin & Booker, L.L.C., attorneys; Mr. Gordon, on the briefs). David A. Capozzi argued the cause for respondents. PER CURIAM
Appellants, the owners of four multifamily apartment complexes in the Borough of Lindenwold ("Borough"), appeal from the Chancery Division's final order dated September 11, 2015. The court rejected appellants' argument that they are not obligated under the applicable statutes to pay a per-unit fee to the Borough for solid waste collection services they declined to use. For the reasons that follow, we conclude that appellants had no duty to pay the fees in the circumstances presented, and therefore reverse.
I.
The pertinent facts and procedural history are substantially undisputed. In August 2010, plaintiff Timber Ridge, LLC ("Timber Ridge"), as well as the owners of seven other apartment complexes in Lindenwold who are not parties to the present litigation, filed separate complaints in lieu of prerogative writs against the Borough in the Law Division. Those prior lawsuits alleged that the Borough was violating N.J.S.A. 40:66-1.3 by failing to provide solid waste collection services to the owners of multifamily dwellings. Subsection (a) of that provision, which the Legislature enacted in 2001 to specifically address the collection of solid waste from multifamily dwellings, provides as follows:
The trial court docket numbers were CAM-L-3961-10, CAM-L-3962-10, CAM-L-3796-10, CAM-L-4215-10, CAM-L-4214-10, CAM-L-3797-10, CAM-L-4216-10, and CAM-L-3276-10.
Except as otherwise provided in subsection b. of this section, when solid waste collection services are provided to the residents of a municipality, the governing body of that municipality shall reimburse a multifamily dwelling for the actual cost to the multifamily dwelling of providing that service, but not more than the amount that the municipality would have expended on the solid waste collection services if provided by the municipality directly to the multifamily dwelling, calculated as if the dwelling units were located along public roads and streets and the service provided curbside. Alternatively, when solid waste collection services are provided to the residents of a municipality, the governing body of the municipality shall provide the solid waste collection services in the same manner as provided to the residents of the municipality who live along public roads and streets.Timber Ridge and the other Law Division plaintiffs asserted that the Borough was required by N.J.S.A. 40:66-1.3 to furnish solid waste collection services to their multifamily properties equivalent to such services provided to other residents. Alternatively, the Law Division plaintiffs sought to compel the Borough to reimburse them for their reasonable costs of procuring such services privately.
[N. J.S.A. 40:66-1.3(a) (emphasis added)].
Subsection (b), which is codified at N.J.S.A. 40:66-1.3(b), concerns street access issues that are not pertinent here.
Eventually, Timber Ridge and the other plaintiffs in the Law Division cases settled with the Borough for a reimbursement sum for past services. As part of that settlement, the Borough agreed to provide multifamily property owners in the municipality with solid waste collection services in the future.
In the meantime, on December 28, 2011, the Borough adopted Ordinance No. 1295, creating a Solid Waste Management Utility ("the Solid Waste Utility") for the municipality. The ordinance established a new program for solid waste collection services within the Borough to be administered by the Solid Waste Utility. The associated costs of the program were to be recovered through "uniform fees fixed from time to time" by the Borough Council and "collected from the property owners to whom the service is available." The annual service charge, initially set at $120 per residential unit, was computed by "dividing the approved annual budget of the Solid Waste Utility by the number of residential units to which the service will be made available[.]" The ordinance directed those annual fees to be paid by multifamily property owners in two equal installments.
At the outset of the new program, the Borough only was able to provide solid waste collection services to owners of single-family residences, and was not initially able to provide the services to multifamily residences. Consequently, when the annual collection fees were first implemented in July 2012, the Borough offset those fees for multifamily properties by reimbursing their costs of obtaining private collection services, capped at the Borough's $120 per-unit amount.
This offset arrangement continued until mid-2014, when the Borough completed the public bidding process and entered into a contract with a private solid waste hauler to provide the service to multifamily residences. At the time, the Borough believed that it would save costs by utilizing the single private contractor instead of reimbursing multifamily property owners in full or in part for their actual costs of obtaining the service.
On April 17, 2014, the Borough's mayor wrote a letter to multifamily residential property owners, informing them the Borough would begin to provide their properties with solid waste collection services. The letter informed these owners that it would offer twice-per-week collection (as opposed to the once-per-week collection offered less frequently to single-family homes) and would begin such collections on June 10, 2014.
The mayor's letter also notified property owners that the Borough "will no longer be providing a reimbursement to your property for private solid waste collection[.]" In the letter's last paragraph, the mayor stated: "In the event your property wishes not to avail itself of the municipal solid waste collection services . . . please be advised that the Borough will no longer provide reimbursement to your property for solid waste collection." The letter did not specifically mention the $120 fee, or whether or how a multifamily property owner could opt out of the service.
After receiving the mayor's letter, several multifamily property owners, including plaintiffs Timber Ridge, Lynnebrook Gardens, LLC ("Lynnebrook"), East Coast Pines at Arborwood, LLC ("East Coast Pines"), and Lindenwold PH, LP ("Lindenwold PH"), determined that it would be cheaper for them to continue with their private contracts for solid waste collection than to remit the Borough's $120 per-unit annual fee. Through their counsel, the four owners asked the Borough to relieve them of the annual fee, without success.
Consequently, in October 2014, plaintiffs filed the present action in the Chancery Division. The action sought a declaratory judgment allowing them to opt out of the municipal collection service, and also to enjoin the Borough from enforcing the ordinance's fee impositions against them. The named defendants included the Borough itself, the Solid Waste Utility, the Mayor, and the Borough Council (collectively, "the Borough defendants"). The Borough defendants opposed the Chancery lawsuit, contending that plaintiffs and other multifamily complex owners must pay the annual $120 per-unit fee, regardless of whether they decline to use the service and arrange their own private collection.
During the pendency of this Chancery litigation, the four plaintiffs took different individual approaches regarding their ongoing collection needs. Lynnebrook and Lindenwold PH decided to use the Borough's service and paid the annual fees, while continuing to challenge the system in the lawsuit. Timber Ridge used its own private collection company due to a prior contractual obligation, but also continued to pay the Borough the unreimbursed fee. East Coast Pines also used its own private collector, but stopped paying the Borough's annual fee because it had not made use of the municipal service. As time went by, East Coast Pines accumulated what the Borough tabulated as $75,222.96 in unpaid fees.
The parties initially argued their positions before the Chancery Division judge in May 2015. Thereafter, in a June 3, 2015 letter opinion, the judge ruled that the Borough's ordinance was valid, but that plaintiffs had the right to opt out of the municipal service and the $120 per-unit annual fee if they wished to instead contract for the service themselves. The judge rejected, however, plaintiffs' request for reimbursement of sums they had already paid to the Borough.
The Borough defendants moved for reconsideration. Plaintiffs cross-moved for clarification as to whether East Coast Pines was liable for any past arrears, and also for reconsideration of the court's decision to disallow any refunds for fees that had been already collected from any of the plaintiffs.
On reconsideration, the Chancery Division judge substantially changed her original ruling. She continued to find the Borough's program valid, but concluded that plaintiffs did not, in fact, have the right to opt out of paying the annual collection fee. In her oral decision on reconsideration, the judge construed the applicable statutes, including N.J.S.A. 40:66-1.3, to require multifamily property owners to pay the municipal fee, regardless of whether they chose to avail themselves of the service. In this regard, the judge noted the importance of "uniformity" within the municipality, and to encourage the use of the solid waste hauler that had been procured by the Borough through public bidding.
Plaintiffs appealed from the trial court's reconsideration decision. They argued that the court misapplied the applicable statutes and unfairly required them to pay for a collection service they did not use nor want to use.
Notably, while this appeal was pending, the Borough decided to disband the Solid Waste Utility and discontinue its collection program, effective December 31, 2015. According to the representations of defendants' counsel at the appellate oral argument, the Borough is now providing solid waste collection through the use of municipal equipment and employees, with the annual costs of that service being recovered through local property taxes. Counsel indicated to us that, on reflection, the Borough officials decided it would be cheaper and more efficient to provide collection services through such an "in-house" manner.
Although the Borough argues that its recent termination of the solid waste collection program moots plaintiffs' appeal, we decline to dismiss this matter. There still remain unresolved issues about the propriety of the past fees paid by Timber Ridge, as well as those charged to (but not paid by) East Coast Pines. See N.Y. Susquehanna & W. Ry. Corp. v. New Jersey Dep't of Treasury, Div. of Taxation, 6 N.J. Tax 575, 582 (Tax 1984) (defining mootness to encompass cases in which the court's decision will "have no practical effect" on the existing controversy), aff'd, 204 N.J. Super. 630 (App. Div. 1985). In addition, although the owner of the East Coast Pines complex has sold the premises to a new owner, the Borough still maintains a lien on the property for the past unpaid collection fees, thereby enabling the Borough to bring a future foreclosure action for that debt. The appeal is not moot.
II.
The legal issues before us involve matters of statutory interpretation. As we already noted at the outset of this opinion, the Legislature adopted in 2001 a special set of provisions to address solid waste services provided by municipalities to multifamily properties. The legislation was adopted largely in response to this court's opinion in WHS Realty Company v. Town of Morristown, 323 N.J. Super. 553 (App. Div.), certif. denied, 162 N.J. 489 (1999), in which we held that a municipality's solid waste collection ordinance violates equal protection principles if it excludes apartment buildings and other multifamily properties from such services when they are provided to other residents within the municipality. Although a municipality is not mandated to provide residential trash removal services, it must not discriminate between multifamily property owners and single-family home owners when it chooses to provide such a service. Id. at 562-63. In addition, a municipality may not use an inequitable methodology in computing the fees charged to each class of property owner for such service. Id. at 571-72.
The solution devised by the Legislature in response to WHS Realty, as set forth in particular at N.J.S.A. 40:66-1.3(a), instructs that when a municipality elects to provide solid waste collection services to its residents but not to multifamily dwellings, the municipality must reimburse the multifamily property owners for their "actual cost" in obtaining that service. However, the reimbursement amount payable shall not exceed "the amount that the municipality would have expended on the solid waste collection service if provided by the municipality directly to the multifamily dwelling[.]" Ibid. That is exactly what the Borough did here from the time of the establishment of the Solid Waste Utility in late 2011 through mid-2014 — a timeframe when it only provided collection services to single-family homes and did not extend those services to multifamily dwellings.
The situation changed in mid-2014 when the Borough began offering multifamily dwelling owners solid waste collection services through a publicly-bid vendor. However, there is nothing in N.J.S.A. 40:66-1.3, or in the rest of the statutory scheme, that requires such multifamily property owners to avail themselves of such a municipally-offered service.
The Borough defendants acknowledge this. They insist, however, that multifamily property owners such as plaintiffs were nonetheless obligated to pay the annual per-unit fees charged for the service, even if they declined to use it.
We reject the Borough defendants' position, at least in the context presented in this particular litigation. The charges imposed here were inherently in the nature of fees associated with an optional municipal service, as distinguished from taxes imposed for general public services, such as police and fire protection, road maintenance, public schools, and the like. Such public services that are provided comprehensively within a locality, rather than to specific individual properties, are commonly funded by general revenue raised by "property taxes imposed pursuant to express and comprehensive legislative provisions." Holmdel Builders Ass'n v. Twp. of Holmdel, 121 N.J. 550, 582 (1990) (citing Salomon v. Jersey City, 12 N.J. 379, 384 (1953)). "If the primary purpose of the fee is to raise general revenue, it is a tax." Holmdel Builders Ass'n, supra, 121 N.J. at 582. However, if the primary purpose instead is to reimburse the municipality for services rendered, it is not a tax but rather a "regulatory exaction." Id. at 582-83.
Where the general public bears the burden of an expense, the fee involved is commonly viewed as a tax. Id. at 583. For example, charging all local property owners for the costs of public education is a tax, because education is a "municipal obligation that must be supported through general taxation." Id. at 583-84. By contrast, charges generated based on a user's consumption or connection to an infrastructure, as with accessed municipal sewer and water systems, are considered fees. See Bi-County Dev. of Clinton, Inc. v. Borough of High Bridge, 174 N.J. 301, 315-16 (2002).
The Municipal and County Utility Authorities Law ("MCUAL"), N.J.S.A. 40:14B-1 to -78, is consistent with these general principles. The MCUAL authorizes the creation of municipal utility authorities, N.J.S.A. 40:14B-4. It further enables "counties, or municipalities either separately or in combination with other municipalities, by means and through the agency of a municipal authority, to acquire, construct, maintain, operate or improve . . . works for the collection, treatment, recycling, and disposal of solid wastes[.]" N.J.S.A. 40:14B-2(1).
Significantly, in directing how "solid waste service charges" are to be collected within a municipality, the MCUAL restricts those charges to persons who (1) "contract for" the "use or services" of such a municipal solid waste collection program, or (2) "originate" solid waste "to be treated by the solid waste system or authorities." As delineated in N.J.S.A. 40:14B-22.1:
Every municipal authority is hereby authorized to charge and collect rents, rates, fees or other charges (in this act sometimes referred to as "solid waste service charges") for the use or services of the solid waste system. Such solid waste service charges may be charged to and collected from . . . any person contracting for such use or services or from the owner or occupant, or both of them, of any real property from or on which originates or has originated any solid waste to be treated by the solid waste system of the authority, and the owner of any such real property shall be liable for and shall pay such solid waste service charges to the municipal authority at
the time when and place where such solid waste service charges are due and payable.
[N. J.S.A. 40:14B-22.1 (emphasis added)].
Here, two of the plaintiffs — Timber Ridge and East Coast Pines — did not "use" the Borough's solid waste collection system during the period in question. See N.J.S.A. 40:14B-22.1. Nor did they "originate" solid waste that was "treated by the [Borough's] solid waste system." Ibid. Instead, both of those plaintiffs rejected the offered municipal collection service, and elected instead to rely on their own private vendors.
Our Supreme Court has declined in several contexts to require property owners to pay user fees to governmental authorities for services that they do not use. For example, in In re Passaic County Utilities Authority, 164 N.J. 270, 303 (2000), the Court held that a county solid waste facility could not collect a retroactive "environmental investment charge" from municipalities and commercial waste generators who no longer used the facility in order to pay off debt incurred to build the facility. Id. at 274. In construing the MCUAL in that setting, the Court noted that solid waste collection does not require a "sole centralized source." Id. at 302. Instead, the collection of solid waste is often provided through what the Court described as "a thriving and competitive private solid waste industry." Ibid.
Moreover, the Court analogously noted in Passaic County Utilities Authority that the statutory schemes for water and sewer service limit the imposition of user fees to parties who actually use those services. Id. at 300. In this regard, the Court cited to opinions of this court holding that water service charges, see Ivan v. Marlboro Township Municipal Utilities Authority, 162 N.J. Super. 466, 469 (App. Div. 1978), and sewer service charges, see Hamilton Township Municipal Utilities Authority v. Apple Tree Corporation, 202 N.J. Super. 440, 446 (App. Div.), certif. denied, 102 N.J. 327-28 (1985), could not be collected from non-users. Passaic County Utils. Auth., supra, 164 N.J. at 302. Accord, Airwick Indus., Inc. v. Carlstadt Sewerage Auth., 57 N.J. 107 (1970), cert. denied, 402 U.S. 967, 91 S. Ct. 1666, 29 L. Ed. 2d 132 (1971); Meglino v. Twp. Comm. of Eagleswood, 103 N.J. 144 (1986).
Although it is not essential to our reasoning, we further note that the Borough defendants here did not attempt to make an evidentiary showing in the trial court that their solid waste collection system would become financially infeasible (due to lost economies of scale or otherwise) if a sufficient number of multifamily property owners such as plaintiffs opted out of the system. We need not address here whether, if such a showing had been made, it would have affected the statutory and legal analysis.
Nor do we comment on whether, as a matter of public policy, it is preferable for solid waste collection within a municipality to be administered in a "uniform" manner through a single provider, subject to the local officials' procurement authority and oversight, as opposed to a mixed system combining municipal collection with private collection. Those are policy matters reserved for the Legislature and local governments. We merely apply in this litigation the terms of the existing statutes, in a manner consistent with precedential case law, in concluding that the trial court ultimately erred in this case in requiring plaintiffs to pay for an optional solid waste collection system that they did not use.
Because we reverse the trial court's decision on reconsideration on its merits, we need not address the parties' procedural arguments about whether the judge should have reexamined the issues a second time. Indeed, we by no means fault the judge for conscientiously attempting to give the issues further thought and reflection after both sides moved for reconsideration. As it turned out, the judge essentially reached the right result the first time, except for remedial facets that remain unresolved. --------
The final questions before us concern remedy. Because plaintiffs Lynnebrook and Lindenwold PH made use of the Borough's collection services for the time period at issue, and duly paid the fees for those services, we discern no legal or equitable reason to award those two plaintiffs any refunds.
The remedial questions relating to Timber Ridge and East Coast Pines, who did not use the service, warrant further examination, including consideration of whether one or both of these plaintiffs should be regarded as a "volunteer" who paid the charges. The common law "Volunteer Rule" generally instructs that when "a party, without mistake of fact, fraud, duress, or extortion, voluntarily pays money on a demand that is not enforc[a]ble against him, he may not recover it." Continental Trailways v. Dir., Div. of Motor Vehicles, 102 N.J. 526, 548 (1986), cert. denied 481 U.S. 1001, 107 S. Ct. 1636, 95 L. Ed. 2d 195 (1987). The Volunteer Rule discourages lawsuits for the refund of amounts "erroneously paid or illegally collected" because governments rely on the presumptive validity of such monetary collections for budgetary planning. Ibid.
Here, the record does not reveal the precise timing or amounts of fees that Timber Ridge paid to the Borough, and whether those fees were expressly paid without protest. Nor does the record reflect the fiscal impact that a retroactive refund to Timber Ridge or the discharge of the East Coast Pines' lien might have on the Borough's finances. These issues are best left to the trial court to consider, if the parties cannot otherwise resolve them consensually. In the meantime, the Borough shall be enjoined from foreclosing on the East Coast Pines' lien, or taking other collection measures against it or its successor in title.
Reversed and remanded. We do not retain jurisdiction. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION