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Houman v. Mayor and Council of Borough of Pompton Lakes

Decided: September 12, 1977.


Martin, J.s.c.


In order to resolve the numerous issues presented by this case, a rather detailed summary of its factual background is necessary.*fn1

Plaintiffs are taxpayers and owners of certain real property in the Borough of Pompton Lakes. Sometime in the spring or early summer of 1976 plaintiffs, having received their tax bills and assessments for the year 1976, filed appeals from these assessments with the Passaic County Board of Taxation.

On August 24 the mayor and council received notice of the pending appeals from John Steinhauser, secretary of the board of assessors for the borough. It was common procedure for the borough attorney, Lawrence Isenberg, and the president of the board of assessors, Arthur Riedel, to represent the borough on property tax appeals to the county board of taxation.

Isenberg and Riedel, in their affidavits and testimony, assert that on September 2, 1976 they met with Steinhauser and local board member James McGrath for the purpose of discussing the pending tax appeals. Allegedly, it was agreed that due to various conflicts of interest, Isenberg would withdraw from the Lockwood appeal, leaving Riedel alone to represent the borough on this matter, and Riedel would withdraw

from the Bernstein and Houman appeals, leaving Isenberg as the sole representative of the borough in these two cases. It was also allegedly agreed that since the Bernstein appeal would have to be taken to the State Division of Tax Appeals, the borough would only make a pro forma presentation at the county level, purely for the purpose of protecting its right to appeal to the State. McGrath and Steinhauser deny that this meeting took place, that such an agreement was reached concerning representation for the borough, and that it was agreed the County appeal would not be fully and vigorously litigated in the Bernstein case.

Hearings before the Passaic County Board of Taxation were held on plaintiffs' appeals on October 1, 1976, at which time judgments were rendered in favor of plaintiffs reducing their assessments. At that hearing Riedel alleged that he withdrew from the Bernstein and Houman appeals, while Isenberg allegedly withdrew from the Lockwood appeal. Immediately following the hearings a report, which contained a description of the properties and the results of the county board's decisions to reduce the assessments, was forwarded by Isenberg to the borough board of assessors.

As a matter of routine, the borough clerk's office, on November 15, 1976, sent vouchers to those taxpayers whose assessments had been reduced in order to facilitate their requests for tax rebates.

On November 22, 1976 Isenberg forwarded a letter to the board of assessors recommending that of the three cases only the Bernstein case, where the county board had reduced the assessments by $81,000, should be appealed to the State Division of Tax Appeals. No appeal of the other reductions was recommended, even though the Lockwood assessment was reduced by about $63,000. The letter also requested, for the Bernstein appeal, information regarding the assessments for all other apartments in the borough, this information apparently not having been requested for the county hearing. The board's advice and recommendations

concerning appeals to the State was sought. Apparently, Isenberg never received a response to this letter.

Steinhauser received a complaint on or about November 20, 1976 concerning the manner in which the borough had been represented at the October 1 tax appeal hearing. The matter was brought to the attention of the mayor, who requested a written report from Steinhauser. In a letter dated December 2, 1976 Steinhauser described the alleged conduct of Isenberg and Riedel at the October 1 hearing and advised that the matter be investigated.

Mayor Spinnanger discussed the problem with Municipal Clerk Eugene Dockery and stated that he would recommend to the council the hiring of an outside attorney, Herman Steinberg, to represent the borough for the appeals. Between December 2 and December 8 Dockery discussed the matter with Steinberg, who recommended appeals to the State on all three cases and agreed to handle the matter, conditioned on the council's approval of his appointment.

At a regularly scheduled public meeting, held on December 8, 1976, council member Palatucci moved the following resolution, which had previously been included in the agenda posted in the municipal building several days prior to the meeting:

Be it resolved, pursuant to N.J.S.A. 10:4-13 and 10:4-12, that the Mayor and Council of the Borough of Pompton Lakes hold a closed session regarding personnel matters, and negotiations, following the public meeting on December 8, 1976. It is expected that the discussions undertaken in closed session will be made public at the next regular meeting, and at a public meeting early in 1977.

The resolution was adopted and the clerk read it to the public.

In the executive session Mayor Spinnanger announced that the three tax appeals, involving refunds of $8,700, would be taken; that Isenberg could not represent the borough on these appeals because of the conflict of interest involved, and therefore Steinberg would represent the borough in these matters,

the clerk to notify him in the morning. No formal resolution was adopted at this time, but it was stated that a resolution confirming the retention of Steinberg would be adopted upon receipt of a written opinion from Steinberg as to what action he recommended.

On December 9 the borough clerk revoked the rebate vouchers that had been returned by the three plaintiffs and instructed Steinberg to prepare and file the appeals. They were filed on December 14, the deadline being December 15.

On December 22, 1976 plaintiffs filed the present suit seeking, among other things, to have the appeals of the borough set aside, the appointment of Steinberg declared invalid, and payment by the borough of the amounts due plaintiffs as a result of the decisions by the county board of taxation.

The Mayor and council received the opinion prepared by attorney Steinberg on December 27, 1976. On the same day a special meeting of the council was announced for the purpose of adopting a formal resolution appointing Steinberg and authorizing the appeals to the State Division of Tax Appeals. Borough Clerk Dockery, in his affidavit and testimony, stated than on December 27 a notice of the special meeting was delivered to the mayor and members of the council by officers of the Pompton Lakes Police Department, and that at the outset of the meeting Mayor Spinnanger stated its purpose and that notice had been given to the public and others in accordance with the Sunshine Law. Myra Nell Cohen, a clerk in the office of the borough clerk stated in her affidavit that more than 48 hours before the December 29 meeting she informed five newspapers, including the Pompton Bulletin , of the purpose of the special meeting, and posted a public notice to the same effect in the municipal building.

At the December 29 special meeting Mayor Spinnanger stated the purpose of the special meeting was to consider adoption of a resolution naming an attorney to represent the Borough in six tax appeals to the State Division of Tax

Appeals, to defend the borough and its officials in any civil court action instituted against the borough or any of its officers concerning assessments or assessment appeals, and to represent the borough in a counterclaim and third-party complaint against the county board of taxation and to represent the borough in certain other legal matters.

The following resolution was adopted at the meeting:

Now, be it resolved by the Mayor and Council of the Borough of Pompton Lakes, in the County of Passaic, a Municipal Corporation of the State of New Jersey, that the appointment of Herman W. Steinberg to represent the Borough in the aforementioned appeals, and to file a written opinion with recommendations, is hereby confirmed and made a matter of public record as required by N.J.S.A. 10:4-12, 10:4-13, and 40A:11-5, and

Be it further resolved that Herman W. Steinberg be and is hereby authorized and directed to defend the Mayor and Council of the Borough of Pompton Lakes, the Mayor, the Clerk, the Treasurer and himself in a civil action filed on December 22, 1976, by Nathan Bernstein on behalf of Garret C. Houman, Lockwood Brothers, Pompton Hills and Nathan Bernstein, and to perform such incidental legal work as may be required in connection with the foregoing, and

Be it further resolved that the Mayor and Clerk be and are hereby authorized and directed to sign an agreement with Herman W. Steinberg covering the aforementioned assignments; and

Be it further resolved that his contract is awarded without competitive bidding in accordance with N.J.S.A. 40A:11-5, and

Be it further resolved that a copy of this resolution be published in the Bulletin, issue of December 30, 1976.

At the June 15, 1977 special meeting of the council the following resolution was adopted to correct an inadvertent omission from the minutes of the December 29, 1976 special meeting:

Now, be it resolved by the Mayor and Council of the Borough of Pompton Lakes, that the minutes of the special meeting of December 29, 1976, be corrected to read:

Mayor Spinnanger stated the meeting was being held in conformance with the Open Public Meetings Act, and the agenda had been telephoned to the Mayor and Council, Trends, Paterson News, Herald News, Today , and the Bulletin newspapers before 3:00 p.m. on Monday, December 27, 1976, and posted on the Municipal bulletin board.

The council also readopted the resolution appointing Steinberg at its August 3, 1977 special meeting.

On January 3, 1977, Steinberg filed an answer to plaintiffs' complaint and a third-party complaint against Riedel and Isenberg alleging that they both failed to notify the municipality of their various conflicts of interest, did not provide proper representation for the borough at the October 1, 1976 hearings of the county board of taxation, neglected to take affirmative steps to protect the borough's right to appeal the decision of the county board, and generally were derelict in their duties as representatives of the borough in these matters.

If the original plaintiffs are successful in obtaining the relief they seek, then the defendant, third-party plaintiff will be barred and estopped from proceeding with the appeals to the State. Therefore, third-party plaintiff seeks damages for loss of taxes, counsel fees and costs against the third-party defendants.*fn2 Third-party defendants have counterclaimed against third-party plaintiff for costs and counsel fees in this matter.

Plaintiffs claim is grounded on three theories: first, that the council failed to take formal action by way of resolution or motion, as required by common law; second, that the Municipal action was taken without calling for a public meeting and without notice to the public or providing the public with an agenda, all in violation of the Open Public Meetings Act, N.J.S.A. 10:4-6 et seq.; third, that the appointment of Steinberg was invalid for failure to comply with the provisions of N.J.S.A. 40A:11-5 which requires that a contract for professional services, which is awarded without public advertising and bidding, state supporting reasons, and

the text of the resolution be printed in the municipal legal advertiser.*fn3

As a result of the council's alleged failure to comply with these requirements, plaintiffs assert that the council's decision at its December 8, 1976 executive session, to retain Steinberg for the purpose of appealing the judgment of the county board of taxation, was void ab initio and could not subsequently be ratified at the special December 29 session.

Both parties have raised a number of issues of first impression concerning the interpretation and application of this very important piece of legislation, the Open Public Meetings Act. While it is not necessary to consider and rule on all of these issues in order to make a final disposition of this case, the court feels compelled to do so in the interest of furthering the policies and objective of the act.

As to the common law requirement that the council act in a formal manner, Keyport Sewerage Auth. v. Granata , 52 N.J. Super. 76 (Law Div. 1958), states:

A body such as a borough council must act when assembled at stated or special meetings, and organize with a mayor to conduct and a clerk to record its proceedings. It can hardly act in any manner other than by ordinance or resolution or something equivalent thereto. Every act must be by a vote of the members present, and whether it is called an order, direction or motion, it still is a resolution because it must be resolved on upon a motion by some member. Town of Irvington v. Ollemar , 128 N.J. Eq. 402 (Ch. 1940), aff'd Irvington Nat. Bank v. Geiger , 131 N.J. Eq. 189 (E. & A. 1942). [at 83]

Cited with approval in Woodhull v. Manahan , 85 N.J. Super. 157, 164 (App. Div. 1964).

The court finds that the basic requirements of Keyport were met at the December 8 executive session. The minutes clearly show that the council members were assembled at an announced executive meeting, with the mayor conducting the

proceedings and the clerk recording them. The statement made by the mayor at the end of the executive meeting clearly evidences the fact that the council did discuss and resolve to take the three appeals and retain Steinberg to process them, the clerk being instructed to notify Steinberg of his appointment. From the mayor's December 2, 1976 statement to Dockery, and Dockery's own testimony, it is found that the mayor proposed this action be taken and that it was approved by a vote of the council. The fact that the mayor did not use any of the magic words -- "order", "direction", "motion", or "resolution" -- cannot negate the fact that the council obviously agreed to take the stated action. "Something equivalent" to a motion or order was approved at the December 8 executive session, with a formal resolution, confirming this earlier action, to be adopted following the filing of a letter opinion by attorney Steinberg reaffirming his earlier informal, oral opinion that all three cases should be appealed to the State. This court looks to substance and not form.

As to the first statutory requirement, N.J.S.A. 10:4-12(b)(7), (8) provides:

b. A public body may exclude the public only from that portion of a meeting at which the public body discusses:

(7) any pending or anticipated litigation or contract negotiation other than in subsection b.(4) herein in which the public body is, or may become a party.

Any matters falling within the attorney-client privilege, to the extent that confidentiality is required in order for the attorney to exercise his ethical duties as a lawyer.

(8) Any matter involving the employment, appointment, termination of employment, terms and conditions of employment, evaluation of the performance of, promotion or disciplining of any specific prospective public officer or employee or current public officer or employee employed or appointed by the public body, unless all the individual employees or appointees whose rights could be adversely affected request in writing that such matter or matters be discussed at a public meeting.

In the absence of an explicit indication of a special meaning, words in a statute are to be given their common

usage. Ford Motor Co. v. N.J. Dep't of Labor and Industry , 5 N.J. 494 (1950). The term "litigation" has a broad significance in common usage. It is defined thus: "Act or process of litigating, a suit at law; a judicial contest; also figuratively, (a) dispute; discussion." Websters New International Dictionary (2 ed); City Affairs Comm. v. Jersey City , 134 N.J.L. 180, 184 (E. & A. 1946). The word "litigation" in 38 C.J.S. 68 is defined: "A contest in a court of justice, for the purpose of enforcing a right; a judicial contest, a judicial controversy; a suit of law." In re Loudenslager Estate , 113 N.J. Eq. 418, 420 (1933). The State Division of Tax Appeals is a statutory tribunal which performs the quasi -judicial function of determining, de novo , the full and fair value of property. Gibraltar Corrugated Paper Co. v. North Bergen Tp. , 20 N.J. 213 (1955); Rek Investment Co. v. Newark , 80 N.J. Super. 552 (App. Div. 1963).

It is the council's consideration of litigability which may be conducted in a private session under N.J.S.A. 10:4-12(b)(7). Accardi v. North Wildwood Mayor and Council , 145 N.J. Super. 532 (Law Div. 1976).

To invoke this exception, the subject under discussion must be the 'pending or anticipated litigation' itself, i.e., the public body must be discussing its strategy in the litigation, the position it will take, the strengths and weaknesses of that position with respect to the litigation, possible settlements of the litigation or some other facet of the litigation itself. [Attorney General's Formal Opinion 30-1976, 100 N.J.L.J. 31]

The discussion by the council of its anticipated litigation before the State Division of Tax Appeals was, therefore, within the exception for closed session, as provided by N.J.S.A. 10:4-12(b)(7).

The discussion of whether to employ Steinberg as borough attorney for the purpose of processing these appeals was clearly within the ambit of N.J.S.A. 10:4-12(b)(8) since this provision encompasses "any matter" involving the employment or appointment of an employee. The question of individual privacy would have arisen during these discussions

of attorney Steinberg's qualifications, just as if he was being personally interviewed during the meeting. Jones v. East Windsor Regional Bd. of Ed. , 143 N.J. Super. 182 (Law Div. 1976).

Concerning the second statutory requirement, N.J.S.A. 10:4-13 provides in part:

No public body shall exclude the public from any meeting to discuss any matter described in subsection 7b. until the public body shall first adopt a resolution, at a meeting to which the public shall be admitted. * * *.

The Attorney General's Formal Opinion 29-1976 states that

In general, the Open Meetings Act requires that all meetings of public bodies shall be open to the public at all times. N.J.S.A. 10:4-12. The Act, however, does permit a public body to exclude the public from that portion of a meeting at which it discusses any of the items listed in subsection b of N.J.S.A. 10:4-12. Before excluding the public, however, section 10:4-13 of the Act requires the public body to first pass a resolution at a public meeting. Since this provision requires a resolution to be passed "at a meeting to which the public shall be admitted" and the Act prohibits a public body from holding a meeting "unless adequate notice thereof has been provided", N.J.S.A. 10:4-9, the resolution for going into closed session must be passed at a meeting for which adequate notice has been provided.

Accordingly, it is our judgment that the probable legislative purpose underlying the enactment of these provisions was to allow a public body to hold a meeting limited to the items to be discussed in closed session without the need for 'adequate notice' only if the public body has already passed a resolution required by section 10:4-13 at a prior meeting for which adequate notice was given.

"Adequate notice" [is] provided by placing the time, date and location of a meeting in the annual schedule of regular meetings promulgated in accordance with section 10:4-18 of the Act. Providing notice in this fashion complies with the "adequate notice" requirement since the definition of "adequate notice" specifically states that "(W)here annual notice or revisions thereof in compliance with section 13 (N.J.S.A. 10:4-18) of this Act ...

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