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Rieder Communities Inc. v. Township of North Brunswick

Decided: August 9, 1988.

RIEDER COMMUNITIES, INC., D/B/A DAYTON SQUARE, DAYTON CENTER AND DAYTON CENTER EAST; SILVER BAY PROPERTIES, INC.; RIDER LAND TECHNOLOGY, INC.; SOLOMON RIEDER, GEORGE RIEDER AND STANLEY RIEDER, PLAINTIFFS-APPELLANTS,
v.
TOWNSHIP OF NORTH BRUNSWICK, DEFENDANT-RESPONDENT. CHARLES J. KUPPER, INC., DEFENDANT-THIRD-PARTY PLAINTIFF-RESPONDENT, AND INTERNATIONAL BUSINESS MACHINES CORPORATION, MIDEAST ALUMINUM INDUSTRIES, INC., R & M, INC. AND OTHER UNKNOWN COMPANIES AND INDIVIDUALS, DEFENDANTS, V. TOWNSHIP OF SOUTH BRUNSWICK, THIRD-PARTY DEFENDANT



On appeal from Superior Court, Law Division, Middlesex County.

Michels, Gaynor and Arnold M. Stein. The opinion of the court was delivered by Gaynor, J.A.D.

Gaynor

Plaintiffs, land developers and builders in South Brunswick Township, collectively referred to as Rieder, appeal from the dismissal of their complaint seeking damages because of building delays allegedly caused by, (1) the negligence of defendant, Charles J. Kupper, Inc. (Kupper) in the performance of its duties as the design engineer for the construction of a North Brunswick Township sewer extension and thereafter as the consulting engineer, and (2) the failure of North Brunswick to comply with a contract between it and South Brunswick providing for the pumping of a certain volume of sanitary sewage from South Brunswick through the North Brunswick facilities to the treatment plant operated by the Middlesex County Sewerage Authority. The contract claim was dismissed on North Brunswick's motion for summary judgment and the claim against Kupper was dismissed following an extended bench trial.*fn1

On this appeal, plaintiffs contend that the summary dismissal of their claim against North Brunswick was contrary to law and, as the authority relied upon by the motion judge was

subsequently reversed by the Supreme Court, a reversal of the summary judgment in favor of North Brunswick is required. Further, it is urged that the decision of the trial court dismissing the claim against Kupper cannot stand as (1) findings of the court were contrary to the evidence, (2) in limiting its findings concerning the asserted negligence of the engineer to the subject of the design contract, the court misconceived the essence of the negligence charged against Kupper, (3) the court erroneously limited, as a matter of law, the scope of Kupper's duty toward North Brunswick, (4) Kupper was liable in tort to plaintiffs despite the absence of privity, and (5) the court's collateral attack on plaintiffs' receipt of building approvals from South Brunswick constituted an excursion into an issue irrelevant to a disposition of the action. We disagree and affirm.

In May 1969, Kupper was retained by North Brunswick to design and monitor the construction of an extension of its main sewer trunk line known as the Maple Meade extension. Kupper prepared a report and recommended that neighboring tributary municipalities be contacted to determine whether they were interested in participating in this project. This suggestion was followed and South Brunswick expressed interest in the proposal. By a further agreement entered into in 1970, Kupper was retained to evaluate the capacity of the North Brunswick sewerage facilities to determine whether South Brunswick's estimated flows could be accommodated. Further reports prepared by Kupper analyzing the effect of South Brunswick's use of the North Brunswick sewer system served as a basis for the contract subsequently entered into by the two municipalities. It was conceded that these reports contained representations that the existing North Brunswick system had the capacity to accept three million gallons per day (MGD) peak flow from South Brunswick.

The contract between the townships was executed on August 10, 1971. In pertinent part, it provided that South Brunswick would convey its sewage through the North Brunswick system

for treatment at the Middlesex County Sewerage Authority's treatment plant; that a sewer line known as the Georges Road line would be constructed by South Brunswick and connected to the North Brunswick Maple Meade extension; and that South Brunswick would pay the cost of the required oversizing of the Maple Meade extension. In return, South Brunswick was granted the right to transmit up to three million gallons a day peak flow through the North Brunswick sewer system. It was agreed that any upgrading costs necessitated by the flow from South Brunswick would be shared by the two municipalities. However, South Brunswick would have no obligation to contribute to upgrading costs until it had transmitted in excess of 3.0 MGD peak flow or the expiration of five years. The agreement also provided for the periodic review by North Brunswick's consulting engineer of the major components of the North Brunswick system to determine capacity and condition. The contract was effectuated upon the completion of the Maple Meade extension construction in September 1971.

During 1971, plaintiffs were contemplating the purchase of large tracts of undeveloped land in the Dayton area of South Brunswick. Upon assurance by the Director of Public Works that, because of the contract with North Brunswick and the adoption of a sewer construction ordinance, South Brunswick would have adequate sewer capacity for the proposed developments, plaintiffs proceeded with the acquisition of land for a large housing development. As the development was to be built in phases, a portion of the land was acquired by way of option contracts which allowed plaintiffs to close title when development was imminent.

By July 1975, the Georges Road line had been constructed by South Brunswick and connected to the North Brunswick sewer system. Construction costs approximated $4 million which were raised through a sewer assessment against landowners, including plaintiffs, whose properties were benefitted by the improvement. During the summer of 1975, when South Brunswick was sending about 0.8 MGD peak flow through the North

Brunswick system, the system began experiencing overflows. However, South Brunswick was not informed of any overflow problem by North Brunswick or Kupper until 1977, although it had previously received some information in this regard from its own employees. During 1977, Kupper issued three reports relating to the capacity of the North Brunswick sewer system. The February report considered the effect of two high density developments in North Brunswick on the Livingston Avenue interception system and concluded that the system could accommodate the estimated .35 MGD to be thereby generated with the implementation of certain improvements. The subsequent reports in September and October concluded that there were problems throughout the system and that the cost of resolving these problems would far exceed the amount that the township ever expected to spend.

During the previous September, upon obtaining construction approval from the South Brunswick Planning Board for a portion of the proposed housing development, plaintiffs made inquiry concerning the issuance of the necessary sewer permits. Although South Brunswick was prepared to approve the application, North Brunswick's approval was also required since the sewage would flow through its system. Because of the overflows then being experienced, plaintiffs were informed that such approval would not be forthcoming. In May 1977, South Brunswick was formally notified that North Brunswick would not be endorsing any new applications for sewer connection permits submitted by South Brunswick residents. It was indicated that overloading problems at the Edly's Lane pumping station made this action necessary. Plaintiffs' formal application in September 1977 for sewer permits, although endorsed by South Brunswick, was rejected by North Brunswick and consequently by the New Jersey Department of ...


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