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Browning-Ferris Industries of North Jersey Inc. v. City of Passaic

Decided: July 26, 1989.

BROWNING-FERRIS INDUSTRIES OF NORTH JERSEY, INC., A CORPORATION OF THE STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT,
v.
CITY OF PASSAIC, A PUBLIC BODY POLITIC OF THE STATE OF NEW JERSEY; FRED J. KUREN, WAYNE ALSTON, PAUL DI GAETANO, LEWIS J. GILL, MARGIE SEMLER, JAMES SHOOP, HERBERT M. SORKIN, AS MEMBERS OF THE COUNCIL OF THE CITY OF PASSAIC AND INDIVIDUALLY, DEFENDANTS-APPELLANTS



On certification to the Superior Court, Appellate Division.

For affirmance -- Justices Clifford, Pollack, Handler, Garibaldi and Stein. For reversal -- Justice O'Hern. The opinion of the Court was delivered by Handler, J. O'Hern, J., dissenting.

Handler

The dispute in this appeal arose when a municipality disapproved a contract that had been awarded by the local municipal utilities authority to a party for the collection and disposal of solid waste. The municipality acted under the authority of an ordinance that prohibits a municipal utilities authority from executing contracts unless approved by the municipal governing body. The issue posed on appeal is whether such an ordinance violates the Municipal and County Utilities Authorities Law, which governs the creation of local utility authorities and defines their powers.

On September 4, 1980, the City of Passaic (Passaic), enacted ordinance 601-80, creating the City of Passaic Municipal Utilities Authority (MUA or Authority) pursuant to the Municipal and County Utilities Authorities Law, N.J.S.A. 40:14B-1 to -69 (Law) for the purpose of collecting, removing, and disposing of solid waste. In July 1986, the plaintiff, Browning-Ferris Industries of North Jersey Inc., (Browning-Ferris), was one of two companies that submitted public bids to the MUA for the collection and disposal of solid waste. Plaintiff's bid proposals were for two-, three-, and five-year contracts. The only other bidder submitted proposals for two- and three-year contracts. By resolution, the MUA awarded a five-year contract to plaintiff.

In accordance with section 5 of the ordinance, the Authority submitted its resolution to the Passaic City Council for its approval. Section 5 provides that the MUA may execute contracts in its name only after the contract has been approved by the City Council. The City Council preferred plaintiff's two-year bid proposal and consequently refused to approve the MUA award of plaintiff's five-year contract.

Browning-Ferris brought suit challenging the action of the City Council. It sought a determination that section 5 of ordinance 601-80 was null and void. On cross-motions for summary judgment, the trial court ruled that section 5 of

ordinance 601-80 was contrary to and inconsistent with the Municipal and County Utilities Authority Law, and therefore null and void. In addition, the court enjoined Passaic from enforcing section 5 of the ordinance and from preventing the Authority from entering into a five-year contract with Browning-Ferris. On appeal, the Appellate Division, in a per curiam opinion, affirmed the judgment of the trial court.

I.

The Municipal and County Utilities Authorities Law, N.J.S.A. 40:14B-1 to -69, provides that a municipality may create a Municipal Utilities Authority to furnish municipal water and sewage services, including solid waste disposal systems, in the manner provided in the Law and subject to the limitations therein. N.J.S.A. 40:14B-4. As noted, Passaic created the MUA pursuant to the Law. Passaic, N.J., Ordinance 601-80 (1980). Section 5 of the ordinance limits the ability of the MUA to enter into contracts. It states:

The City of Passaic Municipal Utilities Authority shall have the power to authorize, issue and sell bonds and other obligations only with the approval of the City Council of said City and the City of Passaic Municipal Utilities Authority may execute contracts or agreements in its name only after any such contract or agreement shall have been approved by the City Council of said City.

Passaic contends that the ultimate purpose of this section is to assure the "financial stability and integrity of the City of Passaic." It accomplishes this purpose by allowing the municipality to exercise some degree of control over the Authority's expenditures and indebtedness, which the City alleges it would have to assume if the Authority either disbanded or dissolved. In contrast, Browning-Ferris contends that the Law clearly contemplates that an authority is empowered to enter into contracts without being subject to this kind of veto power; hence, section 5 is invalid. It also argues that section 5 "was not so intimately related to the entire ordinance as to render the ordinance totally invalid," and therefore can be properly severed from the entire ordinance.

The policy of the Law is to "foster and promote by all reasonable means the provision and distribution of an adequate supply of water . . ., the relief of lands and waters . . . from pollution, . . . and the generation of hydroelectric power." N.J.S.A. 40:14B-2. Municipal authorities created under the Law can be authorized to furnish a wide range of services and achieve a variety of purposes. These include the distribution of an adequate water supply, elimination and prevention of water pollution, furnishing sewage collection and disposal services, providing solid waste services in a manner consistent with the Solid Waste Management Act, N.J.S.A. 13:1E-1 to -48, generating hydroelectric power, and operating and maintaining utility systems owned by other governments through contracts. N.J.S.A. 40:14B-19(a).

The Law provides authorities expansive powers commensurate with their broad and important responsibilities. See, e.g., N.J.S.A. 40:14B-20. An authority is thus empowered to engage in a variety of functions to assure the effective execution of its statutory powers and accomplishment of its purposes. It may acquire, construct, and operate treatment, purification, and filtration plants and other types of works, N.J.S.A. 40:14B-19(b), and exercise "full responsibility and powers" with respect to any works created under the Law. N.J.S.A. 40:14B-2(3). A municipal authority may also "legally supply the treatment and disposal aspect of the sewerage service through its own facility or through outside contract." Reahl v. Randolph Township Mun. Utils. Auth., 163 N.J. Super. 501, 514 (App.Div.1978), certif. den., 81 N.J. 45 (1979).

Further, authorities have a general power to enter into and award contracts to achieve their goals. The relevant statute provides:

Every municipal authority shall be a public body politic and corporate, constituting a political subdivision of the State established as an instrumentality exercising public and essential governmental functions to provide for the public

health and welfare and shall have perpetual succession and have the following powers:

(13) To do and perform any acts and things authorized by this act under, through or by means of its own officers, agents and ...


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