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Pine Belt Chevrolet Inc. v. Jersey Central Power and Light Co.

Decided: July 8, 1993.


On certification to the Superior Court, Appellate Division, whose opinion is reported at 249 N.J. Super. 461 (1991).

Clifford, Wilentz, Handler, Pollock, O'Hern, Garibaldi, Stein



This appeal raises an issue of statutory interpretation. Under the colon law a utility company is required to pay the costs of relocating a utility facility when the relocation is required because of highway construction that furthers the public interest. A section of the Act, N.J.S.A. 27:7-44.9, shifts those costs to the State Department of Transportation (DOT) for relocations necessitated by highway projects.

We granted certification, 130 N.J. 10 (1992), to review the Appellate Division's determination that DOT, rather than the utility company or private-property owners, should pay the costs of relocating utility facilities when DOT requires a road-widening as a condition for granting a highway-access permit. We reverse the judgment of the Appellate Division and now hold that N.J.S.A. 27:7-44.9 shifts relocation costs in only those circumstances in which DOT both administers and contracts for the project and pays all or part of the costs thereof. Absent those conditions, the common-law rule applies and the utility company must bear the costs of relocations necessitated by highway construction ordered by DOT in furtherance of the public interest. On this appeal no party seeks to change that common-law rule; the argument is over the extent to which the Legislature has abrogated the rule.


Plaintiff Pine Belt Chevrolet, Inc. (Pine Belt) owns property adjacent to Route 88, a State highway, in Lakewood. Plaintiffs Nicholas and Jean Sportelli own property adjacent to the same highway in Bricktown. Plaintiffs began developing their properties in 1985 and 1986: Pine Belt built an automobile sales and service center and the Sportellis built a private residence and medical office. Each applied to DOT for permits and approvals to gain access to Route 88. See N.J.S.A. 27:7-44.1.

In accordance with its policy of conditioning access permits on compliance with the design guidelines set out in its Design Manual - Roadway (Design Manual), DOT notified plaintiffs that permits would be issued only if the curb lines abutting their respective properties were set back twenty-two feet from the centerline of Route 88. The Design Manual indicates the desirability of twelve-foot roadway lanes and ten-foot shoulders. DOT also informed plaintiffs that the utility poles, owned by Jersey Central Power & Light Company (JCP&L), located along their frontages would have to be relocated behind the new curb line. DOT made no determination concerning who should shoulder the costs of those relocations. Plaintiffs submitted plans consistent with DOT's directives, and DOT issued the permits.

When the Sportellis began construction, they notified JCP&L of the need to relocate the utility poles. JCP&L refused to relocate the poles unless the Sportellis paid for the relocation. The Sportellis refused to pay but continued with the road-widening and the other work on their property. At the time the Sportellis submitted their brief to this Court, the poles remained on the roadway side of the relocated curb line.

Pine Belt too refused to pay JCP&L for the relocation costs. At JCP&L's behest DOT intervened and instructed Pine Belt to reach an agreement with JCP&L within thirty days or suffer revocation of its access permit. Pine Belt reached an agreement with JCP&L and deposited $34,866.25 with the utility, $19,107.73 of which was refunded after the relocation. Pine Belt did so without waiving its right to challenge DOT's action and JCP&L's refusal to pay the relocation costs.

Plaintiffs filed a Complaint against JCP&L, DOT, and Hazel Gluck, the former Commissioner of DOT, seeking a declaratory judgment that plaintiffs were not responsible for the utility-relocation costs. JCP&L filed an Answer, Counterclaim, and Crossclaim, denying financial responsibility and claiming that plaintiffs or DOT should pay. DOT filed an Answer and a Counterclaim. All parties then moved for summary judgment.

Before the trial court, JCP&L argued that N.J.S.A. 27:7-44.9 controlled the Disposition of the case. That statute provides in pertinent part:

a. In addition to other powers conferred upon the Commissioner of Transportation by any other law and not in limitation thereof, the commissioner, in connection with the construction, reconstruction, maintenance or operation of any highway project, may make reasonable regulations for the installation, construction, maintenance, repair, renewal, relocation and removal of pipes, mains, conduits, cables, wires, towers, poles and other equipment and appliances, herein called "facilities," of any public utility * * * in, on, along, over or under any highway project. Whenever the commissioner determines that it is necessary that [utility] facilities which now are, or hereafter may be, located in, on, along, over or under any highway project shall be relocated in the project or should be removed from the project, the public utility * * * company owning or operating the facilities shall relocate or remove the same in accordance with the order of the commissioner. The cost and expenses of such relocation or removal * * * shall be ascertained and paid by the commissioner as a part of the cost of the project. * * *

b. As used in this act, "highway project," in addition to its ordinary meaning means one which is administered and contracted for by the commissioner. (emphasis added.)

JCP&L read that statute as requiring DOT to pay the relocation costs because the required road widening fell within the ordinary meaning of "highway project" -- an ordinary meaning that, according to the utility, was expanded by the "administered and contracted for" language of subsection b. JCP&L interpreted the statute as abrogating completely the common law, which required the utility to pay for relocations necessitated by highway constructions furthering the public interest. Under JCP&L's view DOT is liable for relocation costs whether it performs a project itself or requests someone else to perform. In short, a utility should pay for only those relocations undertaken on its own initiative.

DOT argued that the "highway projects" to which the statute applies are limited by the "administered and contracted for" phrase contained therein. DOT claims that it must bear relocation costs only when the State both administers and contracts for the project such that relocation costs are includable in the overall project cost.

Plaintiffs argued that DOT was implementing a highway project and that allowing it to evade payment of relocation costs would circumvent the purpose of the statute. Alternatively, plaintiffs argued that if the statute did not apply, the common law required the utility to pay because the road-widening benefitted the public.

The trial court granted plaintiffs' and DOT's motions for summary judgment and denied JCP&L's motion. The court held that N.J.S.A. 27:7-44.9 did not require DOT to absorb the cost of relocating the utility poles. The trial court found no other statute assigning the cost to DOT, and therefore applied the common-law rule requiring the utility to bear the costs of utility relocations necessitated by road construction furthering the public interest.

In holding that N.J.S.A. 27:7-44.9 did not require the Commissioner to pay the relocation costs, the trial court noted: "The commissioner did not order the utility to relocate the poles. More importantly, this was not a project administered and contracted for by the commissioner." The trial court read "administered and contracted for" to limit the definition of "highway project" and hence the applicability of the statute to only those projects for which the Commissioner directly administers and contracts. To hold otherwise, reasoned the trial court, would render meaningless that language in the statute directing DOT to absorb relocation costs "as a part of the cost of the project." N.J.S.A. 27:7-44.9(a). The trial court also supported its decision by citing the statute's legislative history.

Finding the statute inapplicable and DOT not liable, the trial court then considered whether plaintiffs or JCP&L should pay the relocation costs. The court found that the road-widening furthered the public welfare and that the relocation of the utility poles was, therefore, for the public good and not solely for the benefit of the property owners. That being the case, the common law, as explicated in Port Authority v. Hackensack Water Co., 41 N.J. 90, 195 A.2d 1 (1963), and Fellowship Bank v. Public Service Electric & Gas Co., 158 N.J. Super. 107, 385 A.2d 887 (App. Div.), certif. denied, 77 N.J. 503 (1978), required JCP&L to bear the relocation costs.

The Appellate Division reversed, 249 N.J. Super. 461 (1991). In assigning relocation costs to DOT, the court rejected the trial court's narrow reading of the statute. Id. at 473. The Appellate Division found the definition of "highway project" in subsection (b) to be an expansive one that included projects administered or contracted for by the Commissioner. Id. at 474. If one reads the statutory phrases disjunctively, N.J.S.A. 27:7-44.9 would include within its scope projects administered by DOT but not contracted out as well as projects for the completion of which DOT contracts with agencies, political subdivisions, or private entities. Such a definition, according to the Appellate Division, would encompass the current case, in which the grant of an access permit was conditioned on the performance of an improvement conforming to DOT's design guidelines.

The Appellate Division pointed out that when relocation is necessitated by an improvement such as an acceleration or deceleration lane required by an increase in traffic resulting from a commercial or housing development, the development as the primary beneficiary would be required to underwrite the costs. Id. at 472-73. Similarly, if the relocation is brought about as part of the utility's efforts to improve or expand service, the utility should bear the costs. Id. at 473. Concluding that the Legislature had intended to change the common-law rule with regard to the allocation of utility-relocation costs, the court stated:

In enacting N.J.S.A. 27:7-44.9, the legislature has found it more appropriate that DOT undertake obligations for public utility relocation costs incurred in connection with highway improvements rather than to charge the utility for those costs. Under this policy, when DOT pays, the monies ultimately come from the beneficiaries of the highway improvements, i.e., the motoring public through other sources such as federal or state public funds or gasoline taxes. On the other hand, when the utility pays, the costs are ultimately borne by the utility rate ...

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