On appeal from Superior Court, Law Division, Passaic County.
Approved for Publication April 13, 1995.
Before Judges Pressler, Landau and Newman. The opinion of the court was delivered by Landau, J.A.D.
The opinion of the court was delivered by: Landau
This matter reaches us on the cross-appeal by the Wanaque Valley Regional Sewerage Authority (WVRSA) from an order dismissing its cross-claims and third-party complaint against several municipalities and their sewerage authorities in a Law Division action commenced by the Wanaque Borough Sewerage Authority (WBSA) to compel payment to WVRSA of proportionate shares of costs incurred in planning and designing an aborted regional sewerage facility initially intended to serve areas of the three municipalities.
At the Conclusion of plaintiff's proofs in the Law Division non-jury trial, motions to dismiss were granted in favor of defendants Township of West Milford (West Milford), the West Milford Municipal Utilities Authority (WMMUA), and the Borough of Ringwood (Ringwood). Judgment against the Ringwood Borough Sewerage Authority (RBSA) was entered for $894,850.12 representing its share of the planning and design costs for a regional facility. An appeal by RBSA was dismissed for lack of prosecution. WVRSA's claim against the Borough of Ringwood has since been resolved amicably. Thus, this appeal involves only the dismissed claims of WVRSA against West Milford and WMMUA, made in its cross-claim and third-party complaint. We reverse.
In its cross-claim and third-party complaint, WVRSA alleged that in 1966 the Wanaque Valley Regional Sewerage Study Committee (Study Committee) was formed by, among others, the adjacent municipalities of Wanaque, Ringwood and West Milford to study and evaluate the problems of sewage disposal in the Passaic River basin. Wanaque, Ringwood and WMMUA were members of the Study Committee. In 1969 the Study Committee was authorized to obtain $457,000 in loans from the New Jersey Department of Health to finance preliminary planning and design work for a proposed regional sewage system. In 1971 WVRSA was created by the joint action of Wanaque, Ringwood and West Milford to design and construct a regional sewage transmission and treatment system. WVRSA claimed that its creation was "premised on the understanding that Wanaque, Ringwood and a portion of West Milford would be physically serviced by the WVRSA."
In May 1971 the Study Committee assigned all its rights to WVRSA in exchange for WVRSA's agreement to repay the loans which the Study Committee had received. WVRSA claimed that its agreement to repay these loans, "which Ringwood, Wanaque, and WMMUA were obligated to pay," was "premised on the representation, promise, and/or implied promise of Ringwood, RBSA, and WMMUA that areas within Ringwood and West Milford would tie into and support the [proposed] regional system", which they later declined to do.
Because WVRSA had used the loan funds for "studies, designs and projections in the three municipalities [Wanaque, Ringwood and West Milford]," WVRSA claimed that Ringwood, West Milford and WMMUA had "benefitted from the studies, designs and projections funded by the loans without paying for same and have been unjustly enriched thereby." WVRSA demanded a judgment against them for their proportionate share of the loans.
WVRSA also alleged that in October 1976 WMMUA refused to sign a service agreement with WVRSA to participate in its proposed regional sewage system, and "as a result, the planning of the whole project, including projected capacities had to be revised at additional cost to WVRSA and much of the planning, design and studies became valueless to WVRSA." While WVRSA acknowledged that West Milford, and "its agency" (WMMUA), had the "right to drop out" of WVRSA's proposed regional sewage system, WVRSA asserted that "West Milford and WMMUA benefitted from ... [WVRSA's] design, planning and projections and were thereby unjustly enriched." Therefore, WVRSA demanded that they pay it "their pro rata share of the cost of planning and designing attributable to the inclusion of West Milford in the project as well as a pro rata share of redesign costs occasioned by the refusal of WMMUA to enter into a Service Agreement."
As noted above, the trial Judge had dismissed all claims save for that against RBSA. Judgment on that claim was granted because of RBSA's breach of a written service agreement entered into among WVRSA, WBSA and RBSA. RBSA was held liable "for its fair share of all costs incurred up to the date of its withdrawal from the WVRSA."
Dismissal of the fair share claims which did not rest upon breach of a written contract was granted because the trial Judge rejected plaintiff's "one theory" of implied contract. He ruled that a municipality can be so bound only where it is shown that it "has the particular power to act and that it does enter into a contract which is for some reason found to be void but nevertheless the other contracting party having acted and extended itself in good faith is entitled to payment ... ." The Judge went on to find no "evidence of such a [fact] situation ... and therefore no basis for implied contract liability against any of the defendants." He also concluded that under the clear terms of the May 1971 resolution of WVRSA, it agreed to repay all loans received by the Study Committee, notwithstanding that defendants all participated in the formation of the joint venture Study Committee and together had created WVRSA in anticipation of a regional sewage system.
In reliance upon Graziano v. Mayor and Tp. Comm. of Montville Tp., 162 N.J. Super. 552, 394 A.2d 103, (App. Div.) certif. denied, 79 N.J. 462 (1978), and N.J.S.A. 40:14B-49, it was held that no authority exists to impose liability on West Milford, WMMUA, or Ringwood because the only written contract in existence was the Service Agreement among WVRSA, RBSA, and WBSA. We must differ with this analysis.
It is clearly inferable from the proofs that at the time WVRSA agreed to be responsible for debts of the Joint Venture, the parties continued to believe that some form of regional sewage program would be implemented. As a matter of law, it cannot be said that the withdrawing municipalities did not receive substantial benefits from exploration of the regional approach. The benefits may have been limited to receipt of cost and other important data which prompted the decisions not to go forward, but such benefits are no less tangible than if they resulted in a decision to pursue the regional program. From the standpoint of WBSA and WVRSA, it surely would not have been necessary to undertake the cost of regional technical studies, or the later costs of preparing downsizing revisions, had it ...