On certification to the Superior Court, Appellate Division, whose opinion is reported at 281 N.J. Super. 22 (1995).
The opinion of the Court was delivered by O'hern, J. Chief Justice Wilentz and Justices Handler, Pollock, Garibaldi, Stein and Coleman join in Justice O'HERN's opinion.
The opinion of the court was delivered by: O'hern
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).
Wanaque Borough Sewerage Authority v. Township of West Milford, et al. (A-82-95)
Argued January 30, 1996 -- Decided June 26, 1996
O'HERN, J., writing for a unanimous Court.
In 1966, the Boroughs of Wanaque, Ringwood, Pompton Lakes and the Township of West Milford joined to form the Wanaque Valley Regional Sewerage Authority Study Committee (Study Committee) to analyze whether treated sewerage could be collected in the Wanaque watershed basin. West Milford was represented in that study by the West Milford Municipal Utilities Authority (WMMUA), a separate legal entity created pursuant to a provision of the Municipal and County Utilities Authorities Law that authorized West Milford to create a municipal authority with sole jurisdiction over the collection, treatment and disposal of the town's sewage.
In 1968, the Study Committee issued a report proposing the development of a regional interim plan. Based on that plan, Pompton Lakes withdrew from the Study Committee. In August 1969, the three remaining towns adopted parallel joint resolutions authorizing the Study Committee to apply for a $457,000 loan from the State Department of Health. The parties agreed to contribute their proportionate share of the repayment of the loan, if necessary, to the extent that each municipality had benefited. The application was approved, and the State loaned the funds to the Study Committee. The money funded environmental and engineering studies in West Milford, Ringwood and Wanaque, as well as preliminary engineering plans and specifications for a regional sewer system that would serve all three municipalities.
On January 6, 1971, the Township of West Milford adopted an ordinance in conjunction with Ringwood and Wanaque consenting to the formation of the Wanaque Valley Regional Sewerage Authority (WVRSA). Because the WMMUA had sole jurisdiction over sewage collection and disposal within the Township of West Milford, it was also necessary for the WMMUA to consent to the formation of the regional sewerage authority. As part of its formation, the WVRSA agreed to assume the debts of the Study Committee.
Once created, the WVRSA became a distinct and independent public entity. Under the Sewerage Authorities Law (the Law), the WVRSA was: financially independent; authorized to agree to accept a loan or donation from a municipality or municipal utilities authority; and authorized to enter into "service agreements" between it and a municipality or municipal utilities authority.
West Milford appointed representatives to serve on the WVRSA but never agreed to loan or donate funds to the WVRSA. West Milford also did not enter into a service agreement with the WVRSA because it did not have the authority to do so, having delegated sole jurisdiction over sewage collection to the WMMUA. In 1976, the WMMUA advised the WVRSA that it would not execute a service agreement or use the regional facility for the treatment of its sewage. In 1981, Ringwood Borough also decided not to enter into a service agreement with the WVRSA.
In 1986, the Wanaque Borough Sewerage Authority (WBSA) instituted suit against, among others, the WVRSA, the Township of West Milford, the Borough of Ringwood and its sewerage authority, and the Borough of Wanaque. The WBSA sought reimbursement for certain of the WVRSA's costs because, as the sole customer of the WVRSA, the WBSA was the only entity left to absorb the planning expenses of the study. The WVRSA, seeking essentially the same relief as the WBSA, filed a cross-claim against the Borough of Ringwood, its sewerage authority, and the Township of West Milford, and filed a third-party complaint against the WMMUA. Both the WVRSA and the WBSA claimed that costs were incurred not only for the planning, design, construction and operation of a treatment plant and system, but significant additional costs were incurred because of the withdrawal of West Milford and Ringwood. The WBSA and the WVRSA also alleged that West Milford and the WMMUA were unjustly enriched by those studies.
At the Conclusion of a non-jury trial, the trial court concluded that Ringwood Borough Sewerage Authority, as the only public entity that had executed a contract with WVRSA in accordance with the statutory requirements, was responsible for its fair share of all costs incurred up to the date of its withdrawal from the WVRSA. The trial court dismissed the claims against the other entities, concluding that the WVRSA had presented no evidence that could support a theory of implied contract. The court also found that, because the WVRSA had expressly agreed to assume the debts of the Study Committee, there could be no recovery under a joint venture claim.
The Appellate Division reversed the trial court's dismissal of the claims against the Township of West Milford and the WMMUA, finding that as long as a governmental entity is not statutorily prohibited from contracting on the subject, and it receives a benefit, it is liable for the reasonable value of the services rendered. The court also concluded that the parties presented sufficient evidence at trial to require the trial court to have considered and ruled on the WVRSA's joint venture theory. The Appellate Division remanded the matter for consideration of whether any losses were recoverable pursuant to a joint venture theory.
The Supreme Court granted West Milford's petition for certification.
HELD: Under the theory of quasi-contract, the Township of West Milford is liable for a proportionate share of the costs incurred by the Wanaque Valley Regional Sewerage Authority Study Committee during the planning stages of a regional sewerage authority.
1. New Jersey law recognizes only very limited circumstances in which a third party may enforce a public contract adopted without proper procedures. New Jersey law does, however, permit recovery to the extent of any benefit conferred on, and knowingly accepted by, the municipality. In an express contract, the agreement is manifested by a writing or spoken words. In a contract implied-in-fact, the agreement is manifested by other conduct. Courts often find and enforce implied promises by interpreting the promisor's words and conduct in light of the surrounding circumstances. (pp. 9-11)
2. A contract implied-in-law, or quasi-contract, is imposed by law for the purpose of bringing about Justice, without reference to the intention of the parties. It is the duty that defines the quasi-contract, and the scope of that duty is a question of law to be decided by a court. Like the equitable doctrine of restitution, the key element of a quasi-contract claim is that one party has been unjustly enriched at the expense of another. Recovery under both ...