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COOPER v. BOROUGH OF WENONAH

August 29, 1997

BRENDA COOPER, Plaintiff,
v.
BOROUGH OF WENONAH, et al., Defendants.



The opinion of the court was delivered by: KUGLER

OPINION

 KUGLER, UNITED STATES MAGISTRATE JUDGE:

 Helen Kinley ("Ms. Kinley") brings this motion to rescind a release, executed on February 25th 1997, absolving Defendant Borough of Wenonah from all claims stemming from the proposed drainage facility to be constructed on Plaintiff Brenda Cooper's property. The Borough of Wenonah opposes this motion. For the reasons set out below, the Motion to rescind the release is DENIED.

 BACKGROUND

 In the early 1990's, the Borough of Wenonah sought to capitalize on undeveloped landlocked property it owned located near the property and home of Plaintiff Cooper. Compl. P 7. To facilitate the sale and development of its property, the Borough of Wenonah established a street to provide frontage to the landlocked lots. Compl. P 8. In constructing the street, the Borough of Wenonah took a portion of the plaintiff's land without her knowledge and without providing adequate compensation. Comp. P 9; Injunctive Order 3 (Sept. 1, 1992). Additionally, because the borough allegedly directed the drainage system funnels onto the plaintiff's property, the drainage has allegedly caused, and continues to cause, severe flood damage to the plaintiff's property and home. Compl. PP 13 - 20.

 Plaintiff Cooper, seeking injunctive relief, filed a complaint with claims sounding in negligence, inverse condemnation, and civil rights violations. Compl. 8 - 11. On September 1, 1992, the Hon. Joseph H. Rodriguez, U.S.D.J., found that the Borough of Wenonah had inversely condemned the plaintiff's property without adequate compensation and ordered it to permit Plaintiff Cooper to connect her residence to the public sewer and water facilities of the borough. Injunctive Order 2 - 3 (Sept. 1, 1992). Judge Rodriguez also ordered that discovery be taken on the issue of damages. Injunctive Order 3 (Sept. 1, 1992).

 As directed by the court, the parties embarked on discovery on the issue of damages. As the discovery unfolded, the parties discussed settlement of the damages issue and, after several discovery extensions, entered into a settlement agreement on September 23, 1993. See Consent Order (Sept. 23, 1997). The Consent Order provided, in pari materia, that the defendants would pay a sum certain to the plaintiff, and construct a drainage facility on the plaintiff's property to remediate the flooding and erosion damage ("Initial Drainage Facility"); and the plaintiff would grant the Borough of Wenonah an easement to construct and maintain the Initial Drainage Facility. Consent Order PP A, B. The construction and design of the Initial Drainage Facility was to be acceptable to and approved by the New Jersey Soil and Erosion and Sediment Control Division, and the plaintiff's engineer. Consent Order P B.

 At some point, Ms. Kinley, the plaintiff's mother, began alleging that the flooding on the plaintiff's property was causing water damage to her property as well. Significantly, the Consent Order directed that the Borough of Wenonah make adequate service available to permit Ms. Kinley to use the water and sewer services of the borough. Ms. Kinley's connection, however, was contingent upon her signing a release of liability for claims resulting from the construction of the proposed drainage facility to be built on her daughter's property, which would presumably alleviate any further water damage to her property as well. Consent Order P C. *fn1" Having addressed Ms. Kinley's interest and granted her relief, the court established her as an interested party in this action.

 For reasons not relevant to the issues herein, construction of the Initial Drainage Facility was not immediately forthcoming. As such, Judge Rodriguez ordered the Borough of Wenonah to immediately take all action necessary to permit the connection of Ms. Cooper's and Ms. Kinley's properties to public water and sewer facilities of the borough. Court Order 1 (Feb. 14, 1995).

 Because the parties disagreed as to whom would bear the cost of Ms. Kinley's water and sewer connection, her executed release was not immediately forthcoming either. On January 2, 1997, the undersigned entered an order clarifying the cost issue. Clarification Order (Jan. 2, 1997). We found that as to the connection of Ms. Kinley's property to the sewer and water facilities of the borough, the Borough of Wenonah was financially responsible for extending its water and sewer services to the edge of Ms. Kinley's property while she was financially responsible for the lateral connection from her property to the extended water and sewer lines. See Clarification Order. The Clarification Order also directed the parties to appear at a scheduled status conference to discuss the progress of the Initial Drainage Facility and any possible modifications.

 When the parties appeared at the status conference on January 14th of this year, Ms. Cooper and the Borough of Wenonah agreed to construct a different type of facility ("Drainage Facility No. 2") on the plaintiff's property. *fn2" This modified facility was also designed to avoid or minimize flood damage to the plaintiff's property. In the order resulting from the conference, the court directed Ms. Kinley to execute a release, pursuant to the Consent Order, within 14 days, if she wanted water and sewer services. Court Order 2 (Jan. 17, 1997). In an ongoing effort to monitor the progress of Drainage Facility No. 2, the court scheduled another status conference for the parties to report on the efforts undertaken to complete the project.

 Within that fourteen day period, Ms. Kinley signed a release as she was first noticed in the Consent Order of September, 1993 ("Amended Release"). But, as with all other matters in the case up to this point, the signing of the release was no simple execution. The circumstances surrounding the signing of the release Ms. Kinley now wants to rescind weigh heavily in the court's determination of the issue, and therefore require detailed attention.

 As a courtesy and directed by the court, Mr. Becker, counsel for the Borough of Wenonah, sent Ms. Kinley a release for her signature ("1997 Release") after the court instructed her to execute a release within fourteen days. See Court Order 2 (Jan. 17, 1997). Apparently, Mr. Becker had also sent Ms. Kinley a release sometime in 1995 pursuant to the court's earlier instruction to sign a release (the "1995 Release"). The differences in the releases are not relevant because Ms. Kinley did not sign either. Instead, on her own volition, she submitted an Amended Release to the court.

 The Amended Release was an updated version of the 1995 Release with two changes made in light of developments in the case since 1995. Ms. Kinley changed the word "unknown" in the first paragraph of the 1995 Release to the date "June 30, 1997" since the court had set a completion date for the project. Additionally, she replaced the second paragraph of the 1995 Release with the second paragraph of the 1997 Release.

 Mr. Becker made changes in the 1997 Release that had not been in the prior releases sent to Ms. Kinley. First, the 1997 Release added other parties to be released that had not been previously named. It now stated that Ms. Kinley released the Borough of Wenonah, its governmental officials, agents, employees, successors and assigns, from any liability, while the 1995 Release only released the borough. Secondly, the 1997 Release released these parties from any liability of any past, present and future problems related to the drainage facility, while the 1995 Release absolved the borough from any liability or alleged problems related to the completion of the proposed project and did not specifically contain language about past, present, and future liability. See Amended Release (Jan. 27, 1997).

 On February 25, 1997, the parties appeared before the court for the status conference. During the conference, Mr. Becker objected to Ms. Kinley's Amended Release. *fn3" With the court's guidance, Ms. Kinley and Mr. Becker prepared a "Hybrid Release" that both parties signed. The negotiations of the executed release were put on the record and are set forth extensively herein as needed. The release states, in relevant part:

 
Specifically, Helen Kinley releases the Borough of Wenonah, its governmental officials, agents, employees, successors, and assigns, from any liability past, present and future for any alleged problems or damage which may be related to the drainage facility project.
 
Helen Kinley shall receive water and sewer service according to an Agreement between the Borough of Wenonah, the Deptford Township Municipal Utilities Authority, and Helen Kinley, which service shall be provided to Helen Kinley in accordance with the Consent Order under Civil Action 92-3216 (JHR) and the January 2 order of Judge Robert B. Kugler, United States Magistrate Judge.

 Hybrid Release (Feb. 25, 1997).

 At this point, construction of Drainage Facility No. 2 was to begin, and Ms. Kinley, having finally signed a release, was to receive water and sewer services from the borough.

 On March 6, 1997, the court held a status conference to monitor the progress of the facility. At the conference, Plaintiff Cooper and the Borough of Wenonah unexpectedly expressed an interest in renegotiating the settlement of the damages portion of the case. The court obliged the parties, and they reached another agreement. The new settlement called for payment of a sum certain and changed the construction of the drainage facility yet again. But, instead of constructing a drainage facility, the Borough of Wenonah proposed to simply put rip rap and shrubbery on the plaintiff's land to disperse the flood water evenly over the soil ("Drainage Facility No. 3"). Ideally, the soil will absorb the water evenly and thereby prevent flooding and water damage to the plaintiff's property and home. Like the prior proposed facilities, Drainage Facility No. 3 must comport with the Soil and Erosion standards and all relevant federal and state laws. See Consent Order P B (Sept. 27, 1993). On March 31, 1997, the case, having been finally resolved, was closed by an Order of Dismissal.

 Before the case officially closed, Ms. Kinley notified the court that she wanted to rescind the Hybrid Release that she signed on February 25, 1997 and forgo receiving water and sewer services from the Borough of Wenonah. Ms. Kinley first noticed the court with her desire to rescind the release in a hand delivered letter to the court on March 26, 1997. Letter from Ms. Kinley to Hon. Robert B. Kugler (Mar. 26, 1997). Several months later, the court held another status conference. At the conference, Ms. Kinley reiterated her desire to rescind the Hybrid Release. See Transcript 28:21 - 29:18 (Jun. 12, 1997). She also broached the subject of getting counsel in this matter. The court directed Ms. Kinley to submit her moving papers, from her counsel or pro se, on or before June 30, 1997. Transcript 49:1, 50:23 - 51:3 (Jun. 12, 1997).

 Ms. Kinley submitted several letters and an affidavit to the court on the issue of rescinding her release. Additionally, Isaac H. Green, Esquire, entered an appearance and sent a letter to the court on her behalf. Letter from Mr. Green to Hon. Robert B. Kugler (Jun. 30, 1997). In her various letters, Ms. Kinley states she wants to rescind the release because (1) she is concerned with the progress in "supplying water and sewer services" to her property, id. ; (2) she is frustrated trying to get a status report from the Borough of Wenonah about the project's progress, id. ; (3) she has been subjected to verbal abuse from Mr. Becker, id. ; (4) she was never aware that a pump was to be installed on her property, letter from Ms. Kinley to Hon. Robert B. Kugler (Apr. 23, 1997); (5) she signed based upon the construction of Drainage Facility No. 2 which was subsequently changed by the settlement on March 6, 1997 to Drainage Facility No. 3, letter from Ms. Kinley to Hon. Robert Kugler (May 7, 1997); (6) she was told by the court to sign the release on February 25, 1997, Kinley Aff. P 4; and (7) Wenonah has not complied with any court orders to build the drainage facility. Id. PP 5, 6.

 DISCUSSION

 PERMISSIVE INTERVENTION

 Before the court delves into the substantive issues, Ms. Kinley must be properly before the court. As such, the court sua sponte moves to allow Ms. Kinley to permissively intervene in the case for the purposes of her motion to rescind the release. Federal Rule of Civil Procedure 24(b) governs permissive intervention and states in relevant part:

 
Upon timely application anyone may be permitted to intervene in an action: . . . (2) when the applicant's claim or defense and the main action have a question of law or fact in common.

 The determination to allow intervention is left to the court's broad discretion. Fed. R. Civ. P. 24 (b). The motion is timely because it is by the court. Additionally, there are common questions of fact. The issue of rescission is intricately linked to the success of the settlement of the underlying case. If Ms. Kinley is allowed to rescind her release the underlying case is not settled and the case will likely go to trial. Transcript 46:8 - 13 (Jun. 12, 1997) (COURT: The problem now becomes [that the] whole settlement of this case is dependent upon this question of [the] release and whether [Ms. Kinley] can rescind it). Accordingly, Ms. Kinley is hereby permitted to permissively intervene in this case for the limited purpose of requesting that the court rescind the release she executed absolving the Borough of Wenonah from any liability and claims related to the construction of a drainage facility on Plaintiff Cooper's property.

 RELEASE

 A release is a writing which provides that a duty owed to the maker of a release is discharged immediately or upon the occurrence of a condition. RESTATEMENT (SECOND) OF CONTRACTS § 284. "The rules of interpretation that apply to contracts generally apply also to writings that purport to be releases." Id. at Comment C. Since the release represents a contract between Ms. Kinley and the Borough of Wenonah, contract principles determine the rights of the parties.

 While jurisdiction of this case is based on a federal question, the present motion to rescind the release is based in contract law. Absent federal requirements, the "laws of the several states . . . shall be regarded as rules of decisions in civil actions . . . in the federal courts." 19 WRIGHT, MILLER & COOPER, FEDERAL PRACTICE AND PROCEDURE, § 4520 at 637 (2d Ed. 1996). "In construing matters of state law in pendent claims or in state law matters otherwise subsidiary to its federal question jurisdiction, a federal court exercising federal question jurisdiction, like a federal court sitting in diversity, is duty-bound to apply the law of the state in which it sits." Vargas v. Calabrese, 714 F. Supp. 714, 719 (D.N.J. 1989) aff'd in relevant part 949 F.2d 665 (3d Cir. 1991); See also Van Houten Service Inc. v. Shell Oil Co., 417 F. Supp. 523, 527 (D.N.J. 1975) aff'd 546 F.2d 421 (3d Cir. 1976). Therefore, the release in question will be determined by the principles of New Jersey contract law.

 PRESUMPTIVE CONCLUSION OF VALIDITY

 In New Jersey, a signed release carries considerable weight.

 
It is the general rule that where a party affixes his signature to a written instrument, such as a release, a conclusive presumption arises that he read, understood and assented to its terms and he will not be heard to complain that he did not comprehend the effect of his act in the signing.

 Peter W. Kero Inc. v. Terminal Construction Corp., 6 N.J. 361, 368, 78 A.2d 814, 817 (1951) (emphasis added); See also Van Houten, 417 F. Supp. at 527.

 The records shows that Ms. Kinley read, understood and consented to the terms of the Hybrid Release, therefore the release is presumptively valid. Her questions, criticisms and comments suggest that she read and understood the terms of the release. The execution of the release after extensive discussions and negotiations concerning its scope suggests that she assented to its terms.

 In her first objection, Ms. Kinley took exception to the use of the clause concerning Wenonah's liability where the borough was released from "any liability for any alleged problems that may or may not be related" to the proposed facility. The records follows.

 
MS. KINLEY: [omitted] It said it may or may not be related. And I'm having some problems that are not related.
 
[omitted]
 
MS. KINLEY: Wait. What does that say right there? Release all employees, successors, government officials from any liability for any alleged problem ...

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