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Municipal Council of the City of Newark v. James

May 24, 2005

MUNICIPAL COUNCIL OF THE CITY OF NEWARK, PLAINTIFF-APPELLANT,
v.
SHARPE JAMES, MAYOR OF THE CITY OF NEWARK, JOANNE Y. WATSON, CORPORATION COUNSEL OF THE CITY OF NEWARK, AND DANIEL GONZALEZ, DIRECTOR OF FINANCE, DEFENDANTS-RESPONDENTS.



On certification to the Superior Court, Appellate Division.

SYLLABUS BY THE COURT

(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).

This appeal arises from a conflict of authority between the Municipal Council of the City of Newark (City Council) and its Mayor, Sharpe James (Mayor).

The City of Newark is organized under the statutory scheme of the Optional Municipal Charter Law, N.J.S.A. 40:69A-1 to -210, (the Faulkner Act). The Faulkner Act authorizes participating municipalities to choose from among four plans of government set forth in the Act. The City of Newark's municipal government is organized under the mayor-council plan C form of government set forth in Sections 60.1 through 60.7 of the Act. The mayor-council plan is very close to the presidential or gubernatorial form in its concentration of power in the hands of a popularly elected mayor. The authority of the mayor under this plan is substantial and the mayor-council plan has been adopted by most of New Jersey's largest municipalities. Under the mayor-council plan, the municipality is governed by an elected council and an elected mayor. Generally, all administrative and executive functions assigned by law to the governing body are exercised by the mayor, while the legislative and investigative functions are exercised by the council.

Since approximately 1986, the Mayor proposed municipal budgets that included appropriations to fund contracts for consulting services to be performed by consultants that the City Council would retain to assist it in carrying out its legislative, investigatory, and auditing responsibilities. In practice, once the budget was adopted, City Council adopted resolutions, rather than ordinances requiring the Mayor's approval, by which City Council retained the consultants it deemed necessary to carry out its duties. Until 1995, City Council directly entered into those consultant contracts on its own authority. However, based on Corporation Counsel's advice, a new three-step procedure was put into effect in 1995: City Council would adopt a resolution authorizing the entry into a consultant contract, the resolution would then be reviewed and approved by Corporation Counsel, and the City Clerk would execute the consultant contract.

In 2002, following the Mayor's re-election for a fifth consecutive term, the City's then Corporation Council undertook an analysis of the Mayor's and City Council's rights and obligations under the Faulkner Act as then practiced in Newark. Corporation Counsel opined that the existing practice by City Council was in derogation of the Faulkner Act because the statute expressly empowers only a mayor with the statutory authority to negotiate and sign contracts on behalf of the municipality. As a result, Corporation Counsel refused to approve any resolution-based contracts and the City's Director of Finance refused to certify funds for the challenged contracts.

Corporation Counsel's actions created two categories of affected contracts: those contracts previously approved by both City Council and Corporation Counsel for which funds had been certified by the Director of Finance and that had been either partially or fully performed but remained unpaid, and those contracts that had been approved by City Council but rejected by Corporation Counsel. Ultimately, the only contracts in dispute were the consultant contract resolutions rejected by Corporation Counsel, consisting of about fifteen separate contracts worth over $1.7 million.

In February 2003, City Council filed a complaint seeking injunctive relief and declaratory relief compelling the Mayor, Corporation Counsel, and the Director of Finance to return to the previous contract procedure. The Mayor, Corporation Counsel and the Director of Finance responded by seeking a declaration that only the Mayor could initiate, negotiate, or sign contracts for the City under the Faulkner Act, which then could be accepted or rejected by City Council in accordance with procedures in the Act. They also sought an injunction prohibiting City Council from initiating, negotiating, awarding, and executing contracts on its own or through the City Clerk.

A hearing was held on May 30, 2003 before the trial court, which denied City Council's applications to have its pending contract resolutions approved by Corporation Counsel and funds certified by the Director of Finance. Instead, the court granted declaratory judgment in favor of the Mayor, Corporation Counsel and the Director of Finance, holding that, under the Faulkner Act, the Mayor is responsible for initiating, negotiating, and signing contracts and the City Council is responsible for approving or rejecting those contracts presented by the Mayor. The trial court determined that City Council does not have the authority to unilaterally retain consultants, nor does it have the authority to tell the Mayor to certify the funds to implement those contracts.

City Council appealed to the Appellate Division, which affirmed the decision of the trial court.

The Supreme Court granted certification.

HELD: Under the circumstances presented here, the statutory scheme of the Faulkner Act, under which the City of

Newark is organized, allocates the responsibility for initiating, negotiating, and signing contracts to the Mayor, while City Council is charged with approving or rejecting the contracts presented to it by the Mayor.

1. The Faulkner Act's mandate is clear and unmistakable -- the Mayor is charged with the duty to negotiate and sign contracts that bind the City of Newark, subject to City Council's approval, while City Council is charged with the duty of approving or rejecting those contracts presented to it by the mayor. There is no room for the interpretation advanced by City Council that would give the responsibility for negotiating and signing contracts for City Council's consultants to City Council alone. This conclusion is underscored by the 1985 Lynch Amendment to the Faulkner Act. (Pp. 13-17)

2. City Council relies on the Lynch Amendment, the Appellate Division opinion in Newark City Council v. James, and the Governor's Reconsideration and Recommendation Statement, Statement to Senate Bill 1206, to argue that, as a matter of law, it is entitled to unilaterally issue contracts for consultant services. These cited authorities are neither persuasive nor controlling. (Pp. 17-19)

3. In light of the assignment of contracting duties already set forth in the Faulkner Act, the Lynch Amendment cannot be reasonably read to extend as far as City Council would have it reach, giving it contracting authority on its own. (Pp. 19-20)

4. City Council argues that Section 5 of the Local Public Contracts Law allows a governing body to purchase professional services by resolution, without public advertisements or competitive bids; therefore, City Council can purchase professional services without input from the Mayor. That reading of the Local Public Contracts Law is too expansive and is contrary to the balanced scheme created by the mayor-council plan of government under the Faulkner Act. (Pp. 20-21)

5. The Faulkner Act burdens the Mayor and City Council with working cooperatively for the benefit of the municipalities residents. There are or will be instances when either the Mayor or City Council should subordinate their respective authority as a matter of simple social harmony and proper statesmanship. (Pp. 21-22)

Judgment of the Appellate Division is AFFIRMED.

CHIEF JUSTICE PORITZ and JUSTICES LONG, LaVECCHIA, ZAZZALI and WALLACE join in JUSTICE RIVERA-SOTO'S opinion. JUSTICE ALBIN did not participate.

The opinion of the court was delivered by: Justice Rivera-soto

Argued January 31, 2005

In our representative democracy, clashes of authority between branches of government are the means by which the tensions among them are defined and, ultimately, resolved. This appeal presents one such conflict, pitting the Municipal Council of the City of Newark against its Mayor.

We hold that, under the circumstances presented here, the statutory scheme of the Optional Municipal Charter Law, N.J.S.A. 40:69A-1 to -210 (the Faulkner Act), under which the City of Newark is organized, allocates the responsibility for initiating, negotiating, and signing contracts to the mayor of the municipality, while the city council is charged with approving or rejecting the contracts presented to it by the mayor.

I.

A.

"The Faulkner Act is an elective statutory scheme that authorizes participating municipalities to choose [from among] four plans of government that are set forth in the Act." McCann v. Clerk of City of Jersey City, 167 N.J. 311, 324 (2001). Specifically, "[t]he Faulkner Act 'was created with the intent to confer upon municipalities the greatest possible power of local self-government consistent with the Constitution of this State. . . .'" Id. at 328 (citing Casamasino v. City of Jersey City, 158 N.J. 333, 342 (1999)). At its foundation, the Faulkner Act creates four optional forms of municipal government -- the mayor-council plan, N.J.S.A. 40:69A-31 to -67; the council-manager plan, N.J.S.A. 40:69A-81 to -98; the small municipality plan, N.J.S.A. 40:69A-115 to -132; and the mayor-council-administration plan, N.J.S.A. 40:69A-149.1 to -149.16. Each Faulkner Act form of government "divides up the 'bundle of rights' [afforded under the Constitution] differently, presumably so as to be the most effective in meeting the needs of a municipality's inhabitants." [Id. at 330 (citation omitted).]

Pursuant to a referendum adopted in 1953 by the voters of the City of Newark and effective July 1, 1954, the City of Newark's municipal government is organized under the mayor-council plan C form of government set forth in Sections 60.1 through 60.7 of the Faulkner Act. N.J.S.A. 40:69A-60.1 to -60.7. The unique characteristics of the Faulkner Act's mayor-council plan bear special note:

That plan is distinguishable from the other options because it is "quite close to the presidential or gubernatorial form in its concentration of power in the hands of a highly-visible, independently-elected Chief Executive who has substantial power over the administration." The mayor in a ...


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