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Wynfield Corp. v. Killam Associates

April 24, 2006

WYNFIELD CORPORATION, A CORPORATION OF THE STATE OF NEW JERSEY, INDIVIDUALLY AND ON BEHALF OF THE CLASS OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFF-APPELLANT/ CROSS-RESPONDENT,
v.
KILLAM ASSOCIATES, DEFENDANT-RESPONDENT/CROSS-APPELLANT, AND HAMBURG BOROUGH AND SUSSEX COUNTY CONSTRUCTION BOARD OF APPEALS, DEFENDANTS.



On appeal from Superior Court of New Jersey, Law Division, Sussex County, Docket No. SSX-L-000594-01.

The opinion of the court was delivered by: Fuentes, J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

APPROVED FOR PUBLICATION

Argued April 5, 2006

Before Judges Wefing, Wecker and Fuentes.

In this suit alleging improper billing brought by a developer against the municipally-retained engineering firm that oversaw its project, plaintiff, Wynfield Corporation, appeals from the Law Division's denial of its motions for class certification, for partial summary judgment on the class action counts in its complaint, and for counsel fees. Plaintiff contends that the trial court erred in concluding that the Superior Court was not the better forum for hearing the claims of similarly-situated plaintiffs, and that an award of counsel fees was not warranted where plaintiff's lawsuit had not resulted in a tangible economic benefit to similarly-situated non-litigants.

In its cross-appeal, defendant Killam Associates (now known as Hatch Mott MacDonald I&E) asserts that the trial court erred in interpreting N.J.S.A. 40:55D-53.2(a), the statute governing payment to professionals for services rendered to municipalities, so as to preclude separate billing for secretarial expenses.

After considering the record before us, and in light of prevailing legal standards, we affirm. We hold that the statutory remedy set forth in N.J.S.A. 40:55D-53.2a for such billing disputes provides the exclusive remedy for plaintiff's action. We will consider and analyze the legal issues presented in the context of the following factual record developed before the trial court.

I.

A. Administrative Review

In late 2000 and early 2001, plaintiff Wynfield Corporation, a developer, was in the process of building an eleven-house subdivision in Hamburg Borough. Defendant Killam Associates, an outside engineering firm retained by the Borough in both 2000 and 2001, was responsible for, among other things, reviewing the plans for the subdivision and performing periodic site inspections. The professional fees charged by defendant for these services were passed on to plaintiff and deducted from the escrow account plaintiff was required to maintain under N.J.S.A. 40:55D-53.2(b), the statute governing payment to professionals for services rendered to municipalities.

In accordance with N.J.S.A. 40:55D-53.2(a), defendant submitted a schedule of its "professional charges" at the time it applied to serve as the Borough's engineering consultant for calendar year 2000. In this schedule, "[s]ecretarial [p]ersonnel" was identified as one of the seven disciplines, which also included engineers, designers, geologists and surveyors, into which defendant's support staff was divided. Secretarial time was to be billed out at $35.00 to $56.00 per hour. The schedule did not contain any other miscellaneous charges.

In the "Hourly Rate Schedule" furnished by defendant in conjunction with its 2001 application to the Borough, defendant again included "secretarial personnel" as one of eight separate disciplines into which its support staff was divided. This schedule provided for secretarial time to be billed out at a flat rate of $50.00 per hour. The 2001 schedule also included a new section entitled "Expenses," wherein defendant detailed the additional charges that would be imposed for, among other things, mileage, photocopies, postal services, office computers and fax transmittals.

Between August 2000 and March 2001, defendant submitted seven invoices to the Borough for engineering services in connection with plaintiff's subdivision. Defendant also mailed "courtesy" copies of these invoices to plaintiff. Contrary to N.J.S.A. 40:55D-53.2(c), these invoices did not identify: (1) the type of service provided; (2) the service provider or his or her hourly rate; (3) the date of the service; or (4) the hours spent to the nearest quarter hour. The invoices merely identified the total amount due for the time collectively spent by unidentified "Professional Personnel," plus an amount due for "Reimbursable Expenses," which typically included printing, postage and mileage. While defendant did supply some backup information to the Borough alone on separate sheets, this information was limited to the date of the service, the name of the service provider, the time spent to the nearest half hour, the provider's hourly rate, and the name of the individual who incurred the mileage charges.

Plaintiff began disputing defendant's bills after its November 2000 invoice proved to be significantly higher than all prior invoices. Over the next several months, plaintiff secured copies of defendant's backup sheets from the Borough, as well as some other backup information, and determined that, between August 2000 and March 2001, it had been billed $1,429.66 for secretarial services; $412.75 for preparation of an unnecessary site map; $859.28 for project coordination time; $660.93 for time spent responding to billing inquiries; and an unspecified amount for travel time.

Believing these charges to be unauthorized under N.J.S.A. 40:55D-53.2(a), plaintiff brought its complaints to the attention of the Borough Council, in accordance with the procedure set forth in N.J.S.A. 40:55D-53.2a(a) for addressing billing disputes. When the matter was not resolved to plaintiff's satisfaction, plaintiff filed an appeal with the Sussex County Construction Board of Appeals (the "Board") on March 2, 2001, in accordance with the procedure set forth in the statute.

A hearing was held before the Board on August 9, 2001. Notably, counsel for the Borough declined to participate, deferring instead to defendant's counsel. At this hearing, plaintiff's president, Robert Bracken, identified the objectionable invoices, and the specific amounts in dispute. He noted that he was unable to identify the travel time for which he was billed, because it was simply billed as regular professional time. Bracken also indicated that defendant conceded that it had no backup documentation from which to differentiate between the time a professional spent traveling to the job site and the time actually spent at the site.

John Ruschke, one of the engineering associates assigned by defendant to work on plaintiff's project, confirmed that travel time and work time on a site were not distinguished on defendant's bills. He stated that, if an engineer stopped at several sites in one area on one day, he or she would divide up the travel time "fairly" between the developers. Ruschke reported that defendant maintained no other records other than the engineer's daily time sheets from which actual travel time could be determined. In a written submission to the Board, defense counsel asserted that secretarial time was a direct "out-of-pocket cost[] and not overhead." By contrast, Ruschke testified that secretarial time was billed out as professional time, not as an out-of-pocket expense.

By resolution dated August 20, 2001, the Board approved defendant's charges for project coordination and travel time, disallowed defendant's charges for billing inquiries and map preparation, and reduced defendant's charges for secretarial time from $50 per hour to $25 per hour. In so doing, the Board determined that travel time was properly included in a professional's reported work time. The Board made no finding, however, as to whether a secretary was a professional for purposes of ...


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