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City of Atlantic City v. Gindhart


March 29, 2007


On appeal from Superior Court of New Jersey, Law Division, Atlantic County, Docket No. L-1056-04.

Per curiam.


Argued January 9, 2007

Before Judges Skillman and Grall.

Plaintiff, City Council of the City of Atlantic City (Council), appeals from an order granting summary judgment in favor of defendant Joseph Gindhart on the Council's complaint for indemnification. Because the Council lacked authority to initiate this litigation and because the entire controversy doctrine would bar the claim against Gindhart even if it had been filed on behalf of the City by a proper party, we affirm.

The government of Atlantic City is organized under the mayor-council plan for local government, N.J.S.A. 40:69A-31 to -67, pursuant to the Faulkner Act, N.J.S.A. 40:69A-1 to -210. See Feriozzi Co., Inc. v. City of Atlantic City, 266 N.J. Super. 124, 128 (Law Div. 1993). Gindhart contracted with the City to manage the City Solicitor's office for a one-year period beginning in January 2002. In April 2002 three women employed in that office filed suit against the City, Mayor Lorenzo Langford and Business Administrator Benjamin Fitzgerald. They asserted claims under New Jersey's Law Against Discrimination, N.J.S.A. 5:10-1 to -38, and alleged negligence. They claimed that Gindhart engaged in a course of sexually harassing conduct and created a hostile work environment and that the City, despite its awareness of this conduct, took no action to remediate the conduct.

Although Gindhart was not named as a defendant in that action, in October 2002 the trial court granted him leave to intervene and file a counter-claim against plaintiffs for defamation, slander and libel. The plaintiffs answered and amended their complaint to include Gindhart as a defendant. The City did not assert a claim for indemnification against Gindhart.

In September 2003 the plaintiffs and Gindhart filed a stipulation dismissing their claims against each other with prejudice. The plaintiffs subsequently settled all claims against the City, the Mayor and the Business Administrator. The Council approved that settlement.

After approving the settlement of the plaintiffs' claims, the Council filed this separate action on behalf of the City seeking indemnification. The Council named Gindhart and his law firm, Joseph G. Gindhart and Associates, as defendants. Gindhart served the Council with a notice of intent to seek sanctions for frivolous litigation and a demand to withdraw the complaint. See R. 1:4-8(b)(1). Subsequently, Gindhart filed an answer and moved to dismiss the Council's complaint. The Council filed a cross-motion for summary judgment.

Viewing the evidence submitted in the light most favorable to the plaintiffs, Judge Todd determined that the Council lacked authority to commence litigation seeking indemnification on behalf of the City and that the Council's suit was barred by the entire controversy doctrine. The Judge also determined that even if the claim for indemnification were not barred, the Council could not prevail on the merits.

While the appeal was pending, Gindhart moved before Judge Todd for counsel fees, costs and sanctions pursuant to Rule 1:4-8. That motion was denied without prejudice because the Council's appeal was pending in this court. We subsequently denied Gindhart's motion to dismiss the appeal as interlocutory and now exercise our discretion to grant leave to appeal as within time. See R. 2:4-4(b)(2); R. 1:1-2.

Because the authority to commence litigation on behalf of the City is an executive function that is assigned to the mayor under the mayor-council form of government, we agree that the Council had no authority to commence this lawsuit. See N.J.S.A. 40:69A-39. A municipality organized pursuant to the mayor-council form of government, is "governed by an elected council, and an elected mayor . . . ." N.J.S.A. 40:69A-32a; see Mun. Council of the City of Newark v. James, 183 N.J. 361, 364 (2005). Under this form of local government, absent specific contrary legislative direction, "administrative or executive functions assigned by general law to the governing body shall be exercised by the mayor, and any legislative and investigative functions assigned by general law to the governing body shall be exercised by the council." N.J.S.A. 40:69A-32b; James, supra, 183 N.J. at 364 (describing this form of government as similar to the "presidential or gubernatorial" form of government in its concentration of power over administration). The Legislature has expressly vested the mayor under this form of government with the authority to enforce the laws, supervise, direct and control the departments of municipal government and supervise the care and custody of municipal property, institutions and agencies. N.J.S.A. 40:69A-40a, c, f; see Vill. of Ridgefield Park v. Bergen County Bd. of Taxation, 61 N.J. Super. 170, 219-20 (App. Div.), rev'd on other grounds, 33 N.J. 262 (1960), appeal dismissed, 365 U.S. 648, 81 S.Ct. 834, 5 L.Ed. 2d 857 (1961). The Supreme Court has held that prosecution of litigation to enforce public policy or vindicate the public interest is a "classic function of the executive branch of government." Twp. of Mount Laurel v. Dep't of Pub. Advocate, 83 N.J. 522, 531 (1980).

Through the laws that establish the mayor-council plan of government, the Legislature vested legislative authority in the council. Its intention was "to confer on the council general legislative powers, and such investigative powers as are germane to the exercise of its legislative powers, but to retain for the mayor full control over the municipal administration and over the administration of municipal services." N.J.S.A. 40:69A-37.1. Consistent with its legislative authority, ordinarily the council's action must be taken by ordinance or resolution.

N.J.S.A. 40:69A-36. Because the legislative power includes the authority to investigate, however, and includes the authority to investigate officers and employees of the executive branch, David v. Vesta Co., 45 N.J. 301, 326 (1965), the council may subpoena and interrogate officials "in furtherance of its proper legislative function." In re Shain, 92 N.J. 524, 539 (1983) (noting that the grant of investigative authority is consistent with a reasonable interpretation of N.J.S.A. 40:69A-36, N.J.S.A. 40:69A-37 and N.J.S.A. 40:48-25); see also N.J.S.A. 40:69A-37.1. The Council's authority to investigate has not been construed to confer a right to commence litigation to enforce a claim for indemnification.

We see no basis for finding authority in the Council to litigate this case as a necessary incident or in furtherance of any authority expressly granted to it. Cf. James, supra, 183 N.J. at 363 (entertaining an appeal from litigation commenced by the City Council of Newark concerning its authority to contract consultants by resolution and noting that City Council could retain its own attorney to provide it with representation in a suit arising from a dispute about the respective authority of the mayor and the council); Gen. Assembly of State of N.J. v. Byrne, 90 N.J. 376, 381 (1982) (considering action for declaratory judgment on the constitutionality of a law vetoed by the Governor as an unconstitutional abridgement of executive authority and reenacted by the Legislature's override of that veto); Twp. of Dover v. Bd. of Adjustment of the Twp. of Dover, 158 N.J. Super. 401, 409 (App. Div. 1978) (recognizing the council's authority to litigate a claim that its powers were infringed by the township zoning board). In filing this complaint the Council did not seek to enforce or clarify its authority. The Council simply sought indemnification from a person who managed an office that is under the supervision of the Mayor.

We reject the Council's claims that pursuant to N.J.S.A. 2A:15-18, it may commence litigation of this sort based on its status as a representative of the taxpayers or that its members may do so collectively by invoking their status as individual taxpayers. In this case, there is no showing that "interests of the . . . municipality would be promoted" by the Council taking action to prosecute this suit without the approval of the mayor. See ibid.

Judge Todd also dismissed the Council's complaint on the alternative ground that the suit was barred by the entire controversy doctrine. The Council's objection to that ruling lacks sufficient merit to warrant more than the brief comment that follows. See R. 2:11-(e)(1)(E).

The Council's complaint against Gindhardt is barred by Rule 4:30A. The Rule states: "Non-joinder of claims required to be joined by the entire controversy doctrine shall result in the preclusion of the omitted claims to the extent required by the entire controversy doctrine . . . ." Ibid. While "the entire controversy doctrine 'does not bar component claims [either] unknown, unarisen, or unaccrued at the time of the original action,'" Harley-Davidson Motor Co., Inc. v. Advance Die Casting, Inc., 150 N.J. 489, 494 (1997) (quoting Mystic Isle Dev. Corp. v. Perskie & Nehmad, 142 N.J. 310, 323 (1995)) (alteration in original), it must be read in connection with Rule 4:7-5.

With respect to claims for indemnification, Rule 4:7-5 provides:

(b) Claim for Contribution or Claim for Indemnity. A defendant shall assert a claim for contribution or indemnity against any party to the action by inserting in the answer . . . a general demand for contribution or indemnity from a named party . . . [and] the answer shall be served upon the parties against whom such relief is sought . . . .

As the Supreme Court explained in Harley-Davidson, Rule 4:7-5 was specifically amended "in accordance with the . . . [entire controversy doctrine] . . . to require defendants to assert any cross-claims for contribution and indemnity which they may have against any other party in the action itself despite the fact that the cause of action for contribution and indemnity does not technically accrue until payment of the judgment by that defendant." 150 N.J. at 498 (quoting Pressler, N.J. Court Rules, cmt. 2 on R. 4:7-5(b) (1997)).

Where, as here, all parties who are interested in the determination and allocation of liability based upon the same facts have been joined in the original action, an affirmative claim for indemnification can and should be litigated in that action. See Buck v. MacDonald, 300 N.J. Super. 158, 161-62 (App. Div. 1997). Allowing a separate action for indemnification under that circumstance would unnecessarily prolong the litigation and undermine important objectives of the entire controversy doctrine. Id. at 162. Both the City and Gindhart were defendants in the original action. Gindhart participated in the underlying harassment litigation for nearly one year before settling his claims with the plaintiffs. The entire controversy doctrine would preclude this subsequent complaint for indemnification of the City even if that complaint had been filed by a proper party. See ibid. For that reason, Judge Todd's determination that the claims were barred must be affirmed.

Our conclusion that the Council's complaint was properly dismissed on two separate grounds makes it unnecessary for us to consider whether the claims asserted were viable.



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