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Select Towing v. Township of West Orange

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


July 17, 2007

SELECT TOWING, PLAINTIFF-APPELLANT,
v.
TOWNSHIP OF WEST ORANGE, DEFENDANT-RESPONDENT.

On appeal from Superior Court of New Jersey, Law Division, Essex County, Docket No. ESX-L-3000-06.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted June 20, 2007

Before Judges Wefing and Weissbard.

Plaintiff, Select Towing (Select), appeals from an order of summary judgment dismissing its complaint in lieu of prerogative writs. Plaintiff's complaint challenged the constitutionality of a portion of an ordinance enacted by defendant, Township of West Orange (the Town), regulating towing. We reverse and remand for further proceedings.

On February 21, 2006, the West Orange Township Council enacted an amendment to the Township's ordinance entitled, "Police-Requested Towing and Storage Services," which included the following provision:

e. No licensee may be listed more than once and no licensee may rent or lease equipment, employees or storage spaces from or to any other licensee in the West Orange Township rotation, or enter into any other arrangements the effect of which will multiply the licensee's participation in the rotation. Additionally, no licensee shall lease equipment, employees or storage space from any towing vendor who currently leases equipment, employees or storage space to any other licensee.

Plaintiff is a towing company licensed under the West Orange ordinance. Plaintiff not only tows and stores vehicles, but also rents out tow vehicles, tow equipment and property for the storage of towed vehicles. On April 7, 2006, plaintiff filed a complaint in lieu of prerogative writs alleging that:

8. By adopting its ordinance and including such preclusionary provision therein, defendant, West Orange, has restrained and precluded any past or future applicant from towing within the municipality from renting or leasing from a licensee, [while] allowing such applicant to rent or lease from a company which is not itself a licensee, but which leases to others who are licensees.

9. By adopting its ordinance, defendant, West Orange, has acted arbitrarily and capriciously and without regard for the business of plaintiff or any other licensee or potential licensee of the Township.

10. By adopting its ordinance, defendant, West Orange, has interfered with plaintiff's ability to engage in its business, thus damaging plaintiff.

11. By adopting its ordinance, defendant, West Orange, has violated plaintiff's right to equal protection in contravention of 42 USC Section 1983 and the New Jersey Constitution.

12. By adopting its ordinance, defendant, West Orange, has unfairly discriminated against plaintiff to plaintiff's detriment and in violation of Federal and State Laws Against Discrimination.

13. By adopting its ordinance, defendant, Township of West Orange, has engaged in unfair practices in violation of its obligation to act fairly to all citizens of the municipality.

14. Defendant, West Orange, is further liable for plaintiff's counsel fees and costs pursuant to 42 USC Section 1988 and other Federal and State statutes.

In lieu of filing an answer, defendant moved for summary judgment. In support of that motion, defendant's counsel provided a certification setting forth the history and purpose of the amendment:

6. All-State Salvage is a company organized under the laws of the State of New Jersey in the business of towing and storage of motor vehicles and is also currently a licensed towing company authorized to service vehicles within the Township of West Orange ("All-State").

7. In April 2005, Mr. John McElroy, a principal of Select, suggested that the Township make various changes to Chapter 5 Section 32 of the Revised General Ordinances of the Township of West Orange, entitled "Police-Requested Towing and Storage Services." ("Towing Ordinance"). See Mr. McElroy's suggestions, a true and correct copy of which is annexed hereto as Exhibit "A."

8. The Towing Ordinance regulates the issuance of municipal towing licenses to towing companies wishing to participate in providing municipal towing services and rotates the licensees on a weekly basis to service the towing needs of the Township Police Department. See the West Orange Towing Ordinance prior to the passage of the subject amendments, a true and correct copy of which is annexed hereto as Exhibit "B."

9. Mr. McElroy's suggested changes included, among other things, equipment ownership requirements that would exclude all types of equipment leasing except for finance leasing. See Exhibit "A."

10. Also included in Mr. McElroy's suggested amendments was a provision that required each licensee to have agreements with at least one other licensed West Orange tower, a provision that would favor local towing companies over those outside of the Township. See id.

11. On May 19, 2005, Richard A. Ragsdale, Esq., attorney for All-State, submitted a letter to the Township responding to Select's proposed changes to the Towing Ordinance. See Mr. Ragsdale's letter, a true and correct copy of which is annexed hereto as Exhibit "C."

12. In his letter, Mr. Ragsdale objected to Select's proposed ordinance changes because they would prevent All-State from obtaining a license; All-State leases its equipment from another company located outside of the Township. See id.

13. Furthermore, Mr. Ragsdale proposed his own suggested changes including, among other things, a restriction on the ability of a licensee to collude with another licensee in order to multiply the licensee's participation in the rotation. See id.

14. After considering these suggestions, January 17, 2006, the Township Council passed ordinance #2053-06 on first reading, amending and supplementing the Towing Ordinance (the "Amended Ordinance"). See the Minutes from the January 17, 2006 Council Meeting, a true and correct copy of which is annexed hereto as Exhibit "D."

15. The Amended Ordinance includes, among other things, an anti-collusion provision that reads as follows:

No licensee may be listed more than once and no licensee may rent or lease equipment, employees or storage spaces from or to any other licensee in the West Orange Township rotation, or enter into any other arrangements the effect of which will multiply the licensee's participation in the rotation. Additionally, no licensee shall lease equipment, employees or storage space from any towing vendor who currently leases equipment, employees or storage space to any other licensee.

See the Amended Ordinance, a true and correct copy of which is annexed hereto as Exhibit "E."

16. The Legislative History of the Amended Ordinance stated that the purpose for this provision was to prevent unfair competition and collusion:

This is intended to prevent licensees from multiplying the licensee's participation in the rotation. Also toward that goal, this Ordinance adds subsection (e) to Chapter 5, Section 32.7, prohibiting the leasing of equipment, employees or storage space from one towing company to another within the Township's rotation. These provisions are meant to specifically prohibit towing companies from setting up shadow entities in order to reserve more than one slot in the towing rotation.

[exhibits omitted.]

After submission of briefs, the court heard oral argument on July 21, 2006. The Town's attorney took the position that the ordinance was simply intended to prohibit "any arrangement that would have the effect of multiplying the licensee's participation in the rotation" to ensure that all of the licensees are "separate independent companies." In opposition, plaintiff's attorney argued:

[PLAINTIFF'S COUNSEL]: Thank you, Judge.

If Your Honor please, the Court should not forget that this is essentially a motion to dismiss on the pleadings. The suggestion that has been presented is that everything that is necessary for the Court to make a decision in a prerogative writ action, which attacks the constitutionality of an ordinance is before you. That is not correct.

The cases are clear that constitutional issues that are raised with respect to ordinances should not be dealt with on summary judgment, they should be dealt with at plenary hearings.

The major issue in this case is not as [defense counsel] would suggest that Select is not able to be a licensee. The issue is that Select, nor anyone else, cannot engage in any kind of a business relating to leasing of vehicles to anyone.

The suggestion in this ordinance is that there is an exclusion to entities that own and operate leasing companies. There is an exclusion for entities who want to lease to multiple other persons. [Defense counsel] suggests to the Court in his argument that towing vendor means licensee or licensor or something. There's no definition of the word towing vendor in the ordinance.

To my - - to my mind, and the manner in which this complaint has been couched, and the manner in which my argument has been presented to the Court, this ordinance excludes any third party business from engaging in business in leasing employees, in leasing real estate, in leasing towing vehicles to persons who want to tow for the City of West Orange. In essence, it attempts to control third persons, third party entities who are not even licensees.

The last sentence of the section of the ordinance that is in question says that a licensee cannot lease from - - not more than one licensee can lease from any towing vendor. Let me give Your Honor an example. If Hertz Equipment Company rented tow vehicles, then no more than one licensee in the City of West Orange could rent from Hertz. That would be a restraint of trade on Hertz's business.

There's no reason to suggest that Select or anybody else, whether a licensee or not, could not rent to any number of people. I suggest to the Court that we need testimony. That Your Honor should take into consideration testimony at a plenary hearing, and that this case is not ripe for what [defense counsel] suggests is a clear and obvious determination by the Court that can be made from the ordinance itself. It's not clear. There is an ambiguity contained in the ordinance. It requires testimony.

Additionally, the test for constitutionality is not what is included. The test is what is excluded, and what is excluded are other persons who can lease vehicles to licensees. If we were to take an entity that was outside of West Orange, that entity could lease any - - to any number of licensees within the municipality without any question at all. Because, according to [defense counsel] and according to the municipality, it is not a licensee.

Also, there's the suggestion that there is an alter ego. There is absolutely no evidence before this Court whatsoever that Select or any persons that - - or any entities that Select was leasing to have any relationship to Select whatsoever. And since [defense counsel] brought up the issue of what occurred this past week before the Council, at that time there was an attempt to show that there was some kind of relationship between Select and the two other entities who were attempting to become licensees, West Orange Towing and Frank's Auto Repair. There was absolutely no evidence presented to suggest that they had any relationship to Select whatsoever, except that they were leasing vehicles and personnel from Select. There was no relationship in a corporate sense. There was no ownership interest. There was absolutely nothing. They were separate and distinct entities.

The same - - the same matter presents to the Court in this case that there is absolutely no evidence, not one scintilla of evidence that there is any relationship between Select and any of the other companies that it attempts to lease to.

What I'm suggesting to the Court is that, number one, this case is not ripe for a determination by the Court without the defendant having even filed an answer. All the defendant is saying is that we think that there is - - that this ordinance is constitutional, that this ordinance is not arbitrary. Just because they say so, doesn't make it so. There's evidence that has to be presented to the Court in a plenary fashion, and the cases are very clear that constitutional issues should not be decided on summary judgment motions.

The entirety of the judge's ruling was as follows:

There's absolutely nothing in the ordinance which would favor West Orange entities or people. Nothing in it which would favor outside of West Orange entities or people. So there's really nothing discriminatory or exclusionary about it, it applies to everybody.

So there's no doubt that the ordinance itself is constitutional and I will grant the motion.

On appeal, plaintiff argues that the Law Division judge failed to apply the proper standard in deciding the motion and that the ordinance "is unconstitutional and plaintiff should have had a chance to prove it."

Plaintiff's first argument is that the case should not have been decided on summary judgment. Because the issue involved only an interpretation of law, we review de novo. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995). Having done so, we agree with plaintiff's argument. While defendant is correct in asserting that prerogative writ complaints are subject to summary judgment, see D'Anastasio Corp. v. Twp. of Pilesgrove, 387 N.J. Super. 241, 245 (App. Div. 2006), this is not such a case. The record is much too thin to resolve the significant constitutional issues involved, including plaintiff's claim that the ordinance is unconstitutional as applied. See Ibid. Indeed, we entertain substantial doubt as to the facial validity of the ordinance under either the "rational basis" test,*fn1 which is applicable to plaintiff's federal equal protection claims in these circumstances, or the balancing test utilized for equal protection analysis under our State constitution. See Brown v. City of Newark, 113 N.J. 565, 571-74 (1989); DeFalco Instant Towing, Inc. v. Borough of New Providence, 380 N.J. Super. 152, 158-59 (App. Div. 2005). The section of the ordinance in question appears to go far beyond its stated purpose; stated differently, the amendment may not be "rationally related to the objective sought to be attained." Id. at 159.

These are among the questions that deserve a full hearing based on a complete record, as envisioned by R. 4:69-4, followed by the requisite findings of fact and conclusions of law. R. 1:7-4(a). The terse ruling by the judge did not comport with the Rule.

Reversed and remanded.


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