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L & M Corp. v. Township of West Orange


March 11, 2008


On appeal from the Superior Court of New Jersey, Law Division, Essex County, L-7253-06.

Per curiam.


Submitted November 28, 2007

Before Judges Wefing, R. B. Coleman and Lyons.

Plaintiff, L & M Corporation (L & M), appeals from a January 5, 2007 order dismissing its November 6, 2006 complaint in lieu of prerogative writs with prejudice. Because we conclude the grant of summary judgment was premature, we reverse and remand for further proceedings.

Plaintiff challenges an amendment to the towing ordinance of the Township of West Orange. The amended ordinance, Section 5-32.7(e), provides as follows:

No licensee may be listed more than once and no licensee may rent or lease equipment, employees, 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.

According to the legislative history of the amended ordinance, the objective of the amendment is to prevent towing companies from capturing more than one slot in the municipal towing rotation:

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.

The Township also argues the amended ordinance was adopted to ensure that sufficient equipment, vehicles and storage space are available to the Township at the time of the licensee's rotation.

On July 18, 2006, the West Orange Township Council held a hearing regarding the appointment of licensees for towing for and on behalf of the Township Police Department. Among the applicants for towing licenses were Twin Towing, Inc. (Twin), All State Salvage Co. (All State), Select Towing (Select), Frank's, and West Orange Towing. Plaintiff L & M, is a leasing company. It was not an applicant to become a towing licensee. It does, however, have leasing arrangements with three of the towing license applicants: Select, Frank's, and West Orange Towing. In addition, John McElroy is the president of both L & M and Select and they share the same address, in West Orange. The three licensing applicants leased the same personnel, storage space, and equipment from L & M.

After an initial investigation, the Township awarded towing licenses to Twin, All State, and Select based apparently on the advice of the Township attorney and on the terms of the newly amended ordinance. The Township reasoned that since L & M had agreements to lease identical equipment to three of the towing vendors, the selection of more than one company which leased from L & M would represent approval of collusion. According to the legislative history of the ordinance, the Township aimed to prevent such action.

On or about August 30, 2006, L & M filed its complaint in the instant action to dispute the Township's decision and to challenge the constitutionality of the amendment to the towing ordinance. On November 6, 2006, in lieu of filing an answer, the Township filed a motion for summary judgment. The court heard oral argument on this motion on January 5, 2007 and granted the requested relief.

At the conclusion of the oral argument, the judge offered his opinion.

"[T]here must be clear abuse of discretion by the municipality in order to -- in order for such a decision to be overturned by the court." [Enteck Corp. v. Newark, 351 N.J. Super. 440, 457 (Law Div. 2002).] In New Jersey, towing ordinances must be rationally related to the objective sought to be obtained. [See] DeFalco Instant Towing, Inc. v. the [sic] Borough of New Providence, 380 [N.J. Super.] 152, 158-59, ([App. Div.] 2005).

The legislative history of the amended towing ordinance states that the reason for the adoption was to prevent collusion and to prohibit towing companies from forming sham entities in order to boost the frequency of their appearance in the towing services rotation. The amended ordinance provisions that prohibit licensees from entering into agreements such as leasing equipment that will multiply the licensee's participation is rationally related to (indiscernible).

The plaintiff, L & M, contends that the disputed ordinance goes beyond the intended scope of the (indiscernible) statute. N.J.S.A. 40:48-2.49 provides, "[a] municipality may regulate by ordinance the removal of motor vehicles from public or private property by operators engaged in such practice, including, but not limited to[,] the fees charged for storage following removal, . . . fees charged for such removal, notice requirements therefor[,] and the mercantile licensing of such operators."

The enabling statute was intended to give broad discretion to municipalities to draft laws regulating business of towing within their towns and cities. The plaintiff's construction of the statute conveniently ignores the key phrase, "included but not limited to," which can be rationally -- which can rationally be extended to include the lease of the tow equipment to tow companies as well as the operation themselves.

The plaintiff failed to demonstrate how one can conclude that the amended towing ordinance is arbitrary, capricious and unreasonable. As a consequence, there is not [sic] genuine issue of material fact in this case. And for the foregoing reasons, the court dismisses the plaintiff's complaint with prejudice -- without prejudice, I'm sorry. Thank you. [(emphasis added).]

After a brief colloquy with the attorneys, the judge altered his opinion in order to dismiss the complaint with prejudice. This appeal ensued.

On appeal, plaintiff argues:



We are convinced that the summary judgment order should be reversed and that the matter should be remanded for further proceedings, which may include a plenary hearing.

Plaintiff argues that the case should not have been decided on summary judgment. Plaintiff suggests that summary judgment is "generally an inappropriate method for determining prerogative writ actions." On the other hand, defendant argues that summary judgment is a "legitimate recourse available in an action in lieu of . . . prerogative writ[s]". Defendant argues further that no discovery was necessary to determine whether the municipality acted in an arbitrary, capricious or unreasonable manner because one only needed to review the amended ordinance and its legislative history to ascertain the ordinance's validity.

We examine the trial court's decision on a de novo basis. We decide first whether there was a genuine issue of fact. If there was not, we then decide whether the trial court's ruling on the law was correct. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 530 (1995); Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div. 1998). No special deference is owed to the trial court's interpretation of law. Manalapan Realty, L.P. v. Twp. Comm. of the Twp. of Manalapan, 140 N.J. 366, 378 (1995).

We do not agree with plaintiff's suggestion that summary judgment is inappropriate in actions in lieu of prerogative writ, but we do agree that summary judgment should not have been granted in this instance. We have previously observed that

[s]ummary judgment is generally an inappropriate procedure in these types of cases because actions in lieu of prerogative writ, which pertain to zoning and planning board decisions, contemplate the filing of briefs and oral argument following submission of the administrative record, thereby facilitating early disposition.

[W.L. Goodfellows and Co. of Turnersville, Inc. v. Washington Twp. Planning Bd., 345 N.J. Super. 109, 112 n.1 (App. Div. 2001) (citing Odabash v. Mayor of Dumont, 65 N.J. 115, 121 n.4 (1974); Willoughby v. Planning Bd. of the Twp. of Deptford, 306 N.J. Super. 266, 274 (App. Div. 1997)).]

However, we also upheld a summary judgment dismissing a constitutional challenge by insurance companies. Affiliated FM Ins. Co. v. State, 338 N.J. Super. 540, 557 (App. Div. 2001). The Affiliated FM court had a detailed record to consider. The record contained financial reports of the parties, settlement negotiations and a settlement agreement. Id. at 553-55.

Unlike the facts presented in Affiliated FM, the trial court here lacked sufficient information to determine "if a genuine issue of material fact exist[ed] . . . ." Brill, supra, 142 N.J. at 536. The parties did not submit any significant papers. The court did not even have the record of West Orange municipal hearings at its disposal. Plaintiff contended it needed discovery and argues before us that it should have had the opportunity to fully develop its case through discovery and testimony. We agree that the trial court lacked the depth of record usually afforded to a judge on a motion for summary judgment.

Considering the timing of the motion and the lack of an established record, defendant's summary judgment motion should have been converted into a motion to dismiss under R. 4:6-2(e). The motion to dismiss was filed in lieu of an answer and essentially challenged the sufficiency of the pleading. Under such circumstances, trial courts are cautioned to search the complaint in depth and with liberality to ascertain whether the fundament of a cause of action may be gleaned even from an obscure statement of claim, opportunity being given to amend if necessary. At this preliminary stage of the litigation [a] [c]court [should not be] concerned with the ability of plaintiffs to prove the allegation contained in the complaint .

[P]laintiffs are entitled to every reasonable inference of fact. The examination of a complaint's allegations of fact required by the aforestated principles should be one that is at once painstaking and undertaken with a generous and hospitable approach.

[Printing Mart-Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 746 (1989) (internal quotations and citations omitted).]

The court did not give the plaintiff the benefits prescribed in Printing Mart. Accordingly, on these facts, summary judgment was inappropriate in this case.

In DeFalco, supra, cited by the trial court, we reversed a trial court's determination that an amendment to the towing ordinance of the Borough of New Providence, which gave a preference to towing vendors who maintained a place of business within the Borough, was valid. We noted that "[i]n the abstract, the stated purpose of the amendment to provide 'the earliest possible response to a towing call' seems rational and reasonable." 380 N.J. Super. at 156. However, we concluded that the record in that case contained nothing to demonstrate that the amended towing ordinance would actually reduce the response time for towing calls by giving preference to local towers or that it would otherwise promote or benefit the public health, safety and welfare. Id. at 158. Indeed, there was support in the record that the amendment was "a thinly disguised attempt to bolster local businesses in the guise of an alleged faster response time." Ibid.

In its decision to dismiss the complaint in this case, the court merely recognized that the reason for the adoption of the amendment to the towing ordinance was "to prevent collusion and to prohibit towing companies from forming sham entities in order to boost the frequency of their appearance in the towing services rotation." The court concluded the provisions of the amended ordinance were rationally related to that objective. However, that conclusion was based on the apparent intent of the enabling statute, N.J.S.A. 40:48-2.49, to give broad discretion to municipalities to regulate the business of towing and it did not include an actual factual analysis of the means by which West Orange sought to attain the permissible purpose of the amended ordinance.

The municipality's ordinance is cloaked with a presumption that it is valid and reasonable. DeFalco, supra, 380 N.J. Super. at 155-56. And while we agree with the Township that rational basis scrutiny is the appropriate standard of review for the amended ordinance, Brown v. City of Newark, 113 N.J. 565, 573 (1989), one challenging an ordinance must be afforded fair opportunity to demonstrate that the ordinance is not rationally related to the objective sought to be attained and, as applied to it, is arbitrary and capricious. We are not satisfied that plaintiff was afforded that opportunity. For example, leasing arrangements by more than one licensee with a single supplier or vendor does not necessarily bespeak collusion. Also, one of the reasons asserted for the amended ordinance is the Township's concern for the availability of sufficient equipment, vehicles and storage spaces. It believes a shortage of those towing necessities would occur if more than one licensee could lease from the same source. If that concern has no valid basis in fact, the ordinance premised on such an assumption may, indeed, be arbitrary, capricious or unreasonable.

As we are remanding the case for further proceedings in accordance with R. 4:69-4, we will not comment further on the constitutionality of the town ordinance nor do we imply what should be the outcome of the litigation. We are, however, of the view that the issue raised by plaintiff's complaint should be explored more extensively in order to create a full record. Mere conclusory statements will not suffice to dispose of a challenge to the constitutionality of an ordinance.

Reversed and remanded.


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