March 13, 2008
LAW OFFICES OF GOLD, ALBANESE, BARLETTI & VELAZQUEZ, PLAINTIFF-APPELLANT,
JERSEY CITY MUNICIPAL UTILITIES AUTHORITY, ITS AGENTS, SERVANTS, AND/OR EMPLOYEES, EXECUTIVE DIRECTOR THOMAS KANE, CHAIRMAN HOWARD JACKSON, COMMISSIONER MARGARET DOYLE, COMMISSIONER GEORGE KELLY, COMMISSIONER KATHLEEN HARTYE, COMMISSIONER EILEEN GAUGHAN, FIRST ALTERNATE COMMISSIONER WILLIAM MACCHI, SECOND ALTERNATE COMMISSIONER JANET GAITA, INDIVIDUALLY AND IN THEIR OFFICIAL CAPACITIES AS COMMISSIONERS OF THE JERSEY CITY MUNICIPAL UTILITY AUTHORITY, DEFENDANTS-RESPONDENTS.
On appeal from Superior Court of New Jersey, Law Division, Hudson County, No. L-5270-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued January 16, 2008
Before Judges Wefing, R. B. Coleman, and Lyons.
The law firm of Gold, Albanese, Barletti & Velazquez ("Gold") appeals from a trial court order granting summary judgment to defendant Jersey City Municipal Utilities Authority ("Authority"). After reviewing the record in light of the contentions advanced on appeal, we reverse.
On June 24, 2004, the Authority passed a resolution authorizing its Executive Director to retain the Gold firm for one year to provide legal services in connection with the Authority's responsibilities for managing the city's water infrastructure and its ownership and maintenance of the sewer infrastructure. The resolution stated that the contract for services relating to water infrastructure would be in the amount of $25,000 and for sewer infrastructure, in the amount of $90,000. It also specified hourly rates of $170 per hour for partners in the firm, $140 per hour for associates of the firm, and $75 per hour for paralegals. In the event that court appearances were required, these rates were adjusted to $185 per hour for partners and $155 per hour for associates. A copy of the resolution, which was prepared by staff counsel for the Authority, was published in the Jersey Journal.
On June 28, 2004, the Gold firm and the Authority executed two separate contracts, one relating to the water infrastructure, one relating to the sewer infrastructure. The contract relating to water infrastructure contained the following provision:
Since neither the Authority nor Gold can anticipate the amount of legal services that may be required under this Agreement, the Authority shall have the right to review this Agreement with Gold in the event legal fees for services rendered exceed $25,000.
The contract relating to sewer infrastructure contained an identical provision, save for the fact that it reserved the Authority's right to review the contract in the event that fees exceeded $90,000. These contracts were prepared by staff counsel for the Authority.
Gold began to render legal services to the Authority and, in accordance with the procedure specified in the contracts, submitted monthly statements. The Authority's protocol was to have these statements reviewed by its Senior Staff Attorney and its Director of Administration and Financial Management. If these two individuals approved the statements, they would be placed upon the agenda for approval by the commissioners. This procedure was followed uneventfully at first, and the Gold firm was paid the sum of $50,786.45 for its services through September 30, 2004. Thereafter, although the Gold firm continued to provide legal services, and its monthly statements for those services were regularly approved by the Authority's Senior Staff Attorney and Director of Administration and Financial Management, the statements were not included on the Authority's agenda for approval. The Authority made no complaint as to quality or necessity of the legal services performed; neither did it ever inform Gold that it was not going to pay the bills submitted. In sum, the Authority simply failed to consider the question whether the Gold firm should be paid for the work it had performed.
The amount owing to the firm continued to increase as the firm continued to provide legal services to the Authority. Eventually, however, on November 17, 2004, Gold submitted its resignation as general counsel to the Authority, effective November 30, 2004. The firm continued to seek payment of the outstanding bills; when its attempts in this regard were unsuccessful, this litigation resulted. In October 2005, after duly filing a notice of claim and notifying the Authority pursuant to Rule 1:20A-6, Gold filed its complaint, seeking to be paid the $162,551.53 it said was due and owing for legal services it had performed for the Authority.
The matter was submitted to the trial court on cross-motions for summary judgment. The firm argued that the Authority had to at least place the question of payment on a regular agenda and take some action, either approval or rejection, with respect to these bills. During the argument there was an implication that the Authority's inaction was the result of a change in administration and a consequent decision to switch counsel. The Authority, on the other hand, contended that to permit Gold to recover would run afoul of the Local Public Contracts Law, N.J.S.A. 40A:11-1 to -49.
The trial court granted the Authority's motion for summary judgment, finding that the Gold firm was not entitled to be paid beyond the $115,000 authorized in the June 24, 2004, resolution. It rejected the firm's argument that it was entitled to be paid under the principles of promissory estoppel and implied contract. The trial court reasoned that under the public contract law, the firm was restricted to the amount approved in the authorizing resolution and that, in the event it sought to be paid for legal services beyond that sum, it was required to return to the Authority to obtain another enabling resolution. The trial court entered a judgment for the firm for $64,213.55, representing the difference between what the firm had been paid and $115,000; the judgment also absolved the Authority of any responsibility to pay the balance of $98,337.98. The Gold firm has appealed from that judgment; the Authority did not participate in this appeal.
The trial court in its oral opinion relied primarily upon Kress v. La Villa, 335 N.J. Super. 400 (App. Div. 2000). We consider that case significantly distinguishable from the present matter, however. The plaintiffs in that case were attorneys who were retained by the mayor of Guttenberg and a member of its council who were indicted for mail fraud and corruptly soliciting political services. Id. at 404. The mayor and councilman sent letters to the town, stating they had retained counsel and, in the event of their acquittal, would seek reimbursement for their counsel fees. There was no response to these letters. Id. at 405. In addition, plaintiffs contended they attended a meeting of the town council and received assurances with regard to their fees. Ibid.
Although found guilty by a jury, the convictions were overturned by the Court of Appeals on the ground that the conduct in question (failing to reappoint individuals who had not supported the Democratic candidates in an election) did not fit within the statutory prohibitions. Id. at 406. Armed with their success on appeal, the attorneys and their clients sought to have the municipality pay the counsel fees, which totaled $785,768.85. Id. at 403.
Faced with that factual context, we concluded that the parties' "contract claims fail because there was no compliance with the Local Public Contracts Law. Because of the lack of compliance, no contract existed." Id. at 408. We noted:
Here, none of the requirements was met in order for the Town to enter into a professional services contract with plaintiffs. These requirements are necessary to advise the public of the reasons for entering into the contract, the nature, duration, service, and amount of the contract. Without satisfying these requirements, all of which are mandatory, the Town did not and could not enter into a contract with plaintiffs to pay the legal fees of Cicco and Tabbachino. [Id. at 409.]
Here, on the other hand, there clearly was a contract; the Board had duly passed a resolution authorizing the retention of the Gold firm at specified hourly rates for a stated sum. The question before the trial court was whether Gold could recover any amount for legal fees beyond that stated in the initial resolution.
We recognize the concerns the trial court expressed about the necessity of protecting the public interest and the public fisc. The Local Public Contracts Law "seeks to protect public funds by ensuring that money is spent in an efficient manner, by those properly authorized to spend it." Saint Barnabas Med. Ctr. v. County of Essex, 111 N.J. 67, 77 (1988). We decline, however, to adopt the approach invoked by the trial court. The trial court expressed the view that once Gold had billed the Authority the amounts specified in the resolution, it was obligated to perform no further work for the Authority without having first obtained an authorizing resolution. We know from the record before this court that the Authority meets only every thirty days. It could, in our judgment, place the Authority in significant peril if its attorneys ceased to perform any legal services while a new resolution was prepared, voted upon and published. Indeed, doing so could, in certain contexts, constitute a violation of an attorney's duty to the client.
Not every failure to comply with the provisions of the Local Public Contract Law, however, leads inexorably to a conclusion that a claimant may not recover. Wanaque Borough Sewerage Auth. v. Twp. of W. Milford, 144 N.J. 564 (1996), and Saint Barnabas Med. Ctr. v. County of Essex, supra, are illustrative. In both cases, the Supreme Court turned to the principles of quasi-contract to prevent one party from being unjustly enriched at the expense of the other. Wanaque Borough, supra, 144 N.J. at 575 ("[T]he key element of a quasi-contract claim is that one party has been unjustly enriched at the expense of another."). Certainly the Authority would be unjustly enriched if it received the benefit of Gold's legal services without the necessity of paying their reasonable value.
We have considered whether the appropriate relief would be to reverse the order under review and remand this matter to the trial court with directions that it enter judgment in plaintiff's favor for the entire balance sought. We have determined, however, that such a course of action would not be appropriate.
The record that is before us is sparse. Each of the attorneys made certain representations to the trial court during the course of oral argument but those representations do not constitute proof. At various points in the oral argument, for instance, there was reference to specific requests having been made to the Gold firm to attend to various legal matters. The record does not reveal whether these requests involved routine matters or urgent issues that had to be attended to promptly. There was also reference to Gold's contention that what it sought by placing its bills on the agenda was a resolution amending the terms of the resolution adopted in June, 2004. Such an approach may have obviated the facial non-compliance with the terms of the statute. The posture adopted by the Authority, however, precluded any curative action while at the same time apparently requesting the Gold firm to attend to certain legal matters. A period of discovery is required to develop the record fully in these respects. Such discovery may establish that Gold is entitled to recover in full, but, on the other hand, it may also establish that the firm is entitled only to recover in part.
The order under review is, therefore, reversed, and the matter is remanded to the trial court for further proceedings in accordance with this opinion. We do not retain jurisdiction.
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