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Board of Education of the Borough of Lincoln Park v. Board of Education of the Town of Boonton


May 19, 2010


On appeal from Superior Court of New Jersey, Law Division, Morris County, Docket No. L-1976-08.

Per curiam.


Argued May 5, 2010

Before Judges Stern and Harris.

Plaintiff Board of Education of Lincoln Park appeals from an order granting summary judgment to defendant Board of Education of Boonton, and denying plaintiff's motion. The case involves a plaintiff-sending school district's claim that it was not obligated for a share of the indebtedness on new high school construction by Boonton to which plaintiff sends its high school students.

The plaintiff argues the parties' agreement "precludes Boonton from including any portion of the capital expenditures for the high school renovations in Lincoln Park's tuition;" that "the trial court erred in ruling that debt service for the high school renovations is not part of the capital expenditures for the project," and that "Boonton should not be permitted to charge Lincoln Park for debt service interest on the high school renovation project for the term of the bond."

We affirm the judgment substantially for the reasons expressed by Judge B. Theodore Bozonelis in his oral opinion of May 5, 2009. We add only the following. The agreement provides that "any portion of capital expenditures shall not be attributable to Lincoln Park without the express written consent of Lincoln Park." Lincoln Park insists that debt service, or interest, is clearly attributable to, and part of, a capital expenditure financed by a bond issue and therefore Boonton cannot include a proportionate share of debt service for high school construction in tuition charges to be paid by plaintiff.

The principal issue is whether debt service is a capital expenditure for which consent was necessary. That must be analyzed in the context of an agreement requiring "written consent" for capital expenditures in lieu of the default provisions controlling permissible charges to the sending district under State law. Lincoln Park insists "the intent of section H(3) [of the contract between the parties] was that all the costs associated with capital projects at the high school be considered capital expenditures including the debt service," and "since Boonton could not charge Lincoln Park for principal under [N.J.S.A. 6A:23A-17.1], section H(3) of the contract would be rendered meaningless if it did not apply to debt service interest."

The regulations provide that debt service is considered as a "building use charge," and the parties' agreement does not define it otherwise. As N.J.A.C. 6A:23A-17.1(e)(6) clearly includes debt service within the category of the "building use charge," and the parties agree that the regulation so provided in 1999 when the parties' agreement was executed,*fn1 their agreement did not override or trump the provision that interest was not part of the "capital expenditure" for purposes of state law for which consent was necessary. Stated differently, the agreement did not clearly or sufficiently express intent to consider debt service or interest as part of the capital expenditure in order to overcome the impact of the regulations.

We therefore agree with Judge Bozonelis that "there is nothing in the contract that would trump the regulation ... as to how tuition is calculated, which includes a building-use charge, which is specifically interest on this debt service." Moreover, once the agreement expires, the regulations will control in the absence of a new agreement between the parties.

While cross motions for summary judgment do not necessarily mean that either side believes the case is ready for disposition if its motion is denied, here the cross motions did not suggest a factual dispute if the adversary's motion was denied or that there was sufficiently presented a factual dispute as to the interpretation of the agreement regarding capital expenditures, and neither party in its brief raised the need for an evidentiary hearing. The fact an ALJ, the Commissioner, and our court found that the paving of a parking lot was a capital expenditure in an earlier dispute between these same parties does not constitute a factual dispute or provide the need for parol evidence as to the intention of the parties. After exploring the issue at oral argument, we find no basis for a remand.


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