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Spectraserv, Inc. v. Middlesex County Utilities Authority

November 18, 2010


On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-3194-07.

The opinion of the court was delivered by: Parrillo, J.A.D.



Argued October 19, 2010

Before Judges Skillman, Parrillo and Yannotti.

Plaintiff Spectraserv, Inc. (Spectraserv) appeals from an order of the Law Division denying its request for attorney's fees of $121,520 as the claimed "prevailing party" in litigation it instituted against defendant Middlesex County Utilities Authority (MCUA) under New Jersey's Open Public Records Act (OPRA), N.J.S.A. 47:1A-1 to -13. For the reasons that follow, we affirm.

The MCUA is a governmental entity responsible for, among other things, wastewater management in Middlesex County and portions of Union and Somerset counties. It services about 750,000 residents and businesses in central New Jersey.

Sometime ago, the MCUA evaluated potential process modifications to its main wastewater treatment plant in Sayreville to reduce the amount of sludge product and minimize transportation, thereby cutting costs. The modification ultimately chosen was based on a patented process known as "biopHast duopHase," which creates a sludge product substantially reduced in volume and water. R3 Management, Ltd. (R3 Management), an engineering firm based in the United Kingdom, held the patent for this technology in the United States and Europe.

On June 21, 2001, the MCUA entered into a licensing and confidentiality agreement with R3 Management wherein the MCUA was granted "a nontransferable, nonexclusive, and irrevocable license" to implement this technology at its wastewater treatment plant. The agreement also obligated the MCUA "to treat as secret and confidential the R3 Management Technology which is disclosed to [the MCUA] by [R3 Management]," and "not at any time to disclose or permit or allow to be disclosed the R3 Management Technology or any part thereof to any third party, except any necessary disclosure to clients and sub-contractors of [the MCUA] or as required by law or court, governmental or administrative order or directive."*fn1

On March 17, 2003, Spectraserv, a New Jersey-based general contractor with experience in the construction and rehabilitation of sewerage and wastewater treatment facilities, bid on the MCUA project. As the lowest bidder, Spectraserv was awarded and signed an engineering contract with the MCUA on May 16, 2003. This contract required the design of an integrated system of equipment and controls that, upon completion, would transfer and process sewage sludge from the MCUA's existing conveyor and dewatering equipment through the patented biopHast duopHase process, drying the sludge with heat and mixing it with an alkaline based-additive. At the end of the process, the treated sludge would be appropriate for use and disposal under applicable government regulations.

Disputes between the parties arose thereafter. The contract between the MCUA and Spectraserv contained milestones that were to be met by May 31, 2005, but when Spectraserv allegedly fell behind schedule, the parties agreed to a change order on March 24, 2005 that settled delays and liquidated damage claims through the end of February 2005. The parties also agreed to extend the last milestone completion date to December 14, 2005, which, according to the MCUA, Spectraserv also failed to meet. Eventually, the MCUA terminated its contract with Spectraserv for default, claiming unexcused completion delays and failure to meet contract specifications. On March 2, 2007, Spectraserv filed a lawsuit against the MCUA in the Law Division, asserting various claims arising under the parties' engineering contract (the construction litigation).

Beginning in October 2005, two months shy of the contract's completion deadline, Spectraserv made several OPRA requests of the MCUA, the last of which is the subject of this appeal. Its initial request on October 7, 2005 sought to inspect any and all documents, contracts, resolutions, and copies of payments relating to R3M Engineering and its president, Michael J. Samuel, for the period from January 2003 to present. On October 18, 2005, the MCUA made the requested documents available for inspection.

A second OPRA request on January 11, 2007, more than one year after the December 31, 2005 contract completion date had passed, sought the MCUA's "entire project file" on the construction and improvements of the agency's wastewater treatment plant in Sayreville, which was designed in the 1950s. Counsel for the MCUA timely responded that the request "encompasses hundreds of thousands of documents and records that have been generated over a period of 50 years or more." Since the request was not "limited in either time or scope" and "contain[ed] broad and expansive language such as 'in connection with,' 'referring or relating to,' and 'or other services,'" the MCUA could not project when it could produce the records. Accordingly, the MCUA inquired of Spectraserv whether "a more tailored and complete request" could be submitted and advised that it would await Spectraserv's answer before deciding whether to proceed with the original request.

Less than one month after this inquiry, on February 22, 2007, Spectraserv submitted its final OPRA request, which the MCUA received via counsel on February 26, 2007. Apparently intended to supplement its earlier request, this latest version included a government records request form and a four-page attachment, consisting of sixteen separate requests in paragraph form, some with multiple subparts. Among other things, this request sought, once again, the "entire project file" pertaining to the contract between Spectraserv and the MCUA, as well as "[a]ny and all contracts performed with or for the benefit of the MCUA" or thirteen other named individuals and entities since January 1998. In addition, Spectraserv sought the complete engineering design of the project's improvements, the engineer's "Development of Design Concept," and "any and all documents detailing design, engineering, construction and/or management plans" as to the Spectraserv contract or "prepared in connection with" certain scientific processes named in the Spectraserv contract.*fn2

Only eight days after it submitted its third OPRA request to the MCUA, Spectraserv, as noted, filed its construction lawsuit against the MCUA. Four days later, and within six business days of receiving this request, the MCUA responded by letter dated March 6, 2007. In what it termed its "preliminary response," the MCUA characterized the request as "vague, overbroad and unreasonable" in requiring the examination of "over nine years worth of files." Having met with agency employees on March 1, 2007 to begin identifying thirty file cabinets of documents and assessing the administrative burden of their review, counsel for the MCUA, in his response, also noted that "under relevant case law a public agency is not obligated to perform research assignments in response to an OPRA request but is only required to produce reasonably identified documents." Viewing many of the requested documents as confidential, proprietary or trade secrets under its licensing agreement with R3 Management, or otherwise privileged, the MCUA expressed its intention to withhold some of the requested records and to produce those it deemed exempt. In light of the construction complaint with which it had been served that very same week, alleging, in part, the inadequacy of the overall design, the MCUA proposed a compromise - a coordinated production of documents, with Bates numbering for tracking compliance, to satisfy both the OPRA request and the anticipated discovery demands in litigation. Although no date was set for document production, the MCUA represented that it would endeavor to produce some or all of the records requested under OPRA in advance of any discovery deadline set in the construction lawsuit.

Spectraserv rejected the MCUA's proposal by letter of March 15, 2007 and demanded that the agency "make available for inspection within ten (10) days, all documents . . . that . . . are not subject to any claim of privilege or protection." Thirteen days later, on March 28, 2007, Spectraserv filed the instant OPRA action by way of verified complaint and order to show cause, seeking, in addition to the requested documents, a statutory civil penalty of $1,000 and a reasonable attorney's fee pursuant to N.J.S.A. 47:1A-11 and N.J.S.A. 47:1A-6, respectively. The court set a return date of June 1, 2007.

Meanwhile, the MCUA began identifying, from the estimated 97,000 documents covered by the OPRA request, those it deemed confidential or privileged and advised Spectraserv on May 2, 2007 that it would make the remainder available for production upon a deposit for the copying costs. On May 7, 2007, Spectraserv objected to the MCUA scanning, copying or Bates numbering of any documents, asserting that inspection could easily be done on-site without sacrificing control, and demanded immediate access to all non-exempt documents. Thereafter, on May 18, 2007, the MCUA invited Spectraserv to inspect documents the agency ...

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