On appeal from the Superior Court of New Jersey, Law Division, Cumberland County, Docket Nos. L-764-07 and L-414-08.
The opinion of the court was delivered by: Axelrad, P.J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued: September 22, 2010
Before Judges Axelrad, R. B. Coleman, and Lihotz.
The opinion of the court was delivered by AXELRAD, P.J.A.D.
Plaintiff appeals from an order of the Law Division denying his request for attorney's fees following settlement of prerogative writs litigation under the "fund in court" exception to the general rule that parties are responsible for their own attorney's fees. R. 4:42-9(a)(2). The court found this exception inapplicable because the municipality made "substantial efforts" before the institution of suit to rectify the problems complained of by plaintiff and the court apparently did not view plaintiff as a prevailing party. The court also interpreted the release of "all claims for damages" in the settlement agreement as including claims for attorney's fees. We reverse and remand.
Plaintiff Paul Porreca, a resident and taxpayer of defendant, City of Millville ("City"), contacted City officials in September 2006 about perceived violations in their management of the tax abatement program. The parties sought to informally resolve plaintiff's concerns. On July l7, 2007, plaintiff filed a motion in the Law Division seeking an order permitting him to file suit against the City pursuant to N.J.S.A. 2A:15-l8,*fn1 based on its alleged failure "to properly review, authorize and manage tax abatements granted by the City." By order of August 20, 2007, the court deemed the complaint attached to plaintiff's motion filed as a prerogative writs action ("Abatement litigation" - CUM-L-764-07). The three-count complaint asserted malfeasance for failure to comply with N.J.S.A. 40A:2l-1, -16, and the City Ordinance Article I, § 65-15; failure to comply with statutory and local ordinances regarding payment of municipal funds; and failure to discharge its duties under the City's municipal code. The City filed an answer to the complaint.
Similarly, around October 2007, plaintiff expressed concern that the City was failing to comply with and enforce its ordinances pertaining to review and inspection fees of various projects, and discussions ensued between the parties. On February 29, 2008, plaintiff filed a motion in the Law Division seeking an order permitting him to file another suit against the City pursuant to N.J.S.A. 2A:15-l8, based on its alleged failure "to properly charge and collect Review and Inspection fees" as required by its municipal code, and to consolidate the action with L-764-07. By order of April 22, 2008, the court: (1) held N.J.S.A. 2A:15-l8 inapplicable to plaintiff's proposed complaint and declined to permit plaintiff to file the complaint pursuant to that authority; (2) permitted plaintiff to file an action in lieu of prerogative writs against the City "in the nature of a mandamus related to the collection or attempt to collect review and/or inspection fees from developers" within the City; (3) stated plaintiff's complaint "shall not seek damages against the City"; and (4) consolidated the two suits for purposes of discovery.
On May 2, 2008, plaintiff filed the second complaint in lieu of prerogative writs alleging the City was not collecting review and inspection fees from developers as required by its municipal code ("Inspection Fee litigation" - CUM-L-414-08). The City filed an answer to the complaint.
On July 7, 2009, the parties executed a settlement agreement addressing the claims in both the Abatement litigation and the Inspection Fee litigation. The agreement was silent as to the specific issue of attorney's fees. A month later, plaintiff filed a motion seeking an award of attorney's fees and costs for services rendered in connection with both lawsuits. The City filed opposition and a cross-motion for counsel fees and costs for defending the motion. Following argument on September 25, 2009, the court orally denied plaintiff's motion and the City's cross-motion, memorialized in orders of the same date. By orders of November 11, 2009, plaintiff's complaints were dismissed with prejudice pursuant to the settlement agreement, with plaintiff reserving the right to appeal from the court's denial of counsel fees. This appeal ensued.
On appeal, plaintiff argues: (1) he is entitled to an award of counsel fees under Henderson v. Camden County Municipal Utilities Authority, 176 N.J. 554 (2003), which the court erroneously deemed inapplicable; (2) he is entitled to counsel fees as a prevailing party, which the court erroneously concluded otherwise; and (3) the court erred in concluding the release contained in the settlement agreement precluded an application for attorney's fees.
Around September 2006, plaintiff contacted the City tax assessor with reported errors about how the City was managing the five-year local property tax abatement program in its Urban Enterprise Zone (UEZ). The alleged errors included granting abatements on untimely applications or without applications and failing to pursue added assessments for the gap period between completion of a project and January l of the following year. Plaintiff certified he also raised issues regarding cell tower assessments and the City's contract with Sun Bank pertaining to the collection of UEZ loan payments on behalf of the City.
City officials took action in response to plaintiff's inquiries. On December l9, 2006 and January l6, 2007, the governing body passed two resolutions (A-5666 and A-5683) rescinding a total of seven abatements that had been approved out of time. The Resolutions also directed the assessor to file an omitted assessment for each of the subject properties for the 2006 calendar year, but expressly declined to permit further action against them for years prior to 2006. As testified to by the assessor in depositions, the City's position was that it lacked the legal authority to collect for the years prior to 2006.
Plaintiff, however, among other items, wanted the City to collect the taxes due and owing from all prior years. About six months later, plaintiff initiated the Abatement litigation. He contended the City: (1) illegally granted tax abatements; (2) improperly entered into a no-bid contract with Sun Bank for it to collect UEZ loan payments on behalf of the City, advanced payments prior to the bank's performance, and permitted the bank to retain late fees it collected on the UEZ loans; and (3) permitted Nextel to construct and maintain its telecommunication towers without complying with the municipal ordinance and paying the requisite application and permit fees. Plaintiff claimed the City's conduct with regard to all counts of the complaint caused a loss of revenue to the detriment of the City and its taxpayers. He sought injunctive relief on all three counts.
In the first count alleging malfeasance, plaintiff sought to compel the City to rescind all illegally granted tax abatements and collect the full amount of property taxes owing during the full abatement and prior gap period. In the second count alleging failure to comply with statutory and local ordinances regarding payment of municipal funds, plaintiff sought to compel the City to rescind the Sun Bank contract and seek repayment from Sun Bank for ultra vires payments and late fees collected on the UEZ contracts. In the third count alleging failure to discharge its duties under the municipal code regarding the Nextel cell tower lease, plaintiff sought to compel the City to either rescind the lease or require Nextel to pay the requisite permit fees. In all three counts, plaintiff also sought to compel the City to comply prospectively with the applicable state statutes and local ordinances with respect to tax abatements, contracts and cell towers. In the ad damnum clause in all three counts, plaintiff sought counsel fees and costs of suit.
Shortly afterwards, plaintiff began to inquire about the City's compliance and enforcement of ordinances regarding in-house review and inspection fees for major development projects. By letter of October 29, 2007, the municipal attorney informed plaintiff's attorney that the administrators were advised to comply with the municipal code regarding such fees and services and to take appropriate action to collect fees presently due and owing. On November 6, 2007, John Knoop and Kim Warker (later known as Ayres), the City's engineer and planning director, respectively, sent a joint letter to the municipal attorney in direct response to plaintiff's inquiry, specifically referencing the new City policy of charging applicants for staff review time and the establishment of escrow accounts for each pending project. In subsequent depositions, Ayres elaborated that the planning department previously had not charged for ...