March 4, 2011
AVENTIS HOLDINGS, LLC, PLAINTIFF-APPELLANT,
KEARNY MUNICIPAL UTILITIES AUTHORITY, DEFENDANT-RESPONDENT, AND CTL TITLE INSURANCE AGENCY, INC., DEFENDANT.
On appeal from the Superior Court of New Jersey, Law Division, Hudson County, L-5848-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued November 17, 2010 -- Decided Before Judges R.B. Coleman and J.N. Harris.
Plaintiff Aventis Holdings, LLC (Aventis) appeals from an order entered January 29, 2010, by Judge Barry P. Sarkisian dismissing with prejudice plaintiff's verified complaint in lieu of prerogative writs. In that complaint, Aventis sought to compel defendant Kearny Municipal Utilities Authority (the KMUA) to issue a new sewer bill with sewer charges based on actual water usage during plaintiff's ownership of the Kearny property. We affirm the dismissal.
The KMUA is a body created pursuant to the Municipal and County Utilities Authorities Law, N.J.S.A. 40:14B-1 to -78. The KMUA operates a sanitation system in Kearny that it bifurcates into two districts for purposes of wastewater treatments, the South Kearny District and the Meadowlands District. The South Kearny District is served by a combined sewer system, which receives both storm water drainage and sewage. The Meadowlands District is served by a separate sewer system, which does not receive storm water drainage inflows.
The KMUA pumps its sewage to the Passaic Valley Sewerage Commission (PVSC) treatment facility, where it receives secondary treatment and is then discharged. The PVSC bills the KMUA directly for its services. In order to acquire funds for the KMUA's operation and maintenance, the KMUA has established a user charge system.
Kearny receives sewer services from the KMUA and its property owners pay the KMUA directly for such services.*fn1 On October 10, 2007, Aventis acquired its property, a vacant commercial property from Radial Casting. Aventis sold the property to Power Property, LLC on or about July 16, 2009. From March 1, 2008 through July 16, 2009, Aventis did not use any water and incurred the minimum charge of $25.86 per billing cycle. The KMUA billed Aventis $11,860.18 for each of the four quarters*fn2 of 2008 and $2,363 for the first two quarters of 2009. The KMUA's bill for the property had been paid through the first quarter of 2008, but outstanding bills exist for the second, third and fourth quarters of 2008 and the first and second quarters of 2009, totaling $44,882 for sewer usage. In connection with the closing of the sale from Aventis to Power Property, defendant CTL Title Insurance Agency, Inc. (CTL), a title company, held and is still holding $67,019.28 in escrow pending a resolution of the amount of the outstanding sewer charges at the property in order to secure payment.*fn3
The KMUA's rate structure is adopted each year at a public hearing following the completion of a user charge study prepared by a professional engineering firm. N.J.S.A. 40:14B-23 provides a schedule of revision for service charges, which is accomplished via an open public process including a public hearing. N.J.S.A. 40:14B-23 provides in pertinent part:
Every municipal authority shall prescribe and from time to time when necessary revise a schedule of all its service charges . . . and may be such that the revenues of the municipal authority will at all times be adequate to pay the expenses of operation and maintenance of the utility system.
The municipal authority shall likewise fix and determine the time or times when and the place or places where such service charges shall be due and payable and may require that such service charges shall be paid in advance for periods of not more than one year.
For the rate at issue, a public hearing was held on June 4, 2009 for KMUA to adopt its 2009 user charge schedule. A 2009 Sanitary Sewer User Charge Study (UCS), prepared by the engineering firm Hatch Mott MacDonald, to determine the annual sewer charge (ASC) for each property, was introduced into evidence. John J. Scheri, an engineer with the firm, testified.
In explaining the KMUA's methodology to determine the ASC, Scheri testified that the UCS "involves review of the [KMUA's] annual budget, evaluation of the water consumption and wastewater discharge data for the users of the system, and the setting of the rate based on that data." Explaining how the user rate charge was derived for 2009, he testified that the rate structure divides the KMUA's customers into three groups: Class I, customers billed based on municipal water utility meters; Class II, customers based upon "incoming potable water meters, less the amount of water that is either evaporated or consumed in product"; and Class III, customers billed based upon wastewater meters. Aventis is a Class I customer.
Additionally, Scheri explained that "the basis of the User Charge Study is the [KMUA's] budget and the revenue requirement [a]nd then the amount of wastewater flow handled by the [KMUA] is used to derive the rate." He continued to articulate how the ASC is derived by stating:
[T]he revenue requirement is identified and then the User Charge is . . . split into two components: The base User Charge Rate, which is applicable to all users of the system; and then we differentiate and calculate the rate for the User Charge associated solely with the PVSC user charges.
The local revenue requirement for the KMUA operations is the [KMUA's] budget less the amount of their budget that is associated with PSVC charges and the sewer [biological oxygen demand] and [total suspended solids] surcharges.
So the base rate, local revenue requirement, is the budget amount of $2,809,744.98, divided by the volume used by all users of the system, which is 666,961 cubic feet. That results in a whole rate of $4.22 per hundred cubic feet.
Similarly, the PSVC charge portion of the [KMUA's] budget is established, and the PVSC charges, of $984,416.47, divided by the KMUA volume, excluding the Meadowlands Commission, which is 361,589 cubic feet. That division results in a whole rate of $2.73 per hundred cubic feet.
As a result of those calculations, Scheri explained that in 2009 the KMUA user charge was set at $6.96 per hundred cubic feet of wastewater generated by each of the fifty-six KMUA users. Finally, Scheri stated that "[i]t is my opinion that the method used to establish the 2009 User Rate is fair and equitable."
At the June 4, 2009 hearing, the UCS described above was duly adopted by vote of the KMUA commissioners. There were no objections and no comments from the KMUA customers or any other member of the public.
On November 13, 2009, plaintiff filed an eight-count complaint in lieu of prerogative writs against defendants in the Law Division, Hudson County. On December 2, 2009, an order to show cause was entered in connection with the above complaint, and on January 29, 2010, Judge Sarkisian heard oral argument on the order to show cause. The judge found that the KMUA's billing practices were lawful and proper and in accordance with N.J.S.A. 40:14B-23. Accordingly, the judge dismissed Aventis's complaint with prejudice and without costs. This appeal follows.
Courts have a limited role "in reviewing municipal rates for utility services." Meglino v. Twp. Comm. of Eagleswood, 103 N.J. 144, 152 (1986). "'[A]n ordinance establishing [such] rates . . . will be upset only if patently unreasonable.'" Ibid. (citations omitted). "[A]n ordinance setting sewer rates is not patently unreasonable provided that those serviced and benefited by a sewer system finance the system in fair proportion to the cost of providing service to them." Seton Co.v. City of Newark, 194 N.J. Super. 499, 507 (App. Div.), certif. denied, 99 N.J. 152 (1984) (citing Airwick Indus., Inc. v. Carlstadt Sewerage Auth., 57 N.J. 107, 122 (1970), cert. denied, 402 U.S. 967, 91 S. Ct. 1666, 29 L. Ed. 2d 132 (1971)).
The reason that courts should defer to municipal decisions as to how to operate their utilities (at least within municipal boundaries) stems from the structure of government. Unlike those of private utilities the rates that municipal utilities charge their customers are not subject to review by the Board of Public Utility Commissioners. "In such cases the Legislature may not regard the need for local consumer protection as compelling. If the resident consumer-voter does not like the management or the rates, he can vote the governing body out of office, and thus achieve reform."
[Meglino, supra, 103 N.J. at 152 (citing In re Complaint by Twp. of Morris, 49 N.J. 194, 204 (1967)).]
Scheri's certification submitted in connection with Aventis's cause of action further explained that the user charge study is "derived by taking water use figures from the Kearny Water Department, private water meter readings and discharge meters from heavy industrial users, and then computing the fee required to provide adequate revenue to fund Authority operations . . . as required by statute." The actual usage numbers are one year behind the billing cycle since the user charge study is prepared for the upcoming year in the first quarter of the year. As a result, the actual usage figures are not available with the billings for each individual property.
For example, the 2009 KMUA charges for Aventis's property are based upon water usage from October 1, 2007 to September 30, 2008. Since it is undisputed that Aventis did not use any water from March 1, 2008 through July 16, 2009, the effect of the KMUA's billing practice is that any reduction in sewer charges for non-usage will be reflected in the 2010 billings, which cover the dates of October 1, 2008 through September 30, 2009.
Aventis submits that the trial court erred in ruling that defendant's billing practices were reasonable pursuant to N.J.S.A. 40:14B-23. More particularly, Aventis asserts that the KMUA's practice of charging for its services in arrears, and not in advance, as explicitly authorized in the statute, is unlawful. The effect, Aventis contends, is that the reduction in the sewer charges as a result of Aventis's non-usage of water from March 2008 until July 2009 inures to the benefit of the subsequent owner of the property.
Aventis first argues that the plain reading of N.J.S.A. 40:14B-23 prohibits billing in arrears. See, e.g., Bergen Commercial Bank v. Sisler, 157 N.J. 188, 202 (1999). "Fundamental principles of statutory construction require that '[i]f the [statutory] language is plain and ambiguous and uncontrolled by other parts of the act or other acts upon the same subject the court cannot give it a different meaning.'" Spiewak v. Bd. of Educ., 90 N.J. 63, 74 (1982) (citing In re Jamesburg High School Closing, 83 N.J. 540 (1980)). We disagree. Courts are to presume that the legislative intent is expressed by the ordinary meaning of the words used. New Jersey Educ. Ass'n v. Bd. of Trustees, P.E.R.S., 327 N.J. Super. 326, 332-33 (App. Div. 2000). "'Our duty is to construe and apply the statute as enacted. We are not at liberty to presume the legislature intended something other than what it expressed by its plain language.'" Lammers v. Bd. of Educ., 134 N.J. 264, 272 (1993) (citing Spiewak, supra, 90 N.J. at 74).
No where intrinsic in N.J.S.A. 40:14B-23 does the statute prohibit a Municipal Utility Authority (MUA) from charging in arrears. The plain reading simply authorizes one way which an MUA may bill, without excluding or prohibiting other various ways.
Thus, we reject plaintiff's contention that the legislative intent behind the statute prohibits an MUA from charging in arrears. We may employ "'time-honored guides to statutory interpretation' that often reveal the legislative intent. These so-called canons of construction are not binding but are utilized as aids in our pursuit of a clear understanding of a statute." Evans v. Atl. City Bd. of Educ., 404 N.J. Super. 87, 92 (App. Div. 2008) (citing Elizabeth Bd. of Educ. v. N.J. Transit Corp., 342 N.J. Super. 262, 267 (App. Div. 2001)). To aid the determination of legislative intent, the Evans court considered the doctrine of expressio unius est exclusio alterius, which suggests that the mentioning of one or more thing from an associated group excludes others. In Evans, the language of the statute authorized four ways in which district representatives shall be eligible to vote on matters before the receiving district board of education. Id. at 91 (citing N.J.S.A. 18A:38-8.1). In utilizing the above canon, the court ruled that "the language chosen by the Legislature unmistakably precludes the inclusion of other matters not specifically mentioned." Id. at 92.
Unlike Evans, the statute here does not "list" various ways that an MUA may charge its customers, instead it merely offered one way an MUA is authorized to charge and that way is authorized, not mandated. Thus, it is not reasonable to assume the legislature intended to exclude every other way an MUA may bill.
We note that in Chevron U.S.A. Inc. v. Echazabal, 536 U.S. 73, 80, 122 S. Ct. 2045, 2049-50, 153 L. Ed. 2d 82, 89-90 (2002), the Court held that expressio unius est exclusio alterius was inapplicable in interpreting a statute containing a list preceded by the phrase "may include." The Court rejected the argument that the Americans with Disabilities Act, by including the provision harm-to-others as a defense to a charge of discrimination under 42 U.S.C.A. § 12113(b), excluded the harm-to-self defense. Id. at 80-84, 122 S. Ct. at 2050-52, 153
L. Ed. 2d at 89-92. The Court reasoned, among other things, that the "may include" phrase in the statute points directly away from the sort of exclusive specifications that expressio unius est exclusio alterius claims. Id. at 81, 122 S. Ct. at 2050, 153 L. Ed. 2d at 90. The following language from the Court's opinion is instructive:
Just as statutory language suggesting exclusiveness is missing, so is that essential extra-statutory ingredient of an expression-exclusion demonstration, the series of terms from which an omission bespeaks a negative implication. The [expressio] canon depends on identifying a series of two or more terms or things that should be understood to go hand in hand, which is abridged in circumstances supporting a sensible inference that the term left out must have been meant to be excluded. [Ibid.]
Similarly, in N.J.S.A. 40:14B-23 the practice authorized is preceded by the language "may require" and therefore, we conclude the legislature did not intend to exclude other options of billing by mentioning that an MUA may bill in advance.
Further, where different interpretations exist or the statute's meaning is not obvious or self-evident on its face, then "[e]xtrinsic aids, such as legislative history, committee reports, and contemporaneous construction, may be used to help resolve any ambiguity and to ascertain the true intent of the Legislature." Wingate v. Estate of Ryan, 149 N.J. 227, 236 (1997) (citing State v. Szemple, 135 N.J. 406, 421 (1994)). Our review of the legislative history behind the statute in question does not show an intent to prohibit an MUA from billing based on actual water charges from the prior year, as the KMUA does.
We next address Aventis's argument that the KMUA's billing practice is arbitrary and capricious since charging in arrears places the burden on a purchaser of property to investigate whether there are unbilled charges for which the purchaser may be responsible. Aventis points out that because the KMUA bills in arrears, a purchaser of property "could not know the amount of the sewer bill for the period prior to its ownership since the bill for such usage is first generated at the beginning of the following year." Thus, to adjust such charges at the closing, the parties would be required to obtain the actual water charges on the property from the independent water company for a period of more than a year prior to the closing.
"'Arbitrary and capricious action of administrative bodies means willful and unreasoning action, without consideration and in disregard of circumstances. Where there is room for two opinions, action is [valid] when exercised honestly and upon due consideration, even though it may be believed that an erroneous conclusion has been reached.'" Worthington v. Fauver, 88 N.J. 183, 205 (1982) (quoting Bayshore Sewerage Co. v. Dept. Env't. Prot., 122 N.J. Super. 184, 199 (Ch. Div. 1973)). "Moreover, a sewer ordinance should withstand a challenge unless it is inequitable, unfair, or lacks adequate standards to ensure the fair and reasonable exercise of municipal authority." First Peoples Bank v. Medford, 126 N.J. 413, 419 (1991). "By their very nature sewer rates cannot be fixed so that they will apply with exactness." Phoenix Assocs., Inc. v. Edgewater Park Sewerage Auth., 178 N.J. Super. 109, 121 (App. Div. 1981).
The KMUA bills each year in arrears at the beginning of the calendar year for the billing period of October 1 two years prior through September 30 of the year prior. Aventis claims since it did not use any water from March 2008 through July 2009, when the property was sold, this usage will not be reflected until 2010 and will never be of benefit to it. Aventis further argues that it is an inconvenience for an owner of a property to pay for actual usage "that's more than a year old or . . . by the time . . . the last quarter of the year comes along it's almost two years old." The KMUA responds that the new charges will take into account the non-usage from the previous year so the two parties, purchaser and seller, are free to adjust the payments based on actual use, at a later date. The trial court addressed this argument and agreed with the KMUA that a seller in this instance would have recourse against a subsequent purchaser opining that if the new owner does not recognize that adjustment then the prior owner "would have a major lawsuit against the - the new owner in terms of not recognizing the adjustment that should be made." The trial court also emphasized that "the operative word 'usage' will be for . . . the period of time that the plaintiff's client did occupy the premises . . . [s]o it's an issue of just having to wait - wait the time."
We find that Aventis has not supported its contention that the approved sewer rate is patently unreasonable or arbitrary and capricious. N.J.S.A. 40:14B-23 provides that an adjustment of service charges may be prescribed after a public hearing and shall be supported by "evidence at the hearing showing that the proposed adjustment of the service charges is necessary and reasonable . . . ." In accordance with the statute, the KMUA's rate structure was adopted at the public hearing on June 4, 2009, on adequate notice, with an engineer testifying to the basis for the rate structure. This testimony included a detailed explanation of the methodology used to prepare the user charge study and no member of the public chose to speak or contest. Aventis also failed to offer expert testimony illustrating the unreasonableness of the rate schedule in question and failed to contest the KMUA's engineer's certification.
The crux of Aventis's argument is that it bears an unreasonable burden in waiting a year to determine the actual allocation for usage reflected in the bill. Aventis is essentially urging that the KMUA should re-focus its method of determining the charges of the sewer bill to accommodate parties to a private real estate transaction. We merely note that this ancillary effect of the method of calculating the usage is neither arbitrary, capricious or unreasonable.
We note further that N.J.S.A. 40:14B-22 expressly authorizes an MUA to utilize consumption of water as a basis for developing the rate structure. Since the statute authorizes such a rate schedule to ensure that adequate revenues are generated to pay the expenses of operation and maintenance of the system, N.J.S.A. 40:14B-23, and since Aventis has failed to provide any valid expert or legal justification to show that the method employed by KMUA is irrational or unfair, we decline to disturb the order from which this appeal is taken.
We last acknowledge Aventis's concern that it may have no sufficient legal basis for recourse against the subsequent purchaser. That issue is not properly before us, and we therefore decline to express an opinion on Aventis's rights visa-vis its successor in interest in the property. We do observe that a prior owner may initially negotiate in its private real estate transaction to reflect a proper allocation of charges and adjustments in the future as they may affect the transaction. Thus, we agree with the trial court's determination that plaintiff's recourse lies in Aventis's dealings with the subsequent owner of the property to the extent its sewer bill will reflect the water usage used by defendant.
Finally, the KMUA raises a jurisdictional issue for the
on appeal. More specifically, it argues that Aventis
bring this action in a timely manner under Rule 4:69-6.*fn4
Rule 4:69-6(a) states "[n]o action in lieu of prerogative
writs shall be commenced later than 45 days after
the accrual of
the right to the review, hearing or relief
claimed. Paragraph c of
that same rule allows for the enlargement of time required under
paragraph a "where it is manifest that the interest of justice so
R. 4:69-6(c). Paragraph c was intended to cover decisional exceptions: "(1) important and novel constitutional questions,
(2) informal or ex parte determinations of legal questions by administrative officials and (3) important public rather than private interests which require adjudication or clarification." Reilly v. Brice, 109 N.J. 555, 558 (1988).
Our rules permit relaxation of the forty-five day requirement "where it is manifest that the interest of justice so requires." R. 4:69-6(c). In Reahl v. Randolph Twp. Mun. Utilities Auth., 163 N.J Super. 501, 504 (App. Div. 1978), plaintiff brought suit against a municipality, challenging the imposition of a service charge for utility services. The trial court dismissed the complaint as untimely under R. 4:69-6 and further found that defendant could charge the fee. Ibid. We affirmed the decision upholding the power of the MUA to impose the service charge, but found that the complaint was not untimely and that the time limit should have been extended in the interests of justice. Id. at 510. We held that:
Although the costs of sewer service to each of the class plaintiffs is a personal expense, the question of the power of the Randolph MUA to charge these class plaintiffs the standard annual rate for single family dwellings is an issue of public importance requiring adjudication . . . because of the continuing impact of the question upon the parties we conclude that the interests of justice require an enlargement of time under R. 4:69-6(c). [Ibid. (citations omitted).]
Similarly, Aventis's action here is a service charge contest which we consider of public interest in light of Reahl. Even though it is uncontested that plaintiff brought the action in lieu of prerogative writs outside of the forty-five day
period,*fn5 the time limit here should have been enlarged because the interest of justice so requires.