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612 Associates, L.L.C v. North Bergen Municipal Utilities Authority

March 9, 2011

612 ASSOCIATES, L.L.C., PLAINTIFF,
v.
NORTH BERGEN MUNICIPAL UTILITIES AUTHORITY, DEFENDANT-APPELLANT, AND NORTH HUDSON REGIONAL SEWER AUTHORITY, DEFENDANT-RESPONDENT, ANDNEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION,*FN1 DEFENDANT.



On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-3946-07.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

January 21, 2009 September 30, 2009

Argued December 10, 2008 - Decided Remanded by Supreme Court Remanded to Law Division March 5, 2010 Resubmitted February 24, 2011 - Decided Before Judges Cuff, Fisher and Baxter.

This appeal originated with the question of which of two sewerage authorities was entitled to payment of the sewerage connection fee in a circumstance where the housing development that generates the effluent is directly connected to one sewerage authority's collection lines, but the effluent is ultimately treated by the other. We held that the two sewerage authorities should share a non-duplicative connection fee that would be apportioned equitably between the two. 612 Assocs., L.L.C. v. N. Bergen Mun. Utils. Auth., 404 N.J. Super. 531, 540-41 (App. Div. 2009).

Thereafter, one of the parties, North Hudson Regional Sewer Authority (NHRSA), successfully petitioned for certification. 612 Assocs. v. N. Hudson Reg'l Sewer Auth., 199 N.J. 540 (2009). By order of September 30, 2009, the Court summarily remanded to this court for reconsideration of our earlier disposition in light of information added to the record by the Court's orders of June 1, 2009 and September 24, 2009. The order of remand specifically authorized us to remand the matter to the Law Division to make findings of fact if we deemed it advisable to do so.

Before describing the information added to the record by the Supreme Court, we pause to briefly describe the record as it existed at the time of argument before us in December 2008. Plaintiff 612 Associates, L.L.C. constructed a fifty-two unit condominium development in Union City ("the project"). 612 Assocs., supra, 404 N.J. Super. at 533. Plaintiff sought to connect the project to a sewerage treatment system, and because the project was located in Union City, plaintiff was required to directly connect its sewage disposal system to the sewer lines of defendant NHRSA. Id. at 533-34. However, because of the project's elevation, effluent flows only 300 feet through NHRSA's lines before reaching defendant North Bergen Municipal Utility Authority's (NBMUA) sewer lines, where it ultimately travels to, and is treated by, NBMUA's facility. Id. at 534.

Because NHRSA and NBMUA both asserted the right to collect a connection fee from plaintiff, and plaintiff was unwilling to pay a duplicate fee, plaintiff filed an interpleader action and ultimately deposited the $153,655 connection fee into an escrow account pending the determination of the dispute. Ibid.

Construing N.J.S.A. 40:14A-8(b) and N.J.S.A. 40:14B-22, we held that a user such as plaintiff, which has an indirect connection to NBMUA's waste treatment system, must pay a non-duplicative connection fee to NBMUA for that indirect connection in addition to the connection fee owed to NHRSA, with which it has a direct connection. Id. at 540-41. We remanded to the Law Division for a hearing to determine the fair apportionment between NHRSA and NBMUA. Id. at 541.

As we have noted, before the remand proceedings commenced in the Law Division, NHRSA sought, and was granted, certification. The Court granted leave to both NHRSA and NBMUA to supplement the record with certifications from their respective executive directors. Those certifications presented an issue not raised in the Law Division or before us, whether NBMUA, in a 1992 agreement with NHRSA, had waived its right to share in the sewer connection fees.

By order of March 5, 2010, we remanded the matter to the Law Division for an evidentiary hearing on the allegations contained in the supplemental information. We also directed the Law Division to resolve the apportionment issue that we addressed in our opinion, ibid., but which was never resolved because of the intervening motions before the Supreme Court.

Pursuant to our March 5, 2010 remand order, the Law Division conducted an evidentiary hearing on August 23, 2010, during which the judge heard the testimony of Patricia Bartoli, the chief financial officer of NBMUA; Frank Pestana, executive director of NBMUA; Frederick Pocci, executive director and chief engineer of NHRSA; and Jeffrey Enright, a consultant whose employer, N.W. Financial Group, serves as the financial advisor to NHRSA.

On the subject of whether, as NHRSA contended, NBMUA had earlier waived its right to share in the connection fees whenever it had only an indirect connection, Judge Mary Costello considered Pocci's testimony. He explained that in 1992, a proposed "Billing Agreement" was drafted, which would have created a "blended rate" that would be charged to customers whenever the effluent flow from any of the participating towns was treated by more than one sewage treatment plant. Notably, Pocci's earlier certification to the Supreme Court had asserted that the unsigned 1992 Billing Agreement afforded NHRSA the "exclusive right" to collect a connection fee from new users in the affected area of Union City. According to his certification, even though there was never a signed agreement, "the North Bergen MUA has never received any connection fee from these users, nor has the North Hudson [R]SA ever agreed to permit it to do so." As is evident, Pocci's trial testimony fell far short of the assertions contained in his certification.

The "Billing Agreement" was never signed by either of the proposed participants, NBMUA or the Hoboken-Union City-Weehawken Sewage Authority (HUCWSA), which was the predecessor of NHRSA. Nor did NHRSA ever adopt a ...


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