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Cumberland County Board of v. the Mayor and Council of the City of Vineland


July 12, 2011


On appeal from Superior Court of New Jersey, Law Division, Cumberland County, Docket No. L-140-09.

Per curiam.


Submitted: November 15, 2010

Before Judges A.A. Rodriguez and C.L. Miniman.

Plaintiff Cumberland County Board of Health appeals from a summary judgment order dismissing its action against defendants Mayor and Council of the City of Vineland. Because we find no legal error in the grant of summary judgment, we affirm.

This is a funding dispute between the parties arising from the provision of early intervention services by plaintiff to children with disabilities in the City of Vineland. The federal Individuals with Disabilities Education Act (IDEA), 20 U.S.C.A. §§ 1400-1482, directs the United States Secretary of Education to "make grants to States . . . to assist each State to maintain and implement a statewide . . . interagency system to provide early intervention services for infants and toddlers with disabilities and their families." 20 U.S.C.A. § 1433. States participating in the IDEA must comply with the requirements for establishing a statewide system. 20 U.S.C.A. § 1435. States must enter into interagency agreements that define each agency's duty to pay for the services, 20 U.S.C.A. § 1435(a)(10)(F), and may enter into contracts with service providers, 20 U.S.C.A. § 1435(a)(11).

New Jersey has elected to participate in the IDEA, Baer v. Klagholz, 339 N.J. Super. 168, 189 (App. Div.), certif. denied, 170 N.J. 84 (2001), and has adopted statutes and regulations to comply with the requirements for establishing a statewide system of early intervention services for children with disabilities. N.J.S.A. 26:1A-36.7; N.J.A.C. 8:17-1.1 to -18.2. Pursuant to N.J.S.A. 26:1A-36.7, the New Jersey Department of Health and Senior Services (DHSS) is the state agency required to "establish a [s]tatewide system of early intervention services" for children with disabilities.*fn1

New Jersey's response to the IDEA is primarily regulatory. Baer, supra, 339 N.J. Super. at 189. Any entity receiving funds from DHSS to render early intervention services under N.J.A.C. 8:17-3.3 is a "[p]rovider agency." N.J.A.C. 8:17-1.3. A provider agency is required to render early intervention services "at public expense and without fees being charged to parents," N.J.A.C. 8:17-9.2(a), unless the family's income equals or exceeds 350% of the federal poverty level, in which case the family must contribute, N.J.A.C. 8:17-9.2(b), (d), (e). Provider agencies under contract with DHSS are monitored by DHSS pursuant to N.J.A.C. 8:17-17.1.

On March 9, 1978, the Cumberland County Board of Chosen Freeholders (the Freeholders) passed a resolution establishing plaintiff in accordance with N.J.S.A. 26:3A2-4. Thereafter, plaintiff established the County Health Department pursuant to N.J.S.A. 26:3A2-6. In 1983, DHSS (then the New Jersey Department of Health) and plaintiff executed an Agreement of Cooperation (the Agreement) for the Health Department to provide early intervention services to all county residents.*fn2

DHSS makes detailed references to the Agreement in a November 18, 2005, letter to plaintiff. The Agreement apparently obligated plaintiff to provide "'case management services and early intervention intake'" for children with disabilities "'at no cost'" to county residents, which services would be jointly funded by the County and DHSS's Special Child Health Services (SCHS) through "'a mutually agreed upon agency and at a mutually agreed upon level of funding.'" The Agreement had a one-year term, automatically renewable on a year-to-year basis.*fn3

DHSS would monitor the "'agreed upon agency'" by including it as part of the Early Intervention Services (EIS) within the SCHS program. The "agreed upon agency" was apparently the Health Department in this case because DHSS identified the Health Department on its website as the SCHS Case Management Unit for the County. DHSS and the Health Department executed a grant contract, authorizing the Health Department to receive a grant to partly fund the cost of providing early intervention services to all County residents. Plaintiff has received a grant from DHSS since 2002, but it is unknown whether plaintiff or the Health Department executed a contract with DHSS in 2002.

As the SCHS program developed, the cost of providing early intervention services annually exceeded the amount of the DHSS grant. Plaintiff has paid for the shortfall from its general operating revenue, which is funded by the County. The County imposes a health tax on county residents living in municipalities that participate in the Health Department. The health tax is assessed at the same time as other taxes and is a separate line item on the county tax form.

City residents are not assessed the health tax because the City withdrew from participating in the Health Department in accordance with N.J.S.A. 26:3A2-12 by establishing a local health department. As a result, city residents do not share in the costs for providing early intervention services that are in excess of the grant. All other municipalities within the County participate in the Health Department. Concerned with this taxing disparity, plaintiff sought to cure it by seeking the City's voluntary participation in funding these services. Over time, the City vacillated over making voluntary payments to plaintiff of sums that represented the proportionate share of services utilized by city residents.

Based on the City's failure to remit payment, plaintiff informed DHSS in 2005 that it intended to terminate the early intervention services provided to city residents by the end of the year. In response, DHSS told plaintiff in a letter dated November 18, 2005, to continue providing services to city residents irrespective of any payments that may be due to plaintiff. DHSS advised plaintiff that discontinuing services to the City would violate the Agreement, the grant contract, and federal law.

Negotiations between the parties continued. In 2006, the parties agreed to hire the County's accounting firm to determine the amounts due to the Health Department for the years 2003 and 2004. However, after receiving a report from the accounting firm, the City refused to remit payment, and eventually plaintiff commenced litigation. In early 2007, plaintiff's complaint was dismissed without prejudice after the parties negotiated a settlement, but in a July 31, 2007, letter to the Health Department, the City advised that the settlement was "made without prejudice to the City's claims that a demand for contribution for [the early intervention] program is illegal and without any basis in [s]tate [s]tatutes."

The City declined to remit any additional payments. From 2007 to 2008, plaintiff continued to demand contributions from the City for amounts owed for the years 2005 to 2007. No agreement was ever reached for these years, with counsel for plaintiff stating in a December 30, 2008, letter to the City that "[plaintiff] has directed me to proceed with litigation if this matter is not immediately settled." The letter demanded payment of $191,604.04, representing 37.8% of total costs exceeding the grant of $506,889 for the years 2005 to 2007. Plaintiff asserted that the City agreed that its residents used 37.8% of the total early intervention services provided to the County.

Since 2004, the parties had also been negotiating to change the manner in which the DHSS grant was received by the County. Plaintiff, not the Health Department, actually receives the grant from DHSS. The City proposed that the Freeholders should receive the grant from DHSS instead of plaintiff. The Freeholders could then integrate the grant funds into the Health Department's budget and tax any overrun costs to the municipalities directly through the county taxes and not the health tax. By this method, the City's residents would be taxed by the County directly for the costs of providing early intervention services based on property values and not proportionate use of services. The parties agreed that this method was the best solution, but for unknown reasons, it was not ratified by the Freeholders. In a September 22, 2008, letter to the City, plaintiff indicated that the Freeholders determined at an informal meeting of September 18, 2008, that the County would not intervene in this dispute. Nothing in the record indicates that the Freeholders acted by formal resolution with respect to any issue involved in this dispute.

On February 18, 2009, plaintiff filed a complaint seeking reimbursement from the City for its proportionate share of the excess costs from January 1, 2005, to June 30, 2007. Count one alleged that the City had been "unjustly enriched" by not paying its "fa[ir] share" of the costs of providing early intervention services that exceeded the grant, which "caused the taxpayers of the remaining municipalities of Cumberland County to pay for [them]." Count two alleged that the City was responsible for providing the services to City residents. Counts three and four alleged that the parties reached an agreement for compensation. The complaint did not allege any issue relating to plaintiff's authority to tax the City directly.

Defendants moved for summary judgment on or about September 8, 2009. On September 21, 2009, plaintiff amended its complaint by consent order, alleging that the City had been "[un]justly enriched" and seeking additional reimbursement for services rendered from July 1, 2007, to June 30, 2008.

Oral argument was held on October 23, 2009, after which the judge granted defendants' motion for summary judgment. The judge rejected plaintiff's allegation that the parties had reached an agreement for compensation, finding that plaintiff's letter to the City of September 15, 2008, indicated that "there was never an absolute meeting of the minds" because plaintiff had stated that it was "seeking" settlement from the City. The judge further rejected plaintiff's unjust enrichment argument, finding that plaintiff had no statutory authority to pursue compensation from the City, including no taxing authority to pursue any contributions from the City for these services. The judge stated that "[t]here has been no response from [plaintiff] citing statutory authority or case law or anything to take the position that it is taking" and that "there does not appear to be a financing mechanism that allows [plaintiff] to take the action that it[']s taking." The judge further stated that the words "quantum meruit" did not appear in the complaint but that, in any event, he was "unaware of any specific case law . . . to allow the case to go forward on a quantum meruit basis."

The judge was particularly concerned that the parties did not attempt to join the County despite each having "pointed the finger at the County." The judge declined to find that the County was an indispensable party, but did hold that if the County were to get involved in this issue, the entire controversy doctrine would not bar it from filing suit. The judge memorialized this decision in an order for summary judgment dated October 23, 2009. This appeal followed.

Plaintiff contends that the judge erred by finding that it did not have statutory authority to tax county residents, which should have been "factored into an appropriate resolution of the issue of funding the provision of [g]rant services for Vineland residents." Plaintiff also argues that the judge erred in concluding that it was not entitled to make a claim for unjust enrichment.

On review of a trial judge's grant of summary judgment, we apply the same standard as the trial judge. Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). Summary judgment will be granted when, after considering the evidence in a light most favorable to the non-moving party, the judge finds that no genuine issue of material fact is present. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995); accord R. 4:46-2(c). A "trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).

Under the Local Health Services Act (the Act), N.J.S.A. 26:3A2-1 to -20.1, the Legislature has empowered a county board of chosen freeholders to establish a county board of health, N.J.S.A. 26:3A2-4(a), which is a board so established and empowered "to exercise within its area of jurisdiction all the powers of a local board of health pursuant to law." N.J.S.A. 26:3A2-3(c). The purpose of the Act is to deliver health services by regional health agencies "as an alternative to the delivery of such services by local boards of health." Mizerak v. Cnty. of Middlesex, 230 N.J. Super. 577, 579 (App. Div. 1989), certif. denied, 121 N.J. 617 (1990); see also N.J.S.A. 26:3A2-2 ("[T]he policy of this State is . . . to encourage the efficient delivery of services by area[-]wide health departments . . . .").

Local boards of health are governmental agencies exercising "the police powers of the State with respect to matters pertaining to public health." Zullo v. Woodbridge Bd. of Health, 9 N.J. 431, 435 (1952). Under the Health Act, N.J.S.A. 26:3-1 to -94, a local board of health has broad powers to enact and amend ordinances and "make rules and regulations in regard to the public health." N.J.S.A. 26:3-31; accord Jones v. Buford, 71 N.J. 433, 437-38 (1976). N.J.S.A. 26:3-31 to -36 enumerate the powers of a local board of health, but those statutory sections do not grant a local board of health the power to raise money by taxation or otherwise. Rather, a local board of health is required to "present to the governing body of the municipality[] an estimate of the appropriation which it believes necessary for health purposes" on an annual basis prior to the formulation of "the budget of municipal taxes to be levied for the year." N.J.S.A. 26:3-41, -43. The governing body is then to "appropriate the amount of such estimate or such other amount as it may determine." N.J.S.A. 26:3-41, -43.

Appropriations are the only source of revenue to support the expenses of a local health department because, although it may impose penalties for violations of the rules and regulations it adopts, N.J.S.A. 26:3-70 to -78, the penalties it collects must "be paid by the local board into the treasury of the municipality within which the local board has jurisdiction." N.J.S.A. 26:3-82.

Generally, the exercise of powers delegated to a local agency "must be restrained within the proper bounds and be held void" if "not within the contemplation of the Legislature." Hasbrouck Heights Hosp. Ass'n v. Borough of Hasbrouck Heights, 15 N.J. 447, 455 (1954). The Legislature has not authorized local boards of health to assess taxes. Zullo, supra, 9 N.J. at 438. Their powers are constrained to the law-making function in respect of the public health, Weehawken Board of Health v. New York Central Railroad Co., 4 N.J. 293, 300-01 (1950), with enforcement power limited to imposing fines in summary actions in municipal court, N.J.S.A. 26:3-72.

Likewise, because a county board of health has the same powers as a local board of health, N.J.S.A. 26:3A2-5(c), a county board of health exercises the State's police power to serve the public health on a regional scale, N.J.S.A. 26:3A2-2, and its enforcement power is equally limited to the imposition of fines in summary actions, N.J.S.A. 26:3A2-9; N.J.S.A. 26:3-72. A board of health is not authorized by statute to tax; rather, the Legislature has empowered the county board of chosen freeholders to raise money by taxation for the "fulfillment of all obligations imposed by law upon the county," N.J.S.A. 40:23-7, which power derives from a county's status as a political subdivision of the Legislature, Warren County Community College v. Warren County Board of Chosen Freeholders, 176 N.J. 432, 442-43 (2003). This power may not be delegated to departments of government, which are not political subdivisions of the Legislature. Ibid.

Plaintiff urges that N.J.S.A. 26:3A2-19 grants taxing authority to county boards of health. Not so. A county health department must, like a local board of health, submit its annual budget for approval to the county board of chosen freeholders. N.J.S.A. 26:3A2-19; see also Stanziale v. Monmouth Cnty. Bd. of Health, 350 N.J. Super. 414, 419 (App. Div.) (finding that a health department under a board of health is "dependent upon the Board of Chosen Freeholders for approval of its budget"), certif. denied, 174 N.J. 361 (2002). The board of chosen freeholders approves and certifies the county health department's budget to the board of taxation, which apportions taxes to the county's municipalities that are participating in the county health department. N.J.S.A. 26:3A2-19. A county cannot apportion taxes in support of a county health department to a municipality that does not participate in the county health department. Ibid. Any penalties collected by the county health department must be paid into the county's treasury. N.J.S.A. 26:3A2-9; N.J.S.A. 26:3-82. Thus, plaintiff's claim that it has the statutory authority to assess taxes is without merit.

Next, plaintiff claims that the judge erred in dismissing its complaint because it is empowered to recover from defendants a proportionate share of its excess costs for providing early intervention services to residents of Vineland under the doctrines of quantum meruit or unjust enrichment. We find no merit to plaintiff's contentions. Plaintiff's claims would abrogate the budget-approval process, which is the only financial method given to the Freeholders to exercise some control over an otherwise autonomous entity. N.J.S.A. 26:3A2-19.

Even if that were not so, plaintiff cannot prevail under either doctrine.

Quantum meruit is a form of quasi-contractual recovery and "'rests on the equitable principle that a person shall not be allowed to enrich himself unjustly at the expense of another.'" Weichert Co. Realtors v. Ryan, 128 N.J. 427, 437 (1992) (quoting Callano v. Oakwood Park Homes Corp., 91 N.J. Super. 105, 108 (App. Div. 1966)). "Courts generally allow recovery in quasi-contract when one party has conferred a benefit on another, and the circumstances are such that to deny recovery would be unjust." Ibid. [Starkey, Kelly, Blaney & White v. Estate of Nicolaysen, 172 N.J. 60, 68 (2002).]

To recover under the doctrines of quantum meruit or unjust enrichment, a party must show "the performance of services," "the acceptance of the services by the person to whom they are rendered," "an expectation of compensation," and "the reasonable value of the services." Starkey, supra, 172 N.J. at 68 (internal quotation marks omitted). Recovery arises from an implied-in-law contract that prevents a party from benefiting at the expense of another. Ibid. Where it is the duty of a party to pay, the law imparts a promise to pay. Callano, supra, 91 N.J. Super. at 108.

Plaintiff has not conferred a benefit on defendants; rather, the benefit was conferred generally on the public residing in Cumberland County and particularly those children with disabilities to whom early intervention services were provided. There is also nothing about the circumstances before us such that a denial of recovery would be unjust. Plaintiff's expenses in providing such services have been fully funded by the grant and by the County.*fn4

We have denied a claim of unjust enrichment in circumstances similar to these. See Garden State Land Co. v. City of Vineland, 368 N.J. Super. 369, 380-81 (App. Div. 2004) (pertaining to demolition services rendered by the City). Although plaintiff performed services, the City cannot be said to have "accepted" the services on its own behalf or on behalf of its residents when all New Jersey residents are entitled to receive early intervention services under the IDEA and N.J.S.A. 26:1A-36.7. See Starkey, supra, 172 N.J. at 68 (concluding that, to find unjust enrichment, the party to whom services are rendered must accept them). Additionally, plaintiff could not have had an expectation of compensation from defendants because they had no obligation or even ability to perform the services as they were not a provider agency. Thus, defendants did not benefit at the expense of the taxpayers in the other municipalities, see ibid., although taxpayers in Vineland certainly did so. That is a disparity that only the County can remedy by creating a separate line item for early intervention services and including it in the county tax rate, thus carving the excess costs of these services from the health tax.*fn5

Finally, we note that the fact that the City paid plaintiff for the years 2003 and 2004 does not give rise to a duty to continue paying. Any voluntary payment made under a mistake of law on a demand that is not enforceable cannot be recovered. See In re Fees of State Bd. of Dentistry, 84 N.J. 582, 588 (1980) (finding that a mistake of law by one who voluntarily pays a tax does not provide a ground of recovery); City of Camden v. Green, 54 N.J.L. 591, 593 (E. & A. 1892) ("[W]here a party, without mistake of fact . . . voluntarily pays money on a demand which is not enforceable . . ., he cannot recover it back.").

The judge correctly determined that plaintiff failed to present any authority "to allow the case to go forward on a quantum meruit basis." While the judge did not engage in an analysis of the elements for recovery, he properly concluded that plaintiff's claims were unsupported.


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