On appeal from the Superior Court of New Jersey, Law Division, Union County, Docket No. L-3814-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted September 27, 2012
Before Judges Axelrad, Sapp-Peterson and Nugent.
Defendants Elizabeth Board of Education (the Board), its former president, Rafael Fajardo, and the former Acting Superintendent of the Elizabeth School District, Pablo Munoz, appeal from the September 13, 2011 Law Division order that granted plaintiff Antonio Rivera's summary judgment and enforcement motions, and required Munoz and Fajardo to reimburse the District $63,622. The Board had paid that amount from district funds to a law firm that filed and prosecuted a civil action, against fictitious entities only, on defendants' behalf, until the trial court enjoined the Board from further funding the lawsuit. The trial court determined that the lawsuit primarily involved personal claims filed on behalf of Munoz and Fajardo. The trial court also determined that the lawsuit had not been authorized by the Board, which violated the Open Public Meetings Act (OPMA), N.J.S.A. 10:4-6 to -21. Lastly, the trial court determined that Munoz and Fajardo had a conflict of interest that required restitution. We affirm.
Shortly before the June 6, 2006 primary election for Elizabeth City Council, someone anonymously mailed to city residents a forged letter, a two-page flier, and a single-page flier. The forged letter, which bore the Board's letterhead, was purportedly written by Munoz to Fajardo, and urged Fajardo to push his subordinates to "inspire parents to commit to putting up political signs in support of our Hispanic candidates." The letter also emphasized the need "to focus on our primary objective, getting the Hispanics to come out and vote for our candidate and to ensure a low turnout of the [I]talian vote."
The two-page flier stated that "the Army of the Undercover
Republicans are getting richer at the expense of taxpayers and the youth of our City"; and asked, among other things, "Why does an owner of a construction company want more construction of schools when the proficiency level in math and science are not focused on?" The flier's second page designated a photograph of Fajardo as the "Captain" and a photograph of Munoz as "1st Sargeant." The single-page flier claimed a City Council candidate was Fajardo's protege, that the school administration building was being used for political purposes, and that Fajardo was advocating construction of more schools so that he could become richer "because of his questionable connection to the construction industry."
On June 30, 2006, the Board, Munoz, and Fajardo filed a six-count complaint (the John Doe lawsuit) alleging that various "John and Jane Does" and various "ABC Corporations" circulated the letter and fliers thereby committing acts of defamation and malicious misrepresentation; conspired to commit torts; invaded the privacy of Munoz and Fajardo by placing them in a false light; intentionally caused Munoz and Fajardo to suffer emotional distress; and violated campaign advertising laws. During the next six months, the Board paid defendants' special counsel McCarter & English $63,622 to prosecute the John Doe lawsuit. The sources of payment included $52,049 in grants the school district had received from the New Jersey Department of Education (the DOE). The Board never adopted a resolution authorizing the lawsuit.
Although no actual persons were ever named as defendants in the John Doe lawsuit, the Board continued to fund it until the DOE investigated and audited the Board, and plaintiff, a political foe of Munoz and Fajardo, filed a prerogative writs action (the subject action) seeking, among other things, to enjoin the Board from continuing to fund defendants' lawsuit.
To provide a context for the summary judgment motion that is the subject of this appeal, we summarize the DOE investigation and the history of the subject action.
In September 2006, three months after defendants filed the John Doe lawsuit, the DOE's Acting Commissioner requested information from the Board, Munoz, and Fajardo concerning the suit. Specifically, in a letter to the Board, the DOE made the following requests:
In order to ensure the appropriateness of the Board's expenditures in this matter, please provide me with any and all information related to the facts that support the filing of this complaint, the Board's authority for bringing this complaint, whether the Board, alone, or the individual plaintiffs would also be able to recover damages awarded in this case and how attorneys' fees are being paid in this matter. With regard to the fees, I am specifically seeking information as to whether the individual plaintiffs are sharing in the costs for these fees with the Board. As part of your submission, please provide me with a copy of the fee agreement or fee arrangement that has been entered into in this matter.
The Board referred the DOE's letter to McCarter & English, and the attorney who had signed the John Doe complaint responded with a letter, but provided no documents. According to the letter, the Board retained the firm "to represent the interests of all the plaintiffs." The firm declined to produce its retainer letter, invoking the attorney-client privilege. The letter characterized the complaint as follows:
The gravamen of the complaint seeks to recover damages for defamation of the Board and of Mr. Fajardo, its president, and Mr. Munoz, the Superintendent of the school district. More specifically, the First Count (Defamation) alleges that the defendants made defamatory statements about Messrs. Munoz and Fajardo, together with members and employees of the Board. It seeks relief on behalf of all plaintiffs.
The letter went on to describe each count of the complaint. As to the fourth count, Invasion of Privacy, the letter indicated this count was "limited to the individual plaintiffs. It is not by any means the focus of the action, and any recovery attributable to this count is likely to be minimal." The letter indicated that the fifth count, alleging Infliction of Emotional Distress, "is similar in nature to the Fourth Count."
The letter further stated:
In short, four of the six counts seek relief on behalf of all three plaintiffs, with the lead plaintiff being the Board. The other two counts are minor in comparison, both in terms of potential additional liability to defendants and in terms of potential damages. Accordingly, the Board's decision to pay all costs of prosecuting this action is similar to that of an insurance company that agrees to pay the cost of defending all counts against an insured even if some counts contain allegations that are not covered under the policy.
The letter further asserted that the Board had standing to sue for defamation, and pointed out that "[t]he defamatory statements in this case are completely unlike legitimate comment that has been made by newspapers, as to which public bodies have generally been prohibited from suing due to the free speech protections afforded by the State and U.S. Constitutions." As to damages, the letter stated
[t]he amount of damages to be awarded to each plaintiff would ultimately be determined as a result of the findings of a jury as reflected on a jury verdict sheet, in which a jury would decide how liability should be apportioned to each defendant and the quantum of damages to be awarded to each plaintiff.
The letter also asserted that "the facts support the conclusion that the Board may appropriately decide to pay all costs of prosecuting this action." Copies of the letter were sent to the Board, Munoz, and the Board's general counsel.
Thereafter, in July 2007, the DOE sent to Fajardo, for distribution to the Board members, an examination report prepared by the DOE's Office of Fiscal Accountability and Compliance (OFAC). The report concluded the Board had inappropriately expended district funds for the John Doe lawsuit because "the complaint did not identify actual defendants and the possibility that this complaint would allow this identification was remote at best." The report also stated, "the litigation was ...