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Jersey Central Power & Light Company (A First Energy Company v. Melcar Utility Company

January 24, 2013

JERSEY CENTRAL POWER & LIGHT COMPANY (A FIRST ENERGY COMPANY), PLAINTIFF-APPELLANT,
v.
MELCAR UTILITY COMPANY, DEFENDANT/THIRD PARTY PLAINTIFF-RESPONDENT, AND VERIZON OF NEW JERSEY, DEFENDANT,
v.
UTILIQUEST, THIRD PARTY DEFENDANT-RESPONDENT.



On certification to the Superior Court, Appellate Division.

Per curiam.

New Jersey Supreme Court

SYLLABUS (This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interest of brevity, portions of any opinion may not have been summarized.)

Jersey Central Power & Light Co. v. Melcar Utility Co.

(A-96-10) (067444)

Argued November 29, 2011

Decided January 24, 2013

PER CURIAM

The essential issue in this appeal is whether N.J.S.A. 48:2-80(d), as written, impinges on the constitutional right to a jury trial for property damages. N.J.S.A. 48:2-80(d), a provision appearing in the Underground Facility Protection Act (UFPA), N.J.S.A. 48:2-73 to -91, compels parties seeking monetary relief for damages to underground facilities to submit such causes of action, if valued under a specified amount, to the Office of Dispute Settlement (ODS) within the Office of the Public Defender for unspecified "dispute resolution."

Recognizing the potential hazards posed by underground facilities, the Legislature enacted the UFPA. The statute creates a "One-Call Damage Prevention System" (System), which is designed to serve as a central repository for the receipt of notices of intent to excavate, from which the notices are forwarded to the appropriate utility. The UFPA requires that, within three days of receipt of such notice, an operator of an underground facility "[m]ark, stake, locate or otherwise provide the position and number of its underground facilities which may be affected by a planned excavation or demolition." N.J.S.A. 48:2-80(a)(2). The UFPA carries significant penalties for those who disregard its mandates. Of particular significance to the underlying dispute, N.J.S.A. 48:2-80(d) imposes liability on the excavator for any negligent damage to an operator's underground facility.

The instant matter concerns underground electrical lines owned by Jersey Central Power and Light Company (JCP&L) in the vicinity of Robin Street in Rockaway, New Jersey. In September 2007, defendant Melcar Utility Company (Melcar) performed excavation work in the area of Robin Street for the purpose of installing underground cables for Verizon of New Jersey (Verizon). During the course of that excavation work, JCP&L's underground electrical lines were damaged. In January 2009, JCP&L filed a complaint against Melcar and Verizon in the Special Civil Part of the Law Division, seeking reimbursement for costs incurred in repairing those electrical lines. Melcar filed a third-party complaint against Utiliquest, an entity contracted by JCP&L to mark the location of JCP&L's underground electrical lines, alleging that Utiliquest failed to properly mark the lines' location and, thus, was responsible for JCP&L's loss.

On the day set for trial before the Special Civil Part, Melcar's attorney made an oral motion to dismiss the matter for lack of jurisdiction, citing N.J.S.A. 48:2-80(d). Melcar argued that subsection (d) compels parties seeking monetary relief for damages to underground facilities to submit such cause of action, if valued under $25,000, to the Office of Dispute Settlement (ODS) within the Office of the Public Defender. JCP&L objected to the motion on procedural, and substantive jurisdictional, grounds. After the jurisdictional question was briefed and argued, the court granted the motion and entered an order dismissing JCP&L's complaint without prejudice.

JCP&L appealed, arguing that N.J.S.A. 48:2-80(d) does not require that claims valued at less than $25,000 be submitted to the ODS, but rather makes it permissible for the parties to submit to that dispute resolution forum. Alternatively, JCP&L argued that if subsection (d) is interpreted as mandating resort to the ODS in those instances, the provision is unconstitutional. In a short, unpublished opinion the Appellate Division affirmed the trial court's order.

The Supreme Court granted JCP&L's petition for certification. 205 N.J. 318 (2011). After the matter was argued, the Court invited the Attorney General of New Jersey to submit a brief addressing the constitutionality of N.J.S.A. 48:2-80(d), and provided the parties an opportunity to respond.

HELD: N.J.S.A. 48:2-80(d), on its face, provides no right to a trial by jury. It is unusual in that it is binding on litigants who are effectively suing in negligence under a statutory standard of care for a claim rooted in common-law negligence causing damage to property. The Court has no recourse except to declare the statute as written to be constitutionally flawed.

1. Abiding by fundamental principles of statutory construction, the Court cannot otherwise conclude but that the Legislature intended that all subsection (d) matters involving damages to underground facilities totaling less than $25,000 must be referred to the Office of Dispute Settlement (ODS) within the Office of the Public Defender. The Court reaches this conclusion for several reasons, not the least of which is the Legislature's choice of the word "shall," which is ordinarily intended to be mandatory, not permissive. Further, the Court agrees with the Appellate Division that the phrase "shall be subject to" must be read as mandatory if the Court is to give effect to the entire provision. The Legislature spoke plainly in creating two categories of disputes, mandating alternative dispute resolution for claims valued at less than $25,000 and permitting alternative dispute resolution for claims valued at more than $25,000. The statute, read as a whole, manifests an unmistakable legislative intent that parties with claims of damage to underground facilities valued at less than $25,000 must present those claims to the ODS, unless the parties mutually agree upon a different forum for dispute resolution. (pp. 10-14)

2. The New Jersey State Constitution guarantees that the "right of trial by jury shall remain inviolate." N.J. Const. art. I, ¶ 9. It is well-established that this protection applies to civil cases only where the right to a jury trial existed at common law and does not normally apply to cases in equity. Only the Legislature can confer litigants with a right to a trial by jury if the action did not exist at common law. In Muise v. GPU Inc., 332 N.J. Super. 140 (App. Div. 2000), the Appellate Division considered whether consumers seeking damages from a utility company for electric outages had a right to a jury trial when the underlying claim was rooted in common-law principles of negligence. The court ultimately concluded in that case that a jury trial de novo was constitutionally owed to the consumers. (pp. 14-20)

3. N.J.S.A. 48:2-80(d), on its face, provides no right to a trial by jury. The Legislature instead has required JCP&L and other private litigants seeking monetary relief for property damages included under N.J.S.A. 48:2-80(d) to submit to an undesignated, alternative dispute resolution process to be developed by the ODS. The ODS has chosen arbitration to carry out its assigned task. In the setting presented, prior case law compels the conclusion that mandatory, binding arbitration is impermissible because it effectively denies JCP&L and other private litigants their constitutionally guaranteed right to a trial by jury for a common-law cause of action in negligence. N.J.S.A. 48:2-82(d)(3) expressly imposes on excavators the common-law responsibility of due care. Thus, as evidenced by the statute's plain language, the Legislature contemplated that principles of common-law negligence underlie this statutory cause of action. The Legislature was not at liberty to ignore the right to a civil jury trial for property damages when enacting the UFPA. Indeed, as already noted, elsewhere in the UFPA the Legislature made express reference to the right to pursue a civil remedy for damages. In light of its express references elsewhere in the statute, the Court cannot insert language that the Legislature could have included in subsection (d) -- but did not. (pp. 20-25)

4. The judicial process in New Jersey uses mandatory, non-binding arbitration in certain limited circumstances. The Legislature has expressly required that litigants submit to that compelled, non-binding alternative dispute resolution process in certain instances. R. 4:21A-1(a). Importantly, however, arbitration does not cut off the right to a jury trial. The process concludes with the option of a trial de novo. R. 4:21A-6(c). Indeed, even when the Legislature has acted to compel the use of arbitration, this Court has highlighted the important caveat of permitting a right to a trial de novo following mandatory arbitration whenever the constitutional right to jury trial was implicated. (pp. 25-28)

5. N.J.S.A. 48:2-80(d) is a unique statute because it retains no option for a trial de novo. Research fails to reveal any other New Jersey statute that has cut off a private litigant's right to a trial by jury for a cause of action rooted in common law by not expressly including the right to a trial de novo. Here, the Legislature did not preserve the right to a trial de novo, as it has done on earlier occasions. Moreover, the Court cannot accept that the ODS can "fix" this statutory deficiency by saying that it will recognize a right to a de novo trial should its arbitration process prove unsuccessful in resolving the dispute. Thus, the Court has no recourse except to declare the statute as written to be constitutionally flawed. Neither the Court, nor the ODS, may write in a right to a trial de novo to save this statute from its constitutional shortcoming. The Court leaves its correction to the Legislature. (pp. 28-31)

The judgment dismissing JCP&L's cause of action is REVERSED and the matter is REMANDED for further proceedings before the Law Division.

CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, ALBIN, HOENS, and PATTERSON join in this opinion.

Argued November 29, 2011

N.J.S.A. 48:2-80(d), a provision appearing in the Underground Facility Protection Act (UFPA), N.J.S.A. 48:2-73 to -91, compels parties seeking monetary relief for damages to underground facilities to submit such causes of action, if valued under a specified amount, to the Office of Dispute Settlement (ODS) within the Office of the Public Defender for unspecified "dispute resolution." On its face, the provision fails to preserve a party's ability to have the property damage dispute remain within or return to a judicial setting. It was applied in this matter to compel the dismissal of a Superior Court action for property damage to underground facilities covered by the UFPA.

The essential issue is whether N.J.S.A. 48:2-80(d), as written, impinges on the constitutional right to a jury trial for property damages. We conclude that it does and therefore reverse the judgment that dismissed the Superior Court action for want of jurisdiction.

I.

This case comes before us with the following factual and procedural background. Plaintiff Jersey Central Power & Light Company (JCP&L), a public utility subject to the jurisdiction and authority of the Board of Public Utilities under N.J.S.A. 48:2-13(a), generates and distributes electric power throughout various areas of New Jersey. When feasible, JCP&L, like many utilities, places facilities such as transmission lines and stations below ground where they are not visible. Underground placement protects against storm-related damage, thereby preventing interruptions in service to customers, and provides aesthetic benefits. However, underground placement also poses hazards to those who may be unaware of the presence of such underground facilities and those who may not take sufficient steps to prevent damage to the facilities of which they are aware.

Recognizing the potential hazards posed by such underground facilities, the Legislature enacted the UFPA to protect both the public from the risk of harm and the utility companies from unnecessary losses. The statute creates a "One-Call Damage Prevention System" (System), which is designed to serve as a central repository for the receipt of notices of intent to excavate, from which the notices are forwarded to the appropriate utility. N.J.S.A. 48:2-76. The UFPA requires that such notices of intent be given to the System not less than three business days prior to the commencement of any excavation or demolition. N.J.S.A. 48:2-82. The UFPA also requires that, within three days of receipt of a notice of intent, an operator of an underground facility "[m]ark, stake, locate or otherwise provide the position and number of its underground facilities which may be affected by a planned excavation or demolition." N.J.S.A. 48:2-80(a)(2).

The UFPA carries significant penalties for those who disregard its mandates. An operator or excavator who violates the statute is liable for a civil penalty, imposed by the Board of Public Utilities, of not less than $1,000 and not greater than $2,500 for each day the violation continues, with a maximum of $25,000 in the case of a series of related violations.

N.J.S.A. 48:2-88. If the violation relates to a natural gas or hazardous liquid underground pipeline or distribution facility, the penalty increases to not more than $100,000 per day, or $1,000,000 for any related series of violations. N.J.S.A. 48:2-86(c). N.J.S.A. 48:2-86(d) provides for the pursuit of civil penalties and expressly authorizes the simultaneous pursuit of administrative and judicial remedies for the damages incurred to underground facilities. See also N.J.S.A. 48:2-88(b) ("Nothing in this act shall affect any civil remedy for damage to an operator's underground facility or for actual damage to any person's property."). Further, a knowing violation of the statute may constitute either a disorderly persons offense or a third-degree crime, depending on the extent of the damage caused by the violation. N.J.S.A. 48:2-87.

Against that backdrop, subsection (d) of N.J.S.A. 48:2-80 draws our specific attention. The Legislature added this subsection in 2005. L. 2005, c. 22, ยง 2. The subsection provides that if an operator of an underground facility, upon receipt of notice of a proposed excavation, does not comply with its obligation to mark or locate the number and position of its underground facilities, the underground facility operator shall be liable to the excavator "for any costs, labor, parts, equipment and personnel downtime" that an excavator may incur as a result of damage to the excavator's equipment. Thus, subsection (d) imposes ...


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