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Walters Development Co., LLC v. Township of Barnegat

Superior Court of New Jersey, Appellate Division

August 22, 2013

WALTERS DEVELOPMENT CO., LLC and MARK MADISON, LLC, Plaintiffs-Respondents/ Cross-Appellants,
v.
TOWNSHIP OF BARNEGAT, Defendant-Respondent/ Cross-Appellant, and MENK CORPORATION, Defendant-Appellant/ Cross-Respondent

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued May 14, 2013

On appeal from Superior Court of New Jersey, Law Division, Ocean County, Docket No. L-1746-09.

Eric I. Abraham argued the cause for appellant/cross-respondent Menk Corporation (Hill Wallack, LLP, attorneys; Mr. Abraham, of counsel and on the briefs; Christina L. Saveriano, on the briefs).

Richard J. Hoff, Jr., argued the cause for respondents/cross-appellants Walters Development Co., LLC and Mark Madison, LLC (Bisgaier Hoff, LLC, attorneys; Mr. Hoff, on the briefs).

Jerry J. Dasti argued the cause for respondent/cross-appellant Township of Barnegat (Dasti, Murphy, McGuckin, Ulaky, Cherkos & Connors, attorneys; Mr. Dasti, of counsel and on the briefs).

Before Judges Fisher, Waugh and St. John.

PER CURIAM

This dispute arises out of three agreements entered into by the parties: a 1998 Water Facilities Agreement (Agreement) between Menk Corporation and the Township of Barnegat; a 2004 Addendum to the Agreement (Addendum); and a 2006 agreement between Mark Madison, LLC and Barnegat (Walters Agreement). Plaintiffs Walters Development Co., LLC and Madison are affiliates (collectively, Walters). Walters contends that Menk has been fully reimbursed pursuant to the Agreement, as amended by the Addendum, and therefore payments are due it under the Walters Agreement. On March 16, 2012, the motion judge issued an order for final judgment which was supplemented on April 3, 2012. Menk appeals, Barnegat and Walters cross-appeal.

I.

We briefly summarize the relevant procedural history and the facts based on the record before us.

A. The Menk Agreement

Barnegat is the owner and operator of the Water System that services all water users within the Township. Prior to 1998, the Water System lacked sufficient capacity to serve additional customers. Menk was developing a planned adult community (PAC) in Barnegat, with a proposed 1380 units (the Project). In order for Barnegat to provide sufficient water service to the Project, and other properties in Barnegat, it was necessary to repair one existing well (well 5), construct and install an additional well (well 6), and construct a 1, 000, 000 gallon water storage tank (collectively, Water Facilities).[1]

As a result Barnegat entered into negotiations with Menk to provide for the construction of improvements to the Water System. On November 5, 1998, Menk and Barnegat entered into the Agreement. [2] The Agreement was amended by the Addendum on April 5, 2004. The Agreement called for Menk to finance, construct, install and complete the Water Facilities, which were projected to benefit 3000 PAC units. Menk completed the Water Facilities and they have been placed in service.

Menk sought payment of the reimbursement amount, which is the total of the actual installation costs plus accrued interest. Section 11.03 of the Agreement provides in part: "Therefore [Menk] shall be reimbursed or credited the amount of 54% of the Installation Costs plus interest calculated on the entire Installation Costs, from the proceeds of payments made to the Township by the 'Future Users.'" The 54% reimbursement percentage was derived by the consensus of the parties in the Agreement that the Water Facilities "will service approximately 3, 000 adult community (PAC) or equivalent units, therefore 1, 620 more PAC units than necessary to service the needs of the Project[.]" Therefore, the Menk Project would use 46% of the Water Facilities, based on the Project having 1380 units, with 54% being available for future users. The parties provided that if the actual number of units at the Project was less than 1380 "then all calculations herein based on the figure of 1380 will be changed to reflect the correct number of actual units constructed within the Project."[3] The Agreement did not provide any adjustment provisions in the event that the Project had more units or the Water Facilities served more customers.

The motion judge noted:

The parties to this litigation have stipulated that the total certified cost for all improvements by Menk under its Agreement is $2, 885, 538.80. The parties have further stipulated that the breakdown between the costs for Well 5 and Well 6 are as follows: All costs incurred for the rehabilitation of Well 5 and the one million gallon water storage tank, which itemized costs are detailed in the original agreement (permit fees, overhead expenses, etc.) were certified as $2, 091, 299.31 in the amended agreement. It is also stipulated further that Menk has provided documentation and the Township has certified that the installation costs for the construction of Well 6 totaled $794, 239.49 which totals certified cost for all improvements of $2, 885, 538.80. These installation costs have been certified to be correct by the Barnegat Auditor, Charles Fallon, in or about 2001.

Under the Agreement, Menk is reimbursed when Barnegat collects a water connection fee from future users.[4] Menk has been paid $1, 153, 112.05 from future users.

The Agreement further provided:

The parties agree that, the Owner [Menk] shall be reimbursed and/or credited for the Reimbursement Amount by any one or more ...

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