WALTERS DEVELOPMENT CO., LLC and MARK MADISON, LLC, Plaintiffs–Respondents/ Cross–Appellants, v. TOWNSHIP OF BARNEGAT, Defendant–Respondent/ Cross–Appellant, MENK CORPORATION, Defendant–Appellant/ Cross–Respondent.
DOCKET NO. A–3899–11T2
-- August 22, 2013
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).
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.
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 or all of the following methods:
(a) A credit in lieu of payment of connection fees for all units within the Project. See Section 11.01 herein.
(b) A credit in lieu of payment of connection fees for any other units constructed and developed by the Owner outside the Project, but within the Service Area. See Section 11.02 herein.
(c) Payment to the Owner, via the Township, of monies from other developers representing those developers' prorate share for construction of the oversized Water Facilities, pursuant to the formula set forth herein. See Section 11.03 herein.
(d) Waiver of payment otherwise due from the Owner to the Township, for his prorate share of the oversized cost pursuant to the method set forth in subparagraph (c) hereinabove, for units developed by Owner outside of the Project, but within the Township of Barnegat. See Section 11.03 herein.
Menk contends it was exempt from paying a $600 per unit water connection fee for all units within the Project, as well as other units constructed by Menk in Barnegat up to 1380 total units. The 1380 aggregate connection fees have a value of $828,000, which Menk argues should not be counted towards the reimbursement of its installation costs and therefore it is entitled to payments under the Walters Agreement. Walters asserts that the non-payment by Menk of aggregate connection fees of $828,000 is a credit against the amount owed to Menk by Barnegat for reimbursement of Menk's installation costs. Upon application of this credit, Walters contends that Menk has been fully reimbursed thereby freeing payments to Walters under the Walters Agreement. Section 11.01 of the Agreement provides that Menk, “as one manner of reimbursement, shall receive a waiver of the Water Connection Fees for all units within the Project for connecting to the Water Facilities and all other water facilities owned and operated by the Township.” Section 11.02 of the Agreement also exempts Menk from payment of water connection fees for other property in Barnegat “up to the point in time when [Menk] has been fully reimbursed for the ‘Reimbursement Amount[.]’ ” The amount of the connection fee waiver due to Menk shall be “supplied as a credit off of the Reimbursement Amount[.]”
B. The Addendum
In 2004, Barnegat requested that the timing of the payments due from future users pursuant to the Agreement be modified. However, Menk and Barnegat “disagreed as to whether the percentage allocations of the Reimbursement Amount as set forth in the Water Agreement should be modified to maintain the intent of the Water Agreement.” The parties did agree on certain points which they memorialized in the Addendum, namely: the amounts future users have been billed and paid as of December 2003; the methodology of how to calculate the amount to be billed to future users who have not paid in full as of the date of the Addendum; and a resolution of issues with regard to well 6. Section 2.01 of the Addendum provided:
Notwithstanding the possible increase in the number of PAC units which can be served by the excess capacity created by the improvements built by Menk under the Water Agreement and the terms of Section 11.03 of the Water Agreement, the amount Menk shall be reimbursed by Future Users is set at 54% of the Installation Costs, ie., $1,129,263.85 (54% of $2,091,299.38), with Interest, plus one hundred percent (100%) of the certified cost for Well No. 6, plus accrued interest.
In addition, Section 3.04 of the Addendum reiterates that Menk shall be reimbursed “for 100% of the projected installation cost of well 6 as a production well.”
C. Walters Agreement
Despite Menk's water facility improvements, Barnegat eventually lacked the capacity to service additional development, including two of Walters' developments and other properties in the Township. In June 2006, Barnegat and Walters entered into a water facilities agreement pursuant to which Walters agreed to construct an additional water supply well (well 9) and associated improvements, and to secure additional permitted water allocation from the New Jersey Department of Environmental Protection (DEP). It was determined that 40.711% of the capacity of the 2006 improvements would be needed to provide water to Walters' developments and the remaining 59.289% of the capacity for those improvements would be available to service other developments. Pursuant to the Walters Agreement, Barnegat was to require other future developers to pay their pro rata share of the costs of the 2006 improvements, and to collect those pro rata payments in order to reimburse Walters for the costs it incurred beyond its pro rata share. The Walters Agreement stipulated that Barnegat would provide Walters with reimbursements only after Menk was fully reimbursed under the Menk Agreement.
D. Motions for Summary Judgment
Walters initiated this matter by way of an Order to Show Cause and Verified Complaint in Lieu of Prerogative Writs. In its complaint Walters contended that Menk had been paid in full and the balance of any funds being held by Barnegat should be paid to Walters.
Barnegat asserted that it is simply an escrow agent for the payments made by future users and will abide by any decision of the courts with regard to the dispute between Menk and Walters. However, Barnegat demanded that Menk reimburse attorneys' fees and costs incurred in connection with this matter, as provided by the Agreement since it “never took a position in opposition to Menk's legal position.” Section 14.10 of the Agreement provides that if either party institutes any action “to enforce any provision of this Agreement or for damages by reason of an alleged breach of any provision of this Agreement,” the prevailing party can recover its attorneys' fees and court costs from the losing party. The motion judge denied Barnegat's request for attorneys' fees and costs incurred.
On October 8, 2009, Menk filed a motion for summary judgment seeking dismissal of Walters' complaint. On October 23, 2009, Walters filed a motion for partial summary judgment to declare Menk's entitlement to further reimbursements under the Menk Agreement terminated and that Barnegat refund any overpayments made to Menk. The motion judge determined that Menk had been overpaid a principal amount of $317,409.27 and that Menk was not entitled to any further reimbursements under the Agreement.
On April 8, 2010, Menk filed a motion for reconsideration. Menk argued that the motion judge erred in his determination of reimbursement to Menk by utilizing the estimated number of users under the 1998 Agreement, 3000, instead of the actual capacity for wells 5 and 6, which Menk contends is 4799 users. However, the Agreement's reimbursement formula, specifically the percentage of the water facility improvements that Menk benefits from, was determined by the parties to be 1380 with total users of 3000.
The motion judge conducted two plenary hearings and took testimony from two expert engineers. John J. Hess, P.E., P.P., C.M.E., testified that “[w]ith both wells in operation, the wells can produce a maximum of 2,880,000 g.d.p. (gallons per day).” Hess further testified that the DEP has administrative regulations which set the average daily water demand for a PAC unit at 225 g.p.d. and an average daily demand of 300 g.p.d. for a single family dwelling. Hess opined, that wells 5 and 6 could serve a total of 4266 units. Brian P. Murphy, P.E., P.P., C.M.E., testified as an expert on behalf of Menk. Murphy testified that 6095 users and 4799 users were both reasonable capacity numbers for wells 5 and 6.
On December 15, 2010, the motion judge granted in part and denied in part Menk's motion for reconsideration of his March 15, 2010 order denying Menk's motion for summary judgment. The motion judge found that the improvements, including well 6, had the capacity to serve 4266 PAC units resulting in Menk's pro rata share established at 32% with a 68% reimbursement entitlement. Based on this pro rata share, the motion judge determined that Menk had been overpaid $18,945.67 with accrued interest.
Menk then moved for reconsideration of the motion judge's December 15, 2010 order, which was denied in a December 22, 2010 order. Thereafter, in a May 9, 2011 order the motion judge, while reaffirming his December 15, 2010 order, granted Walters' motion to determine that Menk had been overpaid and must reimburse Barnegat. The judge directed Menk to reimburse Barnegat in the amount of $198,736.33, of which $18,945.67 was principal and $179,790.66 was interest. Menk was granted leave to file an amended answer asserting amended counterclaims and cross claims.
Menk sought reconsideration of the May 9, 2011 order arguing that the motion judge erred by ordering Menk to hold the $198,736.33 in trust pending final resolution of the case. Menk's motion for reconsideration was denied on June 24, 2011. That order further required Menk to make the payment into an interest bearing trust account within five days.
Barnegat then filed a motion to dismiss Menk's cross-claim and amended cross-claim for unjust enrichment and breach of the covenant of good faith and fair dealing. Subsequently, Menk filed a cross-motion to enjoin Barnegat from continuing to charge it unit reimbursement fees. In a February 21, 2012 opinion the motion judge granted Barnegat's motion to dismiss the amended cross-claims filed by Menk and denied Menk's cross-motion to enjoin Barnegat from continuing to charge unit reimbursement amounts under the Agreement. On March 16, 2012, the motion judge entered final judgment. This appeal ensued.
We apply the same standard of review as the trial court when assessing a summary judgment decision. Murray v. Plainfield Rescue Squad, 210 N.J. 581, 584 (2012). The evidence must be viewed “in the light most favorable to the non-moving party.” Ibid. The role of the court is not “to weigh the evidence and determine the outcome,” Rowe v. Mazel Thirty, LLC, 209 N.J. 35, 50 (2012) (internal quotation marks omitted); rather, it is to determine “if there is a genuine issue as to any material fact or whether the moving party is entitled to judgment as a matter of law,” id. at 41 (citing Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 529 (1995)). Therefore, “[r]eview of an order granting summary judgment is de novo; an appellate court need not accept the trial court's findings of law.” Davis v. Devereux Found., 209 N.J. 269, 286 (2012).
In an appeal from a bench trial, “[t]he scope of appellate review of a trial court's fact-finding function is limited.” Seidman v. Clifton Sav. Bank, S.L.A., 205 N.J. 150, 169 (2011) (quoting Cesare v. Cesare, 154 N.J. 394, 411 (1998)) (internal quotation marks omitted). “[W]e do not disturb the factual findings and legal conclusions of the trial judge unless we are convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant[,] and reasonably credible evidence as to offend the interests of justice.” Ibid. (quoting In re Trust Created By Agreement Dated Dec. 20, 1961, 194 N.J. 276, 284 (2008)) (internal quotation marks omitted). “Deference is especially appropriate when the evidence is largely testimonial and involves questions of credibility.” Ibid. (quoting Cesare, supra, 154 N.J. at 412). “Because a trial court hears the case, sees and observes the witnesses, and hears them testify, it has a better perspective than a reviewing court in evaluating the veracity of witnesses.” Ibid. (quoting Cesare, supra, 154 N.J. at 412). However, we owe no deference to a trial court's interpretation of the law, and review issues of law de novo. State v. Parker, 212 N.J. 269, 278 (2012); Mountain Hill, L.L.C. v. Twp. Comm. of Middletown, 403 N.J.Super. 146, 193 (App.Div.2008), certif. denied, 199 N.J. 129 (2009).
Where the issues involve contract interpretation and the application of case law to the facts of the case, our standard of review is de novo. Hutnick v. ARI Mut. Ins. Co., 391 N.J.Super. 524, 528 (App.Div.), certif. denied, 192 N.J. 70 (2007). The rules of contractual interpretation are well-established. The role of the court is to give “juristic effect” to the intention of the parties as expressed in the contract. George M. Brewster & Son, Inc. v. Catalytic Constr. Co., 17 N.J. 20, 27–28 (1954) (citing Corn Exch. Nat'l Bank & Trust Co. v. Taubel, 113 N.J.L. 605 (E. & A.1934)); see also Domanske v. Rapid–Am. Corp., 330 N.J.Super. 241, 246 (App.Div.2000). If a contract is unambiguous, it must generally be enforced as written. Schenck v. HJI Assocs., 295 N.J.Super. 445, 450 (App.Div.1996) (citing U.S. Pipe & Foundry Co. v. Am. Arbitration Ass'n, 67 N.J.Super. 384, 393 (App.Div.1961)), certif. denied, 149 N.J. 35 (1997). “A basic principle of contract interpretation is to read the document as a whole in a fair and common sense manner.” Hardy ex rel. Dowdell v. Abdul–Matin, 198 N.J. 95, 103 (2009).
On appeal, Menk argues that the motion judge erred by not enforcing the terms of the Agreement and Addendum as written. In his March 15, 2010 order, the motion judge denied Menk's motion for summary judgment for the reasons set forth in his oral decision of December 23, 2009. In his decision, the motion judge diverged from the agreement of the parties when he determined that the Addendum “as it pertains to the 100% reimbursement provisions, and the actions taken in accordance therewith are found to be null and void․”
The judge's decision denying Menk's claim for reimbursement of 100% of its construction costs for well 6 was based on N.J.S.A. 40:55D–42, which is part of the Municipal Land Use Law (MLUL), N.J.S.A. 40:55D–1 to –163. The statute 5 “provides the boundaries of a public entity's power with respect to off-tract improvements.” Toll Bros., Inc. v. Bd. of Chosen Freeholders of the Cnty. of Burlington, 194 N.J. 223, 243–44 (2008). “There must be a consequential relation between the ‘needs generated by the specific development’ and the costs attributable to the developer.” Id. at 244 (quoting N.J. Builders Ass'n. v. Bernards Twp., 108 N.J. 223, 228 (1987)). “[T]he apportionment of costs must be fair and equitable.” Id. at 246. The Supreme Court stressed that the “fundamental requirement” in apportioning costs “is that the end result must be equitable.” Id. at 245 (quoting Divan Builders, Inc. v. Planning Bd. of Wayne, 66 N.J. 582, 599 (1975) (internal quotation marks omitted)). “[A]lthough the entire obligation of installing off-tract improvements may, in appropriate circumstances, be imposed on a developer initially, the ultimate cost to the developer is limited to its pro-rata share.” Ibid. The Court concluded that Toll Brothers had a right to appear before the County to establish a sufficient change in conditions surrounding the property. The Court relied on N.J.S.A. 40:55D–12(a), which codifies the right of a party to request a change in the conditions of approval, after public notice and a hearing for modification of conditions reflected in a developer's agreement. Id. at 254.
Here, neither Barnegat nor Menk requested a change in the conditions of approval or sought to change the formula for reimbursement contained in the Agreement and Addendum. However, the motion judge determined that the one-hundred percent reimbursement for well 6 was not fair and equitable and therefore declared that negotiated provision to be “null and void.” We disagree for two reasons.
In Toll Brothers the Court addressed a developer's pro-rata share stating:
In assessing a developer's pro-rata share, the issue is not simply whether a particular development could single-handedly necessitate the off-tract improvement. Rather, the notion of a pro-rata share mandates “suitable cost apportionment standards” to insure that other landowners do not enjoy a free ride at the expense of another's toil. Divan Builders, Inc. v. Planning Bd. of Wayne, 66 N.J. 582, 598 (1975). That requirement “protects a developer from paying a disproportionate share of the cost of improvements that also benefit other persons.” Holmdel Builders [v. Holmdel, 121 N.J. 550, 571 (1990) ] (internal quotation marks and citations omitted). As we noted in Longridge Builders [v. Planning Bd. of Princeton ], [ ] “[i]t would be impermissible to saddle the developer with the full cost where other property owners receive a special benefit from the improvement.” 52 N.J. [348, 350 (1968).] Thus, it is beyond dispute that under the MLUL, a planning body may not condition site plan approval on a developer paying for improvements that are unconnected to its development, or if connected, paying an amount that is disproportionate to the benefits conferred on the developer.
[Id. at 244–45.]
In analyzing the Addendum and the benefit to Barnegat, the motion judge applied the standard of review to the Township that is afforded to a developer, whether the cost to the Township of well 6 was fair and equitable. However, in undertaking the Water Facilities, Barnegat could have employed one of a number of alternatives to achieve its objective. It could have paid for the Water Facilities from general municipal funds, undertaken the project as local improvements and assessed the costs to property owners benefitted, or compelled Menk to pay all construction costs subject to recoupment in accordance with the terms of a generally applied formula. See Deerfield Estates, Inc. v. Twp. of East Brunswick, 60 N.J. 115, 132 (1972). The Court recognized that N.J.S.A. 40:55D–42 “provides the boundaries of a public entity's power with respect to off-tract improvements.” Toll Bros., supra, 194 N.J. at 243–44. The statute does not mandate that Menk pay its full pro-rata share of the improvements, only that it not exceed its fair and equitable share. Toll Brothers describes the boundaries of a public entity's power with respect to off-tract improvements, not a mandated formulaic amount to be paid by a developer. Obviously, most municipal infrastructures such as roads, sewers, and water are paid from general municipal funds.
Here, the judge erred by grounding his opinion on the premise that the Township could not charge Menk less than its fair and equitable portion of the Water Facilities.6 In arriving at the conclusion that Menk was not paying its fair share, the motion judge did not give due consideration to the risks assumed by Menk in financing and constructing the Water Facilities. Menk undertook the Water Facilities without any assurance that there would be sufficient future users to pay the reimbursement amount. Barnegat did not assume any liability for payment but only acted as a conduit through which the payments flowed. In terms of fairness and equity, the assumption by Menk of this liability should be an important consideration. Further, the factual determination that Menk was paying less than its fair and equitable portion was made on summary judgment without the crucible of a trial.
However, since we agree with Menk that the motion judge erred by not giving “juristic effect” to the intention of the parties as expressed in the Agreement and Addendum. Since neither Barnegat nor Menk requested a change in the conditions of approval, or sought to change the formula for reimbursement contained in the Agreement and Addendum, the motion judge should have enforced the contracts as written.
On appeal, Menk further asserts that Walters' claim is barred by the forty-five day limitations period contained in Rule 4:69–6(b)(3). Like any other challenge to municipal action, challenges to the ordinances approving the Agreement and the Addendum are subject to Rules 4:69–1 to –7, which establish procedures for seeking to invalidate municipal action by the filing of an action in lieu of prerogative writs. Rule 4:69–6(a) requires such challenges be brought within forty-five days of the municipal action.
Walters contends that it is not challenging the validity of the ordinances but simply asserting that Menk has been fully paid. Walters' complaint belies its assertion that it is not also challenging the ordinances. In addition to seeking relief for the over-payment of reimbursement amounts to Menk, Walters demands judgment “declaring that the reimbursement provisions of the Menk Agreement are ultra vires, void, unlawful and unenforceable.” We assume that allegation was used because even if the time Rule 4:69–6 allows for direct review of a municipal agency's action has expired, an action that was “ ‘utterly void’ ․ is ‘subject to collateral attack at any time.’ ” Thorton v. Village of Ridgewood, 17 N.J. 499, 510 (1955) (quoting V.F. Zahodiakin Eng'g Corp. v. Zoning Bd. of Adjustment of Summit, 8 N.J. 386, 395 (1952)). As stated by former Chief Justice Weintraub, then a Law Division Judge, “where there is no semblance of compliance with or authorization in the [governing] ordinance, the deficiency is deemed jurisdictional and reliance will not bar even a collateral attack after the expiration of time limitation applicable to direct review.” Jantausch v. Borough of Verona, 41 N.J.Super. 89, 94 (Law Div.1956), aff'd, 24 N.J. 326 (1957); accord Auciello v. Stauffer, 58 N.J.Super. 522, 527–28 (App.Div.1959); see also Sitkowski v. Zoning Bd. of Adjustment of Lavallette, 238 N.J.Super. 255, 261–62 (App.Div.1990).
Of course, Walters cannot have it both ways, seeking to enforce the reimbursement provisions, while at the same time contending they are void. We are satisfied that Walters' challenge to the Agreement and the Addendum and the respective authorizing ordinances are barred by the period of limitations contained in Rule 4:69–6. However, we agree with Walters' contention that Menk has been over-paid pursuant to the plain meaning of the Agreement and Addendum.
The Agreement and the Addendum read together are clear and unambiguous. Menk is entitled to 54% of the costs of the rehabilitation of well 5 and construction of the water storage tank, which the parties agree is $2,091,299.31, plus interest, plus 100% of the cost for well 6, which the parties agree is $794,239.49, plus interest. The Agreement and the Addendum read together are also clear and unambiguous with regard to the sources of reimbursement to Menk of the amount owed to it. The 1380 aggregate connection fees which have a value of $828,000, should be counted towards the reimbursement of Menk's installation costs. We remand to the motion judge for the computation of the amount that Menk has been reimbursed and the amount owed to it. The motion judge shall then enter an order implementing that result.
In its cross-appeal, Barnegat argues that the motion judge erred in denying its request for an assessment of attorney's fees and litigation expenses against Menk. Menk argues that it was compelled to seek relief from Barnegat after Barnegat and Walters sought to recoup payments made to Menk.
Generally speaking, “New Jersey disfavors the shifting of attorneys' fees.” Litton Indus. Inc. v. IMO Indus., Inc., 200 N.J. 372, 385 (2009) (citing N. Bergen Rex Transp., Inc. v. Trailer Leasing Co., 158 N.J. 561, 569 (1999)). “However, ‘a prevailing party can recover those fees if they are expressly provided for by statute, court rule, or contract.’ ” Ibid. (quoting Packard–Bamberger & Co., Inc. v. Collier, 167 N.J. 427, 440 (2001)) (emphasis added). When fee-shifting is prescribed by contract, “the [relevant] provision should be strictly construed in light of ․ [the] general policy disfavoring the award of attorneys' fees.” Ibid. (citing N. Bergen, supra, 158 N.J. at 570). The Supreme Court has applied the same test for reasonable attorneys' fees in contract cases that is used in other attorney's fee award cases in New Jersey. See id. at 386.
It is important to note that any fee determination made by trial courts “will be disturbed only on the rarest occasions, and then only because of a clear abuse of discretion.” Rendine v. Pantzer, 141 N.J. 292, 317 (1995); see also Packard–Bamberger, supra, 167 N.J. at 444 (“We accord fee determinations substantial deference․”).
An “abuse of discretion” arises when:
[A] decision is made without a rational explanation, inexplicably departed from established policies, or rested on an impermissible basis. In other words, a functional approach to abuse of discretion examines whether there are good reasons for an appellate court to defer to the particular decision at issue. It may be an arbitrary, capricious, whimsical, or manifestly unreasonable judgment.
[Flagg v. Essex Cnty. Prosecutor, 171 N.J. 561, 571 (2002) (internal quotations and citations omitted).]
Appellate courts should grant trial courts “wide latitude in resolving attorney-fee applications, and [the Supreme Court] ․ expect[s] that appellate courts will not disturb the decision to deny a plenary hearing unless there is a clear abuse of discretion.” Furst v. Einstein Moomjy, Inc., 182 N.J. 1, 25 (2004) (citing Rendine, supra, 141 N.J. at 317).
As a threshold matter, the primary issue that needs to be addressed when determining the reasonableness of an attorney's fee award is “whether the party seeking the fee prevailed in the litigation.” Litton, supra, 200 N.J. at 386 (citing N. Bergen, supra, 158 N.J. at 570). The party seeking fees must then “establish that the lawsuit was causally related to securing the relief obtained; a fee award is justified if the party's efforts are a necessary and important factor in obtaining the relief.” Ibid. (quoting Singer v. New Jersey, 95 N.J. 487, 494, cert. denied, 469 U.S. 832, 105 S.Ct. 121, 83 L. Ed.2d 64 (1984)).
Given our disposition of this matter, we remand to the motion judge for his exercise of discretion whether to award attorneys' fees to Barnegat. If the motion judge determines that Menk has been over-reimbursed, then he shall exercise discretion whether Barnegat, as a prevailing party, is entitled to attorneys' fees and litigation expenses.
Reversed and remanded. We do not retain jurisdiction.
1. FN1. The Agreement also provided for the construction of a water treatment plant which has not been raised by the parties as an issue in this appeal.
2. FN2. The parties agree that the governing body of the Township authorized both the Agreement and the Addendum.
3. FN3. The Project was less than 1380 units but the parties agree that Menk is using the full 1380 by incorporating other sites in Barnegat.
4. FN4. Barnegat deposits these payments into a water escrow account and then forwards the funds to Menk as reimbursement of 54% of the installation costs, which was the portion attributed to future users of the Water Facilities.
5. FN5. N.J.S.A. 40:55D–42 states in part:The governing body may by ordinance adopt regulations requiring a developer, as a condition for approval of a subdivision or site plan, to pay the pro-rata share of the cost of providing only reasonable and necessary street improvements and water, sewerage and drainage facilities, and easements therefore, located off-tract but necessitated or required by construction or improvements within such subdivision or development. Such regulations shall be based on circulation and comprehensive utility service plans pursuant to subsections 19b.(4) and 19b.(5) of this act, respectively, and shall establish fair and reasonable standards to determine the proportionate or pro-rata amount of the cost of such facilities that shall be borne by each developer or owner within a related and common area, which standards shall not be altered subsequent to preliminary approval. Where a developer pays the amount determined as his pro-rata share under protest he shall institute legal action within one year of such payment in order to preserve the right to a judicial determination as to the fairness and reasonableness of such amount.
6. FN6. As the Court has stated:The demands of equality do not, however, preclude reasonable differentiation. For instance, individuals and developers need not be treated alike. Woodside Homes, Inc. v. Morristown, [26 N.J. 529, 544 (1958).] Such differentiation in the field of investor owned utilities has received abundant sanction. In re Bd. of Fire Commrs., Fire Dist. No. 3, Piscataway Twp., 27 N.J. 192, 206 (1958). We note also the different arrangements set forth for treating the cost allocation of utility extensions by the Board of Public Utility Commissioners in their Regulations, 14:408–1 being applicable to developers and 14:408–2 to individuals. “Reasonable differentiation of treatment among users in different situations is not discrimination.” Yardville Estates, Inc. v. Trenton, [66 N.J.Super. 51, 61 (App.Div.1961).] See also Oradell Village, et al. v. Twp. of Wayne, 98 N.J.Super. 8 (Ch. Div.1967), aff'd, 101 N.J.Super. 403 (App.Div.1968), aff'd, 53 N.J. 496 (1969).[Deerfield, supra, 60 N.J. at 132.]