DEFALCO INSTANT TOWING, INC v. CITY OF SUMMIT

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-2889-08T22889-08T2

DEFALCO INSTANT TOWING, INC.

and NORLIN CARRILLO, a taxpayer,

Plaintiffs-Appellants/

Cross-Respondents,

v.

CITY OF SUMMIT,

Defendant-Respondent,

and

BROOKSIDE FRIENDLY SERVICE, INC.,

Defendant-Respondent/

Cross-Appellant,

and

SUMMIT FORGE BODY WORKS, INC.,

Defendant-Respondent,

and

BENHAM'S GARAGE,

Defendant.

_________________________________________

 

Submitted March 16, 2010 - Decided

Before Judges Fuentes, Gilroy and Simonelli.

On appeal from the Superior Court of New Jersey, Law Division, Union County, Docket No. L-1698-07.

Fruchter & Associates, L.L.C., attorneys for appellants/cross-respondents (Harvey Fruchter, of counsel and on the brief; Susan R. Kaplan and Jared B. Weiss, on the brief).

Cuyler Burk, attorneys for respondent City of Summit (Barry A. Osmun and Eric J. Konecke, of counsel; Mr. Konecke, on the brief).

Lindabury, McCormick, Estabrook & Cooper, P.C., attorneys for respondent Summit Forge Body Works, Inc. (Peter M. Burke, on the brief).

Law Offices of David C. Bendush, attorneys for respondent/cross-appellant Brookside Friendly Service, Inc. (Mr. Bendush, on the brief).

PER CURIAM

In this action in lieu of prerogative writs challenging a municipal towing ordinance, plaintiffs DeFalco Instant Towing, Inc. and Norlin Carillo (collectively "DeFalco") appeal from the January 5, 2009 Law Division orders denying their motion for summary judgment, and granting the cross-motion for summary judgment filed by defendant City of Summit (City) dismissing the amended complaint with prejudice. Defendant Brookside Friendly Service, Inc. (Brookside) cross-appeals from the March 29, 2008 denial of its motion to dismiss and for counsel fees, and from the January 5, 2009 order denying the same relief.

Because we conclude that DeFalco's claims are time-barred, we affirm the denial of its summary judgment motion and the grant of the City's summary judgment motion. We also affirm the denial of Brookside's motions to dismiss and for counsel fees.

I.

The following facts are derived from evidence submitted by the parties in support of, and in opposition to, the summary judgment motions, viewed in a light most favorable to DeFalco. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).

On April 20, 1999, the City's Common Council (Council) adopted a municipal ordinance regulating the appointment and licensing of operators for the towing of damaged, disabled, abandoned and impounded vehicles when requested by the Summit Police Department (the 1999 ordinance). The 1999 ordinance contains various requirements to become a licensed tow operator, including the following:

D. Minimum Storage Requirements.

(1) Every Tow Operator shall maintain an inside building or outside-secured storage area meeting the following requirements:

. . . .

b. The location of the storage area shall be within the limits of the City.

In February of 2003, DeFalco submitted an application for a tow operator's license. On February 27, 2003, the City denied the application, in part, because DeFalco did not maintain an in-city storage facility, as required by ordinance's minimum storage requirements. DeFalco did not challenge the denial or the in-city storage facility requirement.

In September 2005, DeFalco prevailed in its action against the Borough of New Providence, challenging the validity of an amended towing ordinance, which gave towing preference to tow operators who maintained a business in the Borough. See DeFalco Instant Towing, Inc. v. Borough of New Providence, 380 N.J. Super. 152 (App. Div. 2005).

On December 19, 2006, the Council considered proposed amendments to the 1999 ordinance, which did not include amending the in-city storage facility requirement. DeFalco's attorney appeared at a Council meeting on a January 30, 2007, expressed concern about the in-city storage facility requirement, and asked the Council to reconsider that restriction. On January 30, 2007, the Council adopted an amended ordinance, which did not repeal the 1999 ordinance or amend the in-city storage facility requirement (the 2007 amended ordinance). The 2007 amended ordinance became effective February 3, 2007.

On February 22, 2007, DeFalco filed another application for a tow operator's license. On March 30, 2007, the City denied the application because DeFalco did not maintain an in-city storage facility.

On May 14, 2007, DeFalco filed a complaint in lieu of prerogative writs against the City and defendant Summit Forge Body Works, Inc. (Summit Forge), who is a city-licensed tow operator. DeFalco challenged the 2007 amended ordinance, alleging that the in-city storage facility requirement is overly restrictive and void, and that the City arbitrarily and capriciously permitted Summit Forge to contract with out-of-city unlicensed tow operators to perform in-city tow services in violation of the ordinance. DeFalco also asserted claims for tortious interference with its contractual rights, for damages pursuant to 42 U.S.C.A. 1983, and for attorneys fees pursuant to 42 U.S.C.A. 1988(b) but later voluntarily dismissed these three claims with prejudice.

DeFalco filed an amended complaint, adding Brookside and defendant Benham's Garage (Benham's) as defendant. As to Brookside, who is a city-licensed tow operator, DeFalco alleged that the City arbitrarily and capriciously permitted it to contract with out-of-city unlicensed tow operators to perform in-city tow services in violation of the ordinance. DeFalco sought no monetary damages. Rather, it sought to declare the ordinance invalid and/or void, to compel the City to place it on the on-call tow operator's list, and to revoke Summit Forge's and Brookside's tow operator licenses.

Prior to filing an answer, Brookside's attorney served on DeFalco's attorney a notice of frivolous litigation and demand for withdrawal of the complaint in accordance with Rule 1:4-8 and N.J.S.A. 2A:15-59.1. DeFalco did not withdraw the amended complaint, prompting Brookside to file a motion to dismiss pursuant to Rule 4:6-2(e) for failure to state a claim upon which relief can be granted, and for counsel fees pursuant to Rule 1:4-8 and N.J.S.A. 2A:15:59-1. Relying on Printing Mart-Morristown v. Sharp Elecs., Inc., 116 N.J. 739 (1989), the trial judge denied the motion, finding that DeFalco made factual allegations sufficient to withstand a Rule 4:6-2(e) motion.

DeFalco filed a summary judgment motion. The City and Summit Forge filed a cross-motion for summary judgment, and Brookside filed a second motion to dismiss pursuant to Rule 4:6-2(e), and for counsel fees. The trial judge viewed Brookside's motion to dismiss as one for summary judgment because it relied on matters outside the pleadings. R. 4:6-2. Although the judge found that the motion failed to meet the requirements of Rule 4:46, she denied it as moot because at oral argument, DeFalco voluntarily dismissed its claims against Brookside and Summit Forge with prejudice. The judge also denied Brookside's request for counsel fees, concluding that DeFalco had a reasonable and good faith belief in the merits of its case and asserted its claims "in good faith and at least in partial reliance upon [its] successful challenge [in DeFalco]."

The trial judge granted the City's cross-motion for summary judgment and dismissed the amended complaint with prejudice, concluding, in part, that it was time-barred pursuant to Rule 4:69-6(a). In a written opinion, the judge found that DeFalco's claim relating to the in-city storage requirement accrued when the 1999 ordinance was adopted. Alternatively, the judge found that DeFalco's claim accrued as early as February 2003, when it submitted its first license application, and no later than January 2007, when its attorney appeared at the Council meeting, because it knew at those times of the in-city storage requirement and the negative impact the requirement had on its ability to obtain a tow license in Summit.

The judge declined to enlarge the 45-day limitation period pursuant to Rule 4:69-6(c), concluding that DeFalco failed to establish a manifest injustice. The judge found that DeFalco raised no constitutional question, and no administrative official made an informal or ex parte determination of legal questions. The judge also found that DeFalco sought to protect a private rather than an important public interest, stating,

Both the allegations in the Complaint and the relief sought clearly demonstrate that the interests sought to be vindicated are the business interests of plaintiff DeFalco. Among the relief demanded is the immediate appointment of DeFalco to the towing service rotation. Apart from these private interests, there is no important public interest that requires adjudication here. The evidence presented indicates that the public interest in having appropriate services is met by the ordinance as it stands. The Chief of Police specifically endorsed the in-city storage requirement as convenient for the services the police department provides.

This appeal followed.

Our review of a ruling on summary judgment is de novo, applying the same legal standard as the trial court. Chance v. McCann, 405 N.J. Super. 547, 563 (App. Div. 2009). Thus, we consider, as the trial judge did, "'whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.'" Liberty Surplus Ins. Corp. v. Nowell Amoroso, P.A., 189 N.J. 436, 445-46 (2007) (quoting Brill, supra, 142 N.J. at 536). Summary judgment must be granted "if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2(c). If there is no genuine issue of material fact, we must then "decide whether the trial court correctly interpreted the law." Massachi v. AHL Servs., Inc., 396 N.J. Super. 486, 494 (App. Div. 2007), certif. denied, 195 N.J. 419 (2008).

II.

DeFalco contends that the judge erred in dismissing the amended complaint as time-barred pursuant to Rule 4:69-6(a). DeFalco argues that the judge failed to find a true accrual date, and that based on the 2007 amended ordinance, the 45-day period ran from the denial of its second application on March 30, 2007, or, alternatively, its right to challenge the 1999 ordinance "re-ripened again" after DeFalco, supra. We disagree.

A party may challenge municipal governmental action through an action in lieu of prerogative writs. Dolan v. City of East Orange, 287 N.J. Super. 136, 142 (App. Div. 1996). "No action in lieu of prerogative writs shall be commenced later than 45 days after the accrual of the right to the review, hearing or relief claimed[.]" R. 4:69-6(a). This rule "is 'aimed at those who slumber on their rights.'" Tri-State Ship Repair & Dry Dock Co. v. City of Perth Amboy, 349 N.J. Super. 418, 423 (App. Div. 2002) (quoting Washington Twp. Zoning Bd. v. Planning Bd., 217 N.J. Super. 215, 225 (App. Div.), certif. denied, 108 N.J. 218 (1987)).

"'Generally, a cause of action accrues when facts exist which entitle one party to maintain an action against another.'" Trenkamp v. Burlington, 170 N.J. Super. 251, 263 (Law Div. 1979) (quoting Kohler v. Barnes, 123 N.J. Super. 69, 79 (Law Div.1973)). Because Rule 4:69-6(a) does not define when actions in lieu of prerogative writs accrue, questions of accrual are left to substantive law. Harrison Redevelopment Agency v. DeRose, 398 N.J. Super. 361, 401 (App. Div. 2008). Substantive law indicates that a cause of action pursuant to Rule 4:69-6 challenging the actions of a municipal government accrues on the date the actions are adopted. Concerned Citizens of Princeton, Inc. v. Mayor and Council of Borough of Princeton, 370 N.J. Super. 429, 446-47 (App. Div.), certif. denied, 182 N.J. 139 (2004). Substantive law also indicates that unless an ordinance has been validly repealed, it remains in effect notwithstanding subsequent amendatory ordinances, and must be challenged within forty-five days of initial enactment, Kent v. Borough of Mendham, 111 N.J. Super. 67, 74 (App. Div. 1970), and that an action challenging the validity of an amendment to an ordinance must be brought within forty-five days of the amendment's passage. See Jones v. Zoning Bd. of Adjustment of Long Branch, 28 N.J. Super. 483 (Law. Div. 1953), aff'd, 32 N.J. Super. 397 (App. Div. 1954) (interpreting Rule 4:88-15, the predecessor to Rule 4:69-6, which changed the time period from thirty days to forty-five days).

Here, the 45-day limitation period to challenge the in-city storage requirement accrued in April 1999, when the 1999 ordinance was adopted. The City did not repeal the 1999 ordinance, or amend the in-city storage requirement in the 2007 amended ordinance. Alternatively, the time period accrued on various dates when DeFalco knew or should have known of its right to challenge either the 1999 ordinance or the 2007 amended ordinance: (1) on February 27, 2003, when the City denied its application for a tow operator license based on the in-city storage requirement; (2) on September 8, 2005, when we decided DeFalco, supra; or (3) on January 30, 2007, when the Council adopted the 2007 amended ordinance. DeFalco did not file its complaint until May 17, 2007. Thus, regardless of whether the 1999 ordinance adoption date, the March 2003 application denial date, or the 2007 amended ordinance adoption date applies, DeFalco's complaint was untimely. Accordingly, the judge properly granted summary judgment dismissing the amended complaint with prejudice.

III.

Alternatively, DeFalco contends that the judge erred in failing to enlarge the 45-day limitation period pursuant to Rule 4:69-6(c). It argues that a constitutional question exists because it was denied substantive due process in the passage of the 1999 ordinance, and that the Predatory Towing Prevention Act (PTPA), N.J.S.A. 56:13-1 to - 23 establishes a significant public interest in the regulation of tow operators.

Although the court may enlarge the 45-day limitation period in the interest of justice, Rule 4:69-6(c), "[b]ecause of the importance of stability and finality to public actions, courts do not routinely grant an enlargement of time to file an action in lieu of prerogative writs." Tri-State, supra, 349 N.J. Super. at 423. "Whether to grant or deny an enlargement involves a sound exercise of judicial discretion, with consideration given to both the potential impact upon the public body and upon the plaintiff. The longer a party waits to mount its challenge, the less it may be entitled to an enlargement." Id. at 423-24 (citations omitted). "It is also appropriate to look to the previous actions or inactions of the plaintiff; if it sat idly by in the past, its entitlement to enlargement of the time limit is weakened." Southport Development Group, Inc. v. Twp. of Wall, 310 N.J. Super. 548, 556 (App. Div.), certif. denied, 156 N.J. 384 (1998).

There are three categories of cases that qualify for the interest of justice exception: "'cases involving (1) important and novel constitutional questions; (2) informal or ex parte determinations of legal questions by administrative officials; and (3) important public rather than private interests which require adjudication or clarification.'" Borough of Princeton v. Bd. of Chosen Freeholders of Mercer, 169 N.J. 135, 152 (2001) (quoting Brunetti v. Borough of New Milford, 68 N.J. 576, 586 (1975)). "The Court has added that one of the '[o]ther factors that will ordinarily guide courts include[s] whether there will be a continuing violation of public rights.'" Ibid. (quoting Reilly v. Brice, 109 N.J. 555, 559 (1988)). "Balanced against those interests 'is the important policy of repose expressed in the forty-five day rule. The statute of limitations is designed to encourage parties not to rest on their rights.'" Id. at 152-53 (quoting Reilly, supra, 109 N.J. at 559).

We discern no abuse of discretion in the judge's refusal to enlarge the 45-day limitation period. DeFalco failed to demonstrate that its claims fall within any of the interest of justice exceptions. We reject DeFalco's attempt for the first time on appeal to raise a substantive due process argument. It abandoned its 42 U.S.C.A. 1983 claim, and its attorney represented to the judge at oral argument that DeFalco was not raising a due process or equal protection challenge. We will "decline to consider questions or issues not properly presented to the trial court when an opportunity for such a presentation is available 'unless the questions so raised on appeal go to the jurisdiction of the trial court or concern matters of great public interest.'" Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973) (quoting Reynolds Offset Co., Inc. v. Summer, 58 N.J. Super. 542, 548 (App. Div. 1959), certif. denied, 31 N.J. 554 (1960)).

Also, other than to note that plaintiff Norlin Carillo is a taxpayer, DeFalco failed to establish an important public interest or a continuing violation of public rights. DeFalco did not seek to protect the public interests. Rather, its singular goal in bringing this action was purely one of private concern: to compel the City to place it on the on-call tow operator's list by invalidating the in-city storage requirement.

DeFalco's attempt to invoke the PTPA to establish a significant public interest is unavailing. The intent of the PTPA is to protect the public from "unscrupulous towers . . . engaged in predatory practices victimizing consumers whose vehicles are parked on public streets and private property" by creating "a coordinated, comprehensive framework to establish and enforce minimum standards for tow truck operators. N.J.S.A. 56:13-8(a) and (e). There is no evidence that the City, Summit Forge or Brookside violated the PTPA. There also is no evidence of any violation of the 1999 ordinance or 2007 amended ordinance. Accordingly, DeFalco failed to establish entitlement to enlargement of the 45-day limitation period.

IV.

On cross-appeal, Brookside contends that the judge erred in denying its two motions to dismiss pursuant to Rule 4:6-2(e) for failure to state a claim. As to its first motion, Brookside argues that the amended complaint failed to allege any facts indicating any wrongdoing sufficient to sustain a cause of action against it. As to the second motion, Brookside contends that the judge improperly denied it as moot without explanation.

Our review of a dismissal for failure to state a claim pursuant to Rule 4:6-2(e) is de novo, following the same standard as that of the trial court. Donato v. Moldow, 374 N.J. Super. 475, 483 (App. Div. 2005). "Thus, like the trial court, [we] must accept as true the facts alleged in the complaint, and credit all reasonable inferences of fact therefrom, to ascertain whether there is a claim upon which relief can be granted." Malik v. Ruttenburg, 398 N.J. Super. 489, 494 (App. Div. 2008).

"[M]otions to dismiss should be granted in 'only the rarest [of] instances.'" Banco Popular No. America v. Gandi, 184 N.J. 161, 165 (2005) (quoting Lieberman v. Port Auth. of N.Y. & N.J., 132 N.J. 76, 79 (1993)). In evaluating such a motion, "courts are cautioned to search the complaint 'in depth and with liberality to ascertain whether the fundament of a cause of action may be gleaned even from an obscure statement[.]'" Ibid. (quoting Printing Mart, supra, 166 N.J. at 7). "The test is whether a cause of action is suggested by the facts alleged in the complaint." Russo v. Nagel, 358 N.J. Super. 254, 262 (App. Div. 2003).

Applying these standards, we are satisfied that the judge properly denied the first motion to dismiss. Viewing the amended complaint with liberality and accepting the allegations as true, we are satisfied that it suggested a cause of action against Brookside for engaging in wrongful conduct with the City such that its license should be revoked.

We are also satisfied that the judge properly denied the second motion as moot. DeFalco had voluntarily dismissed it claims against Brookside with prejudice, and the judge had granted the City's cross-motion and dismissed the entire matter with prejudice. Thus, there was nothing left to adjudicate, as Brookside had asserted no counterclaim or crossclaim.

V.

Brookside contends that the trial court erred in denying its motions for counsel fees pursuant to Rule 1:4-8 and N.J.S.A. 2A:15-59.1. We disagree.

In order to recover fees from an adverse party pursuant to N.J.S.A. 2A:15-59.1(a)(1), the prevailing party must show "that a complaint, counterclaim, cross-claim or defense of the nonprevailing party was frivolous." In deciding whether sanctions are appropriate, a court must determine whether the litigation before it is frivolous.

In order to find that a complaint, counterclaim, cross-claim or defense of the nonprevailing party was frivolous, the judge shall find on the basis of the pleadings, discovery, or the evidence presented that either:

(1) The complaint, counterclaim, cross-claim or defense was commenced, used or continued in bad faith, solely for the purpose of harassment, delay or malicious injury; or

(2) The nonprevailing party knew, or should have known, that the complaint, counterclaim, cross-claim or defense was without any reasonable basis in law or equity and could not be supported by a good faith argument for an extension, modification or reversal of existing law.

[N.J.S.A. 2A:15-59.1b.]

Because the statutory language is phrased disjunctively, a valid claim in law or equity, N.J.S.A. 2A:15-59.1b(2), could be frivolous if it were brought for the improper purposes cited, N.J.S.A. 2A:15-59.1b(1). Conversely, even without an improper purpose, N.J.S.A. 2A:15-59.1b(1), a claim could be frivolous if it utterly lacks a "reasonable basis in law or equity" and lacks a good-faith argument for extension of the law, N.J.S.A. 2A:15-59.1b(2).

In K.D. v. Bozarth, 313 N.J. Super. 561, 566, 575 (App. Div.), certif. denied, 156 N.J. 425 (1998), we upheld the trial court's denial of frivolous litigation sanctions sought by defendants against a juvenile who filed a class action civil rights suit against a number of municipal officials in Pemberton Township. Despite the clear absence of liability by the named defendants, we affirmed the trial court's denial of counsel fees because the plaintiff had "good faith" in instituting the action. Id. at 574-75. The key to determining "good faith" is objective reasonableness. Iannone v. McHale, 245 N.J. Super. 17, 29 (App. Div. 1990).

Here, DeFalco had an objectively reasonable basis to join Brookside in this action based on it success in DeFalco, and on its good faith belief that the in-city storage facility requirement was invalid and/or void and Brookside had engaged with the City in violating that requirement.

 
Affirmed.

On December 12, 2007, the court dismissed the case as to Benham's without prejudice. No party challenges that dismissal.

DeFalco also argues that the judge ignored "numerous constitutional questions of substantive law" presented below. However, except to cite Harrison Redevelopment Agency v. DeRose, 398 N.J. Super. 361 (App. Div. 2008), it identifies no other constitutional issues.

DeFalco concedes that this case does not involve informal or ex parte determinations of legal questions by administrative officials.

(continued)

(continued)

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A-2889-08T2

July 16, 2010