JERSEY JML, INC. v. TOWNSHIP OF LITTLE FALLS

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is only binding on the parties in the case and its use in other cases is limited. R.1:36-3.

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

JML, INC., d/b/a

J&M TOWING,

Plaintiff-Appellant,

v.

TOWNSHIP OF LITTLE FALLS,

Defendant-Respondent,

and

CAMP AUTO AND TRUCK PARTS, INC.,

Defendant.

_____________________________________________

October 20, 2016

Argued September 20, 2016 Decided

Before Judges Yannotti and Fasciale.

On appeal from Superior Court of New Jersey, Law Division, Passaic County, Docket No. L-4322-14.

Harvey Fruchter argued the cause for appellant (Fruchter, Weiss & Associates, and Garth Goldberg, attorneys; Mr. Fruchter, of counsel; Mr. Goldberg, on the briefs).

Ted Del Guercio, III, argued the cause for respondent (McManimon, Scotland & Baumann, LLC, attorneys; Mr. Del Guercio and William W. Northgrave, on the brief).

PER CURIAM

Plaintiff JML, Inc. (JML), which does business as J&M Towing, appeals from an order entered by the Law Division on June 5, 2015, dismissing its complaint pursuant to Rule 4:6-2(e) for failure to state a claim upon which relief can be granted. We reverse and remand for further proceedings.

I.

This appeal arises from the following facts. The Township of Little Falls (Township) has adopted ordinances pursuant to N.J.S.A. 40:48-2.49 to regulate the provision of motor vehicle towing and storage services originating in the Township. Ordinance No. 1181, which applies to the towing and storage of motor vehicles with a gross weight of less than 12,000 pounds, is codified in Section 249 of the Township's Municipal Code (Code). Ordinance 1182 applies to towing or motor vehicles with a gross weight of more than 12,000 pounds, and is codified in Section 250 of the Code.

Generally, the ordinances provided that on November 1 of "every odd year," the Township would receive applications for licensure as the Township's official towing companies. Little Falls, N.J. Code 249-3, 250-4 (2010). The applications must contain certain information. Ibid. The Chief of Police reviews the applications for completeness. Id. 249-2(A), 250-2(A). The ordinances also state that, "[n]o more than four (4) towing companies shall be licensed by the Township." Ibid.

"Approved applicants shall be deemed the Township's [l]icensees . . . for the following two years beginning January 1[.]" Ibid. The licensees are placed on a rotation list, in alphabetical order by business name, and the licensee shall remain at the top of the list for two weeks, after which the next listed licensee "shall serve." Id. 249-7(A)(1), 250-8(A)(1). "The two-week rotation schedule shall be implemented throughout the two-year license period." Ibid.

In November 2013, JML and Camp Auto and Truck Parts, Inc. (Camp) submitted applications for licenses for light and heavy duty towing for the two calendar years beginning on the following January 1.1 The Township rejected Camp's application because it did not comply with the application requirements.2 The Township designated JML as the sole licensee for light and heavy duty towing and storage for the 2014-2015 term.

Camp then brought suit against the Township, challenging the rejection of its application, but did not name JML as a party to the litigation. Camp and the Township settled the case and, as a result, the Township adopted Ordinance No. 1202, which amended the Code to state that the Township would accept applications for light and heavy duty towing and storage licenses on November 1 of every even year, beginning in 2014. Id. 249-3, 250-3. The ordinance also amended the Code to state that the Township had the discretion to waive any immaterial defect in a license application. Id. 249-3(B), 250-3(B).

JML, Camp, and four other entities submitted applications for licenses for the 2015-2016 term.3 On December 1, 2014, JML filed an action in lieu of prerogative writs in the trial court against the Township and Camp, and sought an order enjoining the Township from adding Camp as a licensed tower for 2015. The court considered the application on December 8, 2014, and determined that injunctive relief was not warranted.

On December 17, 2014, JML filed an amended complaint in which it alleged that, by amending the Code to allow additional towers to commence operation in 2015, the Township breached a "contractual/license and fair dealing relationship" with JML for that year. JML sought a judgment directing the Township to pay JML lost profits for the towing services that Camp performed in 2015.

JML further alleged that Camp engaged in actions that caused the Township to breach "the covenants of good faith and fair dealing with" JML. JML claimed that Camp thereby lost its right to provide towing services in the Township in 2015. JML sought a judgment against Camp awarding it compensatory and punitive damages, as well as attorney's fees.

In addition, JML alleged that Camp was under a legal duty to notify it of the prior litigation against the Township, and to refrain from competing with JML so as to disrupt its relationship with the Township. JML claimed that Camp's actions caused irreparable and substantial damage, for which it sought compensatory and punitive damages, as well as attorney's fees.

On December 29, 2014, the Township's Council adopted a resolution that approved JML and Camp as the Township's two rotational towing companies for 2015 and 2016. The Township also determined that the applications of Criger, Triton, Vito's, and First Class failed to comply with the application requirements, and the defects in their applications could not be cured.

On January 2, 2015, JML filed a second amended complaint, which added Criger, Triton, Vito's and First Class as additional defendants. JML alleged that Camp and the other applicants did not comply with the application requirements. Among other things, JML claimed that one or more of the applicants failed to submit a Business Registration Certificate (BRC) from the State, which was allegedly required by N.J.S.A. 40A:11-23.2, and that Camp and/or Criger had not submitted certifications for the scales used to weigh heavy duty vehicles.

On February 5, 2015, JML dismissed, without prejudice, its claims against Criger, Triton, Vito's, and First Class. On that same date, the Township filed a motion pursuant to Rule 4:6-2(e) to dismiss the complaint for failure to state a claim upon which relief can be granted. In its brief, the Township noted that it had rejected the applications of Criger, Triton, Vito's, and First Class, and JML's claims regarding those applicants were moot.

The Township therefore asserted that only two claims remained in the case: JML's claim that it was entitled to be the sole rotational towing company for the remainder of 2015, and its claim that Camp's application for the 2015-2016 cycle was non-responsive. The Township argued that neither claim had merit.

The Township asserted that the relevant code provisions did not create an expectation that any rotational tower would serve on an exclusive basis. The Township also argued that any alleged defect in Camp's application was non-material and could be waived. The Township also argued that neither the Local Public Contracts Law, N.J.S.A. 40A:11-1 to -51, nor the Township's ordinances required an applicant to submit a BRC.

JML opposed the motion. It argued that JML was a necessary party to the earlier litigation, and Camp violated the court rules by failing to name it as a party. JML argued that the court should set aside the settlement of that case, or invalidate the ordinance which allowed the Township to accept new applications for towing licenses for 2015.

JML further argued that when the Township awarded it the sole license for the 2014-2015 cycle, it acquired vested rights which could not be taken without due process of law. In addition, JML argued that Camp's license application for 2015-2016 was deficient because Camp did not submit certain required information. JML also argued that it was entitled to discovery on the reasons the Township decided to settle the prior litigation with Camp.

The court heard oral argument on the motion on May 21, 2015, and issued a written opinion dated June 5, 2015, in which it concluded that JML's claims failed as a matter of law. The court stated that under the Township's ordinances, JML "never had any reasonable expectation of being the sole rotational tower, or enjoying exclusivity." The court stated that JML "only had a reasonable expectation of being one of four rotational towers."

The court concluded that the Township's action in opening up the licensing process to "fill the remaining rotational slots" for 2015 was not actionable. The court determined that the Township had the discretion to waive the alleged defects in the Camp application and accept Camp's application for a rotational towing license for the 2015-2016 cycle.

The court also determined that JML would not be afforded an opportunity for discovery, since no amount of discovery would alter the fact that JML never had a reasonable expectation to the "enhanced benefits" it claimed in the litigation. The court entered an order dated June 5, 2015, dismissing JML's complaint with prejudice. This appeal followed.

On appeal, JML argues that: (1) it was awarded the only towing licenses for 2014-2015 and thereby acquired vested rights which could not be taken without due process; (2) JML was a necessary party and should have been joined in the earlier litigation between Camp and the Township; and (3) the trial court erred by refusing to allow discovery.

II.

As noted previously, in its complaint, JML asserted claims against Camp, including claims that Camp's actions caused the Township to breach covenants of good faith and fair dealing with JML, and improperly competed with JML to disrupt its relationship with the Township. JML sought compensatory and punitive damages, as well as attorney's fees, on these claims. Camp did not, however, enter an appearance in the trial court on December 8, 2014, and it is not clear on this record whether Camp ever filed an answer to the complaint.

We also note that JML did not dispute the Township's assertion that since the Township had rejected the license applications for 2015-2016 by Criger, Triton, Vito's, and First Class, only two claims remained in the case. One of those claims was JML's claim based on its alleged expectation it would be the Township's sole rotational tower for 2014-2015. The other claim was that Camp's application for 2015-2016 was non-responsive and could not be accepted.

The trial court's order of June 5, 2015, dismissed JML's entire complaint, which included the claims asserted against Camp. In its notice of appeal, JML indicated that the trial court's order resolved all issues as to all parties. Furthermore, in its brief on appeal, JML does not argue that the trial court erred by dismissing the claims against Camp. Since the issue has not been briefed, we must assume that JML has abandoned the claims against Camp. See Gormley v. Wood-El, 218 N.J. 72, 95 n.8 (2014) (noting that an issue not briefed is deemed waived).

III.

We turn to JML's contention that the trial court erred by dismissing its claims against the Township pursuant to Rule 4:6-2(e). JML contends it pled sufficient facts to support a claim that it had a reasonable expectation it would be the sole rotational tower for the Township in 2014 and 2015.

The court's inquiry in considering a motion to dismiss under Rule 4:6-2(e) is "limited to examining the legal sufficiency of the facts alleged on the face of the complaint." Printing Mart-Morristown v. Sharp Electronics Corp., 116 N.J. 739, 746 (1989) (citing Rieder v. Dept. of Transp., 221 N.J. Super. 547, 552 (App. Div. 1987)). The court must 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 of claim, opportunity being given to amend if necessary." Printing Mart-Morristown, supra, 116 N.J. at 746 (quoting Di Cristofaro v. Laurel Grove Mem'l Park, 43 N.J. Super. 244, 252 (App. Div. 1957)).

"A pleading should be dismissed if it [does not state a] basis for relief and discovery would not provide one." Rezem Family Assocs., L.P. v. Borough of Millstone, 423 N.J. Super. 103, 113 (App. Div.), certif. denied, 208 N.J. 366 (2011). On appeal, we apply the same standard as the trial court applies when it considers a motion to dismiss under Rule 4:6-2(e). Sickles v. Cabot Corp., 379 N.J. Super. 100, 106 (App. Div.) (citation omitted), certif. denied, 185 N.J. 297 (2005).

As stated previously, in its written opinion of June 5, 2015, the trial court found that based upon the ordinances in effect in 2013, JML could not reasonably have expected that it would be the Township's sole provider of towing services for 2014 and 2015. The court noted that the ordinances state that up to four towers could be selected for the two-year period for which licenses would be issued. The court therefore concluded that JML's claim that it had a reasonable expectation it would be the Township's sole towing company for 2014 and 2015 failed as a matter of law.

The trial court's decision is based on its interpretation of the Township's ordinances. We note that the interpretation of an ordinance is primarily a legal issue. Wyzykowski v. Rizas, 132 N.J. 509, 518 (1993). Moreover, "[w]hen the sole issue before us is the meaning of language in an ordinance, the trial judge's determination is not entitled to any special deference[.]" Mountain Hill, L.L.C. v. Zoning Bd. of Adjustment of the Twp. of Middletown, 403 N.J. Super. 210, 234-35 (App. Div. 2008) (citing Toll Bros., Inc. v. Twp. of W. Windsor, 173 N.J. 502, 549 (2002)).

We note that the ordinances do not state that, in the event less than four applicants are licensed for any two-year cycle, the Township retained the right to seek additional applications and grant additional licenses. Indeed, the ordinances in effect when JML submitted its application stated without qualification that there would be one application process every "odd year," and the licenses awarded as a result of that process would be two years in duration, beginning the following January.

We are therefore convinced that, under the terms of the ordinances, a towing company that is the only entity licensed to provide the services for any two-year cycle could reasonably expect it would be the sole provider of towing services for the municipality in that two-year period. We are also convinced that the tower awarded the only license could reasonably assume that no additional licenses would be awarded to provide the services until applications are submitted and licenses awarded for the next two-year cycle.

According to the complaint, JML and Camp sought licenses for 2014-2015, and Camp's application was rejected. It is undisputed that JML was the sole applicant to be awarded a license for 2014-2015. Therefore, based upon the terms of the ordinances that were in effect when JML was awarded its license, JML has pled sufficient facts to support a claim that it had a reasonable expectation it would be the Township's only provider of the towing services for 2014-2015.

That said, we cannot discern from the face of JML's complaint whether JML asserted a valid claim for damages against the Township upon which relief could be granted. On appeal, JML argues that a governmental entity cannot deprive it of a property interest without due process of law.

However, in its complaint, JML did not specifically state that its claim for damages was based on an alleged denial of due process. In the complaint, JML appears to be alleging that its license is tantamount to a contract. Indeed, the complaint suggests that JML is asserting a contract-based claim.

We decline to address JML's argument since the legal basis upon which JML is asserting a claim for damages is not clear from the complaint, and this issue was not addressed by the trial court. We hold only that, under the terms of the ordinances and the facts as alleged in the complaint, JML pled sufficient facts to establish that it had a reasonable expectation that it would be the only entity providing towing services in the Township for the 2014-2015 cycle.4 We leave to the trial court to determine in the first instance whether JML has pled a valid cause of action for damages against the Township for profits it allegedly lost when the Township issued the towing license to Camp for 2015.

IV.

Next, JML argues it should have been joined in Camp's litigation against the Township as a necessary and indispensable party. Rule 4:28-1 states that

A person who is subject to service of process shall be joined as a party to the action if (1) in the person's absence complete relief cannot be accorded among those already parties, or (2) the person claims an interest in the subject of the action and is so situated that the disposition of the action in the person's absence may either (i) as a practical matter impair or impede the person's ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or other inconsistent obligations by reason of the claimed interest. If the person has not been so joined, the court shall order that the person be made a party.

"Indispensability is usually determined from the point of view of the absent party and in consideration of whether or not his rights and interests will be adversely affected." Pressler & Verniero, Current N.J. Court Rules, comment 3.1 on R. 4:28-1 (2016).

We are convinced that the issue of whether or not JML should have been named as a party to the earlier litigation has no bearing upon whether JML has asserted a claim upon which relief can be granted. It is undisputed that JML was not a party to the earlier action, and that Camp and the Township settled the case. It is also undisputed that, as a result of that settlement, the Township adopted a new ordinance which allowed Camp to successfully seek a towing license for 2015.

However, the key issue here is whether, in light of the result of that litigation, JML can legally seek damages from the Township for the profits it allegedly lost because the Township licensed Camp as the second provider of towing services for 2015. That issue should be addressed on remand.

V.

In addition, JML argues that the trial court erred by refusing to allow it to engage in discovery to ascertain the reasons why the Township chose to settle the earlier litigation with Camp. As noted previously, the trial court found that discovery would not have a bearing upon whether JML has a reasonable expectation it would be the only entity providing towing services in the Township in 2015.

In view of our decision, the trial court should reconsider its decision denying JML's request for discovery. If on remand the court determines that JML has pled a claim upon which relief can be granted, the court may allow such discovery as it deems appropriate, consistent with the court rules.

Reversed and remanded for further proceedings in conformity with this opinion. We do not retain jurisdiction.

1 It is unclear from the record whether JML and Camp were the only applicants.

2 Although not mentioned in the complaint, JML alleges that Camp failed to submit proof of workers' compensation insurance, proof that it owned or leased its towing vehicles, and proof of the right to use its vehicle-storage facilities.

3 The other applicants were Criger Service, Inc. (Criger), Triton Towing, LLC (Triton), Vito's Towing, Inc. (Vito's), and First Class Towing, LLC (First Class).

4 We note the Township might be able to refute that allegation with evidence that Camp's application for the license in 2014-2015 had been erroneously and wrongly rejected as deficient, and Camp would have prevailed in the litigation against the Township if the case had not been settled. The Township might also be able to present other evidence to show that JML's expectations of exclusivity were not reasonable.