ADVANCED ENTERPRISES RECYCLING INC v. GLOUCESTER COUNTY IMPROVEMENT AUTHORITY

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

ADVANCED ENTERPRISES RECYCLING,

INC.,

Plaintiff-Respondent,

v.

GLOUCESTER COUNTY IMPROVEMENT

AUTHORITY,

Defendant-Appellant.

August 31, 2016

 

Argued April 20, 2016 Decided

Before Judges Alvarez, Ostrer, and Manahan.

On appeal from the Superior Court of New Jersey, Law Division, Gloucester County, Docket No. L-0039-13.

John A. Alice argued the cause for appellant.

Ross A. Lewin argued the cause for respondent (Drinker Biddle & Reath LLP, attorneys; Mr. Lewin, on the brief).

PER CURIAM

In this case, plaintiff Advanced Enterprises Recycling, Inc. (Advanced) and defendant Gloucester County Improvement Authority (Authority) dispute the price per ton for Advanced's disposal of waste at the Authority's landfill. Summary judgment was granted to Advanced in the amount of $479,403, and denied to the Authority on December 23, 2014. We now reverse and remand.

The Authority, a Gloucester County public entity, manages not only the landfill, but a child development center, nursing home, and recycling center, among other community-based agencies.1 The parties' agreement authorized Advanced to dump ash waste from an Essex County waste-to-energy facility at the Authority's landfill.

In the three-year contract, the Authority agreed to accept up to a maximum of 246,000 tons of waste per year. Section 8 of the initial draft of the agreement addressed tipping fees, following a format the Authority had previously employed

8. Tipping Fee, Quantities and Payment

[Advanced] agrees to pay the Authority a rate per ton (where one ton equals 2,000 pounds), inclusive of all existing taxes and/or surcharges, of Acceptable Waste actually delivered to the Landfill, by, or on behalf of, [Advanced] according to the schedule as detailed below

Year 2012 through Year 2014

Tipping Fee

0-100,000 tons of acceptable ash

$20.00/ton

100,001-200,000 tons

$15.00/ton

Over 200,000 tons

$13.00/ton

Advanced responded with the following draft revision

Total Tons Delivered

Rate/Ton for all Tons

Per Contract Year

During Contract Year

<100,000

$20.00

2012-1/31/15

100,000-200,000

$15.00

>200,001

$13.00

The minutes of the Authority's December 15, 2011 meeting briefly refer to the waste supply agreement

Authorizing Execution of the Waste Supply Agreement By and Between the [Authority] and [Advanced] for the Term of February 1, 2012 to January 31, 2015; [t]he agreement was approved for the following rates during the term noted: [u]p to 100,000 tons at a rate of $20 per ton; from 100,001 to 200,000 tons at a rate of $15 per ton; and 200,001 and above at a rate of $13.00 per ton.

Before the contract was signed, it was discussed by Scott Cunningham, Advanced's Northwest Region Vice President, and Tom Sullivan, an administrator at the Authority's landfill, on August 23, 2011. Although not entirely clear from the record, it appears that Sullivan forwarded the Authority's proposed agreement to Cunningham, who without explanation, returned it with the price modifications. When Sullivan and Cunningham met at the landfill on December 1, 2011, along with Kim Faustino, a second Authority employee, the difference in pricing structure was discussed for the first time. Cunningham explained his interpretation of the language Advanced added, with which Sullivan disagreed.

Once the pricing options were clarified, Cunningham on-the-spot called corporate headquarters. After the call, he reiterated that the contract, as modified by Advanced, called for "all tons adjustment." He defined all tons adjustment pricing as follows: if deliveries exceeded 100,000 tons, the price per ton would be retroactively reduced from $20 to $15, and an appropriate refund or credit would be calculated until deliveries exceeded 200,000. If that occurred, the rate would again be retroactively reduced, this time to $13 a ton, and a credit or refund issued on all tons delivered.

Faustino and Sullivan reiterated their understanding ("straight tiered pricing" herein) that the first 100,000 tons would be charged at $20 per ton, the second 100,000 at $15 a ton, and anything over 200,000 would be charged at $13 a ton. Cunningham signed the document which he had prepared, and Sullivan said that he would convey Cunningham's price revision to someone in the finance department.

In one of his certifications Cunningham describes his discussion with Sullivan as negotiations. The certifications of the Authority's Executive Director George D. Strachan and of Sullivan indicate that the latter had no authority, either while serving as the enforcement supervisor or as the administrator of the landfill, concerning the tipping fees that would be charged. Sullivan's certification stated that Cunningham had no reason to assume that Sullivan had the authority to amend the price structure. The Authority takes the position that the only individual who could change the price structure was Strachan. Faustino did not have the authority to negotiate new contract terms either.

It appears from the record that there was no further mention of the topic, with the Authority's finance department or anyone else, including at the December 15, 2011 meeting at which the Authority adopted the contract. In other words, it appears that the Authority, without any discussion, agreed to significantly different terms than it originally proposed.

In the summer of 2012, Advanced advised the Authority that it expected a refund from the all-tons contract, and the differing interpretations came to light. The Authority refused to pay, contending that the agreement did not lower the price for all the tons already delivered. The Authority asserted the price dropped only as the amount of waste delivered increased into the next tier, but that the price dropped for the tonnage in that category and none other.

In deciding the cross-motions for summary judgment, the Law Division judge focused, as did counsel, on the varying interpretations of the agreement. He concluded that "the clear language of the contract is as Advanced reads it, which is if you surpass a tier, that is the rate you get for all the tons[.]" The judge said that it was the Authority's responsibility to repudiate the terms that Advanced was attempting to negotiate and that because it did not do so, it was bound by them

Thirty days go by. I'm hearing now that it goes before the board and it gets approved. Any changes? No. Is there any request for modification or any changes? Any -- we're not -- we're not accepting your deal? We under -- we understand your deal is -- we're going to change the words. We can't do that. Nothing like that. It is signed as-is.

The judge rejected the notion that the agreement resulted from the Authority's unilateral mistake or that it was a mutual mistake, because Cunningham at least understood the terms in the signed document. He said

If it was a mistake by Sullivan, the mistake is, "Gee, why did I send that memo out?" I mean, because now it confirms what our understanding was; what the deal was. It's just not really what we wanted out of this deal. But now the question is, do you stick the [Authority] with what might be a bad deal for them? Well, yeah. I mean, that's what contract law does. You -- you negotiate, you come to a deal. That's the deal. If it turns out to be not such a good deal later on, you don't get out of the deal.

He therefore concluded that the parties entered into an enforceable contract.

The judge requested further argument upon the Authority's submission of a certification obtained from the officer of a company with whom Advanced had a secondary disposal agreement with the Authority. That person interpreted the contract as straight tiered pricing, which he explained was the industry standard.

After reviewing the submission, the judge's opinion was unchanged with regard to the formation of a contract and its terms. And at the second oral argument, the judge said

And Sullivan does take that and then there's no communications after that, but that same contract that Cunningham's now just described such that it's all tons will be at $13 a ton for -- if we exceed the 200,000. That contract that Cunningham made known and what his intention by it was and what he understood it to be, was taken, then goes to the commission, to the governing body, and they have a public hearing, they sign the contract. There's no changes, there's no revision, there's no communications back saying we're rejecting that, you have to abide by the rate schedule that we publish, we're not going to do the all-tons deal. Instead of doing that, they signed the contract that Cunningham had presented, which was the lower rate for each and every ton that gets delivered once they exceed the graduated rates of over [100,000] or over 200,000.

Now, why they did that is not necessarily clear, but what is clear is that Cunningham's position was known, the contract, at least, I'll get to in a second, I think was clear to confirm what Cunningham had indicated, and that's the deal that's then signed by the governing board of the [Authority].

The new argument that was made by the defense is that Mr. Sullivan didn't have the authority to negotiate is, I think, challenged by the record because there's a lot in the record, a good deal in the record that indicates Mr. Sullivan was, in fact, negotiating with other entities, with this particular plaintiff, and that he had more authority that's being represented; but even giving due inferences to plaintiff's position, it really doesn't matter in the end because this is not a claim of Cunningham committing -- or Sullivan committing the [Authority] to a deal; it's Sullivan taking the Cunningham deal to the governing body and they, in turn, approve it and sign it and send it on. It's the contract that they authorize, it's the contract that they commit to. And so whether Sullivan had the ability to negotiate or not, eventually and ultimately the board approved the contract and sends it on.

The judge therefore concluded

So now the plaintiff wants to hold [the Authority] to the deal that they entered, and that's the motion for summary judgment. And at this point in time, I can't -- I can't find that there's an issue of fact, I can't find that I need a jury staring in the eyes of the witnesses to question their credibility because the record demonstrates issues of fact which are not in dispute, that when this contract was formed, the understanding of Cunningham was made clear, Sullivan understood it, disagreed with it initially but took it back and, for whatever reason, the board confirmed and entered into the contract as Cunningham had proposed it.

And on that basis, I'm satisfied that's the interpretation that has to be applied to the contract. I can't now make a better contract for the [Authority]. Why they took the position they did by signing the contract as worded, I don't know. I -- I've said before, but it's simply speculation, nothing more than that, I don't have any support for it in the record, that perhaps they weren't dotting their I's and crossing their T's; they weren't -- they were being somewhat cavalier because they're a governmental authority that generally or customarily gets its way. Well, when you're not more careful and you enter into a contract that says something different than what you thought it said, but you enter into it, and you give it over, and the position is clear as to what it is that you're entering into, you're going to be bound by it and that's what happens here.

And so I'm satisfied on that basis the plaintiff's motion for summary judgment should be granted.

I.

Ordinarily, the filing of cross-motions does not preclude the existence of material factual disputes. Great Atl. & Pac. Tea v. Checchio, 335 N.J. Super. 495, 498 (App. Div. 2000). It is generally acknowledged, however, that the losing party has a limited ability "to argue that an issue raises questions of fact, because the act of filing the cross-motion represents to the court the ripeness of the party's right to prevail as a matter of law." Spring Creek v. Shinnihon USA, 399 N.J. Super. 158, 177 (App. Div.), certif. denied, 196 N.J. 85 (2008).

In this case, the losing party characterizes the correct legal interpretation of the facts in an entirely different manner than did the judge, although not disputing the facts he relied upon as developed through depositions, certifications, and discovery. Additionally, the Authority contended on its cross-motion for summary judgment that Sullivan did not have the authority to negotiate price.

Our review of the trial court's order is plenary. Fernandez v. Nationwide Mut. Ins., 402 N.J. Super. 166, 170 (App. Div. 2008), aff d o.b., 199 N.J. 591 (2009). We apply the same standard as did the trial court to the same motion record. State v. Perini Corp., 221 N.J. 412, 425 (2015).

Employing that standard, we are unconvinced that a decision can be made on summary judgment that a contract even existed between these parties. In deciding the motion for summary judgment, the judge found, first, that Sullivan had the power to negotiate the pricing. He also found that the Authority should be bound to a significant change without any discussion or even any record that the board knew the price structure varied from the original proposal.

But a judge should not resolve a dispute on the merits when granting summary judgment if a rational jury could have disagreed as to the outcome. See Rowe v. Mazel Thirty, LLC, 209 N.J. 35, 50 (2012). "It [is] not the court's function to weigh the evidence and determine the outcome but only to decide if a material dispute of fact existed." Gilhooley v. Cty. of Union, 164 N.J. 533, 545 (2000).

Here the issues regarding Sullivan's authority, and the Authority's understanding of the terms of the contract, are pivotal. On this record, a reasonable jury could disagree. A reasonable jury could find that Sullivan did not have the authority to negotiate tipping fees and that the Authority was unaware of the significant change in contract terms, assuming that the language of the contract meant tipping fees would be paid under a straight tiered pricing scheme. The judge decided the dispute in the face of a document stating that the industry standard was as the Authority had proposed.

Moreover, the judge's conclusions regarding Sullivan's apparent authority did not distinguish between the apparent authority of a representative of a governmental agency and the agent of a private company.

II.

The Authority, obviously, is a New Jersey public entity, charged by county freeholders to administer various government functions. See N.J.S.A. 40:37A-46 (authorizing creation of a county improvement authority). Thus the law applicable to contracts entered into by public corporate bodies applies to the Authority.

Although general contract principles apply to public corporate bodies, particular principles circumscribe both a public corporate body's authority to contract and the authority of public employees to enter into contracts on behalf of a public corporation. See 10 Eugene McQuillin, The Law of Municipal Corporations, 29.2 (3d Ed. revised 2009).

Governmental bodies enter into contracts only "by formal action[.]" City of Jersey City v. Roosevelt Stadium Marina, Inc., 210 N.J. Super. 315, 327 (App. Div. 1986), certif. denied, 110 N.J. 152 (1988). A public corporation "cannot be bound in contract, express or implied, unless the officer or employee has authority to enter into such a contract on behalf of the corporation." St. Barnabas Med. Ctr. v. Cty. of Essex, 111 N.J. 67, 79 (1988) (quoting Cooper Med. Ctr. v. Johnson, 204 N.J. Super. 79, 82 (Law Div. 1985), aff d, 208 N.J. Super. 38 (App. Div. 1986)).

"The legal principle cannot be too often repeated, that a public corporation is not bound by acts of its agents coming within the apparent scope of their power and authority. Their authority to act must be explicit and direct that the corporation be bound." Giordini v. Mayor of Dover, 101 N.J.L. 444, 446 (Sup. Ct. 1925) (citations omitted); see also Bianchi v. Newark, 53 N.J. Super. 66, 75 (App. Div. 1958).

Private contractors are presumed, when dealing with employees of public corporations, to "operate with knowledge of relevant laws constraining the procedural and substantive discretion and authority of officials with whom they deal, and where applicable provisions are not followed, any agreements entered into are unenforceable, absent lawful ratification." St. Barnabas, supra, 111 N.J. at 77-78 (citations omitted). For that reason, "those seeking to deal with government employees 'must take great care to learn the nature and extent of their power and authority.'" Aeromar C. Por. A v. Port Auth. of New York & New Jersey, 536 N.Y.S.2d 173, 176 (App. Div. 1988) (quoting McDonald v. Mayor of New York, 68 N.Y. 23, 27 (N.Y. 1876)).

Given the distinction between the formation of a public and a private contract, the record poses a material question of fact. It is not at all clear whether the Authority's resolution authorizing the execution of the contract constituted deliberate and knowing ratification of the unauthorized action of its employee. For that reason, it would not be unreasonable for a jury, in considering these circumstances, to conclude that no formal contract was entered into at all as there was no meeting of the minds between the parties.

III.

As set forth in the Restatement (Second) of Contracts 20 (1981): "There is no manifestation of mutual assent to an exchange if the parties attach materially different meanings to their manifestations and . . . each party knows or each party has reason to know the meaning attached by the other." In other words, "even though the parties manifest mutual assent to the same words of agreement, there may be no contract because of the material difference of understanding as to the terms of the exchange." Id. comment c. In this case, a reasonable jury could find that despite the parties' signatures on the contract Advanced modified, there was no meeting of the minds because price, an essential term, was not agreed upon. A jury could find that Sullivan and Cunningham "agreed to disagree" about the meaning of Advanced's modification.

Without a common understanding of the meaning of the language that Cunningham inserted into the document, the Authority cannot be bound by it. The record does not indicate anyone explained the modification to the board. If there was no meeting of the minds, there was no enforceable contract, and there may be no alternative but to resolve the dispute about price in quantum meruit.

IV.

Thus we conclude summary judgment should not have been granted. In rendering his decision, the judge found that Sullivan had the authority to negotiate price, a disputed material fact. He assumed the Authority understood the significantly different terms in the agreement, another unanswered question. The judge weighed the evidence and made rulings on the issues where material disputes of fact existed, thereby exceeding the boundaries of his role on a motion for summary judgment. See Gilhooley, supra, 164 N.J. at 545. Applying contract principles not relevant to this governmental agency as opposed to a private entity, he further concluded that even if the Authority was unaware of the contract modification, it was nonetheless bound by it. Therefore, summary judgment should not have been granted.

Reversed and remanded.

1 According to its mission statement, the Authority "is responsible for providing . . . solid waste disposal, recycling, and household special waste management systems[.]" Gloucester County Improvement Authority, Mission Statement, www.gcianj.com/about-the-gcia/mission-statement (last visited August 11, 2016). Under N.J.S.A. 40:37A-1 to -135, a county improvement authority is given a broad range of powers and purposes.