Township of Lawrence v. Ewing-Lawrence Sewerage Authority

Citations: 233 N.J. Super. 253; 558 A.2d 525; 1989 N.J. Super. LEXIS 183

Court: New Jersey Superior Court Appellate Division; April 10, 1989; New Jersey; State Appellate Court

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ELSA is a public agency established under the Sewerage Authority Law in New Jersey, created in 1947 through resolutions by Ewing and Lawrence Townships, and consists of six members. It reorganizes annually in February, during which it typically appoints legal and financial professionals for one-year terms. In 1987, at the reorganization meeting, various professionals were appointed with resolutions stating their terms as “for a period of one year or until a successor is appointed,” a change from the previous one-year term only. This language change was made by ELSA Chairman S. Leonard DiDonato, and while draft minutes were later approved, the plaintiffs did not contest the new language at the meeting.

The central issue is whether the professionals retained in 1987 could continue serving in subsequent years without contract renewals, given that the Local Public Contracts Law prohibits agreements for professional services from exceeding 12 consecutive months. The court concluded that any language suggesting an extension beyond this period was surplus and unauthorized. Furthermore, the professionals had proposed their services for 1987 in prior correspondence, explicitly referencing the need for compliance with public contracting laws regarding advertising and competitive bidding for such appointments. As a result, ELSA cannot continue using the services of these professionals without new contracts.

Proposals from three professionals indicated their intention to be retained for the upcoming fiscal year of 12 months. Defendants contend that Harris is an employee of ELSA due to his contributions to the Public Employees Retirement System; however, his employment is limited to one year, and his pension contributions do not extend the term. Harris served as an outside consultant rather than a staff attorney, with his retainer making up less than ten percent of his total billings in 1987 and 1988. Each year, he sought board approval for his re-engagement, retainer size, and billing rate. Although ELSA deducted taxes and pension contributions from his retainer payments, it did not control how he provided legal services, nor did it offer work-related benefits or resources.

Under N.J.S.A. 40:14A-7(13), ELSA can contract for professional services as per the Local Public Contracts Law, which allows contracts under $8,400 without advertising for a term of up to 12 consecutive months. Contracts exceeding this amount usually require advertising; however, professional services are an exception. Following ELSA's resolutions, a newspaper advertisement confirmed contracts for one year, consistent with N.J.S.A. 40A:11-15, which mandates that contracts for services cannot exceed 12 months without reappointment by the governing body.

Consequently, all contracts from ELSA's 1987 reorganization meeting automatically expired in February 1988, as the statute's language leaves no room for extension. The court concluded that the contractual relationships with Harris and others ended on February 3, 1988, and it would be against public interest for ELSA to continue using their services without new authorization from a majority of the authority members. ELSA can ratify payments for services from fiscal year 1988 and 1989 through appropriate resolutions. The plaintiffs chose not to amend their complaint regarding other professionals, stating they would be bound by the decision, as neither provided services since February 1987.