Title: Sheila Henderson v. Camden County Municipal Utility Authority
Citation: N/A
Docket Number: a-19-02
State: new-jersey
Issuer: new-jersey Supreme Court
Date: July 8, 2003

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized). Defendant, Camden County Municipal Utilities Authority (CCMUA) provides Camden County residents with water and sewer services. Sheila Henderson, who has been a CCMUA customer for eleven years, ceased making regular payments to CCMUA in 1993. She received a notice seven years later that her property was subject to a municipal lien and tax sale. At that time, she owed CCMUA $3,485.63, including $1,749.02 in interest charges. Henderson later learned that CCMUA had compounded interest on her delinquent account. Henderson eventually paid the entire bill, including the compound interest charges, to avert the tax sale of her property. She then filed a class-action complaint, alleging that CCMUA s assessment of compound interest was unlawful and in violation of N.J.S.A. 40:14B-41 because that section authorized the assessment of only simple interest. She sought a judgment declaring all previously assessed compound interest charges null and void, enjoining CCMUA from charging further compound interest on delinquent accounts, and awarding monetary damages, costs, and attorneys fees. The trial court construed N.J.S.A. 40:14B-41 to allow CCMUA to charge compound interest and entered summary judgment in its favor. In an unreported decision, the Appellate Division reversed, concluding that the statute did not authorize compound interest, and remanded for further proceedings. Henderson moved before the trial court for an order granting class certification and CCMUA petitioned the Supreme Court for certification. The Appellate Division stayed the class certification proceedings pending the disposition of CCMUA s petition by the Supreme Court. The Supreme Court granted CCMUA a petition for certification. HELD : Section 41 of the Municipal and County Utilities Authority Law, N.J.S.A. 40:14B-1 to 70, permits utilities authorities to charge only simple interest, and it was improper for the Camden County Municipal Utilities Authority to assess interest on a principal composed in part of unpaid interest charges. 1. N.J.S.A. 14B-41 provides for the accrual of interest on the unpaid balance of service charges at the rate of 1 % per month. (pp. 3-4) 2. If conflicting interpretations of a statute are plausible, a reviewing court should not regard that statute s meaning to be self-evident, and it should employ extrinsic aids, such as legislative intent or prior precedent, to interpret the language at issue. (pp. 4-5) 3. Compound interest, which is regarded by courts as unfairly harsh and oppressive, is disfavored at common law. No statute is to be construed as altering the common law farther than its words import. Thus, the Legislature s failure to deviate explicitly from the common-law presumption against compound interest suggests that N.J.S.A. 40:14B-41 authorizes only simple interest. (pp. 5-6) 4. The statute s legislative history is also instructive, and to the extent that the increase of the interest rate authorized by section 41 to 1 % was intended to parallel the increase in the annual rate ceiling of N.J.S.A. 54:4-67 to 18%, it suggests that the interest contemplated by section 41 is simple and not compound interest. Moreover, when the Legislature has authorized compound interest, it has done so explicitly. (pp. 6-7) 5. N.J.S.A. 40:14B-41 permits utilities authorities to charge only simple interest and it was improper for CCMUA to assess interest on a principal composed in part of unpaid interest charges. (pp. 7-8) 6. Because the Court s decision implicates the statutory validity of a long-standing practice, it establishes a new rule and should be applied prospectively. Moreover, retroactive application of the Court s decision could produce substantial inequitable results. (pp. 8-10) 7. The Court applies its decision prospectively and declines to require refunds of compound interest that CCMUA customers already have paid. Going forward, CCMUA may not continue to charge compound interest on delinquent customer accounts. In addition, to the extent that any unpaid customer debt consists of compound interest charged pursuant to section 41, that debt may not be collected by CCMUA or by any party that has obtained from CCMUA the right to collect it. Further, if unpaid debt comprised of compound interest forms the basis of municipal liens on customers property, then CCMUA must ensure that those charges are backed out from such liens. (p. 10) 8. Henderson is entitled to the full benefit of the new rule because of her efforts in litigating this appeal. (p. 11) 9. Since the Court s decision confers an economic benefit on a class of persons that did not contribute to the cost of the litigation, and although the Court is not directing class certification in view of its conclusion to apply its decision prospectively, Henderson is awarded attorney s fees pursuant to the fund in court doctrine. (pp. 12-15) The judgment of the Appellate Division is AFFIRMED and the matter is REMANDED to the trial court for an award of attorneys fees in Henderson s favor and to ensure that relief is granted in accordance with the Court s decision. CHIEF JUSTICE PORITZ and JUSTICES COLEMAN, LONG, VERNIERO, LaVECCHIA, and ALBIN join in JUSTICE ZAZZALI s opinion. Plaintiff-Respondent, v. CAMDEN COUNTY MUNICIPAL UTILITY AUTHORITY, Defendant-Appellant. Argued March 4, 2003 Decided July 8, 2003 On certification to the Superior Court, Appellate Division. Warren W. Faulk argued the cause for appellant (Brown &amp; Connery, attorneys). James Greenberg argued the cause for respondent (Wolf, Block, Schorr and Solis-Cohen, attorneys; Mr. Greenberg and Gregory A. Lomax, of counsel and on the briefs). Daniel P. Reynolds, Senior Deputy Attorney General, argued the cause for amicus curiae Attorney General of New Jersey (Peter C. Harvey, Acting Attorney General, attorney; Patrick DeAlmeida, Deputy Attorney General, of counsel). Melville D. Miller, Jr., President, submitted a brief on behalf of amicus curiae Legal Services of New Jersey (Mr. Miller, attorney; Mr. Miller, Dawn K. Miller and Bertram P. Goltz, Jr., on the brief). The opinion of the Court was delivered by ZAZZALI, J. This appeal requires us to determine whether Section 41 of the Municipal and County Utilities Authority Law, N.J.S.A. 40:14B-1 to 70 (MCUAL), authorizes municipal and county utilities authorities to charge compound interest on delinquent customer accounts. We conclude that N.J.S.A. 40:14B-41 authorizes only simple interest. Because this appeal presents a matter of first impression and retroactive application could lead to substantial inequitable results, we also conclude that our decision applies prospectively. In general, allowances are payable from a fund when it would be unfair to saddle the full cost of upon the litigant for the reason that the litigant is doing more than merely advancing his own interests. Thus, for example, when there are classes of claimants to the fund and the services redound to the benefit of others as well, it is fair that all contribute to the cost by a charge against the subject matter. . . . . We think therefore that it would be an unnecessary prolongation of this litigation for us to direct that the trial court proceed with it now as a class action, but that, in fairness to plaintiffs and their attorneys, it ought to be treated as such for the purpose of awarding a counsel fee to plaintiffs attorneys. We consider this to be with the spirit of R.R. 4:55-7(b); Cf. Red Devil Tools v. Tip Top Brush Co., Inc., 50 N.J. 563 (1967). NO. A-19 SEPTEMBER TERM 2002 ON CERTIFICATION TO Appellate Division, Superior Court SHEILA HENDERSON, Plaintiff-Respondent, v. CAMDEN COUNTY MUNICIPAL UTILITY AUTHORITY, Defendant-Appellant. DECIDED July 8, 2003 Chief Justice Poritz PRESIDING OPINION BY Justice Zazzali CONCURRING OPINION BY DISSENTING OPINION BY