Title: McCurrie v. Town of Kearny
Citation: N/A
Docket Number: a-72-01
State: new-jersey
Issuer: new-jersey Supreme Court
Date: November 20, 2002

(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). In this appeal, the Court determines whether it was a permissible exercise of municipal power for the Town of Kearny (Town) to approve a counsel-fee resolution in which the Town agreed to pay legal fees expended on behalf of Defendant Robert M. Czech (defendant), who was previously the municipal clerk and administrator of the Town, in an action by plaintiffs-taxpayers seeking to void defendant's severance agreement. The Town appointed the defendant to dual positions of municipal clerk and town administrator on July 13, 1995. By statute, the term of office for a municipal clerk is three years. Defendant was appointed to the office of town administrator, an at-will position, based on an employment agreement. In the November 1997 election, the Town's incumbent mayor and two council members were defeated. A third incumbent council member did not seek reelection. Accordingly, in January 1998 a majority of the Town's governing body consisted of new members. During their campaign, these new members had made known their intention to remove defendant from his positions. In order to avoid the anticipated tensions and difficulties that would result if defendant insisted on the completion of his statutory and contractual terms of office, he and the outgoing mayor negotiated an agreement by which defendant would resign from both positions as of December 31, 1997, in return for a lump-sum severance payment and healthcare coverage extending to March 31, 1998, a date well within his three-year term. The lump-sum gross severance payment totaled $32,894.20. Had defendant remained in office for the balance of his term, namely, until July 1998, he would have earned $46,042 in salary, vacation and benefits. Defendant's resignation was accepted and a resolution approving the severance agreement was adopted unanimously at a special session of the Town Council on December 31, 1997. Plaintiffs-taxpayers commenced this action against both the Town and defendant on January 15, 1998, challenging the severance resolution and asserting that because its subject was employee compensation, an ordinance was required. The Town was represented by its municipal attorney. Because of a potential conflict of interest between the Town and defendant, the Town took the view that defendant should be separately represented. Accordingly, the Town adopted a counsel-fee resolution retaining an attorney to represent defendant and capping the fees that it would pay for that representation at $10,000. Plaintiffs amended their complaint to add a count challenging the counsel-fee resolution. Defendant filed a protective cross-claim against the Town seeking reinstatement to his two positions if the court determined that the severance resolution was invalid. All parties filed motions for summary judgment. The court invalidated the severance resolution reasoning that because it constituted a compensation agreement, an ordinance was necessary. The court sustained the counsel-fee resolution as having a sufficient nexus to defendant's official duties. Defendant appealed from that portion of the summary judgment invalidating the severance agreement, and plaintiffs cross-appealed from that portion of the summary judgment upholding the counsel-fee resolution. The Town did not participate in the appeal. The Appellate Division reversed both trial court rulings. McCurrie v. Town of Kearny, 344 N.J. Super. 470, 474 (App. Div. 2001). Defendant petitioned this Court for certification seeking review of the adverse counsel-fee holding, and plaintiffs cross-petitioned seeking review of the adverse ruling sustaining the severance resolution. Because the Court denied plaintiffs' cross-petition, 171 N.J. 339 (2002), the Appellate Division's ruling that the severance agreement was not in the nature of compensation and hence did not require an ordinance was not before it. However, the Court granted defendant's petition for certification in order to review the Appellate Division's decision that the counsel-fee resolution was ultra vires. HELD : Under the facts of this case, the Town of Kearny's adoption of a resolution in which it agreed to pay the counsel fees of its former municipal clerk and town administrator was a permissible exercise of municipal power. 1. The underlying facts of this case do not trigger the mandatory defense and indemnification obligations of N.J.S.A. 40A:9-134.1. However, the common law recognizes that although there may not be a statutory compulsion, municipalities nevertheless may have a moral obligation, and hence the discretionary authority, to pay expenses incurred in good faith by municipal employees acting in their official status, including the defense of legal actions challenging acts undertaken or performed by them in that status. All that is necessary to justify the municipality's exercise of discretion to pay its employee's legal expenses is a showing that the employee was acting in good faith in the course of official duties in a matter in which the municipality had an interest. (Pp. 7 to 9). 2. Here, defendant acted in good faith in entering into the severance agreement attendant upon his early resignation. There is no doubt that the municipality had an immediate and critical interest in defendant's resignation. Moreover, this situation qualifies as action that reasonably relates to the public interest, rather than merely a personal interest, for purposes of the common-law moral obligation of the Town. Although defendant could have insisted upon completing his statutory term of office, he chose to accede to the Town's request that he resign with a reasonable severance package. That action fundamentally served as an advantage to the public interest and the Town perceived it as such in its adoption of the severance resolution. The taxpayer lawsuit did not challenge an individualized action taken by defendant. Defendant's involvement was simply the necessary consequence of the Town's exercise of judgment. So viewed, it is clear that defendant's joinder as a party defendant bore a nexus to his official position sufficient to impose a moral obligation on the Town that it had the discretionary authority to fulfill. (Pp. 9 to 11). 3. Additionally, the Town is a body politic and corporate with the capacity to sue and be sued. It had the unquestionable authority to provide for its own defense to the plaintiffs-taxpayers' action and to determine how best to prosecute its defense. The core issue of the plaintiffs' challenge was the Town's authority to adopt the two resolutions. A defense to the litigation offered by defendant inevitably would have had the capacity to affect the Town's defense. The Town's decision to control the overall defense by appointing for defendant at its own expense an attorney who would work collaboratively and in tandem with the municipal attorney was entirely reasonable, and its judgment in respect of that litigation decision is entitled to judicial deference. (Pp. 11 to 12). 4. The Town did not participate in the Appellate Division proceedings, although it defended the two resolutions in the trial court and successfully defended the counsel-fee resolution. Contrary to its position in the trial court, the Town takes the position before this Court that the counsel-fee resolution was invalid. This about-face is a blatant violation of the principle of judicial estoppel, which precludes a party from taking a position contrary to the position he has already successfully espoused in the same or prior litigation. Judicial estoppel is a doctrine designed to protect the integrity of the judicial process by not permitting a litigant to prevail on an issue and then to seek the reversal of that favorable ruling. Nevertheless, because of the public interest involved, the Court opted to consider the meritorious issue despite the Town's improper litigation posture. (Pp. 12 to 13). The judgment of the Appellate Division invalidating the counsel-fee resolution is REVERSED. CHIEF JUSTICE PORITZ and JUSTICES COLEMAN, LONG, VERNIERO and ZAZZALI, and JUDGE PRESSLER, temporarily assigned, join in JUSTICE LaVECCHIA's opinion. H. LESLIE McCURRIE; JOSEPH BIGELOW; JOSEPH SLOAN; ANN MARIE SLOAN; DIANA SALWAN; MANUEL SALWAN; FRANK CARDOZA; PHILIP CHIDICHIMO; CAROL JEAN DOYLE; NORMAN A. DOYLE, JR.; MARGARET PIDGEON and DANIEL PIDGEON, as taxpayers of the Town of Kearny in name of, for, and on behalf of the Town of Kearny, Plaintiffs, v. THE TOWN OF KEARNY (discovery only and on Third Count), Defendant-Respondent, and ROBERT M. CZECH, ESQ., Defendant-Appellant. Argued September 10, 2002 Decided November 20, 2002 On certification to the Superior Court, Appellate Division, whose opinion is reported at 344 N.J. Super. 470 (2001). Robert M. Czech argued the cause, pro se. Gregory J. Castano, Jr. argued the cause for respondent (Castano Quigley, attorneys; Lawrence Z. Kotler and Laura J. Wadleigh, on the briefs). The opinion of the Court was delivered by LaVECCHIA, J. Defendant Robert M. Czech was the municipal clerk and administrator of the Town of Kearny. His appointment as municipal clerk was for a statutory three-year term although his appointment as administrator was at the Town's pleasure. Because a change in the political make-up of the governing body during Czech's statutory term induced him to believe that completion of his term would be counterproductive to both his and the public interest, he agreed with the outgoing municipal council that he would resign in return for a severance package. The severance agreement, approved by municipal resolution (the severance resolution), was challenged by plaintiffs-taxpayers in this action in lieu of prerogative writs in which both the Town and Czech were joined as defendants. The municipality, by resolution (the counsel-fee resolution), then undertook to pay the legal fees that Czech would incur in his defense of the severance resolution. The only question before us is whether the counsel-fee resolution constituted a permissible exercise of municipal power. We conclude that it did, and therefore reverse the contrary holding of the Appellate Division. NO. A-72 SEPTEMBER TERM 2001 ON CERTIFICATION TO Appellate Division, Superior Court H. LESLIE McCURRIE; et al., Plaintiffs, v. THE TOWN OF KEARNY (discovery Only and on Third Count), Defendant-Respondent, And ROBERT M. CZECH, ESQ., Defendant-Appellant. DECIDED November 20, 2002 Chief Justice Poritz PRESIDING OPINION BY Justice LaVecchia CONCURRING OPINION BY DISSENTING OPINION BY