Court Opinion

ID: 4470261
Source: CourtListenerOpinion
Date Created: 2020-01-08 15:06:03.476153+00
Date Added: 2024-06-11T12:16:26.618151
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE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 binding only 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-3324-18T3

LAKEWOOD CITIZENS FOR
FISCAL INTEGRITY, and
LARRY S. LOIGMAN,

          Plaintiffs-Appellants,

v.

TOWNSHIP OF LAKEWOOD,
RAYMOND COLES and
THOMAS L. HENSHAW,

     Defendants-Respondents.
_____________________________

                    Argued December 18, 2019 - Decided January 8, 2020

                    Before Judges Whipple, Gooden Brown, and Mawla.

                    On appeal from the Superior Court of New Jersey, Law
                    Division, Ocean County, Docket No. L-2493-18.

                    Larry S. Loigman, appellant, argued the cause pro se,
                    and for appellant Concerned Citizens for Fiscal
                    Integrity.

                    Kevin B. Riordan argued the cause for respondents
                    (Kevin B. Riordan, LLC, attorneys; Kevin B. Riordan
                    and Gary P. McLean, on the brief).
PER CURIAM

      Plaintiffs appeal from a March 1, 2019 order, dismissing their complaint

in lieu of prerogative writs. We affirm.

      By way of resolution, defendant Thomas L. Henshaw was appointed

municipal manager of the Township of Lakewood in February 2015. Henshaw's

employment agreement provided:

                    Henshaw may be removed from his position
            during the term of this agreement in accordance with
            the Ordinances of the Township of Lakewood and
            N.J.S.A. 40A:9-138; specifically, by two thirds . . . vote
            of the full five . . . members of the Governing Body.
            Said Resolution of the Governing Body for the removal
            of Henshaw shall become effective six months after
            adoption by the Governing Body. The Governing Body
            may provide that the Resolution shall have immediate
            effect provided, however, that the governing Body shall
            . . . cause to be paid to Henshaw his salary for the next
            six . . . calendar months following adoption of the said
            Resolution with health benefits included i[f] Henshaw
            is using Township health benefits. Said salary shall be
            paid to Henshaw during said six . . . month period in the
            same installments and at the same intervals as other
            Township employees, unless other arrangements are
            made and agreed upon by both parties.

                  ....

                   [Henshaw] may submit a resignation to the
            Township Council [sic] no less than two . . . weeks in
            advance or no more than thirty . . . days . . . of the
            effective date of the resignation unless agreed upon by
            the Mayor and Committee.

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      In September 2018, Henshaw and the governing body had a dispute.

Henshaw and Lakewood's mayor, defendant Raymond Coles, entered into a

"Separation Agreement and General Release" stating Henshaw would receive

salary and other benefits for the remainder of 2018 of $4130, $215,000

representing his annual 2019 salary, and $50,593.98 for accumulated leave time.

The agreement granted Henshaw health and spousal benefits until the end of

2018, and Medicare supplement benefits for 2019. The Township reported the

discontinuation of Henshaw's appointment to the Civil Service Commission

effective September 5, 2018.

      Plaintiffs filed a complaint in lieu of prerogative writs in October 2018,

to set aside the agreement. Defendants filed a motion to dismiss for failure to

state a claim the following month. Plaintiffs cross-moved for restraints against

any payments to Henshaw under the agreement.         On January 1, 2019, the

Township Committee held a reorganization meeting and ratified the agreement

via resolution, which in pertinent part stated:

                 WHEREAS, the Township Committee of the
            Township of Lakewood has entered into a Separation
            Agreement and General Release with Thomas
            Henshaw; and

                 WHEREAS, the Township Committee of the
            Township of Lakewood understands the terms of the
            Separation Agreement and General Release and intends

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            that the Township be bound by the Separation
            Agreement and General Release, a copy of which is
            annexed hereto and incorporated herein; and

                  WHEREAS, the Township Committee of the
            Township of Lakewood wishes to have the Mayor
            execute the Separation Agreement and General Release
            on behalf of the Township of Lakewood.

                  NOW, THEREFORE, BE IT RESOLVED by the
            Township Committee of the Township of Lakewood
            that the Separation Agreement and General Release
            entered into on September 5, 2018 between the
            Township of Lakewood and Thomas Henshaw is
            hereby approved and ratified.

Plaintiffs amended their complaint to reference the resolution before oral

argument of the motions.

      The motion judge determined there was no statutory violation because the

agreement was for a severance and general release of claims between the parties.

The judge concluded the resolution adopting the agreement cured any statutory

defect and did not require the adoption of an ordinance because the Township

"only need[s] an ordinance if [it is] creating a new law." The judge dismissed

plaintiffs' complaint and denied their motion for restraints.

      Appellate review of a trial court's ruling on a motion to dismiss is de novo.

Watson v. Dep't of Treasury, 453 N.J. Super. 42, 47 (App. Div. 2017). "A

complaint should be dismissed for failure to state a claim pursuant to Rule 4:6-

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2(e) only if 'the factual allegations are palpably insufficient to support a claim

upon which relief can be granted.'" Frederick v. Smith, 416 N.J. Super. 594,

597 (App. Div. 2010) (quoting Rieder v. State Dep't of Transp., 221 N.J. Super.
547, 552 (App. Div. 1987)).      "This standard requires that 'the pleading be

searched in depth and with liberality to determine whether a cause of action can

be gleaned even from an obscure statement.'" Ibid. (quoting Seidenberg v.

Summit Bank, 348 N.J. Super. 243, 250 (App. Div. 2002)).

      On appeal plaintiffs argue as follows: (1) the severance agreement is

inconsistent with Henshaw's employment contract, local ordinance, and state

statute regarding removal of administrators; (2) the Lakewood ordinance

requires Henshaw be "paid only to the date of actual termination of duties;" (3)

the ratification of the agreement by resolution was invalid because Henshaw's

employment was subject to statute and the municipal ordinance and could not

be altered by resolution; (4) the taxpayers should "have had an opportunity to

be heard before that ordinance was changed for the special benefit of Henshaw;"

and (5) the motion judge failed to make adequate findings of fact or conclusions

of law.

      N.J.S.A. 40A:9-136 states a municipal administrator "shall receive such

compensation as the ordinance creating such office shall provide and as from

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time to time may otherwise be directed by the governing body by ordinance."

N.J.S.A. 40A:9-138 provides:

           The municipal administrator may be removed by a
           [two-thirds] vote of the governing body. The resolution
           of removal shall become effective [three] months after
           its adoption by the governing body. The governing
           body may provide that the resolution shall have
           immediate effect; provided, however, that the
           governing body shall cause to be paid to the
           administrator forthwith any unpaid balance of his salary
           and his salary for the next [three] calendar months
           following adoption of the resolution.

     Section 2:10.2(b) of the Lakewood Township Municipal Code governs

removal of the Township's municipal manager. It states:

           The Township Committee may remove the Manager at
           any time by a [two-thirds] vote of its members. The
           resolution of removal shall become effective three . . .
           months after its adoption by the Township Committee
           unless the resolution provides that it shall have
           immediate effect. If it is to have immediate effect, the
           Township Committee shall cause to be paid to the
           Municipal Manager any unpaid balance of his salary to
           the date of termination of employment and in addition
           his salary for the next three . . . calendar months
           following the adoption of the resolution. This three-
           month provision shall not apply in the event the
           Municipal Manager voluntarily terminates employment
           by resigning the office or position. In such event the
           Manager shall be paid only to the date of actual
           termination of duties. The Manager shall give three-
           months['] notice to terminate prior to voluntary
           resignation from office.

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                                      6
            [Township of Lakewood Mun. Code, §2:10.2(b)
            (emphasis added).]

      The salary of every local government employee must be fixed by

ordinance. See N.J.S.A. 40A:9-165; Cooper v. Mayor, 299 N.J. Super. 174, 179

(App. Div. 1997); City of Ocean City v. Somerville, 403 N.J. Super. 345, 369

(App. Div. 2008). An ordinance—unlike a resolution—requires notice and a

public hearing, giving taxpayers an opportunity to voice their opinions. See

N.J.S.A. 40:49-2. "Increases, decreases or any other modifications must also be

approved by ordinance." McCurrie v. Town of Kearny, 344 N.J. Super. 470,

478 (App. Div. 2001), rev'd on other grounds, 174 N.J. 523 (2002) (citing

N.J.S.A. 40A:9-165). "'[W]hen the law requires a proceeding to be instituted by

an ordinance, it cannot be effected by resolution,'" id. at 480 (quoting Chasis v.

Tumulty, 8 N.J. 147, 153 (1951), but "'where a statute fails to indicate whether

the power should be exercised by ordinance or resolution, it may be done by

either means.'" Ibid. (quoting Fraser v. Twp. of Teaneck, 1 N.J. 503, 507

(1949)). "Accordingly, in the absence of statutory language to the contrary, a

local government may enter into a contract by the passage of a resolution." Ibid.

(citation omitted).

      We reject plaintiffs' argument the agreement and the resolution violated

the statute and the ordinance. N.J.S.A. 40A:9-136 and Section 2:10.2(b) of the

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Lakewood Township Municipal Code did not govern the circumstances of

Henshaw's separation because the Township did not vote to remove him, and

Henshaw did not resign from office. Rather, as in McCurrie, Henshaw entered

into a separation agreement with the Township, whereby the two parted ways in

consideration for the payment of a severance and other benefits. McCurrie, 344
N.J. Super. at 480.     As it was in McCurrie, Henshaw "was not being

compensated for the performance of personal services.        He had a right to

continue in the job, but gave up that right under the terms of the agreement. The

agreement was contractual, not legislative in nature, and as such a resolution is

sufficient." Ibid. The dispute and agreement "were comparable to the buy-out

of an employment contract, not to the fixing of salary or wages." Id. at 481.

      Furthermore, the passage of a resolution was a valid means of adopting

the agreement.

            [A] municipality can ratify a contract entered into by an
            unauthorized agent as long as such contract is one
            within the corporate powers and not [u]ltra vires in the
            primary sense as entirely beyond municipal
            jurisdiction. The ratifying power exists when the
            deficiency invalidating the municipal contract consists
            only in the lack of a proper authorization on the part of
            the party executing it on behalf of the municipality.
            The public is not disserved by this doctrine for the
            responsible officials who should have properly made
            the agreement are not bound by their subsequent

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            acceptance of it through the means of ratification unless
            they are acquainted with all the material facts.

            [Johnson v. Hosp. Serv. Plan of N.J., 25 N.J. 134, 140
            (1957) (internal citations omitted).]

      An ordinance was not required because the agreement did not involve

Henshaw's removal, and thus did not concern N.J.S.A. 40A:9-136 or Section

2:10.2(b) of the Lakewood Township Municipal Code. Moreover, as stated in

Johnson, the resolution memorialized that the governing body reviewed the

agreement, understood its terms, and ratified it. Therefore, plaintiffs lacked a

valid argument evidencing the procedure utilized was improper.

      Finally, we reject plaintiffs' argument the judge made inadequate findings

pursuant to Rule 1:7-4(a). The judge made the necessary findings to adjudicate

the motions. He explained the following: Henshaw was neither terminated nor

unilaterally resigned, but instead the parties contracted for his separation from

the Township; the reasons an ordinance was not required to resolve the dispute;

and why any purported violation was cured by the resolution on which the

Township Committee had an opportunity to review before passing.

      Affirmed.

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