NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-3729-15T4
CITY COUNCIL OF THE CITY OF ORANGE TOWNSHIP, APPROVED FOR PUBLICATION
June 19, 2018 Plaintiff-Respondent, APPELLATE DIVISION v.
WILLIS EDWARDS III,
Defendant-Appellant. _____________________________
Argued May 2, 2018 – Decided June 19, 2018
Before Judges Alvarez, Currier, and Geiger.
On appeal from Superior Court of New Jersey, Law Division, Essex County, Docket No. L-1805-13.
Michael A. Cifelli argued the cause for appellant (Florio Kenny Raval, LLP, attorneys; Michael A. Cifelli and Edward J. Florio, of counsel and on the briefs; William J. Maslo, on the briefs).
Robert L. Tarver, Jr., argued the cause for respondent (Law Offices of Robert L. Tarver, Jr., attorneys; Jeff Thakker, of counsel and on the brief; Robert L. Tarver, Jr., on the brief).
The opinion of the court was delivered by
CURRIER, J.A.D. In this matter, we consider whether the appointment of
defendant Willis Edwards III to the position of Deputy Business
Administrator in the City of Orange Township (City) was unlawful
and whether defendant knowingly remained in the unauthorized
position. If so, we must determine whether disgorgement of
defendant's salaries is the appropriate remedy for the illegal
action.
We conclude, upon review of the record and applicable
principles of law, that the appointment was ultra vires because
the mayor lacked the authority to place defendant in the
position. As defendant was aware that serving in the position
was a violation of state and local law, he did not act in good
faith in remaining in the position and collecting a salary.
Therefore, we are satisfied that the equitable remedy of
disgorgement is appropriate under these circumstances. We
affirm.
In July 2012, the mayor of the City1 appointed defendant to
the position of Acting Business Administrator. The City's
ordinances permitted defendant to hold the position for a term
not to exceed ninety days; the appointment did not require the
advice and consent of City Council. At the end of defendant's
1 The mayor at the time of these events was an attorney practicing law in this state.
2 A-3729-15T4 ninety-day term, the mayor appointed him to the full-time
position of Business Administrator, which did require the advice
and consent of City Council.
The municipal government of the City is organized as a
"Mayor-Council Plan D" form of government under the Faulkner
Act, N.J.S.A. 40:69A-1 to -210. This Act, in conjunction with
City ordinances, requires persons appointed to the position of a
department director, such as the Business Administrator, receive
the advice and consent of City Council. On October 2, 2012,
plaintiff, City Council of the City of Orange Township
(plaintiff or City Council), voted against confirmation of
defendant to the position. The following day, the mayor
appointed defendant as Deputy Business Administrator, setting a
yearly salary of $105,000.2
City Council objected to the appointment. A letter to the
mayor on October 16, 2012 memorialized City Council's objections
and informed him defendant's term as Acting Business
Administrator had expired and the Council had not confirmed him
as Business Administrator. The mayor had no authority to
appoint a deputy; only the department head had that authority.
2 He received an additional stipend of $10,000 for his service as Affirmative Action Officer. At the time of his resignation on December 31, 2015, defendant's compensation had increased to $120,000.
3 A-3729-15T4 Nevertheless, defendant continued in the position, signing
official documents as the Business Administrator and collecting
a salary.
In March 2013, plaintiff presented an Order to Show Cause
and verified complaint against the mayor3 and defendant, seeking
to enjoin defendant from serving as Deputy Business
Administrator. A March 8, 2013 order required defendant and the
mayor to appear and show cause why the court should not issue a
preliminary injunction. Defendant filed an answer and third-
party complaint against five City Council members in their
individual and official capacities.
After oral argument, the court issued an order on April 18,
2013, stating:
1. [Defendant] shall not perform any of the functions of Business Administrator or Acting Business Administrator after May 30, 2013, unless appointed to those positions through the advice and consent of City Council.
2. On or before the date of May 30, 2013, the City of Orange Township shall appoint a Business Administrator or Acting Business Administrator to head the Department of Administration as required by Statute and Ordinance.
3 On the eve of trial, the parties stipulated to the dismissal of the mayor from the lawsuit. Therefore, we refer to Willis Edwards III as defendant.
4 A-3729-15T4 3. The City shall be required to comply with . . . N.J.S.A. 40:69A-43.1 and 43.2 in the appointment of any Deputy Director and any such appointment shall be made by the Director of the Department and the salary of that Deputy must be approved by the City Council.
4. The Counterclaim and Third Party Complaint filed by [d]efendant . . . shall be dismissed in its entirety without prejudice.
As a result of this order, defendant subsequently left the
position of Deputy Business Administrator and the mayor
appointed him Chief of Staff.4
Defendant and the mayor filed motions for reconsideration,
which were granted by a different judge than had considered the
Order to Show Cause. On February 28, 2014, in an oral decision,
the second judge found it improper for his predecessor to have
issued injunctive relief without hearing testimony. He
therefore vacated paragraphs one and two of the April 2013
order, and amended paragraph four to reinstate one count of the
third-party complaint.
Following the ruling, plaintiff's counsel queried: "Judge,
just so that I'm clear and I get this, . . . is it the [c]ourt's
intention by vacating [c]ounts 1, 2 and 4 that Mr. Edwards can
now serve as the deputy business administrator because . . .
4 Defendant received the same salary for Chief of Staff as he was paid as Business Administrator.
5 A-3729-15T4 that was the thrust of the initial complaint." The judge
responded: "The effect of the order vacating [the prior] order
does just that. The factual effect of it, you know, remains to
be executed. All I did was vacate the order based upon the
reasons I stated." (Emphasis added). Following the issuance of
this order, defendant re-assumed the position of Deputy Business
Administrator.
Trial5 was scheduled for January 4, 2016 before Judge
Christine A. Farrington. Defendant resigned from the position
of Deputy Business Administrator on December 31, 2015. As a
result, he contended the matter was moot and requested a
dismissal.6
Testimony at trial from a current councilwoman corroborated
City Council's rejection of the appointment of defendant as
Business Administrator and that a City ordinance required the
mayor to remove acting persons after ninety days if the Council
did not approve them. The councilwoman also advised the
appointment of defendant as Deputy Business Administrator was
contrary to the municipal ordinance. Only the head of a
5 A trial initially began in September 2015. After opening statements, the parties entered into a settlement agreement. Shortly thereafter, material terms of the agreement were breached, and the court vacated the settlement. 6 The court reserved decision on the motion.
6 A-3729-15T4 department could appoint a deputy director. The mayor had no
authority to appoint a Deputy Business Administrator. That was
the province of the Business Administrator.
The councilwoman further stated that even when defendant
briefly left the position pursuant to court order and assumed
the job of Chief of Staff, he continued to perform duties of the
Business Administrator. Finally, the councilwoman confirmed
City Council did not approve defendant's salary, which exceeded
the salary of other deputies by $25,000 to $30,000.
Plaintiff's second witness, the municipal clerk, testified
that the position of Deputy Business Administrator had never
been lawfully created. A position of Assistant Business
Administrator was created in 1985 but repealed that same year.
Therefore, the positions of both Deputy and Assistant Business
Administrator were unlawful after that time. She further
advised the City had never enacted an ordinance creating a Chief
of Staff, and it did not approve the salary of defendant in that
post.7
Defendant also testified. In addition to his Bachelor of
Arts degree, he holds a dual Masters degree in finance and
business management from Columbia University. He was currently
7 The clerk acknowledged that previous people have held the title of Chief of Staff.
7 A-3729-15T4 pursuing his MBA from New Jersey Institute of Technology and was
a Ph.D. candidate at Seton Hall University. Defendant had
served as a New Jersey state legislator and on numerous boards
in both New York and New Jersey. Defendant advised as a college
professor for more than twenty years, he was familiar with
municipal government because he taught courses in government and
public administration.
Defendant's testimony conflicted on whether he ever read
the pertinent statutes and municipal ordinances regarding his
position. At times, defendant testified he did not read the
applicable ordinances and statutes, at other times, he thought
the statutes, codes, and court orders were subject to differing
interpretations. He was adamant the mayor appointed him to the
position, thus rendering defendant blameless for any wrongdoing,
and claimed ignorance of the unlawfulness of his position. He
also denied knowledge of his removal from the position by court
order or that the Deputy Business Administrator position was
unauthorized.
In a comprehensive, well-reasoned opinion, Judge
Farrington determined defendant's appointment to the position of
Deputy Business Administrator was ultra vires in the primary
sense as the mayor had no authority to appoint a Deputy Business
Administrator. She stated the actions of defendant and the mayor
8 A-3729-15T4 were purposeful and designed to circumvent City Council's
decision to deny confirmation.
Judge Farrington found both the councilwoman and municipal
clerk knowledgeable and credible. In contrast, the judge
described defendant as "argumentative, combative and evasive."
She noted his "impressive education credentials" and his
background of serving as a state legislator and college
professor conflicted with his numerous declarations that he did
not understand questions posed, was ignorant of the City
ordinances and applicable statutes, and had a lack of knowledge
and recall.
Judge Farrington further concluded defendant was a de facto
officer and he had not rendered his services in good faith as
either the Deputy Business Administrator or Chief of Staff.
Reiterating that defendant was not credible, the judge found, in
light of his extensive experience working in government and
advanced degrees in public administration, "[h]is attempts to
present himself as an innocent party and cast blame for the
appointments on the [m]ayor are unconvincing and disingenuous.
. . . [H]e knew or had the ability to know the requirements of
state and local law."
The judge concluded disgorgement of defendant's salary was
the appropriate remedy for his deliberate and knowing actions.
9 A-3729-15T4 Because defendant intentionally violated the statutes and City
ordinances, she rejected defendant's contention that he was
entitled to his salary under a quantum meruit theory. The court
ordered remuneration for all salary defendant received serving
in the unauthorized position of Deputy Business Administrator.8
"Final determinations made by the trial court sitting in a
non-jury case are subject to a limited and well-established
scope of review." D'Agostino v. Maldonado, 216 N.J. 168, 182
(2013) (quoting Seidman v. Clifton Sav. Bank, SLA, 205 N.J. 150,
169 (2011)). Although our review of legal determinations made
by the trial court is de novo, we do not disturb the factual
findings of the trial court "unless we are convinced that they
are so manifestly unsupported by[,] or inconsistent with[,] the
competent, relevant[,] and reasonably credible evidence as to
offend the interests of justice." Ibid. (quoting Seidman, 205
N.J. at 169). Additionally, we defer to the trial court's
credibility determinations, because it "'hears the case, sees
and observes the witnesses, and hears them testify,' affording
it 'a better perspective than a reviewing court in evaluating
the veracity of a witness.'" Gnall v. Gnall, 222 N.J. 414, 428
(2015) (quoting Cesare v. Cesare, 154 N.J. 394, 412 (1998)).
8 Plaintiff did not seek the return of salaries paid to defendant as Chief of Staff.
10 A-3729-15T4 On appeal, defendant argues the court erred in determining
his conduct was ultra vires or, if it was ultra vires, it was
not an act in the primary sense because City Council ratified
his conduct in approving yearly budgets that included his
salary.
Two forms of ultra vires acts exist under the law: ultra
vires acts in the primary sense and ultra vires acts in the
secondary sense. See Middletown Twp. Policemen's Benevolent
Ass'n Local No. 124 v. Twp. of Middletown, 162 N.J. 361, 368
(2000). Ultra vires acts in the primary sense are "act[s]
utterly beyond the jurisdiction of a municipal corporation" and
are void. Ibid. (quoting Summer Cottagers' Ass'n v. City of
Cape May, 19 N.J. 493, 504 (1955)). In contrast, an ultra vires
act in the secondary sense arises from the "irregular exercise
of a basic power under the legislative grant in matters not in
themselves jurisdictional. . . . [It] does not preclude
ratification or the application of the doctrine of estoppel." 9
Ibid. (quoting Summer Cottagers' Ass'n, 19 N.J. at 504).
9 The doctrine of equitable estoppel, however, is "applied against a municipality only in very compelling circumstances," Maltese v. Twp. of N. Brunswick, 353 N.J. Super. 226, 244 (App. Div. 2002), and is "rarely invoked against a governmental entity." Twp. of Middletown, 162 N.J. at 367 (quoting Wood v. Borough of Wildwood Crest, 319 N.J. Super. 650, 656 (App. Div. 1999)).
11 A-3729-15T4 As did the trial court, we employ a two-step analysis in
reviewing the validity of a government appointment. See
Casamasino v. City of Jersey City, 158 N.J. 333, 347 (1999).
First, we must determine whether the appointment was ultra vires
and, if so, whether it was in the primary or secondary sense.
Ibid. Second, if the appointment was ultra vires in the
secondary sense and can be ratified, then we must determine
whether the appointment was "made with the same formalities
required for the original exercise of power" and, thus, was
properly ratified. Ibid.
For a municipal decision or action to be considered ultra
vires in the primary sense, the municipality must be "utterly
without capacity to perform the act or make the appointment."
Maltese, 353 N.J. Super. at 246 (quoting Casamasino, 158 N.J. at
347). "[A] void act results where the public officer has no
authority to act at all." Independence One Mortg. Corp. v.
Gillespie, 289 N.J. Super. 91, 94 (1996). In comparison, an act
is ultra vires in the secondary sense when the action is
generally within the power of the municipality but was carried
out improperly or irregularly. See ibid.
The appointment of a Deputy Business Administrator is
controlled by N.J.S.A. 40:69A-43.1, which provides: "The
director of each department . . . may appoint a deputy director
12 A-3729-15T4 of his department who shall serve, and be removable at the
pleasure of the director." The power to appoint deputy
directors is, therefore, solely vested in the directors of the
departments, not the mayor.
Here, the mayor nominated defendant to the position of
Acting Business Administrator. This appointment was within his
authority. See N.J.S.A. 40:69A-43(b) ("Each department shall be
headed by a director, who shall be appointed by the mayor with
the advice and consent of the council"). The corresponding City
ordinance provides the mayor's department head appointments must
have the advice and consent of City Council. Orange, N.J., Code
§ 4-24(A) (2015).
Plaintiff voted to reject the nomination of defendant as
Business Administrator on October 2, 2012. The mayor did not
appoint anyone else to fill that position.10 Instead, the next
day, in circumvention of City Council, the mayor appointed
defendant to the position of Deputy Business Administrator in
violation of both state and local law as the power to appoint
deputies lies with the department director. See Orange, N.J.,
10 Section 4-24(A)(4) of the City Ordinances requires the mayor to appoint a new person to a department director position when City Council "declines to extend the timeframe within which the person is serving in an acting capacity or directly rejects the person." Orange, N.J., Code, § 4-24(A)(4) (2015).
13 A-3729-15T4 Code § 4-24(C)(1) (2015) (authorizing the department director to
"appoint subordinate officers and employees within his/her
department"); N.J.S.A. 40:69A-43-1 (permitting a department
director to appoint a deputy director who serves at the
director's pleasure).
The mayor acted outside the bounds of his statutorily
prescribed authority, exercising instead a power only vested in
the director of a department. As there was no authority for
defendant to serve in the deputy position, the mayor's
appointment of a deputy was an illegal act — an act that was
ultra vires in the primary sense and, therefore, void.
We find defendant's argument that he accepted the position
of Deputy Business Administrator in good faith and with the
"reasonable understanding" that the mayor had the authority to
appoint him to the post disingenuous. Defendant is a highly
educated man who had served in the state legislature and taught
college courses in municipal government and public
administration. He acknowledged having reviewed the Faulkner
Act, N.J.S.A. 40:69A-1 to -210, and the City ordinances that
pertained to his employment.
Defendant also knew of City Council's objection to him
serving in the deputy position. If there was any doubt, it was
certainly alleviated when he was named as a defendant along with
14 A-3729-15T4 the mayor in plaintiff's application for injunctive relief and
Order to Show Cause. He was in court during the Order to Show
Cause ruling and was directed in the April 2013 order to step
down from the deputy position as his appointment was in
violation of section 4-24(A)(4) of the City ordinances.
Following the April 2013 order, defendant was removed from
the deputy job and appointed as Chief of Staff, evidencing an
awareness by him and the mayor of the illegality of his
appointment. Although certain portions of the April order were
vacated in a subsequent reconsideration, the provision ordering
the City to comply with the statute's regulations concerning the
appointment of a deputy director remained in effect. That
provision directed any appointment of a deputy director be made
by the director of the department and the salary for that
position be approved by City Council. Nevertheless, in February
2014, in contravention of this order, defendant resumed the
position of Deputy Business Administrator. Any claim of
ignorance of the applicable laws is defeated by the ample
divergent evidence in the record.
The record is bereft of any facts to support defendant's
contention that plaintiff ratified his actions at any point.
The filing of a lawsuit to enjoin his continued employment is
more than sufficient to defeat that argument. His position that
15 A-3729-15T4 plaintiff's passage of a budget affirmed his salary and ratified
his actions is also without merit. Witnesses at trial confirmed
the budget did not contain line items for specific salaries; it
set a budget for each department and the mayor then determined
the salaries for personnel.
Judge Farrington also rejected defendant's argument that he
should retain his salary based upon the de facto officer
doctrine.11 This doctrine, based on considerations of policy and
public convenience, recognizes the validity of actions
undertaken by a person who acted in a legally non-existent
position. See Jersey City, 57 N.J. Super. at 27. In that case,
11 A de facto officer is:
one whose acts . . . will hold valid so far as they involve the interests of the public and third persons, where the duties of the office were exercised,
. . . .
. . . under color of a known election or appointment, void because the officer was not eligible, or because there was a want of power in the electing or appointing body, or by reason of some defect or irregularity in its exercise, such ineligibility, want of power, or defect being unknown to the public.
[City of Jersey City v. Dept. of Civil Serv., 57 N.J. Super. 13, 27 (App. Div. 1959) (quoting State v. Carroll, 38 Conn. 449, 471-72 (Sup. Ct. Err. 1871)).]
16 A-3729-15T4 we considered the consequences of the actions of a person who
"had the reputation of being a public official and possessing
the authority purportedly vested in such position" but who
served in a position that had no de jure existence. Id. at 28.
Because the faux official's actions could affect third parties,
we determined she would be considered a de facto officer and her
actions deemed valid despite the absence of a de jure office.
Ibid. Under the circumstances here, in light of defendant's
performance of duties under the guise of the City's Deputy
Business Administrator, we deem he was properly considered a de
facto officer. The doctrine is appropriately applied here to
protect innocent third parties who relied on the acts of
defendant holding himself out as having the authority of a
public officer. See, e.g., Casamasino, 158 N.J. at 349-51;
Jersey City, 57 N.J. Super. at 27.
Defendant testified as Deputy Business Administrator he
presented resolutions to City Council for its approval, reduced
spending and salaries, consolidated departments, eliminated
contractors, entered into contracts with third parties and
approved invoices, proposed a bond ordinance and infrastructure
reinvestment, and worked with the governor and legislature on
grants. He advised he was instrumental in obtaining an
appropriation from the legislature of several million dollars
17 A-3729-15T4 for needed infrastructure repairs and operational needs of the
city. Clearly, the official acts defendant performed in his
public office capacity must be valid and binding as to third
parties and the public. Any other conclusion would create chaos
and uncertainty for all dealings defendant had with others under
color of a legal authorized position. See Slurzberg v. Bayone,
29 N.J. 106, 139 (1959) (work done for a municipal office not
created, or properly filled, by ordinance or statute is void
regardless of whether the City accepts that office's work
product).
We disagree, however, with defendant's contention that his
status of a de facto officer entitles him to retain the
compensation he received for the services he rendered on behalf
of the City. He argues "clear interests of justice, morality
and common fairness" entitle him to retain his salary. However,
the issue of the validity of his acts performed as a purported
public official is distinct from his entitlement to retain his
salaries.
Inherent in a decision to compensate a de facto officer for
his services is the tenet that such services were rendered in
good faith. "[A] de facto officer may, by his good-faith
rendering of services, acquire rights against the municipality"
entitling him to compensation. Jersey City, 57 N.J. Super. at
18 A-3729-15T4 37. A de facto officer carries the burden of showing he acted
in good faith and is thus entitled to compensation. See id. at
37-38; Casamasino, 158 N.J. at 349-51. Our determination that
defendant's actions in accepting and holding the deputy post
were ultra vires in the primary sense negates any proposition
that he was acting in good faith. To the contrary, the record
is replete with evidence of defendant's awareness of his
unlawful employment.
Although defendant did not raise N.J.S.A. 40A:9-6 to either
the trial judge or this court in support of his argument, we
feel it important to briefly address it. That statute, which
codified the common law definition of de facto officer provides:
Any person who has held or who may hereafter hold, de facto, any office or position in the public service of any county or municipality, and who has or shall have performed the duties thereof, shall be entitled to the emoluments and compensation appropriate to such office or position for the time in fact so held and may recover therefor in any court of competent jurisdiction, notwithstanding any refusal or failure of any other person or officer to approve or authorize the payment of said emoluments and compensation.
[N.J.S.A. 40A:9-6.]
We do not find our decision to disgorge defendant's compensation
despite his status as a de factor officer to be incompatible
with the statute. The common law precedent permitting the
19 A-3729-15T4 compensation for services performed by a de facto officer is
premised on the qualification that the services were rendered in
good faith. See Jersey City, 57 N.J. Super. at 37-38. Here,
defendant's "actions do not bespeak the good faith required to
invoke the rule of fairness and justice which underlies the
grant of compensation to a de facto officer." O'Connor v.
Calandrillo, 117 N.J. Super. 586, 596 (Law Div. 1971), aff'd,
121 N.J. Super. 135 (App. Div. 1972).
To remain consistent, we similarly conclude the equitable
theories of quantum meruit and equitable estoppel are equally
unavailable to defendant. In her thorough decision, Judge
Farrington considered these doctrines offered by defendant to
support the retention of his salary. She concluded such
defenses were inapplicable to defendant who acted willfully and
unlawfully, "with knowledge and at [his] peril to circumvent the
authority of the Council." Concluding "the services rendered by
Edwards in conjunction with both the Deputy [Business]
Administrator and chief of staff positions were not rendered in
good faith," she determined there was "no interest of justice,
morality or common fairness which would dictate a finding
Edwards is entitled to retain his salary under the
circumstances."
20 A-3729-15T4 Equitable estoppel and quantum meruit are equitable
doctrines reserved for achieving fair and practical resolutions
in particular circumstances. See Rutgers Cas. Ins. Co. v.
LaCroix, 194 N.J. 515, 529 (2008) (holding a court has the power
to adapt equitable remedies to the particular circumstances of a
case). We are satisfied the circumstances to support such
equitable remedies are not present here as there is sufficient
evidence in the record for Judge Farrington's factual findings
that defendant lacked credibility and he knew, or should have
known, of the illegality of his appointment.
The trial court ordered disgorgement of defendant's
salaries earned while serving as the Deputy Business
Administrator. Disgorgement is an equitable claim "grounded in
the theory that a wrongdoer should not profit from its
wrongdoing regardless of whether the innocent party suffered any
damages." Cty. of Essex v. First Union Nat'l Bank, 186 N.J. 46,
61 (2006). It is a harsh remedy and one to be used sparingly.
In First Union, the Supreme Court noted the need for strong
remedies, including disgorgement of wrongfully paid fees, to
combat unlawful conduct involving public officials. Id. at 58.
The remedy has also been successfully invoked when we found a
conveyance of land was ultra vires and void ab initio. First
21 A-3729-15T4 Am. Title Ins. Co. v. Twp. of Rockaway, 322 N.J. Super. 583, 594
(App. Div. 1999).
Defendant conceded knowledge of municipal law and public
administration, agreed he reviewed the applicable statutes and
City ordinances, and advised he was aware of two court orders
stating he was illegally serving as the Deputy Business
Administrator. Nevertheless, he remained in the position and
took a salary paid out of taxpayer funds. His blatant disregard
for the law forced plaintiff to litigate this matter for three
years, resulting in the not unexpected conclusion that defendant
acted unlawfully in serving as the Deputy Business
Defendant has not demonstrated any factual dispute in the
events surrounding his appointment, nor any ambiguity in the
controlling statutes. As a result, his actions were inexcusable
and he displayed a flagrant contempt for the citizens of the
City and the law. The sole remedy to make the aggrieved
taxpayers whole is to disgorge defendant of the monies paid to
him during his service in the unlawful appointment. We,
therefore, affirm Judge Farrington's order for the return of all
22 A-3729-15T4 remuneration paid to defendant for the position of Deputy
Business Administrator.12
Affirmed.
12 We find defendant's remaining arguments that the trial court heard "inadmissible evidence" or should have recused itself to be unworthy of a written opinion. R. 2:11-3(e)(1)(E).
23 A-3729-15T4