TOWNSHIP OF HARDYSTON, ETC. VS. BLOCK 63, LOT 1.01, 3490 ROUTE 94(F-42162-14, SUSSEX COUNTY AND STATEWIDE)
A-2661-15T2
| N.J. Super. Ct. App. Div. | Aug 3, 2017Background
- The HTMUA (acting for Hardyston Township) contracted to acquire 25,000 gallons of sewer capacity from Sussex Borough for the exclusive benefit of High Ridge (the property owner/developer), with High Ridge agreeing to pay all costs and indemnify the HTMUA.
- High Ridge (and its developer Beaver Run) did not pay the charged transmission/maintenance fees; HTMUA obtained a 2012 Law Division judgment for unpaid sewer charges against High Ridge for $350,092 and later a municipal certificate for unpaid developer allocation charges.
- Beaver Run also defaulted on municipal taxes; Sass Muni bought a tax sale certificate in 2011 and then sought foreclosure, representing municipal liens were or would be paid; Sass Muni joined HTMUA to foreclose HTMUA’s judgment lien.
- The Law Division initially ruled that HTMUA’s sewer lien was a municipal lien enforceable under the Tax Sale Law (N.J.S.A. 54:5‑1 et seq.), preventing final judgment on Sass Muni’s tax foreclosure until municipal liens were satisfied; Sass Muni later sought reconsideration.
- A different Law Division judge later held HTMUA’s sewer allocation/charges invalid as a lien on unimproved, non‑using property under the MCUAL and Airwick principles, vacated the HTMUA tax certificate foreclosure, and remanded for further proceedings.
- The Appellate Division held the record insufficient to resolve whether the reserved allocation charges qualify as “sewer service charges” under the MCUAL, noted factual gaps (agreements, payments, HTMUA rules, past settlements), and remanded both linked foreclosures to Chancery Division (General Equity) for factfinding and application of Airwick principles.
Issues
| Issue | Plaintiff's Argument (Hardyston/HTMUA) | Defendant's Argument (Sass Muni) | Held |
|---|---|---|---|
| Whether HTMUA’s unpaid allocation/transmission charges are "sewer service charges" under the MCUAL and thus a municipal lien enforceable in tax‑sale foreclosure | The charges are municipal utility charges and were previously adjudicated/enforced; they are lienable and senior to Sass Muni’s tax certificate | The charges are ultra vires as imposed on unimproved non‑user property and are not the kind of MCUAL "sewer service charges" that create tax‑sale liens | Remanded: court refused to decide on present record; factual development required to determine whether charges qualify as MCUAL sewer service charges under Airwick principles |
| Whether Airwick/Passaic County line bars charging unimproved non‑users | HTMUA contends High Ridge contracted for and received a present benefit (reserved allocation) making it more than a typical non‑user; thus Airwick may not bar lien | Sass Muni argues Airwick/Passaic County prohibit assessing annual sewer charges against unimproved non‑users; such charges are ultra vires | Court held Airwick principles govern but whether High Ridge is a "non‑user" is a factual question unresolved on the record; remand required |
| Priority and enforceability in tax‑sale foreclosure: can HTMUA’s lien be foreclosed or extinguished in the tax‑sale process | HTMUA asserted its lien is a municipal lien payable/prior to tax‑sale final judgment and must be satisfied before final judgment | Sass Muni argued any HTMUA claim is merely a judgment lien or invalid and thus subject to extinction by Sass Muni’s tax‑sale foreclosure | Court declined to resolve priority fully; directed the General Equity court to consider both foreclosures together and assess lien validity and priority after factfinding |
| Whether reserved sewer allocation should be revoked if charges are not lienable | HTMUA sought to keep allocation tied to property and enforce charges | Sass Muni contended allocation should not burden current users if charges are invalid | Court directed that if charges are not a property lien, the judge must consider revocation of the reserved allocation before a tax‑sale final judgment is entered |
Key Cases Cited
- In re Passaic Cty. Utils. Auth., 164 N.J. 270 (2000) (MCUAL must be interpreted consistent with Airwick principles; service charges generally imposed only on users)
- Airwick Indus. v. Carlstadt Sewerage Auth., 57 N.J. 107 (1970) (distinguishes operation/maintenance charges payable by users from debt/connection charges apportioned to benefited properties, including unimproved land)
- 388 Route 22 Readington Realty Holdings, LLC v. Twp. of Readington, 221 N.J. 318 (2015) (recognizes sale/reservation of sewer capacity can finance wastewater system expansion; context for allocation arrangements)
- Hamilton Twp. Mun. Utils. Auth. v. Apple Tree Corp., 202 N.J. Super. 440 (App. Div.) (1985) (reservation‑of‑capacity charge exceeding authorized service or connection charges is ultra vires)