Wisniewski v. Murphy
186 A.3d 321
| N.J. Super. Ct. App. Div. | 2018Background
- The State House Complex (ESH and LSH) required a comprehensive $284M renovation (plus $55M contingency); JMC approved up to $300M and authorized lease/leaseback with NJEDA.
- NJEDA adopted a bond resolution on May 11, 2017 to issue two series of lease revenue bonds (Series A refunding; Series B $300M) secured by NJEDA revenues and rent paid under a sublease; bonds stated they did not pledge the State’s faith and credit.
- Bonds were sold the same day the NJEDA resolution passed and were immediately distributed into the market; plaintiff Wisniewski filed suit on May 12, 2017 challenging the actions as violating the New Jersey Constitution’s Debt Limitation Clause (DLC).
- The trial court dismissed the complaint as moot because the bonds had been issued and dispersed; plaintiff appealed mootness and the agencies’ final decisions.
- The Appellate Division deemed the appeals technically moot but proceeded to decide the merits because the issue was of substantial public importance, likely to recur, and capable of evading review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Mootness of challenge to bonds sold and dispersed | Sale into market does not prevent adjudication; bonds can be redeemed and parties were on notice | Once bonds are disseminated, practical relief is impossible; recalling bonds would be extraordinary and disruptive | Technically moot, but court reaches merits because issue is important, likely to recur, and capable of evading review |
| Whether bond/lease structure violated the Debt Limitation Clause (DLC) | The transaction effectively saddles the State with debt via NJEDA and appropriations-backed rent, circumventing DLC | NJEDA is an independent authority; bonds expressly disclaim State obligation and are payable from NJEDA/rental revenues | DLC not violated: debt assumed by independent authority (NJEDA), bonds disclaim State obligation, rent is separate revenue source |
| Agency authority to approve renovation and enter lease/leaseback | Agencies lacked authority to bind State via this financing structure | JMC and NJEDA acted within statutory powers to preserve/maintain SHC and to arrange financing; JMC has express and implied authority | JMC and NJEDA acted within delegated authority; decisions not arbitrary, capricious or unsupported by record |
| Remedy feasibility after bond sale (recall/invalidation) | Plaintiffs urge invalidation despite sale, arguing market actors were on notice | Defendants point to extensive downstream transactions, expenditures, and precedent that recall is appropriate only in extraordinary cases | Revocation would be disruptive; no extraordinary circumstances exist to warrant unwinding; court affirms agency actions |
Key Cases Cited
- Spadoro v. Whitman, 150 N.J. 2 (1997) (mootness of bond challenges where bonds sold; Justice Handler’s concurrence warning about evading review)
- Enourato v. New Jersey Building Authority, 90 N.J. 396 (1982) (independent authority may issue bonds payable from rents without creating State debt)
- Lonegan v. State, 176 N.J. 2 (2003) (Lonegan II) (appropriations-backed rent/lease arrangements do not automatically create State debt under DLC)
- New Jersey Sports & Exposition Auth. v. McCrane, 61 N.J. 1 (1972) (authority-issued bonds funded by facility revenues not treated as State debt)
- In re Petition for Referendum to Repeal Ordinance 2354-12 v. Township of West Orange, 223 N.J. 589 (2015) (courts should invalidate municipal bonds post-sale only in extraordinary circumstances)