Suit against West Orange dismissed by Supreme Court

WEST ORANGE, NJ — The New Jersey Supreme Court unanimously upheld the superior and appellate courts’ dismissals of the lawsuit filed by five West Orange residents against the township regarding the issuance of $6.3 million in municipal bonds to Edison Village redeveloper Prism Capital Partners in a decision on Dec. 21, 2015.

In the decision written by Justice Barry Albin, the court ruled that the lawsuit must be dismissed simply because plaintiffs Windale Simpson, Rosary Morelli, Mark Meyerowitz, Althia Tweiten and Michael Scharfstein filed their prerogative-writs action after the passage of the 20-day time limit to challenge a bond ordinance mandated by the Local Bond Law. The bond ordinance was published March 22, 2012, but the plaintiffs did not file suit until May 14, 2012 — 53 days later.

Writing on behalf of the court, Albin said the purpose of the 20-day deadline is to assure bondholders and financial markets that the bonds will not be subject to attack once issued. He backed this up by quoting the Local Bond Law, which states that the legality of a bond ordinance “shall be conclusively presumed” 20 days after its passage, with any objectors “estopped (forever) from denying that such an ordinance or its final adoption or issuance of obligations thereunder do not comply with the provisions of this and every other law.”

To rule in the plaintiffs’ favor, then, would lead to consequences down the road, Albin said.

“Permitting late-filed challenges to bond ordinances would erode public confidence in the legitimacy of bonds that are issued and almost certainly lead to delay in the implementation of such ordinances,” Albin wrote on behalf of the court.

The plaintiffs argued that the Rules Governing the Courts do have an interest-of-justice provision, allowing the 20-day time limit to be extended for matters involving extraordinary legal questions and public rights violations, so the court would have the right to overlook the deadline. But Albin said the circumstances of this particular case prevent the court from ignoring the Local Bond Law’s reasoning for having a 20-day deadline. Therefore, he said the court found that the interest-of-justice provision should not be applied here.

“Only in the most extraordinary of circumstances — circumstances that are not presented here and difficult to envision — should a court entertain a request to enlarge the 20-day filing period for an action in lieu of prerogative writs challenging an ordinance authorizing the issuance of municipal bonds,” Albin wrote in the decision.

The court furthermore rejected the plaintiffs’ stance that their first petition for referendum filed on April 5, 2012 — their attempt to put the bond issuance before a public vote, which was denied by township Clerk Karen Carnevale on the grounds that a bond ordinance cannot legally be voted on by the public and that they had not obtained the required number of valid signatures — should count as an action satisfying the 20-day window. Albin explained that the neither the Local Bond Law nor the Rules Governing the Courts states that pursuing a referendum, which is not an action challenging the legality of the bond ordinance, satisfies the prerogative-writs action deadline.

“If we were to declare otherwise, we would sanction a template that delays the implementation of a duly enacted bond ordinance,” Albin wrote.

In addition, the court ruled that Carnevale acted properly in rejecting the plaintiffs’ first petition for referendum on April 16, 2012, as well as their second on May 2, 2012, pointing out that the Local Redevelopment and Housing Law mandates that ordinances under the Local Redevelopment and Housing Law are exempt from referendum.

And though most of the case’s Oct. 7, 2015, oral-arguments time was spent discussing the plaintiffs’ other contention that the township should have sought approval from the Local Finance Board before issuing the bonds, the court ended up not deciding on that matter, ruling it a moot point due to the plaintiffs’ failure to file suit within the necessary 20-day time limit in the first place.

From the lawsuit’s initial filing in 2012 through the New Jersey Supreme Court’s decision more than three years later, the fact that this issue has finally been decided should come as a relief to the township. Indeed, Mayor Robert Parisi said the administration is satisfied with how it turned out, and especially what it means for the Edison Village project.

“We are pleased with the court’s decision,” Parisi told the Chronicle in a Dec. 30 email. “The bonds, in conjunction with private construction financing, make the financing of this project possible.”

Plaintiffs Morelli and Meyerowitz, on the other hand, said they were “deeply disappointed” that the court did not rule on whether the township needed the Local Finance Board’s oversight to issue the bonds. In a joint interview, they said they are now worried that the township will take this as a green light to commit taxpayer funds to more bonds in the future, which they feel will be “little more than taxpayer giveaways to developers who can avoid competitive bidding processes.”

But despite their loss, the plaintiffs said they are glad that they brought the litigation to court.

“We have no regrets about filing the lawsuit,” Morelli and Meyerowitz told the Chronicle in a Jan. 4 email. “It was our civic duty, and it served notice to the administration that the citizens of the township are watching them and that we will not be intimidated into silence. We always keep our rights to file another suit if needed.”

The court’s decision upholds the legality of the bonds’ issuance, but Parisi said the town will actually not pay the pledged $6.3 million to the redeveloper until well into the project, after the redeveloper has invested a significant amount of its own resources into its construction. The redeveloper was also responsible for paying all legal costs related to this lawsuit, he said.

As for the status of construction, the mayor said building has not yet commenced beyond the preliminary work already done. He said the redeveloper is “close” to closing on the $70 million construction loan it is seeking, and the township is providing whatever support it can to ensure that the loan is finally obtained.