Midtown Water Company v. Old Bridge Municipal Utilities Authority
CourtNew Jersey Superior Court Appellate Division
Date FiledOctober 21, 2026
DocketA-2756-24
StatusUnpublished
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Full Opinion
NOT FOR PUBLICATION WITHOUT THE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-2756-24
MIDTOWN WATER
COMPANY, BRUNETTI
ORGANIZATION, and
JOHN J. BRUNETTI, JR.,
Plaintiff-Respondents,
v.
OLD BRIDGE MUNICIPAL
UTILITIES AUTHORITY,
Defendant-Appellant.
_________________________
Argued October 8, 2026 – Decided October 21, 2026
Before Judges Mawla, DeAlmeida, and Chase.
On appeal from the Superior Court of New Jersey, Law
Division, Middlesex County, Docket No. L-7031-23.
Elliot D. Ostrove argued the cause for appellant
(Epstein Ostrove, LLC, attorneys; Elliot D. Ostrove, of
counsel and on the briefs; Lucia W. Yang, on the
briefs).
Eric I. Abraham argued the cause for respondents (Hill
Wallack, LLP, attorneys; Eric I. Abraham, of counsel
and on the brief).
PER CURIAM
Defendant Old Bridge Municipal Utilities Authority appeals from two
March 27, 2025 orders granting summary judgment to plaintiffs Midtown Water
Company, Brunetti Organization, and John J. Brunetti, Jr., and denying its
motion for partial summary judgment. We affirm as modified.
In the 1950s, plaintiffs acquired property in what is now Old Bridge. They
were awarded State approval for water and sewage franchises on the property,
which the parties refer to as the franchise area. A 1956 ordinance permitted
plaintiffs to construct, operate, and maintain water mains and pipes in the
franchise area. Plaintiffs entered several agreements with defendant to support
the development.
In 1967, plaintiffs agreed to sell defendant water wells in exchange for
defendant providing sufficient water to the entirety of the franchise area. A
1986 agreement required plaintiffs to connect constructed property units to
defendant's water conveyance system and waived plaintiffs' requirement to pay
the connection fees.
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In November 2019, one of plaintiffs' affiliated entities entered an
agreement with defendant for a contribution of $5 million in lieu of constructing
a water storage tank. The agreement stated plaintiffs did not have to pay
defendant "a water connection fee . . . for certain properties within [the]
franchise area."
A 1965 agreement granted plaintiffs the right to install and construct a
sewer in exchange for paying defendant $120,000. In 1982, another agreement
granted plaintiffs the right to construct another sewer to service another part of
the franchise area and stated plaintiffs "shall not pay any sewer connection fees."
In 1995, the parties entered an agreement, which superseded all prior
agreements, to allow plaintiffs, at their own expense, to install new sewage lines
to service all properties owned or later acquired and developed. The agreement
had no expiration date. Defendant waived the requirement for plaintiffs to pay
connection fees. Paragraph ten of the agreement also granted plaintiffs the
ability to assign their rights to their "heirs or successors in interest to the
properties owned within the service area describe[d]."
In 2017, one of plaintiffs' affiliates contracted with K. Hovnanian at Old
Bridge II, LLC (KHOV) to sell part of plaintiffs' property. Defendant treated
the water connection fees as having been paid pursuant to the November 2019
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agreement. Special counsel to defendant wrote a letter confirming the lots sold
were within the franchise area, so KHOV qualified as a successor in interest and
was entitled to "free water and sewer connections."
A sales contract was entered for another property with a different
developer in 2019. Defendant's engineering expert recommended approving the
developer's application since the property was within the franchise area. A July
15, 2022 final engineering report noted defendant's waiver of the sewer
connections fees under the 1995 agreement.
In December 2023, plaintiffs sued defendant. Citing their agreements,
plaintiffs sought a declaratory judgment that they did not have to pay defendant
water and sewer fees for the development within the franchise area. They also
asserted claims for breach of contract, tortious interference of contract, breach
of the implied covenant of good faith and fair dealing, and unjust enrichment.
Defendant's counterclaim sought a declaratory judgment on the reasonable time
limits of the various agreements' provisions and plaintiffs' ability to assign their
rights. It also counterclaimed for unjust enrichment.
In April 2024, plaintiffs moved for summary judgment and to dismiss
defendant's counterclaim. According to defendant, the primary issues the judge
had to decide were: interpreting the parties' agreements to make the water and
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sewer concessions valid as a matter of public policy; and the extent and nature
of plaintiffs' ability to partially assign their rights under their agreements.
The motion judge questioned defendant's attorney about what "at any
time" meant in the 1986 agreement. Counsel responded defendant was not
challenging the meaning of the term. Instead, defendant argued despite the fact
the agreement was entered voluntarily, it was against public policy to bind it to
its terms in perpetuity.
The 1995 sewer agreement limited plaintiffs' right to assignment, but
defendant could not explain why it had not expressly prohibited assignment
under other agreements between the parties. Defendant argued the court should
interpret the 2019 agreement as allowing assignments to be made only to
members of plaintiffs' family.
Defendant claimed the letter from its special counsel about free water and
sewer connections only addressed certain developments in the franchise area.
And the engineering expert report was not dispositive as a means of interpreting
the parties' agreement.
The judge pointed out there had been prior litigation between the parties
over the same issues, which potentially had a preclusive effect on the claims
before him. Brunetti v. Old Bridge Mun. Utils. Auth., No. A-4576-13 (App.
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Div. Sep. 22, 2015) (slip op. at 1-2). That case involved a 2014 complaint by
plaintiffs for a declaratory judgment against defendant, after defendant
demanded payment of water fees from a property plaintiffs owned. Plaintiffs
sought an order declaring the property was within the franchise area and
therefore exempt from fees. The motion court granted plaintiffs' summary
judgment on these issues and we affirmed. Id. at 1.
However, defendant claimed the prior case did not consider the public
policy issues. It reiterated the common law permitted the court to set a
reasonable time limit on the water and sewer fee exemptions in the parties'
agreements.
Plaintiffs argued their declaratory judgment claim in this case sought to
enforce our ruling in the prior case that they were not required to pay the
connection fees. The 1995 agreement's prohibition on assignment meant
plaintiffs could not sell the agreement to another entity for use on property
outside the franchise area. Plaintiffs disputed defendant's assertion the right to
the fee exemptions was perpetual or a giveaway. Not only had they invested in
the infrastructure upfront, the free water and sewer connections would end
because they were limited to the franchise area. Therefore, it was unfair to
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rewrite the parties' contract and deprive plaintiffs of the ability to recoup their
investment.
On March 27, 2025, the motion judge issued detailed written opinions
granting plaintiffs' motion for summary judgment and dismissing defendant's
counterclaim with prejudice. He also denied defendant's cross-motion for partial
summary judgment.
The judge observed both parties were sophisticated and represented by
counsel. Defendant entered into the agreements and plaintiffs had "paid
significant money" in exchange for rights under the agreements. The agreement
providing plaintiffs were not responsible for water and sewer fees was
unambiguous and contained no expiration provisions. The judge found the
parties could have provided for an expiration date but did not, and he was not
inclined to re-write the parties' agreements.
Even though the 1995 sewer agreement was not itself assignable, the judge
found plaintiffs did not give up the ability to assign other rights contained in the
agreement. Paragraph ten of the agreement limited the assignment to plaintiffs'
heirs or successors in interest to the properties owned within the franchise area.
KHOV, therefore, constituted a successor in interest in the property. The judge
rejected defendant's argument the assignment was limited to plaintiffs and their
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blood relatives, noting it contained no such language. He concluded interpreting
the agreement in such a manner would ignore the March 2021 letter from
defendant's special counsel, "which confirmed the assignment to KHOV and did
not contend on behalf of [defendant] that [plaintiffs] could not assign any of
their properties in the [f]ranchise [a]rea to an individual or entity of their
choosing."
The judge rejected the public policy argument because the parties had
entered the agreements at arm's length, and it was no mystery the cost of water
and sewer would increase as time passed. He rejected defendant's argument
there were "'give[]aways' of the prospective revenues of Old Bridge" because
defendant offered no "expert reports to support its conclusion . . . the actions of
[plaintiffs] led to the alleged tripling of rate increases as opposed to other
reasons."
I.
A motion for summary judgment must be granted "if the pleadings,
depositions, answers to interrogatories and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any material fact
challenged and that the moving party is entitled to a judgment or order as a
matter of law." R. 4:46-2(c). The court must "consider whether the competent
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evidential materials presented, when viewed in the light most favorable to the
non-moving party, are sufficient to permit a rational factfinder to resolve the
alleged disputed issue in favor of the non-moving party." Brill v. Guardian Life
Ins. Co. of Am., 142 N.J. 520, 540 (1995).
"Summary judgment should be granted, in particular, 'after adequate time
for discovery and upon motion, against a party who fails to make a showing
sufficient to establish the existence of an element essential to that party's case,
and on which that party will bear the burden of proof at trial.'" Friedman v.
Martinez, 242 N.J. 449, 472 (2020) (quoting Celotex Corp. v. Catrett, 477 U.S.
317, 322 (1986)). "If there is no genuine issue of material fact, [the court] must
then 'decide whether the trial court correctly interpreted the law.'" DepoLink
Ct. Reporting & Litig. Support Servs. v. Rochman, 430 N.J. Super. 325, 333
(App. Div. 2013) (quoting Massachi v. AHL Servs., Inc., 396 N.J. Super. 486,
494 (App. Div. 2007)).
We review the trial court's grant or denial of a motion for summary
judgment de novo, applying the same standard used by the trial court. Samolyk
v. Berthe, 251 N.J. 73, 78 (2022). On de novo review, "[a] trial court's
interpretation of the law and the legal consequences that flow from established
facts are not entitled to any special deference." Rowe v. Bell & Gossett Co.,
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239 N.J. 531, 552 (2019) (alteration in original) (quoting Manalapan Realty,
L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995)). Contract
interpretation issues are also reviewed de novo. Serico v. Rothberg, 234 N.J.
168, 178 (2018).
II.
Defendant argues neither plaintiffs nor the motion judge addressed the
other claims in the case beyond the declaratory judgment. It asserts the judge's
opinion lacks sufficient findings of fact and conclusions of law required by Rule
1:7-4.
Defendant contends plaintiffs' partial assignment of its rights to other
developers within the franchise area "materially increase[d] the burden" on
defendant because it became liable not only to plaintiffs but other developers
with whom it had not contracted. Moreover, allowing plaintiffs to assign their
rights allowed them to profit from a service provided by defendant to an
unrelated assignee, while also depriving the assignee of certain protections
afforded to property owners who pay for the delivery of utility services. The
assignment therefore was invalid as a matter of law and void as against public
policy.
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Defendant argues the motion judge misinterpreted the 1995 Agreement,
which expressly stated the connection fees were not assignable. They reiterate
the more reasonable interpretation would be interpreting the assignment as
applicable to wholly owned entities of plaintiffs or plaintiffs' heirs.
According to defendant, the motion judge's reliance on its special
counsel's letter is misplaced because it only covered certain lots, many of which
did not belong to KHOV. Regardless, the letter shows plaintiffs could not assign
its rights without defendant's consent.
Defendant contends the law disfavors municipal agreements with a
perpetual term. Municipalities cannot be bound to agreements they had no
power to make. The agreements here bear on issues of public health and cannot
be surrendered or impaired by contract. Plaintiffs were aware of these
limitations.
Defendant is authorized to collect fees for the connection, use, and
services of water and sewage. It is statutorily mandated to compute connection
fees by accounting for current costs and conditions of operating a utility system.
Therefore, the judge erred when he interpreted the contract as fixed in
perpetuity. His ruling granted plaintiffs a waiver on paying the connection fees,
forcing defendant to give away revenue at the expense of the public to benefit
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plaintiffs. For these reasons, defendant argues the judge should have found the
agreements were ultra vires.
Since the agreement is ultra vires, defendant asserts further discovery,
including expert discovery, is necessary to enable the motion judge to determine
a reasonable time limit on the agreements. The judge must examine facts,
including the amounts: paid to plaintiffs; collected from the assignment; and
not paid over the years, to determine what a reasonable time limit may be for
continuing the water and sewer provisions of the parties' agreement. We address
these arguments in turn.
A.
Rule 1:7-4(a) requires the trial court to "find the facts and state its
conclusions of law" on all motions decided by written orders appealable as of
right. "'Naked conclusions' do not suffice." Kas Oriental Rugs, Inc. v. Ellman,
407 N.J. Super. 538, 562-63 (App. Div. 2009) (quoting Curtis v. Finneran, 83
N.J. 563, 570 (1980)). A court may reject a party's arguments without
expressing its reasons if it explicitly indicates its reliance on the opposing party's
arguments. Allstate Ins. Co. v. Fisher, 408 N.J. Super. 289, 301 (App. Div.
2009).
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The motion judge's findings more than met the requirements of Rule 1:7-
4. After noting the parties agreed no further discovery was required, the judge
credited plaintiffs' arguments and explained why. He did not need to specifically
address every count in the parties' pleadings, because they were mooted by his
findings upholding the parties' agreements and the assignment.
B.
The parties' intent is important to construing contracts. Kieffer v. Best
Buy, 205 N.J. 213, 223 (2011). The court examines "the relations of the parties,
the attendant circumstances, and the objects they were trying to attain." Tessmar
v. Grosner, 23 N.J. 193, 201 (1957). Contract terms should "be given their plain
and ordinary meaning." Roach v. BM Motoring, LLC, 228 N.J. 163, 174 (2017)
(quoting M.J. Paquet, Inc. v. N.J. Dep't of Transp., 171 N.J. 378, 396 (2002)).
They should not be construed to render one term meaningless. Porreca v. City
of Millville, 419 N.J. Super. 212, 233 (App. Div. 2011).
Contracts generally permit an assignment of rights unless prohibited by a
provision expressly stating the opposite, the operation of law, or public policy.
Somerset Orthopedic Assocs., P.A. v. Horizon Blue Cross & Blue Shield of N.J.,
345 N.J. Super. 410, 418 (App. Div. 2001). Rights can be assigned in property
sales contracts. See Aronsohn v. Mandara, 98 N.J. 92, 99-100 (1984) (holding
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a party's sale of a home to the plaintiffs resulted in the assignment of a right
against the defendant contractor for the non-negligent construction of a patio).
"[C]ontractual provisions prohibiting or limiting assignments operate only
to limit the parties' right to assign the contract, but not their power to assign,
unless the parties manifest with specificity an intent to the contrary." Owen v.
CNA Ins./Cont'l Cas. Co., 167 N.J. 450, 467 (2001). A manifestation of a party's
intent to the contrary is evidenced through express language, noting such
assignment is invalid or limiting the power to assign. Id. at 467-68. Without
such language, the provision is merely a covenant, which if breached results in
liability to the assigning party. Id. at 467. However, "[t]he assignment . . .
remains valid and enforceable." Ibid.
Another bedrock principle is "[o]ne who follows another in ownership or
control of property" is a successor in interest. Black's Law Dictionary 1570
(12th ed. 2024). "A successor in interest retains the same rights as the original
owner, with no change in substance." Ibid.
The law relied upon by defendant to argue the assignment was invalid is
inapplicable because it pertains to contracts for the assignment of debt,
Mandeville v. Welch, 18 U.S. 277, 288-89 (1820); Otis v. Adams, 56 N.J.L. 38,
40-41 (1893), rather than the assignment of a right to prepaid utilities. The
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motion judge correctly found defendant provided no legal authority to support
the claim the contractual utility rights in a property sale were unassignable. The
law points in the opposite direction. Aronsohn, 98 N.J. at 99-100.
Defendant's assertion it will be materially burdened because plaintiffs can
continue to sell property in the franchise area and assign their water and sewer
rights ignores the fact plaintiffs purchased this right. The agreements signed
between the parties over the decades, and special counsel's letter underscore this
conclusion.
C.
Utility authorities are empowered "[t]o enter into any and all contracts . . .
to carry out any power" under the Local Public Contracts Law. N.J.S.A. 40:14B-
20(14). N.J.S.A. 40:14B-21 and -22 permit authorities to charge developers and
property owners for water and sewage. In Airwick Industries, Inc. v. Carlstadt
Sewerage Authority, our Supreme Court held utility authorities may charge
improved and unimproved properties for connection fees. 57 N.J. 107, 120 -21
(1970). This is because "the unimproved property will benefit unfairly with
respect to so much of the capital cost and interest thereon as may have been paid
in the past by users of the sewer." Id. at 121.
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We are unconvinced defendant has been deprived of its statutory
authority. It entered into the contracts with plaintiffs over the decades to charge
water and sewage connection fees for improved and unimproved parts of the
franchise area. N.J.S.A. 40:14B-21, -22. Plaintiffs prepaid the connection fees
based on the values determined at those times. Therefore, the notion that
plaintiffs collected defendant's revenues is unsupported by the facts. Nothing
in our law prohibits parties from entering into agreements to prepay for utility
services. Nor is there any authority prohibiting a developer from later seeking
to recoup those costs in a sale to another private party.
D.
"Ultra vires acts in the primary sense are 'act[s] utterly beyond the
jurisdiction of a municipal corporation' and are void." City Council of Orange
Twp. v. Edwards, 455 N.J. Super. 261, 272 (App. Div. 2018) (alteration in
original) (quoting Middletown Twp. Policemen's Benevolent Ass'n Loc. No. 124
v. Twp. of Middletown, 162 N.J. 361, 368 (2000)). Secondary sense ultra vires
acts occur "from the 'irregular exercise of a basic power under the legislative
grant in matters not in themselves jurisdictional . . . .'" Edwards, 455 N.J. Super.
at 272 (quoting Middletown Twp. Policemen's Benevolent Ass'n Loc. No. 124,
162 N.J. at 368). In other words, a municipal entity may act ultra vires in the
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secondary sense when its conduct occurs in an improper or irregular manner,
despite being within the entity's authority. Id. at 273.
It is fundamental that courts may not remake a contract to be more
favorable or to benefit only one party. Karl's Sales & Serv., Inc. v. Gimbel
Bros., 249 N.J. Super. 487, 493 (App. Div. 1991). While municipal entities
"may not contract away [their] legislative or governmental powers[,]" they still
may incur obligations and "cannot escape th[e] obligation[s] by asserting that
[they are] merely exercising the police power delegated to" them. Palisades
Props., Inc. v. Brunetti, 44 N.J. 117, 133 (1965).
Rate regulations are "a continuing, ongoing governmental function." City
of Plainfield v. Pub. Serv. Elec. & Gas Co., 82 N.J. 245, 252 (1980). The rates
must be examined "against the backdrop of current conditions." Ibid.
"Unchangeable rates and practices are almost certain to become unlawful." Atl.
Coast Elec. Ry. Co. v. Bd. of Pub. Util. Comm'rs, 92 N.J.L. 168, 175 (E. & A.
1918).
Palisades Properties involved several development proposals and the
municipality's execution of a restrictive covenant with one party. 44 N.J. at 121-
26. Our Supreme Court held the municipality had the power to enter the contract
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imposing the restrictive covenants and could not later seek to invalidate the
agreements based on its alleged police power. Id. at 133-34.
In Plainfield, a municipality sought to compel Public Service Electric &
Gas Company (PSE&G) to provide free electricity to municipal buildings in
1974, pursuant to an 1898 contract. 82 N.J. at 247. The Court discussed
PSE&G's statutory obligation to provide reasonable rates and how unchanged
rates would reasonably become unlawful over long periods of time. Id. at 252-
53. It concluded the contract was illegal because of its indefinite duration,
which "if unaltered, would inevitably become progressively unfair." Ibid.
The contracts here were not ultra vires in the primary sense because:
defendant had the authority to enter the agreements to collect the water and
sewer fees up front; the agreements were not executed in an improper or
irregular manner; and defendant cannot escape its obligations by asserting its
police powers. The fact utility rates have changed over the decades was not
evidence of irregularity or impropriety at the time the parties contracted.
Edwards, 455 N.J. Super. at 273. Thus, defendant did not act ultra vires in the
secondary sense.
While rates are an "ongoing governmental function" and should be
examined under contemporary conditions, no evidence was presented to show
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this information was not considered when the parties entered each of their
agreements. Plainfield, 82 N.J. at 252. Unlike Plainfield, where the
municipality sought to enforce an almost eighty-year-old contract for continued
free electricity without any new consideration, id. at 257, the parties here entered
into multiple agreements over the decades, and at several junctures plaintiffs
prepaid for the connection fees. Ibid. This case is also distinguishable from
Plainfield because it involves one-time connection fees as opposed to the
ongoing delivery of utilities, whose rates are market based. We recognize while
the connection fees may also change over time they are nonetheless different
than the delivery of utilities by a municipality to a customer.
For these reasons, we reject defendant's argument the agreements were a
public funds giveaway. Plaintiffs paid for the connection fees when they entered
the agreements. Municipal contracts with private entities have been upheld
where there was adequate consideration for the right relinquished. Spoerl v.
Pennsauken Twp., 14 N.J. 186, 190 (1954). This was the case here.
E.
Defendant's arguments the motion judge should have imposed a
reasonable time limitation on the parties' agreements and that discovery is
necessary to ascertain what is a reasonable limitation lack merit. Aside from the
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fact both parties indicated no further discovery was necessary; the fee provisions
of their agreements already provide a reasonable limitation on the number of
connections plaintiffs could make for future developments. And the connection
fee issue will no longer exist once the franchise area has been built out.
F.
Finally, the motion judge stated he could not rely on our prior ruling
because it was unpublished and therefore had no binding effect under Rule 1:36-
3. Although this issue is not a part of defendant's appeal, we must address it to
offer guidance in the event of another dispute between the parties .
Under Rule 1:36-3, unpublished opinions are not binding or precedential
in any court. However, unpublished opinions may be cited by a court "to the
extent required by res judicata, collateral estoppel, the single controversy
doctrine[,] or any other similar principle of law." R. 1:36-3. Unpublished
opinions are also binding on all parties in the case in which the opinion was
rendered, and especially, where a public party conduct was prescribed. See
Eherenstorfer v. Div. of Pub. Welfare, 196 N.J. Super. 405, 412 (App. Div.
1984) ("A party does not have the right to avoid a legal determination made by
this court merely because a decision is unpublished.").
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Collateral estoppel precludes an issue, which is "identical to the issue
decided in the prior proceeding," if it was "actually litigated in the prior
proceeding," and a final judgment issued on the merits. In re Est. of Dawson,
136 N.J. 1, 20 (1994). "[T]he determination of the issue [must have been]
essential to the prior judgment[] and . . . the party against whom the doctrine is
asserted was a party to or in privity with a party to the earlier proceeding. " Id.
at 21.
A review of our prior decision shows the elements of collateral estoppel
were met. Plaintiffs had filed a complaint seeking a declaration they did not
have to pay the fees related to a development based on the 1986 agreement.
Brunetti, slip op. at 1. The parties litigated whether there was a time limitation
in the agreement. Id. at 1-2. A final judgment was entered and affirmed on
appeal. Ibid. This was essential to the prior judgment because we construed the
plain language of the 1986 agreement to conclude plaintiffs did not have to pay
any fees "at any time." Id. at 1. And the parties were the same in both
proceedings. Ibid.
The judge erred in declining to examine the prior decision's preclusive
effect. Our prior holding precluded defendant from challenging the provisions
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of the 1986 agreement, which stated plaintiffs did not have to pay any water
connection fees.
Affirmed as modified.
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