Opinion
DOCKET NO. A-1023-11T4
01-18-2013
ANTONIO RIVERA, Plaintiff-Respondent, v. ELIZABETH BOARD OF EDUCATION, a body Corporate of the State of New Jersey, PABLO MUNOZ, individually and in his official capacity as Superintendent of Schools for the City of Elizabeth, and RAFAEL J. FAJARDO, Individually and in his official capacity as the President of the Elizabeth Board of Education, Defendants-Appellants, and LUCILLE DAVY, Commissioner of the New Jersey Department of Education, Defendant.
Pashman Stein P.C., attorneys for appellants (Michael S. Stein and John T. Whipple, on the briefs). Weiner Lesniak, L.L.P., attorneys for respondent (Richard L. Rudin, of counsel; Bryant Gonzalez, on the briefs).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Axelrad, Sapp-Peterson and Nugent.
On appeal from the Superior Court of New Jersey, Law Division, Union County, Docket No. L-3814-06.
Pashman Stein P.C., attorneys for appellants (Michael S. Stein and John T. Whipple, on the briefs).
Weiner Lesniak, L.L.P., attorneys for respondent (Richard L. Rudin, of counsel; Bryant Gonzalez, on the briefs). PER CURIAM
Defendants Elizabeth Board of Education (the Board), its former president, Rafael Fajardo, and the former Acting Superintendent of the Elizabeth School District, Pablo Munoz, appeal from the September 13, 2011 Law Division order that granted plaintiff Antonio Rivera's summary judgment and enforcement motions, and required Munoz and Fajardo to reimburse the District $63,622. The Board had paid that amount from district funds to a law firm that filed and prosecuted a civil action, against fictitious entities only, on defendants' behalf, until the trial court enjoined the Board from further funding the lawsuit. The trial court determined that the lawsuit primarily involved personal claims filed on behalf of Munoz and Fajardo. The trial court also determined that the lawsuit had not been authorized by the Board, which violated the Open Public Meetings Act (OPMA), N.J.S.A. 10:4-6 to -21. Lastly, the trial court determined that Munoz and Fajardo had a conflict of interest that required restitution. We affirm.
I.
A.
Shortly before the June 6, 2006 primary election for Elizabeth City Council, someone anonymously mailed to city residents a forged letter, a two-page flier, and a single-page flier. The forged letter, which bore the Board's letterhead, was purportedly written by Munoz to Fajardo, and urged Fajardo to push his subordinates to "inspire parents to commit to putting up political signs in support of our Hispanic candidates." The letter also emphasized the need "to focus on our primary objective, getting the Hispanics to come out and vote for our candidate and to ensure a low turnout of the [I]talian vote."
The two-page flier stated that "the Army of the Undercover Republicans are getting richer at the expense of taxpayers and the youth of our City"; and asked, among other things, "Why does an owner of a construction company want more construction of schools when the proficiency level in math and science are not focused on?" The flier's second page designated a photograph of Fajardo as the "Captain" and a photograph of Munoz as "1st Sargeant." The single-page flier claimed a City Council candidate was Fajardo's protégé, that the school administration building was being used for political purposes, and that Fajardo was advocating construction of more schools so that he could become richer "because of his questionable connection to the construction industry."
On June 30, 2006, the Board, Munoz, and Fajardo filed a six-count complaint (the John Doe lawsuit) alleging that various "John and Jane Does" and various "ABC Corporations" circulated the letter and fliers thereby committing acts of defamation and malicious misrepresentation; conspired to commit torts; invaded the privacy of Munoz and Fajardo by placing them in a false light; intentionally caused Munoz and Fajardo to suffer emotional distress; and violated campaign advertising laws. During the next six months, the Board paid defendants' special counsel McCarter & English $63,622 to prosecute the John Doe lawsuit. The sources of payment included $52,049 in grants the school district had received from the New Jersey Department of Education (the DOE). The Board never adopted a resolution authorizing the lawsuit.
Although no actual persons were ever named as defendants in the John Doe lawsuit, the Board continued to fund it until the DOE investigated and audited the Board, and plaintiff, a political foe of Munoz and Fajardo, filed a prerogative writs action (the subject action) seeking, among other things, to enjoin the Board from continuing to fund defendants' lawsuit. To provide a context for the summary judgment motion that is the subject of this appeal, we summarize the DOE investigation and the history of the subject action.
In September 2006, three months after defendants filed the John Doe lawsuit, the DOE's Acting Commissioner requested information from the Board, Munoz, and Fajardo concerning the suit. Specifically, in a letter to the Board, the DOE made the following requests:
In order to ensure the appropriateness of the Board's expenditures in this matter, please provide me with any and all information related to the facts that support the filing of this complaint, the Board's authority for bringing this complaint, whether the Board, alone, or the individual plaintiffs would also be able to recover damages awarded in this case and how attorneys' fees are being paid in this matter. With regard to the fees, I am specifically seeking information as to whether the individual plaintiffs are sharing in the costs for these fees with the Board. As part of your submission, please provide me with a copy of the fee agreement or fee arrangement that has been entered into in this matter.
The Board referred the DOE's letter to McCarter & English, and the attorney who had signed the John Doe complaint responded with a letter, but provided no documents. According to the letter, the Board retained the firm "to represent the interests of all the plaintiffs." The firm declined to produce its retainer letter, invoking the attorney-client privilege. The letter characterized the complaint as follows:
The gravamen of the complaint seeks to recover damages for defamation of the Board and of Mr. Fajardo, its president, and Mr. Munoz, the Superintendent of the school district. More specifically, the First Count (Defamation) alleges that the defendants made defamatory statements about Messrs. Munoz and Fajardo, together with members and employees of the Board. It seeks relief on behalf of all plaintiffs.
The letter went on to describe each count of the complaint. As to the fourth count, Invasion of Privacy, the letter indicated this count was "limited to the individual plaintiffs. It is not by any means the focus of the action, and any recovery attributable to this count is likely to be minimal." The letter indicated that the fifth count, alleging Infliction of Emotional Distress, "is similar in nature to the Fourth Count." The letter further stated:
In short, four of the six counts seek relief on behalf of all three plaintiffs, with the lead plaintiff being the Board. The other two counts are minor in comparison, both in terms of potential additional liability to defendants and in terms of potential damages. Accordingly, the Board's decision to pay all costs of prosecuting this action is similar to that of an insurance company that agrees to pay the cost of defending all counts against an insured even if some counts contain allegations that are not covered under the policy.
The letter further asserted that the Board had standing to sue for defamation, and pointed out that "[t]he defamatory statements in this case are completely unlike legitimate comment that has been made by newspapers, as to which public bodies have generally been prohibited from suing due to the free speech protections afforded by the State and U.S. Constitutions." As to damages, the letter stated
[t]he amount of damages to be awarded to each plaintiff would ultimately be determined as a result of the findings of a jury as reflected on a jury verdict sheet, in which a jury would decide how liability should be apportioned to each defendant and the quantum of damages to be awarded to each plaintiff.
The letter also asserted that "the facts support the conclusion that the Board may appropriately decide to pay all costs of prosecuting this action." Copies of the letter were sent to the Board, Munoz, and the Board's general counsel.
Thereafter, in July 2007, the DOE sent to Fajardo, for distribution to the Board members, an examination report prepared by the DOE's Office of Fiscal Accountability and Compliance (OFAC). The report concluded the Board had inappropriately expended district funds for the John Doe lawsuit because "the complaint did not identify actual defendants and the possibility that this complaint would allow this identification was remote at best." The report also stated, "the litigation was more geared to the superintendent and the Board president's personal interests." The Board filed an administrative appeal.
In its final determination dated July 1, 2009, the DOE upheld the OFAC investigative findings. The DOE cited an independent review performed by the Director, Budget Review and Fiscal Monitors, Division of Finance, which concluded, among other things:
The school district and/or the superintendent and board president did not act appropriately in conducting an investigation, hiring attorneys and engaging in litigation regarding this matter. Therefore, any expenditure of school district funds to pursue such actions including hiring of special counsel, investigators, filing lawsuits and other related expenditures were a misuse of school district funds and should not be permitted.The Director noted that
[i]t is not clear whether the full Board of Education was knowledgeable about the scope of the investigation or whether they voted to approve legal action. In the July 2007 interviews the scribe noted that [general counsel] claims that "there may be Executive Session minutes of the Board discussions leading up to and inclusive of the actual decision to have the Firm file the lawsuit." In the January 30, 2007 Elizabeth Interviews, [general counsel] discusses that the process for investigation and response to the letter was done administratively, however discussions were held with the Board. Conflicting opinion of the Board of Education authorization was given by
[special counsel] in the January 30, 2007 Elizabeth Interviews, in which he indicated that the "civil action was not based on specific Board approval. Super wanted initial investigation. McCarter and English were already under contract with Board for another matter."
The Board did not appeal the DOE's final decision. On November 16, 2009, the DOE deducted "the State Aid recovery of $52,049 from the Elizabeth Board of Education's remaining FY 2009-2010 State Aid payments."
Meanwhile, in October 2006, plaintiff commenced the subject action. Plaintiff alleged the Board's improper expenditure of public funds to protect personal rights of its members was beyond its statutory powers and void; and the Board had violated the Open Public Records Act (OPRA), N.J.S.A. 47:1A-1 to -13, by failing to provide records including resolutions authorizing the filing and funding of the John Doe lawsuit. In an order issued on December 5, 2006, the court denied plaintiff's application for a preliminary injunction restraining defendants from prosecuting the John Doe action. The court determined that plaintiff had not shown "a possibility of success on the merits due to the fact that it is likely that jurisdiction to hear plaintiff's claims rests with the Commissioner of [the DOE]." The court granted, in part, plaintiff's application to compel the Board to comply with OPRA.
On February 26, 2007, the court reconsidered, granted plaintiff's application for a preliminary injunction, and enjoined the Board from continuing the John Doe lawsuit and from continuing to use school funds to fund it. On July 10, 2008, in a "Consent Order for Judgment," the court converted the preliminary injunction into a permanent injunction and dismissed the balance of the complaint without prejudice pending the DOE's final administrative decision.
Plaintiff had filed a summary judgment motion on December 6, 2007, seeking a declaration that the Board had improperly expended funds on the Joe Doe lawsuit, an order enjoining the Board from continuing to fund the suit, and an order requiring Munoz and Fajardo to repay the $63,622 the Board had expended on the John Doe lawsuit. The court denied plaintiff's motion on January 18, 2008.
After learning of the DOE's decision, on April 28, 2010, plaintiff filed a motion to enforce litigant's rights in which it sought, among other relief, an order requiring Munoz and Fajardo to reimburse the Board $63,622, the legal fees the Board had paid to fund the John Doe lawsuit. The trial court declined to decide that issue, concluding that the DOE had exclusive jurisdiction. Plaintiff appealed from the court's May 28, 2010 confirming order.
On appeal, in an unpublished decision, we reversed. Rivera v. Elizabeth Bd. of Educ, No. A-5365-09 (App. Div. March 30, 2011). We explained:
[T]he question of whether a board member should be required to indemnify a board of education for improper expenditures he authorized does not require the expertise of DOE. The decision is purely one of law, whether there was a breach of duty and whether any such breach requires indemnification. Such questions are within the common law and non-Title 18A questions that trial judges routinely decide. We perceive no need for the trial court to have deferred to DOE's primary jurisdiction on such an issue. Where the matter involves "a question of law outside the purview of the school laws," the Commissioner's jurisdiction is not exclusive. Archway [Programs, Inc. v. Pemberton Twp. Bd. of Educ.], 352 N.J. Super. [420, 424-25 (App. Div. 2002)].
[Rivera, supra, slip op. at 13-14].
B.
On remand, plaintiff refiled his motion to enforce litigant's rights and for summary judgment. Defendants filed opposition and a cross-motion, which included certifications from five individuals who had been Board members in June 2006. Each certification was signed on the same date, and contained virtually identical language. Each Board member certified, "[t]he decision to file the John Doe Action was made by a Majority of the Board on advise [sic] of our Special Counsel, McCarter & English." Each member further certified that Special Counsel specifically advised "that our colleagues, [Munoz and Fajardo] must be named in the case as plaintiffs. I understood that Munoz and Fajardo were plaintiffs in name only and did not stand to benefit personally from the John Doe Action." In addition, each Board member certified that general counsel "advised that since McCarter had already been retained as special counsel, there was no need to adopt a resolution authorizing the filing of the John Doe Action, and for that reason, none was prepared or adopted."
Munoz also submitted a certification in which he averred that special counsel advised that he and Fajardo should be named as plaintiffs in the John Doe lawsuit; and that he, Munoz, had no expectation of receiving monetary damages. He further averred he had come across a letter he had written to Rivera and, based upon a comparison of that letter with the signature on the anonymous, forged letter, he believed Rivera "either authored the defamatory letter or he was instrumental in assisting others in creating the letter."
Finally, general counsel and an attorney from McCarter & English submitted certifications. General counsel certified that since McCarter & English had already been retained by the Board as special counsel, he determined that there was no need to adopt a resolution authorizing the filing of the John Doe lawsuit. An attorney from McCarter & English, though not the attorney who had signed the complaint and responded to the DOE in 2007, submitted a certification stating that he
advised the board that Mr. Munoz and Mr. Fajardo should be named as plaintiffs because they, as well as the Board, had been specific victims of false and defamatory publications. This advice was based in part on concerns of counsel that certain claims might be precluded by the entire controversy doctrine. There was no discussion as to whether the individual plaintiffs would ever have any right to receive a portion of any damage award that would be recovered at trial. At all times relevant counsel and the plaintiffs assumed that any damages that would be awarded at trial would belong to the Board.The attorney also stated that neither Munoz nor Fajardo had requested that they be named as parties in the John Doe lawsuit. "Rather, they permitted themselves to be included as parties plaintiff based on the direct advice of counsel."
The trial court granted plaintiff's motion and denied defendants' cross-motion. In a confirming order dated September 13, 2011, the court directed Munoz and Fajardo to reimburse the District $63,622, "the legal fees and costs set forth in the invoices submitted to the Elizabeth School District."
In a written decision, the court declined to consider the certifications of the former Board members. Noting that the Board's failure to comply with the OPMA was one reason it had enjoined the Board from funding the John Doe lawsuit, the court determined that it was inappropriate for defendants "to rely on self-serving, carbon copy certifications developed five years after the institution of the [John Doe lawsuit] in support of their positions." Rejecting defendants' argument that their reliance upon the advice of counsel was a complete defense to plaintiff's action, the court determined that Munoz and Fajardo had a conflict of interest and that "the inherent conflict of interest . . . compels restitution."
II.
A.
Defendants argue on appeal that their undisputed reliance upon counsel's advice — that Munoz and Fajardo should be named in the lawsuit — is dispositive of plaintiff's claim, because such reliance demonstrates that Munoz and Fajardo were not acting in their personal interest, but in their capacities as Board representatives. They also argue the trial court improperly determined they were collaterally estopped by the DOE from contesting the issue of whether the Board had funded personal pursuits of Munoz and Fajardo. According to defendants, the trial court misconstrued this Court's earlier opinion by determining that this issue was one of law, and consequently ignored the facts that supported defendants' advice-of-counsel defense. Lastly, defendants contend that the trial court had no authority to require defendants to reimburse the Board.
Plaintiff responds that the Board had no statutory authority to indemnify Munoz and Fajardo for either the John Doe lawsuit or the subject action. Plaintiff emphasizes the Board acted without an authorizing resolution; and the DOE determined that the John Doe lawsuit primarily served the personal interest of Munoz and Fajardo, a determination that became final when defendants did not file an appeal from the DOE's final administrative action.
Plaintiff also argues that the trial court properly declined to consider defendants' belated assertion that Board members had authorized the John Doe lawsuit; and that the certifications of the Board's general and special counsel do not require a contrary result because Munoz and Fajardo had an evident conflict of interest. Plaintiff emphasizes the trial court's determination that the Board was prohibited from maintaining a John Doe lawsuit in its own right. Plaintiff contends that the trial court properly determined that it had the authority to require defendants Munoz and Fajardo to reimburse the Board due to their conflicts of interest; and that permitting public officials who use public funds for private purposes to rely upon an advice-of-counsel defense is contrary to public policy.
Plaintiff also asserts that the Board is not a real party in interest, that substitute counsel must be disqualified from further representing defendants due to a conflict of interest, and that the Board must be enjoined from further funding Munoz and Fajardo's appeal.
Defendants reply that plaintiff failed to address their primary arguments. They insist plaintiff's "conflict-of-interest argument" has no factual support. While acknowledging the OPMA's requirements for recordkeeping, defendants assert the sole remedy for non-compliance is that undocumented actions are voidable. Defendants point out that nothing in the OPMA suggests that previously undocumented decisions may not be explained after the fact, as has occurred here with the certifications of the prior Board members.
In addition to reiterating its original arguments, defendants contend that plaintiff's arguments concerning defendants' current counsel, the Board's standing, and the Board's funding of the appeal are without merit.
B.
Defendants appeal from the trial court's order disposing of the pending action on summary judgment. A trial court must grant a summary judgment motion if "the pleadings, depositions, answers to interrogatories and admissions on file, together with 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); see also Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 529-30 (1995). "An issue of fact is genuine only if, considering the burden of persuasion at trial, the evidence submitted by the parties on the motion, together with all legitimate inferences therefrom favoring the non-moving party, would require submission of the issue to the trier of fact." R.4:46-2(c). "That the trier of fact makes determinations as to credibility does 'not require a court to turn a blind eye to the weight of the evidence; the opponent must do more than simply show that there is some metaphysical doubt as to the material facts.'" Triffin v. Am. Int'l. Grp., Inc., 372 N.J. Super. 517, 523-24 (App. Div. 2004) (quoting Big Apple BMW, Inc. v. BMW of N. Am., Inc., 974 F.2d 1358, 1363 (3rd Cir. 1992), cert. denied, 507 U.S. 912, 113 S. Ct. 1262, 122 L. Ed. 2d 659 (1993)). If the evidence submitted on the motion "'is so one-sided that one party must prevail as a matter of law,' the trial court should not hesitate to grant summary judgment." Brill, supra, 142 N.J. at 540 (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S. Ct. 2505, 2512, 91 L. Ed. 2d 202, 214, (1986)).
When a party appeals from a trial court order granting or denying a summary judgment motion, we "'employ the same standard [of review] that governs the trial court.'" Henry v. N.J. Dep't. of Human Servs., 204 N.J. 320, 330 (2010) (alteration in original) (quoting Busciglio v. DellaFave, 366 N.J. Super. 135, 139 (App. Div. 2004)). Thus, we must determine whether there was a genuine issue of material fact, and if not, whether the trial court's ruling on the law was correct. Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). We review legal conclusions de novo. Henry, supra, 204 N.J. at 330.
We begin by addressing the factual issue that is central to the parties' argument; whether Munoz's and Fajardo's pursuit of the John Doe lawsuit was brought in the Board's interest only, or for their personal interests as well. Munoz and Fajardo assert that the certifications of the Board attorney, special counsel, and various Board members, establish, at the very least, a disputed issue of material fact. Plaintiff argues the John Doe lawsuit was never authorized by the Board, and in any event, "primarily served the personal interests of Munoz and Fajardo." Applying the summary judgment standard, we conclude that the trial court correctly decided the issue in favor of plaintiff, though we reach that result for somewhat different reasons.
We begin with the John Doe lawsuit. On its face, it clearly and unequivocally states causes of action on behalf of Munoz and Fajardo individually, and in two counts seeks compensatory damages for them, not the Board. Of the remaining four counts, three fail to state a cognizable cause of action on behalf of the Board in its own right, and the other alleges violations of the New Jersey Campaign Contributions and Expenditures Reporting Act, N.J.S.A. 19:44A-1 to -47. Boards of education and school district superintendents are in the business of providing a thorough and efficient education for children, not enforcing campaign laws that may have been violated during a municipal primary election.
The Board's defamation claim, pled in the first count, is not cognizable. A governmental entity cannot maintain a cause of action for defamation. The United States Supreme Court has recognized, "[f]or good reason, 'no court of last resort in this country has ever held, or even suggested, that prosecutions for libel on government have any place in the American system of jurisprudence.'" New York Times Co. v. Sullivan, 376 U.S. 254, 291, 84 S. Ct. 710, 732, 11 L. Ed. 2d 686, 713 (1964) (quoting City of Chicago v. Tribune Co., 139 N.E. 86, 88 (Ill. 1923)).
In Tribune Co. , the seminal case on the issue, the City of Chicago brought an action for libel against a corporation that owned a newspaper that, for purposes of the demurrer decided by the court, admitted "it published malicious and false statements regarding the city of Chicago with intent to destroy its credit and financial standing[.]" Supra, 139 N.E. at 91. In upholding the dismissal of the action, the Illinois Supreme Court explained,
[f]or the same reason that members of the legislature, judges of the courts[] and other persons engaged in certain fields of the public service or in the administration of justice are absolutely immune from actions, civil or criminal, for libel for words published in the discharge of such public duties, the individual citizen must be given a like privilege when he is acting in his sovereign capacity. This action is out of tune with the American spirit and has no place in American jurisprudence.Noting exceptions where one attempts to persuade another "to violate existing law or overthrow by force or other unlawful means the existing government[,]" the Illinois Supreme Court held that "all other utterances or publications against the government must be considered absolutely privileged." Id. at 90.
[Ibid.]
"In addition to absolute privilege, the constitutional right of free speech as well as the fact that a governmental entity is not a 'person' with a reputation subject to libel have also been cited as grounds for defeating such an action." Weymouth Tp. Bd. of Educ. v. Wolf, 178 N.J. Super. 481, 483, n.1 (Law Div. 1981) (citing J.A. Bryant, J.R., Annotation, Right of Governmental Entity to Maintain Action for Defamation, 45 A.L.R.3d 1315 (1972)). In Wolf, the Law Division, following precedent in other states, "essentially adopted by every other court which has faced this issue," id. at 483, held that a board of education could not maintain an action for defamation in its own right. Id. at 482.
Here, the Board's defamation claim is not cognizable. The Board's couching of the facts underpinning the defamation action in terms of malicious misrepresentation (second count), and in terms of "a common design to perpetrate the foregoing torts" (third count), does not lead to a different result. The Board could not maintain a cause of action in its own right based upon defamatory statements made by citizens, whether pled as defamation or some variation of defamation.
The Board did not assert a cause of action on its behalf in the fourth or fifth counts, and the sixth count alleged violation of campaign advertising laws.
The trial court thus considered on summary judgment the John Doe lawsuit's explicit assertions of causes of action on behalf of Munoz and Fajardo, individually; strong evidence that the complaint was filed, in part, to pursue their personal claims. The non-cognizability of the Board's defamation claim, and defamation-like claims, further fortified the conclusion that the suit primarily advanced Munoz's and Fajardo's individual interests. But the letter by defendants' counsel to the DOE, written less than three months after the complaint was filed, left little doubt that the John Doe lawsuit benefited Munoz and Fajardo individually. Although counsel minimized the claims asserted on behalf of Munoz and Fajardo, counsel acknowledged that the complaint sought relief "on behalf of all three plaintiffs, with the lead plaintiff being the Board." And though he characterized the two counts filed on behalf of Munoz and Fajardo as "minor in comparison, both in terms of potential additional liability to defendants and in terms of potential damages," he stated that
[t]he amount of damages to be awarded to each plaintiff would ultimately be determined as a result of the findings of a jury as reflected on a jury verdict sheet,
in which a jury would decide how liability should be apportioned to each defendant and the quantum of damages to be awarded to each plaintiff.
The letter also stated that because the individual claims filed on behalf of Munoz and Fajardo were minor in comparison to the other claims, "the Board's decision to pay all costs of prosecuting this action is similar to that of an insurance company that agrees to pay the cost of defending all counts against an insured even if some counts contain allegations that are not covered under the policy." That statement suggests that the fourth and fifth counts did not involve Munoz and Fajardo in their official capacities.
In addition to the plain language of the complaint and counsel's letter to the DOE, defendants' failure to comply with the OPMA and OPRA suggested that Munoz and Fajardo were acting in their individual interests. We recount some general principles of law concerning the business of public bodies.
Generally, governmental bodies "can ordinarily act only by adoption of an ordinance or a resolution at a public meeting." See Jersey City v. Roosevelt Stadium Marina, 210 N.J. Super. 315, 327 (App. Div. 1986) (characterizing this general principle as "elementary" as applied to municipalities). "Governmental bodies must act by formal action . . . with respect to contracts[.]" Ibid. Additionally, members of the public have the right "to be present at all meetings of public bodies, and to witness in full detail all phases of the deliberation, policy formulation, and decision making of public bodies." N.J.S.A. 10:4-7. To ensure those rights to the public, the Legislature enacted the OPMA, which "shall be liberally construed in order to accomplish its purpose and the public policy of this State[.]" N.J.S.A. 10:4-21.
Those fundamental principles are particularly applicable here. The Board was required to provide adequate notice of its meetings and to keep reasonably comprehensible minutes. It has produced no minutes and no resolution authorizing special counsel, at considerable expense, to pursue an action on behalf of itself, its Board president, and its superintendent, against unidentified and unknown individuals. There is no evidence that the Board, by resolution or formal oral motion, authorized the filing of the John Doe complaint.
Although Munoz and Fajardo maintain that they were acting in the interests of the school district when they agreed to be named in the complaint, it cannot be reasonably disputed that there is a counter-argument. That argument has essentially been made by plaintiff throughout this litigation: the John Doe complaint was an expensive, politically motivated fishing expedition that named no one and was never going anywhere. There is also a third argument: when striking a balance between, on one hand, expending district funds and educational grants on programs directly aimed at educating children; and, on the other, spending those same funds on an expensive and perhaps unproductive lawsuit that on its face furthers the interest of two individuals; the balance should be struck in favor of the former consideration. The Board's failure to comply with the OPMA in effect assured that the public would not be made aware of the competing considerations and would be excluded from the debate. Subject to public scrutiny, the Board might have struck the balance in favor of programs directly involved with the education of the District's children. Defendants' failure to adhere to the requirements of the OPMA and OPRA supported plaintiff's summary judgment contentions that defendants had filed the John Doe lawsuit primarily for the benefit of Munoz and Fajardo, and the Board expended funds on a complaint containing no cognizable action that would benefit the Board in its own right.
In response to plaintiff's summary judgment evidence and arguments, defendants provided certifications from several attorneys and former Board members. General counsel certified that because McCarter & English "had already been retained as the Board's Special Counsel . . . the Board at times would simply ask McCarter to take certain action, without an accompanying resolution." According to counsel, "[t]hat is precisely what happened here — a majority of the Board, on advice of counsel, authorized the suit, and the Board's general counsel determined that a resolution retaining McCarter to file that suit was unnecessary."
Counsel's certification and the certifications of the former Board members were prepared nearly five years after the John Doe complaint was filed. General counsel's certification did not address the reference in the DOE's final determination to the January 30, 2007 interviews, where at least one attorney had "indicated that the civil action was not based on specific Board approval." The certifications of the five former Board members do not indicate when their votes allegedly occurred, where they occurred, who was present, or to what extent, if at all, Munoz or Fajardo participated. The certifications are unsupported by Board meeting minutes.
In view of the clear and unequivocal language in the John Doe complaint; the defendants' failure to comply with the OPMA; the clear and unequivocal letter from the attorney who filed the John Doe lawsuit to the DOE, confirming the suit, in part, sought individual damages on behalf of Munoz and Fajardo; the Board's non-compliance with plaintiff's OPRA request concerning Board minutes and resolutions; and the fact that former Board members' certifications were not filed until years after the events the certifications addressed; we conclude that the trial court did not err when it determined that the John Doe lawsuit advanced personal claims of Munoz and Fajardo. The evidence on that issue was so one-sided that plaintiff should have prevailed, as he did.
We turn to defendants' argument that Munoz and Fajardo acted on the advice of counsel. Specifically, defendants assert that the "unrefuted 2008 McCarter certification . . . undeniably demonstrates that Mr. Munoz and Mr. Fajardo agreed to be named Plaintiffs in the [John Doe lawsuit] solely as a consequence of McCarter's advice." In that certification, counsel stated that he "advised the Board that Mr. Munoz and Mr. Fajardo should be named as plaintiffs because they, as well as the Board, had been specific victims of false and defamatory publications," and that "[a]t all times relevant counsel and the plaintiffs assumed that any damages that would be awarded at trial would belong to the Board." Counsel explained that Munoz and Fajardo "permitted themselves to be included as parties plaintiff based on the direct advice of counsel."
The certification is not that of the attorney who signed the John Doe complaint. In contrast to the 2008 certification's assertion that defendants assumed any damages awarded at trial would belong to the Board, three months after preparing the complaint its author informed the DOE that the fourth and fifth counts of the complaint were limited to the individual plaintiffs, and that the amount of damages to be awarded to each plaintiff would ultimately be determined by a jury. The letter further characterized the Board as the "lead plaintiff." The letter to the DOE suggests that Munoz and Fajardo intended to recover damages on their own behalf, according to the jury verdict. Nothing in the letter suggests anything to the contrary. Certainly, nothing in the letter indicates that Munoz and Fajardo, if awarded damages by the jury, would gratuitously pay them to the Board.
A defendant's reliance upon the advice of counsel may constitute a defense to a cause of action that includes malice as a specific element. See LoBiondo v. Schwartz, 199 N.J. 62, 95 (2009) (explaining that even when, objectively, there was no probable cause for a malicious prosecution complaint, "reliance on the advice of counsel to the contrary will be sufficient because it will defeat the separate element of malicious intent"); Weinstein v. Klitch, 106 N.J.L. 408, 409 (1929) (explaining "the rule is that advice of counsel is a complete defense to an action for malicious prosecution of a criminal action where it appears that the prosecution was initiated in reliance in good faith on such advice given after a full and fair statement to the attorney of all the facts."). A defendant's good faith reliance upon counsel's advice also constitutes a defense to a claim asserted against a litigant under the frivolous claims statute, N.J.S.A. 2A:15-59.1, when the defendant has relied in good faith on the advice of counsel that the claim has merit. McKeown-Brand v. Trump Castle Hotel & Casino, 132 N.J. 546, 558 (1993).
Defendants argue the advice-of-counsel defense is not restricted to torts involving malice and claims alleging frivolous litigation. They contend the attorney's certification is dispositive of four facts: the John Doe lawsuit was brought in furtherance of the Board's interest only, not for any personal interest; Munoz and Fajardo expected that any awarded damages would belong to the Board; Munoz and Fajardo never sought to be named parties in the defamation action; and, Munoz and Fajardo only acquiesced to be included as plaintiffs based on the advice of the Board's counsel.
Although we agree that the advice-of-counsel defense is not restricted to malicious prosecution and frivolous claims actions, we do not find that it was supported by the evidence in the summary judgment motion record. As we have previously explained, the first two facts in counsel's certification are contradicted by the explicit language in the John Doe complaint and by the letter sent by the complaint's author to the DOE. Munoz's and Fajardo's motivation for being included in the complaint does not negate the fact that they had a conflict of interest and that they permitted public funds earmarked for the education of students to be spent on a claim from which, according to their attorney's letter to the DOE, they sought a personal, albeit small, financial gain. Under those circumstances, we cannot conclude the trial court erred by rejecting defendants' advice-of-counsel defense.
Defendants next argue that the trial court had no authority to require Munoz and Fajardo to reimburse the Board. We disagree.
Munoz and Fajardo had a conflict of interest. That should have been self-evident. If not, the School Ethics Act, N.J.S.A. 18A:12-21 to -34 made it explicit: "No school official shall . . . allow to be used, his public office or employment, . . . for the purpose of securing financial gain for himself . . . ." N.J.S.A. 18A:12-24(f). Our Supreme Court has recognized that "[s]trong remedies are necessary to combat unlawful conduct involving public officials." Cnty of Essex v. First Union Nat'l Bank, 186 N.J. 46, 58 (2006). In Thompson v. Atlantic City, where settlement negotiations involved egregious conflict-of-interest violations rendering the settlement itself void ab initio, and where public officials were unjustly enriched at the expense of taxpayers, the Court held that the equitable remedy was rescission of the settlement agreement that had resulted from the conflicts, "and restitution of the ill-gotten settlement proceeds." Supra, 190 N.J. 359, 383 (2007).
Here, where the Board action was never properly authorized, and where Munoz and Fajardo received, albeit indirectly, the benefit of district funds to pursue a suit they otherwise would not have pursued, there should be no bar to the imposition of the equitable remedy of restitution. "Restitution, by virtue of its adaptability to individual cases on equitable principles may . . . reach situations beyond the grasp of other civil or criminal remedies and do justice on equitable principles . . . always on the fundamental basis of preventing the unfaithful public official or public body profiting from his or its wrongdoing." Jersey City v. Hague, 18 N.J. 584, 595-96 (1955).
Plaintiff attempts to "renew" his previously denied motions to dismiss the Board's appeal, disqualify current defense counsel, and enjoin the Board from funding further appeals. We deny those motions.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION