Case Law Summaries

Borough of Princeton v. Board of Chosen Freeholders of the County of Mercer

• Opinion Date: July 23, 2001
• Real Property Law
• E-Mail

PUBLIC BIDDING—A contract that mixes a real property conveyance, for which public bidding may not be required, with the provision of services, for which it would be required, must be offered for public bidding.

Two counties entered into separate, long term agreements with a solid waste disposal company. One of the agreements was a “license agreement” which granted the county “all rights, title and interest in an irrevocable, non-exclusive license which shall run with the land” on landfill space at an out of state landfill. The agreement also provided that if the landfill space became depleted, the solid waste disposal company would be required to find alternative disposal sites. The agreement was for a term of 25 years and required the county to pay a monthly fixed fee. The other agreement was structurally similar granting the county “all rights, title and interest in the landfill, consisting of the acquisition of certain easement rights relating thereto.” After the agreements had been in force for a number of years, each county was sued by individual third parties alleging that the contracts violated the Local Public Contracts Law (LCPL) because they were entered into without being offered for public bid. These cases, after judgment by the Law Division, were consolidated by the Appellate Division for review. The Appellate Division began by recognizing that the LCPL requires public bidding for all contracts exceeding $7,500 (now $17,500), except for those contracts for professional services, contracts for the marketing of recyclable materials, and contracts for real property or any interest therein. Both counties argued that the contracts were exempt from the LCPL because they involved easements which are real property interests. The Appellate Division recognized that “notwithstanding the language purporting to grant easement rights, both agreements were subject to the LCPL because they involved the performance of services.” It then concluded that “neither of the agreements creates an easement such as would exempt the transactions from the requirements of the LCPL,” and then remanded the cases to the respective Law Divisions for a determination of a realistic time frame in which to disengage the contracts. On further appeal, the Supreme Court granted certification to determine whether the contracts should have been characterized, for the purposes of the LCPL, as contracts for “real property interests,” exempt from the LCPL, or contracts for the “performance of any work,” necessitating public bidding. After reviewing the respective agreements, the Court recognized that each of the agreements required the solid waste disposal company to provide additional landfill space, beyond that specified in the metes and bounds description, if the current landfill capacity subject to the ‘easement’ was not sufficient. For that reason, the Court concluded that the contracts were not merely for the acquisition of property, and remanded the cases with instruction to have the contracts opened for public bidding pursuant to the LCPL.

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