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Wynfield Corporation v. Killam Associates

385 N.J. Super. 20, 895 A.2d 1192 (App. Div. 2006)

DEVELOPERS; MUNICIPALITIES; FEES—Secretarial services are not properly charged to a developer by a municipality’s retained engineering professional, but the developer can only sue the municipality, and not the professional, for any resulting overcharges.

A developer sued, alleging improper billing by a municipally-retained engineering firm that oversaw its project. In addition to challenging the engineering firm having billed for a duplicate site plan and for invoicing “billing inquiry charges,” the developer objected to paying for secretaries working for the engineering firm. In calendar year 2000, the engineering firm listed secretarial personnel as one of the seven disciplines on its schedule of professional charges. In 2001, it again listed secretarial services as a professional discipline and added a new section entitled “Expenses” to include, “among other things, mileage, photocopies, postal services, office computers and fax transmittals.”

Although the lower court found in favor of the developer and entered a judgment against the municipal engineer, the Appellate Division, looking at prior case law, found it “clear” that the developer’s “direct suit against [the engineer] for damages [was] barred.” In 1995, the Legislature adopted a statute establishing the procedure that a developer “must follow in the event of a billing dispute with a municipal professional.” That procedure did not grant a right for a developer to directly sue a municipal professional in connection with a billing dispute.

As to charging for secretarial services, both the lower court and the Appellate Division agreed that secretarial services were not chargeable by an outside professional. Each looked to the definition of professional services as set forth in the Local Public Contracts Law. In that statute, “professional services are defined as services requiring ‘knowledge of an advanced type in a field of learning acquired by a prolonged formal course of specialized instruction and study as distinguished from a general academic instruction,’” performed by a person “authorized by law to practice in a recognized profession whose practice is regulated by law.” Further, both the lower court and the Appellate Division agreed that secretarial expenses did not constitute out-of-pocket expenses. The lower court ruled that reimbursable expenses aren’t meant to be generalized overhead costs; they are meant to be “specific charges that are made perhaps for copying, perhaps for telephone, for a variety of things that ... might appropriately be reimbursable expenses. But ... the labor cost of the staff of the professional are not reimbursable expenses.” The Court pointed out that when municipalities utilized staff professionals, the municipalities cannot charge for those staff professionals, but can charge for overhead costs, including secretarial costs, subject to a cap. That made it clear to the Court that the Legislature understood that the billing rates for outside professionals included overhead charges whereas the billing rate for in-house municipal professionals did not.


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