Thompson v. City of Atlantic City, A-44 September Term 2006.

• Decision Date: 16 May 2007
• Docket Number: No. A-44 September Term 2006.,A-44 September Term 2006.
• Parties: Tracy M. THOMPSON, Acting Director, Office of Government Integrity, Plaintiff-Respondent, v. CITY OF ATLANTIC CITY, a Municipal Corporation of the State of New Jersey, Defendant, and Lorenzo Langford and William Marsh, Defendants-Appellants.
• Court: New Jersey Supreme Court

921 A.2d 427

190 N.J. 359

Tracy M. THOMPSON, Acting Director, Office of Government Integrity, Plaintiff-Respondent, v. CITY OF ATLANTIC CITY, a Municipal Corporation of the State of New Jersey, Defendant, and Lorenzo Langford and William Marsh, Defendants-Appellants.

No. A-44 September Term 2006.

Supreme Court of New Jersey.

Argued January 29, 2007.

Decided May 16, 2007.

Fredric L. Bor argued the cause for appellants (Mr. Bor, attorney; Stephen G. Raymond, Mount Holly, on the brief).

Ronald A. Epstein, Deputy Attorney General, argued the cause for respondent (Stuart Rabner, Attorney General of New Jersey, attorney).

Justice ALBIN delivered the opinion of the Court.

At the time Lorenzo Langford became mayor of Atlantic City in 2002, he and a political ally, William Marsh, had a pending federal civil rights lawsuit against the City. Shortly after he assumed his post as mayor, Langford's municipal appointees negotiated a settlement of the federal suit with Langford's and Marsh's private attorneys in the amount of $850,000. With the case settled, a federal judge entered an order of dismissal.

The State's Office of Governmental Integrity (OGI) then sought to have the settlement rescinded in the Law Division because of various violations of the State's conflict of interest laws. The trial court acknowledged that the settlement violated state law, but declined to void it as a matter of comity to our federal courts. The Appellate Division disagreed with that approach, determining that the conflicts vitiated the settlement. Applying principles of equity, the appellate panel then ordered that Langford and Marsh be allowed to seek relief first in federal court and, if that failed, to return to state court for a hearing to decide the reasonableness of the settlement.

The primary purpose of conflict of interest laws is to ensure that public officials provide disinterested service to their communities and refrain from self-dealing. A secondary purpose is to promote confidence in the integrity of governmental operations. The conflict-ridden actions of Mayor Langford's political appointees, entering into a financial settlement to benefit their boss at the expense of the City, can hardly be viewed as disinterested or inspiring confidence in government. We now hold the City's settlement with its own mayor was so infected with conflicts of interest that it is void as a matter of state law. Because the City's unlawful settlement agreement with Langford and Marsh is a nullity, the monies disbursed to both must be returned to the municipal coffers. Any further relief sought by Langford and Marsh, such as reinstating the civil rights suit, must be pursued in federal court.

I.

A.

This case has its genesis in the 1998 Atlantic City mayoral election when Langford attempted to unseat the incumbent, James Whelan. William Marsh was Langford's campaign treasurer. Three days after Langford lost the election, the positions that both he and Marsh held on the Atlantic City Board of Education were eliminated. Believing that they were victims of political retaliation, Langford and Marsh met with Charles Ercole, Esq., to discuss their case. Because Ercole's law firm did not represent employees in discrimination lawsuits, he referred Langford and Marsh to attorneys who specialized in that area of law. Langford eventually retained Sidney Gold, one of the attorneys recommended by Ercole. Marsh retained separate counsel.

In June 1999, Langford and Marsh filed a federal civil rights action under 42 U.S.C.A. § 1983 in the United States District Court for the District of New Jersey, naming as defendants Atlantic City, Mayor Whelan, and various members of the city council. The complaint alleged that the defendants eliminated Marsh's position as a neighborhood facilities coordinator and Langford's position as a neighborhood facilities liaison in retaliation for their constitutionally protected political activities.¹ Later that year, United States District Court Judge Joseph E. Irenas dismissed the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). The United States Court of Appeals for the Third Circuit, however, reversed and reinstated the case, which then proceeded through a lengthy pre-trial discovery period.

In 2001, with his federal case still pending and while a member of the city council, Langford ran for mayor again, and this time emerged victorious in the November election. During the campaign, Ercole served as Langford's co-finance chair, hosted fund-raising events for Langford, and, in his capacity as a lawyer, agreed to accept service of a complaint filed against Langford by his mayoral opponent.²

After the election, the City and the attorneys for Langford and Marsh entered into settlement discussions in an effort to resolve the federal lawsuit before Langford assumed office on January 2, 2002. During an executive session of the city council on December 12, 2001, the city solicitor, Mary Siracusa, advised the council that Judge Irenas indicated that the case should settle for a nominal amount and if it did not settle during the transition period, he was not certain how he would proceed. Judge Irenas did not "feel comfortable" with a situation in which the city solicitor would recommend a settlement to the mayor about his own case. Judge Irenas also had suggested that he might place the case "on hold" for four years or appoint independent counsel to represent the City's interests. As a result of her discussions with Mayor Whelan and the attorney representing the City in the federal action, the city solicitor recommended that $300,000 be offered to settle the case. Langford and Marsh had demanded a $1,000,000 settlement.

Two weeks later, Council President Ernest Coursey proposed and the council adopted a resolution, offering a settlement inclusive of attorneys' fees of $600,000 to Marsh and $400,000 to Langford. The council solicitor at that meeting, Christopher Brown, told the council that under the Faulkner Act only the mayor had the power to settle the case and that the council's role was limited to "advice and consent." Although the attorneys for Marsh and Langford expressed their willingness to accept the $1,000,000 settlement proposed by the council, the outgoing mayor never consented to making such an offer to settle the case.

On January 2, 2002, with his federal suit against the City scheduled for trial in early February, Langford assumed the position of Atlantic City mayor and appointed Benjamin Fitzgerald as Atlantic City's business administrator. Approximately two weeks later, Langford named Fitzgerald to serve as acting mayor in circumstances when Langford could not attend to his official duties. On January 16, at Langford's request, the council adopted a resolution allowing Langford to retain Charles Ercole to provide legal services to the City.³ Ercole proceeded to advise the City concerning the federal lawsuit filed by Langford and Marsh. In addition, by letter dated January 16, Ernest Coursey informed the city clerk that he would be resigning his position as councilman effective January 31, 2002, to become Mayor Langford's confidential aide.⁴

On January 30, when the city council went into executive session to discuss a settlement of Langford's and Marsh's lawsuit, Coursey remained at his post as councilman. At that meeting, Ercole provided legal advice to the City and Fitzgerald, the business administrator, acted in place of the mayor.⁵

Ercole stated that the $1,000,000 settlement offer previously approved by council resolution was an "appropriate number, in light of the potential risk of the case."⁶ Citing budgetary concerns, Fitzgerald recommended that the offer be reduced to $850,000. Coursey, just days away from becoming Langford's confidential aide, agreed that the case should be settled for the reduced amount. The $850,000 settlement proposal received the backing of a majority of the council. At the meeting, Diana Fauntleroy, Esq., the council solicitor, expressed concern about the "level of conflicts that exist between the Council and the Mayor's office," particularly noting that the council was "approv[ing] a settlement with a sitting Mayor who was a former Council member." The council did not heed Fauntleroy's advice to withhold voting until a "written opinion" was issued addressing the potential conflicts. One councilman, Timothy Mancuso, observed: "[T]here's conflict written all over this. Publicity is going to look at you guys delivering a package to the new Mayor." He added that Coursey could have a conflict because "you got a job from the Mayor and you're voting to give him a million dollars."

On January 31, 2002, the City communicated the $850,000 settlement offer, which was accepted by Langford and Marsh. An attorney acting for Langford and Marsh requested that the City provide one check for the settlement amount. That same day, having been informed of the settlement, Judge Irenas signed an order dismissing the federal suit.

Thereafter, on February 13, 2002, the council went into executive session to discuss a letter from Fauntleroy that set forth her analysis of the conflicts that placed in question the validity of the settlement. Fauntleroy explained that a potential conflict of interest existed because of both Ercole's and Fitzgerald's participation in the settlement negotiations. She recommended that the council retain an independent attorney — unconnected to the mayor — to determine if the settlement was in the best interest of Atlantic City.⁷ On February 27, the council reconsidered the conflicts issue, and by a vote of five in favor, one against, and one abstaining, upheld the settlement tendered to Langford and Marsh. Before the vote, Councilman Mancuso urged the council to await a review by the Attorney General.⁸

Indeed, three weeks earlier, Councilman Mancuso forwarded a letter to the Attorney General questioning the legality of the settlement. By telefaxed letter...