                                NOT FOR PUBLICATION WITHOUT THE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-0363-17T2

TOWNSHIP OF WYCKOFF,
BOROUGH OF GLEN ROCK,
and BOROUGH OF MIDLAND
PARK, all on behalf of themselves
and all others similarly situated,

          Plaintiffs-Appellants/
          Cross-Respondents,

v.

VILLAGE OF RIDGEWOOD,

          Defendant-Respondent/
          Cross-Appellant.


                    Argued May 21, 2019 – Decided August 5, 2019

                    Before Judges Rothstadt, Gilson and Natali.

                    On appeal from the Superior Court of New Jersey, Law
                    Division, Bergen County, Docket No. L-5651-12.

                    Joseph B. Fiorenzo argued the cause for
                    appellants/cross-respondents (Sills Cummis & Gross,
                    PC, attorneys; Joseph B. Fiorenzo, of counsel and on
                    the briefs; Gregory Edward Reid, on the briefs).
              William W. Northgrave argued the cause for
              respondent/cross-appellant (Mc Manimon Scotland &
              Baumann, LLC, attorneys; William W. Northgrave and
              Thaddeus John Del Guercio, on the briefs).

PER CURIAM

         This appeal arises out of disputes over several rate increases the

Ridgewood Water Utility (Utility) charged for potable water. Defendant Village

of Ridgewood (Ridgewood or defendant) owns and operates the Utility, which

supplies water to the residents of Ridgewood and three other municipalities.

Plaintiffs, the Township of Wyckoff, Borough of Glen Rock, and Borough of

Midland Park, challenged three ordinances passed by Ridgewood that authorized

the Utility to increase rates by approximately thirty-seven percent over five

years.

         Following a bench trial, the trial court held that the ordinances were

arbitrary, capricious, and unreasonable, and, thus, invalid.      The court then

remanded the matter to the Ridgewood Council to establish appropriate rates for

the years in question. The trial court also ordered that plaintiffs be refunded the

difference between the rates actually charged and the rates to be established on

remand. Those rulings were embodied in a judgment entered on July 20, 2017.

Plaintiffs appeal from that judgment, and defendant cross-appeals.



                                                                           A-0363-17T2
                                        2
      Plaintiffs argue that the trial court erred in remanding the matter and they

should be refunded the difference between the invalid rates and the rates that

had been in effect before the ordinances were adopted. Plaintiffs also argue that

the trial court should have required defendant to return millions of dollars that

were transferred from the Utility to Ridgewood as surplus. Finally, plaintiffs

assert that they were entitled to attorney's fees. On its cross-appeal, defendant

argues that the trial court erred in invalidating the ordinances, in capping the

annual amount of surplus that can be transferred from the Utility to Ridgewood

at five percent of the Utility's budget, and in not finding plaintiffs' complaint

was time-barred.

      Having considered the arguments of all parties in light of the record and

law, we affirm substantially for the reasons set forth in the comprehensive 104-

page opinion issued by Judge Lisa Perez-Friscia. The factual findings made by

Judge Perez-Friscia are supported by substantial, credible evidence. Moreover,

we discern no error in her legal conclusions.

                                        I.

      Ridgewood is a municipal corporation that owns and operates the Utility

as authorized by the County and Municipal Water Supply Act (Water Supply

Act), N.J.S.A. 40A:31-1 to -24. In addition to providing potable water to


                                                                          A-0363-17T2
                                        3
residents of Ridgewood, the Utility also supplies water to the residents of

Wyckoff, Glen Rock, and Midland Park. Thus, the Utility has over 20,000

customers, including more than 1000 who are not residents of Ridgewood.

      The Utility controls or operates fifty-four wells and numerous buildings,

water treatment facilities, and storage tanks. It also has approximately thirty-

five full-time employees, and uses various support services supplied by

Ridgewood. Accordingly, the Utility periodically requests Ridgewood to set the

water rates it charges to its customers to generate the revenue to operate.

      Effective in 2010, 2011, and 2012, Ridgewood adopted three ordinances,

which increased by a total of more than thirty-seven percent the water usage

rates charged by the Utility. Thus, customers went from paying $3.32 per

thousand gallons of water to $4.68.

      The first ordinance, Ordinance No. 3236, became effective January 1,

2010 (the 2010 Ordinance). It was adopted by the Ridgewood Council after

hearing from representatives of the Utility and Ridgewood.                    Those

representatives informed the Council that there had not been a rate increase since

2004, the Utility's operating expenses had increased, capital projects had been

undertaken and were anticipated, and the Utility had incurred a deficit of over

$400,000 in 2008, and was projecting a $500,000 deficit for 2009.


                                                                          A-0363-17T2
                                        4
      The Ridgewood Council was also provided with a comparison of the water

usage rates charged in nearby communities. The Council was then advised that

Ridgewood's proposed rate increase would be in the middle range of the rate s

charged in other communities.

      Furthermore, the Council was given a report prepared by Louis C. Mai, a

Certified Public Accountant and Registered Municipal Accountant. Mai had

been retained by Ridgewood in 2008 to perform audits, and was asked in 2009

to review and develop a new rate structure for the Utility.       Mai told the

Ridgewood Council that the Utility was running a deficit. He also projected that

water consumption rates would decline in 2009, causing a reduction in the

Utility's anticipated revenues.

      In preparing the information and projections provided to the Ridgewood

Council, representatives of the Utility, Ridgewood, and Mai relied on allocation

of indirect costs from Ridgewood to the Utility. Those cost allocations included

charges for fire, police, healthcare, pension, and other expenses for services

provided to the Utility by Ridgewood. Those cost allocations were based on a

study conducted in 2003.

      After receiving and considering the information provided to it, the

Ridgewood Council voted to adopt the 2010 Ordinance.            That ordinance


                                                                        A-0363-17T2
                                       5
increased the water usage rates by approximately twenty-one percent, from

$3.32 per thousand gallons to $4.00.

      In late 2010, the Ridgewood Council considered another water usage rate

increase. The Council was asked to adopt Ordinance No. 3272, to become

effective January 1, 2011 (the 2011 Ordinance). Under the 2011 Ordinance,

water usage rates would increase by five percent, going from $4.00 per thousand

gallons to $4.20.

      Representatives from Wyckoff, Glen Rock, and Midland Park objected to

the proposed 2011 Ordinance at a public hearing the Ridgewood Council

conducted in December 2010. In particular, the other municipalities presented

testimony from Gary Higgins, a financial advisor hired by Wyckoff, Glen Rock,

and Midland Park.

      Higgins informed the Ridgewood Council that he had reviewed financial

data from the Utility going back to 2004. He told the Council that twenty-two

percent of the Utility's $12,600,000 budget for 2010 was comprised of indirect

costs allocated from Ridgewood to the Utility. Higgins then opined that most

of those allocated costs bore no relationship to the operations of the Utility.

Higgins also stated that there was no support for the reported deficits of the




                                                                       A-0363-17T2
                                       6
Utility. Thus, Higgins concluded that the 2010 rate increase was not necessary,

and that the proposed 2011 rate increase of five percent was "not legitimate."

      Representatives of the Utility and Ridgewood provided different

information to the Council in consideration of the 2011 Ordinance. In that

regard, Mai advised the Council that water consumption was below average and

that the 2010 rate increase had not generated the anticipated revenues. Mai also

opined that the five percent rate increase in 2011 was necessary to balance the

Utility's budget. Ultimately, the Ridgewood Council voted to adopt the 2011

Ordinance.

      A third water usage rate increase was adopted, effective in 2012. That

ordinance, Ordinance No. 3319, increased water usage rates by five percent,

from $4.20 per thousand gallons to $4.41 (the 2012 Ordinance). The 2012

Ordinance also provided:    "Each year thereafter [Ridgewood], at [its] sole

discretion shall increase water rates effective January 1 of that year, in an

amount not to exceed 3%." Accordingly, water usage rates were increased in

2013 and 2014 by three percent each year. Thus, between 2010 and 2014, the

water usage rates charged by the Utility increased by approximately thirty-seven

percent.




                                                                        A-0363-17T2
                                       7
      On February 1, 2010, a month after the 2010 Ordinance became effective,

Wyckoff filed a proposed class action complaint in lieu of prerogative writs

challenging the 2010 Ordinance. The complaint sought to declare the 2010

Ordinance invalid and requested damages for all water charges improperly

assessed. In May 2011, the case was certified as a class action, in which

Wyckoff, Glen Rock, and Midland Park acted as class representatives for their

residents.

      In July 2012, plaintiffs filed an amended class action challenging the 2011

and 2012 Ordinances, in addition to the 2010 Ordinance. Plaintiffs alleged that

the ordinances were arbitrary, capricious, and unreasonable, violated statutory

mandates, and discriminated against class members in violation of the state and

federal constitutions.

      Among other things, plaintiffs claimed that the rate ordinances

Ridgewood adopted in 2010, 2011, and 2012 were inconsistent with N.J.S.A.

40A:31-10(a), which requires annual rental charges to be "uniform and equitable

for the same type and class of use," and violated N.J.S.A. 40A:31-10(c), which

limits the type of costs that can be included in establishing water rates. Plaintiffs

claimed that the water rates established in the three ordinances improperly

permitted the Utility to include millions of dollars of Ridgewood's municipal


                                                                             A-0363-17T2
                                         8
operating expenses, such as the cost of providing health insurance to non-Utility

employees, police department salaries and expenses, fire department salaries

and expenses, and a significant portion of the fees charged by Ridgewood's

attorney. Plaintiffs also claimed that the net effect of those improper allocations

of expenses created a de facto lack of uniformity between the rates charged to

Ridgewood residents and those charged to non-residents. Plaintiffs sought a

declaratory judgment that the ordinances were invalid, an injunction preventing

enforcement of the ordinances, refunds of the increases in water charges paid

under the ordinances, compensatory damages, and attorney's fees.

      Ridgewood filed an answer and counterclaim. The counterclaim asserted

that if Ridgewood was required to "recast the . . . Utility budget[s]," it would

"make appropriate adjustments to its rates" and would seek to recoup any

shortfall in the rates charged to the plaintiffs' class of ratepayers.

      Thereafter, the parties engaged in discovery. In 2013, plaintiffs and

defendant filed cross-motions for summary judgment. On December 27, 2013,

the trial court denied both motions for summary judgment and, instead, the

court, sua sponte, transferred the case to the Board of Public Utilities (BPU) for

an administrative proceeding to establish the appropriate water usage rates for

the years in question.      We, however, granted leave to appeal the order


                                                                           A-0363-17T2
                                          9
transferring the matter to the BPU, reversed, and remanded the case to the trial

court. Twp. of Wyckoff v. Vill. of Ridgewood, No. A-2703-13 (App. Div. July

15, 2015).

      Following the remand, the trial court considered the substance of the

summary judgment motions and denied both motions. The trial court then

conducted a fourteen-day bench trial in late 2016 and early 2017. At trial,

plaintiffs called six witnesses: Frank Moritz, the Director of the Utility from

1991 to 2015; Dorothy Stikna, the Chief Financial Officer of Ridgewood from

2004 to 2010; Mai; Katie Chen, a Principal Accountant for Ridgewood from

2005 to 2012; Stephen Sanzari, the Treasurer of Ridgewood; and Higgins.

Defendant called three witnesses: David Scheibner, the Business Manager for

the Utility; James Ten Hoeve, the Manager of Ridgewood from 2003 to 2009;

and Steven Wielkotz, a financial expert.

      Based on the testimony from the various witnesses and the documents and

exhibits that were introduced into evidence, the trial court made extensive

findings of facts. The court also made credibility findings, often crediting some

of a particular witness's testimony, while not accepting other testimony from

that same witness.




                                                                         A-0363-17T2
                                      10
         The trial court found that Ridgewood did not have a proper factual

foundation to support the rate increases in the 2010, 2011, and 2012 Ordinances.

In that regard, the court found that plaintiffs, primarily through the testimony of

Higgins, established that some of the indirect expenses allocated to the Utility

were unreasonable. Specifically, the court found that Ridgewood had based its

allocation of indirect expenses on a study conducted in 2003, but no new or

recent study or reconciliation had been conducted. The trial court also made a

number of other specific factual findings supporting its overall finding that

Ridgewood did not have a reliable foundation for increasing the water usage

rates.

         In that regard, the court found (1) the water rate increases were made when

Ridgewood was facing difficult financial times, and one of the ways that

Ridgewood considered reducing its expenses was by allocating certain of its

costs to the Utility; (2) no reliable financial data supported the reported and

projected deficits at the Utility; (3) there had been a high turnover of senior

personnel at the Utility and Ridgewood, which contributed to poor financial

reporting, reviews, and projections; (4) the costs allocated to the Utility in 2010

through 2012 were not verified or based on reliable financial data; (5) the Mai

report did not independently review costs and the projected water consumption


                                                                            A-0363-17T2
                                         11
was flawed; thus, that report, which the Ridgewood Council relied upon in

enacting the 2010 Ordinance, was not reliable; and (6) the water usage rate

comparisons presented to the Ridgewood Council in connection with the 2010

Ordinance were "not demonstrated to be an accepted competent methodology

for establishing a rate structure."

      The trial court also found, however, that other indirect expenses were

reasonably allocated to the Utility. Thus, the trial court accepted some of

Higgins's testimony and opinions, but rejected other portions. In particular, the

trial court rejected Higgins's "all or nothing" approach of disallowing all indirect

costs allocated to the Utility. The court also rejected Higgins's opinion as to the

amount of damages due to plaintiffs. In contrast, the trial court accepted the

testimony of defendant's expert, Wielkotz, to the extent that Wielkotz opined

that some rate increases were necessary and that plaintiffs were not entitled to a

complete refund of all the rate increases.

      Based on its factual findings, the trial court then analyzed the legal

arguments presented by the parties. The trial court first addressed defendant's

argument that plaintiffs' challenges to the ordinances were untimely under Rule

4:69-6(a). That rule requires prerogative writ actions to be filed within forty-

five days of the action sought to be challenged. The court reasoned that it was


                                                                            A-0363-17T2
                                        12
in the interest of justice to enlarge the forty-five-day time limit, as allowed under

the rule.

      The trial court then turned to the substance of the case, and determined

that plaintiffs had demonstrated that the 2010, 2011, and 2012 Ordinances were

arbitrary, capricious, and unreasonable because they were adopted without a

factual foundation substantiating the need for rate increases. The court also

found that the rate increases were inconsistent with N.J.S.A. 40A:31-10(c).

      In striking down the 2012 Ordinance, the trial court also struck down the

provision that allowed the Utility to increase the rates by three percent each year

in 2013 and 2014. Relying on N.J.S.A. 40A:31-10(c), the trial court held that

Ridgewood had to pass an ordinance, based on a proper record, to implement

future rate increases. The court reasoned that the Water Supply Act precluded

Ridgewood from authorizing automatic rate increases.

      Turning to damages, the court found that plaintiffs had not established a

specific amount of their alleged damages. In that regard, the trial court found

that plaintiffs had not presented evidence that allowed the court to make

appropriate allocations and reimbursement computations. Consequently, the

trial court concluded that a remand to the Ridgewood Council was necessary so

the Council could determine the appropriate rate structure. The court direc ted


                                                                             A-0363-17T2
                                        13
that the record be supplemented on remand so that revenues and direct costs

could be reviewed and substantiated by the Ridgewood Council.

      The court then ordered that a refund be "distributed to plaintiffs, based on

the difference between the rate charged and the appropriate rate[s] determined

[by the Ridgewood Council] on remand." The trial court retained jurisdiction to

further review the matter as necessary.

      Next, the trial court dismissed defendant's counterclaim, holding that

Ridgewood could not retroactively transfer surpluses from the Utility. The court

found, however, that Ridgewood was permitted to authorize the annual transfer

of an available surplus in an amount not to exceed five percent of the Utility's

costs of operation. The court further instructed that any surplus transferred

"must be authorized and included in the local budget, in accordance with

statutory criteria, and same should be adopted by ordinance." It found that

"[t]aking an automatic cumulative 5% surplus transfer [was] not authorized by

statute."

      Finally, the court found that "the circumstances in this matter [did not]

dictate the equitable allowance of litigation costs and attorney's fees." The court

noted that the residential ratepayers of Wyckoff, Glen Rock, and Midland Park

had an interest in correctly establishing the water rates.


                                                                           A-0363-17T2
                                       14
         The court embodied its final rulings in a judgment entered on July 20,

2017. That judgment (1) invalidated the 2010, 2011, and 2012 Ordinances; (2)

remanded the matter to the Ridgewood Council to conduct a hearing to

recalculate and establish the rates; and (3) ordered refunds to plaintiffs of the

difference between the rates charged and the appropriate rates determined by the

Ridgewood Council on remand.           The court supported its judgment with a

thorough, written opinion.

         Plaintiffs moved for reconsideration. The trial court, however, denied that

motion in an order entered on September 1, 2017. Thereafter, plaintiffs appealed

and defendant cross-appealed. Plaintiffs also moved for a stay of the remand

proceedings pending appeal. That motion was denied both by the trial court and

by us.

                                          II.

         On appeal, plaintiffs make three primary arguments, with numerous

related sub-arguments.       Plaintiffs contend that the trial court erred by (1)

remanding the issue of setting appropriate water usage rates and not making a

ruling and award of damages to the class; (2) failing to award just over $3.6




                                                                            A-0363-17T2
                                         15
million in damages to plaintiffs for the improper transfer of surpluses from the

Utility to Ridgewood; and (3) not awarding plaintiffs attorney's fees. 1

      In its cross-appeal, defendant argues that the trial court erred in (1) ruling

that the three ordinances were arbitrary, capricious, and unreasonable; (2)

finding that the water usage rate comparisons to surrounding communities were

not a proper consideration in establishing water rate increases; (3) making

certain findings that were against the weight of the evidence; (4) capping the

annual transfer of the Utility's surplus at five percent of its budget; and (5) not

finding that plaintiffs' complaint was time-barred.

      Comparing the issues raised on the appeal and cross-appeal, and

synthesizing some of those issues, we are presented with five primary issues.

The issues are whether the trial court erred by (1) not finding that plaintiffs'

challenge to the ordinances was time-barred; (2) invalidating the three

ordinances; (3) remanding the matter to the Ridgewood Council to set


1
   In their reply brief, plaintiffs contended that the trial court also erred by
allowing defendant's expert to testify to opinions that had not been included in
his report. That issue was not included in plaintiffs' notice of appeal or as an
argument in their initial brief on appeal. Instead, plaintiffs referenced the issue
in the statement of facts in their initial brief and first raised the issue as an
argument in their reply brief. Because "[i]t is improper to introduce new issues
in a reply brief," we decline to consider this argument. In re Bell Atl.-N.J., Inc.,
342 N.J. Super. 439, 442 (App. Div. 2001). Moreover, we are not persuaded by
this argument.
                                                                            A-0363-17T2
                                        16
appropriate water usage rates; (4) ruling that surpluses could be transferred from

the Utility to Ridgewood, but capping the annual surplus transfer; and (5) not

awarding plaintiffs attorney's fees.

      Initially, we identify our standard of review. Municipal actions enjoy a

presumption of validity. Cona v. Twp. of Washington, 456 N.J. Super. 197, 215

(App. Div. 2018) (quoting State v. Clarksburg Inn, 375 N.J. Super. 624, 632

(App. Div. 2005)). Accordingly, courts have a "limited role . . . in reviewing

municipal rates for utility services." Meglino v. Twp. Comm. of Eagleswood,

103 N.J. 144, 152 (1986). "An ordinance establishing [such] rates will be upset

only if patently unreasonable." New Providence Apartments Co. v. Mayor &

Council of New Providence, 423 N.J. Super. 210, 216 (App. Div. 2011)

(alteration in original) (quoting Meglino, 103 N.J. at 152). The party seeking to

challenge an ordinance has the burden to establish that the ordinance is either

invalid, or that it is arbitrary, capricious, or unreasonable. Timber Glen Phase

III, LLC v. Twp. of Hamilton, 441 N.J. Super. 514, 523-24 (App. Div. 2015).

Nevertheless, when a municipal utility supplies water to non-residents, a court

should strictly construe the enabling legislation to protect non-resident

customers. See Mayor & Mun. Council of Clifton v. Passaic Valley Water

Comm'n, 115 N.J. 126, 137-38 (1989).


                                                                          A-0363-17T2
                                       17
      Here, the parties engaged in a fourteen-day trial, where they presented

evidence beyond the record developed before the Ridgewood Council. The trial

court then made extensive findings of facts and conclusions of law. "Final

determinations made by [a] trial court sitting in a non-jury case are subject to a

limited and well-established scope of review." City Council of Orange Twp. v.

Edwards, 455 N.J. Super. 261, 271 (App. Div. 2018) (quoting D'Agostino v.

Maldonado, 216 N.J. 168, 182 (2013)). We will not "disturb the factual findings

of the trial court 'unless we are convinced that they are so manifestly

unsupported by[,] or inconsistent with[,] the competent, relevant[,] and

reasonably credible evidence as to offend the interests of justice.'" Id. at 272

(alterations in original) (quoting D'Agostino, 216 N.J. at 182). A trial court's

credibility determinations are also accorded deference because the court "'hears

the case, sees and observes the witnesses, and hears them testify,' affording it 'a

better perspective than a reviewing court in evaluating the veracity of a

witness.'" Ibid. (quoting Gnall v. Gnall, 222 N.J. 414, 428 (2015)). "To the

extent that the trial court interprets the law and the legal consequences that flow

from established facts, we review its conclusions de novo." Motorworld, Inc. v.

Benkendorf, 228 N.J. 311, 329 (2017) (first citing D'Agostino, 216 N.J. at 182;




                                                                           A-0363-17T2
                                       18
then citing Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366,

378 (1995)).

      A.    Whether Plaintiffs' Complaint Was Time-Barred

      Plaintiffs brought an action in lieu of prerogative writs. Rule 4:69-6(a)

states: "No action in lieu of prerogative writs shall be commenced later than 45

days after the accrual of the right to the review, hearing or relief claimed[.]"

Accord Save Camden Pub. Schs. v. Camden City Bd. of Educ., 454 N.J. Super.

478, 489 (App. Div. 2018) (quoting R. 4:69-6(a)). This rule is "aimed at those

who slumber on their rights." Hopewell Valley Citizens' Grp., Inc. v. Berwind

Prop. Grp. Dev. Co., 204 N.J. 569, 579 (2011) (quoting Schack v. Trimble, 28

N.J. 40, 49 (1958)).

      Rule 4:69-6(a) does not define when actions in lieu of prerogative writs

accrue, therefore, questions of accrual are left to substantive law. Harrison

Redevelopment Agency v. DeRose, 398 N.J. Super. 361, 401 (App. Div. 2008).

Substantive law establishes that a cause of action pursuant to Rule 4:69-6

challenging the actions of a municipal government accrues on the date that the

actions are adopted. See Concerned Citizens of Princeton, Inc. v. Mayor &

Council of Princeton, 370 N.J. Super. 429, 446-47 (App. Div. 2004).




                                                                        A-0363-17T2
                                      19
      Here, plaintiffs challenge the water usage rate increases implemented in

the 2010, 2011, and 2012 Ordinances. The 2010 Ordinance was adopted on

December 14, 2009, and became effective on January 1, 2010. Plaintiffs filed

their initial action on February 1, 2010. Thus, that action was timely.

      Thereafter, plaintiffs amended the complaint to challenge the 2011 and

2012 Ordinances after those ordinances were adopted. Furthermore, a fair and

plain reading of plaintiffs' original complaint establishes that plaintiffs would

be challenging any future rate increases. Accordingly, the amended complaint

was also timely.

      Defendant argues that although the complaint challenges the 2010, 2011,

and 2012 Ordinances, plaintiffs base that challenge on contentions that the cost

allocations that occurred between 2004 and 2009 were improper and without

factual bases.     Consequently, defendant argues that plaintiffs are really

challenging the allocation of expenses between 2004 and 2009. Moreover,

defendant contends that in 2004, the New Jersey Department of Community

Affairs, Local Finance Board approved Ridgewood's water usage rate increase,

and plaintiffs did not file a timely challenge to that administrative action.

      Defendant's arguments concerning the time-bar issue are not based on a

fair or accurate reading of plaintiffs' complaint. Plaintiffs are not challenging


                                                                           A-0363-17T2
                                       20
the rate increase that was implemented in 2004. Instead, plaintiffs challenge

three ordinances that were adopted between December 2009 and June 2012.

That plaintiffs argue that the rate increases are based on improper cost

allocations does not convert their action into a challenge to the Utility's or

Ridgewood's budgets for years 2004 through 2009. In short, plaintiffs timely

filed their complaint and the trial court did not err in denying defendant's

motions to dismiss the complaint as time-barred.

      B.     Whether the Three Ordinances Were Invalid

      As previously noted, Ridgewood owns and operates the Utility under the

authority granted to it in the Water Supply Act. The Water Supply Act allows

municipalities, such as Ridgewood, to "prescribe and, from time to time, alter

rates or rentals to be charged to users of water supply services." N.J.S.A.

40A:31-10(a). The rates must be "uniform and equitable for the same type and

class of use or service of the facilities[.]" Ibid.

      In setting rates, a municipality

             shall establish a rate structure that allows . . . [it] to:

                   (1) Recover all costs of acquisition,
                   construction or operation, including the
                   costs of raw materials, administration, real
                   or personal property, maintenance, taxes,
                   debt service charges, fees and an amount
                   equal to any operating budget deficit

                                                                           A-0363-17T2
                                         21
                  occurring in the immediately preceding
                  fiscal year;

                  (2) Establish a surplus in an amount
                  sufficient to provide for the reasonable
                  anticipation of any contingency that may
                  affect the operation of the utility, and, at
                  the discretion of the [municipality], allow
                  for the transfer of moneys from the budget
                  for the water supply facilities to the local
                  budget in accordance with [N.J.S.A.
                  40A:4-35.1].

                  [N.J.S.A. 40A:31-10(c).]

      The Utility is subject to the "jurisdiction, regulation and control" of the

BPU because it "suppl[ied] water to more than 1,000 billed customers within

another local unit[.]" L. 1989, c. 109, § 1; N.J.S.A. 40A:31-23(d)(1). See also

L. 1975 c. 184, § 1. Effective January 5, 2006, that provision of the Water

Supply Act was amended to exempt municipalities from the BPU's rate-setting

jurisdiction "whenever any supplying local unit or units charge the same rates

or rentals to the billed customers outside of the supplying local unit or units as

are charged to customers within the supplying local unit or units[.]" L. 2005, c.

267, § 1; N.J.S.A. 40A:31-23(e). The Utility continued to be subject to the

jurisdiction of the BPU for service and reliability. N.J.S.A. 40A:31-23(f).

      Instead of being subject to the BPU's rate-setting jurisdiction,

municipalities must authorize rate increases by adopting an ordinance. N.J.S.A.

                                                                          A-0363-17T2
                                       22
40A:31-23(e).    By requiring an ordinance, the Legislature ensured that

municipal water usage rate increases would be subject to the normal procedures

and notice requirements governing ordinances. Accordingly, the municipality

must give advanced notice of a proposed rate increase and hold a public hearing

before adopting the ordinance implementing the rate increase. Ibid. See also

N.J.S.A. 40:49-2 (detailing procedures for passing municipal ordinances);

N.J.S.A. 10:4-9 (requiring public notice prior to all meetings of public bodies).

      The Water Supply Act also requires that the rate increases are to be based

on reliable financial information. See N.J.S.A. 40A:31-10(c). In that regard,

N.J.S.A. 40A:31-10(c) identifies specific "costs" that can be recovered through

water usage rates. Ibid. See also N.J.S.A. 40A:31-3(b) (defining "cost").

      Here, the trial court found that Ridgewood did not have a reliable factual

basis for the rate increases it implemented in the 2010, 2011, and 2012

Ordinances. The court made that finding based on the extensive evidence

presented during the trial. The court also supported that overall finding by

making a number of specific factual findings. Moreover, those factual findings

were based on credibility determinations that the trial court made regarding the

testimony provided by the nine witnesses who appeared at trial.




                                                                         A-0363-17T2
                                      23
      The principal factual findings by the trial court included findings that (1)

Ridgewood did not establish whether and in what amount the Utility had

operating deficits, and (2) Ridgewood used unreliable revenue projections.

      To support the rate increases in the 2010 Ordinance, Ridgewood relied on

testimony from Moritz and Mai. The trial court found that neither Moritz nor

Mai properly accounted for the substantial indirect costs that were allocated to

the Utility. The court also found that Ridgewood had not conducted a reliable

examination of the Utility's deficits and indirect costs. Thus, the court found

that the method by which the Utility's deficits were determined "was not credibly

established" and the financial information provided to the Ridgewood Council

was "question[able]." The trial court also found that the information provided

to the Ridgewood Council included unreliable revenue projections because there

was no rate study conducted to support the rate increases.

      The trial court made similar findings with regard to the rate increases

implemented in the 2011 and 2012 Ordinances. Again, the court found that

those increases were not supported by reliable financial information or studies.

Moreover, the court found that in 2011 and thereafter, the Ridgewood Council

had been advised that there were significant concerns about the reliability of the




                                                                          A-0363-17T2
                                       24
cost allocations, the Utility's deficits, and whether any rate increase was

warranted.

         All of the trial court's factual findings are amply supported by the evidence

presented at the trial. Those findings are also supported by the court's credibility

determinations. We discern no basis to reject any of the principal factual

findings made by the trial court.

         Applying the trial court's factual findings to the law, we also agree with

the legal conclusions the trial court reached. Specifically, we agree that the rate

increases implemented in the 2010, 2011, and 2012 Ordinances were arbitrary,

capricious, and unreasonable because they lacked an adequate factual basis. As

previously noted, the Water Supply Act requires rates to be based on specific

costs.     See N.J.S.A. 40A:31-10(c)(1).       Here, the evidence established that

Ridgewood did not have accurate or reliable financial reports or data

establishing the costs of the Utility and whether and in what amount the Utility

had deficits.

         Defendant makes three primary arguments in challenging the trial court's

findings that the three ordinances were invalid. First, defendant contends that

no one, including plaintiffs, objected to the 2010 Ordinance. Defendant then

goes on to argue that the Council relied on information provided by the Utility


                                                                              A-0363-17T2
                                          25
and senior Ridgewood officials and that reliance was reasonable. We reject that

argument given the factual findings made by the trial court. The Ridgewood

Council was told that indirect costs allocated from Ridgewood comprised part

of the Utility's operating expenses.     The Council was also told that those

allocations were based on a study conducted in 2003, and no new study or

reconciliation had ever been performed. Given those facts, the Council had an

obligation to question the financial information provided to it to ensure that the

information was reliable. The trial court found the Council did not conduct that

due diligence and that finding is supported by credible evidence.

      Second, defendant contends that the trial court did not give appropriate

consideration to the water rate comparisons information that had been provided

to the Council. The Council had been told that rates from other communities

had been reviewed and that the proposed increase in 2010 would be in the middle

range of those other rates. The trial court correctly found that the comparisons,

in and of themselves, could not be the basis for a rate increase. The Water

Supply Act requires that rate increases be based on the actual costs of the Utility.

See N.J.S.A. 40A:31-10(c). The comparisons, however, do not focus on the

actual costs incurred by the Utility.




                                                                            A-0363-17T2
                                        26
      Finally, defendant takes issue with four specific factual findings made by

the trial court. Defendant argues that the trial court erred in finding that (1)

there was no support for the allocation of time and expenses of Utility employees

doing work for Ridgewood; (2) Ridgewood failed to establish that the Utility

had deficits; (3) there was no factual support for the allocation of the entire

salary of Moritz to the Utility; and (4) Mai had no reliable basis for his

projections of revenue and water consumption.

      Initially, we note that none of these factual findings, either individually or

in combination, undermine the trial court's primary factual finding that

Ridgewood lacked a reliable basis for establishing the rate increases in the three

ordinances. In addition, having reviewed the record, the trial court's factual

findings on all four of the challenged facts are supported by credible evidence

in the record.

      First, the trial court found Stikna, Ridgewood's former Chief Financial

Officer, to be credible when she testified that the allocations were never

reconciled in accordance with the 2003 study, and that the Utility was never

reimbursed by Ridgewood for its employees' work performed for the benefit of

Ridgewood. Second, although the Utility calculated a deficit, the trial court

determined that that deficit was not based on reliable data, as Mai testified that


                                                                            A-0363-17T2
                                       27
he did not perform a cost allocation study, but rather compiled data that was

"spoon fed" to him by Stikna and the finance department. Third, the trial court

found that the allocation of Moritz's entire salary to the Utility was not justified

because he testified that he spent an hour to an hour-and-one-half on work for

Ridgewood each day, and Stikna testified that indirect costs such as work

performed for Ridgewood were never reconciled or reviewed. Fourth, the court

found that Mai's predictions of revenue and water consumption for 2010 were

flawed because Mai testified that he used the lowest water consumption rates to

project water consumption for October, November, and December 2009, which

ultimately affected the projection for 2010.

      C.    The Remand to the Ridgewood Council

      Plaintiffs argue that the trial court erred in remanding the matter to the

Ridgewood Council to establish appropriate rates. They contend that they were

entitled to a refund of the difference between what the rates were in 2009 and

the invalid rate increases in the 2010, 2011, and 2012 Ordinances.            Thus,

plaintiffs seek a refund of the approximately thirty-seven percent increase in

rates put into effect beginning January 1, 2010. That is, an approximately

twenty-one percent increase in 2010, a five percent increase in 2011, a five

percent increase in 2012, a three percent increase in 2013, and a three percent


                                                                            A-0363-17T2
                                        28
increase in 2014. Plaintiffs assert that they submitted evidence, through their

expert Higgins, to show that their damages as of July 31, 2016, were

$13,834,324. We disagree.

      Ridgewood was authorized by the Water Supply Act to set appropriate

rates for the Utility. See N.J.S.A. 40A:31-10(a). The trial court found that

Ridgewood did not have reliable financial information to properly set the

increased rates that it implemented under the three ordinances. In that regard,

the trial court found that much of the information provided to the Ridgewood

Council was unreliable, out of date, and not verified. Critically, the trial court

also found that since the last rate increase in 2004, the Utility had increased

expenses and had undertaken significant capital improvements. Therefore, the

trial court found that Ridgewood may well have the right to increase the rates,

but it needed to do it based on a proper factual record.

      Consequently, the trial court remanded the matter to the Ridgewood

Council to set appropriate rates for the periods after January 1, 2010. The trial

court also ruled that plaintiffs will be entitled to receive the difference between

what they paid for their water under the invalid ordinances and the appropriate

rates established on remand. Furthermore, the trial court retained jurisdiction to

review the proceedings on remand and the award of a refund.


                                                                           A-0363-17T2
                                       29
      The trial court had the legal authority and acted appropriately in

remanding the matter to the Ridgewood Council. It is well established that

claimants are entitled to a refund of excessive fees if those fees are determined

to be improper. See Automatic Merch. Council of N.J. v. Twp. of Edison, 102

N.J. 125, 130-31 (1986) (quoting In re Increase in Fees by N.J. State Bd. of

Dentistry, 84 N.J. 582, 587 (1980)). "[O]rdinarily the proper procedure is for

the agency [or municipality] to redetermine the fees in accordance with correct

principles and to refund the excess." Id. at 131 (citing State Bd. of Dentistry,

84 N.J. at 589-90). In other words, where a municipal action is authorized by

statute, but the municipality acts improperly, it can thereafter properly exercise

its authority under the statute to calculate a refund to those harmed by the

improper action. See id. at 130-32.

      For example, in Automatic Merchandising, our Supreme Court addressed

a situation where a municipality had imposed an excessive licensing fee for

vending machines.     See 102 N.J. at 127-28, 130.       The Court directed the

municipality to "reenact the fee schedule for the regulatory year in question and

[to] refund the balance to the claimants." Id. at 131. See also N.J. Builders

Ass'n v. Borough of Mendham, 263 N.J. Super. 88, 96 (App. Div. 1993) (finding

a municipality's failure "to use a proper method in calculating [a water


                                                                          A-0363-17T2
                                       30
connection] fee is neither a waiver nor a forfeiture of its right to collect a

reasonable connection fee"). In short, the trial court's remand was in accordance

with established authority and we discern no basis for reversing that remand.

      In challenging the trial court's remand, plaintiffs make four principal

arguments. First, they contend that the trial court erroneously conflated the

separate and distinct proofs for liability and damages. We disagree. The trial

court made detailed findings concerning the lack of a proper factual basis for

the rate increases implemented in the 2010, 2011, and 2012 Ordinances. As

already discussed, however, the court also made detailed findings, which are

amply supported by the record, that the Utility had costs that may well justify

rate increases. Since the court was not provided with evidence that would allow

it to calculate those increases, the court was within its authority to remand the

matter to the Ridgewood Council for a proper determination of appropriate rates.

      Second, plaintiffs contend that our prior decision compelled the trial court

to make a calculation of plaintiffs' damages. Not so. The issue before us in our

prior decision was whether the trial court had erred in transferring the matter to

the BPU. The question whether the matter could be remanded to the Ridgewood

Council was not presented or determined by our prior decision. Accordingly,

we have not previously determined this issue.


                                                                          A-0363-17T2
                                       31
      Third, plaintiffs argue that New Jersey law provides that a refund is the

appropriate remedy. To support that position, plaintiffs cite to In re Increase in

Fees by New Jersey State Board of Dentistry, 84 N.J. 582, 587 (1980); Riker v.

Mayor & Aldermen of Jersey City, 38 N.J.L. 225 (Sup. Ct. 1876); and Mayor &

Municipal Council of Clifton v. Passaic Valley Water Commission, 115 N.J. 126

(1989).    These three cases, however, either support a remand or are

distinguishable from the facts at issue here.

      Specifically, the decisions in State Board of Dentistry and Riker support

the remand and refund ordered by the trial court in this case. In State Board of

Dentistry, after this court invalidated a license and registration fee schedule set

by the New Jersey State Board of Dentistry, and after that Board calculated a

new lawful fee schedule, the Supreme Court ruled that the Board did not have a

"right" to keep the excess fees charged. 84 N.J. at 587 (quoting Riker, 38 N.J.L.

at 228). Thus, the Court "remand[ed] the case to the State Board of Dentistry

for calculation and distribution of the proper refund[.]" Id. at 590.

      Similarly, in Riker, the plaintiff sought a refund of the difference between

an invalidated sewer assessment and a recalculated assessment. 38 N.J.L. at

225, 227. In Riker, the Court held the plaintiff was entitled to the refund based

on the commissioners' recalculated assessment.          38 N.J.L. at 225, 228.


                                                                           A-0363-17T2
                                       32
Accordingly, both State Board of Dentistry and Riker support the calculation of

damages based on the difference between the unlawful rate actually charged and

the municipality's recalculated lawful rate based on actual Utility costs.

      Next, the facts underlying the Court's decision in Clifton are

distinguishable from the instant matter. In Clifton, the Court determined that a

multijurisdictional water utility's distribution of funds to its owner -cities was

invalid as there was no legislative authorization for such distribution of funds .

115 N.J. at 136, 141, 147. Therefore, the Court ordered the full amounts

distributed to be refunded to the water utility, because the utility had no statutory

right to make the distributions. 115 N.J. at 141, 145-47. Here, in contrast, the

Utility has a statutory right to set rates, see N.J.S.A. 40A:31-10(a), but the trial

court determined that the rates set by the Utility were invalid because they were

arbitrary, capricious, and unreasonable. Accordingly, a remand is appropriate

to allow the Utility to validly exercise its rate-setting authority. Cf. Twp. of

Middletown v. Simon, 193 N.J. 228, 251 (2008) (acknowledging "a distinction

between an act utterly beyond the jurisdiction of a municipal corporation and

the irregular exercise of a basic power under the legislative grant in matters not

in   themselves    jurisdictional"   (quoting   Middletown      Twp.    Policemen's




                                                                             A-0363-17T2
                                        33
Benevolent Ass'n Local No. 124 v. Twp. of Middletown, 162 N.J. 361, 368

(2000))).

      Finally, plaintiffs assert that their expert set forth the calculation of

damages, which was unchallenged at trial. The specific findings of fact made

by the trial court do not support that argument. As previously noted, the trial

court rejected plaintiffs' expert's position on damages, a rejection amply

supported by substantial, credible evidence.

      D.    The Surpluses

      The parties make two arguments concerning the surpluses the Utility

transferred to Ridgewood. First, plaintiffs argue the trial court erred in failing

to award them just over $3.6 million as damages for the alleged improper

transfer of surpluses from 2011 to 2016. Second, defendant contends that not

only were surplus transfers permitted, but the trial court erred in capping future

annual surplus transfers at five percent of the Utility's cost of operation.

      Whether Ridgewood is permitted to transfer surpluses from the Utility

involves the interpretation of several statutory provisions, specifically, N.J.S.A.

40A:31-10, N.J.S.A. 40A:31-23, and N.J.S.A. 40A:4-35.1. Accordingly, our

review of these issues is de novo. Saccone v. Bd. of Trs. of Police & Firemen's

Ret. Sys., 219 N.J. 369, 380 (2014) (first citing McGovern v. Rutgers, 211 N.J.


                                                                               A-0363-17T2
                                       34
94, 107-08 (2012); then citing Russo v. Bd. of Trs., Police & Firemen's Ret.

Sys., 206 N.J. 14, 27 (2011); and then citing State v. Gandhi, 201 N.J. 161, 176

(2010)).

      When interpreting a statute, the primary goal is to give effect to the intent

of the Legislature. State v. Lenihan, 219 N.J. 251, 262 (2014) (quoting State v.

Hudson, 209 N.J. 513, 529 (2012)). "[T]he best indicator of that intent is the

plain language chosen by the Legislature." Ibid. (alteration in original) (quoting

Gandhi, 201 N.J. at 176). "[W]ords and phrases shall be read and construed with

their context, and shall, unless inconsistent with the manifest intent of the

[L]egislature or unless another or different meaning is expressly indicated, be

given their generally accepted meaning, according to the approved usage of the

language." State v. Hupka, 203 N.J. 222, 232 (2010) (quoting N.J.S.A. 1:1-1).

"If the statute is clear and unambiguous on its face and admits of only one

interpretation, [a court] need delve no deeper than the act's literal terms to divine

the Legislature's intent." State v. Butler, 89 N.J. 220, 226 (1982).

      The Water Supply Act permits municipalities to establish surpluses for a

water utility for anticipated contingencies. N.J.S.A. 40A:31-10(c)(2). It also

allows, in certain circumstances, municipalities to transfer some of that surplus

to its local budget. Ibid. Specifically, the Water Supply Act states:


                                                                             A-0363-17T2
                                        35
            In fixing rates . . . the local unit . . . [can] . . .
            [e]stablish a surplus in an amount sufficient to provide
            for the reasonable anticipation of any contingency that
            may affect the operation of the utility, and, at the
            discretion of the local unit or units, allow for the
            transfer of moneys from the budget for the water supply
            facilities to the local budget in accordance with
            [N.J.S.A. 40A:4-35.1].

            [N.J.S.A. 40A:31-10(c)(2).]

      In turn, N.J.S.A. 40A:4-35.1 provides that a surplus not exceeding five

percent of the annual cost of the Utility's operation may be transferred to the

municipality when the Utility is "regulated by the [BPU] pursuant to subsection

d. of N.J.S.[A.] 40A:31-23[.]" Subsection (d) of N.J.S.A. 40A:31-23 provides

that "a local unit or local units owning and operating water supply

facilities . . . which supply water to more than 1,000 billed customers within

another local unit, shall be subject to the jurisdiction, regulation and control of

the [BPU][.]"

      Paragraph (e) of N.J.S.A. 40A:31-23 exempts certain utilities from the

BPU's rate-setting jurisdiction. In that regard, subsection (e) provides that:

            [W]henever any supplying local unit or units charge the
            same rates or rentals to the billed customers outside of
            the supplying local unit or units as are charged to
            customers within the supplying local unit or units, the
            local unit or units owning and operating water supply
            facilities . . . shall, with respect to the rates or rentals to
            be charged to users of water supply services, be exempt

                                                                              A-0363-17T2
                                         36
                from the jurisdiction, regulation and control of the
                [BPU].

                [N.J.S.A. 40A:31-23(e).]

      N.J.S.A. 40A:31-23(f) provides that "[n]othing in subsection e. of this

section shall be construed to exempt any supplying local unit or units supplying

billed customers outside of the supplying local unit or units, from the

jurisdiction, regulation and control of the [BPU], with respect to service and

reliability."

      In applying the language used by the Legislature, these statutory

provisions authorize a municipality, such as Ridgewood, to transfer surplus from

its utility, but cap the annual transfer at five percent of the utility's costs of

operation. First, N.J.S.A. 40A:31-10(c)(2) authorizes a surplus and a transfer of

some of that surplus "in accordance with" N.J.S.A. 40A:4-35.1.           Second,

N.J.S.A. 40A:4-35.1 applies to any municipality supplying a utility service that

is regulated by the BPU pursuant to subsection (d) of N.J.S.A. 40A:31-23.

Third, N.J.S.A. 40A:31-23(d) gives the BPU jurisdiction over a utility owned

by a municipality when that utility "suppl[ies] water to more than 1,000 billed

customers within another local unit[.]" Fourth, N.J.S.A. 40A:31-23(e) exempts

from the BPU's jurisdiction the "rates" charged by such utilities.       Finally,



                                                                          A-0363-17T2
                                           37
N.J.S.A. 40A:31-23(f) clarifies that a utility remains subject to the BPU's

jurisdiction with regard to "service and reliability."

      In summary, while subsection (e) exempts rate setting from the BPU's

jurisdiction, subsection (f) clarifies that the BPU retains jurisdiction over such

utilities for other purposes.   Therefore, N.J.S.A. 40A:4-35.1 applies to the

Utility because the Utility is still subject to the BPU's jurisdiction for service

and reliability.

      Both plaintiffs and Ridgewood argue that N.J.S.A. 40A:4-35.1 does not

apply because the Utility's rates are not subject to regulation by the BPU.

Plaintiffs then argue that there is no statutory authority permitting a transfer of

any surplus. Relying on Clifton, plaintiffs go on to argue that all transfers must

be vacated and the monies returned to the Utility. They also assert that the

$3,641,649 transferred between 2011 and 2016 should be awarded to them as

damages.

      Ridgewood also argues that N.J.S.A. 40A:4-35.1 does not apply, asserting

that N.J.S.A. 40A:4-35 governs. That statutory section provides:

             If, in any year as a result of the operation of such
             utility . . . , there shall be a surplus, . . . then such
             surplus, when authorized by the . . . body controlling




                                                                           A-0363-17T2
                                        38
            the utility . . . , may be included in the budget as an item
            of miscellaneous revenue[.]

            [N.J.S.A. 40A:4-35.]

      We disagree with both parties' positions.          As already summarized,

N.J.S.A. 40A:4-35.1 applies. The Legislature withdrew the BPU's jurisdiction

only over "rates . . . to be charged," but left such utilities subject to the BPU's

jurisdiction for other purposes, such as "service and reliability."        N.J.S.A.

40A:31-23(e) and -23(f).

      Moreover, to accept plaintiffs' argument would ignore N.J.S.A 40A:31-

10(c)(2), which expressly authorizes surpluses.        Because there is statutory

authority for surpluses and the transfer of some portion of the surplus , Clifton

does not control. Furthermore, to accept defendant's position would conflict

with Clifton, which determined N.J.S.A. 40A:4-35 does not apply to a municipal

utility that supplies water to customers outside the municipality. See 115 N.J.

at 145.

      E.    The Attorney's Fees

      Finally, plaintiffs argue that they are entitled to an award of attorney's fees

as the prevailing representatives of a class. In that regard, they contend that the

litigation resulted in a tangible benefit to all ratepayers because the rate

increases in the 2010, 2011, and 2012 Ordinances were invalidated.

                                                                             A-0363-17T2
                                        39
Accordingly, plaintiffs requested the trial court to order defendant to pay their

attorney's fees through a fund in court in accordance with Rules 4:32-2(h) and

4:42-9(a)(2).

      "[T]he prevailing party in litigation generally is not entitled to an award

of attorneys' fees." Henderson v. Camden Cty. Mun. Util. Auth., 176 N.J. 554,

564 (2003). There are, however, exceptions to that general rule. "One exception

to that rule is that attorneys' fees may be awarded from a 'fund in court.'" Ibid.

(quoting R. 4:42-9(a)(2)). Rule 4:32-2(h) states that in an action certified as a

class action, an application for attorney's fees may be made in accordance with

Rule 4:42-9. Rule 4:42-9, in turn, authorizes attorney's fees in eight instances,

including "[o]ut of a fund in court." R. 4:42-9(a)(2). Specifically, the fund-in-

court exception states:

            The court in its discretion may make an allowance out
            of such a fund, but no allowance shall be made as to
            issues triable of right by a jury. A fiduciary may make
            payments on account of fees for legal services rendered
            out of a fund entrusted to the fiduciary for
            administration, subject to approval and allowance or to
            disallowance by the court upon settlement of the
            account.

            [R. 4:42-9(a)(2).]

      The fund-in-court exception applies to "situations in which equitably

allowances should be made and can be made consistently with the policy of the

                                                                          A-0363-17T2
                                       40
rule that each litigant shall bear his [or her] own costs."          Sunset Beach

Amusement Co. v. Belk, 33 N.J. 162, 168 (1960). Such a situation exists "when

a party litigates a matter that produces a tangible economic benefit for a class of

persons that did not contribute to the cost of the litigation," making it "unfair to

saddle the full cost" of the litigation upon the plaintiff. Henderson, 176 N.J. at

564 (first citing Silverstein v. Shadow Lawn Sav. & Loan Ass'n, 51 N.J. 30, 45

(1968); then quoting Sunset Beach Amusement Co., 33 N.J. at 168).

      Whether the fund-in-court exception applies requires a two-step analysis.

Porreca v. City of Millville, 419 N.J. Super. 212, 227-28 (App. Div. 2011).

"First, the court must determine as a matter of law whether plaintiff is entitled

to seek an attorney fee award under the fund in court exception as articulated in

Henderson." Id. at 228. Second, if the court determines the plaintiff has met

the threshold, the court has discretion to make an award by considering "the

totality of the facts of the case." Ibid. We have explained that

            [t]he critical question in considering plaintiff's
            entitlement to request attorney's fees under this Rule is
            whether a fund in court was created as a result of
            [plaintiff's] litigation. There need not be recovery of a
            lump sum fund of money; it is sufficient if the fund is
            the subject matter of the litigation and is thus brought
            under the control of the court.

            [Ibid.]


                                                                            A-0363-17T2
                                        41
      Here, the trial court denied plaintiffs an award of attorney's fees. In

making that ruling, the trial court found that the circumstances of this matter did

not dictate the equitable allowance of attorney's fees. The trial court explained

that all ratepayers had an interest in correctly delineating water usage rates and

the circumstances of this case did not warrant an award of attorney's fees to the

plaintiffs.

      We discern no error in the trial court's decision not to award attorney's

fees. The trial court correctly recognized that plaintiffs had a legal basis for an

award of attorney's fees under the fund-in-court exception in Rule 4:42-9(a)(2).

The trial court, however, exercised its discretion and denied an award of

attorney's fees given the circumstances of this case. In particular, we note that

the ratepayers in Wyckoff, Glen Rock, and Midland Park effectively did

participate in the litigation through their municipalities because those

municipalities used public funds to pay their attorney's fees.

      Having reviewed all the arguments put forward on the appeal and cross-

appeal, we have rejected each of those arguments. To the extent that we did not

address specific sub-arguments, it is because we deem such arguments as not

warranting a discussion in a written opinion.         See Rule 2:11-3(e)(1)(E).

      Affirmed.


                                                                           A-0363-17T2
                                       42
