NEW JERSEY LAND TITLE ASSOCIATION VS. DANA RONE, COUNTY REGISTER OF THE COUNTY OF ESSEX (L-2077-17, HUDSON COUNTY AND STATEWIDE) ( 2019 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-5028-16T1
NEW JERSEY LAND TITLE
ASSOCIATION,
APPROVED FOR PUBLICATION
Plaintiff-Appellant,
February 11, 2019
v. APPELLATE DIVISION
DANA RONE, COUNTY REGISTER
OF THE COUNTY OF ESSEX,
Defendant-Respondent.
_________________________________
Argued December 4, 2018 – Decided February 11, 2019
Before Judges Yannotti, Rothstadt, and Gilson.
On appeal from Superior Court of New Jersey, Law
Division, Hudson County, Docket No. L-2077-17.
Edward C. Eastman argued the cause for appellant
(Davison, Eastman, Muñoz, Lederman & Paone, PA,
attorneys; Michael J. Fasano, on the briefs).
Thomas M. Bachman, Assistant County Counsel,
argued the cause for respondent (Courtney M.
Gaccione, Essex County Counsel, attorney; Thomas M.
Bachman and Sylvia Hall, Assistant County Counsel,
on the brief).
The opinion of the court was delivered by
GILSON, J.A.D.
The issue presented is whether a county register or clerk has the authority
to charge a "convenience fee" for the electronic filing of documents concerning
real property. The Legislature has prescribed the fees a county register or clerk
may charge for the filing of documents, and a convenience fee is not one of the
legislatively authorized fees. Accordingly, we hold that a county register or
clerk cannot impose such a fee. We therefore reverse a June 23, 2017 order
granting summary judgment to the Essex County Register of Deeds and
Mortgages (Essex Register) and dismissing the complaint of plaintiff, the New
Jersey Land Title Association (Association). We remand with direction that the
Association be granted partial summary judgment on its claim to enjoin,
prospectively, the Essex Register from collecting the convenience fee. On
remand, the trial court will also address the Association's claim for disgorgement
of the fees previously paid.
I.
Documents affecting real property, such as deeds, mortgages, and liens,
are filed in the county where the land is located. N.J.S.A. 46:26A-6(a). The
county recording officer is then responsible for recording, indexing , and
maintaining those documents. Ibid.; see also N.J.S.A. 46:1-1. The recording
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officer is either the register or, if the county does not have a register, the county
clerk. N.J.S.A. 40A:9-90.
Documents can be filed as paper documents or electronic documents. See
N.J.S.A. 46:26A-1(a). Effective May 1, 2017, all counties were required to offer
the option of filing documents electronically. See N.J.A.C. 15:3-9.3.
Accordingly, documents can be submitted in person, by mail, or electronically.
The Legislature has established the fees that a county recording officer
can charge, "for entering, filing, recording, registering, indexing, copying and
certifying copies" of documents that may be recorded. N.J.S.A. 46:26-1. The
authorized fees "shall be the fees prescribed and fixed by the title Fees and
Costs." Ibid. Title 22A, in turn, is the title that prescribes fees and costs.
Section 4-4.1 of Title 22A sets forth a specific, enumerated list of fees that can
be charged by county clerks and registers. N.J.S.A. 22A:4-4.1.
The Essex Register is responsible for recording and preserving documents
affecting real property in the municipalities in Essex County. See N.J.S.A.
46:26A-6(a); N.J.S.A. 46:1-1. The Essex Register began accepting
electronically-filed documents in 2006. To provide electronic filing, the Essex
Register entered into a shared servicing agreement to use a web-based document
management system. That system was originally developed for Monmouth
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County by a private vendor, Sunrise Systems, Inc. (Sunrise). Essex and at least
eight other counties now provide electronic filing through the system hosted by
Monmouth County.
To file a document electronically, the filer connects to an internet portal
and sends a scanned copy of the document to be recorded. The filer must either
have an escrow account or a bank account so that the filing fee can be withdrawn
as an electronic transfer.
The Essex Register incurs costs to accept electronic filing. Those costs
include monies paid to Monmouth County, which in turn pays Sunrise to
maintain, operate, and update the document management system. An officer for
the Essex Register has also certified that the office incurs additional personnel
and equipment expenses to approve, review, record, verify, and issue receipts
for electronically-filed documents.
When the Essex Register began accepting documents electronically in
2006, the Register did not charge a separate or additional fee for such a filing.
In 2016, however, the Essex County Board of Freeholders passed an ordinance
allowing the Essex Register to charge "a surcharge or convenience fee of
$3.00 . . . to offset the cost of electronic receipt transactions with respect to the
electronic filing of documents for recordation with the Essex County Register
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of Deeds & Mortgages paid for by credit card, debit card, automatic clearing
house ('ACH') or electronic funds transfer[.]" The Essex Register represents
that the $3 fee is designed to offset some of the additional costs incurred in
accepting electronically-filed documents. In that regard, an officer of the Essex
Register certified that in 2016, the office paid more than $24,700 to Monmouth
County for access to the web portal. The officer also certified that, as of April
2017, expenses associated with electronic filing exceeded the convenience fees
collected.
In May 2016, the Association filed a complaint in lieu of prerogative writs
against the Essex Register. The Association sought two forms of relief: (1) to
enjoin the Essex Register from charging the convenience fee; and (2) to compel
the Essex Register to disgorge and return all "wrongfully charged 'convenience
fee[s].'"
The Essex Register filed an answer and, thereafter, the parties engaged in
discovery. The Association then moved for partial summary judgment seeking
to declare the convenience fee unlawful and to permanently enjoin the Essex
Register from charging the fee. The Essex Register opposed that motion and
cross-moved for summary judgment in her favor. The matter was transferred to
Hudson County, where the trial court heard oral argument on the motions. On
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June 23, 2017, the court entered two orders: one order denied summary
judgment to the Association, and the second order granted summary judgment
to the Essex Register and dismissed with prejudice the Association's complaint.
The trial court explained the reasons for those rulings on the record on
June 23, 2017. It held that the convenience fee was authorized by the
Government Electronic Payment Acceptance Act (GEPAA), N.J.S.A. 40A:5-43
to -47, and its regulations, N.J.A.C. 5:30-9.1 to -9.11. The court also reasoned
that the convenience fee was consistent with the rules regarding
electronically-submitted documents affecting real property, N.J.A.C. 15:3-9.1
to -9.13. The Association now appeals the orders denying it summary judgment
and granting summary judgment to the Essex Register.
II.
The central issue is whether a county register or clerk can charge a
surcharge or convenience fee when a document is filed electronically. That is a
question of law because the fees permitted to be charged for filing documents
affecting real property are prescribed by statute. N.J.S.A. 46:26-1; N.J.S.A.
22A:4-4.1. Accordingly, our review of this issue is de novo. See Verry v.
Franklin Fire Dist. No. 1, 230 N.J. 285, 294 (2017) (citing Saccone v. Bd. of
Trs. of Police & Firemen's Ret. Sys., 219 N.J. 369, 380 (2014)).
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We start with the statutes authorizing fees for filing documents affecting
real property. That authority is set forth in two cross-referenced statutes:
N.J.S.A. 46:26-1 and N.J.S.A. 22A:4-4.1. N.J.S.A. 46:26-1 states that the
permitted fees are those fixed by the statute governing fees and costs:
The fees of the county recording officers and other
officers for entering, filing, recording, registering,
indexing, copying and certifying copies of all deeds and
instruments of the nature or description set forth in
section [46:26A-2] of this title, shall be the fees
prescribed and fixed by the title Fees and Costs. 1
The plain meaning of N.J.S.A. 46:26-1 is that the Legislature has
prescribed the fees that a county recording officer can charge for filing
documents. The authorized fees "shall be the fees prescribed and fixed by the
title Fees and Costs." N.J.S.A. 46:26-1. Title 22A, in turn, is the title that
prescribes fees and costs. N.J.S.A. 22A:1-1.1 to 5-1.
Section 4-4.1 of Title 22A sets forth a specific, enumerated list of fees
that can be charged by clerks or registers for filing documents affecting real
property. N.J.S.A. 22A:4-4.1. That enumerated list does not include a fee for
accepting an electronically-filed document. Instead, N.J.S.A. 22A:4-4.1
1
N.J.S.A. 46:26-1 references the documents set forth in N.J.S.A. 46:16-1.
N.J.S.A. 46:16-1, however, has been repealed and replaced with N.J.S.A.
46:26A-2. L. 2011, c. 217, §§ 1, 2.
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provides that for any document filed, the register or clerk, "shall charge" $30 for
the first page, $10 for each additional page, and $10 for each "rider, insertion,
addition, or any map, plat or sketch[.]" Ibid. N.J.S.A. 22A:4-4.1 goes on to list
charges for other filings and services, such as preparing and transmitting an
abstract of title or entering marginal notations. The statute, however, does not
authorize a fee for accepting an electronically-filed document.
The clear object of N.J.S.A. 22A:4-4.1 is to establish a uniform schedule
of fees to be charged by all county registers or clerks for the filing of documents
affecting real property. See Dugan v. Camden Cty. Clerk's Office, 376 N.J.
Super. 271, 277 (App. Div. 2005) (finding a similar object of N.J.S.A. 22A:2-29,
which establishes a uniform schedule of fees to be charged by county clerks for
rendering other services). In short, neither N.J.S.A. 46:26-1 nor N.J.S.A.
22A:4-4.1 allow a register or clerk to charge a surcharge or convenience fee for
accepting an electronically-filed document.
The Essex Register argues that the fees set forth in N.J.S.A. 22A:4-4.1 are
for the physical act of filing, recording, and entering paper documents. Thus,
the Register contends that the enumerated fees in N.J.S.A. 22A:4-4.1 do not
address the electronic processing of documents. We disagree.
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In 2012, the Legislature revised the statutes pertaining to the recording of
documents affecting real property to address, in part, electronic documents. L.
2011, c. 217; N.J.S.A. 46:26A-1 to 26C-3. At that same time, the Legislature
directed the Division of Archives and Records Management (DARM) 2 to adopt
regulations "to establish format and technical requirements for recorded
documents to foster state-wide uniformity in title recordation[.]" N.J.S.A.
46:26C-1; cf. N.J.A.C. 15:3-9.1 to -9.13 (regulations promulgated pursuant to
this directive). The Legislature also directed DARM to collect data and prepare
reports on the number of documents recorded and fees collected by all county
registers and clerks. N.J.S.A. 46:26C-3(a) to (c). Further, the Legislature
provided that, based on those reports, it will consider establishing standard per
document filing and recording fees for each type of document filed or recorded.
N.J.S.A. 46:26C-3(e). In that regard, the statute states:
Five years after the date of adoption of N.J.S.[A.]
46:26A-1 et al., the Legislature shall consider the
establishment of standard per document filing or
recording fees for each type of document which is filed
or recorded with a county recording officer. Standard
2
In 2012, the records management, records storage, imaging, and micrographic
functions of DARM were transferred to the Division of Revenue and Enterprise
Services in the Department of the Treasury pursuant to an intergovernmental
agreement. Currently-pending legislation proposes to transfer "all records
management functions, powers and duties" to the Department of the Treasury.
S. 2338 (2018).
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per document filing and recording fees shall be set so
that the per document fee is no less than the average fee
for the filing or recording of the document as set forth
in the final report required to be issued pursuant to
subsection c. of this section.
[Ibid.]
Moreover, the Legislature has provided a mechanism by which
technological upgrades are to be funded. In 1986, the Legislature enacted a new
section of Title 22A titled "Funds to upgrade services." L. 1985, c. 422, § 7; see
N.J.S.A. 22A:4-17.1. That section directed the county treasurer to return "$1.00
of each fee received for the recording, filing or cancelling of a document in the
office of the county clerk or register of deeds and mortgages" to be "used to
upgrade and modernize the services provided by their offices." L. 1985, c. 422,
§ 7. In 1990, this amount was increased to $2. L. 1989, c. 301, § 1; see N.J.S.A.
22A:4-17.1. In 2002, the Legislature enacted another section of Title 22A
requiring planning for the use of fee revenues, "which are dedicated to upgrading
and modernizing the services provided by the offices" including registers of
deeds. L. 2001, c. 370, § 13; N.J.S.A. 22A:2-51.1. Registers and county clerks,
as well as other county offices, were directed to create a "five-year capital plan
setting forth the capital purposes to which the . . . fee revenues are to be
applied[.]" N.J.S.A. 22A:2-51.1(a).
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These statutes demonstrate that the Legislature has explicitly addressed
both the fees to be charged to the public and the source of funding from which
registers of deeds are to draw if they seek to upgrade or modernize their services.
Accordingly, the Legislature has comprehensively preempted the field of filing
fees for documents affecting real property. The fees in N.J.S.A. 22A:4-4.1 are,
therefore, the comprehensive fees authorized by the Legislature for county
registers and clerks to perform their services as the county recording officer. If
a fee is not listed in N.J.S.A. 22A:4-4.1, it cannot be charged.
Moreover, neither the register nor the county can authorize a new fee for
these services. "When the Legislature has preempted a field by comprehensive
regulation, a [local] ordinance attempting to regulate the same field is void if
the [local] action adversely affects the legislative scheme." Plaza Joint Venture
v. City of Atlantic City, 174 N.J. Super. 231, 238 (App. Div. 1980) (citing Fair
Lawn Educ. Ass'n v. Fair Lawn Bd. of Educ., 79 N.J. 574, 586 (1979); Summer
v. Teaneck, 53 N.J. 548, 554 (1969)). Instead, the Legislature controls and
establishes the allowed fees for processing both paper and electronic documents.
That control by the Legislature ensures that the fees charged are uniform
statewide.
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III.
The Essex Register argues that her authority to charge a convenience fee
is found in N.J.S.A. 40A:5-45, and that statute's implementing regulations,
N.J.A.C. 5:30-9.1 to -9.11. The Essex Register also contends that the $3
convenience fee is consistent with the regulations regarding
electronically-submitted documents, N.J.A.C. 15:3-9.1 to -9.13. Alternatively,
the Essex Register contends that she should be allowed to collect the
convenience fee based on the doctrine of quantum meruit. We will address each
of these arguments in turn.
A. N.J.S.A. 40A:5-45 and Its Regulations
N.J.S.A. 40A:5-45 allows local government units to establish systems to
accept payment of fees and other obligations owed to the unit by credit card or
electronic fund transfers. Specifically, the statute provides:
Subject to the provisions of [N.J.S.A. 40A:5-47 and
N.J.S.A. 2B:1-5], a local unit may establish a card
payment system or electronic funds transfer system
upon passage of a resolution of the governing body.
The resolution shall specify those types of charges,
taxes, fees, assessments, fines, or other obligations
approved for card based or electronic funds transfer
payment, except that credit card payment shall not be
authorized for the payment of delinquent local unit
obligations or for the redemption of local unit liens.
[N.J.S.A. 40A:5-45.]
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That statutory provision is part of GEPAA, N.J.S.A. 40A:5-43 to -47.
GEPAA is a statute allowing for electronic payment of obligations owed to a
local government unit, such as a county register. GEPAA authorizes only one
type of assessment: charges related to accepting electronic payments. N.J.S.A.
40A:5-46. In that regard, section 5-46 of GEPAA states: "local units are
authorized to assess and collect service charges related to obligations owed to
or collected by the local unit when credit cards, debit cards or electronic funds
transfer systems are utilized." N.J.S.A. 40A:5-46. "Service charge" is defined
as "a fee charged by the Supreme Court, the Superior Court, Tax Court or local
unit in excess of the total obligation owed by a person or organization to offset
processing charges or discount fees for the use of a card payment system or an
electronic funds transfer system." N.J.S.A. 40A:5-44.
The Essex Register argues that the word "obligation" in N.J.S.A.
40A:5-44 should be construed to mean that she can collect fees to pay the
contractual obligation she has under the shared service agreement with
Monmouth County. The Register also argues that since the payment for an
electronically-filed document is also made electronically, she can impose an
additional $3 fee. A plain reading of GEPAA, however, does not support such
a construction.
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The "obligation" referenced in N.J.S.A. 40A:5-44 is any obligation that
an individual or entity owes to the local unit, such as "taxes, fees, assessments
[or] fines." N.J.S.A. 40A:5-45. Thus, "obligation" does not refer to the
obligations the local unit may owe to vendors or other entities in performing the
unit's functions.
More to the point, N.J.S.A. 40A:5-45 does not authorize a local unit to
collect additional payments or fees from persons or entities paying an obligation
owed to the local unit beyond the service charge for processing an electronic
payment. Instead, the statute allows the local unit to set up a system to accept
such payments by credit card and electronic fund transfers and to "offset
processing charges or discount fees for the use of a card payment system or an
electronic funds transfer system." N.J.S.A. 40A:5-44.
The regulations promulgated under GEPAA also do not authorize the
collection of fees beyond recouping processing charges. See N.J.A.C. 5:30-9.1
to -9.11. The regulations explain their purpose as: "rules and guidance for local
government units to utilize credit cards, debit cards, and electronic fund transfer
mechanism as means of collecting local unit obligations." N.J.A.C. 5:30-9.1(a).
The regulations then limit the fee that can be collected to the cost of handling
and processing the electronic transaction:
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When permitted to be charged by the processor, local
units may charge a percentage of the transaction or a
flat fee to offset the costs of electronic receipt
transactions. Such fees shall not exceed the cost of
handling and processing the transaction to the local
unit.
[N.J.A.C. 5:30-9.9(a).]
The Essex Register is charging the $3 convenience fee to offset the cost
of maintaining a web-based system to accept electronically-filed documents.
The $3 fee is not being used to offset processing charges or discount fees for the
use of a card payment system or electronic funds transfer system. In that regard,
an officer of the Essex Register has certified that the $3 fee is to pay for the
web-based management system hosted by Monmouth County and other related
costs. While the ordinance authorizing the $3 convenience fee references that
electronically-filed documents are "paid for by credit card, debit card, automatic
clearing house ('ACH') or electronic funds transfer," the $3 fee is not used to
offset processing charges or discount fees related to the electronic payment.
Thus, while the $3 fee is collected from some payers electronically, it is an
additional fee beyond any processing cost. 3
3
The Essex Register has represented in certifications from her office that some
payers have established escrow accounts and other payers, who submit
documents electronically, are required to use bank accounts that will allow for
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B. Rules Regarding Electronically-Submitted Documents Affecting
Real Property
DARM has promulgated regulations pursuant to N.J.S.A. 46:26C-1
regarding electronically-submitted documents affecting real property. N.J.A.C.
15:3-9.1 to -9.13 (Electronic Regulations). Those regulations direct that by May
1, 2017, "all county recorders shall accept electronic documents and electronic
document packages[.]" N.J.A.C. 15:3-9.3. The Electronic Regulations,
however, do not authorize the imposition of fees for accepting electronic
documents. Instead, the only additional fees that can be collected are processing
fees related to accepting electronic payment. See N.J.A.C. 15:3-9.10; N.J.A.C.
5:30-9.1 to -9.11. In that regard, N.J.A.C. 15:3-9.10 provides:
Each county recorder receiving electronic documents
shall accept payment of recording fees by electronic
means. Each county recorder may collect fees from
electronically submitted electronic documents or
electronic document packages in a manner compatible
with its internal software, financial practices, and
N.J.A.C. 5:30-9.
electronic transfer of payment. Approximately fifteen percent of the payers
submitting electronically-filed documents had escrow accounts and the other
eighty-five percent of the payers use bank accounts.
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In short, nothing in the Electronic Regulations authorizes a county or a
county register to impose a $3 surcharge or convenience fee for accepting an
electronically-filed document.
C. Quantum Meruit
Finally, the Essex Register argues, in the alternative, that she should have
the right to collect the $3 fee based on the doctrine of quantum meruit. We
disagree.
Quantum meruit means, literally, "as much as is deserved." Kas Oriental
Rugs, Inc. v. Ellman, 394 N.J. Super. 278, 286 (App. Div. 2007). Quantum
meruit applies when "one party has conferred a benefit on another and the
circumstances are such that to deny recovery would be unjust." Ibid. (quoting
Weichert Co. Realtors v. Ryan, 128 N.J. 427, 437 (1992)). To recover under a
theory of quantum meruit, a party must establish "(1) the performance of
services in good faith, (2) the acceptance of the services by the person to whom
they are rendered, (3) an expectation of compensation therefor, and (4) the
reasonable value of the services." Starkey, Kelly, Blaney & White v. Estate of
Nicolaysen, 172 N.J. 60, 68 (2002) (quoting Longo v. Shore & Reich, Ltd., 25
F.3d 94, 98 (2d Cir. 1994)). That party must also establish a "reasonable
expectation of payment" and that the services were performed "under
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circumstances that should have put the beneficiary on notice" that the party
expected to be paid. Weichert Co. Realtors, 128 N.J. at 437-38.
The doctrine of quantum meruit does not apply here. Indeed, this
argument lacks sufficient merit to warrant extended discussion.
R. 2:11-3(e)(1)(E). Parties submitting documents affecting real property are not
enriching themselves by filing those documents electronically. Instead, they are
filing those documents to protect their interests and are paying an associated fee
established by the Legislature. As already explained, the Legislature has
established a uniform schedule of fees to be charged by county registers or clerks
for the filing of documents affecting real property. See N.J.S.A. 22A:4-4.1.
Accordingly, a filer would not reasonably expect to have to make a payment
beyond those statutory fees.
It is the responsibility of a register's office to budget and pay for the costs
associated with performing its functions. See N.J.S.A. 40A:9-89.1; N.J.S.A.
22A:2-51.1(a). If county registers or clerks believe their offices are incurring
costs that are not covered by the fees set forth in Title 22A, their recourse is to
petition the Legislature to provide some means to address those costs, by
allowing the collection of an additional fee or in some other manner .
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In summary, no statute or regulation authorizes the Essex Register to
impose a $3 convenience fee in connection with electronically filing a
document. Consequently, we reverse the June 23, 2017 order granting summary
judgment to the Essex Register and dismissing the Association's complaint. We
remand with the direction that the complaint be reinstated and that the
Association be granted partial summary judgment on its claim to prospectively
enjoin the Essex Register from collecting the convenience fee. We also remand
for further proceedings on the Association's claim for disgorgement of the fees
previously paid.
Reversed and remanded. We do not retain jurisdiction.
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