The Appellate Division of New Jersey Superior Court recently decided a municipal engineer is a “public employee” afforded the protections of the Torts Claims Act, rather than an “independent contractor.”  As a result, the court dismissed a developer’s malpractice claim against the Township’s engineering firm.  The Torts Claims Act limits lawsuits against “public employees” but not “independent contractors.”

Remington & Vernick Engineers had a three-year “professional services” contract to serve as East Greenwich’s part-time municipal engineer.  The municipal engineer was paid on an hourly basis without the employer deductions or withholdings of the traditional employee. 

BEZR Homes obtained approvals for a residential development on land it owned in East Greenwich.  The development required construction of a water main to provide potable water service to the development.  The permit was issued in the name of the municipality, as is often the case with off-site facilities needed for water or sewer service, although the permitting and construction costs are typically at the developer’s expense.  BEZR claimed that prior to the expiration of the permit, it requested the Township to file for an extension, but that Remington and Vernick filed the extension request in an untimely manner despite knowing this would result in denial.  As a result, BEZR claimed a prospective purchaser terminated a contract for sale, depriving BEZR of the $7.5 million sales price.

BEZR sued Remington & Vernick.  While the lawsuit was filed well within the statute of limitations generally applicable to claims against engineers, it was filed after the Torts Claims Act’s two-year statute of limitations for public employees. The issue before the court was whether the engineering firm was a “public employee” within the meaning of the Torts Claims Act.  The Torts Claims Act states that an “independent contractor” is not a public employee.  In BEZR Homes v Township of East Greenwich, the court decided that an engineering firm serving as a municipal engineer on a part-time basis is a “public employee”, and dismissed the developer’s claim.

Developers often have no choice to but to rely on private engineers, hired by municipalities, but whose fees the developer must reimburse.  Developers should be aware that these engineers may enjoy the protections afforded public employees under the Torts Claims Act.