Appeal From The United States District Court, D.C. Civ. No. 83-2364, For The District Of New Jersey - Newark.
Before GIBBONS and BECKER, Circuit Judges, and FULLAM, District Judge.*fn*
The Board of Education of East Windsor Regional School District appeals, and the parents of a minor child -- Andrew Diamond -- cross appeal, from a final judgment declaring that the School District must pay Andrew Diamond's educational expenses in a residential placement on a full calendar year basis, ordering reimbursement of expenses incurred by his parents to date, and dismissing his parents' counterclaim for damages for injury to their son, for prejudgment interest, and for attorneys' fees. We affirm the judgment insofar as it declares that the School District must fund Andrew Diamond's education in a residential placement and orders reimbursement of expenses already incurred by such placement. We reverse and remand for further proceedings on the counterclaim.
State and Local Proceedings
Andrew Diamond was born on February 16, 1971 with several congenital physical abnormalities. He has a neurological impairment which inhibits his ability to walk or to communicate. Because of these impairments he has special educational needs which were recognized when the School Board made his first placement at the Midland School, a private school for disabled children. Andrew Diamond continued at Midland School for a number of years. In September 1980, however, Midland School advised his parents that it was no longer able to provide an appropriate education for Andrew because his learning skills were declining and his behavior becoming counterproductive. Although the Midland School placement was determined to be inappropriate, the School Board continued it anyway.
Andrew Diamond's parents, meanwhile, requested a hearing before a classification officer of the New Jersey Department of Education. While a decision on that request was pending, the parents removed Andrew from the Midland School and placed him in Rhode Island's Behavior Research Institute in June, 1981. On July 31, 1981 the New Jersey Department of Education hearing officer determined that Andrew Diamond should be reclassified as neurologically impaired and trainably mentally retarded. He therefore ordered that a residential placement be made if no suitable day placement could be found.
In response to the Department of Education's order the School Board proposed placing Andrew in the Mercer Special Services School District (Mercer Special). The Mercer Special program is nonresidential, uses group instruction, and administers consequences for less than 15% of targeted behavior. At this time, Andrew was making remarkable progress at the Behavior Research Institute, which is residential, offers individual instruction, and administers consequences for targeted behavior much more frequently. The School Board, unfortunately, was not paying for the Behavior Research Institute placement. Therefore, the resultant financial hardship forced the parents to bring their child home after about five months. At home, Andrew's condition deteriorated because the School Board provided only 1 to 1 1/2 hours of home instruction per day.
In response, Andrew's parents requested another hearing before the New Jersey Department of Education. After an extended hearing, the Department Classification Officer's May 18, 1983 order directed the Board both to continue Andrew Diamond's residential placement and to reimburse his parents for all of Andrew's residential placement expenses.
District Court Proceedings
Throughout the proceedings before the New Jersey Department of Education, the School Board resisted any residential placement for Andrew Diamond. It reacted to the May 18, 1983 Department order by filing a complaint in the United States District Court for the District of New Jersey on June 13, 1983. The School Board sought an order placing Andrew at Mercer Special and denying his parents reimbursement of costs incurred in Andrew's residential placement,*fn1
In the proceedings before the New Jersey Department of Education the Diamonds were represented by the New Jersey Public Advocate. The Public Advocate entered an appearance and filed an answer on their behalf in the district court action, which was limited to defending against the relief sought by the School Board. Private counsel, retained by the Diamonds, filed a counterclaim for damages for the School Board's non-compliance with its obligation to provide a free appropriate education -- both with respect to expenditures made by the parents and with respect to damage to Andrew Diamond. The counterclaim sought counsel fees and "such further ...