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Melmark, Inc. v. Schutt

Superior Court of Pennsylvania

August 21, 2017

MELMARK, INC. Appellant

         Appeal from the Judgment Entered June 24, 2016 In the Court of Common Pleas of Delaware County Civil Division at No(s): 13-01572 Civil Action



          STEVENS, P.J.

         Appellant, Melmark, Inc. ("Melmark") appeals from the judgment entered in the Court of Common Pleas of Delaware County in Melmark's action raising claims of unjust enrichment and quantum meruit. We affirm.

         This case presents a "choice of law" question bearing on whether New Jersey residents Dr. Clarence Schutt and Barbara Rosenthal Schutt ("the Schutts") are personally liable for the unpaid balance for specialized services rendered to their severely autistic, 31 year-old son, Alexander Schutt ("Alex"), by Melmark, a Delaware County, Pennsylvania residential care facility assisting individuals with intellectual disabilities and autism. New Jersey's filial support law would shield the Schutts from financial responsibility for Alex's care because they are over age 55 and Alex is no longer a minor. Pennsylvania's filial support law, meanwhile, would provide no age-based exception to parental responsibility to pay for care rendered to an indigent adult child. See, infra.

         Presiding over Melmark's action against the Schutts, the Court of Common Pleas of Delaware County identified a conflict between the laws and resolved it in favor of the Schutts. Specifically, the court concluded that New Jersey had a greater interest in insulating its elderly parents of adult indigent children from such collection efforts than Pennsylvania had in compelling out-of-state parents to pay an indigent adult child's bill to a private provider.

         The attached trial court opinion provides as detailed a factual and procedural history as can be offered, and we need not repeat such detail, herein. Suffice it to say that Dr. and Mrs. Schutt, 71 and 70 years old, respectively, reside in Princeton, New Jersey, and availed themselves of New Jersey public funding to pay for Alex's care at Melmark from 2001 to 2012.

         In 2011, however, the New Jersey Department of Developmental Disabilities (NJDDD) did not approve Melmark's rates, and it notified the Schutts that relocation of Alex would soon be necessary. NJDDD offered Alex placement at Bancroft House, in Mullica Hill, New Jersey, but the Schutts protested about the facility's lack of oxygen systems onsite and its refusal to waive its policy of requiring legal guardians to consent to the use of non-emergency restraints.

         NJDDD advised the Schutts that if they did not agree to the transfer, NJDDD would cease payments to Melmark as of March 31, 2012. The Schutts elected against placing Alex at Bancroft and filed an appeal to the New Jersey Office of Administrative Law, which was denied. On March 31, 2012, the Schutts did not take custody of Alex, leaving Melmark to care for him without receiving payment.

         On August 27, 2012, the Schutts filed an "Application for Emergent Relief" in New Jersey courts requesting immediate restoration of New Jersey funding for Alex's care at Melmark pending the outcome of the administrative appeal.

         Melmark, meanwhile, on July 31, 2012, had filed a Pennsylvania Commitment Petition in Delaware County Court of Common Pleas, Orphans' Court Division, asking the County Mental Health or PA Department of Welfare to take custody of Alex. The Schutts opposed this petition, and argued in open court that a "funding dispute" between Melmark and NJDDD was at the root of this issue, and that their upcoming New Jersey hearing regarding their administrative appeal would resolve the problem.

         The Delaware County Orphans' Court sided with the Schutts, as it identified the issue in the case as one involving "a funding dispute between NJDDD and Melmark . . . that can be resolved at the January 16, 2013 [New Jersey] Appeals Hearing]."

         Thereafter, the Schutts voluntarily canceled the upcoming hearing, and in so doing, eliminated any opportunity they alleged was available to obtain payment from NJDDD for Melmark's services to Alex. Because of Alex's increasingly aggressive behaviors, Melmark transported him to a New Jersey crisis center on May 15, 2013.

         Therefore, from April 1, 2012, to May 14, 2013, Melmark provided Alex with services without receiving payment. With basic services costing $356.34 per day at seven days a week, and "Adult Day Program" costs of an additional $221.99 per day at five days a week, Alex's total unpaid residential services amounted to $205, 236.38.

         Melmark filed its Complaint on February 20, 2013 in the Court of Common Pleas of Delaware County. The court denied the parties' cross-motions for summary judgment and set a bench trial date of January 12, 2016. After testimony, trial exhibits, and briefs/memoranda of counsel, the court found in favor of Melmark on its claims against Alex, by and through his parents as legal guardians, as to Count I, Unjust Enrichment, and Count II, Quantum Meruit, in the amount of $205, 236.38.

         The court, however, found in favor of the Schutts, individually, and against Melmark as to Counts I, Unjust Enrichment, Count II, Quantum Meruit, and Count III, Common Law Duty of Support. Notably, the trial court applied New Jersey's filial support law to deny Melmark's claims against the parents in this respect.

         The trial court relied on several bases to support its decision in favor of the Schutts. Initially, the court noted that the law upon which Melmark's position relied, the Pennsylvania Filial Support Law, [1] directs that "the amount of liability shall be set by the court in the judicial district in which the indigent person resides." 23 Pa.C.S.A. § 4603(b)(1). Because both parties stipulated that Alex was a resident and domiciliary of New Jersey at all times, the court concluded that, even if it were to apply Pennsylvania law to Melmark's claims, Section 4603(b)(1) divested the court of authority to set an amount owed because the court clearly does not exist in the judicial district where the parties agreed Alex resides.

         Assuming, arguendo, that Section 4603(b)(1) would confer authority upon the court to set the amount due, the court undertook a choice of law analysis pursuant to Pennsylvania precedent, see infra. The court identified a conflict between Pennsylvania and New Jersey's filial support laws, and it determined that, because New Jersey has the most significant contacts or ...

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