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Archway Programs, Inc. v. Pemberton Township Board of Education

June 28, 2002


On appeal from the Superior Court of New Jersey, Law Division, Civil Part, Camden County, L-7091-00.

Before Judges Petrella, *fn1 Kestin and Alley.

The opinion of the court was delivered by: Kestin, J.A.D.


Argued: November 13, 2001

Plaintiff, Archway Programs, Inc. (Archway), seeks recovery under a contract or, alternatively, on theories of unjust enrichment or quantum meruit. The amount alleged in the complaint to be due is $95,795.72 for the rendition of educational services to defendant, Pemberton Township Board of Education (Board), during the 1999-2000 contract year. The Board counterclaims, also in three counts, for judgment against Archway in an amount to be determined, representing alleged overcharges from Archway to the Board in prior contract years. In a certification filed in the trial court, the Board's Assistant Superintendent for Business Affairs alleged that sums due Archway for its services in past years "are less than amounts due for overpayments made to Archway. After giving credit for all sums due for tuition, Archway still owes the District approximately $20,000."

The Board also raises several affirmative defenses including that primary jurisdiction over Archway's claim resides with the Department of Education (Department), that Archway had failed to exhaust its administrative remedies with the Commissioner of Education (Commissioner), and that Archway's claim was barred by application of the "doctrines of actual or equitable fraud."

Archway moved for dismissal of the counterclaim, to strike the aforementioned affirmative defenses, and for summary judgment on its claim. The trial court denied the motions. Archway appeals from that denial and the trial court's denial of its motion for reconsideration.

We granted Archway's motion for leave to appeal, specifically directing the parties to address the issue whether the entire Law Division matter should be transferred to the Department. Archway argues on appeal that the trial court lacks jurisdiction over the counterclaim and, alternatively, even if jurisdiction exists, the counterclaim should be dismissed; and that neither the complaint nor the counterclaim should be transferred to the Department. The Board continues to assert its right to set-off or recoupment and to advance the concepts of primary jurisdiction and exhaustion of remedies in arguing that the entire matter should be entrusted to the Commissioner for decision and to the Department for resolution before the trial court addresses the purely legal issues that may remain.

We begin by noting our institutional respect for the Department's subject matter interest and for the Commissioner's first-instance jurisdiction "to hear and determine . . . all controversies and disputes arising under the school laws[.]" N.J.S.A. 18A:6-9. The Commissioner's authority is plenary. See Abbott v. Burke (I), 100 N.J. 269, 301 (1985). Manifestly, however, the sweep of the Department's interest and the Commissioner's jurisdiction does not extend to all matters involving boards of education. For example, contract claims against boards do not arise under the school laws but rather from statutory or common law. See Picogna v. Board of Educ. of Cherry Hill, 249 N.J. Super. 332, 335 (App. Div. 1991). Claims of the latter type are, therefore, typically and appropriately adjudicated in the courts. See ibid.; South Orange-Maplewood Educ. Ass'n v. Board of Educ. of South Orange & Maplewood, 146 N.J. Super. 457, 463 (App. Div. 1977).

This is not to say that courts must apply their jurisdictional authority to resolve all contract claims before cognate issues pending on the administrative level are resolved. The concept of primary jurisdiction suggests otherwise. Where one aspect of a single, integrated dispute is pending before an administrative agency and another aspect of the same dispute is pending before a court, logic commends that the entire matter be dealt with, at least initially, by the entity with plenary authority over the subject matter field involved.

The doctrine of primary jurisdiction, like that requiring exhaustion of administrative remedies, promotes proper relationships between courts and regulatory agencies. * * *

Under the doctrine of primary jurisdiction, when enforcement of a claim requires resolution of an issue within the special competence of an administrative agency, a court may defer to a decision of that agency. [Campione v. Adamar of New Jersey, Inc., 155 N.J. 245, 263 (1998) (citations omitted).] See also, e.g., Muise v. GPU, Inc., 332 N.J. Super. 140, 160 (App. Div. 2000) (holding that a court should exercise its discretion to defer to the primary jurisdiction of an agency where failure to do so "would be inconsistent with the 'statutory scheme'" conferring regulatory authority on the agency).

Thus, it may be appropriate, in order to avoid piecemeal adjudication or duplicative, anomalous or contradictory results, for a court to defer in its jurisdictional exercise, even if only temporarily, while the administrative agency with the primary interest sorts out the issues and the claims. See, e.g., Boldt v. Correspondence Mgmt. Inc., 320 N.J. Super. 74, 83-85 (App. Div. 1999); Village of Ridgefield Park v. New York, Susquehanna & W. Ry. Corp., 318 N.J. Super. 385, 405-07 (App. Div. 1999), modified and remanded on other grounds, 163 N.J. 446 (2000). Concomitantly, if resolution of the action at law is the key element to resolving the entire dispute, the administrative agency may defer its consideration until the lawsuit is resolved. See New Jersey Div., Horsemen's Benevolent Protective Ass'n v. New Jersey Racing Comm'n, 251 N.J. Super. 589, 603-04 (App. Div. 1991); cf. Lemelledo v. Beneficial Mgmt. Corp., 150 N.J. 255, 273-75 (1997); Hinfey v. Matawan Reg'l Bd. of Educ., 77 N.J. 514, 531- 32 (1978).

The basic proposition that no administrative officer or agency, absent a specific grant of legislative authority, is empowered to decide questions of law, such as those arising in contract actions, applies to the Commissioner of Education even in the context of his plenary authority to decide controversies and disputes arising under the school laws. The Commissioner's authority is not exclusive where particular statutes provide alternate routes for issue resolution, see Roxbury Twp. Bd. of Educ. v. West Milford Bd. of Educ., 283 N.J. Super. 505, 519-21 (App. Div.), certif. denied, 143 N.J. 325 (1995), or where the matter involves a question of law outside the purview of the school laws. Id. at 520. Nevertheless, in appropriate instances where legal relief is sought while a closely related administrative proceeding pends in the Department, a trial court should normally stay its hand, even while retaining jurisdiction where appropriate, out of deference for the ...

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