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Seabrook Village v. Murphy

July 21, 2004

SEABROOK VILLAGE, RESPONDENT-RESPONDENT,
v.
JOHN MURPHY, PETITIONER-APPELLANT.



On appeal from a final agency decision of the Department of Community Affairs.

Before Judges Petrella, Collester and Fuentes.

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

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted May 17, 2004

Petitioner John Murphy appeals from the final decision of the New Jersey Department of Community Affairs (DCA), Bureau of Homeowner Protection. In its decision, the DCA determined that Seabrook Village was legally entitled to cancel its Residence and Care Agreement with petitioner and discharge him from its facility for his (1) refusal to pay monthly service fees and (2) failure to execute a release of the Living Unit that he previously occupied.

This appeal requires us to answer two legal questions, namely: (1) whether the procedures employed by the DCA upholding Seabrook's cancellation of the Residence and Care Agreement comport with the requirements of the Administrative Procedure Act, N.J.S.A. 52:14B-1 to -15; and (2) whether Seabrook can terminate petitioner's residency without establishing"just cause" pursuant to the Continuing Care Retirement Community Regulation and Financial Disclosure Act, N.J.S.A. 52:27D-344d and 344e and N.J.A.C. 5:19-6.5(c).

We now hold that a resident of a continuing care facility appealing his or her dismissal or discharge from such facility to the DCA is legally entitled to a"plenary hearing," as defined in N.J.A.C. 1:1-2.1. Such a hearing must be conducted by either the Commissioner of the DCA or by the Office of Administrative Law pursuant to the Commissioner's referral for adjudication. We further hold that a resident of a continuing care facility can be involuntarily discharged only upon the establishment of"just cause," as defined in N.J.S.A. 52:27D-344d and N.J.A.C. 5:19-6.5(c). Any waiver of"just cause" contained in an agreement entered into by a resident or any contractually crafted ground for removal not sanctioned by specific statutory or regulatory authority, is legally unenforceable and void as against public policy.

We will address these legal issues in the following factual context.

I.

Erickson Retirement Communities, d/b/a Seabrook Village, operates a continuing care retirement community located in Tinton Falls. Seabrook offers three types of living arrangements for its residents: (1) Independent Living Units; (2) Assisted Living Units; and (3) Care Center Units. The latter two are housed in the Extended Care Center. The Residence and Care Agreement contains the following descriptions of the Independent Living and Assisted Living Units:

Independent Living Units

The facility is planned to have approximately 1650 Independent Living Units within three (3) residential neighborhoods. Each residential neighborhood will be comprised of four (4) residential buildings containing Independent Living Units and one (1) community building. Each community building includes a dining room, classrooms, cardrooms, lounges and other common areas.

Extended Care Center

The Extended Care Center will house both the Assisted Living Units and the Care Center Units. Each floor of the Extended Care Center will include a dining room, a resident lounge, activity rooms and a bathing core. The Extended Care Center will be constructed in three (3) phases, with Phase One expected to become available in March, 2001. Phase Two expected to become available in March, 2004 and Phase Three expected to become available in March, 2007. All opening dates are approximate and may change according to changing in weather conditions [sic], market demands, etc. Until the Extended Care Center is opened, [SEABROOK VILLAGE] will enter into transfer agreements for its Residents with outside assisted living and nursing care centers.

Petitioner, in consultation with his son Michael Murphy,*fn1 decided to reside in one of Seabrook's Independent Living Units. Prior to signing any documents or making any payments, petitioner sought clarification as to the status of any deposit required. By letter dated February 17, 1999, Seabrook Executive Director Joan Carr assured petitioner that"[a]ll of these funds are fully refundable," both prior to and after petitioner moved into his unit.

On June 10, 1999, petitioner signed the Residence and Care Agreement with Seabrook and paid the required entrance fee of $149,000.*fn2 In addition to the entrance fee, the Agreement also required petitioner to pay a Monthly Service Fee of $1,290. Michael ...


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