January 26, 2009
IN THE MATTER OF D.B.
On appeal from a Final Decision of the Department of Human Services, Division of Developmental Disabilities.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted December 16, 2008
Before Judges Gilroy and Chambers.
H.B. and S.B., on behalf of their son D.B., appeal the final decision of the Department of Human Services (Department), Division of Developmental Disabilities (Division), requiring that they contribute to the cost of D.B.'s residential placement until he reaches the age of eighteen and that thereafter D.B. contribute to that cost from his Social Security payments. Although existing law requires these contributions, H.B. and S.B. contend that a settlement reached with the Division and D.B.'s school district in 1999 relieves them and D.B. of these obligations. We disagree, and affirm.
D.B., born on November 13, 1989, is autistic and severely mentally handicapped; he has poor life skills; and he has a history of severely violent behavior. In 1999, due to D.B.'s violent behavior and the refusal of D.B.'s local school district, the Roselle Park Board of Education (Board of Education), and the Division to fund a residential placement for him, his parents commenced litigation on his behalf to compel them to do so. That litigation was settled.
As part of the settlement, the Division agreed, in a written Stipulation of Settlement (Stipulation), to place D.B. in The Linden Neurobehavorial Stabilization Unit at Bancroft Neurohealth beginning on May 1, 1999, at the Division's cost. Beginning September 1, 1999, D.B. would be placed in the Children's Residential Program at Bancroft Neurohealth. The Stipulation further provided that the Division "will pay the residential portion of the Children's program, which at the time of the signing of this Agreement is $99,767.543 per year."*fn1 Nothing in the agreement refers to contributions by D.B. or his parents. The Stipulation was executed by H.B. and S.B. and their attorney as well as by a Deputy Attorney General and the Assistant Director of the Northern Region of the Division. The Stipulation was approved by the Administrative Law Judge in accordance with N.J.A.C. 1:1-19.1.
In the companion Stipulation of Settlement reached between D.B.'s parents on behalf of D.B. and the Board of Education, the Board of Education agreed to pay the educational component of D.B.'s placement, which in 1999 was $50,498.40.
These arrangements continued for a number of years, with the Division paying the residential component of D.B.'s placement and the Board of Education paying the educational component of the placement. The Division then sent a letter to D.B. requesting payment of a monthly contribution to the cost of his residential placement.*fn2 D.B. and his parents refused to make a contribution, contending that under the terms of the settlement, the costs of his placement were to be borne entirely by the Division and the Board of Education.
D.B.'s request for an administrative hearing was denied on the basis that no factfinding was necessary. In its Final Decision of September 6, 2007, the Department rejected the contention of D.B. and his parents that they need not contribute to his residential care. The Department concluded that the parents must contribute to D.B.'s residential placement cost until he reached the age of eighteen, in accordance with N.J.A.C. 10:46D-3.2. Based on the information that the parents had provided to the Department regarding their income, the Department determined that their income did not meet the minimum income threshold until January 2007. Accordingly, they did not owe any amounts up to that time. Because the Department had not yet received additional financial information requested from the parents, the exact amount of their contribution was not determined. The parents were ordered to submit the additional information if they had not already done so. Since D.B. turned eighteen on November 13, 2007, the parent's obligation to contribute spans a period of a little less than eleven months.
The Final Decision determined that beginning on November 13, 2007, when D.B. reaches the age of eighteen, he is to contribute to his residential placement cost in accordance with N.J.A.C. 10:46D-3.1. The Division determined that he must contribute seventy-five percent of his unearned income less a personal allowance of $40 per month. D.B.'s sole source of income identified by the Division was $753.05 a month in Social Security payments.
D.B. and his parents appeal the Final Decision. They contend that they were entitled to a factfinding hearing before an administrative law judge. They also maintain that due to the terms of the settlement, they have no obligation to make the contributions and that the Division is bound by those terms under the principles of res judicata, collateral estoppel, the entire controversy doctrine, and waiver.
At the outset, we note that no administrative hearing was required in this case. An administrative hearing is only necessary when material issues of fact are in dispute. N.J.A.C. 10:46D-6.1(f); Frank v. Ivy Club, 120 N.J. 73, 98 (1990), cert. denied, 498 U.S. 1073, 111 S.Ct. 799, 112 L.Ed. 2d 860 (1991). Here the material facts are not in dispute. Rather the disagreement concerns the interplay between the settlement and the law governing contributions to residential placement costs.
Appellate review of an administrative agency's decision is limited and this Court will reverse only if the decision is "arbitrary, capricious or unreasonable, or is not supported by substantial credible evidence in the record as a whole." J.D. v. N.J. Div. of Developmental Disabilities, 329 N.J. Super. 516, 521 (App. Div. 2000). However, legal decisions of administrative agencies will be reviewed de novo. Id. at 528.
The statutes and accompanying regulations require the parents of a minor receiving residential services from the Division to contribute to the placement in accordance with their ability to pay as determined by regulation. N.J.S.A. 30:4-60(b); N.J.S.A. 30:4-66; N.J.A.C. 10:46D-3.2. Once the minor reaches the age of eighteen, the minor then must contribute to the costs of the placement in accordance with the regulatory formula. N.J.S.A. 30:4-60(b); N.J.S.A. 30:4-66; N.J.A.C. 10:46D-3.1.
The settlement agreements are silent on the statutory and regulatory contribution obligations of D.B. and his parents. Thus, the settlement agreements neither expressly relieve D.B. and his parents of those obligations nor do they expressly impose those obligations.
D.B. and his parents argue that, under the terms of the settlement agreements, they are not obligated to contribute to the cost of D.B.'s residential placement and that the legal theories of res judicata and collateral estoppel prevent the Division from seeking contributions at this late date.
"The term 'res judicata' refers broadly to the common-law doctrine barring relitigation of claims or issues that have already been adjudicated." Innes v. Carrascosa, 391 N.J. Super. 453, 488-89 (App. Div.) (quoting Velasquez v. Franz, 123 N.J. 498, 505 (1991)), certif. denied, 192 N.J. 73 (2007). For a judicial determination to be accorded the effect of res judicata, it "must be a valid and final adjudication on the merits of the claim." Id. at 489 (quoting Velasquez v. Franz, supra, 123 N.J. at 506). The dispute must have been fairly litigated and not subject to further litigation. Ibid. In order for the doctrine to apply, the cases must involve "substantially similar or identical causes of action and issues, parties, and relief sought." Culver v. Ins. Co. of N. Am., 115 N.J. 451, 460 (1989). When determining that this latter requirement has been met, the court will consider the following factors:
(1) whether the acts complained of and the demand for relief are the same (that is, whether the wrong for which redress is sought is the same in both actions); (2) whether the theory of recovery is the same; (3) whether the witnesses and documents necessary at trial are the same (that is, whether the same evidence necessary to maintain the second action would have been sufficient to support the first); and (4) whether the material facts alleged are the same. [Id. at 461-62 (quoting United States v. Athlone Indus., Inc., 746 F.2d 977, 984 (3d Cir. 1984)) (citations omitted).]
Under the related doctrine of collateral estoppel, an issue may not be relitigated where:
(1) the issue to be precluded is identical to the issue decided in the prior proceeding; (2) the issue was actually litigated in the prior proceeding; (3) the court in the prior proceeding issued a final judgment on the merits; (4) the determination of the issue was essential to the prior judgment; and (5) the party against whom the doctrine is asserted was a party to or in privity with a party to the earlier proceeding. [Olivieri v. Y.M.F. Carpet, Inc., 186 N.J. 511, 521 (2006) (quoting In re Estate of Dawson, 136 N.J. 1, 20-21 (1994)).]
Neither the doctrine of res judicata nor the doctrine of collateral estoppel are applicable in this case because, as far as we can discern from the record before us, the issue of whether the parents or D.B. must contribute to the residential costs under this regulatory framework was not an issue in the earlier litigation. The issues in that litigation concerned the responsibility of the Division and the Board of Education to contribute to D.B.'s placement. The obligation of D.B. and his parents to contribute to those costs under the statutory and regulatory scheme was not raised as an issue, and hence is not barred by principles of res judicata or collateral estoppel.
D.B. and his parents also argue that the entire controversy doctrine bars the Division's claims for contribution. Under the entire controversy doctrine, litigants must "assert in one action all claims arising from a single controversy" and will be precluded from asserting the claim in a subsequent proceeding. Thomas v. Hargest, 363 N.J. Super. 589, 595 (App. Div. 2003); see R. 4:30A (providing for preclusion of omitted claims that should have been joined under the entire controversy doctrine). It is an equitable doctrine left to the court's discretion based on the facts of the case and is designed to further judicial efficiency and fairness to the parties. Id. at 596. "The determination of whether claims must be joined in a single action depends on whether they arise from a core set of related facts." Id. at 595. However, the doctrine does not apply to claims that are "unknown, unarisen or unaccrued at the time of the original action." Pressler, Current N.J. Court Rules, comment 3.3 on R. 4:30A (2009).
At the time of the initial litigation, no dispute regarding contribution had arisen. D.B.'s parents had no obligation to contribute at that time because they did not then meet the minimum financial requirements that would have required them to do so. Similarly, D.B.'s obligation to contribute only accrued when he reached the age of eighteen. As a result, any dispute with regard to the obligation of D.B. and his parents to contribute was not ripe at the time of the earlier litigation.
Accordingly, these claims are not barred by the entire controversy doctrine.
D.B. and his parents also argue that the release executed by the Division at the conclusion of the earlier litigation constituted a waiver of any rights the Division had to contribution from them. Waiver is defined as "the voluntary and intentional relinquishment of a known right." Knorr v. Smeal, 178 N.J. 169, 177 (2003). If a waiver is not expressly stated, then to be effective "the circumstances [must] clearly show that the party knew of the right and then abandoned it, either by design or indifference." Ibid. The waiver must be given "clearly, unequivocally, and decisively." Ibid. The release provision in the Stipulation between the Division and D.B.'s parents on behalf of D.B. states:
Each party in this action, individually, and on behalf of his heirs, executors, personal representatives, successors and assigns, does mutually release the opposite party or parties and the insurers, agents, employees, heirs, executors, personal representatives and assigns from all claims, demands, damages, causes of action, or suits which have been, could have been, or might have been made or prosecuted on account of any conduct of any party occurring at any time with respect to the events, information and disputes giving rise to this action including but not limited to any claim for payment of counsel fees and costs.
This provision makes no mention of the statutory and regulatory contribution obligations of D.B. and his parents, and thus, the Division did not expressly waive its right to seek contributions. Further, as noted above, the Division did not have a ripe claim for contribution against the parents and D.B. at the time the stipulation of settlement was made. Under these circumstances, the Division did not waive, abandon, or release its right to such contributions when the stipulation of settlement was made.
In light of this ruling, we need not reach the question of whether the Division could legally relinquish its rights to contribution or if such a relinquishment is ultra vires. Further, we note that the Division will receive contributions from D.B.'s parents only for the time period from January to November 13, 2007, and thereafter from D.B. The Division placed D.B. and his parents on notice years in advance of January 2007 that it was seeking contributions from them. As a result, this is not a situation where the Division retroactively sought from them payments due years ago, in which case equitable estoppel concerns may be implicated.
For all of these reasons we affirm the Final Decision.