May 3, 2010
G.S. AND K.S., BY THEIR GUARDIANS AD LITEM, T.S. AND M.H.S., AND T.S. AND M.H.S., INDIVIDUALLY, PLAINTIFFS-APPELLANTS,
RUMSON BOARD OF EDUCATION, ROGER CARUBA, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY AS SUPERINTENDENT OF RUMSON SCHOOL DISTRICT, GAYLE GUNNING, INDIVIDUALLY AND IN HER OFFICIAL CAPACITY AS SUPERVISOR OF SPECIAL SERVICES FOR RUMSON SCHOOL DISTRICT, GREGG HAUSER, INDIVIDUALLY AND IN HIS FORMER OFFICIAL CAPACITY AS INTERIM SUPERINTENDENT OF RUMSON SCHOOL DISTRICT, AND JULIE LIPTON, INDIVIDUALLY AND IN HER FORMER OFFICIAL CAPACITY AS SUPERVISOR OF SPECIAL SERVICES FOR RUMSON SCHOOL DISTRICT, DEFENDANTS-RESPONDENTS.
On appeal from Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-4605-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued March 24, 2010
Before Judges Stern, J. N. Harris, and Newman.
This appeal comes to us from the Law Division's dismissal of several of plaintiffs' claims with prejudice, and others without prejudice. The parties' disagreement emanates from their putative settlement of a dispute pursuant to the Individuals with Disabilities in Education Act (IDEA), 20 U.S.C.A. §§ 1401 to -1482. We affirm.*fn1
G.S. and K.S. are the children of T.S. and M.H.S. The children were enrolled in the public school district operated by defendant Rumson Board of Education (Board). In 2001, G.S and K.S. were classified as eligible for special education and associated services, which were provided by the Board through the end of the 2002-2003 school year.
In July 2003, the parents filed a due process complaint with the New Jersey Department of Education (Department) pursuant to 20 U.S.C.A. § 1415(b)(6) and N.J.A.C. 6A:14-2.7(a) challenging the Board's discontinuation of its special education and associated services. Eventually, the Board and the parents resolved their disagreements and entered into a stipulation of settlement (stipulation), which was memorialized in a detailed six-page written instrument executed in February 2005. Implementation of the provisions of the stipulation was to commence in that month.
The stipulation was submitted to, and reviewed by, an administrative law judge (ALJ) who concluded that the parties had voluntarily agreed to the entirety of its terms. Because he found the stipulation to be "consistent with the law," the ALJ incorporated the stipulation into his final decision and order dated March 22, 2005, which obligated "the parties [to] comply with the settlement terms and that these proceedings be concluded." The ALJ's decision and order further stated, "[i]f either party feels that this decision is not being fully implemented, this concern should be communicated in writing to the Director, Office of Special Education Programs [within the Department of Education]."
It did not take long before the children's parents felt that the Board was not observing the terms of the stipulation. Less than seven months after it was signed, the first of many disputes over the stipulation's implementation arose. On September 19, 2005, the parents filed a petition for voluntary mediation with the Office of Special Education Programs (OSEP) pursuant to N.J.A.C. 6A:14-2.6(d). Among the areas of concern were the children's Lindamood-Bell test results, the Board's allegedly inadequate individualized educational programs (IEPs) for the children during the 2005-2006 school year, the purportedly truncated and often-interrupted IEP meetings, and the Board's refusal to incorporate pre-teaching of vocabulary, language structure, and review of concepts into the children's learning plan. The parents followed up with the submission of a formal complaint in the Department of Education on November 7, 2005, requesting a due process hearing, which ultimately fell under the stewardship of a different ALJ from the one who had vetted the original stipulation.
After enduring several months of procedural wrangling in the Office of Administrative Law (OAL), in May 2006, the parents withdrew their due process complaint that addressed their concerns surrounding the 2005-2006 school year and the implementation of the stipulation. Within four weeks of this withdrawal, the parents filed a three-count complaint--each denominated as a "Breach of Contract"--in the Chancery Division, seeking enforcement of the stipulation, along with consequential, compensatory, and punitive damages. In response to the Board's motion to dismiss for failure to exhaust administrative remedies, the Chancery Division judge granted such relief, which triggered the first appeal to this court.
Despite affirming the decision of the Chancery Division, we nevertheless expressly refused to terminate the plaintiffs' enforcement action. Instead, in conformity to a then newly-revised administrative regulation of the Department of Education, N.J.A.C. 6A:14-2.7(t),*fn2 and based upon the first ALJ's decision and order, which incorporated Paragraph 15 of the stipulation, we transferred the matter to the OSEP pursuant to Rule 1:13-4(b). In so doing, on May 14, 2007, we expressly stated:
Such OSEP review is directed to proceed expeditiously so that the enforcement issues may be resolved--administratively, judicially, or by agreement of the parties-- well in advance of the 2007-08 school year.
If the OSEP review process is not completed, with all enforcement issues resolved, within forty-five days of this opinion, plaintiffs shall have the right to renew their claims for enforcement by filing a new complaint in the Chancery Division. The forty-five day deadline is imposed for purposes of this case only, and shall not be extended, absent the mutual consent of the parties and OSEP. [T.S. v. Rumson Board of Education, supra, slip op. at 18.]
On May 31, 2007, as part of the remand, plaintiffs outlined for the OSEP every issue that they wanted resolved, and included a request for an investigation of a "subsequent breach of the settlement agreement," which allegedly occurred around March 2007. OSEP responded by recognizing the application of N.J.A.C. 6A:14-2.7(t) to the "subsequent breach of the settlement agreement," and informed plaintiffs that in light of this court's transfer, OSEP would limit itself to the issues that "were before OSEP in September 2005." A separate request for enforcement of the stipulation would be analyzed under the ninety-day rule of the aforementioned regulation.
On June 20, 2007,*fn3 the OSEP issued a six-page letter, which explained the basis for its jurisdiction, outlined the contested issues, "reopened" the parents' request for enforcement that had been previously withdrawn, and then resolved the disputed issues. After analyzing the Board's claim of compliance with the stipulation under the lens of the parents' assertions of non-compliance, together with the disputed interpretations of whether the stipulation applied to IEPs after the completion of the 2004-2005 school year, the OSEP stated:
Upon careful review of the terms of the agreement, the OSEP finds that, contrary to the parents' assertion, paragraph 14 of the Order does not clearly speak to future IEPs.
Where the Order was issued in March 2005, the language may well refer to the children's 2004-2005 IEPs. Accordingly, there is no further action that the OSEP can take with respect to this request for enforcement.
Seventy-nine days later, on September 7, 2007, plaintiffs filed yet another complaint for due process with the Department of Education, this time related to the children's IEPs for the 2007-2008 school year. On that same date, plaintiffs also filed a ten-count complaint against five defendants*fn4 in the United States District Court for the District of New Jersey, which was jurisdictionally and substantively bottomed upon the IDEA. Count one alleged that the Board had committed a breach of contract by failing to implement certain provisions of the stipulation. Counts two through five alleged that the individual school officials each violated plaintiffs' rights pursuant to the Federal Civil Rights Act, 42 U.S.C.A. § 1983 (§ 1983). Count six sought remedies against all defendants pursuant to the Rehabilitation Act of 1973, 29 U.S.C.A § 794 (RA). Count seven sought remedies against all defendants in accordance with the Americans with Disabilities Act, 42 U.S.C.A. §§ 12101 to 12213 (ADA). Count eight claimed that all of the named defendants violated the New Jersey Law Against Discrimination (LAD), N.J.S.A. 10:5-1 to -49. Count nine sought common law fraud remedies against only defendants Board and Hauser. Lastly, count ten claimed that all defendants had violated the implied covenant of good faith and fair dealing. Notwithstanding the clarity and detail of the federal complaint, it did not expressly mention, much less challenge or appeal, the OSEP determination rendered on June 20, 2007.
While a motion to dismiss the federal complaint was pending, plaintiffs filed an amended complaint.*fn5 This time the pleading consisted of eight claims for relief: count one alleged an entitlement to compensatory, consequential, and punitive damages from all defendants due to their "outrageous conduct and breach of the settlement agreement;" counts two and three sought remedies for defendants' discrimination and failure to accommodate the children's disabilities pursuant to the RA and ADA, respectively; count four alleged that the Board violated the LAD; count five charged the individual defendants with aiding and abetting the Board's violation of the LAD; count six expressly appealed the OSEP determinations of June 20, 2007;*fn6 count seven expanded the fraud claims to include all defendants; and count eight again recited that all defendants had breached the implied covenant of good faith and fair dealing.
On August 18, 2008, United States District Judge Mary L. Cooper considered defendants' motion to dismiss the amended complaint pursuant to Rule 12(b) of the Federal Rules of Civil Procedure. After oral argument, the court dismissed plaintiffs' amended complaint without prejudice but with the express recognition of the tolling effect of 28 U.S.C.A. § 1367(d).
Forty-four days later, on October 1, 2008, plaintiffs filed a six-count Law Division action against the defendants; ten days after that, an amended complaint was filed by plaintiffs; and finally, on February 20, 2009, plaintiffs filed their second amended complaint. During this period, plaintiffs also filed another due process complaint in the Department of Education, this time relating to the children's 2008-2009 school year.*fn7
Count one of the second amended complaint alleged that the Board breached the stipulation, but plaintiffs also sought remedies for "outrageous conduct" from all defendants. Counts two and three sought remedies against all defendants for putative violations of the LAD. Count four contained plaintiffs' appeal of the OSEP determination.*fn8 Count five charged all defendants with employing "deception, fraud, and false premises, and knowingly conceal[ing] and/or omitt[ing] material facts, with the intent that [p]laintiffs would rely upon same when entering into the settlement agreement." Finally, count six reiterated plaintiffs' claims that all defendants had breached the implied covenant of good faith and fair dealing.
Defendants moved to dismiss plaintiffs' pleadings and sought sanctions for violating N.J.S.A. 2A:15-59.1. Plaintiffs cross-moved for summary judgment on count one of their second amended complaint. After oral argument, the motion judge denied plaintiffs' application. However, the court dismissed--with prejudice--counts one and four on statute of limitations grounds, and dismissed--without prejudice--the balance of the second amended complaint for plaintiffs' failure to exhaust administrative remedies. This appeal followed.
Appeals of administrative decisions to federal or state courts, such as the one here, pursuant to the IDEA, are governed by a limited ninety-day statute of limitations. 20 U.S.C.A. § 1415(i)(2)(B) ("The party bringing the action shall have 90 days from the date of the decision of the hearing officer to bring such an action, or, if the State has an explicit time limitation for bringing such action under this part [20 U.S.C.A. §§ 1411 et seq.], in such time as the State law allows."). New Jersey's explicit time limitation tracks the federal ninety days. See N.J.A.C. 6A:14-2.7(v) ("Any appeal of a final decision of an administrative law judge in a due process hearing shall be filed within 90 days of the date of issuance of the final decision."). In this case, it is undisputed that the OSEP determination was issued on June 20, 2007. Accordingly, the statute of limitations on plaintiffs' claims related to this determination expired on September 19, 2007, ninety days from the date the letter was issued. Plaintiffs filed their complaint in the Superior Court on October 1, 2008, 377 days from the expiration of the statute of limitations and forty-four days after the dismissal of the federal case.
Notwithstanding the foregoing chronology, plaintiffs were in the midst of pursuing an appeal from the OSEP in federal court, to no avail. When that matter was dismissed, it was with the explicit proviso that the tolling effect of 28 U.S.C.A. § 1367(d) apply. This federal law provides:
The period of limitations for any claim asserted under subsection (a) [claims in which the federal district courts have original jurisdiction], and for any other claim in the same action that is voluntarily dismissed at the same time as or after the dismissal of the claim under subsection (a), shall be tolled while the claim is pending and for a period of 30 days after it is dismissed unless State law provides for a longer tolling period.
[28 U.S.C.A. § 1367(d)].
The late Judge Sylvia B. Pressler, speaking for our court, interpreted 28 U.S.C.A. § 1367(d) as "simply toll[ing] the running of the state statute of limitations from its customary expiration date until the expiration of a thirty-day period following conclusion of the federal action, that is, to provide a thirty-day grace period." Berke v. Buckley Broadcasting Corp., 359 N.J. Super. 587, 595 (App. Div.), certif. denied, 177 N.J. 571 (2003). This federal statute did not "intend a result that would permit a gross protraction of the limitations period." Id. This construction of 28 U.S.C.A. § 1367(d) has more recently been applied in Binder v. Price Waterhouse & Co., L.L.P., 393 N.J. Super. 304, 310 (App. Div. 2007) and we are satisfied that Berke and Binder are correct expressions of federal law and we shall not disturb them, notwithstanding plaintiffs' entreaties to the contrary.
Thus, it is clear that between the customary statute of limitations' expiration date on September 19, 2007--when the federal case was already pending, albeit without then containing an express appeal of the OSEP determination--and the District Court's dismissal of plaintiffs' case on August 18, 2008, there was a suspension of the running of the statute of limitations for the purposes of an ensuing state court action. Because plaintiffs did not commence this action within the thirty-day grace period of 28 U.S.C.A. § 1367(d), that is, by the September 17, 2008 deadline, statutory relief is not available. Stated bluntly, plaintiffs were fourteen days late when their complaint in the Law Division was filed on October 1, 2008. In light of the abbreviated ninety-day period provided by federal law, fourteen days is a substantial lapse.
Plaintiffs urge that even if they missed the statute of limitations closing date, equitable principles should nevertheless facilitate their appeal's survival. In plaintiffs' initial brief, they cite Bernoskie v. Zarinsky, 383 N.J. Super. 127, 140 (App. Div.), certif. denied, 186 N.J. 604 (2006), an equitable tolling case, as support for their position. In the reply brief, plaintiffs principally rely upon Negron v. Llarena, 156 N.J. 296, 300 (1998), a substantial compliance case. Under either doctrine--equitable tolling or substantial compliance-- plaintiffs have failed to demonstrate an entitlement to relief from their tardy filing.
Plaintiff's claim is not preserved by the principle of equitable tolling. This equitable device is to be applied (1) where an adversary has tricked or induced a complainant to allow the filing deadline to pass, where in some extraordinary way, the plaintiff has been kept from asserting his rights, or (2) where a plaintiff timely asserts his rights, but does so mistakenly by defective pleading or in the wrong forum. Freeman v. State, 347 N.J. Super. 11, 31 (App. Div.), certif. denied, 172 N.J. 178 (2002); see also Dunn v. Boro. of Mountainside, 301 N.J. Super. 262, 275 (App. Div. 1997), certif. denied, 153 N.J. 402 (1998). For a claim to be saved under this equitable principle, a plaintiff must diligently pursue his or her claim.
Villalobos v. Fava, 342 N.J. Super. 38, 52 (App. Div.), certif. denied, 170 N.J. 210 (2001).
Plaintiffs have neither demonstrated trickery or inducement into filing late by their adversary, nor have they shown that vital information was withheld from them such that they filed their claims improperly. Plaintiffs have also failed to show that they were prevented from asserting their rights in state court. Most importantly, plaintiffs did not assert their rights in a timely manner, contrary to our expectation that the issues would be resolved expeditiously after the OSEP remand, "well in advance of the 2007-2008 school year." T.S. v. Rumson Board of Education, supra, slip op. at 18.
Although plaintiffs urge this court to consider equitable grounds to preserve their claims, it is well established that "[e]quity does not aid one whose indifference contributes materially to the injury he complains of." Harrington v. Heder, 109 N.J. Eq. 528, 534 (E. & A. 1931); see also Stout v. Seabrook's Executors, 30 N.J. Eq. 187, 191 (Ch. 1878), aff'd, 32 N.J. Eq. 826 (E. & A. 1880) (holding that "the law assists those who are vigilant, not those who sleep on their rights"). Therefore, the motion court did not err in dismissing plaintiff's action as plaintiff's claim of the alleged breach of the stipulation is time-barred.
Plaintiffs' argument that defendant will not be prejudiced by a late filing is insufficient to explain such a significant delay in asserting the right to appeal. Indeed, the absence of a specified prejudice on defendant's part does not excuse plaintiffs' dilatory failure to file a state court complaint promptly after the federal litigation ended. The salutary federal policies underlying the long-expired statute of limitations would surely be undermined if we were to allow plaintiffs to pursue their claims in state court at their leisure.
If substantial compliance were the standard, the Supreme Court has expressed that to benefit from the substantial compliance exception to the statute of limitations, a plaintiff should diligently file its state action "immediately following dismissal in federal court." Negron, supra, 156 N.J. at 305; see also Berke, supra, 359 N.J. Super. at 597 (noting that where a forum is "erroneously selected by filing of a timely suit and the plaintiff acts diligently to rectify the error by refiling in the proper state forum, the policy of the statute of limitations is not offended by regarding the first erroneous filing as substantial compliance with the statute of limitations"). In the instant case, plaintiffs did not promptly file their claim in state court immediately following the dismissal of their claims by the federal court, but waited six weeks after dismissal of the federal action to finally file a complaint in state court. Plaintiffs cannot rely on the principle of substantial compliance when they have failed to demonstrate that they diligently or substantially acted in order to assert a state claim in a timely manner.
Once again, we are reminded of our previous expectation that plaintiffs would first pursue their remedies at the OSEP and, if necessary, only then continue to appeal the matter expeditiously. Almost three years ago, we wrote:
If the OSEP review process is not completed, with all enforcement issues resolved, within forty-five days of this opinion, plaintiffs shall have the right to renew their claims for enforcement by filing a new complaint in the Chancery Division. The forty-five day deadline is imposed for purposes of this case only, and shall not be extended, absent the mutual consent of the parties and OSEP.
In transferring this matter back to the administrative forum, we express no opinion regarding the merits of the enforcement dispute. We do stress, however, that plaintiffs and their children are entitled to a prompt and fair resolution of their grievances, and a reliable plan for ongoing compliance with the terms of the February 2005 settlement. Too much time has already passed for this matter to be left unresolved. [T.S. v. Rumson Board of Education, supra, slip op. at 18-19 (emphasis added)].
The only reasons our goals still remain unfulfilled are due to the puzzling maneuverings by plaintiffs throughout the course of this litigation. The dismissal of counts one and four with prejudice, which relate to the implementation of the stipulation and purport to appeal the OSEP determination, was proper.
The motion judge dismissed without prejudice the remaining counts of plaintiffs' complaint, which sought common law remedies for fraud and breach of the implied covenant of good faith and fair dealing, together with statutory claims pursuant to the LAD. The rationale for this dismissal was the perceived failure of plaintiffs to have exhausted their due process administrative remedies in the OSEP.
Our review of the second amended complaint reveals that each theory of liability advanced by plaintiffs, including those in the dismissed counts one and four, sought identical remedies:
a) Reimbursement of all education costs;
b) Reimbursement of the $5000 evaluation fees Defendants agreed to pay as part of the subject settlement agreement;
c) Compensatory, consequential, and punitive damages;
e) Costs of suit;
f) Attorneys' fees and cost for this action and all prior enforcement and administrative actions;
g) Declaratory judgment that all IEPs for G.S. and K.S. from February 2005 to the present be amended to reflect the terms of the settlement agreement; and
h) Such other relief as the Court shall deem fair and equitable.
Because several of these remedies may still be available in the unresolved due process complaints poised for reinstatement, we find merit in defendants' arguments that insist upon administrative exhaustion prior to embarking upon litigation. Accordingly, the dismissals without prejudice were proper.*fn9
Our exhaustion analysis finds its moorings in the IDEA, which was originally enacted in 1970 as the Education for All Handicapped Children Act. The IDEA provides federal funding to state and local educational agencies that provide disabled students with access to a free and appropriate public education, conditioned on the implementation of various substantive and procedural requirements. The IDEA creates a statutory and regulatory scheme by which states must identify, evaluate and serve the unique needs of each handicapped student residing within the state. Central to the IDEA is the IEP, a comprehensive written plan developed by a team consisting of the student's parents, teachers, and representatives of the local educational agency or school district where the child is receiving educational services. 20 U.S.C.A. § 1414(d). The IEP's ultimate purpose is to tailor the educational services provided to the student in order to meet the special needs resulting from the student's disability and also to ensure that the student receives the benefit of a free and appropriate public education.
20 U.S.C.A. § 1412 (a), § 1414(d).
Given their circumstances, it was entirely appropriate that plaintiffs expressly proceeded to vindicate their perceived rights pursuant to the IDEA; we cannot disengage from that starting point just for the sake of expediency. Generally, pursuant to the IDEA, plaintiffs must exhaust their administrative remedies before proceeding with an action in federal court:
Nothing in this title [20 U.S.C.A. §§ 1400 et seq.] shall be construed to restrict or limit the rights, procedures, and remedies available under the Constitution, the Americans with Disabilities Act of 1990, title V of the Rehabilitation Act of 1973 [29 U.S.C.A. §§ 790 et seq.], or other Federal laws protecting the rights of children with disabilities, except that before the filing of a civil action under such laws seeking relief that is also available under this part [20 U.S.C.A. §§ 1411 et seq.], the procedures under subsections (f) and (g) shall be exhausted to the same extent as would be required had the action been brought under this part [20 U.S.C.A. §§ 1411 et seq.].
[20 U.S.C.A. § 1415(l).]
See also W.B. v. Matula, 67 F.3d 484, 493 (3d Cir. 1995). Moreover, considering the inextricable connection between the IDEA and local decision-makers, we find that exhaustion jurisprudence is applicable to the instant action in state court. 20 U.S.C.A. 1415(i)(2)(A) ("Any party aggrieved . . . shall have the right to bring a civil action with respect to the complaint presented pursuant to this section, which action may be brought in any State court of competent jurisdiction or in a district court of the United States, without regard to the amount in controversy.").
The obligation to exhaust "administrative remedies before resort to the courts is a firmly embedded judicial principle." Garrow v. Elizabeth Gen. Hosp. & Dispensary, 79 N.J. 549, 559 (1979); see Cent. R.R. Co. v. Neeld, 26 N.J. 172, 178, cert. denied. 357 U.S. 928, 78 S.Ct. 1373, 2 L.Ed. 2d 1371 (1958). While the exhaustion requirement may be relaxed in the interest of justice, such relief is not appropriate when the factual record is less than adequate and the issue presented is one that requires the expertise of the appropriate agency. In re Stoeco Dev., Ltd., 262 N.J. Super. 326, 335 (App. Div. 1993). The OSEP is imbued with the requisite experience and expertise to first consider plaintiffs' due process complaints; it may determine that relief pursuant to the IDEA is available, and that could resolve all of plaintiffs' claims, making further resort to our courts unnecessary.
This exhaustion requirement is, by its very terms, limited to those claims where plaintiffs are seeking relief that is concurrently available under the IDEA. 20 U.S.C.A. § 1415(f). This provision bars plaintiffs from circumventing the IDEA'S exhaustion requirement by taking claims that could have been brought under the IDEA and repackaging them as claims under some other statute such as § 1983, the RA, the ADA, or the LAD. See Matula, supra, 67 F.3d at 495-96. Because plaintiffs' primary relief is firmly within the orbit of the IDEA, they must exhaust their due process proceedings before engaging litigational machinery for remedies that may then, arguably, lie outside of the IDEA.
Having reviewed the extensive record, we conclude that plaintiffs' other appellate contentions are entirely without merit and warrant no discussion. R. 2:11-3(e)(1)(E).