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EGG Harbor Care Center v. Scheraldi

Superior Court of New Jersey, Appellate Division

July 10, 2018

EGG HARBOR CARE CENTER, Plaintiff-Appellant,

          Argued June 5, 2018

          On appeal from Superior Court of New Jersey, Law Division, Atlantic County, Docket No. L-0166-16.

          Kevin S. Englert argued the cause for appellant (Law Office of Laurie M. Fierro, PA, attorneys; Laurie M. Fierro, of counsel; Kevin S. Englert, on the brief).

          Jennifer M. Carlson argued the cause for respondent (Richard M. Pescatore, PC, attorneys; Jennifer M. Carlson, on the brief).

          Before Judges Fisher, Sumners, and Natali.


          NATALI JR., J.S.C.

          In this collection action we must determine whether a New Jersey court may, consistent with the Due Process Clauses of the State and Federal Constitutions, permissibly exercise specific personal jurisdiction over a California resident for losses incurred by a New Jersey nursing facility that was caring for the Californian's mother. Because we conclude the quantity and nature of the California resident's contacts with New Jersey are so remote and insufficient that to hale him into New Jersey to defend this action would offend "traditional notions of fair play and substantial justice, "[1] we affirm the trial judge's decision to dismiss the case. We remand only to permit the entry of an amended order dismissing the action without prejudice.

         Before moving to New Jersey, Patricia Scheraldi lived in Virginia where she executed a durable, general power of attorney naming her son, defendant Corey Pagano as her attorney-in-fact. Pagano has not lived in New Jersey in over three decades and has not set foot in our state in seventeen years.

         Scheraldi became a resident of plaintiff Egg Harbor Care Center after suffering a stroke and broken hip. Prior to her admission on July 7, 2014, she and her sister, Betty Terhune Davis, also a New Jersey resident, executed an admission agreement with Egg Harbor that contained provisions detailing the parties' respective responsibilities related to Scheraldi's care and, of course, payment. Among the obligations Davis agreed to shoulder was to advocate on Scheraldi's behalf before social services and to be a co-guarantor for Scheraldi's payment obligation. Pagano was neither presented with nor signed the admission document. Rather, he was merely listed as an "other person to be notified."

         Consistent with these obligations and shortly after Scheraldi's admission, Davis filed for Medicaid benefits with the Atlantic County Medicaid Long Term Care Unit (Medicaid Office). Davis' application was denied because Pagano was in control of a California bank account in Scheraldi's name in the amount of $4700, which was above the maximum allowed for Medicaid eligibility. Pagano attempted to contact the Medicaid office on numerous occasions via telephone, email, and facsimile to provide information and ask questions surrounding Scheraldi's application. Pagano ultimately spent down Scheraldi's assets and she was granted coverage beginning January 1, 2015. As a result of Pagano's delay, Egg Harbor did not receive payment from Medicaid for Scheraldi's care from July through December of 2014. The loss of reimbursement from Scheraldi during these five months forms the factual basis for Egg Harbor's damages.

         After an appeal of the Medicaid disqualification period was filed, an Administrative Law Judge (ALJ) reversed the decision of the Medicaid Office. The ALJ also noted the submission of a letter that Pagano sent outlining his efforts to contact the Medicaid Office. The ALJ's decision was reversed by the Director of the Division of Medical Assistance and Health Services (Director).

         Egg Harbor filed a complaint in the Law Division to recover the approximately $19, 000 allegedly owed by Scheraldi, Davis and Pagano. As to Pagano, Egg Harbor alleged that he committed negligence, breached his fiduciary obligation and interfered with Egg Harbor's contractual relations and economic advantage by failing to timely pay down Scheraldi's assets. Davis was dismissed from the case after declaring bankruptcy and Egg Harbor obtained default judgment against Scheraldi.

         Pagano moved to dismiss the complaint claiming New Jersey lacked personal jurisdiction over him. Egg Harbor challenged Pagano's contacts by relying upon the certification of Rosemarie Barruos, Egg Harbor's accounts receivable supervisor. According to Barruos, in addition to being Scheraldi's attorney-in-fact, Pagano served as the representative payee of Scheraldi's monthly pension income, which means that he "receive[d] it on her behalf each month and pays it monthly to Egg Harbor through the mail from California to New Jersey." Barruos also averred that since Scheraldi's admission, she and her staff "have had many conversations and email communications with Mr. Pagano." Although she failed to detail precisely the substance of those conversations, Egg Harbor's merits brief provides that Pagano "maintained regular contact with Egg Harbor by email and telephone" and that the contact was "presumably related to Scheraldi's ongoing health care." Finally, Barruos contended that Pagano's contacts with New Jersey included communications with social services in New Jersey and his direct and indirect prosecution of the action before the ALJ and the Director.

         The trial judge agreed with Pagano and dismissed the complaint with prejudice. On appeal, Egg Harbor makes the same arguments rejected by the trial judge claiming: (1) Pagano's email and telephone contacts with Egg Harbor related to Scheraldi's care; and (2) Pagano's communications with Medicaid and actions with respect to the proceedings before the ...

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