Melmark, Inc. v. Schutt, A.

• Court: Superior Court of Pennsylvania
• Decided: July 19, 2017
• Docket: Melmark, Inc. v. Schutt, A. No. 2253 EDA 2016
• Status: Unpublished

Opinion

J-A08033-17

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

MELMARK, INC. : IN THE SUPERIOR COURT OF : PENNSYLVANIA Appellant : : : v. : : : ALEXANDER SCHUTT, AN : No. 2253 EDA 2016 INCAPACITATED PERSON, BY AND : THROUGH CLARENCE E. SCHUTT : AND BARBARA ROSENTHAL SCHUTT, : HIS LEGAL GUARDIANS, AND : CLARENCE E. SCHUTT AND BARBARA : ROSENTHAL SCHUTT, INDIVIDUALLY :

Appeal from the Judgment Entered June 24, 2016 In the Court of Common Pleas of Delaware County Civil Division at No(s): 13-01572 Civil Action

BEFORE: PANELLA, LAZARUS, JJ., and STEVENS*

MEMORANDUM BY STEVENS, P.J.E.: FILED JULY 19, 2017

Appellant, Melmark, Inc. (“Melmark”) appeals from the judgment

entered in the Court of Common Pleas of Delaware County in Melmark’s

action raising claims of unjust enrichment and quantum meruit. We affirm.

This case presents a “choice of law” question bearing on whether New

Jersey residents Dr. Clarence Schutt and Barbara Rosenthal Schutt (“the

Schutts”) are personally liable for the unpaid balance for specialized services

rendered to their severely autistic, 31 year-old son, Alexander Schutt

____________________________________________

* Former Justice specially assigned to the Superior Court. J-A08033-17

(“Alex”), by Melmark, a Delaware County, Pennsylvania residential care

facility assisting individuals with intellectual disabilities and autism. New

Jersey’s filial support law would shield the Schutts from financial

responsibility for Alex’s care because they are over age 55 and Alex is no

longer a minor. Pennsylvania’s filial support law, meanwhile, would provide

no age-based exception to parental responsibility to pay for care rendered to

an indigent adult child. See, infra.

Presiding over Melmark’s action against the Schutts, the Court of

Common Pleas of Delaware County identified a conflict between the laws and

resolved it in favor of the Schutts. Specifically, the court concluded that

New Jersey had a greater interest in insulating its elderly parents of adult

indigent children from such collection efforts than Pennsylvania had in

compelling out-of-state parents to pay an indigent adult child’s bill to a

private provider.

The attached trial court opinion provides as detailed a factual and

procedural history as can be offered, and we need not repeat such detail,

herein. Suffice it to say that Dr. and Mrs. Schutt, 71 and 70 years old,

respectively, reside in Princeton, New Jersey, and availed themselves of New

Jersey public funding to pay for Alex’s care at Melmark from 2001 to 2012.

In 2011, however, the New Jersey Department of Developmental

Disabilities (NJDDD) did not approve Melmark’s rates, and it notified the

Schutts that relocation of Alex would soon be necessary. NJDDD offered

Alex placement at Bancroft House, in Mullica Hill, New Jersey, but the

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Schutts protested about the facility’s lack of oxygen systems onsite and its

refusal to waive its policy of requiring legal guardians to consent to the use

of non-emergency restraints.

NJDDD advised the Schutts that if they did not agree to the transfer,

NJDDD would cease payments to Melmark as of March 31, 2012. The

Schutts elected against placing Alex at Bancroft and filed an appeal to the

New Jersey Office of Administrative Law, which was denied. On March 31,

2012, the Schutts did not take custody of Alex, leaving Melmark to care for

him without receiving payment.

On August 27, 2012, the Schutts filed an “Application for Emergent

Relief” in New Jersey courts requesting immediate restoration of New Jersey

funding for Alex’s care at Melmark pending the outcome of the

administrative appeal.

Melmark, meanwhile, on July 31, 2012, had filed a Pennsylvania

Commitment Petition in Delaware County Court of Common Pleas, Orphans’

Court Division, asking the County Mental Health or PA Department of

Welfare to take custody of Alex. The Schutts opposed this petition, and

argued in open court that a “funding dispute” between Melmark and NJDDD

was at the root of this issue, and that their upcoming New Jersey hearing

regarding their administrative appeal would resolve the problem.

The Delaware County Orphans’ Court sided with the Schutts, as it

identified the issue in the case as one involving “a funding dispute between

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NJDDD and Melmark . . . that can be resolved at the January 16, 2013 [New

Jersey] Appeals Hearing].”

Thereafter, the Schutts voluntarily canceled the upcoming hearing, and

in so doing, eliminated any opportunity they alleged was available to obtain

payment from NJDDD for Melmark’s services to Alex. Because of Alex’s

increasingly aggressive behaviors, Melmark transported him to a New Jersey

crisis center on May 15, 2013.

Therefore, from April 1, 2012, to May 14, 2013, Melmark provided

Alex with services without receiving payment. With basic services costing

$356.34 per day at seven days a week, and “Adult Day Program” costs of an

additional $221.99 per day at five days a week, Alex’s total unpaid

residential services amounted to $205,236.38.

Melmark filed its Complaint on February 20, 2013 in the Court of

Common Pleas of Delaware County. The court denied the parties’ cross-

motions for summary judgment and set a bench trial date of January 12,

2016. After testimony, trial exhibits, and briefs/memoranda of counsel, the

court found in favor of Melmark on its claims against Alex, by and through

his parents as legal guardians, as to Count I, Unjust Enrichment, and Count

II, Quantum Meruit, in the amount of $205,236.38.

The court, however, found in favor of the Schutts, individually, and

against Melmark as to Counts I, Unjust Enrichment, Count II, Quantum

Meruit, and Count III, Common Law Duty of Support. Notably, the trial

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court applied New Jersey’s filial support law to deny Melmark’s claims

against the parents in this respect.

The trial court relied on several bases to support its decision in favor of

the Schutts. Initially, the court noted that the law upon which Melmark’s

position relied, the Pennsylvania Filial Support Law,1 directs that “the ____________________________________________

1 Section 4603, “Relatives’ liability; procedure” provides, in pertinent part:

(a) Liability.--

(1) Except as set forth in paragraph (2), all of the following individuals have the responsibility to care for and maintain or financially assist an indigent person, regardless of whether the indigent person is a public charge:

(i) The spouse of the indigent person. (ii) A child of the indigent person. (iii) A parent of the indigent person.

(2) Paragraph (1) does not apply in any of the following cases:

(i) If an individual does not have sufficient financial ability to support the indigent person. (ii) A child shall not be liable for the support of a parent who abandoned the child and persisted in the abandonment for a period of ten years during the child's minority.

(b) Amount.--

(1) Except as set forth in paragraph (2), the amount of liability shall be set by the court in the judicial district in which the indigent person resides.

**** 23 Pa.S.C.A. § 4603.

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amount of liability shall be set by the court in the judicial district in which

the indigent person resides.” 23 Pa.C.S.A. § 4603(b)(1). Because both

parties stipulated that Alex was a resident and domiciliary of New Jersey at

all times, the court concluded that, even if it were to apply Pennsylvania law

to Melmark’s claims, Section 4603(b)(1) divested the court of authority to

set an amount owed because the court clearly does not exist in the judicial

district where the parties agreed Alex resides.

Assuming, arguendo, that Section 4603(b)(1) would confer authority

upon the court to set the amount due, the court undertook a choice of law

analysis pursuant to Pennsylvania precedent, see infra. The court identified

a conflict between Pennsylvania and New Jersey’s filial support laws, and it

determined that, because New Jersey has the most significant contacts or

relationships in the present controversy, New Jersey has the greater interest

in the application of its law.

Melmark filed the present appeal and raised the following questions:

DID DELAWARE COUNTY ORPHANS’ COURT ERR WHEN IT DETERMINED THAT NEW JERSEY’S FILIAL SUPPORT LAW— INSTEAD OF PENNSYLVANIA’S FILIAL SUPPORT LAW—APPLIED WHEN THIS DISPUTE INVOLVES A FAILURE TO PAY FOR SERVICES PROVIDED BY A PENNSYLVANIA NOT-FOR-PROFIT ORGANIZATION OPERATING IN PENNSYLVANIA?

DID THE COURT ERR WHEN IT FOUND IT LACKED THE ABILITY UNDER THE PENNSYLVANIA FILIAL SUPPORT STATUTE, 23 PA.C.S. § 4603, TO SET THE AMOUNT DUE IN THIS MATTER?

DID THE LOWER COURT ERR IN NOT ENTERING A VERDICT OR JNOV IN FAVOR OF MELMARK UNDER PENNSYLVANIA’S FILIAL SUPPORT LAW?

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DID THE LOWER COURT ERR IN NOT ENTERING A VERDICT OR JNOV IN FAVOR OF MELMARK UNDER THE THEORIES OF UNJUST ENRICHMENT AND QUANTUM MERUIT?

Appellant’s brief at 3-4.

Melmark contends, first, that the court erred when it applied New

Jersey law rather than Pennsylvania law to the question of whether the

Schutts were financially liable for all unreimbursed expenses incurred by

Melmark in supporting Alex. According to Melmark, New Jersey’s filial

support law at N.J.S.A. §§ 44:1-139 and 1-1402 has no application to the ____________________________________________

2 Section 44:1-139, “Obtaining or compelling assistance of relatives,” provides:

Upon application for the relief of a poor person an overseer1 shall ascertain if possible the relatives chargeable by law for his support and proceed to obtain their assistance or compel them to render such assistance as is provided by law. 1 Now municipal director of welfare, see N.J.S.A. § 44.1-73.2.

N.J.S.A. § 44:1-139.

Section 44:1-140, “Relatives Chargeable,” provides:

a. The father and mother of a person under 18 years of age who applies for and is eligible to receive public assistance, and the children, and husband or wife, severally and respectively, of a person who applies for and is eligible to receive public assistance, shall, if of sufficient ability, at his or their charge and expense, relieve and maintain the poor person or child in such manner as shall be ordered, after due notice and opportunity to be heard, by any county or municipal director of welfare, or by any court of competent jurisdiction upon its own initiative or the information of any person.

(Footnote Continued Next Page)

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present matter because the sole purpose of the scheme is to allow New

Jersey to seek contribution from family members of an indigent person

under 18 years old who is receiving public assistance funds. Notably, New

Jersey was not supplying public assistance funds during the time about

which Melmark complains, i.e., April 1, 2012, to May 14, 2013.

Therefore, Melmark maintains, there existed no conflict of law between

New Jersey’s and Pennsylvania’s respective filial support laws, as New Jersey

had no interest in the present case, where a Pennsylvania non-profit, alone,

was seeking reimbursement.

It is well-settled that a dispute concerning the applicable substantive

law compels a choice of law analysis. Wilson v. Transport Ins. Co., 889

A.2d 563, 571 (Pa.Super. 2005). “Substantive law is the portion of the law

which creates the rights and duties of the parties to a judicial proceeding,

_______________________ (Footnote Continued)

b. The provisions of this section shall apply to the minor children of a mother whose husband shall fail properly to support and maintain such children when by reason thereof they are likely to become a public charge.

c. The provisions of this section shall not apply to any person 55 years of age or over except with regard to his or her spouse, or his or her natural or adopted child under the age of 18 years.

N.J. Stat. Ann. § 44:1-140.

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whereas procedural law is the set of rules which prescribe the steps by which

the parties may have their respective rights and duties judicially enforced.”

Id. A court conducts the choice of law analysis under the choice of law rules

of the forum state. See Griffith v. United Air Lines, Inc., 416 Pa. 1, 21,

203 A.2d 796, 805 (1964).

“The first step in a choice of law analysis under Pennsylvania law is to

determine whether a conflict exists between the laws of the competing

states.” Budtel Associates, LP v. Continental Cas. Co., 915 A.2d 640,

643 (Pa.Super. 2006). “If no conflict exists, further analysis is

unnecessary.” Id. If the court finds a true conflict exists, the court must

then decide which state has the greater interest in the application of its law,

including which state had the most significant contacts or relationship to the

action. Id. See also Troxel v. A.I. DuPont Inst., 636 A.2d 1179, 1180-

81 (Pa.Super. 1994) (noting relevant inquiry is “the extent to which one

state rather than another has demonstrated, by reason of its policies and

their connection and relevance to the matter in dispute, a priority of interest

in the application of its rule of law.”).

Initially, we address whether the trial court erred in discerning a

conflict of law between the Pennsylvania and New Jersey filial support laws.

Melmark argues that since the present action did not involve a New Jersey

agency attempting to recoup public funds expended for Alex’s care, New

Jersey’s statutory regime has no application in Melmark’s action for

reimbursement against the Schutts.

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While there is no dispute that the entity seeking reimbursement is

private rather than public, we disagree with Melmark’s position that the New

Jersey statutory scheme evinces no purpose to shield elderly parents from

collection efforts for services rendered to an adult indigent child who had

received public assistance for the majority of his stay with the provider and

continues to remain eligible for public assistance.

Implicit in the law’s inclusion of age-based limits is the legislative

intent to exempt elderly parents such as the Schutts from filial support

responsibility for adult indigent children eligible for public assistance. As

noted by the trial court, Alex has been the recipient of public assistance,

through Medicaid, Social Security Disability benefits, and the NJDDD since

2004. “At all relevant times,” the court indicates, “Alex paid and continues

to pay most of his Social Security Disability benefits to NJDDD to contribute

to the services provided by NJDDD.” Trial Court Opinion at 19. Thus, the

record establishes that Alex had sought and received public assistance

through the state of New Jersey for the majority of the relevant time period,

and he remains eligible for New Jersey assistance despite the fact the

inability of NJDDD and Melmark to agree on payment terms.

We, therefore, agree with the trial court that the New Jersey statutory

scheme reflects a legislative purpose to protect its elderly parents from

financial liability associated with the provision of care for their public

assistance-eligible indigent adult children under the present circumstances.

The purpose is plainly manifest in the language of N.J.S.A. 44:1-140 and is

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appropriately put into effect where, as here, elderly parents have depended

on New Jersey payments to a private health care provider for many years

and where they have made sincere efforts to secure appropriate

replacement services once New Jersey and the provider could no longer

agree on payment terms.

Having identified such a protective purpose in the New Jersey law

distinguishes the present matter from a federal decision upon which Melmark

relies. In Eades v. Kennedy, PC Law Offices, 799 F.3d 161 (2d Cir.

2015), the Second Circuit Court of Appeals found no conflict between the

Nursing Home Reform Act (NHRA) and Pennsylvania’s indigent support

statute because there was “[n]othing in the NHRA indicates that its purpose

is to shield family members of nursing home residents from financial

responsibility for the residents’ medical care[.]” Id. at 172. All provisions of

the law, the circuit court observed, pertained to the provision of quality care

for nursing home residents.

In contrast, the New Jersey law in question expressly contemplates

shielding elderly parents of adult indigent children from support obligations.

Eades, therefore, is inapposite to the present matter, and it offers no

support for Melmark’s position denying the existence of a conflict between

New Jersey’s and Pennsylvania’s filial support laws. Accordingly, we discern

no error with the trial court’s opinion recognizing a conflict between the

Pennsylvania and New Jersey filial support statutes as applied to the present

matter.

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Even if a conflict does exist, Melmark argues, it is Pennsylvania that

enjoys the stronger interest in having its filial support law applied, as the law

was designed to allow Pennsylvania facilities providing care for indigent

persons in Pennsylvania to secure payment from responsible family

members. This purpose is especially pertinent in the present case, Melmark

argues, because the Schutts took legal steps that prolonged Alex’s stay in

Pennsylvania after NJDDD stopped paying for his expenses.

According to the Schutts, the State of New Jersey has the most

significant interest because its relevant statute is a “family law support” law,

and the location of one’s domicile provides the primary and ultimate

reference for the court in deciding choice of law issues. Here, Alex’s

permanent domicile has always been his family’s New Jersey home, making

New Jersey “the state with the most central relationship to the family unit.”

Appellees’ brief at 10-11.

These considerations should be controlling, the Schutts maintain,

particularly where Melmark wishes to use the Pennsylvania filial support

statute as a debt collection tool rather than as a means by which to maintain

the continued support of the indigent. It is New Jersey that has the primary

responsibility to establish and regulate the support obligations of New Jersey

citizens, the Schutts emphasize, such that its interest in this matter would

be impaired by application of Pennsylvania filial support law.

Upon conducting a full examination of party briefs, the certified record,

and our standard of review pertaining to choice of laws issues, as set forth

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above, we find that the trial court’s opinion provides a cogent and

comprehensive discussion rejecting Melmark’s claims and supporting its

opinion that New Jersey’s interest in the application of its filial support law

was paramount. See Trial Court Opinion at pp. 18-21. In this regard, the

court’s opinion subordinates Pennsylvania’s interest as one involving not the

provision of care for the indigent but, instead, the collection of a private debt

for services rendered after New Jersey withdrew funding from a

Pennsylvania institution. New Jersey, on the other hand, had an interest in

protecting elderly New Jersey parents from caring for their adult child, also a

New Jersey resident, consistent with New Jersey law. Finding no abuse of

discretion or error of law in the court’s assessment, we uphold its decision to

apply New Jersey’s filial support law to Melmark’s claims seeking parental

support from the Schutts.

Having determined that the Schutts were under no obligation under

New Jersey law to finance Alex’s stay at Melmark after NJDDD withdrew

funding, it follows that they experienced no personal enrichment during this

latter portion of Alex’s stay, contrary to Melmark’s final claim for quantum

meruit.

Quantum meruit is essentially a claim for unjust enrichment, which

“implies a contract [and] requires the defendant to pay to the plaintiff the

value of the benefit conferred.” Durst v. Milroy, 52 A.3d 357, 360 (Pa.

Super. 2012). In a quantum meruit action, the plaintiff must prove: (1)

[the] benefits conferred on defendant by plaintiff; (2) appreciation of such

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benefits by defendant; and (3) acceptance and retention of such benefits

under such circumstances that it would be inequitable for defendant to retain

the benefit without payment of value. See id. The application of the

doctrine depends on the particular factual circumstances of the case at

issue. Schneck v. K.E. David, Ltd., 666 A.2d 327, 328 (Pa. Super. 1995).

Again, for the reasons expressed in the trial court’s opinion, we uphold

the court’s determination that Melmark was not entitled to relief under a

theory of quantum meruit. As the trial court observed, the Schutts had no

legal obligation to care for their adult son, services were not rendered to the

Schutts personally, and they never entered into a contract with Melmark in

any capacity. Only Alex appreciated the benefits of Melmark’s services, the

trial court concluded, and it was for that reason that the court entered

judgment against Alex, by and through the Schutts in their fiduciary

capacities and payable by the estate, and not in their individual capacities.

For the foregoing reasons, judgment is AFFIRMED. Judgment Entered.

Joseph D. Seletyn, Esq. Prothonotary

Date: 7/19/2017

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