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M.K. v. Prestige Academy charter school

United States District Court, D. Delaware

January 31, 2018

M.K., by and through his Mother, BARLOWE K. Plaintiffs,
v.
PRESTIGE ACADEMY CHARTER SCHOOL, et al., Defendants.

          MEMORANDUM

          Gerald Austin McHugh United States District Judge

         This case concerns both substantive and procedural questions as to the enforceability of an agreement between a parent and a charter school in settlement of claims under the Individuals with Disabilities Act (IDEA), 20 U.S.C. § 1400 (2004). The substantive question is whether the agreement can be enforced against the Delaware Department of Education, as the responsible State Education Agency, where the charter school has ceased to exist, leaving the child with nowhere else to turn to vindicate his right to a free and appropriate education. The threshold procedural question is whether Plaintiff has waived federal jurisdiction because the settlement was finalized outside the statute's resolution process, or whether jurisdiction nonetheless exists because the case necessarily presents a substantial issue of federal law. Because I am persuaded that the agreement is enforceable against the State, and because I further conclude that resolution of that question necessarily creates a substantial federal question, Delaware's pending Motion to Dismiss will be denied.

         I. The IDEA Framework

         The Individuals with Disabilities Education Act (IDEA) requires states to “make available a free and appropriate public education [“FAPE”] to all children with disabilities residing within their borders.” D.S. v. Bayonne Bd. of Educ., 602 F.3d 553, 556 (3d Cir. 2010). The Act seeks to ensure that every child with a disability has access to a FAPE that is tailored to meet his or her unique educational needs. Charlene R. v. Solomon Charter Sch., 63 F.Supp.3d 510, 512 (E.D. Pa. 2014). The central mechanism for securing this right is the Individualized Education Program (IEP), which is a package of special educational and related services designed to meet the unique needs of a disabled child. H.E. v. Palmer, 220 F.Supp.3d 574, 577 (E.D. Pa. 2016). To administer those services, the IDEA relies on states' education apparatuses.

         The IDEA requires states to submit a plan of compliance to the Secretary of Education in exchange for federal money. § 1401(9). The Secretary then distributes federal funding to State Education Agencies (SEAs), which are responsible for apportioning those funds to schools and other Local Education Agencies (LEAs). § 1413(a). That process requires LEAs to apply to their SEA for funding. § 1412(a)(11)(A). With this funding, the LEA provides services to children with disabilities through, inter alia, developing an IEP after evaluating the child and continually making revisions as appropriate. §§ 1414(d)(1)(A)(i), (d)(4). The Fourth Circuit has aptly summarized the framework as follows:

The IDEA delegates supervisory authority to the SEA, which is responsible for administering funds, setting up policies and procedures to ensure local compliance with IDEA, and filling in for the LEA by providing services directly to students in need where the LEA is either unable or unwilling to establish and maintain programs in compliance with IDEA. The LEA, on the other hand, is responsible for the direct provision of services under IDEA, including the development of an . . . [IEP] for each disabled student, the expenditure of IDEA funds to establish programs in compliance with IDEA, and the maintenance of records and the supply of information to the SEA as needed to enable the SEA to function effectively in its supervisory role under [the] IDEA.

Gadsby v. Grasmick, 109 F.3d 940, 943 (4th Cir. 1997).

         The Act enforces a child's right to a FAPE by providing procedural safeguards that allow parents to contest LEA decisions regarding their children. Specifically, it requires states to adopt procedures affording an opportunity for any party to present a due process complaint regarding the “identification, evaluation, or educational placement of the child, or the provision of a [FAPE].” §§ 1415(a), (b)(6). Upon the LEA or SEA receiving that complaint, parents are entitled to an impartial due process hearing. § 1415(f)(1)(A). The findings and decisions that result are appealable in both state and federal district court. § 1415(i)(2)(A).

         In addition, out of concern that such adversarial proceedings alone could breed distrust and discourage cooperation between the parents and school personnel, Congress amended the IDEA in 1997 and 2004 to facilitate the amicable resolution of disputes prior to the formal due process hearing. T.L. ex. rel. Latisha G. v. Pennsylvania Leadership Charter Sch., 224 F.Supp.3d 421, 425 (E.D. Pa. 2016) [hereinafter “T.L.”] (citing H. R. Rep. No. 108-77, at 85 (2003); Pub. L. No. 105-17 (1997); Pub. L. No. 108-446 (2004)). Two additional processes were added: the resolution meeting and period [hereinafter “resolution process”], and the mediation process.

         The resolution process begins when the LEA receives a proper due process complaint and requires that a due process hearing not be held until at least 30 days after the filing of that complaint. 34 C.F.R. § 500.510(b) (2007). In the interim, the LEA must hold a resolution meeting-akin to a pretrial settlement conference-within 15 days of the filing of a due process complaint. Id. § 300.510(a). The meeting allows parents to “discuss their complaint, and the facts that form the basis of the complaint, ” and gives the LEA “the opportunity to resolve the complaint.” 20 U.S.C. § 1415(f)(1)(B). To ensure productive resolution meetings, the IDEA requires the attendance of “a representative of the [LEA] who has decision-making authority.” Id.; see also 34 C.F.R. § 300.510(b)(5) (allowing parents to seek the intervention of a hearing officer if the LEA fails to produce the required decision-maker). The parties may also agree to expand or contract the initial 30-day time frame between the filing of the complaint and the initiation of a due process hearing. See §§ 1415(e)(2)(B), (f)(1)(B)(i). And if a settlement agreement is reached “at a [resolution meeting]” or during the resolution period, the parties can execute an agreement, which is then enforceable in state or federal court. §§ 1415(e)(2)(B), (f)(1)(B)(i), 1415(f)(1)(B)(iii). Although it is less relevant here, a resolution reached in the mediation process under 1415(e)(2)(F) is likewise enforceable in federal or state court.

         Ordinarily, disputes regarding a FAPE denial are between parents and LEAs. Here, as discussed more fully below, M.K.'s school, Prestige, was a charter entity that Plaintiff contends will soon be defunct. Accordingly, Plaintiff has sued the State of Delaware as the responsible SEA, and Prestige has not defended the case.

         II. Relevant Facts

         M.K., now 16 years old, attended Prestige Academy Charter in Wilmington, Delaware from August 2011 to the end of the 2013-14 school year. His mother, Barlowe K., filed a due process complaint on his behalf against the Charter School in November 2015. The complaint alleged that Prestige failed to appropriately evaluate M.K. and provide an appropriate educational program to meet his needs, despite his being eligible as a student with disabilities under the IDEA. Barlowe K. eventually executed a settlement agreement with Prestige on May 9, 2016 [hereinafter “Settlement Agreement”]. See Ex. A. 7, ECF No. 1-1.

         The Settlement Agreement itself required Prestige to “provide payment or reimbursement for up to $30, 000 worth of legitimate educational expenses for [M.K.] to be utilized between [then] and M.K.'s 21st birthday, ” id. ¶ 3, in addition to attorney's fees in the amount of $15, 000, id. ¶ 5. Requests for reimbursement that qualified as legitimate educational expenses, as defined by the Agreement, were to be paid within 30 days of receipt. Id. ¶ 4. These included expenses for tutoring, related services (as defined under the IDEA), vocational training, educational evaluations, behavioral and social skills training, and assistive technology. The State of Delaware is not a party to the agreement and did not participate in the negotiations.

         In reaching the Agreement, the Hearing Panel Order dated January 4, 2016 states that, on December 30, 2015, the parties orally agreed to waive the 30-day waiting period in light of “settlement negotiations [that] were taking place.” Def.'s Ex. A-1 p. 1, ECF No. 4-1. That same order states that the resolution period ended on the day of the verbal waiver. The parties memorialized that waiver in a written agreement dated January 22, 2016, and ended the due process hearing by stipulation on January 25, 2016. Def.'s Ex. A-2, A-3, ECF No 4-1.

         In exchange, Plaintiff relinquished her and her son's statutory rights under the IDEA, the Rehabilitation Act, the Americans with Disabilities Act, the No Child Left Behind Act, and the Delaware state special education statutes. They also relinquished their rights arising from Prestige's noncompliance with any IDEA provisions concerning identification, evaluation, and development of an IEP for M.K., such as claims for compensatory education, tuition reimbursement, and reimbursement for attorney's fees. Plaintiff did, however, reserve the right to litigate issues of non-compliance, and claims arising from physical injuries that may have occurred while M.K. was at Prestige.

         Prestige has since failed to make any payments under the Agreement, according to allegations in the Complaint. It has also not renewed its charter, and according to Plaintiff, will soon cease to be a viable entity. That means it will not be able to satisfy its obligations under the Agreement. As a result, Plaintiff contacted the Delaware Department of Education [hereinafter “Delaware”], as the governing SEA, but Delaware has denied responsibility for the relief negotiated in the Settlement Agreement.

         Plaintiff has sued Prestige and Delaware alleging two counts: (i) violation of the IDEA, and (ii) breach of contract regarding M.K.'s “ongoing federal right.” Delaware premises its denial of responsibility on the fact that the Agreement was not made through the resolution process, and on that same basis has moved to dismiss the case for lack of subject matter jurisdiction. In the alternative, Delaware moves to dismiss for failure to state a claim, contending it has no legal responsibility, and supporting its position with eight different arguments.

         III. Standard

         Defendant Delaware's motion is two-fold, first challenging the existence of jurisdiction under Rule 12(b)(1) and second, contending that Plaintiff has not made out a legally cognizable claim under Rule 12(b)(6). The standard of review for the latter is well-settled. I accept as true all of the factual allegations contained in the complaint, and assess whether they make out a plausible legal claim. Bell Atlantic Corp v. Twombly, 550 U.S. 554, 572 (2007). Depending on the nature of the challenge, that same standard may apply to the former. That is the case if the jurisdictional challenge is facial-that is, Plaintiff's allegations have not been contradicted. Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 892 n.17 (3d Cir. 1977). But if the contrary is true, rendering the challenge a factual one, the reviewing court is allowed to “consider evidence outside the pleadings and resolve any disputed material facts in order to evaluate the jurisdictional [challenge].” Tonge v. Fundamental Labor Strategies, Inc., No. 16-cv-6310, 2017 WL 4347663, at *5 (E.D. Pa. 2017) (quoting Constitution Party of Pa. v. Aichele, 757 F.3d 347, 358-59 (3d Cir. 2014)).

         Despite Defendant challenging Plaintiff's allegation that the “Settlement Agreement was reached pursuant to [the] IDEA's resolution process, ” Def.'s Mot. 2, ECF No. 4 (citing Complaint ¶ 13, ECF No. 1), I construe Defendant's Rule 12(b)(1) motion as a facial jurisdictional challenge. Indeed, that an agreement was reached pursuant to or during the IDEA's resolution process is dispositive of the legal question: whether the IDEA provides the basis for jurisdiction. See T.L., 224 F.Supp. at 425 (E.D. Pa. 2016). As a result, it is a legal conclusion that I would not consider under the controlling Rule 12(b)(6) standard. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (“[W]e are not bound to accept as true a legal conclusion couched as a factual allegation”) (quoting Twombly, 550 U.S. at 555)).

         And as to the facts underlying Plaintiff's allegation, Defendant supplements the pleadings with public documents from the administrative proceedings leading up to the Settlement Agreement. See Def.'s Mot. 2, ECF No. 4. These documents reveal that Plaintiff agreed to waive the resolution process. See Id. But even if the complaint alleged otherwise, which it does not, and I considered such allegations factual which, as explained above, I do not, that would still not amount to a factual jurisdictional challenge because I could properly consider those documents under the Rule 12(b)(6) standard, and likewise on a facial jurisdictional challenge. See Ludovico v. Mun. of Norristown, No. 17-cv-2214, 2017 WL 4404308, at *2 (E.D. Pa. 2017) (“[A] court may properly look at public records, including judicial proceedings, in addition to the ...


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