Choice of Law; Quantum Meruit

Melmark Inc. v. Schutt, 169 A.3d 638 (Pa. Super. 2017), allocatur granted Dec. 26, 2017, appeal docket 78 MAP 2017

Alex Shutt, an indigent individual with autism, resided at Melmark, a non-profit Pennsylvania residential care facility, from 2001 through 2013.  Up until 2012, New Jersey public funding paid Melmark for Alex’s care, at which time the New Jersey Department of Developmental Disability (NJDDD) refused to approve Melmark’s rates.  Alex’s elderly parents, Mr. and Mrs. Shutt, who are New Jersey residents, did not remove Alex from Melmark’s care during either the pendency of their appeal of the NJDDD’s decision or later once they voluntarily dismissed that appeal.  Melmark sued the Shutts for payment for Alex’s care from 2012-2013.

Under both Pennsylvania and New Jersey law, parents of indigent adult children are liable for the financial assistance for their indigent child.  23 Pa. C.S. § 4603; N.J.S.A. § 44:1-140.  However, New Jersey law provides an exception for elderly parents of adult children.  N.J. Stat. Ann. § 44:1-140(c).  The Delaware County Court of Common Pleas held that New Jersey law applied to the suit between Melmark and the Shutts.

The Superior Court upheld this ruling, applying the choice of law analysis known as the Griffith rule, which first requires the court to examine whether a conflict between two states’ laws truly exists, and if so, to apply the law of the state that has the greater interest in application of its law based on a multi-factor, policy-based test.  Budtel Associates, LP v. Continental Casualty Co., 915 A.2d 1353, 1355 (Pa. Super. 1983).

President Judge Emeritus Stevens, specially assigned to the Superior Court and writing for the three-judge panel, rejected Melmark’s argument that there was no conflict of laws because Melmark is a private entity, whereas the New Jersey statute’s elderly parent exception to liability pertained only to situations in which a New Jersey agency was seeking contribution from family members of an indigent person who is receiving public assistance funds.  Focusing instead on the New Jersey statute’s purpose and intent, which are to exempt elderly parents from filial support responsibility for adult indigent children eligible for public assistance, the Superior Court found that the New Jersey statute is applicable, conflicts with the Pennsylvania law, and that New Jersey law should control.

After establishing that a conflict between the two laws existed, the court went on to hold that New Jersey law should apply because New Jersey has the most significant interest.  This interest is protecting elderly New Jersey parents from the financial burden of caring for the adult child who was also a New Jersey resident, as opposed to Pennsylvania’s interest, which the court described as “one involving not the provision of care for the indigent but, instead, the collection of a private debt.” Thus, the court’s policy choice that protecting elderly parents from paying for care for their indigent adult son was more important than the collection of that private debt by the non-profit care provider decided the outcome of the case.

The court also dismissed Melmark’s quantum meruit (unjust enrichment) claim against the Shutts.  The court found that since the Shutts had no legal duty to care for their adult son, Melmark’s services did not benefit the Shutts and therefore the Shutts were not unjustly enriched.

The Supreme Court granted allocatur to determine:

  1. Whether the Superior Court erred as a matter of law in finding that New Jersey’s filial support statute, rather than Pennsylvania’s, applied in this matter where there is no conflict between the New Jersey statute and Pennsylvania’s statute under the facts of this case?
  2. Whether the Superior Court erred in finding that New Jersey has a greater interest in the application of its filial support statute where, inter alia, all of the relevant contacts, with the exception of the residency of Respondents Clarence and Barbara Schutt, are with Pennsylvania; where the Schutts took affirmative actions to keep their highly disabled son in a Pennsylvania nonprofit residential and therapeutic institution, Petitioner Melmark, Inc., with the avowed aim of Melmark funding his care for his “entire life,” including manipulating the Pennsylvania and New Jersey legal systems to prevent his return to New Jersey; and where the Superior Court’s decision results in Melmark being entirely uncompensated for providing an extended period of vital, intensive care for the Schutts’ son?
  3. Whether the Superior Court erred in finding that the lower court properly denied relief on Melmark’s claims for quantum meruit and unjust enrichment?

For more information, contact Kevin McKeon or Dennis Whitaker.