Red Clay Consolidated School District v. Stadter et al
Filing
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MEMORANDUM OPINION re 16 defendants' motion for leave to file amended answer with counterclaim. Signed by Judge Leonard P. Stark on 9/27/11. (ntl)
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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
RED CLAY CONSOLIDATED SCHOOL
DISTRICT
Plaintiff,
v.
Civ. No. 10-00784-LPS
T.S. and R.S.,
as parents of 1.S.
Defendants.
James 1. Sullivan, Jr., BUCHANAN INGERSOLL & ROONEY P.C., Wilmington, DE,
Attorney for Plaintiff.
Neil R. Lapinski, ELLIOTT GREENLEAF, Wilmington, DE,
Attorney for Defendants.
MEMORANDUM OPINION
Date: September 27,2011
Wilmington, Delaware
STARK, U.S. District Judge:
Plaintiff Red Clay School District ("Plaintiff" or the "District") filed this action pursuant
to 20 U.S.C. § 1415(i)(C), seeking judicial review of a decision rendered by an administrative
panel at a due process hearing. (D.l. 2) Presently pending before the Court is a motion for leave
to file sealed first amended answer with counterclaim filed by Defendants T.S. and R.S., parents
of 1.S. ("Defendants"). (D.l. 16) For the reasons discussed below, the Court will deny the
motion.
I.
BACKGROUND
On December 22,2009, Defendants filed a due process complaint against Plaintiff
alleging that their minor son's educational needs were not being met in the public school system
and requesting that he be placed in Our Lady of Confidence School at public expense. (D.l. 2 at
~
34) Subsequently, a due process hearing was held before a three-member administrative panel.
(Id. at ~ 35-36) At this hearing, the panel considered the following issues: (1) whether the
District failed to provide an appropriate individualized educational plan ("IEP") for 6th and 7th
grades for 1.S.; (2) whether the District failed to implement 1.S. 's IEP; and (3) whether the
District failed to provide 'meaningful educational benefits to 1.S. (D.l. 2 Ex. A at 2) On luly 12,
2010, the panel issued a 2-1 split decision. (D.l. 2 at ~ 35-36) The panel held that the District
failed to provide 1.S. with a "cohesive educational plan during his 6th and 7th grade years." (Id.)
Further, the panel awarded compensatory education in the form of a reading specialist. (Id.)
However, the panel denied Defendants' requested placement. (ld.)
On September 15,2010, Plaintiff filed this action pursuant to 20 U.S.C. § I4I5(i)(C)
seeking judicial review of the panel's decision. (D.L 2) Defendants filed an answer and
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counterclaim on October 8, 2010. (D.l. 7) Thereafter, on February 1,2011 - the deadline for
amendment of the pleadings contained in the Court's Scheduling Order (D.!. 17 at ~ 2)
Defendants filed the instant motion (D.l. 16). Defendants seek to raise new counterclaims under
the Individuals with Disabilities Education Act ("IDEA"), 20 U.S.C. § 1400 et seq. and § 504 of
the Rehabilitation Act, 29 U.S.C. § 794. (D.I. 16 Ex. 2 at 12-13) Additionally, Defendants seek
to raise a common law claim for fraud. (ld. at 14) Plaintiff opposes the motion. (D.!. 19) The
parties completed briefing on the motion on February 22,2011. (D.I. 22)
II.
LEGAL STANDARDS
Rule 15(a)(2) of the Federal Rules of Civil Procedure provides that after a responsive
pleading has been filed, a party may amend its pleading "only with the opposing party's written
consent or the court's leave," and "[t]he court should freely give leave when justice so requires."
The decision to grant or deny leave to amend lies within the discretion of the court. See Foman
v. Davis, 371 U.S. 178, 182 (1962); In re Burlington Coat Factory Sees. Litig., 114 F.3d 1410,
1434 (3d Cir. 1997). The Third Circuit has adopted a liberal approach to the amendment of
pleadings. See Dole v. Arco, 921 F.2d 484, 487 (3d Cir. 1990). In the absence of undue delay,
bad faith, or dilatory motives on the part of the moving party, the amendment should be freely
granted, unless it is futile or unfairly prejudicial to the non-moving party. See Foman, 371 U.S.
at 182; In re Burlington, 114 F.3d at 1434.
An amendment is futile if it is frivolous, fails to state a claim upon which relief can be
granted, or "advances a claim or defense that is legally insufficient on its face." Koleen v. OPC
Int'/, Inc., 443 F. Supp. 2d 631, 634 (D. Del. 2006). Delay alone is an insufficient reason to deny
leave to amend, but there is grounds to deny amendment if the delay is coupled with either an
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unwarranted burden on the court or undue prejudice to the non-moving party (as a result of the
amendment). See Cureton v. Nat 'I Collegiate Athletic Ass'n, 252 F.3d 267, 273 (3d Cir. 2001).
"[P]rejudice to the non-moving party is the touchstone for the denial of the amendment."
Bechtel v. Robinson, 886 F.2d 644, 652 (3d Cir. 1989) (internal quotation marks omitted). To
establish prejudice, the non-moving party must make a showing that allowing the amended
pleading would (1) require the non-moving party to "expend significant additional resources to
conduct discovery and prepare for trial;" (2) "significantly delay the resolution of the dispute;" or
(3) "prevent [a party] from bringing a timely action in another jurisdiction." Longv. Wilson, 393
F.3d 390, 400 (3d Cir. 2004); see also Cureton, 252 F.3d at 273 (explaining that party may suffer
undue prejudice if proposed amendment causes surprise or results in additional discovery,
additional costs, or additional preparation to defend against new facts or theories alleged).
"Thus, while bearing in mind the liberal pleading philosophy of the federal rules," it is also true
that "substantial or undue prejudice to the non-moving party is a sufficient ground for denial of
leave to amend." Cureton, 252 F.3d at 273.
III.
DISCUSSION
A.
Futility
Plaintiff asserts that Defendants' proposed amendments are futile because Defendants
failed to exhaust the administrative procedures available under the IDEA before bringing their
proposed new claims. (D.I. 19 at 4) Defendants respond that they properly exhausted all
administrative reemedies in accordance with the IDEA. (D.L 21 at 3) Specifically, Defendants
point to § 1415(i)(2) of the IDEA, which permits the Court to "hear additional evidence at the
request of a party;" in Defendants' view, they are not asking the Court to hear new claims, but
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rather are simply presenting additional evidence related to claims previously raised at the due
process hearing. (Id.)
Under the IDEA, a parent can challenge "any matter relating to the identification,
evaluation, or educational placement of a child, or the provision of a free appropriate public
education [("FAPE")] to such child." 20 U.S.C. § 1415(b)(6). However, before an IDEA
challenge can be brought in court, the party asserting the challenge must first exhaust all
administrative remedies. See R.R. v. Manheim Twp. Sch. Dist., 2011 WL 465339, at *3 (3d Cir.
Feb. 10,2011) ("[T]o the extent that any claim seeks relief that is 'available' under the IDEA, the
IDEA's administrative remedies must be exhausted before such an action is brought."); Woodruff
v. Hamilton Twp. Pub. Schs., 305 Fed. Appx. 833, 837 (3d Cir. 2009) ("[T]he IDEA ordinarily
requires that a party exhaust administrative remedies."). IDEA's exhaustion requirement
explicitly applies to claims under federal statutes, including § 504 of the Rehabilitation Act. See
20 U.S.C. § 1415(1); R.R., 2011 WL 465339, at *4 (requiring that claims brought under
Rehabilitation Act "be submitted in the first instance to the administrative tribunal when the
relief sought is essentially the same as that available under the IDEA"). IDEA's exhaustion
requirement also applies to a broad spectrum of ancillary claims relating to a child's F APE. See
Sch. Bd. ofLee CIy., Fla. v. MM ex rei. MM, Fed. Appx. 504, 511 (11th Cir. 2009) (requiring
exhaustion of claim alleging breach of settlement agreement resulting from IDEA due process
hearing because it "relate[s] to" child's FAPE).
Beginning with paragraph 73 of their proposed amended answer and counterclaim
("Counterclaim"), Defendants make allegations relating to J.S.'s 8th grade IEP and post-hearing
placement of J.S. at Our Lady of Confidence. Count One and Count Two of the Counterclaim
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allege violation ofIDEA and § 504 of the Rehabilitation Act. (DJ. 16 Ex. 1 at 12-14) These
allegations, which center around J.S.'s post-hearing IEP, must be exhausted administratively and
cannot be raised before this Court in the first instance.
Defendants do not dispute that they failed to raise these exact issues at the hearing.
Indeed, "[a]s a matter of chronology, a state administrative complaint could not seek relief for a
due process violation that had not yet occurred." CH v. Cape Henlopen Sch. Dist., 606 F.3d 59,
72 n.13 (3d Cir. 2009). The Court finds that Defendants are not simply seeking to have the Court
examine additional evidence, but instead are attempting to assert claims that were not raised at
the administrative hearing. Thus, Count One and Count Two of the Counterclaim are futile
because Defendants failed to exhaust their administrative remedies relating to these claims.
Further, the Court finds Defendants' argument that the Court should waive the exhaustion
requirement is unpersuasive. Defendants assert that where a factual record was developed below,
the purpose of the procedural requirements has been fulfilled. (DJ. 21 at 7) However, in this
case there has been no factual record developed with regard to the claims Defendants now
attempt to raise because the issue of J.S.'s 8th grade IEP was not presented before the
administrative hearing panel below. (See D.l. 2 Ex. A at 2) Thus, the Court will not waive the
exhaustion requirements with respect to Count One and Count Two of the Counterclaim.
Count Three of the Counterclaim asserts a claim for common law fraud under Delaware
law. (DJ. 16 Ex. 1 at 14) In addition to seeking remedies available under IDEA, Defendants
also seek monetary damages for their fraud claim. (D.l. 21 at 5) Monetary damages are not
available as a remedy at an IDEA administrative hearing. See Chambers ex rei. Chambers v.
Sch. Dist. ofPhiladelphia Bd. ofEduc., 587 F.3d 176, 186 (holding "compensatory and punitive
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damages are not an available remedy under the IDEA"); D.E. v. Cent. Dauphin Sch. Dist., 2009
WL 904960, at *4 (M.D. Pa. 2009) (same). Thus, exhaustion of administrative remedies is not
required for the fraud claim. See W.B. v. Matula, 67 F.3d 484, 496 (3d Cir. 1995), abrogated on
other grounds by A. W. v. Jersey City Pub. Schs., 486 F 3d 791, 806 (3d Cir. 2007) ("[W]here the
relief sought in a civil action is not available in an IDEA administrative proceeding, recourse to
such proceedings would be futile and exhaustion is excused.") (emphasis in original); see also
Lester H by Octavia P. v. Gilhool, 916 F.2d 865, 870 (3d Cir. 1990) (determining exhaustion not
required where relief sought was not available in IDEA administrative proceeding).
Although exhaustion of administrative remedies is not required for Count Three, Plaintiff
asserts that this Count is nonetheless futile because Defendants fail to state a claim upon which
relief can be granted. (D.1. 19 at 7) In order to plead a claim for common law fraud under
Delaware law, Defendant must plead facts supporting an inference that: (1) the District falsely
represented or omitted facts that the District had a duty to disclose; (2) the District knew or
believed that the representation was false or made the representation with a reckless indifference
to the truth; (3) the District intended to induce Defendants to act or refrain from acting; (4) the
Defendants acted in justifiable reliance on the representation; and (5) Defendants were injured by
their reliance. See Langdon v. Google, 474 F. Supp.2d 622, 633 (D. Del. 2007). The
circumstances constituting fraud must be pled with particularity. See Fed. R. Civ. P. 9(b); Del.
Super. Ct. R. 9(b). Malice, intent, knowledge and other condition of mind of a person may be
averred to generally. See Del. Super. Ct. R. 9(b).
Here, the Court concludes that Defendants have not met the heightened pleading standard
applicable to their claim for fraud. Although Defendants allege that "[t]he District knew or
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should have known that [J.S.'s] reclassification is dubious," the Counterclaim does not
adequately allege that the District officials had knowledge that J.S.'s reclassification was false or
that they made this reclassification with reckless disregard for the truth. (D.I. 16 Ex. 1 at ~ 93)
Moreover, the Counterclaim does not allege that Defendants acted in justifiable reliance on the
District's representations, as Defendants' own allegations state that they never agreed with 1.S.'s
IEP or the results of his evaluation. (D.1. 16 Ex. 1 at ~~ 18, 29) Thus, the Court concludes that
Count Three of the Counterclaim would not survive a motion to dismiss and is, therefore, futile.
B.
Prejudice l
A motion for leave to amend under Rule 15(a) may be denied when "allowing an
amendment would result in additional discovery, cost, and preparation to defend against new
facts or new theories." See Magsi/ Corp. v. Seagate Tech., 2010 WL 2710472, at *2 (D. Del.
July 7, 2010) (denying motion to amend answer to include counterclaim for fraud because
"plaintiffs would likely be required to conduct additional discovery, ... obtain an additional
expert, and develop new legal strategies"). Here, if Defendants were permitted to add a
counterclaim for fraud, Plaintiff would have to conduct additional discovery beyond what has
already been produced and beyond what is feasible under the governing discovery time line.
Additionally, Plaintiff would likely have to obtain additional expert analysis and develop new
legal strategies relating to Defendants' new claim. Defendants' counterclaim for fraud would
require Plaintiff to produce new evidence regarding the post-implementation appropriateness of
lThe Court will only discuss prejudice with regard to the fraud claim because the Court
has already determined that Defendants failed to exhaust administrative remedies, as is required
under the IDEA, with respect to Count One and Count Two of the Counterclaim.
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lS.'s IEP, which is beyond the scope of issues contemplated by Defendants' initial answer and
counterclaims. Therefore, allowing a counterclaim for fraud would significantly expand the
scope of this case and would unfairly prejudice Plaintiff.
IV.
CONCLUSION
For the foregoing reasons, the Court concludes that Defendants' proposed amended
answer is not appropriate under the circumstances. Defendants' motion for leave to amend
pursuant to Fed. R. Civ. P. 15(a) (D.l. 87) is, therefore, denied. An appropriate order follows.
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