New Jersey Appellate Division Weighs In On Filial Responsibility

Egg Harbor Care Ctr. v. Scheraldi, No. A-2956-16T4, 2018 WL 3352770 (N.J. Super. Ct. App. Div. July 10, 2018).

This Appellate Division opinion focuses on whether family members can be personally liable for the costs of a loved one’s nursing home care facility.

Patricia Scheraldi (“Patricia”) lived in Virginia, where she executed a Durable Power of Attorney naming her son, defendant Corey Pagano (“Corey”), as her attorney-in-fact. Patricia became a resident of Egg Harbor Care Center, in New Jersey, on July 7, 2014, after suffering a stroke and broken hip.  Prior to her admission to the Egg Harbor Care Center, Patricia and her sister, Betty Davis (“Betty”), a resident of New Jersey, executed an admission agreement with Egg Harbor Care Center that contained provisions detailing the parties’ respective responsibilities related to Patricia’s care and payment for that care.  Among the obligations, Betty agreed to advocate on Patricia’s behalf before Social Services and be a co-guarantor for Patricia’s payment obligations.  Patricia’s son Corey was neither presented with nor signed the admission agreement.  Rather, he was merely listed as “another person to be notified” in the agreement. Id. at *2-3.

Shortly after Patricia was admitted to Egg Harbor Care Center, Betty filed for Medicaid benefits with the Atlantic County Medicaid Long Term Care Unit. Initially, Betty’s application was denied because Patricia’s son Corey was in control of a California bank account in Patricia’s name, containing $4,700, which was above the maximum allowed with Medicaid eligibility.  Corey contacted the Medicaid office on numerous occasions via telephone, e-mail, and fax to provide information and ask questions about Patricia’s application.  Ultimately, Corey spent down Patricia’s assets and Patricia was granted coverage on January 1, 2015.  As a result of this delay, Egg Harbor did not receive payment from Medicare for Patricia’s care from July through December of 2014 — totaling approximately $19,000. Id. at *3.

Egg Harbor filed a Complaint in the Law Division to recover the $19,000 from Patricia, Betty, and Corey. As to Corey, Egg Harbor alleged that he committed negligence, breached his fiduciary obligation and interfered with Egg Harbor’s contractual obligations and economic advantage by failing to timely pay down Patricia’s assets.  Betty was dismissed from the case after declaring bankruptcy, and Egg Harbor obtained a default judgment against Patricia. Id. at * 4.

Corey moved to dismiss the Complaint, claiming that New Jersey lacked personal jurisdiction over him. Egg Harbor challenged Corey’s claim and pointed to his contacts with New Jersey by relying on a Certification of Rosemary Barruos, Egg Harbor’s accounts receivable advisor.  She certified that in addition to being Patricia’s attorney-in-fact, Corey served as a representative payee of Patricia’s monthly pension income, which meant that he received it on her behalf each month and paid it monthly to Egg Harbor through the mail from California to New Jersey.  She also certified that herself and her staff had many conversations and e-mail communications with Corey regarding his mother’s health.  Finally, Barruos also contended that Corey’s contacts in New Jersey included communications with Social Services in New Jersey. Id. at * 4 -5.

The Appellate Division disagreed and affirmed the trial court’s holding.

The Appellate Division analyzed when a New Jersey court can exercise personal jurisdiction over a non-resident defendant and went through the two-part test that governs the analysis.

[D]ue process requires only that in order to subject a defendant to a judgment in persona, if he be not present within the territory of the forum, (1) he had certain minimal contacts with it, and (2) such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.

Id. at * 6.

The Appellate Division’s reasoned that it was clear upon consideration of the relationship among Corey, the forum and the litigation that he did not purposely avail himself to the laws and protection of New Jersey. In fact, Corey’s conduct in connection with New Jersey arose out of his relationship with his mother and her residency in the State.  The court reasoned that Corey could not reasonably anticipate being called into court in New Jersey based upon his actions on behalf of his mother.  Corey did not purposely create contacts with New Jersey –

[H]e did not sign the admission agreement and did not otherwise consent to a single term that would have obligated him for his mother’s expenses. This absence of any contractual obligation with Egg Harbor, combined with his lack of residence and lack of physical presence for such an extended period fairly characterizes his contacts as attenuated.

Id. at *10.

The court further opined that Corey’s relevant inactions with Egg Harbor and his attendant contacts to secure benefits for his mother were not affirmative choices that he could reasonably prevent. In fact, his mother’s Power of Attorney (executed in Virginia) obligated him to address issues related to his mother’s assets.  Since those contacts took place in New Jersey, they reflect the fortuitous status of his mother’s residence in a New Jersey facility, a decision to which he played no meaningful role.

Thus, the court concluded that Corey’s communications with New Jersey were not purposeful in the context of minimal contacts analysis. In light of that finding, the court did not discuss the second part of the due process test — whether it would offend traditional notions of fair play and substantial justice.