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Lifespan of Minnesota, Inc. v. Minneapolis Public Schools Independent School District #1

Court of Appeals of Minnesota

January 13, 2014

Lifespan of Minnesota, Inc., Appellant,
v.
Minneapolis Public Schools Independent School District #1, Respondent (A13-1165), St. Paul Public School District #625, Respondent (A13- 166), Rosemount-Apple Valley-Eagan Public Schools Independent School District #196, Respondent (A13-1167), Anoka-Hennepin School District #11, Respondent (A13-1168)

Ross, Judge Ramsey County District Court File Nos. 62-CV-12-7967 62-CV-12-8033 62-CV-12-9082 62-CV-12-9218

Terrance W. Moore, Carol. R. M. Moss, Hellmuth & Johnson, PLLC, Edina, Minnesota (for appellant)

Laura Tubbs Booth, Cindy L. Lavorato, Booth & Lavorato, LLC, Minnetonka, Minnesota (for respondents)

Considered and decided by Halbrooks, Presiding Judge; Ross, Judge; and Crippen, Judge. [*]

SYLLABUS

A district court has subject-matter jurisdiction over a corporation's breach-of-contract claims against school districts when the corporation's claims do not require the district court to evaluate the quality of or reasons for the school districts' discretionary executive decisions.

OPINION

ROSS, Judge

Appellant Lifespan of Minnesota, Inc., sued respondents Minneapolis Public Schools, St. Paul Public Schools, Rosemount-Apple Valley-Eagan Public Schools, and Anoka-Hennepin School District for breach of contract based on the school districts' alleged failure to pay for educational services that Lifespan provided to student-attendees of its day treatment program. Lifespan also sued the St. Paul and Anoka-Hennepin districts for alleged statutory violations. The school districts moved for judgment on the pleadings. The district court dismissed Lifespan's claims with prejudice, holding that the court lacked subject-matter jurisdiction over the breach-of-contract claims and that the statutory claims lacked merit. Because Lifespan's contract claims in part seek only to recover damages for the school districts' refusal to pay Lifespan for prior services that Lifespan provided under its contracts with the districts, its claims do not challenge quasi- judicial conduct and are actionable within the district court's subject-matter jurisdiction. We therefore reverse in part. But because the district court appropriately held that the balance of Lifespan's claims either challenge quasi-judicial decisions or lack legal merit, we affirm in part.

FACTS

Litigation in the district court has not left the pleading stage, so we base our jurisdictional review on the following facts without prejudice to the case as it may develop. Lifespan operates a youth day treatment program called the Youth Transition Program. A "[d]ay treatment program" is "a site-based structured program consisting of group psychotherapy . . . and other intensive therapeutic services provided by a multidisciplinary team, under the clinical supervision of a mental health professional." Minn. Stat. § 256B.0943, subd. 1(f) (2012). The program's psychotherapy helps attendees develop independent living skills. Lifespan also provides basic education to the program attendees for the school districts, which remain statutorily obligated to educate students who are enrolled in day treatment programs. See Minn. Stat. §§ 125A.15(c), 125A.51(d) (2012).

Because the districts remain responsible for providing education, they typically pay Lifespan for its academic services to students in their districts. The payment obligation is reflected in a one-page document executed for each attending student, entitled, "Special Education Student Acknowledgement and Tuition Agreement." These tuition agreements include information about the student, the student's parents, the institution providing special education services, and the student's resident school district. Near the bottom of each document is a "fiscal responsibility acknowledgement" that states, "The undersigned District of Legal Residence hereby acknowledges fiscal responsibility for the above student's educational costs. It is understood that this district will be billed for special instruction and service costs provided for this student during Fiscal Year __." A fiscal year is stated for each student. The form document includes a signature block for the "Superintendent/Responsible Authority" to sign and date.

Although an intermediate school district had previously coordinated Lifespan's education services, the intermediate district and Lifespan split in June 2011, and Lifespan began directly employing its own licensed general and special education teachers. This transition allegedly raised the school districts' concerns about the appropriateness of Lifespan's academic programs. The school districts' special education directors, for example, allegedly became unsure whether Lifespan was complying with state and federal regulations because it is not subject to Minnesota Department of Education oversight. They also claimed that their districts could provide the same educational services more efficiently and economically. Each school district informed Lifespan that it would no longer reimburse Lifespan for educational costs or sign tuition agreements for students who attend Lifespan's treatment program.

The St. Paul district's interim executive director of special education sent a letter to Lifespan on June 20, 2011. She wrote, "As Lifespan is not designated as an [Extended School Year] site, Saint Paul will not sign any tuition agreements or pay any invoices for services beginning after June 14, 2011, through the beginning of the new school year." St. Paul then sent letters to parents with children at Lifespan informing them of this decision.

Similarly, an attorney for the Rosemount-Apple Valley-Eagan district sent a letter to Lifespan on ...


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