KIPP PHILADELPHIA CHARTER SCHOOLS v. COMMONWEALTH of Pennsylvania, DEPARTMENT OF EDUCATION; and Pedro A. Rivera, in his official capacity as Secretary of Education, Respondents
No. 52 M.D. 2016
Commonwealth Court of Pennsylvania.
May 1, 2017
Argued: December 14, 2016
OPINION BY JUDGE COVEY
Having determined that the Charter School is entitled to summary relief, Respondents’ Preliminary Objections are overruled as moot. See Leach v, Commonwealth, 118 A.3d 1271, 1289 (Pa. Cmwlth. 2015), aff‘d, 141 A.3d 426 (Pa. 2016); see also Marshall v. Pa. Bd. of Prob. & Parole, 162 Pa.Cmwlth. 256, 638 A.2d 451 (1994) (summary relief may be granted before disposing of outstanding preliminary objections).
IV. Conclusion
Chester II does not apply to the circumstances presented in this case, nor did Respondents seek to adhere to its ruling. Based upon the particular facts presented herein, the Charter School‘s Application is granted. Accordingly, we direct Respondents to:
- Deduct and withhold $83,593.32 for the 2014-2015 school year, as documented by the Charter School, from any and all state payments made to the School District of Philadelphia.
- Deduct and withhold $19,492.40 for the 2014-2015 school year, as documented by the Charter School, from any and all state payments made to the William Penn School District.
- Pay to the Charter School costs and attorney‘s fees incurred from the date the Charter School‘s Complaint was filed with this Court, until the aforementioned amounts are deducted and withheld by Respondents.
Respondents’ Preliminary Objections are overruled.
ORDER
AND NOW, this 1st day of May, 2017, Richard Allen Preparatory Charter School‘s (Charter School) Application for Summary Relief is GRANTED. The Commonwealth of Pennsylvania, Department of Education and Pedro A. Rivera (Respondents) are directed to:
- Deduct and withhold $83,593.32 for the 2014-2015 school year, as documented by the Charter School, from any and all state payments made to the School District of Philadelphia.
- Deduct and withhold $19,492.40 for the 2014-2015 school year, as documented by the Charter School, from any and all state payments made to the William Penn School District.
- Pay to the Charter School costs and attorney‘s fees incurred from the date the Charter School‘s Petition for Review in the Nature of an Appeal and a Complaint for Direct Payment, Mandamus, Declaratory and Injunctive Relief was filed with this Court, until the aforementioned amounts are deducted and withheld.
Respondents’ Preliminary Objections are OVERRULED.
M. Abbegael Giunta, Senior Deputy Attorney General, Harrisburg, for respondents.
BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge, HONORABLE RENÉE COHN JUBELIRER, Judge, HONORABLE ROBERT SIMPSON, Judge, HONORABLE PATRICIA A. McCULLOUGH, Judge, HONORABLE ANNE E. COVEY, Judge, HONORABLE MICHAEL H. WOJCIK, Judge, HONORABLE JULIA K. HEARTHWAY, Judge
OPINION BY JUDGE COVEY
Before the Court is KIPP Philadelphia Charter Schools’ (Charter Schools)1 Application for Summary Relief (Application)
I. Background
Pursuant to [S]ection 1725-A of the CSL ..., a school district that has any resident students enrolled in a charter school must pay the charter school for each enrolled student. Waslow v. Pa. Dep‘t of Educ., 984 A.2d 575, 576 (Pa. Cmwlth. 2009).
If a school district fails to make a payment to a charter school as prescribed in this clause, the [S]ecretary shall deduct the estimated amount, as documented by the charter school, from any and all [s]tate payments made to the district after receipt of documentation from the charter school.
On July 14, 2015, the Charter Schools submitted a reconciliation report to the
In 2012, the Pennsylvania Commonwealth Court [in Chester Community Charter School v. Pennsylvania Department of Education, 44 A.3d 715 (Pa. Cmwlth. 2012) (Chester II)] determined that the mandatory withholding requirements of [S]ection 1725-A(a)(5) of the [CSL] apply only to claims on current year funding. The prior administration delayed the implementation of the [C]ourt‘s decision. [The Department] cannot contravene the law, and therefore will cease the end-of-year reconciliation process. Instead, charter schools may work directly with resident school districts to reconcile each school year‘s tuition payments based on the number of days that each student was enrolled in the charter school. Charter schools may continue to submit invoices to [the Department] for deduction of estimated amounts related to current school year enrollment. However, pursuant to the law, charter schools must first provide resident school districts with an invoice and must have provided the resident school district with sufficient time and opportunity to make a payment before requesting subsidy redirection from [the Department]. Therefore, [the Department] will only process charter school withholding requests that relate to the enrollment of students in the current school year.
Complaint Ex. B (emphasis added). Effectively, the Department declared it would only redirect delinquent school districts’ funding under
On January 8, 2016, the Charter Schools made an email inquiry to the Department regarding the status of its fund redirection request. By January 20, 2016 email, the Department notified the Charter Schools that the Department would not pay the Charter Schools’ 2014-2015 reconciliation. See Complaint Ex. C.
On February 8, 2016, the Charter Schools filed the Complaint seeking: (1) an order directing the Department and/or the Secretary to pay the Charter Schools $425,658.74 owed by the District for the 2014-2015 school year (Count I); (2) a mandamus order directing the Secretary to withhold the District‘s state funds until the Charter Schools are paid in full, redirect the Charter Schools’ overdue payments, make all outstanding payments to the Charter Schools and pay the Charter
On March 7, 2016, the Department issued a letter to charter schools, including the Charter Schools (March 2016 Notice), clarifying:
On January 8, 2016, the [Department] notified charter schools and school districts that it would no longer be performing an end-of-year reconciliation process. However, prior to issuing this notification, the Department received documentation from charter schools for the 2014-2015 school year. As a result, the Department is providing school districts with the information received prior to January 8, 2016. One or more charter schools have prepared the enclosed report(s) related to payments made and the amount claimed to be due for students enrolled during the 2014-2015 school year. As indicated in its previous communication, the Department will not be withholding funds related to the documentation submitted by charter schools because there are no 2014-[20]15 funds from which to withhold. This matter will proceed to an administrative hearing as prescribed by [Chester II]. As a result of the record established through the administrative hearing process, the Secretary will then issue a decision. Since there are no 2014-[20]15 funds from which to withhold, the manner in which funds are paid based on the Secretary‘s decision will be decided by the respective charter school and school district.
Application Ex. A (emphasis added).
On March 14, 2016, Respondents filed their Preliminary Objections to the Complaint arguing that: (1) the Charter Schools failed to exhaust their statutory remedies since the matter has not been submitted to a hearing (Objection I); (2) this Court lacks jurisdiction because the January 2016 Notice was not a final, appealable order (Objection II); (3) not all of the Charter Schools have a direct interest and, thus, lack standing (Objection III); (4) Complaint Counts I through IV fail to state claims upon which relief may be granted because, inter alia, Respondents have sovereign immunity (Objections IV-IX); and, (5) the Charter Schools failed to join necessary parties (Objection V).
On April 13, 2016, the Charter Schools filed the Application seeking judgment in its favor and against Respondents because Respondents have denied its reconciliation request for the 2014-2015 school year in violation of
II. Summary Relief
[Pennsylvania Rule of Appellate Procedure (Pa.R.A.P.)] 1532(b) provides that [a]t any time after the filing of a petition for review in an original jurisdiction matter the court may on application enter judgment if the right of the applicant thereto is clear. Pa.R.A.P. 1532(b). An application for summary relief is properly evaluated according to the standards for summary judgment. Myers v. Commonwealth, 128 A.3d 846, 849 (Pa. Cmwlth. 2015). That is, in ruling on a[n application] for summary relief, the evidence must be viewed in the light most favorable to the non-moving party and the court may enter judgment only if: (1) there are no genuine issues of material fact; and (2) the right to relief is clear as a matter of law. N. Youth Servs., Inc. v. Dep‘t of Pub. Welfare, 1 A.3d 988, 990 n.1 (Pa. Cmwlth. 2010).
Flagg v. Int‘l Union, Sec., Police, Fire Prof‘ls of Am., Local 506, 146 A.3d 300, 305 (Pa. Cmwlth. 2016) (emphasis added).
A. Genuine Issues of Material Fact
At December 14, 2016 oral argument before this Court, counsel for the Charter Schools represented, and Respondents acknowledged, that under Governor Corbett‘s administration, the Department‘s practice was to allow charter schools to conduct end-of-year reconciliations and, based upon the amounts charter schools documented they were owed, the Department would withhold state funding from delinquent school districts in the relevant amounts in accordance with
Notwithstanding this Court‘s 2012 Chester II decision, the Department continued this reconciliation practice for the 2012-2013 and 2013-2014 school years. The Charter Schools made its reconciliation request with supporting documentation just days after the 2014-2015 school year ended. At that time, the Charter Schools were not aware of any change to the Department‘s end-of-year reconciliation procedure. The Charter Schools’ first notice of the process modification was the Department‘s January 2016 Notice. Further, the Charter Schools had no notice that the matter was being submitted to a hearing until it received the Department‘s March 2016 Notice. However, to date, the Department has not scheduled or conducted a hearing. Moreover, the Department has not withheld the funds the Charter Schools requested in accordance with
Based on the foregoing, there are no genuine issues of material fact that would preclude this Court from deciding the Charter Schools’ Application.
B. Clear Right to Relief
The Charter Schools’ Complaint seeks declaratory, mandamus and injunctive relief against Respondents.8
1. Declaratory Judgment
The Charter Schools aver that Respondents are in violation of the CSL‘s mandatory fund withholding provisions, that Chester II does not prevent its 2014-2015 school year claims, and that the Department‘s reliance on the January 2016 Notice that Chester II precludes it from withholding the Charter Schools’ funds is incorrect. The Charter Schools also seek an order from this Court that:
- [Respondents are] in violation of [their] mandatory obligations under the CSL by failing to withhold the funds sought by [the Charter Schools];
- this Court‘s decision in Chester II does not prevent Respondents from
withholding state payments where the claim was made after the requisite school year; - [Respondents‘] statement in the January 8, 2016 email that the CSL or Chester II preclude [them] from withholding the funds sought by [the Charter Schools] is incorrect;
- [Respondents] must withhold the funds sought by [the Charter Schools] and pay them to [the Charter Schools] in order for Respondents to be in compliance with their mandatory obligations under the CSL[.]
Complaint at 20. The Charter Schools also request costs, attorney‘s fees, and such other relief as the Court shall deem appropriate for Respondents’ failure to comply with the CSL. Complaint at 20.
Respondents claim that
Section 7532 of the Declaratory Judgments Act provides: Courts of record, within their respective jurisdictions, shall have power to declare rights, status, and other legal relations whether or not further relief is or could be claimed.
However, declaratory judgment is appropriate only where there exists an actual controversy. Allegheny Cnty. Constables Ass‘n, Inc. v. O‘Malley, 108 Pa.Cmwlth. 1, 528 A.2d 716 (1987). An actual controversy exists when litigation is both imminent and inevitable and the declaration sought will practically help to end the controversy between the parties. Chester Cmty. Charter Sch. v. Dep‘t of Educ., 996 A.2d 68, 80 (Pa. Cmwlth. 2010) (Chester I). Granting or denying a petition for a declaratory judgment is committed to the sound discretion of a court of original jurisdiction. GTECH Corp. v. Dep‘t of Revenue, 965 A.2d 1276, 1285 (Pa. Cmwlth. 2009).
The General Assembly mandated in
[u]nder
[Section 1725-A(a)(5) of the CSL], if a school district does not make its required statutory payments, the Secretary, upon notification by the affected charter school, shall deduct the estimated amount as documented by the charter school from any and all state payments made to the school district. If a school district refuses to transfer funds to a charter school, the Secretaryhas no discretion to decline to withhold the estimated amount of payment from the charter school. Thus, the Secretary has a mandatory, non-discretionary obligation to deduct the estimated amount of payment due a charter school by a school district upon submission of supporting documentation by the charter school. [Under Section 1725-A(a)(6) of the CSL a] school district has 30 days to challenge the accuracy of the estimated amount withheld by the Secretary and to require the Secretary to provide the school district with an opportunity to be heard on the estimated deduction.
Chester II, 44 A.3d at 719-20.
Despite this Court‘s acknowledgement in Chester II that
Respondents assert that the Secretary may only deduct, withhold and pay monies allocated for the current school year, and that a hearing may be held before Respondents withhold funds, was based solely upon this Court‘s Chester II holding. In Chester II, the Chester Community Charter School (CCCS) filed a petition in this Court to compel the Department and then-Secretary Gerald L. Zahorchak to withhold Chester Upland School District‘s (Chester Upland) state subsidies because Chester Upland used an improper special education student calculation rate between September 1998 and September 2007 and, thus, underfunded CCCS by $7,490,171.75. Chester Upland responded, inter alia, that CCCS’ claims for past school years were barred as untimely filed.9 CCCS filed an application for summary relief.
In denying the summary relief application, this Court expressly held:
Under
Section 1725-A(a)(5) [of the CSL], challenges are made by the charter school to one or all of the 12 equal monthly payments calculated by the school district based on the budgeted education expenditures within the operating school year. Because that ties the challenge to the withholding to a particular school year, withholding for purported underfunding can only be made against funds appropriated in the school year for which payment is authorized to withhold disputed amounts.Our previous holding in Chester I [was] that
Sections 1725-A(a)(5) and(6) [of the CSL] provide the exclusive remedy for underpayment(s) to a charter school, and our holding in this case [is] that withholding can only be made against appropriations for the school year in question .... [Thus, w]hen there are no funds to withhold, the Secretary must still acknowledge the receipt of the claim for underpayment from the charter school, state that there are no appropriated funds for the year in which the charter school claim can be withheld, and because there is no ‘trigger’ for the School District to appeal, the Secretary must inform the charter school that theclaim will go directly to a hearing. In keeping with the process under Section 1725-A(a)(6) [of the CSL] that the school district has to take the appeal, the school district still has the burden to prove the claim is invalid. Of course, the school district can defend the purported claim based on the timeliness or validity of the claim.Because we have previously held that the administrative remedy is the exclusive remedy to hear disputes regarding payments made to charter schools by school districts, this court will not address the merits of the claims or whether the claims were untimely filed. Accordingly, the application for summary relief is denied. The Secretary is to hold a hearing, previously held in abeyance, in accordance with this opinion.
Chester II, 44 A.3d at 722-23 (emphasis added; footnote omitted). However, Chester II is clearly distinguishable from the current case and is limited to its particular facts.
Initially, although Respondents purportedly applied Chester II‘s legal conclusions, they failed to satisfy the conditions the Chester II Court established. Specifically, Respondents did not, as the Chester II Court prescribed, acknowledge the receipt of the claim for underpayment from the charter school, [and/or] state that there are no appropriated funds for the year in which the charter school claim can be withheld. Id. at 722 (emphasis added). Rather, Respondents in this case issued the general January 2016 Notice of its policy change to all Pennsylvania charter schools and school districts more than three months after the Charter School‘s request. It was not until another four months later, on April 14, 2016 (the day after the Charter Schools filed the instant Application), that the Department issued specific notice to the Charter Schools and the District that there are no funds from which payments could be made, and these particular parties were entitled to a hearing. See Respondents’ Ans. to Application Ex. 1. However, the Department has never scheduled a hearing. Under the circumstances, Respondents’ failure to adhere to Chester II‘s clear mandates eviscerates their argument that they followed Chester II and that it controls in the resolution of this matter.
Moreover, the fact that Chester II did not address timeliness or the merits of CCCS’ claims also distinguishes that case from the instant matter. The Court finds it significant that, in Chester II, CCCS sought underpayment reconciliations up to nine years after the applicable fiscal years. In the case at bar, the Charter Schools submitted their 2014-2015 documentation only days after the applicable school year ended, in accordance with Respondents’ previously-permitted practice. But for the Commonwealth‘s budget impasse,10 Respondents could have, as they had repeatedly done in the years following the Chester II decision, withheld the underfunded amounts from the next fiscal year‘s appropriations.11 Instead, long after the Charter Schools submitted its reconciliation requests, Respondents decided to and did retroactively apply a previously-undocumented, significant policy change.
In addition,
Further illustrative of Respondents’ misguided application of Chester II to this case is that Act 86 has since amended
Our decision herein will have a limited effect on a finite number of charter schools and school districts. Assuming, arguendo, that Respondents effectuated a valid policy change with its January 2016 Notice, it could not conceivably be effective any sooner than when it was issued on January 8, 2016. Act 86‘s amendment to
Having concluded that Chester II is not controlling in this case and, thus, does not prohibit the Charter Schools’ 2014-2015 school year reconciliation claims, we declare that Respondents are in violation of the CSL‘s mandatory fund withholding provisions.
2. Mandamus
The Charter School also seeks an order of preemptory mandamus as follows:
- directing [Respondents] to withhold all further state payments to school districts until [the Charter Schools‘] reconciliation request is paid in full in accordance with
Section 1725-A of the CSL; - directing [Respondents] to redirect the overdue payment in the full amount of [the Charter Schools‘] claim in accordance with
Section 1725-A of the CSL; - ordering [Respondents] to direct the school districts to make all outstanding payments in full to [the Charter Schools‘] or be in contempt of this Court[.]
Complaint at 17. The Charter Schools also request an order directing [Respondents] to pay to [the Charter Schools] all costs, attorney‘s fees, and such other relief as the Court shall deem appropriate. Complaint at 17.
A writ of mandamus is an extraordinary remedy used to compel official performance of a ministerial act when a petitioner establishes a clear legal right, the respondent has a corresponding duty, and the petitioner has no other adequate remedy at law. The purpose of mandamus is to enforce rights that have been clearly established. Tindell v. Dep‘t of Corr., 87 A.3d 1029, 1034 (Pa. Cmwlth. 2014) (citation omitted; emphasis added).
3. Injunctive Relief
An injunction that commands the performance of an affirmative act, a ‘mandatory injunction,’ is the rarest form of injunctive relief and is often described as an extreme remedy. The case for a mandatory injunction must be made by a very strong showing, one stronger than that required for a restraining-type injunction. An applicant seeking mandatory injunctive relief must establish the following elements: (1) irreparable harm will occur that is not compensable by money damages; (2) greater injury will result from the denial of the injunction than by granting the injunction; (3) the injunction will restore the status quo between the parties; and (4) the party seeking relief has a clear right to relief in an actionable claim. Wyland v. W. Shore Sch. Dist., 52 A.3d 572, 582 (Pa. Cmwlth. 2012) (citations omitted). Each of the above requirements must be satisfied before a mandatory injunction will be ordered. Big Bass Lake Cmty. Ass‘n v. Warren, 23 A.3d 619 (Pa. Cmwlth. 2011).
In the instant case, there is a strong showing that the District had a legal obligation to fully fund the Charter Schools for the 2014-2015 school year, but failed to do so, and Respondents refused to reconcile payments due to the Charter Schools.
It is clear, ... that as between the school district and the charter school, the legislature has decided that more harm will befall a charter school that is not paid timely and accurately than upon a school district that may experience a delay in the receipt of the state subsidy to which it is entitled.
Id. at 78 (emphasis added). The injunction will restore the status quo between the Charter Schools and the District. Accordingly, the Charter Schools are entitled to injunctive relief.
In addition to there being no genuine issues of material fact, the Charter Schools have a clear legal right to declaratory, mandamus and injunctive relief. Accordingly, the Court grants the Charter Schools’ Application.
Costs
[(a)](1) Attorney‘s fees are not an item of taxable costs except to the extent authorized by [S]ection 2503 [of the Judicial Code,
42 Pa. C.S. § 2503 ] (relating to right of participants to receive counsel fees).[(a)](2) The prevailing party should recover his costs from the unsuccessful litigant except where the:
(i) Costs relate to the existence, possession or disposition of a fund and the costs should be borne by the fund.
(ii) Question involved is a public question or where the applicable law is uncertain and the purpose of the litigants is primarily to clarify the law.
(iii) Application of the rule would work substantial injustice.
[(a)](3) The imposition of actual costs or a multiple thereof may be used as a penalty for violation of general rules or rules of court.
Attorney‘s Fees
The American Rule states that a litigant cannot recover counsel fees from an adverse party unless there is express statutory authorization, a clear agreement of the parties or some other established exception. Lavelle v. Koch, 532 Pa. 631, 617 A.2d 319, 323 (1992). In Pennsylvania, the American Rule is embodied in [Section 1726(a)(1) of the Judicial Code,]
Relative to mandamus,
The following participants shall be entitled to a reasonable counsel fee as part of the taxable costs of the matter:
....
(6) Any participant who is awarded counsel fees as a sanction against another participant for violation of any general rule which expressly prescribes the award of counsel fees as a sanction for dilatory, obdurate or vexatious conduct during the pendency of any matter.
(7) Any participant who is awarded counsel fees as a sanction against another participant for dilatory, obdurate or vexatious conduct during the pendency of a matter.
....
(9) Any participant who is awarded counsel fees because the conduct of another party in commencing the matter or otherwise was arbitrary, vexatious or in bad faith.
[t]he phrase ‘or otherwise’ in [Section 2503(9) of the Judicial Code] refers to misconduct in the raising of defenses, and cannot be construed to refer to the [Commonwealth agency‘s] action before the commencement of the case in court.
Here, after the Charter Schools commenced this action on February 8, 2016, Respondents continued to delay and/or refuse the Charter Schools’ withholding requests. Also during the pendency of this matter since the Complaint was filed, the Department issued its March 2016 Notice wherein it declared that the matter will proceed to administrative hearing as prescribed by [Chester II] and, [a]s a result of the record established through the administrative hearing process, the Secretary will then issue a decision. Application Ex. A. Notwithstanding, Respondents have failed to make any withholdings and/or schedule a hearing.
We hold that Respondents’ retroactive application of a significant policy change without proper notice to the Charter Schools or the District was, at the very least, arbitrary, and its ongoing refusal to withhold reconciliation funds and/or schedule a hearing in accordance with the CSL since the Complaint was filed is dilatory and obdurate. Thus, the Charter Schools are entitled to attorney‘s fees from Respondents related to the Charter Schools’ mandamus action.17
III. Preliminary Objections
Having determined that the Charter Schools are entitled to summary relief, Respondents’ Preliminary Objections are overruled as moot. See Leach v. Commonwealth, 118 A.3d 1271, 1289 (Pa. Cmwlth. 2015), aff‘d, 141 A.3d 426 (Pa. 2016); see also Marshall v. Pa. Bd. of Prob. & Parole, 162 Pa.Cmwlth. 256, 638 A.2d 451 (1994) (summary relief may be granted before disposing of outstanding preliminary objections).
IV. Conclusion
Chester II does not apply to the circumstances presented in this case, nor did Respondents seek to adhere to its ruling. Based upon the particular facts presented herein, the Charter Schools’ Application is granted. Accordingly, we direct Respondents to:
- Deduct and withhold $425,658.74 for the 2014-2015 school year, as documented by the Charter Schools, from any and all state payments made to the School District of Philadelphia.
- Pay to the Charter Schools costs and attorney‘s fees incurred from the date the Charter Schools’ Complaint was filed with this Court, until the aforementioned
amounts are deducted and withheld by Respondents.
Respondents’ Preliminary Objections are overruled.
ORDER
AND NOW, this 1st day of May, 2017, KIPP Philadelphia Charter Schools’ (Charter Schools) Application for Summary Relief is GRANTED. The Commonwealth of Pennsylvania, Department of Education and Pedro A. Rivera (Respondents) are directed to:
- Deduct and withhold $425,658.74 for the 2014-2015 school year, as documented by the Charter Schools, from any and all state payments made to the School District of Philadelphia.
- Pay to the Charter Schools costs and attorney‘s fees incurred from the date the Charter Schools’ Complaint was filed with this Court, until the aforementioned amounts are deducted and withheld by Respondents.
Respondents’ Preliminary Objections are OVERRULED.
ANNE E. COVEY
JUDGE