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Juneau Academy v. Chicago Bd of Ed.

OPINION FILED MARCH 13, 1984.

JUNEAU ACADEMY, PLAINTIFF-APPELLANT,

v.

CHICAGO BOARD OF EDUCATION ET AL., DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Cook County; the Hon. Francis Barth, Judge, presiding.

JUSTICE STAMOS DELIVERED THE OPINION OF THE COURT:

Plaintiff Juneau Academy (Juneau), a special education facility, brought suit in the circuit court of Cook County against the Chicago Board of Education (CBE) and the Board of Education of High School District 108 (108) to recover the value of services rendered to students from the defendant school districts. After a bench trial, judgment was entered for defendants. Plaintiff appeals.

Juneau Academy is a residential facility for the treatment of mentally handicapped adolescent boys. It is located in Milwaukee, Wisconsin. The instant dispute arises from the placement with Juneau in late 1979 of five high school students from CBE and one from 108. Juneau, unfamiliar with Illinois procedures for the payment of tuition to private facilities for handicapped students, accepted the Illinois students into its program before it had received approval from Illinois for its rate structure. Without such approval, Juneau was ineligible under Illinois law to receive tuition payments from Illinois school boards.

The student from 108 was referred to Juneau by Michael Schack, the administrator of the Institute for Motivational Development. Schack sent a letter of referral on November 11, 1979, to Thomas O'Brien, the assistant director of Juneau. Upon receiving the letter, O'Brien set out to determine the student's eligibility for admission to Juneau. Schack also contacted Alex Grandt, a supervisor of special education for 108, to inform him that the student was in need of residential treatment. Schack was not an agent of either Juneau or 108. The decision to place the student in a residential facility was made by 108 on December 7, 1979, with Grandt's knowledge. Juneau accepted the student on December 26, 1979, without 108's knowledge.

On January 8, 1980, Grandt wrote to O'Brien, asking that the student be considered for placement with Juneau. Upon receiving this letter, O'Brien telephoned Grandt and informed him that the student had been at Juneau since December 26. Grandt expressed satisfaction that a placement had been accomplished, but said Juneau had moved faster than he had anticipated. O'Brien informed Grandt stated that Juneau would soon be approved for Illinois funds, and Grandt stated that 108 would discuss payment of the tuition once approval was obtained. At this time, however, Juneau had applied only for approval of its program. It was not aware that approval of its rates by the Illinois Governor's Purchased Care Review Board was also required. Because of this misunderstanding, Juneau was not able to obtain complete approval until July 28, 1980. When the 108 student's treatment was completed in August, Juneau contacted 108 to arrange for payment of the tuition, which at that time exceeded $2,000 per month. 108 refused to pay for any treatment provided prior to Juneau's approval for Illinois funds. Juneau then filed suit, seeking recovery in contract.

The trial court found that the facts were not sufficient to prove the existence of an express or implied contract between Juneau and 108. The court found that 108 had not agreed to assume responsibility for the tuition for services provided prior to Juneau's Illinois approval.

Five students from CBE were also placed with Juneau in late 1979 and early 1980, under circumstances similar to those of the student from 108. However, the trial court found that an agreement implied in fact existed between Juneau and CBE for the period of treatment prior to Juneau's approval in Illinois. This finding was based on a statement made by James Clemons, a social worker employed by CBE, that once Juneau was approved, CBE would pay tuition retroactively to the dates of the students' placements.

The trial court went on, however, to hold that CBE was without authority to enter into such an agreement. The court cited section 14-7.02 of the School Code (Ill. Rev. Stat. 1981, ch. 122, par. 14-7.02), which had been interpreted by the supreme court in In re Claudia K. (1982), 91 Ill.2d 469, 440 N.E.2d 78, as prohibiting the placement by school districts of students in nonpublic facilities which have not been approved by the Governor's Purchased Care Review Board. Because CBE was without authority to place the students with Juneau, the court held, the contract was ultra vires and void. See Stahelin v. Board of Education (1967), 87 Ill. App.2d 28, 41, 230 N.E.2d 465.

Juneau first contends that the trial court erred in holding that section 14-7.02 of the School Code prohibited CBE from placing students with Juneau prior to Juneau's approval in Illinois. Juneau argues that the trial court incorrectly interpreted the supreme court's decision in Claudia K. The trial court found that section 14-7.02 of the School Code, as construed in Claudia K., prohibited the placement of students in certain non-approved private institutions.

In Claudia K., the appellee argued that section 14-7.02 did not forbid placement in a non-approved institution, but provided only that such placement would not entitle the school district to reimbursement from the State. The supreme court stated:

"Under section 14-7.02 of the School Code (Ill. Rev. Stat. 1979, ch. 122, par. 14-7.02) a district is authorized to place children in out-of-State and private special education facilities, under certain restrictions, and reimbursement of the district for certain expenses is provided. The first sentence of the second paragraph of this section states: `No child shall be placed in a special education program pursuant to this Section if the tuition cost for special education and related services increased more than 10 percent over the tuition cost for the previous year or exceeds $4,500 per year unless such costs have been approved by the Governor's Purchased Care Review Board.' (Ill. Rev. Stat. 1979, ch. 122, par. 14-7.02.) Even if, however, this sentence could be construed as authorizing placement in a non-approved institution while only denying reimbursement, a regulation governing District conduct in this area leaves no doubt as to the absence of placement authority:

`No nonpublic facility shall be utilized by a district until: (1) The facility is approved by the SBE, (2) Costs have been established for it by the Governor's Purchased Care Review Board, (3) Proposed residential placements are reviewed and approved by the Illinois State Board of Education prior to placement * * *.' Adopted Amendments to the Rules and Regulations for Approval of Non-public Facilities Educating Handicapped Students under section 14-7.02 of the School Code, 5 Ill. Reg. 4577 (April 24, 1981).

Clearly the District had no authority to place Claudia in Ridgeway, which was unapproved." In re Claudia K. (1982), 91 Ill.2d 469, 478-79.

Juneau argues that the supreme court's opinion was based not upon section 14-7.02, but upon the regulation quoted above. Because this regulation did not become effective until after Juneau obtained approval for Illinois finding, Juneau contends, the ...


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