White v. State of California

Decision Date08 October 1987
Citation240 Cal.Rptr. 732,195 Cal.App.3d 452
CourtCalifornia Court of Appeals Court of Appeals
Parties, 42 Ed. Law Rep. 262 Douglas R. WHITE, an Incompetent Person, etc., Plaintiff and Appellant, v. STATE of California et al., Defendants and Respondents. C000017.

A. Lee Sanders, Fremont, for plaintiff and appellant.

David W. Girard, Walnut Creek, for defendants and respondents.

SIMS, Associate Justice.

Plaintiff Douglas R. White appeals from a judgment entered after the trial court sustained defendants' demurrer to plaintiff's second amended complaint without leave to amend. Plaintiff, a developmentally disabled (handicapped) person residing in Stockton State Hospital, claims defendants wrongfully failed to spend money received by the state under the federal Education of the Handicapped Act (20 U.S.C. § 1400 et seq.) 1 (hereafter EHA) on handicapped children in state hospitals. As a consequence, the class of eligible children in state hospitals has been and will be denied the free appropriate public education due it under the EHA.

Plaintiff's complaint alleged various theories upon which he and his class were entitled either to money damages or to an order compelling defendants to spend EHA funds for their education.

We conclude plaintiff and his class are not entitled to money damages for any past denial of a free appropriate public education. We further conclude plaintiff and his class cannot pursue a lawsuit to compel the expenditure of current EHA funds for their benefit without first exhausting an available administrative procedure. However, we also conclude plaintiff and his class are entitled to be provided with compensatory educational services to remedy any past denial of services for which they were eligible. Since there is no available administrative remedy to adjudicate the past class-wide, systemic exclusion from the EHA alleged by plaintiff on behalf of his class, plaintiff is not barred from pursuing this action to obtain an adjudication of the entitlement of eligible children in state hospitals to compensatory educational services. In the event plaintiff prevails on his claim, proving a systemic exclusion of handicapped children from EHA services to which they were entitled, any disputes about the compensatory services due each child should be initially resolved through an available administrative procedure under the supervision of the court.

FACTUAL AND PROCEDURAL BACKGROUND

On July 11, 1983, plaintiff filed his second amended complaint alleging six counts purporting to state separate causes of action. The facts alleged in the complaint, which we accept as true (Committee on Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 213, 197 Cal.Rptr. 783, 673 P.2d 660), are as follows:

Plaintiff is a developmentally disabled person who has been diagnosed as mentally retarded, autistic, cerebrally palsied and ataxic since the age of two years.

Between 1977 and 1981, defendant State of California applied for and received federal funds to provide a free appropriate education to handicapped children as mandated by the EHA. These funds were allocated by defendants to public educational institutions and systems in California for the benefit of handicapped children. However, between 1977 and 1981, defendants allocated no EHA funds to the education of eligible students in the California State Hospital System which includes Stockton State Hospital in which plaintiff resides.

Plaintiff alleged that the failure to allocate EHA funds for the education of children in state hospitals deprived him, and those similarly situated, of their "liberty interest" in a free appropriate public education in violation of the due process clauses of the state and federal Constitutions. Plaintiff's first count sought at least $20 million in damages and attorney's fees under the federal Civil Rights Act (42 U.S.C. §§ 1983-1988) (hereafter section 1983 or 1988) for violations of the EHA and section 504 of the Rehabilitation Act of 1973 (29 U.S.C. § 794) (hereafter Rehabilitation Act).

Plaintiff's second count also sought damages under the Civil Rights Act. It realleged the provisions of the first count and alleged that defendants' acts restricting his free appropriate public education in turn impaired his ability to care for himself and live free from restraint [presumably the restraints of life in state hospitals], all in violation of interests allegedly protected by the Due Process Clause of the Fourteenth Amendment.

Plaintiff's third count sought specific performance. It alleged defendants entered into a series of annual contracts with the federal government between 1978 and the present to provide plaintiff and his class a free appropriate public education, "but defendants did fail to allocate any monies received as a result of said agreement for the purpose of providing a free appropriate education to plaintiff, and all other persons similarly situated, who were residents at state hospitals ... from 1978 until the present." Plaintiff, as a third-party beneficiary, sought to compel defendants to allocate EHA funds received pursuant to the contracts for the benefit of handicapped children in state hospitals.

Plaintiff's fourth count realleged the pertinent provisions of the first and third counts and sought $20 million in damages for breach of contract. Plaintiff did not allege he complied with the Tort Claims Act (Gov.Code, § 905.2) by timely filing a claim with the state Board of Control.

Plaintiff's fifth count sought to impose a constructive trust on the moneys plaintiff alleges should have been spent on him and on members of his class. It alleged that defendants, as public entities and officials, owed plaintiff a fiduciary duty with regard to distribution of federal funds and failed to take all necessary and reasonable actions to assure that the funds would be used for plaintiff's benefit, so as to provide him a free appropriate public education.

Plaintiff's sixth count sought an accounting of all federal EHA funds received by defendants.

Plaintiff did not attempt to exhaust any administrative remedies.

Defendants filed a demurrer to plaintiff's complaint alleging, among other things, that there existed administrative remedies that plaintiff had failed to exhaust. The trial court sustained the demurrer without leave to amend, noting in its ruling "the [EHA] has procedures and remedies which must be exhausted."

DISCUSSION
I First Count
A. An overview of the EHA.

Plaintiff has attempted to state claims under section 1983 and the Rehabilitation Act in addition to the EHA. However, since the EHA is at the center of plaintiff's universe of claims, plaintiff's contentions are best understood by beginning with an overview of the EHA furnished by the United States Supreme Court.

"Congress stated the purpose of the [EHA] in these words:

" '[T]o assure that all handicapped children have available to them ... a free appropriate public education which emphasizes special education and related services designed to meet their unique needs [and] to assure that the rights of handicapped children and their parents or guardians are protected.' 20 U.S.C. § 1400(c).

"The [EHA] defines a 'free appropriate public education' to mean 'special education and related services which (A) have been provided at public expense, under public supervision and direction, and without charge, (B) meet the standards of the State educational agency, (C) include an appropriate preschool, elementary, or secondary school education in the State involved, and (D) are provided in conformity with [an] individualized educational program.' 20 U.S.C. § 1401(18).

"...

"The modus operandi of the [EHA] is the ... 'individualized educational program [IEP].' The IEP is in brief a comprehensive statement of the educational needs of a handicapped child and the specially designed instruction and related services to be employed to meet those needs. § 1401(19). The IEP is to be developed jointly by a school official qualified in special education, a child's teacher, the parents or guardian, and, where appropriate, the child. In several places, the [EHA] emphasizes the participation of the parents in developing the child's educational program and assessing its effectiveness. See §§ 1400(c), 1401(19), 1412(7), 1415(b)(1)(A), (C), (D), (E), and 1415(b)(2); 34 CFR § 300.345 (1984)." (Burlington School Comm. v. Ma. Dept. of Ed. (1985) 471 U.S. 359, 367-368, 105 S.Ct. 1996, 2001-2002, 85 L.Ed.2d 385, 393-394.)

"The [EHA] provides federal money to assist state and local agencies in educating handicapped children, and conditions such funding upon a State's compliance with extensive goals and procedures. The [EHA] represents an ambitious federal effort to promote the education of handicapped children, and was passed in response to Congress' perception that a majority of handicapped children in the United States 'were either totally excluded from schools or [were] sitting idly in regular classrooms awaiting the time when they were old enough to "drop out." ' HR Rep No. 94-332, p. 2 (1975) (HR Rep).... [p] In order to qualify for federal financial assistance under the [EHA], a State must demonstrate that it 'has in effect a policy that assures all handicapped children the right to a free appropriate public education.' 20 USC § 1412(1) [20 USCS § 1412(1) ]. That policy must be reflected in a state plan submitted to and approved by the Secretary of Education, § 1413, which describes in detail the goals, programs, and timetables under which the State intends to educate handicapped children within its borders. §§ 1412, 1413.... The [EHA] broadly defines 'handicapped children' to include 'mentally retarded, hard of hearing, deaf, speech impaired, visually handicapped, seriously emotionally disturbed, orthopedically impaired, [and] other health impaired children, [and] children with...

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