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Shook v. Gaston County Board of Education

decided as corrected.: August 15, 1989.


Appeal from the United States District Court for the Western District of North Carolina, at Charlotte. James B. McMillan, District Judge. CA-86-555-M.

Widener, Circuit Judge, Butzner, Senior Circuit Judge, and Henderson, District Judge for the District of South Carolina, sitting by designation.

Author: Widener

WIDENER, Circuit Judge:

Karen L. Shook, by her guardian ad litem, appeals the grant of summary judgment in favor of the Gaston County Board of Education. The district court found that although the statute of limitations did not bar her claim, she lacked requisite standing. We are of opinion that the plaintiff has timely filed and further that she has standing to pursue her cause of action. We affirm in part and vacate and remand this case to the district court for further proceedings.

Karen, a mentally handicapped woman, brought this action, seeking reimbursement of education expenses pursuant to the Education of the Handicapped Act (E.H.A.), 20 U.S.C. § 1400 et seq. In October of 1976, Karen began attending public schools operated by the defendant in Gaston County. Due to psychological difficulties, Karen's doctors recommended, in January 1980, that she be placed in a private educational institution in Austin, Texas. On February 20, 1980, Karen was enrolled at the Brown Schools which provided a program of special education and related services, including a therapeutic residential setting. She attended the Brown Schools until the conclusion of the 1981-82 school year.

The Gaston County Administrative Placement Committee, an agency of the Gaston County Board of Education, in the meantime, held a meeting which Karen's parents attended on December 9, 1981 concerning Karen's placement pursuant to the E.H.A. By letter dated two days after the meeting, the Shooks were notified that the Placement Committee recommended that Karen be placed at Western Carolina Center. The letter further informed the Shooks of their right to appeal the decision.

The Shooks retained counsel, who was informed by counsel for the Board of Education that there would be no reimbursement by the Board for Karen's attendance at the Brown Schools. While at the Brown Schools, Karen's education was paid for by her parents' private funds as well as by insurance payments, mentioned later. The insurance in question is a group health insurance policy issued by Pilot Life Insurance Company in consideration of Shook's employment for the benefit of himself and his dependents. We also note that, although Karen is an adult, she is still eligible to receive funds for special therapeutic services under the terms of the policy because she continues to be disabled by reason of mental retardation.

The policy, as issued by Pilot Life, was in what we presume to be a more or less standard form. But, at the time of Shook's employment, the policy provisions with respect to mental and nervous disorders were changed so that Shook's policy was different from that of other employees. Shook's employer, Tultex Corporation, in the words of its Vice President for Personnel, "provided a special self-insurance plan for the direct benefit of Karen Leigh Shook, individually, to provide an available maximum lifetime benefit for special therapeutic services relating to mental and nervous disorders in the amount of $100,000." This change in coverage was made in the form of a letter from Tultex to Shook, which included the following language: "Tultex has elected to make an administrative change in your policy to provide the following coverage for your daughter, Karen: (1) increase to $100,000 the maximum lifetime benefit for treatment of mental and nervous disorders." So, as a result of the policy change, the coverage with respect to Karen's mental and nervous disorders was in favor of her by name rather than merely as a beneficiary as a result of being a dependent of Shook, and Tultex became obligated to perform the contractual obligation.

Karen reached age eighteen on February 9, 1984. A legal guardian was appointed in July of the same year, and her guardian ad litem filed this suit against the Board in 1986, seeking reimbursement for the depletion of her health insurance benefits used to pay for her education. Her parents had not previously pursued the claim in court. The district court agreed with Karen that the statute of limitations had been tolled due to her minority and incompetency, yet granted summary judgment in favor of Gaston County, finding that Karen lacked standing as it was her parents, not Karen, who had sustained the injury. Karen appeals.*fn1

The district court, in its Memorandum and Order, outlined the framework of the E.H.A. The E.H.A. provides public school districts with federal funding for the education of handicapped children so long as the State has in effect a policy that assures all handicapped children the right to a free appropriate public education. 20 U.S.C. § 1412(1); Burlington School Committee v. Massachusetts Department of Education, 471 U.S. 359, 368, 85 L. Ed. 2d 385, 105 S. Ct. 1996 (1985); Manecke v. School Board of Pinellas County, Florida, 762 F.2d 912, 916-17 (11th Cir. 1985), cert. den., 474 U.S. 1062, 88 L. Ed. 2d 784, 106 S. Ct. 809 (1986). A "free appropriate public education" by definition includes "special education and related services." 20 U.S.C. § 1401(18); Manecke, 762 F.2d at 916. Federal regulations provide that if necessary to give a handicapped child special education and related services, the State must place that child in a public or private residential program at public expense. 34 C.F.R. § 300.302; Manecke, 762 F.2d at 917.

The three-year statute of limitations in North Carolina within which to bring a reimbursement suit based on the E.H.A. is found under N.C.G.S. § 1-52(2). However, as the district court properly found in this case, that statute was tolled by Karen's infancy and incompetency pursuant to N.C.G.S. § 1-17(a) which allows a person who is within the age of 18 at the time the cause of action accrues to bring suit within three years after the removal of the disability, in this case, upon reaching the age of majority. Thus, Karen's cause of action is not time barred as she timely filed after attaining her majority and having a guardian appointed. When a state statute is borrowed, as here, the federal court will also borrow the state rules on tolling. Board of Regents v. Tomanio, 446 U.S. 478, 483-486, 64 L. Ed. 2d 440, 100 S. Ct. 1790 (1980).*fn2

The district court, however, granted summary judgment in favor of the defendant. It found that Karen lacked standing because it was her parents who had suffered the monetary loss. The court found that Karen had not spent any of her own money on her education, nor could she show that she failed to receive an appropriate education because of Gaston County's refusal to reimburse her parents or the insurance company.

The argument of the Board with respect to the standing of Karen to bring suit is very narrow and rather curious.

The Board acknowledges that a "child who has reached majority and is not incapacitated can represent his own interest in claims not already barred by the statute of limitations." Brief p. 10, quoting from Alexopulos, 817 F.2d at 556. This is in accord with the reasoning of Vander Malle, to which we have previously referred, and which we follow, that both ...

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