The Corwin family sent their daughter to Holy Child Academy for kindergarten in the 2006-2007 school year. In April 2007, the Corwins signed a contract for the following school year and paid 10% of the $15,800 tuition as a non-refundable deposit. The enrollment contract stated that parents could cancel by written notice on or before June 15, 2007.
In late 2006, the Corwins had begun to worry that their daughter had special educational needs that could not be met by the school. They still signed the enrollment agreement, however, and did not decide to withdraw their daughter until August 2007, after the cancellation deadline of June15 had passed. Under the terms of the contract, if a parent cancelled after the deadline, they would forfeit the entire year's tuition as liquidated damages unless they participated in the tuition refund program. The Corwins did not opt for the tuition refund program.
The school sued to recover the unpaid tuition. The Corwins argued in defense that their daughter had special needs that required them to cancel the contract and that the school failed to identify those needs. They also claimed the damages were unreasonable and punitive. The Corwins also counterclaimed, alleging the school failed in its duty to identify their daughter's special needs, breached a duty of confidentiality, and claimed they were owed legal fees. The school moved for summary judgment but the district court denied the motion and found there was an issue of material fact as to (1) whether the school was so incapable of providing the services needed that the Corwins were forced to rescind the contract, and (2) whether the liquidated damages were an unenforceable penalty.
On appeal, the court explained that the parties' rights are governed by the enrollment contract. The school made a prima facie showing of breach of contract by presenting the contract, which contained an unconditional promise to pay and evidence that the parents failed to pay. The court explained that the quality of teachers employed by private schools is not a matter of review for a court. The Corwins' claim basically boiled down to educational malpractice and that is not a cognizable cause of action in New York. (It is also not a cognizable action in California.)
The court found the school was entitled to summary judgment dismissing the Corwins' first counterclaim, for failure to provide adequate services. The court also found the Corwins failed to submit any evidence to demonstrate that the liquidated damages clause was actually a penalty. The school provided evidence, in the form of an affidavit by the Headmaster, that the school makes financial obligations in advance based on student enrollment. Therefore, the school was entitled to summary judgment on its breach of contract claim. The other counterclaims, for breach of confidentiality and legal fees, also failed.
The outcome of this case is what we would hope to see in these types of cases. The parents were obligated to pay the outstanding balance because the contract had liquidated damages language stating that the unpaid tuition was a reasonable estimate of the damages the school would suffer if a parent failed to pay. This shows that clear contract language is absolutely vital to asserting a school's right to collect unpaid tuition or refuse to refund tuition paid in advance. Like New York, California also does not recognize educational malpractice as a cause of action, so the parents' claim that the school failed to identify their child's needs could not proceed. While many schools choose to settle these types of claims because of the costs of proceeding with litigation, here the school asserted its rights and won.
Sisters of the Holy Child Jesus at Old Westbury, Inc. v. Corwin, --N.Y.S.3d--, 2016 WL732909.