Seabrook Village v. Murphy

Seabrook Village (Seabrook) (defendant) was a continuing-care retirement community (CCRC) that provided residents with three housing options to meet their changing needs, namely independent-living units, assisted-living units, and a full-care center. When John Murphy (plaintiff) moved into an independent-living unit, he signed a residence-and-care agreement that required him to pay a $1,290 monthly fee in addition to an entrance deposit of $149,000, which Seabrook’s director orally assured him was fully refundable. John’s son, Michael Murphy, signed the agreement as guarantor for John’s financial obligation. Two years later, John transferred to an assisted-living unit. Michael discovered promotional materials stating that Seabrook was charging an entrance deposit of only $99,000 for assisted-living units. He therefore requested a $50,000 credit to John’s account, reflecting the difference between John’s original deposit and the deposit for assisted-living units. Seabrook refused, citing the residence-and-care agreement, which stated that an entrance deposit would not be refunded or reduced based on a resident’s transfer. In response, Michael, who held John’s power of attorney, refused to execute a release for John’s independent-living unit or make the monthly payments until the matter was resolved. Eventually, Michael signed a release for the independent-living unit, allowing Seabrook to house another resident there. However, he still did not make the monthly payments. Seabrook eventually sent John 60 days’ notice of intent to terminate his residency because of an arrearage of $47,255. The notice referenced a provision in the residence-and-care agreement that allowed Seabrook to terminate residency without cause with 60 days’ notice. Michael disputed the arrearage, reiterating his claim that John’s account was entitled to a $50,000 credit. He requested a full administrative hearing before the New Jersey Department of Community Affairs (DCA) to challenge Seabrook’s termination of John’s residency. Based only on written submissions from the parties, the DCA held in Seabrook’s favor, finding that Seabrook had just cause to discharge John. John appealed.