## Facts

- Seabrook Village operated a continuing care retirement community offering independent living, assisted living, and care center units.
- John Murphy entered Seabrook under a written Residence and Care Agreement for an independent-living unit, paying a $149,000 entrance deposit and owing monthly service fees; his son, Michael Murphy, signed as guarantor and later acted under a power of attorney.
- Murphy later transferred to an assisted-living unit; Michael demanded a $50,000 credit based on promotional materials indicating a lower assisted-living entrance deposit.
- Seabrook refused, relying on contract terms stating the entrance deposit would not be reduced or refunded due to a transfer between units.
- Michael refused to sign a release for the prior independent-living unit and stopped paying monthly service fees; he later signed the release but continued withholding fees.
- With arrears reaching roughly $47,255, Seabrook issued a 60-day notice of intent to terminate Murphy’s residency pursuant to a contractual “without cause” termination clause.
- Murphy sought administrative review through the New Jersey Department of Community Affairs (DCA); the DCA resolved the dispute on written submissions and upheld Seabrook’s termination decision.

## Issues

1. Whether the DCA could decide a CCRC involuntary-discharge dispute on written submissions, or whether the matter required a plenary contested-case hearing under the New Jersey Administrative Procedure Act and implementing regulations.
2. Whether a CCRC may involuntarily discharge a resident based on a contractual “without cause” clause, or whether discharge is permitted only for “just cause” as defined by statute and regulation, rendering contrary contract terms unenforceable.

## Decision

- The Appellate Division reversed the DCA’s final agency decision and remanded.
- The court held the resident was entitled to a plenary hearing (trial-type contested-case procedures) before the DCA Commissioner or the Office of Administrative Law.
- The court held that involuntary discharge from a CCRC is permissible only upon proof of statutory “just cause.”
- The court held that any contractual waiver of “just cause,” or any contractually created discharge ground not authorized by statute or regulation (including “no-cause” termination), is void as against public policy.

## Legal Principles

- A CCRC discharge challenge that determines a specific resident’s continued right to housing and care is a “contested case” requiring a plenary, evidentiary hearing rather than a paper-only adjudication.
- A CCRC may involuntarily discharge a resident only for “just cause” as defined by the Continuing Care Retirement Community Regulation and Financial Disclosure Act and implementing regulations.
- Contract provisions allowing termination “without cause,” or expanding discharge grounds beyond those authorized by statute or regulation, are unenforceable as contrary to public policy.
- Even when alleged nonpayment may constitute “just cause,” the agency must decide that question under the statutory framework and through required contested-case procedures.

## Conclusion

The court required a full evidentiary administrative hearing for CCRC involuntary-discharge disputes and held that a resident may be discharged only for statutory “just cause,” invalidating contractual no-cause termination provisions inconsistent with the governing regulatory scheme.


Seabrook Vill. v. Murphy, 371 N.J. Super. 319, 853 A.2d 280 (App. Div. 2004)