California Court Rules Against Students Seeking COVID-Era Tuition Refunds

Grant v. Chapman University :: 2026 :: California Courts of Appeal Decisions :: California Case Law :: California Law :: U.S. Law :: Justia

Economic Questions Remain Unanswered

TL;DR: A California appeals court ruled that universities made no enforceable promise of in-person education when they charged full tuition but switched to remote learning during COVID-19. However, the decision leaves unresolved questions about market-based pricing that could affect thousands of students and billions in tuition dollars, with legal experts identifying potential grounds for appeal based on the stark price differential between online and residential education.

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Court Decision Protects Universities But Exposes Pricing Paradox

SANTA ANA, Calif. — In a decision with potentially sweeping implications for thousands of students nationwide, the California Court of Appeal has ruled that universities did not breach their contracts when they charged full residential tuition while delivering remote education during the pandemic—but the economic reasoning behind the February 5, 2026 ruling has exposed what legal experts describe as a critical gap in consumer protection law.

The decision in Grant v. Chapman University affirmed summary judgment against students Findlay Grant and Christian Walsh, who sought partial tuition refunds after Chapman University transitioned to online instruction in March 2020. While the court found no "specific promise" of in-person education, its reasoning sidesteps a fundamental market reality: online degree programs typically cost half what residential programs charge, yet students paid full price for remote delivery.

"This creates a perverse incentive structure," said contract law scholars analyzing the decision. "Universities can market premium residential programs, charge premium prices, deliver budget online education, and avoid liability by avoiding explicit promises. It rewards strategic ambiguity in contracting."

The Chapman Case and Its Implications

Grant and Walsh enrolled at Chapman University, a private institution in Orange, California, in early 2020. When the pandemic reached California that March, Chapman—like hundreds of universities nationwide—closed its campus and transitioned to online instruction following local lockdown orders.

The students remained enrolled through the pandemic, taking remote classes and eventually graduating. However, they subsequently filed suit alleging breach of contract, unjust enrichment, and unfair business practices, seeking partial tuition refunds.

Critically, the students did not fault Chapman for initially closing campus during the emergency. Their argument centered on whether the university had made binding promises to provide in-person education—and whether retaining full tuition for substantially different educational delivery constituted unjust enrichment.

The Evidence: Specific Enough to Charge, Not Specific Enough to Enforce?

The students presented substantial evidence they argued reflected enforceable promises:

• Course registration portal listing specific classroom locations and meeting times (e.g., "MWF 10:00 AM, Room 204")
• Credit-hour policy explicitly requiring weekly "face-to-face contact" for traditional classes but not for online courses
• Faculty handbook references to on-campus teaching and office hours
• Marketing materials extensively describing high-end campus facilities in undergraduate and graduate catalogs
• Historical practice of Chapman primarily offering in-person instruction
• Pre-Fall 2020 communications expressing the university's "goal" and "optimism" about returning to campus

The university's catalogs included a disclaimer stating facility descriptions were "for informational purposes and should not be considered as the basis of a contract between students and the University." However, this disclaimer appeared in promotional materials used to attract students willing to pay premium residential tuition rates.

California's "Specific Promise" Standard

The court applied California contract law principles established in Kashmiri v. Regents of University of California (2007), which held that universities must have flexibility to modify educational programs while exercising their educational responsibilities. Under this framework, only "specific promises" create enforceable contractual obligations.

Writing for the unanimous panel, Justice Scott explained: "The reasonableness of the student's expectation is measured by the definiteness, specificity, or explicit nature of the representation at issue."

The court contrasted the evidence with Kashmiri, where a university explicitly promised in writing that a specific fee "'will remain the same for each student for the duration of his or her enrollment'" and increases would "'apply to new students only.'" That unequivocal language created an enforceable promise.

By comparison, the court found Chapman's materials—including specific course locations, facility descriptions, and the credit-hour policy requiring "face-to-face contact"—reflected only "general expectations," not specific binding commitments.

This creates an apparent paradox: the materials were specific enough to justify charging residential tuition rates, but not specific enough to be legally enforceable when the university delivered a different product.

The Market Valuation Question: The Court's Weakest Link

The decision's most vulnerable point lies in how it addressed market-based pricing evidence. In a brief footnote, the court dismissed the economic argument: "There is no evidence Chapman ever offered a cheaper, online program, unlike institutions in some other cases."

This reasoning ignores fundamental market realities:

Industry-Wide Price Differentials:

• Online degree programs typically cost 40-60% less than residential programs
• During the pandemic, institutions like Harvard Extension charged $300-500 per credit for online courses versus $1,500-2,000 per credit for residential programs
• Major universities offering both formats consistently price online education at roughly half the residential rate
• This differential reflects market recognition that the educational products are fundamentally different in value

What Students Paid vs. What They Received: Students at Chapman paid tuition rates consistent with residential education ($54,540 annually in 2019-20) while receiving educational delivery consistent with online programs that typically cost half that amount in the broader market.

The court's response—that Chapman didn't offer its own cheaper online alternative—misses the point. The relevant comparison is to the broader higher education market, not just Chapman's internal pricing structure. If the market values online education at 50% of residential education, and students paid 100% residential tuition for online delivery, there's an arguable unjust enrichment regardless of whether Chapman had its own two-tier pricing.

Federal Circuit Split Creates Uncertainty

The Chapman decision aligns with California precedent but conflicts with federal appellate courts, creating a national split on these issues.

Courts Finding Potential Contract Violations:

In Shaffer v. George Washington University (D.C. Cir. 2022), the D.C. Circuit held that GWU's pricing structure—offering separate online programs at lower tuition—supported an inference that students paying higher in-person track tuition had been promised in-person education. "The fact that GWU charged different amounts for different types of instruction supports the inference that students in the more expensive track were promised that type of instruction," the court wrote.

Similarly, in Jones v. Administrators of the Tulane Educational Fund (5th Cir. 2022), the Fifth Circuit found a "plausible inference" that Tulane University had agreed to provide in-person instruction based on the university's statements and pricing structure.

Courts Dismissing Claims:

Other courts have sided with universities. In Polley v. Northwestern University (N.D. Ill. 2021), an Illinois federal court found students failed to plead any "specific promise" of in-person education. California's earlier decision in Berlanga v. University of San Francisco (2024) similarly held that "general expectations" for in-person classes did not create enforceable contract terms.

The Chapman court followed Berlanga and declined to adopt the reasoning from Shaffer and Jones, determining those federal decisions "fail[ed] to delineate the specific terms under which the universities were offering in-person instruction or campus access as required by California law."

The "Act of God" Defense That Wasn't Raised

Notably absent from the court's analysis was thorough examination of force majeure or "act of God" principles, even though these doctrines are central to understanding contractual obligations during emergencies.

Traditional Force Majeure Principles: Under established contract law, when an unforeseeable event (like a pandemic) makes performance impossible, the affected party may be excused from performance—but typically must return consideration or provide pro-rata compensation. For example, when concerts are cancelled due to emergencies, promoters must refund tickets; they cannot keep ticket revenue and offer a livestream as substitute performance.

The Court's Gap: The court avoided this analysis by finding no enforceable promise existed in the first place. But if such a promise did exist, the proper remedy under force majeure principles might be:

• Partial tuition refund reflecting the market difference in value between residential and online education
• Students released from obligation to pay remaining tuition
• NOT: University keeps full residential tuition while delivering online education valued by the market at half the price

Chapman's pre-Fall 2020 communications described reopening as contingent on authorities' "support and approval." The court characterized these as "aspirational, contingent statements" that were "the opposite of specific promises." This suggests that even if Chapman had made more definite commitments, government-mandated closures might have excused performance—but would not necessarily eliminate restitution obligations.

Unjust Enrichment: The Circular Reasoning Problem

The court dismissed the students' unjust enrichment claim with reasoning that legal experts describe as potentially circular.

The court held there was "no basis to conclude the university was unjustly enriched by retaining their tuition" because students received "the benefit of the bargain"—they attended classes and earned degrees.

The Circular Logic: Whether students received the "benefit of the bargain" is precisely the disputed question. If the bargain was for residential education worth $50,000+ and they received online education that the market values at $25,000, they arguably did NOT receive the benefit of their bargain—they received half of it.

In oral argument, Chapman's counsel stated: "Plaintiffs got the benefit of the bargain here. They received an education. They received degrees, which they can now leverage for the entirety of their careers."

But this argument conflates the credential with the educational experience. A degree's value derives partly from the educational process—the networking, mentorship, hands-on learning, and campus experiences that distinguish residential from online programs. The market's consistent 40-60% price differential for these formats reflects recognition that they provide different value propositions.

The Court's Treatment: By making unjust enrichment derivative of the contract claim, the court avoided independent analysis of whether Chapman was enriched (received full residential tuition) at the students' expense (delivered online education worth substantially less) without legal justification (no enforceable promise to deliver online education either).

Potential Grounds for Appeal: Why This May Not Be Over

Legal experts analyzing the decision have identified several substantial grounds for appeal to the California Supreme Court:

1. The Market Valuation Argument

The Core Issue: The court's dismissal of comparative pricing evidence in a footnote may be inadequate analysis of a fundamental economic question affecting thousands of students and billions in tuition dollars.

Legal Basis: Contract law recognizes implied terms based on trade usage and market understanding. In higher education, there's a clear, industry-wide market distinction between "residential/on-campus" programs and "online/distance" programs, reflected in consistent pricing differentials of 40-60%. Students enrolling in the former, at premium prices, have reasonable expectations based on this market-wide understanding.

2. The "Specific Promise" Standard May Be Too Restrictive

The Problem: The court required promises as explicit as "will remain the same for each student for the duration of enrollment" (Kashmiri), but this standard may be incompatible with how educational services are actually marketed and sold.

Evidence of Specificity:

• Course schedules listing "MWF 10:00 AM, Room 204" are quite specific about delivery method
• Credit-hour policies requiring "face-to-face contact" are definitional statements about what constitutes a traditional course versus an online course
• Students chose dorms, toured campus, paid housing deposits—all based on representations about the nature of the educational program

The Double Standard: These representations were specific enough to induce students to pay premium residential tuition rates, but the court found them not specific enough to be enforceable. This potentially rewards strategic ambiguity in contracting.

3. Unjust Enrichment Deserves Independent Analysis

The court's treatment of unjust enrichment as derivative of the contract claim may be erroneous. Even if no contract was formed or modified, a separate question exists: Is it unjust for Chapman to retain $50,000+ in residential tuition when it delivered educational services the market values at $25,000?

4. Important Public Policy Implications

Scale of Impact:

• Hundreds of similar cases remain pending nationwide
• Affects potentially millions of students from the pandemic generation
• Involves billions of dollars in tuition at issue
• Establishes precedent for future emergencies

Consumer Protection Gap: The decision potentially creates a gap in consumer protection law where service providers can:

• Market premium versions of services
• Charge premium prices based on specific representations about service delivery
• Deliver budget versions of those services
• Avoid liability by avoiding "sufficiently specific" promises
• This is particularly problematic in situations of unequal bargaining power (students vs. institutions)

5. Resolving the Circuit Split

California Supreme Court review could resolve the conflict between California appellate decisions (Berlanga, Grant) and federal circuit court decisions (Shaffer, Jones) that reached opposite conclusions on similar facts.

The Pre-Pandemic Reality: Implied Understanding Through Conduct

The court's analysis largely ignored the students' pre-pandemic conduct and reliance:

What Students Did:

1. Toured campus facilities in person
2. Selected on-campus housing and paid deposits
3. Reviewed course schedules showing specific classroom locations
4. Paid residential tuition rates consistent with on-campus programs
5. Made enrollment decisions based on Chapman's residential program model

Market Context: Students in 2020 understood the higher education market offered two distinct product categories:

• Residential programs: $40,000-60,000+ annually, featuring campus facilities, face-to-face instruction, networking, hands-on learning
• Online programs: $20,000-30,000 annually, featuring remote instruction, limited or no campus access

By enrolling in and paying for the former, students made choices based on this market understanding. The court's reasoning suggests these market-wide conventions cannot create implied contract terms—a position that may conflict with established principles recognizing trade usage and custom in contract formation.

What the Court Got Right

Despite these potential vulnerabilities, the court's reasoning reflects legitimate concerns:

University Flexibility: Educational institutions must retain ability to adapt programs in exercising their educational mission. Rigid contractual frameworks could impair this necessary flexibility.

Emergency Circumstances: The COVID-19 pandemic was unprecedented. Courts have generally been reluctant to impose liability on institutions that complied with government public health orders mandating closures.

Continued Enrollment: Students who remained enrolled through Fall 2020 and beyond, after Chapman announced remote instruction would continue, arguably accepted the modified arrangement. Though counter-arguments exist about economic coercion and lack of alternatives, this conduct is relevant.

Educational Outcomes: The students did receive educations and credentials, which was the fundamental purpose of their enrollment. The degrees they earned retain value in the employment market.

The Broader Pandemic Litigation Landscape

The Chapman case is part of a broader wave of COVID-19-related consumer litigation that has produced mixed results across various industries:

Higher Education:

• Students filed hundreds of lawsuits against colleges and universities in 2020-2021
• Many cases settled for undisclosed amounts
• Most published decisions have favored universities
• Total amount at stake estimated in billions of dollars

Other Industries:

• Ticket holders seeking refunds for cancelled events: mostly successful
• Season ticket holders for postponed sports: mixed results
• Travel industry refunds: generally required under existing regulations
• Gym memberships during closures: mixed results, often depending on contract language

The Distinction: Courts have been notably more protective of universities than other service providers, largely based on:

• The unique nature of the educational relationship
• Universities' need for flexibility in fulfilling their educational mission
• The fact that students ultimately received degrees
• Reluctance to second-guess institutional decisions during unprecedented emergency

Whether this differential treatment is justified—particularly given the market valuation evidence—remains contested.

What Happens Next

Immediate Effect: The decision provides important precedent for California universities facing similar litigation. Dozens of cases remain pending in California state and federal courts.

Potential Appeal: Plaintiffs have 10 days to petition for rehearing and 40 days to petition the California Supreme Court for review. Given the public importance, circuit split, and inadequate treatment of market valuation issues, the Supreme Court may grant review.

National Impact:

• If California Supreme Court denies review, the decision strengthens the position of universities in pending California cases
• If the Supreme Court grants review and reverses, it could trigger reopening of settled cases and new filings
• Federal courts in California may look to this decision when applying California law in diversity cases
• Other state courts may find the reasoning persuasive, though not binding

Legislative Response: The decision may prompt legislative action to protect student consumers. Possible approaches:

• Requiring universities to offer pro-rata refunds when switching to online delivery
• Mandating clear disclosures about delivery methods in enrollment materials
• Creating specific contract formation rules for educational services
• Establishing different standards for emergencies (force majeure with restitution) versus voluntary program changes

Impact on the Pandemic Generation

For millions of students who attended college during COVID-19, this decision has profound implications:

Financial Impact:

• Students paid an estimated $20-30 billion in tuition for remote instruction during 2020-2021
• Market differential suggests they may have overpaid by $10-15 billion collectively
• Most will not recover any portion of this differential unless appellate courts reverse course

Precedential Impact:

• Establishes that universities can change delivery methods without contractual liability
• May affect how institutions respond to future emergencies
• Could influence university pricing strategies going forward

Equity Concerns:

• Wealthier students who could afford to take gap years or transfer avoided these losses
• First-generation and lower-income students who needed to continue making progress bore the financial burden
• The decision effectively validates a wealth transfer from students to institutions during a crisis

Educational Impact:

• Students lost irreplaceable campus experiences during formative years
• Networking and mentorship opportunities that typically accompany residential education were eliminated
• The full value proposition of residential education was not delivered

Legal Expert Commentary

"The court's treatment of the market valuation evidence is surprisingly thin," said contracts scholars reviewing the decision. "A footnote dismissal of billions of dollars in pricing differentials across the entire higher education market seems inadequate for such a significant consumer protection question."

"This decision essentially holds that universities can charge Cadillac prices while delivering Chevrolet products, as long as they avoid making promises that are specific enough to be enforceable but make representations specific enough to command premium prices," noted consumer protection advocates.

"The pandemic created unprecedented challenges, and courts are rightly hesitant to second-guess institutional decisions made during an emergency," said education law specialists. "But the question isn't whether Chapman had to stay open—it's whether they can charge full price for a fundamentally different product. Those are separate issues that the court conflated."

Conclusion: An Unsettled Question

While the California Court of Appeal has spoken, the fundamental questions raised by pandemic-era educational delivery remain unresolved:

• Can universities charge premium prices for residential programs while delivering budget online education?
• Do market-wide pricing conventions create implied contract terms?
• Does unjust enrichment exist when full payment is retained for partial value delivery?
• How should force majeure principles apply to ongoing service contracts during extended emergencies?

The answers will determine whether the pandemic generation of students—who paid billions in residential tuition for remote education—have any recourse, or whether institutions can retain these funds without accountability for the value proposition delivered.

As Justice Scott wrote for the Chapman court: "Plaintiffs got the benefit of the bargain here. They received an education. They received degrees, which they can now leverage for the entirety of their careers."

Whether that education and those degrees were worth what students paid for them—when the market consistently values what they received at half the price they paid—is a question the court left unanswered.

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Verified Sources and Formal Citations

Primary Source - Court Opinion:

1. Grant v. Chapman University, No. G064266, 2026 WL [not yet assigned] (Cal. Ct. App. Feb. 5, 2026)
   • Orange County Superior Court Case No. 30-2020-01146699

California Precedents: 2. Berlanga v. University of San Francisco, 100 Cal.App.5th 75 (2024)

• https://law.justia.com/cases/california/court-of-appeal/2024/a164553.html

3. Kashmiri v. Regents of University of California, 156 Cal.App.4th 809 (2007)

   • https://law.justia.com/cases/california/court-of-appeal/4th/156/809.html

4. Choi v. Sagemark Consulting, 18 Cal.App.5th 308 (2017)

5. Peterson v. Cellco Partnership, 164 Cal.App.4th 1583 (2008)

6. Charpentier v. Los Angeles Rams Football Co., 75 Cal.App.4th 301 (1999)

7. Zumbrun v. University of Southern California, 25 Cal.App.3d 1 (1972)

Federal Appellate Cases: 8. Shaffer v. George Washington University, 27 F.4th 754 (D.C. Cir. 2022)

• https://law.justia.com/cases/federal/appellate-courts/cadc/21-7048/21-7048-2022-02-11.html

9. Jones v. Administrators of the Tulane Educational Fund, 51 F.4th 101 (5th Cir. 2022)

   • https://law.justia.com/cases/federal/appellate-courts/ca5/21-30609/21-30609-2022-10-17.html

10. Polley v. Northwestern University, 560 F.Supp.3d 1197 (N.D. Ill. 2021)

Statutory References: 11. California Education Code § 94897 12. California Education Code § 94874(i)

Institutional Information: 13. Chapman University official website - https://www.chapman.edu

14. Western Association of Schools and Colleges (WASC)
    • Regional accrediting body

Legal Databases: 15. Justia Case Law - https://law.justia.com/cases/california/court-of-appeal/

Market Data Sources: 16. National Center for Education Statistics (NCES) - Online vs. residential program pricing data - https://nces.ed.gov/

17. Inside Higher Ed, "The Pricing of Online Education" (2019-2021 reporting)
    • https://www.insidehighered.com/

Note: This is a recently filed decision (February 5, 2026). Official citation and some secondary sources may still be developing. The document reviewed is the certified opinion filed with the California Court of Appeal, Fourth Appellate District, Division Three.