Court Opinion

ID: 4368841
Source: CourtListenerOpinion
Date Created: 2019-02-19 13:05:22.936638+00
Date Added: 2024-06-11T14:22:05.510877
License: Public Domain

IN THE COURT OF APPEALS OF NORTH CAROLINA

                                  No. COA18-679

                              Filed: 19 February 2019

Robeson County, No. 17 CVS 1375

NANNY’S KORNER DAY CARE CENTER, INC., Plaintiff,

             v.

NORTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES,
DIVISION OF CHILD DEVELOPMENT AND EARLY EDUCATION, Defendant.

      Appeal by Plaintiff Nanny’s Korner Day Care Center, Inc. from order entered

12 March 2018 by Judge C. Winston Gilchrist in Robeson County Superior Court.

Heard in the Court of Appeals 14 January 2019.

      Ralph T. Bryant, Jr., for Plaintiff-Appellant Nanny’s Korner Day Care Center,
      Inc.

      North Carolina Attorney General Josh Stein, by Assistant Attorney General
      Alexandra Gruber, for Defendant-Appellee.

      HUNTER, JR., Robert N., Judge

      Plaintiff Nanny’s Korner Day Care Center, Inc. (“Plaintiff”) appeals from an

order dismissing its complaint against the North Carolina Department of Health and

Human Services, Division of Child Development and Early Education (“Defendant”)

for failure to state a claim upon which relief may be granted based on the statute of

limitations. We affirm.
                          NANNY’S KORNER DAY CARE V. NCDHHS

                                        Opinion of the Court

                          I.      Factual & Procedural History

       On 5 November 2009, Defendant received a report that an eight-year-old girl

enrolled at Plaintiff’s daycare center complained a staff member at the facility had

touched her inappropriately. The complaint prompted an investigation by Sharon

Miller (“Ms. Miller”), an abuse and neglect consultant for Defendant, and a social

worker from the Robeson County Department of Social Services (“DSS”).                            The

investigation consisted of visits to the child’s school and home to interview the child,

as well as the child’s guidance counselor, teacher, mother, and sibling. Ms. Miller

and the social worker then visited Plaintiff’s facility to interview staff members.

While there, Ms. Miller and the social worker also interviewed Plaintiff’s CEO,

Bernice Cromartie (“Mrs. Cromartie”), as well as the accused, her husband Ricky

Cromartie (“Mr. Cromartie”).           Mr. Cromartie, now deceased, was a teacher and

maintenance worker at Plaintiff’s facility. Mr. Cromartie denied inappropriately

touching the child, and requested a polygraph test, which he passed with no

deception. No criminal charges were filed against Mr. Cromartie.

       On 2 February 2010, Ms. Miller received notice that DSS completed its

investigation and “substantiated” the allegations of sexual abuse against Mr.

Cromartie.1 On 4 February 2010, Ms. Miller submitted a Case Decision Summary of

       1  N.C. Gen. Stat. § 7B-302 details the required assessment that must be completed by the
Director of the Department of Social Services when a report of abuse, neglect, or dependency is
received. See N.C. Gen. Stat. § 7B-101 for definitions. We note “substantiated” as used in the statute

                                                -2-
                        NANNY’S KORNER DAY CARE V. NCDHHS

                                     Opinion of the Court

Defendant’s investigation to her supervisor, noting DSS had substantiated the

allegations of inappropriate touching of a child at Plaintiff’s facility by Mr. Cromartie.

       In June 2010, Defendant’s Internal Review Panel (“the Panel”) determined the

appropriate administrative action was a written warning. The Panel also reviewed

its decision to prohibit Mr. Cromartie from Plaintiff’s facility during operating hours,

and upheld the decision, citing DSS’s substantiation of child sexual abuse. The Panel

agreed the decision would remain in effect unless substantiation was overturned.

Defendant never conducted an independent investigation into the allegations, but

rather relied on DSS’s substantiation of child sexual abuse in its decision to issue a

written warning to Plaintiff. Defendant did not give Plaintiff or Mr. Cromartie a

hearing to contest the finding of substantiation of abuse.

       After a timely petition by Plaintiff for a contested case hearing in the Office of

Administrative Hearings (“OAH”), a hearing on the petition was held on 12 July 2011.

Despite expressing doubts about whether Mr. Cromartie sexually abused the child at

Plaintiff’s facility, the Administrative Law Judge affirmed the Division’s decision to

issue a written warning to Plaintiff and restrict Mr. Cromartie from the property

when children were present. In its conclusion of law, the Administrative Law Judge

concluded:

              11. The only issue before the undersigned is whether
              respondent acted properly in issuing the written warning

does not involve an impartial review by a neutral magistrate where an accused has the right to
traditional due process protections. See discussion supra.

                                            -3-
                           NANNY’S KORNER DAY CARE V. NCDHHS

                                         Opinion of the Court

                to Petitioner’s family child care center, and in
                implementing the Correct Action plan prohibiting Ricky
                Cromartie from being on the child care facility premises
                while children are in care.

                12. While the preponderance of the evidence before me
                raises serious questions and/or doubts about whether Mr.
                Cromartie sexually abused the minor child at Petitioner’s
                center on November 5, 2009, the undersigned lacks the
                authority and/or jurisdiction to issue a formal
                determination on the merits of that substantiation.
                Review of DSS’ substantiation is located in another forum
                other than the Office of Administrative Hearings.

        On or about 12 March 2012, Defendant adopted the Administrative Law

Judge’s order as its Final Agency Decision. Plaintiff then filed a petition in Wake

County Superior Court seeking judicial review of Defendant’s Final Agency Decision

pursuant to N.C. Gen. Stat. § 150B-362 of the North Carolina Administrative

Procedure Act (“NCAPA”).               The Wake County Superior Court upheld the

Administrative Law Judge’s decision in an order entered on 9 January 2013.

        Plaintiff filed a timely notice of appeal to the North Carolina Court of Appeals

(“Nanny’s Korner I”). On 20 May 2014, the Court of Appeals held Defendant erred

when it relied upon DSS’s substantiation of abuse to issue the written warning to

        2 In 2011, the General Assembly revised the contested case procedure set forth in the NCAPA
by amending and repealing various statutory provisions in Chapter 150B of the North Carolina
General Statutes. See 2011 N.C. Sess. Law 1678, 1685-97, ch. 398, §§ 15-55. The amendments went
into effect on 1 January 2012. Plaintiff’s contested case commenced on 21 July 2010. We therefore
conduct our review pursuant to the statutory procedures in effect at the time Plaintiff’s contested case
was filed with the OAH.

                                                 -4-
                          NANNY’S KORNER DAY CARE V. NCDHHS

                                        Opinion of the Court

Plaintiff and order Mr. Cromartie to remain off the premises.3 The Court stated that

Defendant was required to conduct an independent investigation into the allegations

of abuse, and upon substantiation, allow Plaintiff an opportunity to contest the

agency’s determination. The Court further stated: “Thus, given the documented

evidence in the record showing the impact of [Defendant’s] administrative action on

[Plaintiff’s] livelihood, [Plaintiff] has arguably suffered a deprivation of her liberty

interests guaranteed by our State’s constitution, necessitating a procedural due

process analysis.” Nanny’s Korner Care Ctr. v. N.C. HHS, 234 N.C. App. 51, 64, 758

S.E.2d 423, 431 (2014).

       Even though the Court found for Plaintiff in Nanny’s Korner I and reversed

the final agency decision, the damage to Plaintiff had already occurred.                        The

administrative penalty required Plaintiff to notify its customers on or around 15 June

2010 that a report of child abuse at the daycare center had been substantiated.

Consequently, Plaintiff began to lose customers and was eventually forced to close its

doors. “The injury was real, immediate, and inescapable.”

       On 23 January 2017, Plaintiff filed a Tort Claims Act Affidavit with the North

Carolina Industrial Commission alleging negligence by Defendant for failing to

conduct an independent investigation into the allegations of child sexual abuse. In

       3  In 2016, the General Assembly revised the required process Defendant must take when it
receives a report of child maltreatment. See 2015 Sess. Law 123. Under the revised law, the Defendant
is required to conduct its own investigations of child maltreatment. See N.C. Gen. Stat. § 110-1-5.3.
The amendments went into effect on 1 January 2016.

                                                -5-
                       NANNY’S KORNER DAY CARE V. NCDHHS

                                   Opinion of the Court

the Affidavit, Plaintiff claimed $600,000 in damages under the North Carolina Tort

Claims Act (“Tort Claims Act”). On 20 March 2017, Defendant filed a Motion to

Dismiss in accordance with Rule 12(b)(6), and on 4 May 2017, Deputy Commissioner

Robert J. Harris granted Defendant’s motion and dismissed the claim with prejudice.

Plaintiff then appealed to the Full Commission, which heard the matter on 18 October

2017. On 21 December 2018, after Plaintiff filed notice of appeal for the instant

action, the Industrial Commission dismissed Plaintiff’s tort claim, stating that the

claim fell outside the Tort Claims Act’s three-year statute of limitations.

      On 22 May 2017, Plaintiff filed the instant action in Robeson County Superior

Court, alleging a violation of its due process rights under Article 1, section 19 of the

North Carolina Constitution. Plaintiff’s complaint alleged in pertinent part:

             22. The defendant enforced the administrative action
             without conducting an independent determination of
             whether child abuse had occurred at plaintiff’s facility.

             23. Plaintiff was never allowed the opportunity to have a
             hearing to contest the finding of substantiation of abuse
             occurring at plaintiff’s facility.

             25. The defendant merely adopted the local DSS finding of
             a substantiation of abuse.

             26. The defendant violated plaintiff’s constitutional right
             to due process when it issued administrative action,
             without conducting an independent investigation to
             substantiate abuse. In so doing the plaintiff was deprived
             on [its] due process right in that plaintiff had a protected
             interest in the day care licensing and a right to be free from
             administrative action without due process of law.

                                          -6-
                      NANNY’S KORNER DAY CARE V. NCDHHS

                                   Opinion of the Court

             32. The Administrative Procedure Act does not provide a
             remedy for the plaintiff to recover for the harm caused by
             the deprivation of plaintiff’s due process rights, namely,
             harm to reputation, loss of goodwill, lost income and
             profits.

             33. Because of the defendant’s violation of plaintiff’s due
             process rights, plaintiff’s business was completely
             decimated and plaintiff lost all income from the day care
             operation.

             34. There is no adequate remedy at state law for plaintiff
             to redress the violation of [its] constitutional rights and the
             resultant harm of lost reputation, business goodwill and
             lost profits from the business.

             43. Article I, Section 19 of the North Carolina Constitution
             warrants that “[no] person shall be taken, imprisoned, or
             disseized of his freehold, liberties, or privileges, or
             outlawed, or exiled, or in any manner deprived of his life,
             liberty, or property, but by the law of the land. N.C. Const.
             art. I § 19.

             51. Plaintiff was deprived of the liberty interest guaranteed
             under the North Carolina Constitution.

      On 17 October 2017, Defendant filed an Answer and Motion to Dismiss for

failure to state a claim upon which relief may be granted. Defendant notified Plaintiff

of a hearing on the Motion to Dismiss to take place on 12 February 2018, and on 5

February 2018, Defendant submitted a brief in support of the Motion to Dismiss. On

12 February 2018, Plaintiff filed its brief in opposition to the Motion to Dismiss. On

12 March 2018, the Honorable Judge C. Winston Gilchrist of Robeson County

Superior Court granted Defendant’s motion and dismissed Plaintiff’s complaint

                                          -7-
                          NANNY’S KORNER DAY CARE V. NCDHHS

                                   Opinion of the Court

pursuant to Rule 12(b)(6) of the North Carolina Rules of Civil Procedure. On 9 April

2018, Plaintiff filed a timely notice of appeal to the North Carolina Court of Appeals

from the judgment and order of the superior court.

                    II.      Jurisdiction & Standard of Review

      Plaintiff’s appeal from the superior court order lies as of right to this Court

pursuant to N.C. Gen. Stat. § 7A-27(b) (2017). “We review a motion to dismiss for

failure to state a claim de novo.” Doe v. Charlotte-Mecklenburg Bd. of Educ., 222 N.C.

App. 359, 365, 731 S.E.2d 245, 249 (2012) (citing Bobbitt ex. rel. Bobbitt v. Eizenga,

215 N.C. App. 378, 379, 715 S.E.2d 613, 615 (2011)).

      When considering a motion to dismiss under Rule 12(b)(6) of the Rules of Civil

Procedure, we consider “whether the allegations of the complaint, if treated as true,

are sufficient to state a claim upon which relief can be granted under some legal

theory.” Hinson v. City of Greensboro, 232 N.C. App. 204, 208, 753 S.E.2d 822, 826

(2014).   “[O]nce a defendant raises the affirmative defense of the statute of

limitations, the burden shifts to the plaintiff[] to show their action was filed within

the prescribed period.”      Asheville Lakeview Properties, LLC v. Lake View Park

Commission, Inc., 803 S.E.2d 632, 636 (2017). “Dismissal is proper when one of the

following three conditions is satisfied: (1) the complaint on its face reveals that no law

supports the plaintiff’s claim; (2) the complaint on its face reveals the absence of facts

sufficient to make a good claim; or (3) the complaint discloses some fact that

                                          -8-
                       NANNY’S KORNER DAY CARE V. NCDHHS

                                   Opinion of the Court

necessarily defeats the plaintiff’s claim.” Podrebarac v. Horack, Talley, Pharr, &

Lowndes, P.A., 231 N.C. App. 70, 74, 752 S.E.2d 661, 663 (2013). “A statute of

limitations can be the basis for dismissal on a Rule 12(b)(6) motion if the face of the

complaint discloses that plaintiff’s claim is so barred.” Reunion Land Co. v. Village

of Marvin, 129 N.C. App 249, 250, 497 S.E.2d 446, 447 (1998) (citations omitted). It

is well settled that “[q]estions of statutory interpretations are ultimately questions of

law for the courts.” Ray v. North Carolina Dept. of Transp., 366 N.C. 1, 9, 727 S.E.2d

675, 681-82 (2012).     Accordingly, we review de novo the superior court’s order

granting dismissal.

                                    III.   Analysis

      Plaintiff argues its constitutional procedural due process claim was improperly

dismissed under Rule 12(b)(6) of the Rules of Civil Procedure because the statute of

limitations was tolled while Plaintiff exhausted its administrative remedies.

Unfortunately, we must disagree.

      On appeal, Plaintiff raises two primary issues for the Court: (1) whether the

superior court erred when it granted Defendant’s Motion to Dismiss Plaintiff’s

procedural due process claim; and (2) whether the superior court erred when it failed

to apply the Doctrine of Judicial Estoppel to prevent Defendant from taking an

inconsistent position before the Industrial Commission. Because Plaintiff at oral

                                           -9-
                      NANNY’S KORNER DAY CARE V. NCDHHS

                                  Opinion of the Court

argument on 14 January 2019 waived the Judicial Estoppel issue, we need not

address it here.

      In support of its position that the superior court erred in granting Defendant’s

Motion to Dismiss its procedural due process claim, Plaintiff argues (1) Plaintiff

alleged sufficient facts to support a constitutional claim; (2) The Law of the Land

Clause provides a remedy; (3) Plaintiff’s claim is not barred by sovereign immunity;

(4) The statute of limitations was tolled while Plaintiff pursued administrative

remedies through Nanny’s Korner I; and (5) Plaintiff is entitled to recover monetary

damages for its direct constitutional claim. Even though this appeal is resolved by a

determination of the statute of limitations issue, we will briefly address the

procedural due process claim.

                                A. Statute of Limitations

      The statute of limitations in North Carolina for both constitutional and

negligence claims is three years. See N.C. Gen. Stat. § 1-52 (2017). The accrual of

the statute of limitations period typically begins “when the plaintiff is injured or

discovers he or she has been injured.” Christie v. Hartley Constr., Inc., 367 N.C. 534,

538, 766 S.E.2d 283, 286 (2014). However, “[w]hen the General Assembly provides

an effective administrative remedy by statute, that remedy is exclusive and the party

must pursue and exhaust it before resorting to the courts.” Jackson for Jackson v.

North Carolina Dept. of Human Resources Div. of Mental Health, Developmental

                                         - 10 -
                      NANNY’S KORNER DAY CARE V. NCDHHS

                                  Opinion of the Court

Disabilities, & Substance Abuse Servs., 131 N.C. App. 179, 186, 505 S.E.2d 899, 903-

04 (1998).   Nevertheless, the exhaustion of administrative remedies doctrine is

inapplicable when the remedies sought are not considered in the administrative

proceeding. Philips v. Pitt County Mem. Hosp., Inc., 222 N.C. App. 511, 522, 731

S.E.2d 462, 470 (2012). Under those circumstances, “the administrative remedy will

not bar a claimant from pursuing an adequate remedy in civil court.” Johnson v. First

Union Corp., 128 N.C. App. 450, 456, 496 S.E.2d 1, 5 (1998).

      Plaintiff argues the statute of limitations was tolled while Plaintiff exhausted

its administrative remedies through the appeal of Defendant’s final agency decision

in Nanny’s Korner I. Plaintiff contends the exhaustion of administrative remedies

doctrine required Plaintiff to exhaust its remedy through the claim under the NCAPA

before Plaintiff’s right to bring a constitutional claim arose. Accordingly, Plaintiff

argues that its cause of action for the alleged due process violation did not accrue

until 9 June 2014, when this Court issued its mandate in Nanny’s Korner I.

      Conversely, Defendant contends the statute of limitations began to run on or

about 15 June 2010, around the time Defendant issued its written warning to

Plaintiff. Defendant argues it is reasonable to conclude the alleged damages occurred

near the time of the issuance of the written warning requiring Plaintiff to warn its

customers and keep Mr. Cromartie off the premises. Defendant also argues the

statute of limitations was not tolled by the pursuit of administrative remedies under

                                         - 11 -
                       NANNY’S KORNER DAY CARE V. NCDHHS

                                   Opinion of the Court

the exhaustion of administrative remedies doctrine since Plaintiff sought monetary

damages, a remedy not available under the NCAPA. Defendant further suggests that

even Plaintiff viewed the remedy under the statute as inadequate, “since it prevailed

in its case against the agency, i.e. Nanny’s Korner I, but now seeks a monetary remedy

under both the North Carolina Tort Claims Act and the Law of the Land Clause.”

Accordingly, Defendant argues the statute of limitations was not tolled, and has long

since run.

      We hold the statute of limitations began to run on or about 15 June 2010, when

Defendant issued the written warning to Plaintiff. Defendant’s written warning was

the “breach” that proximately caused—in Plaintiff’s own words—a “real, immediate,

and inescapable” injury. The statute of limitations began to run when Plaintiff was

injured or discovered the injury, which in this case happened almost simultaneously.

The statute of limitations was not tolled while Plaintiff pursued its administrative

remedies in Nanny’s Korner I because in that action, Plaintiff sought a remedy not

available through the NCAPA—namely, monetary damages.                In its complaint,

Plaintiff acknowledges that the NCAPA “does not provide a remedy for . . . lost income

and profits.” Therefore, the statute of limitations was not tolled while Plaintiff

pursued its administrative remedies, and the filing of the instant claim on 22 May

2017 fell outside the statute of limitations. We affirm the trial court.

                    B. Constitutional Procedural Due Process Claim

                                          - 12 -
                       NANNY’S KORNER DAY CARE V. NCDHHS

                                  Opinion of the Court

      Plaintiff contends it sufficiently plead a direct claim against the State of North

Carolina for a violation of its due process rights guaranteed under the state

constitution.    “‘[I]n the absence of an adequate state remedy, one whose state

constitutional rights have been abridged has a direct claim against the State under

our Constitution.’” Craig v. New Hanover Cty. Bd. of Educ., 363 N.C. 334, 338, 678

S.E.2d 351, 354 (2009) (quoting Corum v. University of North Carolina, 330 N.C. 761,

782, 413 S.E.2d 276, 289 (1992)).     “[P]laintiffs have the burden of showing, by

allegations in the complaint, that the particular remedy is inadequate.” Shell Island

Homeowners Ass’n Inc. v. Tomlinson, 134 N.C. App. 217, 223, 517 S.E.2d 406, 411

(1999).   “An adequate remedy must provide the possibility of relief under the

circumstances.” Craig at 340, 678 S.E.2d at 355. “An adequate state remedy exists

if, assuming the plaintiff’s claim is successful, the remedy would compensate the

plaintiff for the same injury alleged in the direct constitutional claim.” Estate of

Fennell v. Stephenson, 137 N.C. App. 430, 437, 528 S.E.2d 911, 915-16 (2000) (rev’d

on other grounds by 354 N.C. 327, 554 S.E.2d 629 (2001)). Further, a plaintiff must

still win other pretrial motions, including filing a timely claim. Craig at 340, 678

S.E.2d at 355.

      Plaintiff argues it has the right to bring a direct constitutional claim since no

adequate state remedy exists. In its complaint, Plaintiff states that the NCAPA “does

not provide a remedy for the plaintiff to recover for the harm caused by the

                                         - 13 -
                             NANNY’S KORNER DAY CARE V. NCDHHS

                                           Opinion of the Court

deprivation of plaintiff’s due process rights, namely, harm to reputation, loss of

goodwill, lost income and profits.” Plaintiff also argues the dismissal of its claim at

the Industrial Commission proves it does not have an adequate state remedy.

“Certainly, a cause of action under the Tort Claims Act that expires before the right

to bring the constitutional law claim even arose, cannot be an adequate remedy at

law.”

        Defendant argues Plaintiff does not have a direct constitutional claim because

it had an adequate state remedy in the form of the Industrial Commission through

the Torts Claim Act. We agree. The Tort Claims Act explicitly grants authority to

the North Carolina Industrial Commission to hear tort claims against State agencies.

See N.C. Gen. Stat. § 143.291(a) (2017). Plaintiff pursued that remedy when it filed

an affidavit at the Industrial Commission on 23 January 2017, alleging negligence on

the part of Defendant and seeking $600,000 in damages. Nonetheless, the Full

Commission dismissed Plaintiff’s claim on 21 December 2018, citing the Tort Claims

Act’s three-year statute of limitations.4              Plaintiff’s failure to comply with the

applicable statute of limitations does not render its remedy inadequate. An adequate

state remedy existed because, assuming Plaintiff’s claim under the Tort Claims Act

had been successful, the remedy would have compensated Plaintiff for the same

injury alleged in the constitutional claim.

        4   See N.C. Gen. Stat. § 1-52 (2017).

                                                  - 14 -
                       NANNY’S KORNER DAY CARE V. NCDHHS

                                   Opinion of the Court

       Accordingly, because the Tort Claims Act provided an adequate state remedy

for Plaintiff’s claim, Plaintiff does not have a direct constitutional claim against the

State under the North Carolina Constitution.

                                  IV.    Conclusion

       Because Plaintiff had an adequate state remedy for its procedural due process

claim but did not pursue it within the three-year statute of limitations, we affirm the

trial court.

       AFFIRMED.

       Chief Judge McGee and Judge Hampson concur.

                                          - 15 -