Link to original WordPerfect file
Link to PDF file
How to access the above link?
Return to nccourts.org
Return to the Opinions Page
All opinions are subject to modification and technical correction prior to official publication in the North Carolina Reports and North Carolina Court of Appeals Reports. In the event of discrepancies between the electronic version of an opinion and the print version appearing in the North Carolina Reports and North Carolina Court of Appeals Reports, the latest print version is to be considered authoritative.
CARILLON ASSISTED LIVING, LLC, Petitioner, v. NORTH CAROLINA
DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADULT CARE LICENSURE
SECTION; and THE STATE OF NORTH CAROLINA, Respondents
Filed: 3 January 2006
Administrative Law--assisted living facilities--settlement projects--2001 Session Law
The trial court erred by failing to uphold the decision of the ALJ granting summary
judgment for petitioner on the ground that a 2001 Session Law did not apply to settlement
projects regarding the development of assisted living facilities, and the case is remanded for entry
of judgment in favor of petitioner as provided in the settlement agreement, because: (1) the
language of the settlement agreement is unambiguous and provides that in exchange for the right
to develop the settlement projects without obtaining an exemption, petitioner forfeited its right to
litigate its remaining claims and constitutional challenges; (2) respondents properly exercised
their statutory authorities to settle the case under N.C.G.S. § 150B-22 and determined that the
moratorium did not operate to limit DHHS and the State's authority with regard to certain of the
projects at issue; (3) appellate courts must avoid constitutional questions, even if properly
presented, where a case may be resolved on other grounds; (4) the 2001 Session Law is
inapplicable to the settlement or gap projects, and the statutory exemptions apply only to the
moratorium; and (5) the settlement agreement does not provide petitioner solely a statutory
exemption to develop the projects, but instead, the agreement expressly provides that petitioner
shall be entitled to develop the settlement projects.
Judge JACKSON dissenting.
Appeal by petitioner from order entered 16 November 2004 by
Judge Orlando F. Hudson, Jr., in Wake County Superior Court. Heard
in the Court of Appeals 12 October 2005.
Brooks, Pierce, McLendon, Humphrey & Leonard, L.L.P., by Jim
W. Phillips, Jr., Forrest W. Campbell, Jr., and Charles F.
Marshall III, for petitioner-appellant.
Attorney General Roy Cooper, by Assistant Attorney General
Thomas M. Woodward and Assistant Attorney General
Hackney, for respondents-appellees.
Carillon Assisted Living, LLC (petitioner) appeals from
order entered granting the North Carolina Department of Health and
Human Services, Adult Care Licensure Section's (DHHS) motion todismiss petitioner's constitutional, breach of contract, and
damages claims and its claims against DHHS and the State for lack
of jurisdiction and summary judgment for respondents on all
remaining claims. We reverse and remand.
Karen Moriarty Penry founded Carillon Assisted Living, LLC in
1996. Petitioner established an office in Raleigh to develop
assisted living facilities in North Carolina. As of 29
2004, petitioner operated six licensed assisted living facilities
in six different North Carolina counties.
In June 1997, petitioner filed plans with DHHS for development
of twenty-one assisted living facilities.
August 1997, the North Carolina General Assembly imposed
a moratorium on the development of additional assisted living
facilities. The moratorium was retroactive to 1 July 1997 and
expired on 30 June 1998. The law provided:
From the effective date of this Act until 12
months after the effective date of this Act,
the Department of Health and Human Services
shall not approve the addition of any adult
care home beds for any type home or facility
in the State, except as follows:
(1) Plans submitted for approval prior to May
(2) Plans submitted for approval prior to May
18, 1997, may be processed for approval if the
individual or organization submitting the plan
demonstrates to the Department that on or
before August 25, 1997, the individual or
organization purchased real property, entered
into a contract to purchase or obtain an
option to purchase real property entered intoa binding real property lease arrangement, or
has otherwise made a binding financial
commitment for the purpose of establishing or
expanding an adult care home facility.
1997 N.C. Sess. Laws 443.
On 30 October 1998, the legislature reinstated the moratorium
retroactive to 1 July 1998 through 26 August 1999. The legislature
again extended the moratorium in 1999 and 2000. It remained in
force through 31 December 2001.
In January 1999, DHHS declined to issue a declaratory ruling
that eight of petitioner's new projects and six of its expansion
projects were to be exempt from the moratorium. Petitioner
petitioned for review in Wake County Superior Court alleging: (1)
its proposed projects were exempt from the moratorium; (2) the
moratorium was unconstitutional; and (3) application of the
moratorium to petitioner's projects was unconstitutional. The
court ruled in petitioner's favor
on 15 October 1999 and held that
the projects were exempt from the moratorium and petitioner was
entitled to develop all twenty-seven projects. DHHS appealed.
On 20 June 2000, petitioner, DHHS, and the State of North
Carolina through its Attorney General, entered into a settlement
agreement that resolved and settled the litigation. In the
agreement, petitioner agreed to forego its constitutional
challenges to the moratorium in exchange for the unconditional
right to develop nineteen projects (settlement projects) instead
of the twenty-seven petitioner applied for. In accordance with the
agreement, the trial court's order was vacated and the pending
appeals were withdrawn. The General Assembly enacted the 2001 Session Law, which
provided the moratorium would expire on 31 December 2001. After 31
December 2001, all assisted living facilities were to be subject to
a Certificate of Need (CON) law. N.C. Gen. Stat. § 131E-175
(2003). The 2001 Session Law provides, any person who obtained an
exemption under the moratorium must meet financing and
construction deadlines on its exempt projects to save the
exemption. 2001 N.C. Sess. Laws 234. The exemption holder must
provide DHHS with evidence of: (a) the funding to cover the
project's capital costs by 1
June 2004; (b) the completion of
building foundation and footings by 1 December 2004; and (c) the
issuance of a certificate of occupancy by 1 December 2005. Id. If
the holder of the exemption fails to meet these deadlines, the
exemption is terminated. Id.
Petitioner maintained the deadlines did not apply to its
development plans and did not comply with the statutory deadlines
for many of its projects. DHHS advised petitioner that it could
not develop forty-three projects (gap projects) for which
petitioner filed plans during the four-month period between the
date the moratorium expired, 30 June 1998, and the date it was
reinstated, 30 October 1998. DHHS asserted that if the moratorium
precluded petitioner from developing the gap projects until 31
December 2001, the moratorium's expiration date precluded
petitioner from developing the gap projects absent a CON.
On 24 July 2003, petitioner filed a contested case in the
Office of Administrative Hearings. Petitioner asserted: (1) the2001 Session Law is inapplicable to the settlement projects; (2)
DHHS breached the settlement agreement; and (3) the application of
the 2001 Session Law and moratorium to the settlement projects and
the gap projects violated petitioner's rights under the United
States and North Carolina Constitutions.
Administrative Law Judge Beecher R. Gray (ALJ)
petitioner's favor on 13 May 2004. The ALJ found the parties had
agreed and settled for petitioner
to possess an unconditional right
to develop the settlement projects, had not agreed solely to an
exemption from the moratorium, and the deadlines contained in the
2001 Session Law did not apply to the settlement projects.
On further review, DHHS reversed the ALJ. DHHS dismissed
petitioner's constitutional, breach of contract, and damages
claims, and its claims against the State for lack of jurisdiction.
DHHS granted summary judgment for itself and the State and rejected
petitioner's claim that the 2001 Session Law is inapplicable to the
settlement projects and on its claim relating to the gap projects.
On 11 August 2004, petitioner filed a petition for judicial
review in Wake County Superior Court. The trial court granted
respondents' motion to dismiss petitioner's constitutional, breach
of contract, and damages claims, and its claims against the State
for lack of jurisdiction. The trial court granted summary judgment
for respondents on all remaining claims. Petitioner appeals.
Petitioner argues the trial court erred by: (1) failing to
uphold the decision of the ALJ granting summary judgment forpetitioner on the ground that the 2001 Session Law did not apply to
the Settlement Projects; (2) dismissing petitioner's
constitutional, breach of contract, and damages claims, and its
claims against the State for lack of jurisdiction; and (3) failing
to grant summary judgment for petitioner on its constitutional
claims. Petitioner argues it is entitled to develop the gap
projects for which plans were filed with DHHS when there was no
moratorium or other development conditions were in effect.
III. Standard of Review on Administrative Claims
The appropriate standard of review in this case depends upon
the issue being reviewed. This Court has stated:
The proper standard of review by the trial
court depends upon the particular issues
presented by the appeal. ACT-UP Triangle v.
Commission for Health Services, 345 N.C. 699,
706, 483 S.E.2d 388, 392 (1997); Brooks v.
McWhirter Grading Co., Inc., 303 N.C. 573,
580, 281 S.E.2d 24, 28 (1981). If appellant
argues the agency's decision was based on an
error of law, then de novo review is required.
In re McCrary, 112 N.C. App. 161, 165, 435
S.E.2d 359, 363 (1993) (citations omitted).
If appellant questions whether the agency's
decision was supported by the evidence or
whether it was arbitrary or capricious, then
the reviewing court must apply the whole
Deep River Citizens' Coalition v. NC Dep't of Env't and Natural
Resources, 149 N.C. App. 211, 213-14, 560 S.E.2d 814, 816 (2002).
The reviewing court must determine whether the evidence is
substantial to justify the agency's decision. Gordon v. North
Carolina Department of Correction, 173 N.C. App. 22, 34, 618 S.E.2d
280, 289 (2005). A reviewing court may not substitute itsjudgment for the agency's, even if a different conclusion may
result under a whole record review. Id.
As to appellate review of a superior court
order regarding an agency decision, the
appellate court examines the trial court's
order for error of law. The process has been
described as a twofold task: (1) determining
whether the trial court exercised the
appropriate scope of review and, if
appropriate, (2) deciding whether the court
did so properly. As distinguished from the
any competent evidence test and a de novo
review, the whole record test gives a
reviewing court the capability to determine
whether an administrative decision has a
rational basis in the evidence.
ACT-UP Triangle, 345 N.C. at 706-07, 483 S.E.2d at 392 (internal
IV. Session Law
Petitioner argues the language of the settlement agreement
provides petitioner with the unconditional right to develop the
projects and the 2001 Session Law is inapplicable to their
projects. Respondents argue that petitioner's settlement projects
are subject to the 2001 Session Law requiring a CON.
Our Supreme Court has stated, if the meaning of the
is clear and only one reasonable interpretation exists,
the courts must enforce the contract as written . . . . Woods v.
Insurance Co., 295 N.C. 500, 506, 246 S.E.2d 773, 777 (1978).
The settlement agreement provides:
Immediately upon entry of an order by the
Superior Court of Wake County allowing the
joint motion references in Paragraph 1 of this
agreement, Carillon, and any of Carillon's
wholly-owned subsidiaries, shall be entitled
to develop the assisted living facilities
identified in Exhibit A to this agreement. The parties hereby agree that the moratorium
is not applicable to development of the
facilities described in Exhibit A.
The language of the settlement agreement is unambiguous. In
exchange for the right to develop the settlement projects without
obtaining an exemption, petitioner forfeited its right to litigate
its remaining claims and constitutional challenges. DHHS
previously had been granted full legislative authority to approve
projects prior to the moratorium, which set limitations on that
authority. To resolve a constitutional challenge to the
moratorium, the parties agreed the moratorium did not operate to
limit DHHS and the State's authority with regards to certain of the
projects at issue, thereby settling a question which otherwise
would have to have been resolved by the courts. This settlement
authority is precisely the legislative purpose of N.C. Gen. Stat.
§ 150B-22. Respondents properly exercised their statutory
authorities to settle the case. N.C. Gen. Stat. § 150B-22 (2003)
(It is the policy of this State that any dispute between an agency
and another person that involves the person's rights, duties, or
privileges, including licensing or the levy of a monetary penalty,
should be settled through informal procedures.).
The dissenting opinion argues that while respondents had
authority to enter into settlement agreements pursuant to this
statute, that authority is not without constitutional limitation.
However, appellate courts must 'avoid constitutional questions,
even if properly presented, where a case may be resolved on other
grounds.' James v. Bartlett, 359 N.C. 260, 266, 607 S.E.2d 638,642 (2005) (quoting Anderson v. Assimos, 356 N.C. 415, 416, 572
S.E.2d 101, 102 (2002)); see also Union Carbide Corp. v. Davis, 253
N.C. 324, 327, 116 S.E.2d 792, 794 (1960) (Courts must pass on
constitutional questions when, but only when, they are squarely
presented and necessary to the disposition of a matter then pending
and at issue.); State v. Blackwell, 246 N.C. 642, 644, 99 S.E.2d
867, 869 (1957) ([A] constitutional question will not be passed on
even when properly presented if there is also present some other
ground upon which the case may be decided.); State v. Muse, 219
N.C. 226, 227, 13 S.E.2d 229, 229 (1941) (an appellate court will
not decide a constitutional question unless it is properly
presented, and will not decide such a question even then when the
appeal may be properly determined on a question of less moment.).
Applying this principle, the present case can be resolved on purely
statutory grounds. N.C. Gen. Stat. § 150B-22.
Additionally, the settlement agreement was executed by DHHS's
chief of the Adult Care Licensure Section and the State of North
Carolina by the Special and Assistant Attorney Generals. The
agreement specifically provides, [t]he undersigned represent and
warrant that they are authorized to enter into this agreement on
behalf of the parties. Both DHHS and the State of North Carolina
consented to the settlement agreement. The Superior Court's order
in petitioner's favor was vacated and the parties' appeals were
withdrawn. When the Attorney General has control of the action
[he] may settle it when he determines it is in the best interest ofthe State to do so. Tice v. DOT, 67 N.C. App. 48, 51, 312 S.E.2d
241, 243 (1984).
The 2001 Session Law requires the exemption holder to provide
evidence of: (a) the funding to cover the project's capital costs
by 1 June 2004; (b) the completion of building foundation and
footings by 1 December 2004; and (c) the issuance of a certificate
of occupancy by 1 December 2005. 2001 N.C. Sess. Laws 234.
The 2001 Session Law is inapplicable to the settlement or gap
projects. The statutory exemptions apply only to the moratorium.
The settlement agreement does not provide petitioner solely a
statutory exemption to develop the settlement projects. Rather,
the agreement expressly provides that petitioner shall be entitled
to develop the settlement projects. The agreement also expressly
provides, [t]he parties hereby agree that the moratorium is not
applicable to development of the facilities described in Exhibit
A. Because the exemptions apply only to the moratorium and the
moratorium is expressly inapplicable to petitioner by the
settlement agreement, petitioner is not bound by the 2001 Session
Law. N.C. Gen. Stat. § 150B-22.
In light of our decision, it is unnecessary to reach
petitioner's constitutional claims.
Petitioner's settlement projects are not subject to the 2001
Session Law. Id
. The language of the settlement agreement
expressly provides petitioner the right to develop the projects,
not a right to an exemption, and was executed by parties withauthority to bind DHHS and the State. The provisions of the
moratorium and the 2001 Session Law are inapplicable to the gap
projects. In light of our decision, it is unnecessary to reach
petitioner's constitutional claims. The trial court's order is
reversed and this cause is remanded for entry of judgment in favor
of petitioner as provided in the settlement agreement.
Reversed and remanded.
Judge JOHN concurs.
Judge JACKSON dissents.
JACKSON, Judge dissenting.
For the following reasons, I must respectfully dissent from
the majority opinion.
Petitioner argues that the settlement agreement grants an
unconditional right to develop the settlement projects and makes
the legislatively enacted moratorium inapplicable to the settlement
projects. Respondent argues that the settlement projects always
were subject to legislative constraints and that the settlement
agreement merely settled the parties' dispute regarding whether the
projects in question could be approved under one of the enumerated
exceptions to the moratorium. I would hold that petitioner cannot
prevail on its breach of contract claim under the interpretation of
the settlement agreement proposed by either party.
The 1997 moratorium provides, in relevant part:
(b) From the effective date of this act until
12 months after the effective date of
this act, the Department of Health and
Human Services shall not approve
theaddition of any adult care home beds for
any type home or facility in the State,
except as follows
(1) Plans submitted for approval
prior to May 18, 1997, may
continue to be processed for
(2) Plans submitted for approval
subsequent to May 18, 1997, may
be processed for approval if
the individual or organization
submitting the plan
demonstrates to the Department
that on or before August 25,
1997, the individual or
organization purchased real
property, entered into a
contract to purchase or obtain
an option to purchase real
property, entered into a
binding real property lease
arrangement, or has otherwise
made a binding financial
commitment for the purpose of
establishing or expanding an
adult care home facility. An
owner of real property who
entered into a contract prior
to August 25, 1997, for the
sale of an existing building
together with land zoned for
the development of not more
than 50 adult care home beds
with a proposed purchaser who
failed to consummate the
transaction may, after August
25, 1997, sell the property to
another purchaser and the
Department may process and
approve plans submitted by the
purchaser for the development
of not more than 50 adult care
home beds. It shall be the
responsibility of the applicant
to establish, to the
satisfaction of the Department,
that any of these conditions
have been met;
(3) Adult care home beds in
facilities for the
developmentally disabled with
six beds or less which are or
would be licensed under G.S.
131D or G.S. 122C may continue
to be approved;
(4) If the Department determines
that the vacancy rate of available adult care home beds in a county is fifteen percent
(15%) or less of the total number of available beds in the county
as of the effective date of this act and no new beds have been
approved or licensed in the county or plans submitted for approval
in accordance with subdivision (3) or (2) of this section which
would make the vacancy rate above fifteen percent (15%) in the
county, then the Department may accept and approve the addition of
beds in that county; or
(5) If a county board of
commissioners determines that a
substantial need exists for the
addition of adult care home
beds in that county, the board
of commissioners may request
that a specified number of
additional beds be licensed for
development in their county. In
making their determination, the
board of commissioners shall
give consideration to meeting
the needs of Special Assistance
clients. The Department may
approve licensure of the
additional beds from the first
facility that files for
licensure and subsequently
meets the licensure
1997 N.C. Sess. Laws 443 (emphasis added). This legislative
enactment clearly precludes the Department of Health and Human
Services from approving additional beds after the effective date of
the legislation - 1 July 1997 - except pursuant to the specific
circumstances enumerated in the session law. As petitioner's
applications were for the purpose of adding beds that had not been
licensed prior to 1 July 1997, the Department had the authority toapprove them only if they fell within one of the exemptions.
Further, the session law made no provision for new beds which would
be categorically exempt from its application, but provided solely
for exceptions by which the statutory prohibition could be avoided.
The moratorium was continuously in effect from 1 July 1997
through 30 June 1998 and again from 30 October 1998 through 31
December 2001, having been extended annually by legislative action.
The moratorium was reinstated retroactively effective 1 July 1998
by session law 212 dated 30 October 1998. 1998 N.C. Sess. Laws
After 31 December 2001, the approval of additional beds was
authorized only subject to receipt of a Certificate of Need
(CON). In the legislation authorizing the approval of additional
beds subject to receipt of a CON, the General Assembly included
limitations on the licensing of beds pursuant to the enumerated
exemptions in the moratorium. 2001 N.C. Sess. Laws 234. These
limitations provided that beds that qualified under one of the
exemptions for which a license had not yet been obtained could no
longer be developed unless evidence of qualifying financial
commitments and developmental progress milestones was submitted to
respondent by certain dates. It is undisputed that petitioner had
not satisfied, and could not satisfy, these requirements.
The majority argues that this matter may be resolved without
reaching any constitutional issues in the appeal as the language of
the settlement agreement is unambiguous and North Carolina GeneralStatutes, section 150B-22, which states that, [i]t is the policy
of this State that any dispute between an agency and another person
that involves the person's rights, duties, or privileges, including
licensing or the levy of a monetary penalty, should be settled
through informal procedures, is dispositive. See supra. I cannot
As noted by our Supreme Court, [i]t has long been understood
that it is the duty of the courts to determine the meaning of the
requirements of our Constitution. Leandro v. State of North
Carolina, 346 N.C. 336, 345, 488 S.E.2d 249, 253 (1997) (citing
Mitchell v. N.C. Indus. Dev. Fin. Auth., 273 N.C. 137, 144, 159
S.E.2d 745, 750 (1968), Ex parte Schenck, 65 N.C.353, 367 (1871),
Bayard v. Singleton, 1 N.C. 5, 6-7 (1787)). Moreover, [w]hen a
government action is challenged as unconstitutional, the courts
have a duty to determine whether that action exceeds constitutional
limits. Id. (citing Maready v. City of Winston-Salem, 342 N.C.
708, 716, 467, 467 S.E.2d 615, 620 (1996)). Such is the case in
the instant matter.
One of the most basic tenets of our system of government is
the separation of powers of the three branches. Article I, section
6 of the North Carolina Constitution provides [t]he legislative,
executive, and supreme judicial powers of the State government
shall be forever separate and distinct from each other. The
General Assembly is vested with the legislative power of the State.
N.C. Const. art. II, . 1. The duty of the executive branch, of
which respondent is a part, is to ensure that legislation enactedby the General Assembly be faithfully executed. N.C. Const. art.
III . 5(4); see also N.C. Const. art. III, . 1.
The General Assembly may not delegate its authority to enact
legislation to another branch of the government or a subordinate
agency, however, it may allow an administrative body charged with
executing the laws to determine the facts to which the policy as
declared by the Legislature shall apply. Coastal Highway v.
Turnpike Authority, 237 N.C. 52, 60, 74 S.E.2d 310, 316 (1953). In
doing so, the General Assembly must provide adequate standards for
guidance to the administrative agency in finding the facts to which
the legislation shall apply. Id. Significantly, although the
General Assembly may delegate such fact finding power, it cannot
delegate the authority to apply or withhold the application of the
law in [the agency's] absolute or unguided discretion. Id.
(citing 11 Am. Jur., Constitutional Law, Sec. 234).
I believe that, viewed as urged by petitioner, the settlement
agreement would be tantamount to allowing respondent to apply or
withhold the application of the law in its unfettered discretion.
This would constitute an ultra vires act and the settlement
agreement thus would be null and void and petitioner would have no
authority to develop the additional beds contained in the
settlement projects under any circumstances. Bowers v. City of
High Point, 339 N.C. 413, 424, 451 S.E.2d 284, 292 (1994) (quoting
Moody v. Transylvania County, 271 N.C. 384, 388, 156 S.E.2d 716,
719 (1967)). The majority holds that respondent had statutory authority to
enter into the settlement agreement pursuant to North Carolina
General Statutes, section 150B-22 (2005). This section merely
establishes a State policy encouraging settlement of disputes
between agencies and other parties through informal procedures.
Although it is undisputed that respondent has authority to enter
settlement agreements pursuant to this statutorily established
policy, that authority is not without limitation. '[A]n
administrative agency is a creature of the statute creating it and
has only those powers expressly granted to it or those powers
included by necessary implication from the legislature [sic] grant
of authority.' Boston v. N.C. Private Protective Services Bd., 96
N.C. App. 204, 207, 385 S.E.2d 148, 150-51 (1989) (quoting In re
Williams, 58 N.C. App. 273, 279, 293 S.E.2d 680, 685 (1982)).
The Department of Health and Human Services was created
pursuant to North Carolina General Statutes, section 143B-136.1,
and its duties and express powers are set forth in sections 143B-
137.1 through 216.66. I am unable to find any provision within
these sections which authorizes respondent to exempt any person,
organization, or project from the application of any duly enacted
legislation to which such legislation otherwise would apply.
Respondent's authority regarding the application of the moratorium,
consequently, was limited to the authority delegated in the
legislation itself. The authority granted to respondent in the
legislation was limited to the determination of presence or absenceof facts which would allow development of new beds pursuant to the
Interpreted as urged by respondent, the settlement agreement
would fall within the constraints placed upon the General
Assembly's delegation of authority. Respondent entered into the
settlement agreement pursuant to the State's policy to settle
disputes through informal procedures based upon the decision of the
superior court that petitioner's projects, including the settlement
projects, fell within one of the enumerated exceptions to the
moratorium. Consequently, the agreement would be enforceable as
its terms were within respondent's authority. Under this
interpretation, the settlement projects could be developed lawfully
pursuant to the settlement agreement, subject to the constraints
imposed by the subsequent legislation.
It is a well accepted canon of contract interpretation that
where the words of a contract can be interpreted two different
ways, one making the contract lawful and the other making it
unlawful, the lawful interpretation is preferred. A. Corbin,
Corbin on Contracts . 24.22 (1998); see Great N.R.R. v. Delmar Co.,
283 U.S. 686, 75 L. Ed. 1349 (1931). Interpreting the settlement
agreement as suggested by petitioner, presents a situation in which
the executive branch of our government has invaded the exclusive
province of the legislative branch. In the instant case, the
General Assembly enacted legislation, the validity of which is not
at issue before this Court, and an agency of the executive branch
purportedly disregarded its mandate to faithfully execute thatlegislation. The settlement agreement, therefore, would be
unlawful. Interpreting the settlement agreement as urged by
respondent, however, the actions of respondent do not violate the
separation of powers doctrine. According to respondent's
interpretation, the settlement agreement was entered into pursuant
to a legislative delegation of authority to determine the existence
of facts to which the enacted legislation will apply. Respondent's
interpretation results in the settlement agreement being lawful
and, therefore, is the preferred interpretation.
Accordingly, I would hold that the development of the beds in
question is subject to the subsequent legislation and affirm the
trial court's summary judgment order.
Petitioner also assigns error to the trial court's grant of
respondent's motion to dismiss on the grounds that the
Administrative Law Judge (ALJ) lacked jurisdiction over
petitioner's claims. In its petition for contested case hearing,
petitioner raised constitutional, breach of contract and damages
claims against respondent and the State of North Carolina as well
as several of the claims set forth in North Carolina General
Statutes, section 150B-51(b), including that the Department ha[d]
exceeded its authority and jurisdiction, acted erroneously, [and]
failed to act as required by law and rule. See N.C. Gen. Stat. .
Petitioner's argue that North Carolina General Statutes,
section 150B-51(b)(1) grants the trial court the jurisdiction to
review the constitutionality of a statute if raised before OAH andappealed in a petition for judicial review. This is incorrect.
The purpose of the statute is to allow the trial court to determine
whether the agency acted in violation of constitutional
provisions in reaching its decision_not whether an organic law of
the General Assembly is unconstitutional as such determinations may
not be made by administrative agencies, such as OAH.
Court has made clear that administrative agencies do not have
subject matter jurisdiction over constitutional issues.
[C]onstitutional claims will not be acted upon by administrative
tribunals, . . . Johnston v. Gaston County, 71 N.C. App. 707,
713, 323 S.E.2d 381, 384 (1984), disc. rev. denied, 313 N.C. 508,
329 S.E.2d 392 (1985); see also Meads v. N.C. Dep't of Agric., 349
N.C. 656, 670, 509 S.E.2d 165, 174 (1998) (holding that, because
constitutional determinations are the province of the judiciary,
seeking a determination of the constitutionality of regulations
before an administrative agency would have been in vain and,
consequently, petitioner's administrative remedies were inadequate
to address the constitutional claims and petitioner was not
required to exhaust them prior to seeking a judicial determination
of those issues); Great American Ins. Co. v. Gold, 254 N.C. 168,
173, 118 S.E.2d 792, 796 (1961) (The question of constitutionality
of a statute is for the judicial branch.). Petitioner's proper
procedural course regarding its constitutional claims would have
been to file a separate complaint alleging its constitutional
claims in superior court. N.C. Gen. Stat. . 150B-43 (2003)
(providing [n]othing in this Chapter shall prevent any person frominvoking any judicial remedy available to him under the law to test
the validity of any administrative action not made reviewable under
Fundamentally, Petitioner's challenge would
require a determination of whether the application of the
moratorium and the CON statute themselves are constitutional or
not. Such a determination was beyond the scope of agency
decisionmaking and therefore properly should have been raised de
novo before the superior court. This is clear as Petitioner noted
itself in its original contested case petition the reason for
including the State of North Carolina as a party was because, inter
alia, Petitioner sought to challenge the constitutionality of
certain laws enacted by the General Assembly. (R.p. 54)
Accordingly, I would affirm the trial court's dismissal of
petitioner's action with respect to the constitutional claims.
Petitioner also argues that, because the superior court has
jurisdiction to decide constitutional issues, it should have
considered those issues on appeal. Petitioner fails, however, to
recognize that the sole issue raised on appeal was the propriety of
the final agency decision which did not adopt the ruling of the
ALJ. Petitioner also erroneously argues that, notwithstanding the
well-settled caselaw to the contrary, the ALJ did have jurisdiction
over its constitutional, breach of contract, and damages claims.
See Meads, 349 N.C. 656, 509 S.E.2d 165; Great American Insurance
Co., 254 N.C. 168, 118 S.E.2d 792; Johnston, 71 N.C. App. 707, 323
S.E.2d 381. As noted supra, this is simply an incorrect
understanding of our caselaw. This argument appears to be anattempt by petitioner to correct its procedural error in failing to
preserve its constitutional claims without initially filing a
complaint asserting those claims in superior court.
In light of the holding that I would make regarding the
interpretation of the settlement agreement, I would hold that the
issues pertaining to petitioner's breach of contract and damages
claims become moot. Therefore, it is unnecessary to address those
issues on appeal.
As discussed supra, petitioner's challenge of the
constitutionality of the legislation was not properly before the
ALJ. Accordingly, I do not believe that the issue was properly
before the superior court on the petition for judicial review and
believe petitioner's argument that the superior court erred in
failing to grant summary judgment in its favor regarding the
constitutionality of the retroactive application of the moratorium
extension to the Gap Projects unpersuasive as well. Consequently,
I would hold that the superior court properly did not reach the
merits of the issue.
For the reasons stated above, I would affirm the order of the
*** Converted from WordPerfect ***