Appeal by petitioner from order entered 18 February 2005 by
Judge Henry W. Hight, Jr. in Superior Court, Wake County. Heard in
the Court of Appeals 9 January 2006.
Biggers & Hunter, PLLC, by John C. Hunter, for petitioner-
Attorney General Roy Cooper, by Assistant Attorney General
Tina A. Krasner, for respondent-appellee.
Joseph E. Teague (Teague) was employed as an engineer by the
North Carolina Department of Transportation (DOT) in the Program
Analysis Unit. By letter dated 17 May 2001, DOT dismissed Teague
from employment based on unacceptable personal conduct. Teague
filed a grievance, and DOT upheld its dismissal decision.
Thereafter, Teague filed a petition for a contested case hearing in
the Office of Administrative Hearings. A hearing was held before
an administrative law judge (the ALJ) on 9 and 10 April 2002. The
ALJ rendered a decision on 17 October 2002 upholding DOT's
dismissal of Teague for unacceptable personal conduct.
The State Personnel Commission (the Commission) considered the
decision of the ALJ at its 20 February 2003 meeting. The
Commission issued a Memorandum of Consideration on 1 April 2003,
stating that four members of the Commission voted to adopt the
ALJ's decision and four members voted against the adoption of the
ALJ's decision. The Memorandum of Consideration continued: "Beingunable to sustain a majority in favor of a motion to adopt or
reject the [ALJ's] decision, the Commission took no further action
with regard to the recommended decision." The Memorandum of
Consideration concluded: "Note: G.S. 150B-44 provides the
following: If an agency subject to Article 3 of this Chapter has
not made a final decision within [the time limit specified in the
statute], the agency is considered to have adopted the [ALJ's]
recommended decision as the agency's final decision." Teague filed
a petition for judicial review. The trial court determined the
ALJ's decision to be the final agency decision, and affirmed the
ALJ's decision. Teague appeals.
The evidence before the ALJ tended to show that Teague was
continuously employed by DOT from 1988 until his discharge in 2001.
Teague received an A.B.S. degree in Mechanical Engineering from
Georgia Tech University, an M.B.A. in Economics from the University
of Oklahoma, and a Master's Degree in Civil Engineering from North
Carolina State University. From 1998 until 2000, Teague's
responsibilities at DOT involved computer security and software
licensing issues. On 11 April 2001, DOT staff conducted a routine,
random scan of local ports and Internet Protocol addresses in
Teague's unit. As a result of the scan and a subsequent inspection
of Teague's computer, DOT discovered nineteen software applications
on Teague's computer that were not issued by DOT. Teague was
placed on "investigatory placement" with pay while a full
investigatory audit of Teague's computer was completed.
Ultimately, Teague was dismissed from his employment forunacceptable personal conduct, specifically for the willful
violation of known or written work rules.
The ALJ determined that Teague willfully violated two sets
of work rules: (1) a document entitled "Internet and Email Policy
and Procedure" (Internet Policy); and (2) a document entitled
"Statement of Understanding Regarding Use of Computers" (Statement
of Understanding). The ALJ found that Teague admitted to reading
and signing the Internet Policy, the first paragraph of which
stated that the Internet Policy was to be understood "[a]s a
supplement to and in conjunction with" the Statement of
 Teague first assigns error to the trial court's
determination that the ALJ's recommended decision became the final
decision of the Commission pursuant to N.C. Gen. Stat. § 150B-44.
The statute provides that "[i]f an agency subject to Article 3 of
[Chapter 150B] has not made a final decision within the [relevant]
time limit, the agency is considered to have adopted the [ALJ's]
decision as the agency's final decision." N.C. Gen. Stat. § 150B-
44 (2005). In interpreting the statute, our Court has held that,
"[b]ecause the primary purpose of [Chapter 150B] is to provide
procedural protection for persons aggrieved by an agency decision,
the provisions thereof are to be 'liberally construed . . . to
preserve and effectuate such right.'" Holland Group v. N.C. Dept.
, 130 N.C. App. 721, 725, 504 S.E.2d 300, 304
(1998) (quoting Empire Power Co. v. N.C. Dept. of E.H.N.R.
, 337N.C. 569, 594, 447 S.E.2d 768, 783 (1994)). Moreover,
language of [N.C.]G.S. § 150-44 indicates the section is intended
to guard those involved in the administrative process from the
inconvenience and uncertainty of unreasonable delay." Id
Occaneechi Band of the Saponi Nation v. N.C. Comm'n of Indian
, 145 N.C. App. 649, 653, 551 S.E.2d 535, 538, disc. review
, 354 N.C. 365, 556 S.E.2d 575 (2001) (finding "no ambiguity
in [the] statutory language [of N.C.G.S. § 150-44] that would give
the trial court need to further explore legislative intent").
Teague argues that the Commission's act of voting, and failure
to reach a majority vote, was in fact a final decision that DOT
failed to carry its burden of showing just cause for Teague's
dismissal. Therefore, he contends N.C.G.S. § 150B-44 does not
apply. This is incorrect. The plain language of N.C.G.S. § 150B-
44 provides that an agency, such as the Commission, that is subject
to Article 3, "has 60 days from the day it receives the official
record in a contested case . . . or 60 days after its next
regularly scheduled meeting, whichever is longer, to make a final
decision in the case." N.C.G.S. § 150B-44. N.C. Gen. Stat. §
150B-36(b) (2005) provides that "a final decision in a contested
case shall be made by the agency in writing . . . and shall include
findings of fact and conclusions of law.
" (emphasis added). Our
Court has explained that N.C.G.S. § 150B-36(b) "clearly requires
that a final agency decision be in writing and include findings of
fact and conclusions of law." Walton v. N.C. State Treas.
N.C. App. 273, 276, 625 S.E.2d 883, 885 (2006) (holding that anoral announcement by an agency subject to Article 3 did not
constitute a "final decision" under N.C.G.S. § 150B-36(b)).
In the present case, the Commission received the official
record on 18 December 2002 and heard the case at its next regularly
scheduled meeting on 20 February 2003. Therefore, the Commission
had 60 days from its 20 February 2003 meeting in which to render a
final decision in writing, including findings of fact and
conclusions of law. See
N.C.G.S. § 150B-36(b); N.C.G.S. § 150B-44.
After failing to reach a majority vote during its 20 February 2003
meeting, the Commission issued a Memorandum of Consideration on 1
April 2003. The Memorandum of Consideration did not recite any
findings of fact or conclusions of law. Nor did it include any
language that could be construed as a finding of fact or conclusion
of law. Absent any findings of fact or conclusions of law, the
Memorandum of Consideration cannot be considered a final decision
under N.C.G.S. § 150B-36(b).
Because the Memorandum of Consideration did not constitute a
final decision under N.C.G.S. § 150B-36, the Commission failed to
make a final decision within the time limit set forth in N.C.G.S.
§ 150B-44. Accordingly, in order to protect Teague from
unreasonable delay resulting from the Commission's failure to issue
a final decision, the Commission "[was] considered to have adopted
the [ALJ's] decision as the agency's final decision." N.C.G.S. §
150B-44. The ALJ's recommended decision became the final decision
in the case "by operation of law." Occaneechi
, 145 N.C. App. at
655, 551 S.E.2d at 539
. Teague correctly asserts that, under the State Personnel Act,
the Commission had the burden of showing Teague was discharged for
just cause. N.C. Gen. Stat. § 126-35 states in pertinent part that
(a) No career State employee subject to the
State Personnel Act shall be discharged,
suspended, or demoted for disciplinary
reasons, except for just cause. . . .
. . . .
(d) In contested cases conducted subject to
Chapter 150B of the General Statutes, the
burden of showing that a career State employee
subject to the State Personnel Act was
discharged, suspended, or demoted for just
cause rests with the department or agency
N.C. Gen. Stat. § 126-35 (2005).
Our Supreme Court has held that, for the purpose of procedural
due process, "[t]he North Carolina General Assembly created, by
enactment of the State Personnel Act, a constitutionally protected
'property' interest in the continued employment of career State
employees." Peace v. Employment Sec. Comm'n
, 349 N.C. 315, 321,
507 S.E.2d 272, 277 (1998). In the present case, Teague does not
raise an argument as to procedural due process, but rather argues
that N.C.G.S. § 150-44 cannot be interpreted to apply to his
situation because there was no prescribed delay by the Commission.
We have determined that the Commission failed to issue a final
decision within the meaning of N.C.G.S. § 150B-36(b). In order to
protect Teague from unreasonable delay, N.C.G.S. § 150B-44 provided
Teague the remedy of making the ALJ's recommended decision the
final decision of the agency, so the administrative appeals processcould continue. This situation, in which an administrative agency
failed to issue a final decision within the statutorily prescribed
period, is the situation N.C.G.S. § 150B-44 was intended to remedy.
, 130 N.C. App. at 725, 504 S.E.2d at 304 (stating that
N.C.G.S. § 150B-44 "is intended to guard those involved in the
administrative process from the inconvenience and uncertainty of
unreasonable delay"). This assignment of error is overruled.
 Teague next argues the trial court erred in using the
"whole record" standard of review in reviewing his petition.
Teague contends the trial court should have reviewed the matter de
When reviewing a trial court's order affirming a decision by
an administrative agency, our Court must "examine the trial court's
order for errors of law and determine whether the trial court
exercised the appropriate scope of review and whether the trial
court properly applied this standard." Hilliard v. N.C. Dept. of
, 173 N.C. App. 594, 596, 620 S.E.2d 14, 17 (2005).
The particular legal standard applied by a reviewing trial
court depends on the type of issues presented for judicial review.
Powell v. N.C. Dept. of Transportation
, 347 N.C. 614, 623, 499
S.E.2d 180, 185 (1998). In cases where a petitioner contends an
agency decision was based on an error of law, the trial court
conducts a de novo
review. Air-A-Plane Corp. v. N.C. Dept. of
118 N.C. App. 118, 124, 454 S.E.2d 297, 301, disc. review
, 340 N.C. 358, 458 S.E.2d 184 (1995). In cases where thepetitioner contends the agency decision was not supported by
substantial evidence, the whole record test is the proper standard
of review. N.C. Gen. Stat. § 150B-51(b)(5) (2005); Dillingham v.
N.C. Dep't of Human Res.
, 132 N.C. App. 704, 708, 513 S.E.2d 823,
In the present case, Teague asserted two alternative grounds
for relief in his petition: (1) the ALJ's findings of fact and
conclusions of law were not supported by evidence in the record;
and (2) N.C.G.S. § 150B-44 did not apply to the Commission's act of
voting and issuance of the Memorandum of Consideration. As to the
first ground, the trial court stated that "[t]he appropriate
standard of review is whether the decision is supported by the
substantial evidence in view of the entire record." We hold that
this determination was correct under N.C.G.S. § 150B-51(b)(5).
As to the second ground, the trial court did not specify that
it was using a de novo
review, but addressed the matter in depth in
its order and determined that "
the recommended decision of the ALJ
in favor of the DOT became the final decision by operation of law
. . . in accordance with Occaneechi
." We find that the trial court
properly employed a de novo
review of the question of the
application of N.C.G.S. § 150B-44. Moreover, our Supreme Court
recently held that
it is well settled that the trial court's
erroneous application of the standard of
review does not automatically necessitate
remand, provided the appellate court can
reasonably determine from the record whether
the petitioner's asserted grounds for
challenging the agency's final decision
warrant reversal or modification of thatdecision under the applicable provisions of
N.C.G.S. § 150B-51(b).
N.C. Dep't of Env't and Natural Res. v. Carroll
, 358 N.C. 649, 665,
599 S.E.2d 888, 898 (2004). As discussed above, our own de novo
review of the issue reveals no error in the application of N.C.G.S.
§ 150B-44 to the present case. This assignment of error is
 Teague argues that, even employing a whole record review,
the trial court erred in determining there was sufficient evidence
to support his dismissal for just cause. The State Personnel
Act permits disciplinary action against career state employees for
N.C.G.S. § 126-35. Just cause may consist of
"unacceptable personal conduct." 25 N.C.A.C. 1J.0604(b) (August
2005). Unacceptable personal conduct includes "the willful
violation of known or written work rules[.]" 25 N.C.A.C.
1J.0614(i) (August 2005). Our Court has held that a willful
violation of known or written work rules occurs when an employee
"willfully takes action which violates the rule and does not
require that the employee intend [the] conduct to violate the work
, 173 N.C. App. at 597, 620 S.E.2d at 17.
"'[T]he "whole record" test requires the reviewing court to
examine all competent evidence (the "whole record") in order to
determine whether the agency decision is supported by "substantial
evidence."'" ACT-UP Triangle v. Commission for Health Services
345 N.C. 699, 706, 483 S.E.2d 388, 392 (1997)(quoting Amanini v.
N.C. Dep't of Human Resources
, 114 N.C. App. 668, 674, 443 S.E.2d114, 118 (1994)). Substantial evidence is evidence that a
reasonable mind would deem adequate to support a particular
conclusion. Walker v. N.C. Dept. of Human Resources
, 100 N.C. App.
498, 503, 397 S.E.2d 350, 354 (1990), disc. review denied
, 328 N.C.
98, 402 S.E.2d 430 (1991). In conducting a whole record review, a
trial court "'may not substitute its judgment for the agency's,'
even if a different conclusion may result under a whole record
review." Gordon v. N.C. Dept. of Correction
, 173 N.C. App. 22, 34,
618 S.E.2d 280, 289 (2005) (quoting Watkins v. N.C. State Bd. of
, 358 N.C. 190, 199, 593 S.E.2d 764, 769 (2004)).
In his petition for judicial review, Teague excepted to four
findings of fact and four conclusions of law. The first three
contested findings assert that Teague was, in fact, aware of the
terms of the Statement of Understanding. Teague contends the only
direct evidence in the record on this issue was Teague's own
testimony that he had never seen nor signed the Statement of
Understanding. He further argues that DOT did not present a copy
of the Statement of Understanding signed by Teague. For the
reasons discussed below, we find no error.
In finding number twenty-three, the ALJ explained that she
found Teague's denial of knowledge of the Statement of
Understanding "simply not credible for several reasons." Among
those reasons were: (1) Teague was a Computer Security Liaison for
DOT for ten years; (2) Teague signed the Internet Policy, which
explicitly referenced the Statement of Understanding; and (3)
Teague was advised by a DOT computer systems administrator onseveral occasions that Teague needed to obtain permission to
install software, which was part of the substance of the Statement
of Understanding. Each of these reasons is supported by evidence
of record. Moreover, the credibility of witnesses and the
resolution of conflicting evidence is a matter for the agency, and
not for the reviewing court. Huntington Manor of Murphy v. N.C.
Dept. of Human Resources
, 99 N.C. App. 52, 57, 393 S.E.2d 104, 107
Similarly, in finding number twenty-four, the ALJ discredited
Teague's assertion that Teague was unaware he was required to
obtain his supervisor's approval before installing software onto
his work computer. The ALJ explained that her disbelief of Teague
was based on Teague's educational background, intellectual
abilities, and on-the-job computer experience. This finding was
supported by evidence of record, and it was within the ALJ's
discretion to analyze the credibility of witnesses and to resolve
conflicting testimony. Id
. Accordingly, the trial court did not
err in upholding finding number twenty-four.
Finding twenty-five, that Teague admitted not having
permission, or even asking permission, to install the software
discovered on his computer, is supported by Teague's own testimony
Q. In fact, did anyone ever explicitly give
you permission to put any of these items that
are listed in this time line _ any of these
software applications onto your own computer?
A. No. I never asked.
Q. You never asked permission?
Therefore, the trial court did not err in upholding finding number
In finding number thirty-one, the ALJ found Teague's
unauthorized installation of applications such as remote access
servers, virtual private networking servers, and Point-to-Point
Protocol was "inconsistent with [DOT's] objective to insure its
files and computer network system were properly protected by the
appropriate security devices[,]" in violation of the Internet
Policy. This finding is supported by evidence that Teague did not
have permission to install such software and that installing the
servers and protocols breached DOT's network security and exposed
DOT's systems to invasion by external computer hackers. The trial
court did not err in upholding finding number thirty-one.
Conclusion of law number seven, which simply quotes language
from the Statement of Understanding, was supported by substantial
evidence, and was therefore correctly upheld by the trial court.
Conclusion eight, that Teague was dismissed for unacceptable
conduct, was based upon the finding that Teague knowingly violated
the Statement of Understanding. As we uphold the finding that
Teague was aware of the Statement of Understanding, we likewise
find no error in the trial court's upholding this conclusion, as
well as conclusion nine, which stated that DOT had just cause to
dismiss Teague for unacceptable conduct, which constitutes just
cause under N.C. Gen. Stat. § 126-35. Finally, conclusion eleven,
that Teague knowingly violated the Internet Policy, is supported byevidence that Teague signed the Internet Policy, which stated that
"use of all telecommunications and computer systems and resources
must be in support of NCDOT activities and consistent with NCDOT
objectives" and that "[c]omputing systems include, but are not
limited to host computers, file servers, workstations, . . . and
internal and external communication networks." Substantial
evidence of the security risk posed by Teague's installation of
software on his computer system further supports this conclusion.
Accordingly, the trial court did not err in affirming conclusion
Chief Judge MARTIN and Judge STEELMAN concur.
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