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
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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.
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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.
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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.
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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.
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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
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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
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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
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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
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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
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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
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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
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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).
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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.
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