Carillon Assisted Living, LLC v. North Carolina Department of Health & Human Services

623 S.E.2d 629, 175 N.C. App. 265, 2006 N.C. App. LEXIS 60
CourtCourt of Appeals of North Carolina
DecidedJanuary 3, 2006
DocketCOA05-135
StatusPublished
Cited by13 cases

This text of 623 S.E.2d 629 (Carillon Assisted Living, LLC v. North Carolina Department of Health & Human Services) is published on Counsel Stack Legal Research, covering Court of Appeals of North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Carillon Assisted Living, LLC v. North Carolina Department of Health & Human Services, 623 S.E.2d 629, 175 N.C. App. 265, 2006 N.C. App. LEXIS 60 (N.C. Ct. App. 2006).

Opinions

TYSON, Judge.

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 to dismiss 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.

I. Background

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 January 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.

On 28 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 [267]*267Services 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 18, 1997;
(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 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,

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 [268]*268Certificate 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) the 2001 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”) ruled in 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.

[269]*269On 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.

II. Issues

Petitioner argues the trial court erred by: (1) failing to uphold the decision of the ALJ granting summary judgment for petitioner 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:

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Carillon Assisted Living, LLC v. North Carolina Department of Health & Human Services
623 S.E.2d 629 (Court of Appeals of North Carolina, 2006)

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623 S.E.2d 629, 175 N.C. App. 265, 2006 N.C. App. LEXIS 60, Counsel Stack Legal Research, https://law.counselstack.com/opinion/carillon-assisted-living-llc-v-north-carolina-department-of-health-ncctapp-2006.