State of North Carolina in the Office Of s17

STATE OF NORTH CAROLINA IN THE OFFICE OF ADMINISTRATIVE HEARINGS COUNTY OF GUILFORD 08 DHR 0617

Allred & Allred Day Care Center, Inc., ) Petitioner, ) ) v. ) DECISION GRANTING ) SUMMARY JUDGMENT N.C. Department of Health and Human ) Services, Division of Public Health, Child and ) Adult Care Food Program, ) Respondent. )

THIS MATTER came before the undersigned Administrative Law Judge on April 23, 2008 in High Point, North Carolina for consideration of Respondent’s Motion for Summary Judgment. Appearing personally before the undersigned Administrative Law Judge were Petitioner, pro se, and Respondent, by and through Assistant Attorney General Thomas Henry. Having carefully considered Respondent’s motion, accompanying documents, applicable law, and the oral argument of the parties, the undersigned Administrative Law Judge finds that there are no genuine issues of material fact and makes the following:

CONCLUSIONS OF LAW

1. In this case, the Office of Administrative Hearings has jurisdiction over the subject matter and the parties.

2. When Petitioner entered into the Child and Adult Care Food Program (“CACFP”) on November 20, 2007, via an Agreement with Respondent, Petitioner was a corporation under a revenue suspension. The North Carolina General Statutes curtail the ability of suspended corporations to conduct business as usual. See N.C.G.S. § 105-230(a) (2007) (“The powers, privileges, and franchises conferred upon the corporation or limited liability company by the articles of incorporation, the articles of organization, or the certificate of authority terminate upon suspension.”) (emphasis added); N.C.G.S. § 105-230(b) (2007) (“Any act performed or attempted to be performed during the period of suspension is invalid and of no effect . . . .”) (emphasis added).

3. South Mecklenburg Painting Contractors, Inc. v. The Cunnane Group, Inc. stands for the proposition that a “corporation under revenue suspension ‘loses its state-granted privileges’” and is “indisputably prevent[ed] . . . from ‘continuing to conduct [its] business as usual.’” 134 N.C. App. 307, 310-11, 517 S.E.2d 167, 168-69 (1999) (quoting Pierce Concrete, Inc. v. Cannon Realty & Constr. Co., 77 N.C. App. 411, 412-13, 335 S.E.2d 30, 31 (1985)). Under South Mecklenburg, the suspended Petitioner was not entitled to conduct business as usual when it entered into the Agreement with Respondent. Nor should the suspended Petitioner be entitled to withstand summary judgment. Based on South Mecklenburg, Respondent is entitled to judgment as a matter of law.

4. Furthermore, the undersigned concludes that it is factually undisputed that, on February 12, 2008, the Division of Child Development issued a “Revocation of License” to Petitioner based on, inter alia, “a violation of child care requirements regarding safety, which resulted in a substantiation of child neglect by Guilford County Department of Social Services.”

5. The Child and Adult Care Food Program, which is administered by Respondent, is governed by a body of regulations set forth at 7 C.F.R. Part 226. See 7 C.F.R. § 226.1. In response to the revocation action, Respondent acted pursuant to 7 C.F.R. § 226.6(c)(5)(i) of the CACFP regulations. 7 C.F.R. § 226.6(c)(5)(i) provides:

If State or local health or licensing officials have cited an institution for serious health or safety violations, the State agency must immediately suspend the institution’s Program participation, initiate action to terminate the institution’s agreement, and initiate action to disqualify the institution and the responsible principals and responsible individuals prior to any formal action to revoke the institution’s licensure or approval.

6. Based on the “violation of child care requirements regarding safety” which is cited in the revocation notice, Respondent took lawful action, pursuant to 7 C.F.R. § 226.6(c)(5)(i), when Respondent issued the contested Notice of Serious Deficiency, Suspension, Proposed Termination and Proposed Disqualification on February 25, 2008. Accordingly, Respondent is entitled to judgment as a matter of law because Respondent acted in accordance with CACFP regulations.

BASED UPON the absence of any genuine issue of material fact and the foregoing conclusions of law, it is hereby ORDERED that SUMMARY JUDGMENT be granted to Respondent.

NOTICE

The North Carolina Department of Health and Human Services, Division of Public Health will make the Final Decision in this contested case.

Pursuant to N.C. Gen. Stat. § 150B-36(a), before the agency makes a Final Decision in this case, it is required to give each party an opportunity to file exceptions to this decision, and to present written arguments to those in the agency who will make the Final Decision. N.C. Gen. Stat. 150B-36(b3) requires the agency to serve a copy of its Final Decision on each party, and furnish a copy of its Final Decision to each party’s attorney of record and to the Office of Administrative Hearings, 6714 Mail Service Center, Raleigh, NC 27699-6714.

For any decision by the administrative law judge granting summary judgment that disposes of all issues in the contested case, the agency shall make a final decision. If the agency

2 does not adopt the administrative law judge’s decision, it shall set forth the basis for failing to adopt the decision and shall remand the case to the administrative law judge for hearing. N.C. Gen. Stat. § 150B-36(d).

This the 6th day of May, 2008.

______J. Randall May Administrative Law Judge