United States District Court, E.D. North Carolina, Northern Division
C. DEVER III Chief United States District Judge
25, 2015, Les Anciens D Une Eglise En Les Chambres Compagnie
("Les Anciens" or "plaintiff') and its
President, S. G. Abdallah, proceeding pro se, filed a
complaint against the United States Department of Agriculture
("USDA" or "defendant") alleging claims
for "Conversion and Trespass to Chattel;
Fraud/Deceit/Fraud on Authorities, " "Transaction
with parties not authorized; excess of authority, "
"Breach of Contract, " and "Violation of Due
Process" [D.E. 1]. On November 2, 2015, Les Anciens
filed a petition for "leave to settle" [D.E. 7]. On
November 9, 2015, the USDA moved to dismiss the complaint and
filed a memorandum in support [D.E. 10-11]. On February 26,
2016, counsel filed a notice of appearance for Les Anciens
[D.E. 21]. On February 29, 2016, Les Anciens responded in
opposition to the motion to dismiss and moved to amend the
complaint [D.E. 22]. On April 4, 2016, the court denied the
motion for settlement [D.E. 7] and the motion to dismiss
[D.E. 10] and granted plaintiffs motion to amend the
complaint [D.E. 23]. On April 21, 2016, Les Anciens filed an
amended complaint alleging a single count of abuse of
discretion [D.E. 26]. On June 29, 2017, the USDA moved to
dismiss the amended complaint, and for judgment on the
pleadings, and filed a memorandum in support [D .E. 3 9-40].
On July 31, 2017, Les Anciens responded in opposition [D.E.
44]. On August 8, 2017, the USDA replied [D.E. 45]. As
explained below, the court grants the USDA's motion to
dismiss and for judgment on the pleadings.
Anciens is a Minnesota non-profit corporation which was
formed to foster economic growth among "persons who are
disadvantaged" and unable to access traditional forms of
capital "including loans for small business
development." Am. Compl. [D.E. 26] ¶¶ 15-16.
In June 2008, "Rural Development, a division of the
[USDA], granted [Les Anciens]'s request for a RBEG grant
in the amount of $75, 000.00 to establish a revolving loan
fund." Id. ¶ 17; see Am. Answer
[D.E. 27] ¶ 17. After receiving the grant, all but one
member of Les Anciens's board resigned, effectively
dissolving the corporation. In January 2009, the USDA
received a letter from "Reverend David H. Rouson,
Chairman [of Les Anciens]... stating that the Board was
dissolved." Am. Answer ¶ 19. The USDA then
"acted on a request from Reverend Rouson to cancel (i.e.
to de-obligate) the award funding" because
"[w]ithout a functioning Board, the organization was
unable to fulfill the purposes and objectives of the
grant." Id. ¶ 20.
January 20, 2009, the USDA informed Les Anciens of its intent
to cancel the $75, 000 grant. See [D.E. 31-2] 5-7.
The USDA explained that the dissolution of Les Anciens's
board meant that Les Anciens could not "carry out the
responsibilities of administering a revolving loan fund"
and therefore could not "fulfill the objectives of the
grant in accordance to the organization's Scope of Work
and the Letter of Conditions issued by [USDA]."
Id. at 5. The USDA informed Les Anciens of its right
to appeal the decision to a hearing officer with the National
Appeals Division ("NAD"). See Id.
participants can appeal adverse agency action to the NAD.
See 7 C.F.R. §§ 11.1 et. seq. Under
governing regulations, participants (or their authorized
representatives) may request a hearing "on any adverse
decision." See Id. §§ 11.1,
11.8(c). Appellants who dispute the conclusions of the NAD
hearing officer may ask the Director to review the
determination and issue a final determination. See
Id. § 11.9. An appellant may request
reconsideration of the Director's final determination if
the Director made "a material error of fact" or
made a determination "contrary to statute or
regulation." Id. § 11.11. The
director's final determination is a necessary
prerequisite to judicial review in the district court.
See 7 U.S.C. § 6999; 7 C.F.R. § 11.13.
January 21, 2009, Benita Gathers ("Gathers, " or
"claimant"), Secretary of Les Anciens,
"requested an appeal with the National Appeals Division
("NAD") on behalf of [Les Anciens]
(Appellant)." [D.E. 31-2] 97. Gathers "challenge[d]
a Rural Development (RD) decision, dated January 20, 2009,
cancelling a Rural Business Enterprise Grant (RBE Grant) with
Appellant." Id. During this appeal, the NAD
hearing officer focused on whether Gathers, as claimant, was
"authorized to bring an appeal on behalf of [Les
Anciens]." Id. Gathers "assert[ed] she
represented] [Les Anciens] and requested th[e] appeal as
secretary of the corporation, " she also asserted that
she was "the sole remaining member of the board of
directors." Id. The USDA responded that
"there [was] no one authorized to represent [Les
Anciens] because [its] board of directors were removed or
resigned without replacement board members being elected or
appointed in conformity with the requirements of [Les
Anciens's] Articles of Incorporation." Id.
the NAD process, the NAD hearing officer communicated
extensively with Les Anciens to clarify the procedural
requirements of the appeals process and to obtain the
relevant evidence for inclusion in the record. See
[D.E. 32-1] 2-6. The record includes the hearing
officer's notes from fifteen phone calls between the
hearing officer and Les Anciens between January 27, 2009, and
March 2, 2009. See Id. On February 24,
2009, the NAD hearing officer conducted a pre- hearing
conference focusing on the issue of Gather's authority to
conduct an appeal. See [D.E. 31-2] 97. After the
pre-hearing conference, the hearing officer requested
additional information from the parties concerning
Gathers's authority to conduct an appeal and
jurisdiction. See Id. The hearing officer
gave the parties "until March 13, 2009, to submit
additional documents in support of their positions" and
"until March 19, 2009 to submit written rebuttals to any
additional documents submitted by the other party."
Anciens "timely submitted additional documents, "
which the hearing officer included in the record. On March
23, 2009, Les Anciens also submitted an untimely sur-rebuttal
concerning jurisdiction, which the hearing officer included
in the case record but did not consider because it was
submitted after the deadline. See id.
hearing officer reviewed Les Anciens's articles of
incorporation and by-laws, Minnesota and North Carolina law,
federal regulations, and the record. On March 27, 2009, the
hearing officer concluded that Gathers was not authorized to
represent Les Anciens on appeal. See Id. at
99-100. "[O]nly an 'appellant' or
'authorized representative' may request an appeal
with NAD[, ]" because "NAD's rules allow
Claimant to request an appeal on behalf of Appellant only if
Claimant is duly authorized by the Appellant to represent
it." Id. at 99. Thus, the hearing officer
concluded that NAD did "not have jurisdiction to conduct
a hearing for the requested appeal." Id. at 98.
In reaching this conclusion, the hearing officer interpreted
the regulations in Title 7 of the Code of Federal Regulations
which govern requests for appeals. See id.;
7 C.F.R. § 11.1. The hearing officer interpreted
"appellant" to mean "any participant who
appeals an adverse decision... includ[ing] an authorized
representative." [D.E. 31-2] 98. The hearing officer
interpreted "authorized representative" to mean
"any person, who is authorized in writing by a
participant... to act for the participant man administrative
appeal." Id. The hearing officer concluded that
Gathers did not meet these requirements because she was not
"authorized to represent [Les Anciens] in th[e] appeal
or for any purpose." Id. at 100.
April 7, 2009, Gathers requested a Director review of the
NAD's determination. See id, at 153. On June 26,
2009, the Director upheld the NAD's determination, and
concluded that Gathers was not authorized to appeal the
adverse decision cancelling the $75, 000 grant to Les Anciens
on behalf of Les Anciens. See Id. at
153-159. In reaching this conclusion, the Director reviewed
the record and the relevant legal standards, including the
definitions of "participant" and "authorized
representative" in 7 C.F.R. §11.1. See
Id. at 156. On July 22, 2009, the Director denied
Les Anciens's request for reconsideration. See
Id. at 172.
25, 2015, Les Anciens filed this lawsuit. Les Anciens
challenges the USDA's decision to cancel the $75, 000
grant to Les Anciens, and the determination that Gathers was
not authorized to represent Les Anciens on appeal.
See Am. Compl. ¶¶ 35-38. Les Anciens
contends that this court has jurisdiction under 7 U.S.C.
§ 6999 and 5 U.S.C. § 702. See id. ¶
3. Under 7 U.S.C. § 6999, a district court has
jurisdiction to review any "final determination of the
Division." Under 5 U.S.C. § 702, any person who is
"suffering a legal wrong" or who is "adversely
affected or aggrieved [because of an] agency action" may
seek judicial review in a United States District Court.
USDA moves to dismiss this action for lack of subject-matter
jurisdiction because Les Anciens did not exhaust its
administrative remedies before seeking judicial review
concerning the USDA's decision to cancel the $75, 000
grant to Les Anciens. See [D.E. 40] 6-7, 9-12;
Fed.R.Civ.P. 12(b)(1). In support, the USDA cites 7 U.S.C.
§ 6912(e), which provides that a person "shall
exhaust all administrative appeal ...