Guilford County Community Action Program v. Wilson, No. 1:03CV00427.

• Citation: 348 F.Supp.2d 548
• Decision Date: 06 December 2004
• Docket Number: No. 1:03CV00427.
• Parties: The GUILFORD COUNTY COMMUNITY ACTION PROGRAM, INC., Earl Jones, Kim Hayes, Virginia Diggs, Lynn Hill, and Margaret Clinard, Plaintiffs, v. Lawrence D. WILSON, individually and as an employee of the North Carolina Department of Health and Human Services, and H. David Bruton, individually and as an employee of the North Carolina Department of Human Services, Defendants.
• Court: U.S. District Court — Middle District of North Carolina

348 F.Supp.2d 548

The GUILFORD COUNTY COMMUNITY ACTION PROGRAM, INC., Earl Jones, Kim Hayes, Virginia Diggs, Lynn Hill, and Margaret Clinard, Plaintiffs, v. Lawrence D. WILSON, individually and as an employee of the North Carolina Department of Health and Human Services, and H. David Bruton, individually and as an employee of the North Carolina Department of Human Services, Defendants.

No. 1:03CV00427.

United States District Court, M.D. North Carolina.

December 6, 2004.

COPYRIGHT MATERIAL OMITTED

Douglas S. Harris, Greensboro, NC, for Plaintiffs.

Alexander McClure Peters, Raleigh, NC, for Defendants.

MEMORANDUM OPINION

BEATY, District Judge.

I. INTRODUCTION

Plaintiffs, the Guilford County Community Action Program ("GCCAP"), Earl Jones ("Jones"), Kim Hayes ("Hayes"), Virginia Diggs ("Diggs"), Lynn Hill ("Hill"), and Margaret Clinard ("Clinard")(collectively, "Plaintiffs") bring claims against two employees of the North Carolina Department of Health and Human Services ("NCDHHS") in both their individual capacities and official capacities as employees of that department, for damages caused as a result of the termination of a federal Community Service Block Grant ("CSBG") to GCCAP. Before the Court is Defendants' Motion to Dismiss [Doc. # 5], filed on July 22, 2003, seeking dismissal of all of Plaintiffs' Complaint under Fed.R.Civ.P. 12(b)(1) and (b)(6), on the grounds that Plaintiffs' claims are not cognizable under federal law, that Plaintiffs lack standing, that the action is barred by state immunity under the 11th Amendment and that Plaintiffs' failed to serve Defendant Bruton. Plaintiffs filed a Response to Defendants' Motion to Dismiss [Doc. # 9] on September 2, 2003, and Defendants filed a Reply [Doc. # 10] on September 22, 2003. Thus, this Motion is ripe for review.

II. FACTUAL BACKGROUND

Taking the facts of the case in a light most favorable to Plaintiffs, as the Court must do in the context of a Motion to Dismiss, Plaintiffs state that GCCAP is a non-profit corporation that has operated in North Carolina since 1986. Plaintiff Jones is the director of GCCAP, and Plaintiff Hayes was an employee there. Plaintiffs Diggs, Hill, and Clinard were "persons who were eligible for help from GCCAP and were the intended beneficiaries of the federal funding." (Pl.'s Compl. at 2). Defendant Lawrence D. Wilson ("Wilson") is an employee of NCDHHS with responsibility for overseeing the Community Service Block Grant Program. Defendant H. David Bruton ("Bruton") is the former Secretary of NCDHHS. GCCAP was an eligible entity to receive federal Community Service Block Grants from NCDHHS, which GCCAP then used to provide services to alleviate poverty. GCCAP had served as a conduit for federal grants for more than a decade without incident.

In the fall of 1999, GCCAP suffered a fire which caused a power surge, in turn doing severe damage to the records in their computer. Prior to this accident, although all original checks and receipts were kept on paper, all accounting and categorization of the records was done on the computer. The power surge destroyed all accounting records on the computer. In the spring of 2000, NCDHHS began an audit of GCCAP and asked for their accounting records covering the period during which the fire occurred. GCCAP in turn asked NCDHHS for extra time to complete that audit because of the need to re-categorize the paper records. Defendant Wilson sent a letter on May 16, 2000 notifying GCCAP that their federal funding was being terminated immediately. GCCAP thereafter asked for a hearing but did not receive one. As a result of the loss of funding, GCCAP's operations ceased, Plaintiffs Jones and Hayes lost their jobs, and Plaintiffs Diggs, Hill, and Clinard, as intended recipients, alleged that their funding ceased. From these facts, Plaintiffs claim they were denied the chance to submit a plan to NCDHHS for improvement, denied training and technical assistance, and denied a hearing prior to funding termination.

Six months later, Defendant Bruton also wrote a letter to GCCAP denying their request for funding. Plaintiff GCCAP again asked for a hearing on the termination decision, which was granted. NCDHHS employee Lynda McDaniel, who was supervised by Bruton, oversaw the hearing and found against Plaintiffs. Plaintiffs allege that this hearing was tainted by the fact that McDaniel was not an independent trier of fact, and that she was assisted with her rulings at the hearing by a Deputy Attorney General, while another Deputy Attorney General was also present to represent NCDHHS. From these facts, Plaintiffs claim that at this hearing they were denied an impartial decision-maker, in violation of due process, as guaranteed by the Fourteenth Amendment.

Additionally, Plaintiffs allege that during this entire process Defendant Wilson instructed his finance officer and other employees of NCDHHS to refuse to assist employees of GCCAP with training and assistance on financial and accounting matters. Plaintiffs also allege that Defendant Wilson interfered with GCCAP's operations by calling members of the Board of Directors and telling them that they should resign from that board. From these facts, Plaintiffs allege a failure to train and provide technical assistance and wrongful interference with operations.

In redress for these violations, Plaintiffs ask this Court for monetary damages. Specifically, Plaintiffs allege that Defendants Wilson and Bruton caused Plaintiffs financial damages by improperly terminating funding and not assisting GCCAP as provided for in the CSBG program.

Plaintiffs' Complaint is brought pursuant to 42 U.S.C. § 1983 and the Fourteenth Amendment.¹ It is based upon Plaintiffs' allegation that Defendants' violated various provisions of 42 U.S.C. §§ 9914 and 9915. These particular provisions provide procedures both for state monitoring of eligible entities and termination of funding by the state in the event of an agency's failure to comply with the terms of the program. Plaintiffs ask for compensatory and punitive damages, costs, and such other and further relief this Court deems proper. For the reasons set out herein, the Court will dismiss Plaintiffs' Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6), in that the statutes Plaintiffs attempt to rely on do not create any federal rights for any of the Plaintiffs.

III. DEFENDANT'S MOTION TO DISMISS

A. Motion to Dismiss Standard

With respect to a motion to dismiss pursuant to Rule 12(b)(6) for failure to state a claim upon which relief can be granted, dismissals are allowed "only in very limited circumstances." Rogers v. Jefferson-Pilot Life Ins. Co., 883 F.2d 324, 325 (4th Cir.1989). Generally, "[a] court may dismiss a complaint only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514, 122 S.Ct. 992, 998, 152 L.Ed.2d 1 (2002) (internal quotations omitted); accord Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir.1993). In making this determination, a court must view the complaint in the light most favorable to the plaintiff, accepting as true all well-pleaded factual allegations. Randall v. United States, 30 F.3d 518, 522 (4th Cir.1994). Thus, the purpose of a motion to dismiss is to test the legal sufficiency of the complaint and not the facts that support it. Neitzke v. Williams, 490 U.S. 319, 326-27, 109 S.Ct. 1827, 1832, 104 L.Ed.2d 338 (1989). "The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." Revene v. Charles County Comm'rs, 882 F.2d 870, 872 (4th Cir.1989)(internal quotations omitted).

B. History and Purpose of CSBG Program

The CSBG program² began in 1981 as a modification to the federal Economic Opportunity Act ("EOA"). The EOA was designed to help "alleviate the causes and effects of poverty." Accion Social de Puerto Rico, Inc., v. Viera Perez, 831 F.2d 365, 366 (1st Cir.1987). Similarly, the purpose of the CSBG program was to "provide assistance to States and local communities, working through a network of community action agencies ... for the reduction of poverty, the revitalization of low-income communities, and the empowerment of low-income families and individuals ... to become fully self-sufficient." 42 U.S.C. § 9901. The CSBG Act of 1981 shifted the responsibility for running the program from the federal government to the States. Id. Subsequently, funds to reduce poverty were allocated to the States through block grants. The States would then channel the funding to eligible entities, generally non-profit community action agencies, that specialized in poverty reduction. Id. In turn, those agencies provided funding to individuals and to programs designated to reduce poverty.

C. Discussion of 42 U.S.C. § 1983 and 42 U.S.C. § 9915

The initial question before the Court is whether any of the Plaintiffs may enforce a claim for a violation of § 9915 under § 1983. Section 1983 "imposes liability on anyone who, under color of state law, deprives a person `of any rights, privileges, or immunities secured by the Constitution and laws.'" Blessing v. Freestone, 520 U.S. 329, 340, 117 S.Ct. 1353, 1359, 137 L.Ed.2d 569 (1997). It does not, however, in itself create any substantive rights. Beck v. City of Durham, 129 F.Supp.2d 844, 849 (M.D.N.C.2000). Section 1983 provides in part:

§ 1983. Civil action for deprivation of rights Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory or the District of Columbia, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for...