922 S.E.2d 162
N.C. Ct. App.2025Background
- Story Homes (LLC) and its manager Aaron Guess held a limited building license that expired on March 1, 2019; Story Homes continued to request/perform inspections and pull permits on several single-family dwelling projects during the lapse.
- Donna Barbour filed complaints that Story Homes worked with an expired license and exceeded its license scope; three complaint files (19 C 326, 19 C 328, 19 C 329) were opened.
- Story Homes received notice of the complaints on June 3, 2019 and submitted a license renewal on June 10, 2019 answering “no” to a question asking whether it was under investigation or controversy not previously disclosed.
- At the Board hearing, Petitioners’ counsel verbally stipulated to the three charges and did not object when the Board admitted exhibits supporting those files; Petitioners later sought mitigation testimony.
- The Licensing Board found: fraud/deceit for failing to disclose the pending investigations and gross negligence/misconduct for allowing the license to lapse; imposed an 18-month suspension (6 months active, 12 months stayed), a $15,000 fine, and required a Level 1 Building Code Course.
- The superior court affirmed the Board’s final agency decision; Petitioners appealed. The Court of Appeals affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Board improperly interpreted Petitioners’ stipulation | Stipulation did not admit intent/willfulness; limited to license lapse facts | Stipulation was unqualified and included admission to charges and supporting exhibits | Court: Stipulation was a binding judicial admission; Board’s interpretation stands |
| Whether evidence supports findings of fraud/deceit and gross negligence | No evidence of intent, fraud, gross negligence or misconduct | Board introduced unobjected documentary evidence supporting charges | Court: Findings supported by the record; not arbitrary or capricious |
| Whether penalties were disproportionate | Discipline (suspension, $15k fine) excessive compared to lapse and renewal form error | Multiple stipulated violations and nondisclosure justified cumulative fines and suspension | Court: Punishment proportional given three violations and nondisclosure; affirmed |
| Whether procedural unfairness (subpoenas/timing) violated due process | Late issuance of Board subpoenas and delayed issuance of Petitioners’ subpoena requests caused unfairness | Subpoenas complied with procedural rules; Petitioners did not pursue discovery under civil rules | Court: No manifest unfairness; timing complied with regulations |
| Whether nondisclosure was error of law because Board already knew of complaints | Petitioner: Board’s knowledge made nondisclosure harmless or not a false statement | Board: Renewal question requires candid disclosure regardless of Board’s awareness; false answer violates statute | Court: Answering “no” while on notice was unlawful; nondisclosure supported sanction |
Key Cases Cited
- Mann Media, Inc. v. Randolph Cty. Planning Bd., 356 N.C. 1 (2002) (describing narrow scope of arbitrary or capricious review)
- Comstock v. Comstock, 240 N.C. App. 304 (2015) (stipulations are judicial admissions binding the parties)
- Moore v. Richard W. Farms, Inc., 113 N.C. App. 137 (1993) (once made, stipulations prevent inconsistent positions)
- Wetherington v. N.C. Dep’t of Pub. Safety, 368 N.C. 583 (2015) (explaining de novo standard under APA)
- Walker v. N.C. Dept. of Human Resources, 100 N.C. App. 498 (1990) (whole-record test examines evidence detracting from agency decision)
- In re McElwee, 304 N.C. 68 (1981) (agency decisions must have a rational basis in the evidence)