Abdullah v. United States Department of Agriculture
ORDER granting 39 Motion to Dismiss for Lack of Jurisdiction; granting 39 Motion for Judgment on the Pleadings. Signed by Chief Judge James C. Dever III on 3/12/2018. (Briggeman, N.)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICTUF NORTH CAROLINA
LES ANCIENS DUNE EGLISE EN
UNITED STATES DEPARTMENT OF
On June 25, 2015, Les Anciens DUne Eglise En Les Chambres Compagnie ("Les Anciens"
or "plaintiff') and its President, S. G. Abdallah, proceeding prose, filed a complaint against the
United States Department ofAgriculture ("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]. OnApri14, 2016, the court denied the motion for settlement [D.E. 7] and the
motion to dismiss [D.E. 10] and granted plaintiff's 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. 39-40]. 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
Les 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 ofthe [USDA], granted [Les Anciens]'s request for a RBEG grant
in the amountof$75,000.00 to establish a revolving loan fund." ld. ~ 17; see Am. Answer [D.E. 27]
17. After receiving the grant, all but one member ofLes Anciens's board resigned, effectively
dissolving the corporation. In January 2009, the USDA received a letter from "Reverend David H.
Rouson, Chairman [ofLes 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.
On 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 ofLes 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]." ld. 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. at 6-7.
Program 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 ifthe Director made "a material error offact" or made a determination "contrary
to statute or regulation." Id. § 11.11. The director's final determination is anecessary prerequisite
to judicial review in the district court. See 7 U.S.C. § 6999; 7 C.F.R. § 11.13.
On January 21, 2009, Benita Gathers ("Gathers," or "claimant"), Secretary ofLes 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]."
Gathers "assert[ed] she
represent[ed] [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.
During 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 pre3
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." Id.
Les Anciens ''timely submitted additional documents," which thr 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.
The hearing officer reviewed Les Anciens's articles ofincorporation 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 in an administrative appeal." Id. The hearing officer concluded that Gathers did not meet
these requirements becau~e she was not "authorized to represent [Les Anciens] in th[e] appeal or for
any purpose." ld. at 100.
On April 7, 2009, Gathers requested a Director review ofthe 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.
On June 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.
The 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 granttoLesAnciens. See [D.E. 40] 6-1, 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 procedures ... before the person may bring an action in a court of
competent jurisdiction against ... the Department."
Federal courts of appeals are divided over whether the exhaustion requirement in 7 U.S.C.
§ 6912(e) is jurisdictional. See Forest Guardians v. U.S. Forest Serv., 641 F.3d 423,432 (lOth Cir.
2011) (per curiam); Dawson Farms. LLC v. Farm Serv. Agency, 504 F.3d 592, 603--06 (5th Cir.
2007). The Fifth, Ei~th, and Ninth Circuits have held that the exhaustion requirement in section
6912(e) is not jurisdictional. See Dawson Farms. LLC, 504 F .3d at 603--06; Ace Prop. & Cas. Ins.
Co. v. Fed. Crop Ins. Corp., 440 F.3d 992, 999-1000 (8th Cir. 2006); McBride Cotton & Cattle
Corp. v. Venemm 290 F.3d 973, 980 (9th Cir. 2002). The Second Circuit has held that the
exhaustion requirement in section 6912(e) is jurisdictional. See Bastek v. Fed. Crop Ins. Corp., 145
F .3d 90, 94-95 (2d Cir. 1998). The Tenth Circuit has recognized the split, but declined to resolve
whether the exhaustion requirement in section 6912(e) is jurisdictional. See Forest Guardians, 641
F.3d at 432-33.
This court agrees with the Tenth Circuit and declines to resolve that issue.
Regardless of whether the exhaustion requirement in section 6912(e) is jurisdictional, it is
"mandatory." Id. at 432. Section 6912(e) ''unambiguously require[s] plaintiffs to exhaust their
administrative remedies before bringing suit, and their failure to do so deprive[s] them of the
opportunity to obtain relief in the district court." Bastek, 145 F.3d at 95. Furthermore, only "[a]
final determination of the Division [is] reviewable and enforceable" in the district court. See 7
U.S.C. § 6999. Thus, Les Anciens must fully exhaust the appeal procedures within the USDA before
seeking review in this court.
As for Les Anciens's challenge to the USDA's decision cancelling the $75,000 grant, Les
Anciens has not exhausted the "administrative appeal procedures established by the Secretary or
required by law." See 7 U.S.C. § 6912(e). Because the USDA determined that Gathers was not an
"authorized representative," Les Anciens as "participant" or "appellant" never challenged the USDA
decision to cancelthe grant, let alone exhaust the administrative process concerning that issue. The
statutory exhaustion requirement of7 U.S.C. § 6912(e) prevents this court from adjudicating whether
the USDA properly cancelled the $75,000 grant, and the court grants the USDA's motion to dismiss
As for whether Gathers lacked the authority to represent Les Anciens on appeal, Les Anciens
administratively exhausted that claim. See [D.E. 31-2] 153-59. Thus, this court will review that
claim. See 7 U.S.C. § 6912(e).
Federal Rule of Civil Procedure 12(c) permits a party to move for judgment on the pleadings
"[a]:fter the pleadings are closed-but early enough notto delay trial." Fed. R. Civ. P. 12(c) .. A court
should grant amotion for judgment on the pleadings only if''the moving party has clearly established
that no material issue of fact remains to be resolved and the party is entitled to judgment as a matter
oflaw." Park Univ. Enters. v. Am. Cas. Co. of Reading, 442 F.3d 1239, 1244 (lOth Cir. 2006)
(quotation omitted), abrogation on other grounds recognized~ Magnus. Inc. v. Diamond State Ins.
Co., 545 F. App'x 750 (lOth Cir. 2013) (unpublished); see Mayfield v. Nat'l Ass'n for Stock Car
Auto Racing. Inc., 674 F.3d 369, 375 (4th Cir. 2012); Burbach Broad. Co. of Del. v. Elkins Radio
278 F.3d 401,405-06 (4th Cir. 2002).
A court ruling on a Rule 12(c) motion for judgment on the pleadings applies the same
standard as in a Rule 12(b)(6) motion to dismiss. See, e.g., Mayfield, 674 F.3d at 375; Burbach
Broad. Co. of Del., 278 F.3d at 405-06. A motion under either rule tests the legal and factual
sufficiency of the claim. See,~' Ashcroft v. Iqbal, 556 U.S. 662, 677-80, 684 (2009); Bell Atl.
Cor,p. v. Twombly, 550U.S. 544,554--63 (2007); Giarratanov. Johnso!1, 521 F.3d298, 302 (4thCir.
2008). To withstand a Rule 12(c) motion, a pleading "must contain sufficient factual matter,
as true, to state a claim to relief that is plausible on its face." Iqbal, 556 U.S. at 678
(quotation omitted); see Twombly. 550 U.S. at 570; Giarratano, 521 F.3d at 302. In considering the
motion, the court must construe the facts and reasonable inferences in the "light most favorable to
the [nonmoving party]." Massey v. Ojanii!, 759 F.3d 343,347, 352-53 (4th Cir. 2014) (quotation
omitted); see Clatterbuck v. Cizy of Charlottesville, 708 F.3d 549,557 (4th Cir. 2013); Burbach
Broad. Co. of Del., 278 F.3d at 406. A court need not accept a pleading's legal conclusions. Iqbal,
556 U.S. at 678-79; Giarratano, 521 F.3d at 302. Nor must it "accept as true unwarranted
inferences, unreasonable conclusions, or arguments." Giarratano, 521 F.3d at 302 (quotation
omitted). Rather, plaintiffs' allegations must "nudge their claims," Twombly, 550 U.S. at 570,
beyond the realm of"mere possibility" into "plausibility." Iqbal, 556 U.S. at 678-79.
When evaluating a Rule 12 motion, a court considers the pleadings and any materials
"attached or incorporated into the complaint." E.l. duPont de Nemours & Co. v. Kolon Indus .. Inc.,
637 F.3d 43'5, 448 (4th Cir. 2011); see Fed. R. Civ. P. 10(c); Thompson v. Greene, 427 F.3d 263,
268 (4th Cir. 2005); Fayetteville Inv'rs v. Commercial Builders. Inc., 936 F.2d 1462, 1465 (4th Cir.
1991 ). A court also may take judicial notice of public records such as court documents. See, e.g.,
Tellabs. Inc. v. Makor Issues & Rights. Ltd., 551 U.S. 308, 322 (2007); Philips v. Pitt Cty.'.Mem'l
Hosp., 572 F.3d 176, 180 (4th Cir. 2009).
The USDA's adjudicative determinations are entitled to deference. See, e.g., United States
v. Mead Cor,p., 533 U.S. 218,226-28 (2001); Chevron. U.S.A.. Inc. v. Nat. Res. Def. Council. Inc.,
467 U.S. 837, 842-45 (1984). Likewise, the USDA's reasonable interpretations of its own
regulations are entitled to deference.
City of Arlington v. F.C.C., 569 U.S. 290,296-97
(2013); Mead Cor,p., 533 U.S. at 226-28. This deference "applies equally to statutes designed to
curtail the scope of agency discretion." City of Arlingto!l, 569 U.S. at 303 (emphasis omitted).
In reviewing an agency decision under 5 U.S.C. § 706(2)(A), the court asks ''whether the
[agency's] decision was based on a consideration of the relevant factors and whether there has been
a clear error of judgment." Citizens to Preserve Overton Park. Inc. v. Volpe, 401 U.S. 402,416
(1971) abrogated in part on other grounds hy Califano v. Sanders, 430 U.S. 99 (1977). "Arbitrary
and capricious review under the APA differs from Chevron step-two review because it focuses on
the reasonability of the agency's decision-making processes rather than on the reasonability of its
interpretation." Native Angels Home Care Agency. Inc. v. Sebelius, 749 F. Supp. 2d 370,375-76
(E.D.N.C. 2010) (quotation and citation omitted).
The NAD found that when Gathers requested the appeal on behalf ofLes Anciens, she was
not its "authorized representative" and that only an "appellant" or an "authorized representative" of
an appellant may appeal to the NAD. See [D.E. 31-2] 98. The parties do not dispute that Les
Anciens, as the "participant" under the original grant is qualified as an "appellant" under 7 C.F.R.
§ 11.1. However, after reviewing the factual circumstances concerning Les Anciens's board, the
state corporate laws of Minnesota and North Carolina, Les Anciens's articles of incorporation and
by-laws, and the meanings of"appellant" and "authorized representative" within Title 7 ofthe Code
of Federal Regulations, the NAD concluded that Gathers was not authorized as a representative of
Les Anciens to appeal on its behalf. See id. at 98-99; 7 C.F .R. § 11.1. Thus, the NAD concluded
that it lacked jurisdiction to hear Les Anciens's appeal. See [D.E. 31-2] 99-100.
On appeal, the Director reviewed the record and the factual and legal issues, and concluded
that NAD lacked jurisdiction to hear the appeal under 7 C.F.R. § 11.1. See id. 153-59. hi light of
the record and the governing law, the Director reached a reasonable conclusion.
In opposition to this conclusion, Les Anciens argues that Gathers was authorized to act on
behalf ofLes Anciens when she filed the appeal. See [D.E. 44]. Specifically, Les Anciens contends
that a new board of directors authorized Gathers to act on its behalf in the appeal process. See id.
at 8. Les Anciens also contends that the USDA misunderstood how Les Anciens filled vacancies
on its board. See id. at 3-5.
The court rejects Les Anciens's arguments. First, nothing in the administrative record shows
that Gathers complied with 7 C.F.R § 11.6(c), which requires an "authorized representative" to "file
a declaration with NAD, executed in accordance with 28 U.S.C. § 1746, stating that the participant.
has duly authorized the declarant in writing to represent the participant for purposes of a specified
adverse decision or decisions, and attach a copy of the written authorization to the declaration." 7
C.F.R. § 11.6(c). The Director's final determination recounts the "ample time" afforded to Gathers
"after the pre-hearing" to "present evidence to establish she had the requisite authorization to act on
behalf of Appellant" but that she failed to do so. [D.E. 31-2] 158; see id. at 35-37, 43 (unsigned
authorization form designating "Attorney Link" as representative). This failure is fatal. See 7 C.F .R.
Second, Les Anciens asserts that the NAD erroneously concluded that Gathers as the sole
remaining board member lacked authority to pass a resolution electing a new board. Gathers,
however, never provided sufficient documentation to the NAD to dispute this conclusion or to
explain adequately how Les Anciens's elected a new board. Rather, the record indicates that on
November 13, 2008, the board consisted of four members: Reverend David H. Rouson, Pastor
Theodore Tillmon, Pastor John Ponds, and Benita Gaithers. See [D.E. 31-2] 116-?0, 131. The fifth
member of the board, William Small, who appeared on the board documents on June 23, 2008,
apparently died between June 23, 2008, and November 13,2008. See id.; [D.E. 33-l] 96. Between
November 13, 2008, and December 12, 2008, David Rouson, Theodore Tillmon, and John Ponds
all resigned from the board. See [D.E. 31-2] 116-20. At that point, Gathers was the sole board
member and lacked the authority to appoint a new board. See id. at 117. Thus, the USDA
reasonably concluded that when Gathers requested an appeal on January 21, 2009, Gathers was not
an authorized representative of Les Anciens.
Les Anciens disputes this conclusion and cites three pieces of evidence that Les Anciens
submitted to the NAD: (1) an alleged resolution of the board dated February 28,2009, purporting
to appoint a new board of B. Gathers, D. Wiggins, and B. Brown, which Gathers submitted to the
NADon March 12, 2009 [D.E. 32-1] 31; (2) an alleged resolution of the board dated November 25,
2008, purporting to authorize any board member to take "any action" in response to the cancellation
of the $75,000 USDA grant, which Gathers submitted to the NAD on March-12, 2009 [D.E. 32-1]
35; and (3) an alleged resolution ofthe board dated November 25,2008, purporting to appoint anew
board of B. Gathers, D. Wiggins, and B. Brown, which Gathers submitted to the NADon March 23,
2009 [D.E. 32-1] 10.
The cited evidence does not help Les Anciens. In fact, the cited evidence only bolsters the
conclusion that the USDA acted reasonably.
As for the alleged resolution dated February 28, 2009, purporting to appoint a new board of
B. Gathers, D. Wiggins, and B. Brown, the alleged resolution lacks the hallmarks of authenticity for
a document of this type, lacks the signature of any director except Gathers, and lacks the corporate
seal as required by the by-laws. See id. at 31, 116. The USDA acted reasonably in not crediting this
As for the alleged resolution dated November 25, 2008, purporting to authorize any board
member to take "any action" in response to the cancellation of the $75,000 USDA grant, this
resolution does not and cannot authorize Gathers to appoint a new board. Moreover, the' resolution
also lacks the hallmarks of authenticity for a document of this type, lacks the signature of any
director except Gathers, and lacks the corporate seal as required by the by-laws. See id. at 35. The
USDA acted reasonably in not crediting this evidence.
As for the alleged resolution of the board dated November 25,2008, purporting to appoint
a new board· of B. Gathers, D. Wiggins, and B. Brown, which Gathers untimely submitted to the
NDA on March 23, 2009, that document is the most suspicious of all. See id. at 10. The resolution
dated November 25, 2008, and submitted on March 23, 2009, is identical to the resolution dated
February 28, 2009, and submitted on March 12, 2009, except for the different dates. Compare id.,
with id. at 31. Of course, Gathers needed the NAD to find that the new board was installed on the
earlier date of November 25, 2008, because other directors were still on the board with her on
November 25, 2008. See [D.E. 31-2] 116-20. No record evidence, however, explains the existence
of this suspicious duplicate resolution or explains why Les Anciens waited until March 23, 2009,
to submit this alleged resolution ofNovember 25, 2008. Tellingly, Les Anciens (through Gathers)
submitted the alleged resolution of November 25, 2008, after the USDA had submitted its
jurisdictional argument to the NAD contending that the failure to elect new board members before
the resignation of the penultimate board member rendered the board unable to act, and therefore left
Gathers unable to pursue an appeal on behalf ofLes Anciens. See [D.E. 33-1] 96-97.
Notably, the alleged November 25, 2008 resolution does not mention Pastor John Ponds, who
was an active member of the board of directors until his resignation on December 12, 2008. See
[D.E. 31-2] 120. If the resolution that the board purportedly adopted on November 25, 2008, were
authentic, logic dictates that it would include at least some reference to Ponds. It does not. See
[D.E. 32-1] 10. Additionally, only Gathers signed the alleged Nov€?mber 25,2008 resolution, and
it does not bear the corporate seal as the by-laws require. See id. at 116; [D.E. 31-2] 99. As with the
other two documents, the USDA acted reasonably in not crediting this untimely and suspicious piece
The record contains other suspicious documents that call into question the credibility ofLes
Anciens. The record, for example, contains substantial factual questions about whether a letter
purporting to authorize a large grant from within the loan fund was (1) a conflict of interest for
Gathers and (2) whether someone forged David Rouson's signature. See [D.E. 32-1] 45-46, 58.
This court need not address those issues. Suffice it to say that, in light of the record, Les Anciens
has not demonstrated that the USDA's determination concerning Gather's lack of authority to
represent Les Anciens on appeal was arbitrary and capricious or contrary to law. Accordingly, the
USDA's motion for judgment on the pleadings is granted.
In sum, the court GRANTS defendant's motion to dismiss and for judgment on the pleadings
[D.E. 39]. The clerk shall close the case.
SO ORDERED. This__!!__ day of March 2018.
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