Equity Solutions of the Carolinas, Inc. v. North Carolina Department of State Treasurer

NO. COA13-300
NORTH CAROLINA COURT OF APPEALS
Filed: 18 February 2014
EQUITY SOLUTIONS OF THE
CAROLINAS, INC.,
Petitioner,
v. Wake County
No. 10 CVS 15729
NORTH CAROLINA DEPARTMENT
OF STATE TREASURER,
Respondent.
Appeal by petitioner from order entered 11 September 2012 by
Judge W. Osmond Smith, III in Wake County Superior Court. Heard
in the Court of Appeals 9 September 2013.
Ward and Smith, P.A., by A. Charles Ellis and Joseph A.
Schouten, for petitioner-appellant.
Attorney General Roy Cooper, by Assistant Solicitor General
Gary R. Govert, Special Deputy Attorney General K.D. Sturgis,
and Special Deputy Attorney General M.A. Kelly Chambers, for
respondent-appellee.
GEER, Judge.
Petitioner Equity Solutions of the Carolinas, Inc. appeals
from the trial court's order affirming the North Carolina
Department of State Treasurer's decision to deny Equity Solutions'
request for a declaratory ruling and dismissing Equity Solutions'
petition for judicial review of the State Treasurer's decision.
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On appeal, while Equity Solutions contends that the trial court
applied an improper standard of review when reviewing the State
Treasurer's decision to deny Equity Solutions' request for a
declaratory ruling, we hold that the trial court employed the
correct standard of review.
Further, Equity Solutions contends that the State Treasurer
in fact issued a "de facto ruling" against Equity Solutions on the
merits that the trial court should have reviewed. We disagree.
The State Treasurer never rendered a declaratory ruling, and the
merits of Equity Solutions' arguments were, therefore, not before
the trial court and are not before this Court.
Facts
Equity Solutions is a business that identifies the possible
existence of surplus funds remaining from foreclosure sales and
contacts people or entities it believes are entitled to some or
all of the surplus funds. After then entering into an agreement
with the owner of the surplus funds, Equity Solutions files before
the clerk of the superior court holding the surplus funds a special
proceeding pursuant to N.C. Gen. Stat. § 1-339.71 (2013).
Equity Solutions asserts that it attached to its "Petition
for Surplus Funds" initiating the special proceeding a copy of its
agreement with the owner of the surplus funds, which purports to
assign the right to the funds to Equity Solutions in exchange for
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payment of a percentage of the amount of the funds. If the clerk
of court allows the petition and directs that the foreclosure
surplus funds be paid to Equity Solutions, then Equity Solutions
pays the owner of the surplus funds the portion of the funds
designated in the agreement.
The State has contended that Equity Solutions' business
constitutes the recovery of abandoned and unclaimed property
governed by the Unclaimed Property Act, N.C. Gen. Stat. §§ 116B-
51 et seq. (2013). N.C. Gen. Stat. § 116B-78(a1) (2013) governs
an "agreement . . . if its primary purpose is to locate, deliver,
recover, or assist in the recovery of property that is
distributable to the owner or presumed abandoned." Agreements
covered by the statute must be in writing and include certain
disclosures regarding the property at issue and the fee being
charged for the property's recovery. N.C. Gen. Stat. § 116B-
78(b). The statute also generally limits the maximum allowable
property finder's fee. N.C. Gen. Stat. § 116B-78(b)(6). A
violation of the provisions of the statute constitutes an unfair
or deceptive act or practice in violation of N.C. Gen. Stat. § 75-
1.1 (2013). N.C. Gen. Stat. § 116B-78(g).
On 11 May 2010, the Attorney General of North Carolina issued
an investigative demand to Equity Solutions seeking documents
relating to Equity Solutions' business, claiming that it involved
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the recovery of abandoned or unclaimed property located in North
Carolina. In April and June 2010, Allen Martin, an employee of
the State Treasurer's office, sent letters to two county clerks of
court stating that the agreements between Equity Solutions and its
clients filed by Equity Solutions in superior court violated N.C.
Gen. Stat. § 116B-78 and were, therefore, invalid.
On 18 June 2010, Equity Solutions submitted a letter to the
State Treasurer describing its business model and attaching two
sets of business documents that Equity Solutions claimed were
representative of those it had used in the past and those it
planned to use in the future. Equity Solutions requested that the
State Treasurer issue "a declaratory ruling as to the applicability
of N.C. Gen. Stat. § 116B-78 to the assignment agreements which
Equity Solutions has employed in its business operations in the
past . . . and the agreements it intends to employ in the future
. . . ."
On 13 August 2010, the State, through the Attorney General
and the State Treasurer, filed an action against Equity Solutions
and several individuals alleging claims for racketeering, unfair
and deceptive practices, and unjust enrichment (the "enforcement
action"). The complaint alleged that the assignment agreements
referred to in Equity Solutions' request for a declaratory ruling
were, in fact, "sham agreements" that were not supported by
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consideration. The complaint further alleged that Equity
Solutions' business model included inducing "the apparent owners
to agree to pay defendant Equity Solutions a 'contingency fee' and
other fees and charges" that exceed the statutory maximum property
finder's fee under the Unclaimed Property Act and that those
contingency fee agreements constituted the real agreements between
the parties. The complaint alleged that since the contingency fee
agreements did not comply with N.C. Gen. Stat. § 116B-78 for
several reasons, they were unenforceable.
On 16 August 2010, the State Treasurer sent a letter to Equity
Solutions declining to issue a declaratory ruling and stating:
Pursuant to N.C.G.S. § 150B-4 and 20
N.C.A.C. 01F 0205, I have determined that the
issuance of a declaratory ruling is
undesirable. Therefore, the Petitioner's
request is denied for the following reasons:
1. The subject matter of the request is
the subject of active litigation in
Wake County between Equity
Solutions, the State Treasurer, and
the Attorney General.
2. The request seeks application of
N.C.G.S. § 116B-78 to an "Absolute
Assignment" and "Conveyance
Agreement" without disclosing the
full factual setting surrounding
these documents, including any
representations made to induce the
apparent owner to sign these
documents, and the manner in which
any of these documents may have been
used in court proceedings seeking
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disbursement of unclaimed or
abandoned funds.
3. The request involves disputed
issues of material fact, including
whether the "Absolute Assignment"
represents an actual agreement
between the parties.
4. The proposed "Purchase Agreement"
offers only blank spaces for its
material terms, such as the amount
of the finder's fee, and the amount
of the costs and expenses to be
borne by the apparent owner.
On 15 September 2010, Equity Solutions filed a petition for
judicial review of the State Treasurer's denial of its request for
a declaratory ruling. On 15 October 2010, the State Treasurer
moved to dismiss Equity Solutions' petition for judicial review
pursuant to Rules 12(b)(1), (6), and (7) of the Rules of Civil
Procedure.
On 18 October 2010, the defendants in the enforcement action,
including Equity Solutions, filed an answer, motions to dismiss,
a motion for Rule 11 sanctions, counterclaims against the State,
and a third-party complaint against State Treasurer Janet Cowell,
individually. On 17 November 2010, the State filed a motion to
dismiss the third-party complaint against the State Treasurer,
individually, and the counterclaims against the State. On 11
September 2012, the trial court entered an order denying the
defendants' motions to dismiss in the enforcement action, but
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granting the State's motion to dismiss the counterclaims and third-
party complaint in the enforcement action.
Also on 11 September 2012, the trial court entered an order
affirming the State Treasurer's decision to deny Equity Solutions'
request for a declaratory ruling and dismissing Equity Solutions'
petition for judicial review. Equity Solutions timely appealed
the order to this Court.
Discussion
"This Court's review of 'a superior court order entered upon
review of an administrative agency decision, . . . [involves a]
two-fold task: (1) [to] determine whether the trial court exercised
the appropriate scope of review and, if appropriate; (2) [to]
decide whether the court did so properly.'" In re Denial of NC
IDEA's Refund of Sales, 196 N.C. App. 426, 433-34, 675 S.E.2d 88,
94-95 (2009) (quoting Cnty. of Wake v. N.C. Dep't of Env't &
Natural Res., 155 N.C. App. 225, 233–34, 573 S.E.2d 572, 579
(2002)).
Here, Equity Solutions sought a declaratory ruling from the
State Treasurer pursuant to N.C. Gen. Stat. § 150B-4(a) (2009).1
1The General Assembly enacted a revised version of N.C. Gen.
Stat. § 150B-4 in 2011 N.C. Sess. Law ch. 398, § 56 (effective
June 18, 2011). Given the date of Equity Solutions' request for
a declaratory ruling and the State Treasurer's denial of Equity
Solutions' request, the revised version of N.C. Gen. Stat. § 150B-
4 does not apply to this case.
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N.C. Gen. Stat. § 150B-4(a) provides in relevant part: "On request
of a person aggrieved, an agency shall issue a declaratory ruling
as to the validity of a rule or as to the applicability to a given
state of facts of a statute administered by the agency or of a
rule or order of the agency, except when the agency for good cause
finds issuance of a ruling undesirable."
After the State Treasurer denied Equity Solutions' request
for a declaratory ruling, Equity Solutions petitioned the trial
court for judicial review. The trial court's review of the State
Treasurer's denial was governed by N.C. Gen. Stat. § 150B-51(b)
(2009).2 N.C. Gen. Stat. § 150B-51(b) provides that the trial
court may
reverse or modify the agency's decision . . .
if the substantial rights of the petitioners
may have been prejudiced because the agency's
findings, inferences, conclusions, or
decisions are:
(1) In violation of constitutional
provisions;
(2) In excess of the statutory authority
or jurisdiction of the agency;
(3) Made upon unlawful procedure;
(4) Affected by other error of law;
2The General Assembly's revised version of N.C. Gen. Stat. §
150B-51, enacted in 2011 N.C. Sess. Law ch. 398, § 27, applies "to
contested cases commenced on or after" 1 January 2012 and,
therefore, does not apply to this case. Id.
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(5) Unsupported by substantial evidence
admissible under G.S. 150B–29(a), 150B–
30, or 150B–31 in view of the entire
record as submitted; or
(6) Arbitrary, capricious, or an abuse
of discretion.
"During judicial review of an administrative agency's final
decision, the substantive nature of each assignment of error
dictates the standard of review." In re Denial, 196 N.C. App. at
432, 675 S.E.2d at 94. The first four grounds for reversing or
modifying an agency's decision provided in N.C. Gen. Stat. § 150B-
51(b) give rise to questions of law and the trial court,
accordingly, reviews arguments based on those grounds de novo. In
re Denial, 196 N.C. App. at 433, 675 S.E.2d at 94. However, the
fifth and sixth grounds for reversing or modifying an agency's
decision set out in N.C. Gen. Stat. § 150B-51(b) involve factual
inquiries, and the trial court, therefore, reviews arguments on
those two grounds under the whole record test. In re Denial, 196
N.C. App. at 433, 675 S.E.2d at 94.
"Under the de novo standard of review, the trial court
'consider[s] the matter anew[] and freely substitut[es] its own
judgment for the agency's[.]'" Id. (quoting Mann Media, Inc. v.
Randolph Cnty. Planning Bd., 356 N.C. 1, 13, 565 S.E.2d 9, 17
(2002)). "In conducting 'whole record' review, the trial court
must examine all the record evidence in order to determine whether
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there is substantial evidence to support the agency's decision."
Id. "When the trial court reviews an administrative decision under
the whole record test, it 'may not substitute its judgment for the
agency's as between two conflicting views, even though it could
reasonably have reached a different result had it reviewed the
matter de novo.'" Id. (quoting Watkins v. N.C. State Bd. of Dental
Exam'rs, 358 N.C. 190, 199, 593 S.E.2d 764, 769 (2004)).
In this case, in reviewing the State Treasurer's decision,
the trial court concluded (1) that "[t]here is substantial,
competent evidence to support each of the State Treasurer's reasons
for denying the requested declaratory rulings" and (2) that "[t]he
State Treasurer's reasons for denying the request, each standing
alone or taken together, constitute 'good cause' for the denial."
The trial court further observed that "material factual
representations in, and omissions from, Equity Solutions' request
. . . presented merely hypothetical circumstances and did not
provide 'a given state of facts' regarding genuine and legally
valid 'assignments' about which Equity Solutions is presently
'aggrieved' within the meaning of N.C. Gen. Stat. § 150B-4."
The order additionally found:
Regarding Equity Solutions' proposed new
"Purchase Contracts," on the face of the
record and Equity Solutions' pleadings, these
documents are simply possible future
contracts, with several material terms not
provided by Equity Solutions. Therefore,
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Equity Solutions is not presently "aggrieved"
regarding the possible validity or invalidity
of those potential contracts under N.C. Gen.
Stat. § 116B-78 (whatever their material terms
may end up being), and the State Treasurer
therefore could not have lawfully rendered an
advisory opinion on that matter as well.
The trial court ultimately concluded that "[t]he State Treasurer's
denial of the request for declaratory rulings was not arbitrary,
capricious, an abuse of discretion, or otherwise in violation of
substantive or procedural law."
I
Equity Solutions first argues that the trial court erred in
limiting its decision to whether the State Treasurer properly
declined to give a declaratory ruling. Equity Solutions argues
that the trial court should have reached -- and this Court should
reach -- the merits of Equity Solutions' request for a declaratory
ruling and hold that N.C. Gen. Stat. § 116B-78 does not apply to
its business model. Equity Solutions contends that the State
Treasurer issued a "de facto ruling" denying its request on the
merits since the State Treasurer "made [her] position very clear,
through [her] Complaint in the State Action and by the actions
taken by Allen Martin and the Attorney General's Office, that
Section 116B-78 did apply to Equity Solutions' business
arrangements."
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However, investigative actions by the Attorney General's
Office, letters from a State Treasurer's Office employee to two
county clerks of court, and allegations in the enforcement action
complaint do not individually or collectively constitute a formal
decision by a State agency that is legally binding on Equity
Solutions and the State Treasurer, as a formal declaratory ruling
would be. See N.C. Gen. Stat. § 150B-4(a) ("A declaratory ruling
is binding on the agency and the person requesting it unless it is
altered or set aside by the court."). Since there has been no
declaratory ruling that actually binds Equity Solutions and the
State Treasurer, there was no decision on the merits before the
trial court or this Court.
Equity Solutions nonetheless contends that because its
request sought a decision on a solely legal issue -- whether N.C.
Gen. Stat. § 116B-78 applies to its business model as described in
its request to the State Treasurer -- and because this Court
reviews legal issues de novo, this Court can properly reach the
merits of the request for a declaratory ruling. Equity Solutions'
argument appears to confuse the concept of a trial de novo, in
which a court conducts a "'new trial on the entire case . . . as
if there had been no trial in the first instance[,]'" N.C. Dep't
of Env't & Natural Res. v. Carroll, 358 N.C. 649, 661 n.3, 599
S.E.2d 888, 895 n.3 (2004) (quoting Black's Law Dictionary 1512
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(7th ed. 1999)), with the concept of a de novo standard of review
"that applies when the trial court acts, as here, in the capacity
of an appellate court and reviews an agency decision for errors of
law and procedure," id. (internal citation omitted). Again,
because there has been no agency decision on the merits in this
case, there is no decision to which this Court can apply a de novo
standard of review.
We, therefore, offer no opinion on the merits of Equity
Solutions' request for a declaratory ruling. That issue was not
before the trial court and is not before this Court.
II
Equity Solutions next argues that the trial court applied an
improper standard of review when reviewing the petition from the
State Treasurer's denial of its request for a declaratory ruling.
We disagree.
When reviewing the issue whether an agency had good cause to
decline to issue a declaratory ruling, the reviewing court must
first determine whether the record supports the reasons given by
the agency for declining to issue a ruling. Cf. Charlotte-
Mecklenburg Hosp. Auth. v. Bruton, 145 N.C. App. 190, 191-92, 550
S.E.2d 524, 525-26 (2001) (setting out pertinent facts in record
supporting agency's determination that good cause existed to
decline to issue declaratory ruling). If the reviewing court
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determines there is record support for the reason given by the
agency, the reviewing court then reviews de novo whether the reason
given constitutes good cause to decline to issue a ruling. Id. at
193, 550 S.E.2d at 526.
Here, the trial court's order detailed the facts in the record
supporting the State Treasurer's reasons for declining to issue a
ruling. The court then determined that there was "substantial,
competent evidence to support each of the State Treasurer's reasons
for denying the requested declaratory rulings." Thus, the order
demonstrates that the court properly reviewed the record and found
there was evidence supporting the State Treasurer's reasons for
declining to issue a ruling.
After determining that the record supported the reasons given
by the State Treasurer, the trial court further concluded, in a
separately numbered conclusion of law, that the "State Treasurer's
reasons for denying the request, each standing alone or taken
together, constitute 'good cause' for the denial." Given this
language, we hold that the trial court properly applied a de novo
standard of review to the issue whether the reasons set forth by
the trial court constituted good cause to decline to issue a
ruling. We note, however, that the better practice is for a trial
court reviewing an agency decision to expressly state which
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standard of review it has applied to each distinct issue decided
in an order.
Equity Solutions nonetheless points to the language in the
trial court's order stating that the court "reviewed the whole
record to determine whether there is substantial, competent
evidence to support the denial of the request for declaratory
rulings" in support of its contention that the court erroneously
applied the whole record test rather than de novo review. However,
this language supports our determination that the trial court first
properly concluded that the record contained evidence supporting
the State Treasurer's reasons for declining to issue a ruling, and
it does not demonstrate that the trial court erroneously applied
whole record review to the legal issue before the trial court:
whether the reasons given by the State Treasurer constituted good
cause. The trial court, therefore, applied the proper standard of
review.
III
Equity Solutions next contends that even if the trial court
did apply the proper standard of review, the court erred in
affirming the State Treasurer's determination that good cause
existed to decline to issue a ruling. We, like the trial court,
review this issue de novo. Id.
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The first three reasons given by the State Treasurer in
declining to issue a ruling were (1) that the subject matter of
the request was "the subject of active litigation in Wake County
between Equity Solutions, the State Treasurer, and the Attorney
General"; (2) that the request failed to disclose the "full factual
setting" of Equity Solutions' business model, including "any
representations made to induce the apparent owner" to sign the
conveyance and assignment agreements used by Equity Solutions; and
(3) that the request involved "disputed issues of material fact,"
including whether the assignment agreements represented "an actual
agreement between the parties." The trial court agreed.
Equity Solutions has conceded on appeal that this declaratory
ruling action concerns "the same subject matter" as the enforcement
action and that the issues presented in its request for a
declaratory ruling will probably be decided in the course of the
enforcement action. In addition, in its request for a declaratory
ruling, Equity Solutions did not disclose that it entered into
contingency fee agreements with the owners of surplus funds prior
to entering into subsequent conveyance and assignment agreements.
Equity Solutions later filed an affidavit of its vice president in
superior court that acknowledged its practice of entering into an
initial "Authority to Represent & Contingency Fee Agreement" with
the apparent owners. It was these contingency fee agreements that
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the Attorney General and State Treasurer contended, in the
enforcement action, constituted, in whole or in part, the actual
agreements between the parties.
This Court has previously held that an agency had good cause
to decline to issue a ruling where the agency had already issued
a ruling on the same matter and issuing a second ruling would,
therefore, constitute a waste of administrative resources. Id. at
192-93, 550 S.E.2d at 526-27; Catawba Mem'l Hosp. v. N.C. Dep't of
Human Res., 112 N.C. App. 557, 563, 436 S.E.2d 390, 393 (1993).
Although the State Treasurer had not, in this case, already decided
the issue presented in Equity Solutions' request, we believe that
the principle underlying the holdings in Charlotte-Mecklenburg
Hospital and Catawba Memorial Hospital is also applicable here.
It would be a waste of administrative resources for the State
Treasurer to issue a ruling on a matter that would likely be
judicially determined during the course of pending litigation
between Equity Solutions and the State Treasurer. This is
particularly true since the trial court ruling on the issues in
the enforcement action will have the benefit of a fully developed
factual record following discovery, while Equity Solutions'
request to the State Treasurer presented only an alleged factual
basis for a ruling that did not mention the contingency fee
agreements that Equity Solutions has since admitted were part of
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its business model. Indeed, the State Treasurer was aware that
the request submitted by Equity Solutions presented the State
Treasurer with an inadequate record from which to issue a ruling.
Equity Solutions, however, asserts that the State Treasurer
should not be allowed to "manufacture 'good cause' to avoid issuing
a ruling" by, as here, "filing a complaint on the same subject
matter after receiving the request for a ruling." However, the
record shows that the Attorney General and State Treasurer were
openly investigating Equity Solutions at least one month prior to
the time of Equity Solutions' request and that Equity Solutions
was aware of that investigation. We do not believe that the
Attorney General or the State Treasurer's discretion in
determining when to file their enforcement action resulting from
months of investigation should have been curtailed because of the
timing of Equity Solutions' decision to request a declaratory
ruling from the State Treasurer. The State Treasurer was not
required to allow Equity Solutions to preempt the enforcement
proceedings by requesting a declaratory ruling.
With respect to the issue of a factual dispute, Equity
Solutions contends that the "sole purpose" of N.C. Gen. Stat. §
150B-4 is for an agency to aid an aggrieved person by applying the
statute to a "given set of facts." Equity Solutions asserts that
"[t]he agency is not charged with a broader authority to
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investigate the 'given set of facts' to determine whether other
legal issues exist or to otherwise assess the legal validity or
viability of the proposed transaction . . . ."
However, in Catawba Memorial Hospital, this Court determined
that the set of facts provided by the petitioner in its belated
request for a declaratory ruling would not control where the agency
had already closed the record of a contested case hearing on the
same matter, and the agency had determined, in the contested case,
the actual facts to be inconsistent with the set of facts provided
in the petitioner's request. See 112 N.C. App. at 563, 436 S.E.2d
at 393 ("Whereas a declaratory ruling by definition involves the
application of a statute or agency rule to a given state of facts,
the facts regarding [the petitioner's] proposed surgical services
were established by the record in the contested case.").
Similarly, here, the State Treasurer was not obligated to ignore
the existence of the information regarding this same matter that
had been discovered during the investigation that led to the
enforcement action when deciding whether good cause existed to
decline to issue a ruling on Equity Solutions' request.
Equity Solutions also cites Hope-A Women's Cancer Ctr., P.A.
v. N.C. Dep't of Health & Human Servs., 203 N.C. App. 276, 691
S.E.2d 421 (2010), disc. review denied, 365 N.C. 87, 706 S.E.2d
254 (2011), in support of its argument that its failure to provide
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a more factually complete request for a declaratory ruling did not
constitute good cause for the State Treasurer to decline to issue
a ruling. However, the Court in Hope did not address whether
circumstances existed, in that case, that would have constituted
good cause to deny issuing a ruling since the agency, in fact,
issued a ruling on the relevant request. Id. at 279, 282, 691
S.E.2d at 423, 425. Hope does not, therefore, support Equity
Solutions' argument.
We, accordingly, hold that the State Treasurer, and the trial
court, properly determined that good cause existed to decline to
issue a ruling on Equity Solutions' request, based on the first
three grounds asserted by the State Treasurer, as it related to
the business practices already used by Equity Solutions at the
time of the request.
The issue remains whether the State Treasurer had good cause
to decline to issue a ruling as to the business practice that
Equity Solutions planned to employ in the future. With respect to
the agreements that Equity Solutions' request stated that it
proposed to use, the State Treasurer declined to issue a ruling
regarding the propriety of those agreements because "[t]he
proposed 'Purchase Agreement[]' offer[ed] only blank spaces for
its material terms, such as the amount of the finder's fee, and
the amount of the costs and expenses to be borne by the apparent
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owner." As the State Treasurer noted, the purchase agreement
Equity Solutions claimed it planned to use in the future had blank
spaces for material terms, including the percentage of the surplus
funds which would be paid by Equity Solutions to the apparent owner
in exchange for the apparent owner's selling Equity Solutions the
owner's right to the funds -- in other words, Equity Solutions'
fee.
In Diggs v. N.C. Dep't of Health & Human Servs., 157 N.C.
App. 344, 345, 578 S.E.2d 666, 667 (2003), the petitioner was a
custodial parent of three children and had previously been the
caretaker of her niece, and she petitioned an agency for a
declaratory ruling that the practice of calculating the debt owed
to the State when an adult caretaker accepts payment of benefits
under certain government programs was invalid. In order to
demonstrate that she was a "person aggrieved" under N.C. Gen. Stat.
§ 150B-4, the petitioner set out "two hypothetical situations
involving whether child support paid by the biological father of
petitioner's children . . . pursuant to a court order for the
support of their biological children may be taken by the State for
reimbursement of earlier and separate public assistance grants
made solely for the use and benefit of petitioner's niece . . . ."
Diggs, 157 N.C. App. at 347, 578 S.E.2d at 668.
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On appeal, this Court held that the petitioner was not
entitled to a declaratory ruling since she was "not presently
aggrieved." Id. at 348, 578 S.E.2d at 668. The Court reasoned
that the petitioner's request presented merely hypothetical
scenarios that were not certain to occur and, therefore, the
petitioner could not show that her legal rights had, in some way,
been impaired. Id., 578 S.E.2d at 668-69. Because the agency
had, nonetheless, issued a ruling on the petitioner's request, the
court further held that "the request was ineffective to trigger
the issuance of a declaratory ruling, and the declaratory ruling
has no effect, binding or otherwise, on petitioner . . . ." Id.
at 349, 578 S.E.2d at 669.
Similarly, here, the State Treasurer could properly determine
that good cause existed to deny Equity Solutions' request for a
declaratory ruling as to the potential future agreements since,
given the missing material terms of the contracts, any ruling on
whether the contracts were in compliance with N.C. Gen. Stat. §
116B-78 would be purely hypothetical. Notably, the allegations in
the enforcement action that the agreements actually used by Equity
Solutions in the past violated N.C. Gen. Stat. § 116B-78 are
focused, in part, on allegations that the fees charged by Equity
Solutions exceeded the statutory limit for property finder's fees.
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Yet, the proposed purchase agreements did not specify the amount
of the finder's fee.
In the absence of a proposed agreement setting out all terms
material to the request for a declaratory ruling, the State
Treasurer did not have authority to issue a ruling because, as in
Diggs, she was presented only with a hypothetical scenario, and
Equity Solutions could not show that any of its legal rights were
legally impaired. We, therefore, hold that the State Treasurer
had good cause to decline to issue a ruling as to the future
purchase agreements based upon the fourth ground provided by the
State Treasurer.
In sum, the trial court applied the proper standard of review
and did not err in affirming the State Treasurer's decision to
decline to issue a ruling on Equity Solutions' request based upon
all four grounds provided by the State Treasurer. Consequently,
we affirm the trial court's order.
Affirmed.
Chief Judge MARTIN and Judge STROUD concur.