Not sure but perhaps this is a simpler approach?

CREATE TABLE #tTable(

sk int NOT NULL IDENTITY UNIQUE CLUSTERED,

CID INT,

CDate DATETIME,

Dept VARCHAR(10)

);

INSERT INTO #tTable(CID, CDate, Dept)

VALUES

(111,'2012-10-05 00:00:00.000','A'),

(111,'2012-10-18 00:00:00.000','C'),

(111,'2012-11-01 00:00:00.000','B'),

(111,'2012-11-01 00:00:00.000','C'),

(111,'2012-11-20 00:00:00.000','C'),

(111,'2012-12-09 00:00:00.000','C'),

(111,'2012-12-11 00:00:00.000','A'),

(111,'2013-02-21 00:00:00.000','B'),

(111,'2013-03-22 00:00:00.000','B'),

(111, '2013-03-22 00:00:00.000','C'),

(111,'2013-04-12 00:00:00.000','C'),

(111,'2013-04-26 00:00:00.000','B'),

(111,'2013-04-26 00:00:00.000','C'),

(222,'2012-02-13 00:00:00.000','C'),

(222,'2012-03-02 00:00:00.000','B'),

(222, '2012-06-16 00:00:00.000','C'),

(222,'2012-07-12 00:00:00.000','C'),

(222,'2013-04-26 00:00:00.000','B'),

(222, '2013-05-23 00:00:00.000','C'),

(222,'2013-07-11 00:00:00.000','C'),

(222,'2013-09-19 00:00:00.000','C'),

(222,'2013-09-20 00:00:00.000','A'),

(444, '2013-01-14 00:00:00.000','C'),

(444,'2013-02-14 00:00:00.000','C'),

(444,'2013-03-14 00:00:00.000','B'),

(444,'2013-04-14 00:00:00.000','C'),

(444,'2013-05-14 00:00:00.000','C');

WITH GroupedRows AS (

SELECT CID, Dept, sk=1+MIN(sk)

FROM (

SELECT sk, CID, CDate, Dept

,rn=sk-ROW_NUMBER() OVER (PARTITION BY CID, Dept ORDER BY cDATE)

FROM #tTable

WHERE Dept = 'C'

) a

GROUP BY CID, Dept, rn

HAVING MIN(sk) <> MAX(sk))

SELECT a.sk, a.CID, a.cDate, a.Dept

FROM #tTable a

JOIN GroupedRows b ON a.sk=b.sk;

GO

DROP TABLE #tTable;

Edit: Adding my results:

sk CID cDate Dept

5 111 2012-11-20 00:00:00.000 C

11 111 2013-04-12 00:00:00.000 C

17 222 2012-07-12 00:00:00.000 C

20 222 2013-07-11 00:00:00.000 C

24 444 2013-02-14 00:00:00.000 C

27 444 2013-05-14 00:00:00.000 C