Foo v. Tillerson

• Decision Date: 23 March 2017
• Docket Number: Case No. 15–cv–2033 (TSC)
• Citation: 244 F.Supp.3d 17
• Parties: Shar Lyn FOO, Plaintiff, v. Rex TILLERSON, Secretary, U.S. Department of State, et al., Defendants.
• Court: U.S. District Court — District of Columbia

244 F.Supp.3d 17

Shar Lyn FOO, Plaintiff,

v.Rex TILLERSON, Secretary, U.S. Department of State, et al., Defendants.

Case No. 15–cv–2033 (TSC)

United States District Court, District of Columbia.

Signed March 23, 2017

Matthew James Dowd, Dowd PLLC, Robert Gutkin, Andrews Kurth LLP, Washington, DC, for Plaintiff.

Alexander Daniel Shoaibi, April Denise Seabrook, U.S. Attorney's Office for the District of Columbia, Washington, DC, for Defendants.

MEMORANDUM OPINION

TANYA S. CHUTKAN, United States District Judge

Plaintiff Shar Lyn Foo alleges that the State Department and the Foreign Service Grievance Board ("FSGB") violated the Administrative Procedure Act ("APA"), 5 U.S.C. § 706, when they determined that she was ineligible to seek a waiver for the repayment of retirement annuity overpayments. Plaintiff additionally asserts that the regulation Defendants relied on for their determination, 22 C.F.R. § 17.7(a)(2), is invalid because it is not authorized by, and conflicts with, the text of 22 U.S.C. § 4047(d). The parties have filed cross-motions for summary judgment.¹ (ECF Nos. 15, 18). Upon consideration of the motions and the record, and for the reasons set forth below, the parties' cross-motions are both GRANTED IN PART and DENIED IN PART.

I. BACKGROUND

This case concerns Defendants' attempt to collect on annuity overpayments made to Plaintiff between 1997 and 2011. Shar Lyn Foo is the daughter of Charles Foo, a former Foreign Service officer who died in 1984. (FSGB Corrected Decision ("FSGB Decision") at 3 (Compl. Ex. 2)). Charles Foo received retirement annuity payments from the State Department's Foreign Service Retirement and Disability System until his death in 1984, when his wife Lorna Foo began receiving those benefits as a survivor annuitant. (Id. ). These annuity payments were deposited directly into Lorna Foo's account at First Hawaiian Bank, and in 1995 Plaintiff was added to this account as a co-owner. (Id. ; Compl. ¶ 32). After Lorna Foo's death in November 1997, the State Department continued to deposit monthly annuity payments into this bank account until it realized its error and ceased the payments in 2011. (FSGB Decision at 4–5; Compl. ¶ 43). Plaintiff alleges that during the fourteen years, from 1997 to 2011, she was unaware that the monthly deposits were survivor annuity payments that should have ceased with her mother's death; indeed, she was not aware of the source or nature of the payments at all. (Compl. ¶¶ 32–36). Plaintiff states that, as her mother requested, she applied the monthly bank deposits to Lorna Foo's condominium mortgage, and that Lorna had instructed Plaintiff to give the condominium to Plaintiff's nephew when he reached adulthood and the mortgage was paid. (Id. ¶¶ 33–38).

In May 2012, the State Department sent Plaintiff a letter informing her that Lorna Foo's survivor annuity account had been overpaid by $254,343.99 and that Plaintiff was required to repay that amount. (Id. ¶ 55; Def. Ex. 1). The following month, Plaintiff's counsel sent a letter to the State Department requesting a waiver of the collection under 22 C.F.R. § 17.2 because "[t]he alleged overpayment is not the result of Shar Lyn's acts or omissions and therefore Shar Lyn is without fault." (Def. Ex. 2 at 4; Compl. ¶ 56). Section 17.2(a) provides that "[r]ecovery of an overpayment ... may be waived pursuant to [ 22 U.S.C. § 4047(d) ] when the individual is without fault and recovery would be against equity and good conscience or administratively infeasible." Nearly two years later, the State Department responded to Plaintiff's June 2012 letter and notified her that the overpayment amount had been recalculated to $311,703.00 and that it could not consider her waiver request because "[t]he Department is prohibited from waiving collection of an overpayment to an estate under 22 C.F.R. 17.7(a)(2)." (Def. Ex. 3 at 1, 3; Compl. ¶¶ 59–60). 22 C.F.R. § 17.7(a)(2) states that "[w]aiver of an overpayment cannot be granted when ... [t]he overpayment was made to an estate." Plaintiff subsequently appealed the State Department's determination to the FSGB in July 2014, primarily arguing that she was eligible to seek a waiver because the annuity payments were deposited directly into her own bank account, not sent to an account associated with her mother's estate. (Def. Ex. 5; Compl. ¶¶ 65–80).

The FSGB issued its decision in May 2015, followed by a corrected decision in early June 2015. (Compl. Exs. 1, 2). It found that Plaintiff had failed to proffer substantial evidence that the annuity payments were not made to Lorna Foo's estate and therefore determined that Plaintiff was ineligible for a waiver under 22 C.F.R. § 17.7(a)(2). (Id. at 10–17). Plaintiff subsequently brought this suit challenging the FSGB's decision.

II. LEGAL STANDARD

On a motion for summary judgment in a suit seeking APA review, the court must set aside any agency action that is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2). The court's review is "highly deferential" and begins with a presumption that the agency's actions are valid. Envtl. Def. Fund, Inc. v. Costle , 657 F.2d 275, 283 (D.C. Cir. 1981). The court is "not empowered to substitute its judgment for that of the agency," Citizens to Pres. Overton Park, Inc. v. Volpe , 401 U.S. 402, 416, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971), but instead must consider only "whether the agency acted within the scope of its legal authority, whether the agency has explained its decision, whether the facts on which the agency purports to have relied have some basis in the record, and whether the agency considered the relevant factors."

Fulbright v. McHugh , 67 F.Supp.3d 81, 89 (D.D.C. 2014) (quoting Fund for Animals v. Babbitt , 903 F.Supp. 96, 105 (D.D.C. 1995) ). The plaintiff bears the burden of establishing the invalidity of the agency's action. Id.

III. DISCUSSION

A. Ultra Vires Challenge to the State Department's Estate Rule

In Count II of her Complaint, Plaintiff alleges that the State Department acted ultra vires and exceeded its authority when it promulgated 22 C.F.R. § 17.7(a)(2), which prohibits the waiver of repayment for an overpayment made to an estate, and further that the FSGB acted ultra vires in concluding that the estate rule was valid. (Compl. ¶¶ 98–104). Plaintiff argues that this estate rule is contrary to the text of the enabling statute, 22 U.S.C. § 4047(d), which provides the authority for discretionary waivers of overpayment collections. Defendants contend that the estate rule was lawfully promulgated as a valid and reasonable interpretation of the statute.

The parties agree that in order to evaluate Plaintiff's claim that the estate rule is contrary to the statute, the court must "begin [its] analysis with the first step of the two-part framework announced in Chevron ... and ask whether Congress has ‘directly addressed the precise question at issue.’ " Mayo Found. for Med. Educ. & Research v. United States , 562 U.S. 44, 52, 131 S.Ct. 704, 178 L.Ed.2d 588 (2011) (quoting Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc. , 467 U.S. 837, 843, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984) ). Under step one of Chevron , the court first examines "whether the intent of Congress is clear," and if it is then "that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress." Chevron , 467 U.S. at 842–43, 104 S.Ct. 2778. If the statute is "silent or ambiguous," then the analysis proceeds to step two, where "the question for the court is whether the agency's answer is based on a permissible construction of the statute." Id. at 843, 104 S.Ct. 2778.

1. Chevron Step One

The first step of the Chevron framework begins with an evaluation of the statute's text using "the traditional tools of statutory construction in order to discern whether Congress has spoken directly to the question at issue." Eagle Broad. Grp., Ltd. v. FCC , 563 F.3d 543, 552 (D.C. Cir. 2009) (citing Chevron , 467 U.S. at 842–43, 104 S.Ct. 2778 ). The court "looks to the text, structure, and the overall statutory scheme, as well as the problem Congress sought to solve." Fin. Planning Ass'n v. SEC , 482 F.3d 481, 487 (D.C. Cir. 2007). "If this ‘search for the plain meaning of the statute ... yields a clear result, then Congress has expressed its intention as to the question, and deference is not appropriate,’ " ending the court's analysis. Eagle Broad. Grp. , 563 F.3d at 552 (quoting Bell Atl. Tel. Cos. v. FCC , 131 F.3d 1044, 1047 (D.C. Cir. 1997) ).

The State Department's estate rule was promulgated under 22 U.S.C. § 4047, which provides for annuity payments under the Foreign Service Retirement and Disability System. Section 4047(d) states: "Recovery of overpayments under this part may not be made from an individual when, in the judgment of the Secretary of State, the individual is without fault and recovery would be against equity and good conscience or administratively infeasible." 22 U.S.C. § 4047(d). This section of the statute also provides for payment of the retirement annuity to a survivor annuitant, but states that "no annuity shall be due or payable to his or her estate." 22 U.S.C. § 4047(b). Unlike other terms used in this section, such as "annuitant," Congress did not define "individual." See 22 U.S.C. § 4044 (definitions).

Both parties assert that the court's analysis can be resolved at step one. Plaintiff argues that Congress has already addressed the issue of when the State Department may and may not recover an overpayment in the text of 22 U.S.C. § 4047(d). According to Plaintiff, Congress expressly prohibited recovery of an overpayment only where the individual who received the overpayment is without fault such that recovery would be "against equity and good conscience or administratively infeasible." 22 U.S.C. § 4047(d). Plaintiff further contends that Congress intended "an individual" to be a broad...