Jones v. Cavazos, 88-7763

• Decision Date: 06 December 1989
• Docket Number: No. 88-7763,88-7763
• Citation: 889 F.2d 1043
• Parties: -374, 89-2 USTC P 9661, 57 Ed. Law Rep. 63 Adeline JONES, Plaintiff-Appellant, v. Lauro F. CAVAZOS, Secretary, United States Department of Education, in his official capacity, and Richard A. Hastings, etc., Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1043

889 F.2d 1043

65 A.F.T.R.2d 90-374, 89-2 USTC P 9661,

57 Ed. Law Rep. 63

Adeline JONES, Plaintiff-Appellant, v. Lauro F. CAVAZOS, Secretary, United States Department of Education, in his official capacity, and Richard A. Hastings, etc., Defendants-Appellees.

No. 88-7763.

United States Court of Appeals Eleventh Circuit.

Dec. 6, 1989.

O. Randolph Bragg, UAW Legal Services Plan, Newark, Del., Alice J. Hancock, UAW Legal Services Plan, Decatur, Ala., for plaintiff-appellant.

Carol Bengle and Fred J. Marinucci, U.S. Dept. of Educ., Washington, D.C., for defendants-appellees.

Appeal from the United States District Court for the Northern District of Alabama.

Before COX, Circuit Judge, HILL ^*, Senior Circuit Judge, and SNEED ^**, Senior Circuit Judge.

PER CURIAM:

In the early 1970's, Adeline Jones borrowed money under the National Direct Student Loan Program ("NDSL") to attend Coahoma Junior College (the "College") in Clarksdale, Mississippi. This loan, authorized under Title N-E of the Higher Education Act of 1965 (as amended 20 U.S.C.A. Secs. 1087aa et seq. (1978)), was made and administered by the College. The College placed the loan in default in April 1974, and in 1986, assigned the loan to the Secretary of Education for collection. In 1987, the U.S. Department of Education sent Jones a letter informing her that if she did not arrange to repay this obligation, the loan could be subject to offset against her income tax refund.

Jones then brought suit against the Secretary of Education and its former Director of Debt Collection and Management Assistance Service, seeking declaratory and injunctive relief in connection with the proposed tax refund offset. Specifically, Jones sought a declaration that the proposed offset violated her Fifth Amendment due process rights because adequate notice was not given and a hearing was not provided. She sought an injunction to prevent the offset. While her suit was pending, the claim for injunctive relief was mooted by Education's intercept of the refund involved. Thereafter, the district court granted the defendants' motion for summary judgment, and Jones appeals. We affirm.

I. BACKGROUND

As part of the Deficit Reduction Act of 1984, Congress enacted legislation permitting any federal agency owed a past-due legally enforceable debt by an individual to seek an offset of the debt against the debtor's tax refund by notifying the Secretary of the Treasury. 31 U.S.C.A. Sec. 3720A(a), (c) & (d) (Supp.1989). Treasury regulations set forth the times, manner of submission, and information required to be included in or accompany the notice to Treasury. These regulations, codified at 26 C.F.R. Sec. 301.6402-6T (1988), ¹ describe preconditions which a past-due legally enforceable debt must meet before it may be referred to the Internal Revenue Service ("IRS") for offset. The purpose of these conditions is to ensure that the agency has made some effort to collect the obligation and is not seeking tax refund offset as a means of first resort to collect the debt. See Reduction of Tax Overpayments by Amount of Past-due Legally Enforceable Debt Owed to Federal Agency, 50 Fed.Reg. 39661 (1985) (explanation of regulatory provisions).

One precondition of tax refund offset requires that any federal agency seeking to use the offset program promulgate regulations governing its operation within that agency. 26 C.F.R. Sec. 301.6402-6T(b)(1). Pursuant to this requirement, the Department of Education issued regulations governing general offset and IRS tax refund offset procedures. 34 C.F.R. Secs. 30.20 to 30.35 (1987). These Department of Education regulations detail, among other things, the notice which a debtor is entitled to receive, procedures by which the debtor must request an opportunity to inspect and copy records relating to the debt, procedures for obtaining review of the existence or amount of the debt, procedures for obtaining an oral hearing (and the rules applicable thereto), and specifically, the procedures, time frames, and rules applicable when debts are referred to the IRS for offset.

The Department of Education regulations also exist to satisfy requirements found in the offset statute itself. Subsection (b) reads:

No Federal agency may take action pursuant to subsection (a) with respect to any debt until such agency--

(1) notifies the person incurring such debt that such agency proposes to take action pursuant to such paragraph with respect to such debt;

(2) gives such person at least 60 days to present evidence that all or part of such debt is not past due or not legally enforceable;

(3) considers any evidence presented by such person and determines that an amount of such debt is past due and legally enforceable; and

(4) satisfies such other conditions as the Secretary may prescribe to ensure that the determination made under paragraph (3) with respect to such debt is valid and that the agency has made reasonable efforts to obtain payment of such debt.

31 U.S.C.A. Sec. 3720A(b) (Supp.1989). Thus, pursuant to the offset statute and regulations, the Department of Education notifies delinquent debtors whose debts it proposes to offset against tax refunds and sends them a copy of the pertinent Education regulations. Although section 3720A and the IRS regulations require that the taxpayer be granted at least sixty days to present evidence that the debt is not past-due or legally enforceable, the Education regulations which are sent to debtors provide for a more generous sixty-five day period. 34 C.F.R. Sec. 30.33(d)(1).

Having focused on the applicable statute and regulations, we turn to Jones' claims. As the district court resolved the case on a motion for summary judgment, our review is plenary. See Erwin v. Westfall, 785 F.2d 1551, 1552 (11th Cir.1986); Bailey v. Carnival Cruise Lines, 774 F.2d 1577 (11th Cir.1985). Jones contends that the notice she received violated her Fifth Amendment right to procedural due process for two reasons. ² First, she alleges that the notice was insufficient because it failed to provide a list of possible defenses; second, she asserts that the Department of Education failed to afford her an appropriate hearing. We conclude that Jones lacks standing to bring either of these Fifth Amendment due process claims.

Jones also contends that the district court erred in concluding that her defaulted student loan debt was legally enforceable. We find that contention to be without merit.

II. STANDING

Article III of the Constitution requires that the resources of the federal judiciary be applied only to adjudicate actual "cases" and "controversies." Allen v. Wright, 468 U.S. 737, 750, 104 S.Ct. 3315, 3324, 82 L.Ed.2d 556 (1984). The constitutional and prudential limits which counsel a federal court against exercising its judicial power reflect the separation of powers principle on which the federal government is based. ³ Of the various Article III doctrines that serve to define and limit the role of the federal judiciary in our system of government, "perhaps the most important" is standing. Id.

The judge-made prudential limitations encompassed in standing, which include the usual prohibition against allowing litigants to assert the legal rights of others, function to ensure "that the legal questions presented to the court will be resolved ... in a concrete factual context conducive to a realistic appreciation of the consequences of judicial action." Valley Forge Christian College v. Americans United For Separation of Church and State, Inc., 454 U.S. 464, 472, 102 S.Ct. 752, 758, 70 L.Ed.2d 700 (1982). See also, id. at 486, 102 S.Ct. at 766 ("[S]tanding is not measured by the intensity of the litigant's interest or the fervor of his advocacy."). It is the constitutional component of standing, however, that is indispensable:

[A]t an irreducible minimum, Art. III requires that the party who invokes the court's authority "to show that he personally has suffered some actual or threatened injury as a result of the putatively illegal conduct of the defendant," Gladstone Realtors v. Village of Bellwood, 441 U.S. 91, 99, 99 S.Ct. 1601, 1608, 60 L.Ed.2d 66 (1979), and that the injury "fairly can be traced to the challenged action" and "is likely to be redressed by a favorable decision," Simon v. Eastern Ky. Welfare Rights Org., 426 U.S. 26, 38, 41, 96 S.Ct. [1917,] 1924, 1925, 48 L.Ed.2d 450 (1976).

Valley Forge, 454 U.S. at 472, 102 S.Ct. at 758. See also, Allen, 468 U.S. at 751, 104 S.Ct. at 3324 (holding that standing "has a core component derived directly from the Constitution.").

The latter two prongs of the constitutional component of standing, "fairly traceable" and "redressability," initially were considered to be "two facets of a single causation requirement." C. Wright, Law of Federal Courts Sec. 13, p. 68, n. 43 (4th ed. 1983). In Allen v. Wright, however, the Supreme Court clarified the importance of separate inquiry regarding each prong. The first examines the nexus between the conduct and the injury, while the second focuses on the connection between the injury and the relief sought. See Allen, 468 U.S. at 753, 104 S.Ct. at 3325, n. 19. Separate analysis of each is necessary, as both components are required for the litigant to attain standing. In the case before us, we conclude that the appellant fails to demonstrate that the challenged act caused her alleged injury. ⁴

Jones' sole defense to the offset action taken by the Department of Education is the statute of limitations. ⁵ Jones' student loan was made between 1969 and 1972, with the last disbursal being made November 16, 1972. The College placed the loan in default less than two years later, but did not assign it to the Department of Education for collection until October 1986. Thereafter, Jones received a letter dated September 7, 1987, informing her that if payment on the delinquent loan was not received immediately, then her 1987 tax refund would be subject to offset...