McClelland v. Massinga

• Decision Date: 17 April 1986
• Docket Number: No. 85-1138,85-1138
• Citation: 786 F.2d 1205
• Parties: -1077, 54 USLW 2512, 86-1 USTC P 9464 Clifton J. McCLELLAND, June McClelland, Joseph Pringle, Robert Jones, Lillie Jones, David E. Alloway, Appellees, v. Ruth MASSINGA, in her official capacity as Secretary of the Department of Human Resources of the State of Maryland, and Louis Goldstein, in his official capacity as Comptroller of the Treasury of the State of Maryland, Appellants.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 1205

786 F.2d 1205

57 A.F.T.R.2d 86-1077, 54 USLW 2512, 86-1

USTC P 9464

Clifton J. McCLELLAND, June McClelland, Joseph Pringle, Robert Jones, Lillie Jones, David E. Alloway, Appellees, v. Ruth MASSINGA, in her official capacity as Secretary of the

Department of Human Resources of the State of Maryland, and

Louis Goldstein, in his official capacity as Comptroller of

the Treasury of the State of Maryland, Appellants.

No. 85-1138.

United States Court of Appeals, Fourth Circuit.

Argued Oct. 7, 1985.

Decided March 18, 1986.

Rehearing and Rehearing In Banc Denied April 17, 1986.

Diana G. Motz, Asst. Atty. Gen., Baltimore, Md., (Stephen H. Sachs, Atty. Gen., Joseph B. Spillman, Asst. Atty. Gen., Baltimore, Md., Andrew H. Baida, Baltimore, Md., on brief), for appellants.

Paula M. Carmody (Andrea G. Green, UAW-GM Legal Services Plan, Baltimore, Md., on brief), for appellees.

Before RUSSELL and MURNAGHAN, Circuit Judges, and HAYNSWORTH, Senior Circuit Judge.

DONALD RUSSELL, Circuit Judge:

The plaintiffs/appellees in this 42 U.S.C. Sec. 1983 action seek a declaratory judgment finding the Maryland Statutory Tax Refund Interception Program (TRIP) ¹ unconstitutional and enjoining its enforcement. Four of the plaintiffs are fathers who, obligated under valid current Maryland court decrees for child support, are allegedly delinquent for more than sixty days in payment of such support; and the other two plaintiffs are the present spouses of two of the fathers. The defendants are the Secretary of Human Resources ² and the Comptroller of the Treasury, both of the State of Maryland. The district judge found the statute violative of due process in failing to give notice of certification for intercept to the non-obligated spouse of two of the plaintiffs and in failing to provide the plaintiffs with a pre-intercept hearing. ³ The defendants have appealed. We reverse.

TRIP, like similar programs in other states represents a mechanism for assisting the State and dependent children, or their legal custodians, in obtaining child support from court-obligated parents who have failed to make payments as required. It was initiated and enacted under the authorization of 26 U.S.C. Sec. 6402(c). The federal authorizing statute was enacted to encourage States to establish voluntarily such collection mechanisms. In 1984 the statute was amended to change the requirement of a State procedure from that of a voluntary character on the part of the State to a mandatory one. ⁴ As both the relevant federal and the state statutes declare, the collection of past due child support of dependent children, under current valid court-ordered decrees, whether in favor of the State which may have advanced the payments or in favor of the dependent children or the one having their custody, is a legitimate matter of public concern and sustainable as such. ⁵

The procedure as provided under the challenged Maryland statute and its implementing regulations is clear and definite. The Administrator of the Program may certify each year to the Comptroller any person who is more than sixty days in arrears in his court-obligated child support payments "under the most recent court order." At the same time the Administrator is required to notify the person concerned of the filing of the certification and of his right to request an investigation of the arrearage if he deems the certification inaccurate or improper. If there is a request for an investigation, the Administrator is to conduct an investigation into the accuracy of the reported arrearage. If the certification is found to be in error, he is to withdraw the certificate. Under the State Regulations, the scope of the investigation is limited to "the existence or the amount of the arrears." The report of the investigation must be made available to the obligor-parent thirty days from the date his objection was filed. If the certificate is not disputed or, if found correct after investigation, the Administrator is to forward the certification to the Comptroller who shall "withhold and pay to the Administration any income tax refund due to the obligor, in an amount not more than the amount of the arrearage"; otherwise, he is to withdraw the certificate. When it is determined that the obligor-parent is entitled to a tax refund, the Comptroller shall intercept the tax refund and he shall, within fifteen days of the intercept, notify the obligor of the intercept, as well as both of his right to appeal such intercept and of the method of doing so. Should the obligor appeal, he is to be accorded an administrative hearing before an impartial review officer, with the right to have a record made of the proceedings, to be represented by counsel, to offer testimony, to present witnesses, and to submit oral argument. From an adverse decision of the administrative law judge, the obligor has the right to judicial review. Where the delayed support payments have not been assigned to the State under the NAFDC Program, the Regulations provide that the Comptroller shall delay payment of such part of the refund as is due to be paid on the obligors' support obligations for 30 days to allow the obligor time to appeal. If there is an appeal, payment shall be made by the Comptroller as the later decision of the appeal may adjudge, but if there is no appeal within time, such part of the refund as is payable under the court order shall be paid over to the party entitled to the support payments.

The plaintiffs in the complaint would fault the procedure under the statute on due process grounds for these reasons: (1) Failure to provide an opportunity for a hearing before interception of the tax refund; (2) Failure to give adequate certification notice to the obligor's spouse where the obligor and his spouse have filed a joint tax return; and (3) Failure to advise the party whose tax refund has been intercepted of possible defenses to the intercept. The defendants, by their answer or motion, raised the mootness of the claim of two of the plaintiffs because their certifications had been withdrawn and their refunds released to them. In addition, they alleged that the two spouses of the plaintiffs McClelland and Jones, who had no income of their own involved in the intercepted refunds and, therefore, had no personal interest in the tax refunds, lacked standing to challenge the intercepts. The defendants also asked the court in their answer to abstain in favor of on-going state proceedings, or, in any event, to require the presence as parties to the action of the obligees who were to receive the support payments. Finally, the defendants pled the constitutionality of the statute.

After joinder of issues, both parties filed motions for summary judgment on the record established. The district judge granted the motion of the plaintiffs and denied the motion of the defendants. In his order, the district judge dismissed the objections to standing and mootness and the request for abstention by the defendants and addressed the merits of plaintiffs' constitutional attack on the statutory procedures. On the merits, he held that the statutory procedures violated the due process rights of the defaulting obligors by failing to accord them "a pre-intercept hearing." He, also, found that the due process rights of the non-obligated spouses, who admittedly had not contributed to the tax payments resulting in the intercepted tax refund, had been violated by the State's failure to give them "notice prior to interception." He found without merit plaintiffs' claim of a due process violation in the failure under the challenged procedures to provide notice to the defaulting obligors of "a list of all possible defenses" to the proceedings. He held in this regard that it would be "sufficient if the notice clearly state[d] the basis for the action against the taxpayer and outline[d] the factors which will be considered at a hearing, allowing the taxpayer to prepare a defense and present whatever objections are available." The district judge did further find that the notice of intercept should include as a possible ground of objection by the obligor that his arrearage was less than 60 days.

The district judge's requirement that the notice of possible grounds of objection to the intercept include the claim that the arrearages were not more than 60 days old was accepted by the defendants and is no longer an issue in the case. The defendants have also not stated as a ground of appeal the dismissal of their abstention claim. They do contest the ruling by the district court on the standing issue both of the non-obligated spouses and of the obligors who did not contest their arrearage of more than 60 days, and they challenge on appeal the district court's requirement of a full pre-intercept hearing. The plaintiffs, on the other hand, have not appealed the district court's dismissal of the claim that the notice of intercept provide the obligors with "a list of all possible defenses." There are accordingly but two issues posed by the appeal: 1. Did the two non-obligated spouses who made no contribution to the tax payment resulting in the refund have standing "to contest the procedures followed in making" the intercept, and did the two obligors who did not dispute their arrearage have standing? 2. Were the obligated plaintiffs entitled to pre-intercept notice?

We consider first the contention whether non-obligated spouses, who had made no contribution to the income taxes paid and, therefore, allegedly had no claim to a refund on the taxes paid, had standing to contest the validity of the intercept proceedings. It is undisputed that the two non-obligated spouses-plaintiffs in this case did not contribute to the tax payments resulting in the tax refund in issue. The defendants concede that, if they had contributed to the tax payments, the non-obligated spouses would be entitled to some form of notice before interception of a tax refund resulting from such payments. It...