Nakauchi v. Cowart, Court of Appeals No. 21CA0318
| Docket Number | Court of Appeals No. 21CA0318 |
| Decision Date | 14 July 2022 |
| Citation | 519 P.3d 397,2022 COA 77 |
| Parties | Laurie NAKAUCHI, Plaintiff-Appellant and Cross-Appellee, v. Wanda COWART, in her official capacity as Director of the Community Assistance Division for Jefferson County, Colorado; Yvette Gallegos, in her official capacity as a child support specialist for Child Support Services; Larry Desbien, in his official capacity as Director of Colorado Child Support Services; Michelle Barnes, in her official capacity as Executive Director of the Colorado Department of Human Services, Defendants-Appellees and Cross-Appellants. |
| Court | Colorado Court of Appeals |
Dynamic Policy Law, LLC, Matthew J. Morrissey, Arvada, Colorado, for Plaintiff-Appellant and Cross-Appellee
Kimberly Sorrells, County Attorney, Eric T. Butler, Deputy County Attorney, Golden, Colorado, for Defendants-Appellees and Cross-Appellants Wanda Cowart and Yvette Gallegos
Philip J. Weiser, Attorney General, Virginia R. Carreno, Senior Assistant Attorney General, Denver, Colorado, for Defendants-Appellees and Cross-Appellants Larry Desbien and Michelle Barnes
Opinion by JUDGE FOX
¶ 1 Plaintiff, Laurie Nakauchi, appeals the trial court's judgment resolving her civil rights claims against defendants—Wanda Cowart and Yvette Gallegos, employees of Jefferson County Child Support Services (the County), and Larry Desbien and Michelle Barnes, employees of the Colorado Department of Human Services (the State)—for violation of her constitutional right to due process of law.
¶ 2 The trial court agreed with Nakauchi that the County violated her constitutional rights by issuing, without notice, an Income Withholding Order (IWO) to satisfy her future child support obligations. But Nakauchi contends that the court's state-wide injunction, which requires only concurrent notice in such situations, is inadequate. Because due process requires advance notice and an opportunity to be heard, she asserts, the court did not actually remedy the constitutional infirmities of the challenged no notice policy.
¶ 3 Defendants cross-appeal, arguing that the no notice policy was constitutionally sound. Accordingly, they contend, the court's injunction is wholly unwarranted.
¶ 4 We agree with Nakauchi. Thus, we reverse the portion of the court's judgment finding that due process requires only concurrent notice under the circumstances presented, and we remand for the court to modify its injunction to mandate advanced notice and an opportunity to challenge the IWO. However, we affirm the court's judgment that the County cannot be held liable for Nakauchi's due process violation under 42 U.S.C. § 1983 ( Section 1983 ).
¶ 5 Nakauchi and her former husband, J.H., have one child together and divorced in 2011. A 2011 child support order established an "alternative agreement" between Nakauchi and J.H., which required Nakauchi to pay monthly child support directly to J.H. instead of through the Family Support Registry (FSR), as authorized by section 14-14-111.5(3)(a)(II)(B), C.R.S. 2021.
¶ 6 In December 2015, J.H. inaccurately told the County that Nakauchi had not made her monthly payment. In February 2016, pursuant to section 14-14-111.5, the County issued an IWO to Nakauchi's employer that (1) informed the employer that Nakauchi had missed a child support payment, and (2) directed the employer to withhold her child support obligation from her wages each month and remit the funds to the FSR to be paid to J.H. The County did not first notify Nakauchi that it was issuing the IWO; she only became aware of it when her employer apprised her of the IWO a week later. Her employer withheld $169 from her February 2016 paycheck per the County's directive.
¶ 7 Nakauchi contacted the County and provided documents proving that she had not missed a payment. She also made a payment to the FSR for twelve months’ worth of child support. The County rescinded the IWO shortly thereafter.
¶ 8 In June 2016, Nakauchi sued, under Section 1983, two County employees and two State employees—in their official capacities—involved in administering child support services. She alleged that they violated her due process rights under color of state law by failing to give her advance notice of the IWO and an opportunity to be heard. She also claimed that section 14-14-111.5 is unconstitutional on its face because it does not require notice before an income assignment is issued. She sought declaratory and injunctive relief but not damages.
¶ 9 Defendants moved to dismiss under C.R.C.P. 12(b)(5), arguing that Nakauchi's claims were moot and that she lacked standing. In June 2017, the trial court granted the motion—but not on mootness or standing grounds. Instead, relying on Agg v. Flanagan , 855 F.2d 336 (6th Cir. 1988), it concluded that due process was not violated because Nakauchi received notice and an opportunity to be heard before the original child support order issued in 2011. The court did not address whether section 14-14-111.5 was unconstitutional.
¶ 10 A division of this court reversed. See Nakauchi v. Tafoya , Colo. App. No. 17CA1089, 2018 WL 1765132 (Apr. 12, 2018) (). It found that the court had erred by relying exclusively on Agg , since it was neither binding authority nor factually analogous. It concluded that Nakauchi's due process claim was plausible (and therefore should not be dismissed) and remanded to determine whether Nakauchi's due process rights under Mathews v. Eldridge , 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976), had been violated.
¶ 11 The court presided over a three-day trial in July 2019. The court issued a judgment ruling for Nakauchi in part and against her in part. We pause here to discuss the relevant legal framework to provide context for the court's judgment.
¶ 12 Colorado's child support enforcement law establishes procedures to enforce child support orders. The statute authorizes "income assignment[s]," which are a form of garnishment used to satisfy a child support order. § 14-14-111.5(1) ; see also Dep't of Hum. Servs. Reg. 6.002, 9 Code Colo. Regs. 2504-1 ().
¶ 13 Income assignments are relevant in FSR cases and direct pay cases. In an FSR case, the court activates an income assignment requiring the noncustodial parent (the obligor) to pay child support to the custodial parent (the obligee) through a third-party governmental entity known as the FSR. § 14-14-111.5(2)(a). Once the court enters this order, the obligor's employer, trustee, or other payor of funds is notified that it must directly pay the FSR the specified amount. § 14-14-111.5(3)(a)(I)(A).1
¶ 14 In a direct pay case, by contrast, the court determines that the parents can independently manage child support obligations. Under this scheme, the court does not activate an income assignment because the parents have entered into an "alternative agreement" in which the obligor pays the obligee directly—i.e., without going through the FSR. See § 14-14-111.5(3)(a)(II)(B). So, unlike with an FSR case, in a direct pay case, the obligor's employer is not notified of the ongoing child support obligation since an income assignment has yet to be established. Compare § 14-14-111.5(3)(a)(I)(A), (4)(a), with § 14-14-111.5(3)(a)(II)(B).2
¶ 15 An income assignment is activated when an IWO is issued. There are two types of IWOs: forward-looking and arrears. Forward-looking IWOs seek to preemptively secure a child support payment from the obligor's employer, the goal being to avoid future missed payments. In contrast, arrears IWOs seek to recover child support payment(s) that the obligor has failed to make. This distinction matters in the context of direct pay cases because the State and the County provide different processes for obligors based on the type of IWO.
¶ 16 With respect to forward-looking IWOs, the State, in 2016, had an unofficial policy (which the County replicated) to not provide notice or an opportunity to be heard before activating the income assignment. So, if the child enforcement agency had notice that an obligor in a direct pay case had missed a payment, it would automatically issue an IWO to the obligor's employer to withhold wages so as to avoid future missed payments. As for arrears IWOs, the County (but not the State) had a policy of providing the obligor with fourteen days’ notice and an opportunity to be heard before activating an IWO to collect back payments.
¶ 17 Two changes in policy later occurred in response to Nakauchi's case. In 2017, the County instituted an unofficial policy to afford direct pay obligors the same advance notice for forward-looking IWOs as it had been providing for arrears IWOs. And in 2019, the State promulgated a regulation, Dep't of Hum. Servs. Reg. 6.902.14, 9 Code Colo. Regs. 2504-1, requiring fourteen days’ notice and an opportunity to be heard before the issuance of an arrears IWO.3
¶ 18 At trial, Nakauchi sought (1) declaratory and injunctive relief vis-a-vis Section 1983 on the theory that defendants violated her due process rights by issuing a forward-looking IWO without providing notice or an opportunity to be heard; and (2) a declaratory judgment that section 14-14-111.5 is unconstitutional. The court concluded that section 14-14-111.5 is constitutional, and because Nakauchi does not contest that conclusion on appeal, we do not address it.
¶ 19 Regarding Nakauchi's due process claim, the court determined that the State and the County's practice of automatically issuing forward-looking IWOs for direct pay cases violates due process under the Mathews factors. Integral to the court's reasoning was its comparative analysis of the federal authority establishing standards for state...
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