Title: Davis v. N.C. Dept. of Human Resources
Citation: 349 N.C. 208
Docket Number: 314A97
State: north-carolina
Issuer: north-carolina Supreme Court
Date: October 9, 1998

IN THE SUPREME COURT OF NORTH CAROLINA
No. 314A97
HAYWOOD C. DAVIS,
Petitioner
v.
NORTH CAROLINA DEPARTMENT OF HUMAN RESOURCES, DIVISION OF SOCIAL
SERVICES, CHILD SUPPORT ENFORCEMENT SECTION,
Respondent
Appeal by respondent pursuant to N.C.G.S. § 7A-30(2) from
the decision of a divided panel of the Court of Appeals, 126 N.C.
App. 383, 485 S.E.2d 342 (1997), affirming in part, reversing in
part, and remanding an order entered by Smith (W. Osmond, III),
J., on 19 March 1996, in Superior Court, Cumberland County.  On 4
September 1997, this Court allowed petitioner’s petition for writ
of certiorari as to an additional issue.  Heard in the Supreme
Court 15 December 1997.
Reid, Lewis, Deese, Nance & Person, by Renny W. Deese, for
petitioner-appellant and -appellee.
Michael F. Easley, Attorney General, by Gerald K. Robbins,
Assistant Attorney General, for respondent-appellant and
-appellee.
LAKE, Justice.
This case presents for determination the issue of whether a
parent who has paid child support according to a court order, but
still owes arrears, may have his federal and state income-tax
refunds intercepted by a state agency.  The Court of Appeals held
that the petitioner’s federal income-tax refund should not have
been intercepted but approved respondent’s interception of
petitioner’s state-income tax refund.  For the reasons stated
below, we affirm the Court of Appeals’ conclusion that
petitioner’s federal income-tax refund should not have been
intercepted, but we reverse the Court of Appeals with regard to
respondent’s interception of petitioner’s North Carolina state
income-tax refund.
The facts in this case are not in dispute.  On 29 January
1987, petitioner Haywood C. Davis was adjudged to be the father
of LaToyah Renee Davis, born 14 June 1984.  Petitioner was
ordered by the trial court to pay $100.00 per month in ongoing
child support plus $10.00 per month towards the repayment of
$1,391.00 in past support for the child which had been paid by
respondent.  Petitioner complied with this order at least through
the commencement of the administrative process in May 1994.  On 7
October 1993, respondent sent petitioner a “Notice of Intent to
Intercept Tax Refund and Statement of Account,” stating that
petitioner owed respondent $507.00 in child support as of 1 July
1993.  At the time petitioner received this notice of intercept,
he was current in his child-support obligation as directed by the
trial court, but he continued to owe past paid public assistance
and non-AFDC arrearages in excess of $150.00 and $50.00
respectively.  The notice further stated that petitioner’s state
and federal income-tax refunds would be intercepted to pay these
arrearages.
On 22 May 1994 and 23 August 1994, petitioner filed
petitions for a contested case hearing with the Office of
Administrative Hearings, contesting the interception of his 1993
federal and state income-tax refunds because he was not
delinquent in the repayment of his child-support arrearages.  On
23 September 1994, the chief administrative law judge (ALJ)
consolidated the petitions for a single hearing.  Respondent
subsequently moved for summary judgment.  On 17 January 1995, the
ALJ entered a recommended decision for entry of summary judgment
in favor of petitioner.  However, respondent, in its 28 April
1995 final decision, reversed the ALJ and granted summary
judgment for respondent.  Petitioner appealed to Superior Court,
Cumberland County, which, in an order entered 19 March 1996,
affirmed the agency’s ruling authorizing the interception of
petitioner’s state and federal income-tax refunds.  The Court of
Appeals unanimously affirmed the trial court’s ruling approving
respondent’s interception of petitioner’s state income-tax
refund, holding that summary judgment was proper for respondent
on that issue, but in a split decision, it reversed the trial
court’s conclusion that petitioner’s federal income-tax refund
could also be intercepted and remanded for entry of summary
judgment for petitioner on that issue.
We first address whether the Court of Appeals correctly held
that respondent improperly intercepted petitioner’s 1993 federal
income-tax refund when petitioner made child-support payments in
accordance with a court order but had not fully repaid the past
public-assistance debt that he had incurred prior to the
paternity adjudication.  Under United States law, a state agency
may intercept an individual’s federal income-tax refund when the
parent owes “past-due [child] support.”  42 U.S.C. § 664 (1990). 
The United States Code defines “past-due support” to mean, “the
amount of a delinquency, determined under a court order, or an
order of an administrative process established under State law,
for support and maintenance of a child, or of a child and the
parent with whom the child is living.”  42 U.S.C. § 664(c)(1). 
Respondent argues that “delinquency” means any amount of child
support which has been established by a court order and which has
not been fully paid or reimbursed.  We disagree.
Although the word “delinquency” is not defined in the
applicable section of the United States Code, 42 U.S.C. § 664(c),
or other related sections, a federal bankruptcy court has held
that “[t]he delinquency arises when the debtor falls behind in
[the] court ordered payments.”  In re Biddle, 31 B.R. 449, 452
(Bankr. N.D. Iowa 1983).  The Biddle court’s interpretation of
the word “delinquency” under the United States Code is consistent
with the interpretation and application of this term in other
jurisdictions.  For instance, a Pennsylvania court has held that
the federal interception program did not apply where the
supporting parent was current with his court-ordered support
payments even though the parent still owed an arrearage.  Laub v.
Zaslavsky, 369 Pa. Super. 84, 534 A.2d 1090 (1987), aff’d per
curiam, 523 Pa. 102, 565 A.2d 158 (1989).  Similarly, the Ohio
Court of Appeals has held that the state agency could not
intercept the obligor-father’s federal income-tax refund when he
was not in default of his court-ordered obligation, although he
had not yet extinguished his entire debt.  Gladysz v. King, 103
Ohio App. 3d 1, 658 N.E.2d 309, disc. rev. denied, 73 Ohio St. 3d
1428, 652 N.E.2d 801 (1995).  According to the Ohio Court of
Appeals, “a delinquency is created by a default in performance,
not merely by the existence of an outstanding debt.”  Id. at 6,
658 N.E.2d at 312.
Black’s Law Dictionary further supports petitioner’s
interpretation of “delinquency” and defines the word as the
“failure, omission, violation of law or duty.  Failure to make
payment on debts when due.  State or condition of one who has
failed to perform his duty or obligation.”  Black’s Law
Dictionary 428 (6th ed. 1990).  Applying this definition and
these judicial interpretations, we conclude that petitioner was
not “delinquent” under 42 U.S.C. § 664, since he was current in
his court-ordered repayment plan at the time his 1993 federal
income-tax refund was intercepted, even though he had not
completely extinguished his entire child-support debt. 
Accordingly, we hold that a North Carolina agency, administering
a plan approved under 42 U.S.C. § 664, cannot intercept a
supporting parent’s federal income-tax refund until the parent
fails to pay currently due court-ordered support or reimbursement
payments, and we affirm the Court of Appeals on this issue.
We now turn to the interception of petitioner’s state
income-tax refund.  The propriety of this means of debt
collection requires our determination of whether respondent was 
required to obtain an opinion, or advice, from the Attorney
General that the child-support repayment plan established by the
district court was an inadequate means of collecting petitioner’s
child-support arrearage so that the interception of petitioner’s
state income-tax refund would be justified under chapter 105A of
the General Statutes, the Setoff Debt Collection Act, and
specifically subsection 105A-3(b) thereof.  For the reasons
stated below, we hold that N.C.G.S. § 105A-3(b) imposed an
affirmative duty on respondent to seek the advice of the Attorney
General with respect to the adequacy of the existing means of
collection established by the district court.
The controlling statute for interception and setoff relating
to state income-tax refunds provides in pertinent part: 
(b) All claimant agencies shall submit, for
collection under the procedure established by this
Article, all debts which they are owed, except debts
that they are advised by the Attorney General not to
submit because the validity of the debt is legitimately
in dispute, because an alternative means of collection
is pending and believed to be adequate, or because such
a collection attempt would result in a loss of federal
funds. 
N.C.G.S. § 105A-3(b) (1997).  The meaning and intent of this
statutory provision is clear.  “When the language of a statute is
clear and unambiguous, it must be given effect and its clear
meaning may not be evaded by an administrative body or a court
under the guise of construction.”  State ex rel. Util. Comm’n v.
Edmisten, 291 N.C. 451, 465, 232 S.E.2d 184, 192 (1977).  This
statutory provision simply states that claimant agencies “shall
submit” all debts owed “except debts” involved with legal
questions or matters where input from the Attorney General is
needed or would be helpful in three clearly defined areas:  (1)
where the validity of the debt is in dispute, (2) where another
means of collection is pending or available which may be
adequate, or (3) where federal funding may be lost.  By this
language, the legislature could have intended only that in any
one of these three categories, each carrying legal implications
if debt setoff is used, a claimant agency is required to seek and
obtain the advice or opinion of its lawyer, the Attorney General,
before it proceeds with interception and setoff debt collection. 
The situation in the case sub judice clearly falls within the
second of these three categories.
We therefore hold that where, as here, alternative
collection means are in progress, or available, a claimant agency
has an affirmative duty to seek and obtain the Attorney General’s
advice or opinion before undertaking state income-tax refund
interceptions.  Since this statutory procedure was not followed
in the case sub judice, the decision of the Court of Appeals must
be reversed in this respect.
AFFIRMED IN PART; REVERSED IN PART.
Justice WYNN did not participate in the consideration or
decision of this case.