Court Opinion

ID: 4221105
Source: CourtListenerOpinion
Date Created: 2017-11-16 20:07:39.969807+00
Date Added: 2024-06-11T07:47:49.241886
License: Public Domain

IN THE COURT OF APPEALS OF THE STATE OF IDAHO

                                       Docket No. 44466

ACTION COLLECTION SERVICE,                        ) Opinion No. 61
INC., an Idaho corporation,                       )
                                                  ) Filed: November 16, 2017
       Plaintiff-Respondent,                      )
                                                  ) Karel A. Lehrman, Clerk
v.                                                )
                                                  )
HARMONY L. BLACK, aka                             )
McCULLOUGH,                                       )
                                                  )
       Defendant-Appellant.                       )
                                                  )

       Appeal from the District Court of the Third Judicial District, State of Idaho,
       Canyon County. Hon. George D. Carey, District Judge.

       Judgment of the district court, vacated.

       Thomas J. Katsilometes, PLLC; Boise, for appellant. Thomas J. Katsilometes
       argued.

       Shearer & Bonney, PC; Shaun R. Bonney, Boise, for respondent. Shaun R.
       Bonney argued.
                 ________________________________________________

HUSKEY, Judge
       Harmony L. Black appeals from the judgment awarding Action Collection Service, Inc.
(ACS) an amount of $3,546.40 for a debt originally owed to the Idaho Department of Juvenile
Correction (IDJC) which was then assigned to ACS. Black asserts the district court: (1) erred in
finding that a contract existed between IDJC and ACS; (2) abused its discretion by determining
that the hearing held in the district court constituted a hearing under Idaho Code § 20-524; and
(3) erred in finding IDJC’s assignment to ACS valid. The district court’s judgment awarding
ACS the amount of $3,546.40 is vacated.

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                                                I.
                     FACTUAL AND PROCEDURAL BACKGROUND
       In September 2007, Black’s minor child was placed in IDJC’s custody. At that time, the
magistrate did not order Black to reimburse IDJC for her child’s support or treatment. While in
custody, IDJC expended costs for the child’s support and treatment. From time to time, IDJC
sent notices to Black, asserting Black was obliged to contribute $235.00 a month to pay for her
child’s support and treatment pursuant to I.C. § 20-524. However, Black never agreed to pay
that amount. Yet, in the last two months of the child’s custody in IDJC, Black made two
payments of $235.00 to IDJC. Black claimed those payments amounted to ransom for her
child’s release. Black’s child was released from IDJC’s custody in July 2009. Despite the
absence of any court order requiring payment, IDJC determined it was entitled to $4,465.00
reimbursement from Black for its treatment and support of her child, which IDJC calculated
according to the $235.00 monthly rate with a reduction for the two previous payments. At no
point did IDJC request a court hearing to determine whether $4,465.00 was a reasonable sum of
payment. 1 Rather, IDJC attempted, without success, to collect the reimbursement from Black.
       IDJC then assigned Black’s alleged debt to ACS in December 2009 pursuant to a blanket
assignment agreement entered in May 2006 between IDJC and ACS. The first paragraph of that
contract states the contract extends through May 2007. However, a later paragraph of the
contract states the contract remains in force until terminated by giving fifteen days written
notice. At no point did IDJC or ACS terminate the contract by providing written notice. After
ACS attempted, without success, to collect from Black, ACS brought suit in March 2012 against
Black to recover $4,465.00. In addition, ACS sought an additional 33 percent fee for collecting
Black’s alleged debt, in the amount of $1,473.45, pursuant to its contract with IDJC and I.C.
§ 67-2358(1)(b). ACS also sought pre-judgment interest on the alleged debt. The magistrate
granted ACS’s motion for summary judgment in the case, awarding $5,938.45 in principal,
$1,306.47 in interest, $2,595.00 in attorney fees, and $118.00 in costs, for a total of $9,957.92.
Black appealed the magistrate’s decision and judgment to the district court. The district court
vacated the judgment and remanded the case to the magistrate. ACS appealed the district court’s

1
       IDJC told Black in a letter that if she disagreed with the sum of payment, she was the
party responsible to initiate a court hearing to establish the sum. As shown in Section B(1)
below, this statement unlawfully shifted the burden of requesting a court hearing to Black.
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decision. This Court affirmed the district court’s decision in part and remanded the case to the
magistrate court.
       Upon remand, the magistrate conducted one full day of trial in February 2016, but then
identified a conflict with the case and the trial was continued until July 2016, when it was
resumed by an assigned district court judge. The district court entered judgment for ACS in the
amount of $3,546.40, including a 33 percent collection fee in the amount of $884.40 under I.C.
§ 67-2358(1)(b), but did not grant pre-judgment interest because the principal amount was not
mathematically or definitely ascertainable. The district court found that the blanket assignment
agreement between IDJC and ACS remained in force during IDJC’s 2009 assignment of Black’s
debt to ACS, found that the trial constituted a hearing under I.C. § 20-524, and entered judgment
for ACS. Black timely appeals to this Court.
                                               II.
                                  STANDARD OF REVIEW
       When a trial court’s discretionary decision is reviewed on appeal, the appellate court
conducts a multi-tiered inquiry to determine whether the lower court correctly perceived the
issue as one of discretion; acted within the boundaries of such discretion and consistently with
any legal standards applicable to the specific choices before it; and reached its decision by an
exercise of reason. Sun Valley Shopping Ctr., Inc. v. Idaho Power Co., 119 Idaho 87, 94, 803
P.2d 993, 1000 (1991).
       In articulating the proper standard of review for mixed questions of law and fact, this
Court will differentiate among the fact-finding, law-stating, and law-applying functions of the
trial courts. Staggie v. Idaho Falls Consol. Hosps., 110 Idaho 349, 351, 715 P.2d 1019, 1021
(Ct. App. 1986). Appellate judges defer to findings of fact based upon substantial evidence, but
they review freely the conclusions of law reached by stating legal rules or principles and
applying them to the facts found. Id. Where there is conflicting evidence, it is the trial court’s
task to evaluate the credibility of the witnesses and to weigh the evidence presented. Desfosses
v. Desfosses, 120 Idaho 354, 357, 815 P.2d 1094, 1097 (Ct. App. 1991). Over questions of law,
we exercise free review. Kawai Farms, Inc. v. Longstreet, 121 Idaho 610, 613, 826 P.2d 1322,
1325 (1992); Cole v. Kunzler, 115 Idaho 552, 555, 768 P.2d 815, 818 (Ct. App. 1989).

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                                                III.
                                           ANALYSIS
       Black makes several arguments on appeal. First, Black argues that IDJC’s existence as a
state agency violates the Idaho Constitution. Second, Black argues the blanket assignment
agreement between IDJC and ACS terminated before the 2009 assignment.                 Third, Black
contends IDJC never validly assigned a debt to ACS. Fourth, Black asserts the trial below did
not constitute a hearing under I.C. § 20-524.
A.     Black’s Argument That IDJC Is an Unconstitutional State Agency Is Not Properly
       Preserved
       Generally, issues not raised below may not be considered for the first time on appeal.
Sanchez v. Arave, 120 Idaho 321, 322, 815 P.2d 1061, 1062 (1991). Black argues for the first
time on appeal, in a footnote, that IDJC’s existence is unconstitutional because IDJC is a
separate state agency that was created in 1995, twenty years after the cut-off date for the creation
of separate state agencies set forth in Article IV, § 20 of the Idaho Constitution. Because it was
not raised below, this argument is not properly before this Court and will not be considered.
B.     IDJC Did Not Make a Valid Assignment in 2009
       1.      A debt, as defined by I.C. § 67-2358 and in the context of I.C. § 20-524, is
               created only after due notice to a parent of a payment obligation, a court
               hearing, and a court order
       ACS contends that Black’s argument that no debt exists in this case is waived because it
was not raised below. As stated above, issues not raised below may not be considered for the
first time on appeal. Sanchez, 120 Idaho at 322, 815 P.2d at 1062. On this issue, however, Black
made the argument to the trial court. Specifically, Black argued that IDJC had assigned a right
to create a debt, not an existing debt. Further, Black argued that no debt yet existed because a
debt, in the context of I.C. § 20-524, can only be created by a court order and that IDJC had no
power to create a debt itself. Black’s argument on appeal is based on compliance with I.C. § 20-
524, just as was argued below. Thus, Black’s argument is preserved for appeal before this Court.
       ACS and Black dispute the meaning of debt as defined by I.C. § 67-2358 and within the
context of I.C. § 20-524. Idaho Code § 67-2358 details the prerequisite requirements for a state
agency, like IDJC, to make an assignment of debt to a private collection agency, like ACS.
Among the requirements of a written contract and notice, I.C. § 67-2358 recognizes that a debt

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must exist to be the subject of an assignment. I.C. § 67-2358(2)(a). The statute, in a somewhat
tautological fashion, states, “the term ‘debt’ shall include all debts.” I.C. § 67-2358(4).
       ACS argues that the term debt should be interpreted to its broadest sense, citing
dictionary definitions to argue that debt is created by any obligation to pay, assertion of an
obligation to pay, whenever something is owed, when there is any liability on a claim, or when a
party’s conduct acknowledges an obligation to pay. Thus, ACS asserts that a debt was created
when: 1) IDJC requested that Black pay IDJC for its services; 2) Black did not pay IDJC for
those services; 3) Black made two payments to IDJC just before her child’s release; or 3) ACS
made the claim that Black was liable for the payment by filing a lawsuit.
       Black, however, argues that I.C. § 20-524 provides the appropriate definition of debt for
this specific circumstance because it details how IDJC may obtain reimbursement for its
services. Idaho Code § 20-524(1) provides:
               Whenever a juvenile or juvenile offender is placed by the court in custody
       other than that of his or her parents or custodian, after due notice to the parent or
       other persons legally obligated to care for and support the juvenile or juvenile
       offender, and after a hearing, the court may order and decree that the parent or
       other legally obligated person shall pay in such a manner as the court may direct a
       reasonable sum that will cover in whole or in part the support and treatment of the
       juvenile or juvenile offender. If the parent or other legally obligated person
       willfully fails or refuses to pay such sum, the court may proceed against him for
       contempt, or the order may be filed and shall have the effect of a civil judgment.
According to I.C. § 20-524, Black asserts that to create an assignable debt under I.C. § 67-2358
for reimbursement of IDJC’s services: (1) IDJC must give notice to a juvenile’s parent of the
parent’s obligation to pay; (2) after notice to the parent, a court must conduct a hearing to
determine a reasonable sum the parent shall pay; and (3) a court must order and decree that the
parent pay that sum.
       The plain language of I.C. § 20-524 makes clear that actionable debt for reimbursement
of IDJC’s services may only be created by following the procedure laid out in I.C. § 20-524. It
is IDJC who must initiate this procedure because only IDJC is in a position to provide due notice
to the parent. Further, the Juvenile Correction Act, of which I.C. § 20-524 is a subsection,
supports the conclusion that IDJC must initiate this procedure. The Act created IDJC as a
separate state agency. I.C. § 20-503. The Act states the legislature’s intent was that IDJC
operate by following the principle of holding “the parent accountable, where appropriate,
through the payment of detention costs” for IDJC’s supervision and confinement of a juvenile in

                                                  5
a secure facility. I.C. § 20-501(4). This statement indicates the legislature’s desire for IDJC to
advance parental accountability for a juvenile’s action. This statement of intent, paired with the
text of I.C. § 20-524, mandates the conclusion that it is IDJC who must initiate the procedures
found in I.C. § 20-524. Thus, in order for IDJC to create an actionable debt for reimbursement
of its services: (1) IDJC must give notice to a juvenile’s parent of the parent’s obligation to pay;
(2) IDJC must, after notice to the parent, initiate a court hearing to determine a reasonable sum
the parent shall pay; and (3) a court must order and decree that the parent pay that sum. Thus, to
determine if IDJC’s assignment to ACS was valid under I.C. § 67-2358, we must first consider
whether IDJC followed the appropriate procedure for creating a debt in this case.
        2.        Black had notice of IDJC’s claim to payment, but IDJC never initiated a
                  hearing under I.C. § 20-524, and a court never ordered Black to pay a
                  reasonable sum
        Black does not contend that she lacked notice of IDJC’s claim to reimbursement for
providing support and treatment for her child while in IDJC’s custody. Indeed, from time to
time, IDJC sent notices to Black making claims for reimbursement.            Black does contend,
however, that IDJC failed to complete the rest of the procedure called for in I.C. § 20-524. There
is no dispute that before the trial initiated by ACS, no hearing occurred, initiated by either IDJC
or ACS. ACS argues, and the district court agreed, that the district court trial constituted a
hearing under I.C. § 20-524. But ACS initiated the alleged hearing, not IDJC. Therefore, the
order of payment resulting from that hearing does not comply with I.C. § 20-524. Only upon a
hearing initiated by IDJC, before suit, could a court validly order Black to pay IDJC a reasonable
sum for reimbursement of its services.
        At that hearing, the court must determine what constitutes a reasonable sum for the
reimbursement for the care and treatment of Black’s child. The debt is that which the court
ultimately orders and the order must be entered before any debt may be assigned or converted to
a civil judgment. While costs of services may accrue monthly, there is no debt which may be
collected and assigned to a collection agency until IDJC has provided notice of hearing, the
hearing has occurred, and the court has determined the amount of the debt. Here, no such
determination occurred before the debt was assigned to ACS.             Instead, IDJC unilaterally
determined what it believed was a reasonable amount without any hearing or order and then
assigned the debt to collection without any further proceedings. This process is not authorized
by the statute.

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       The hearing to determine and order the debt amount occurs first. Prior notice of the
claimed debt, its method of calculation, and the hearing must be provided to the parent. Upon
hearing, the court sets the debt. Only after following the statutes providing opportunity for the
parent to pay may the debt be assigned for collection. Suit may thereafter occur for collection.
Without question, the hearing held in this case, after years of litigation, could not constitute the
hearing to order the amount of the debt. The district court erred in so holding. Because IDJC
did not initiate a hearing with a court to determine a reasonable sum of reimbursement and
because no court order of payment was entered against Black subsequent to such a hearing, IDJC
never validly created a debt as defined by I.C. § 67-2358 and in the context of I.C. § 20-524.
C.      IDJC Did Not Have a Debt to Assign in 2009 to ACS
       ACS asserts that IDJC assigned ACS a valid debt in 2009. Because a debt was never
validly created by IDJC, this cannot be true. IDJC did not follow the procedures set forth in
I.C. § 20-524 before its 2009 assignment. Because of IDJC’s failure to adhere to I.C. § 20-524,
it could not assign a debt to ACS in 2009 under I.C. § 67-2358. Thus, the alleged assignment to
ACS was premature, invalid, and cannot serve as a basis for ACS’s recovery in this case. 2
D.     Black Is Not Entitled to Attorney Fees
       Black requests attorney fees on appeal. Black’s first appellate brief fails to assert a claim
for attorney fees; instead, she raises the claim only in her reply brief. “Any party seeking
attorney fees on appeal must assert such a claim as an issue presented on appeal in the first
appellate brief filed by such party.” I.A.R. 41. Consequently, Black is not entitled to attorney
fees on appeal.
                                                IV.
                                         CONCLUSION
       ACS cannot collect from Black because IDJC did not make a valid assignment of Black’s
alleged debt in 2009. We vacate the district court’s judgment awarding ACS the amount of
$3,546.40. Costs but not attorney fees are awarded to Black on appeal.
       Chief Judge GRATTON and Judge GUTIERREZ CONCUR.

2
        Black also asserts another ground for invalidating the 2009 assignment, arguing that the
blanket assignment agreement between IDJC and ACS was not a valid, written contract as
I.C. § 67-2358 requires. This Court declines to address this argument because regardless of the
underlying contract’s validity, IDJC did not have a valid debt to assign to ACS. Thus, regardless
of the validity of the contract, ACS cannot recover from Black.
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