Trantham v. State Disbursement Unit

313 Mich.App. 157

882 N.W.2d 170

TRANTHAM

v.STATE DISBURSEMENT UNIT.

Docket No. 322289.

Court of Appeals of Michigan.

Submitted Nov. 3, 2015, at Lansing.

Decided Nov. 10, 2015, at 9:00 a.m.

Kickham Hanley PLLC (by Gregory D. Hanley, Royal Oak and Jamie Warrow) for plaintiff.

Bill Schuette, Attorney General, Aaron D. Lindstrom, Solicitor General, Matthew Schneider, Chief Legal Counsel, and Joshua S. Smith and Kelley McLean, Assistant Attorneys General, for defendants.

The Law Offices of Carson J. Tucker (by Carson J. Tucker, Farmington Hills) for Macomb, Oakland, and Wayne Counties.

Before: GADOLA, P.J., and HOEKSTRA and M.J. KELLY, JJ.

GADOLA, P.J.

Plaintiff, Jeffrey Trantham, individually and on behalf of other individuals similarly situated, filed an action in the Court of Claims against defendants, State Disbursement Unit (SDU), Department of Health and Human Services (DHHS), and Office of Child Support (OCS), claiming that the $3. 50 monthly charge collected by the Friend of the Court (FOC) from child and spousal support payments pursuant to MCL 600.2538(1) constitutes an unconstitutional taking and violates substantive due process. Plaintiff appeals as of right the May 30, 2014 opinion and order of the Court of Claims, granting defendants' motion for summary disposition under MCR 2.116(C)(8) (failure to state a claim). We affirm in part, reverse in part, and remand for further proceedings.

I. FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff has paid child support through the Oakland County FOC since September 2005. The DHHS, through the OCS, oversees and administers Michigan's child support program. In accordance with the requirement of 42 USC 654b, which mandates that each state create a centralized state disbursement unit to collect and distribute child support payments, the SDU collects and distributes child support and spousal support payments in Michigan. Plaintiff asserted that 74% of the support payments are made through income withholding from a payer's paycheck, similar to the way in which taxes and insurance premiums are deducted from an employee's paycheck.

Plaintiff filed this class action complaint under MCR 3.501 on behalf of all persons who (1) “were subject to an income withholding order for child or spousal support” and (2) “had or will have the Fees imposed under [MCL 600.2538(1) ] withdrawn from their salaries, wages or other source of income in the year proceeding [sic] the filing of this suit and/or during the pendency of this suit.” Specifically, plaintiff challenged the $3.50 monthly charge collected by the FOC from all persons who make payments of child and spousal support through the FOC system. Plaintiff asserted that the monthly fee was not a fair approximation of the costs incurred by defendants in providing services to the payers. Thus, plaintiff alleged that the monthly fees constituted an unconstitutional taking of private property without just compensation (Count I) and violated substantive due process (Count II). Plaintiff sought in part to stop collection of the fees, to have MCL 600.2538 declared unconstitutional, and to have the purportedly improper fees placed in a common fund for the benefit of plaintiff and those similarly situated.

Defendants filed a motion for summary disposition under MCR 2.116(C)(8), arguing that the fees charged under MCL 600.2538 were not an unconstitutional taking because they were user fees and did not violate due process. Plaintiff filed a brief in opposition. The Court of Claims granted defendants' motion for summary disposition, concluding that the fee did not violate the Takings Clause or substantive due process. With regard to the Takings Clause, the Court of Claims reasoned that (1) “there is no factual development that would lead to the conclusion that the $3.50 monthly fee at issue ... is so excessive that it is not a user fee,” (2) it was not material whether payers were forced to use the system, (3) even if plaintiff does not use the available services that a portion of the fees fund, he “benefits from the existence of the Friend of the Court system and the availability of services it provides should he need them,” and (4) the distinction between a user fee versus a taking does not depend on where the money is applied. Accordingly, the Court of Claims concluded that the Legislature's decision in MCL 600.2538 to disburse part of the monthly fee to the Attorney General and the State Treasurer for the state court fund did not warrant judicial intervention. In rejecting plaintiff's substantive-due-process claim, the Court of Claims reasoned:

The Legislature has determined that it is appropriate to collect fees from individuals who are part of the Friend of the Court system to provide financial support for services that are not reimbursable under Title IV–D. As previously explained, individuals, such as plaintiff, benefit from the existence of the system and the availability of its services should they be needed. The legislation is rationally related to a legitimate government interest in supporting the services. There is no factual development that could possibly result in a determination that [the] Legislature's judgment to collect the $3.50 a month fee is so arbitrary that it fails the rational basis test.

II. ANALYSIS

A. STANDARD OF REVIEW

This Court reviews de novo a trial court's grant of summary disposition. Jimkoski v. Shupe, 282 Mich.App. 1, 4, 763 N.W.2d 1 (2008). “A motion under MCR 2.116(C)(8) tests the legal sufficiency of the complaint by the pleadings alone.” Wilson v. King, 298 Mich.App. 378, 381, 827 N.W.2d 203 (2012). The motion should be granted if the party opposing the motion failed to state a claim on which relief can be granted. Wyoming Chiropractic Health Clinic, PC v. Auto–Owners Ins. Co., 308 Mich.App. 389, 391, 864 N.W.2d 598 (2014). “All well-pleaded factual allegations are accepted as true and construed in a light most favorable to the plaintiff.” Wilson, 298 Mich.App. at 381, 827 N.W.2d 203. A motion under MCR 2.116(C)(8) may only be granted if “the claims alleged are so clearly unenforceable as a matter of law that no factual development could possibly justify recovery.” Id. (quotation marks and citation omitted).

“This Court reviews de novo a challenge to the constitutionality of a statute.” IME v. DBS, 306 Mich.App. 426, 433, 857 N.W.2d 667 (2014). “Statutes are presumed to be constitutional, and we have a duty to construe a statute as constitutional unless its unconstitutionality is clearly apparent.” Mayor of Cadillac v. Blackburn, 306 Mich.App. 512, 516, 857 N.W.2d 529 (2014) (quotation marks and citation omitted). “The party challenging the constitutionality of legislation bears the burden of proof.” Mich. Soft Drink Ass'n v. Dep't of Treasury, 206 Mich.App. 392, 401, 522 N.W.2d 643 (1994).

B. FRIEND OF THE COURT SERVICES AND FUNDING

The federal government appropriates money “[f]or the purpose of enforcing the support obligations owed by noncustodial parents to their children and the spouse (or former spouse) with whom such children are living, locating noncustodial parents, establishing paternity, obtaining child and spousal support, and assuring that assistance in obtaining support will be available under this part to all children ... for whom such assistance is requested....” 42 USC 651. In turn, the federal government requires state governments to establish state programs and reporting procedures related to child support and the establishment of paternity. 42 USC 651 to 42 USC 669b (Title IV–D).¹ Once a state fulfills these requirements, the federal government will reimburse the state for 66% of the expenses related to child support enforcement services required under Title IV–D. 42 USC 655(a)(1) and (a)(2)(C).

In Michigan, the OCS is the state agency authorized to administer Title IV–D services. MCL 400.232 ; MCL 400.233. The OCS coordinates the provision of Title IV–D services through the FOC. MCL 400.233(o ). Child support services provided in Michigan as required by Title IV–D include (1) establishing paternity, (2) establishing, modifying, or enforcing child support obligations, (3) locating parents, and (4) cooperating with other states to enforce support orders when one parent lives outside the state. 42 USC 654. See also MCL 400.233 (listing the duties of the OCS).

The Friend of the Court Act, MCL 552.501 et seq., “describe[s] the powers and duties of the [FOC]....” MCL 552.501(2). The FOC also provides services that are not required or reimbursable under Title IV–D. For instance, the FOC provides services related to parenting time and custody in domestic relations matters, including investigating and issuing reports regarding child custody or parenting time, MCL 552.505(1)(g), and enforcing domestic relations orders when a written complaint is received regarding the violation of an order, MCL 552.511b.

Under MCL 600.2538(1), persons who are required to make support payments through the FOC system pay a monthly charge of $3.50 for child support collection. MCL 600.2538 states as follows:

(1) For services provided that are not reimbursable under the provisions of part D of title IV of the social security act, 42 USC 651 to 669b, every person required to make payments of support or maintenance to be collected by the friend of the court or the state disbursement unit shall pay a fee of $3.50 per month for every month or portion of a month that support or maintenance is required to be paid. The fee shall be paid monthly, quarterly, or semiannually as required by the friend of the court. The friend of the court shall provide notice of the fee required by this section to the person ordered to pay the support and that the fee shall be paid monthly or as otherwise determined by the friend of the court. The friend of the court or SDU shall transmit each fee collected under this section as follows:

(a) Two dollars and twenty-five cents to the appropriate county treasurer for deposit into the general fund of the

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