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Mindy Jacobson, Individually and On Behalf of S.J., A Minor Child v. United States of America

October 18, 2011


On appeal from Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-2416-08.

The opinion of the court was delivered by: Parrillo, P.J.A.D.



Argued September 19, 2011

Before Judges Parrillo, Grall and Skillman.

The opinion of the court was delivered by PARRILLO, P.J.A.D.

At issue is whether the United States enjoys sovereign immunity from liability for damages arising from the Social Security Administration's (SSA) failure to withhold disability benefits payments pursuant to a proper child support garnishment order. The Law Division granted summary judgment in favor of plaintiff Mindy Jacobson, who sued individually and on behalf of her daughter, S.J., for whom child support was awarded, ordering the federal government to pay them compensatory damages, prejudgment interest, and counsel fees and costs. We reverse and hold that plaintiff's claim is barred by sovereign immunity under 42 U.S.C.A. § 659.

The essential facts are not in dispute. On December 18, 1998, the Family Part ordered Steven Tetz to pay child support to plaintiff for the benefit of their minor daughter, S.J. That order, in turn, was enforced by an income withholding order entered against Tetz, which the New Jersey Department of Human Services, Office of Child Support (OCS), served upon him in August 2004. On August 10, 2004, the OCS also mailed a notice of the income garnishment order to the SSA pursuant to N.J.S.A. 2A:17-56.9 and Rule 5:7-5, although the SSA has no record of the receipt.

Tetz fell behind on his child support payments. He died on March 13, 2008, in arrears on his child support payments in the amount of $79,546. Several months before, on December 17, 2007, the SSA had paid Tetz a retroactive award of Social Security disability benefits totaling $58,947.60, and did not garnish any of this award to satisfy child support arrears.

Consequently, plaintiff brought an action in federal district court against Tetz's estate*fn1 and the United States of America (Government) to enforce the garnishment order entered in state court, alleging that, under 42 U.S.C.A. § 666(b)(6)(C),*fn2 the Government, through the SSA, failed to comply with the garnishment order and is liable for the amount of money that should have been withheld to satisfy Tetz's child support arrears. The Government moved to dismiss plaintiff's complaint, asserting principally that 42 U.S.C.A. § 659 - the provision of federal law subjecting disability benefits received under Title II of the Social Security Act to state "withholding" requirements - does not waive the Government's sovereign immunity from a damages action. The district court dismissed plaintiff's complaint, concluding that section 659 "neither provides [such] a cause of action, nor extends the jurisdiction of federal courts." The dismissal, however, was without prejudice to reinstatement of the action in state court.

As a result, plaintiff, individually and on behalf of S.J., brought this action in the Law Division, once again seeking damages as a result of the SSA's failure to comply with the Family Part's garnishment order to withhold money from Tetz's disability benefits payments. Although not referenced in her complaint, plaintiff's theory of liability was predicated on N.J.S.A. 2A:17-56.11, which provides that a "payor" who fails to "withhold wages in accordance with the provisions of the [garnishment] notice" shall be liable for "any amount up to the accumulated amount the payor should have withheld from the obligor's income . . . ." The Government answered, but did not assert a sovereign immunity defense to the damages claim, relying instead on its asserted lack of notice of the garnishment order.

Following cross-motions for summary judgment, the Law Division found that the SSA was not protected by sovereign immunity,*fn3 and had received proper notice of the garnishment order. As to the latter, the court reasoned that under the "mailbox rule," proof that the order was sent by regular mail creates a rebuttable presumption of receipt that was not adequately refuted by the Government in this instance and that superseded any competing presumption of non-receipt based on the "presumption of regularity" doctrine, which presumes that public officers have properly discharged their official duties.

Finding no genuine issue of material fact, the court held the Government liable for the SSA's failure to withhold Tetz's benefits pursuant to the garnishment order.

After the court's liability determination, plaintiff moved for summary judgment, including compensatory, pre-judgment interest, and attorney's fees and costs, which the Government opposed. Following argument, the court awarded plaintiff compensatory damages of $43,894.05; pre-judgment interest of $6,515.94 pursuant to N.J.S.A. 2A:17-56.11 and Rule 4.42-11(a)(iii); and attorney's fees of $66,050.75, ...

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