Wisdom v. Department of Housing & Urban Development

713 F.2d 422
CourtCourt of Appeals for the Eighth Circuit
DecidedAugust 10, 1983
DocketNo. 82-1981
StatusPublished
Cited by2 cases

This text of 713 F.2d 422 (Wisdom v. Department of Housing & Urban Development) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eighth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Wisdom v. Department of Housing & Urban Development, 713 F.2d 422 (8th Cir. 1983).

Opinion

McMILLIAN, Circuit Judge.

Plaintiff-appellant Gerald Wisdom, a former employee of the Internal Revenue Service (IRS), brought this action against two former IRS supervisors and the Department of Housing and Urban Development (HUD). He asserted that his former supervisors violated 42 U.S.C. § 1985(1) when they conspired to force him to resign. He further alleged that HUD violated his due process rights when it used funds in his retirement account to pay off a defaulted loan and that HUD violated the Privacy Act when it released information on the [424]*424defaulted loan to Wisdom’s employer. The district court1 granted motions for summary judgment in favor of Casey and Langston on the § 1985(1) claim and HUD on the due process claim. After trial, the district court found for HUD on the Privacy Act claim. For the reasons discussed below, we affirm the district court’s judgment in favor of HUD on the Privacy Act claim and the due process claim; we reverse the summary judgment in favor of Casey and Langston on the § 1985(1) claim and remand for further proceedings.

Wisdom was employed by the IRS as a revenue collector in Pine Bluff, Arkansas. In the mid-1970’s Wisdom began having financial difficulties. His superiors at the IRS office gave advice and helped Wisdom set up a payment schedule to pay off all his debts.

In 1973, Wisdom borrowed $5,000 from the Texarkana Oaklawn Bank. The loan was guaranteed by HUD. In 1976, Wisdom defaulted on the loan, and HUD paid it off. On August 3, 1976, a HUD official sent a letter to Langston, the IRS Chief of Personnel in Little Rock, concerning Wisdom’s default. Langston discussed the letter with Casey, an IRS group manager, and the two met with Wisdom on August 6. During the meeting Wisdom offered his resignation, and HUD initiated statutory “setoff” proceedings to recover the loan amount from Wisdom’s retirement account, which became available for that purpose on Wisdom’s resignation. Wisdom was not given a hearing before the setoff was allowed.

Wisdom filed a complaint against HUD, Langston, and Casey, alleging that HUD violated the Privacy Act when it notified Langston of the defaulted loan, that Langston and Casey conspired to force his resignation in violation of 42 U.S.C. § 1985(1), and that HUD violated his due process rights when it deprived him of funds in his retirement account without a predeprivation hearing. We will consider each argument in turn.

1. Privacy Act

The Privacy Act prohibits disclosure of any records on an individual without the individual’s consent. 5 U.S.C. § 552a(b). There are exceptions, but none apply in this case. However, a violation of the Act alone is not enough for Wisdom to recover damages; he must show that the violation had an adverse impact on him, id. § 552a(g)(l)(D), and that the agency acted intentionally or willfully. Id. § 552a(g)(4).

The district court relied on Bruce v. United States; 621 F.2d 914 (8th Cir.1980), to find that HUD’s violation was not willful. In Bruce, this court held that where records were released in accordance with regulations the validity of which had not been questioned, there was no “intentional” violation of the Privacy Act. 621 F.2d at 617.

In this case HUD released the information to the IRS in compliance with the guidelines under the Title I Collection Handbook, which implemented the Federal Claims Collection Act, 31 U.S.C. § 3701.2 Nothing in the record indicates that the Handbook’s guidelines have been questioned or challenged. However, Wisdom contends that HUD’s failure to revise the Handbook in light of the Privacy Act diminishes the deference due to HUD’s use of the Handbook. To a certain extent we agree. HUD certainly could not ignore the dictates of the Privacy Act in promulgating regulations, and the Act does require that agencies establish procedures guaranteeing confidentiality and accuracy of records. 5 U.S.C. § 552a(e). Thus, in some circumstances, the existence of regulations may not shield an agency from liability. However, here we do not consider that HUD’s continued reliance on its Collection Handbook can be characterized as a willful violation of the Act. The Privacy Act was still [425]*425relatively recently enacted and its ramifications not perfectly clear; the particular provision at issue here had not been challenged; nor can it be characterized as so patently egregious and unlawful that anyone applying them should have known they were unlawful. Therefore, we conclude that the district court did not err in applying Bruce to this case.

II. Due Process

Wisdom alleges that HUD’s failure to provide him with a hearing before it applied funds in his retirement account to pay off his defaulted loan violated his right to due process. He relies on Sniadach v. Family Finance Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969), and other cases involving seizure by creditors of the property of debtors.

Clearly due process does not mandate a prior hearing in this case. The deprivation was of property neither then available to Wisdom nor being used by him for necessities of life. Cf. Atwater v. Roudebush, 452 F.Supp. 622, 631 (N.D.Ill.1976). Thus, even if the deprivation in this case had been wrongful, no harm would have resulted from a postdeprivation hearing rather than before. Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976) . Finally, Wisdom neither disputes the amount of the debt nor that he owes it. Thus, no facts exist which, if shown, would have prevented setoff. See Codd v. Velger, 429 U.S. 624, 97 S.Ct. 882, 51 L.Ed.2d 92 (1977) .

Wisdom asserts that he was harmed by the absence of a presetoff hearing because he was given no chance to set up a payment schedule with the government.3 There is no constitutional requirement that debtors be allowed to negotiate settlements on debts owed to the government.

III. Section 1985(1)

Section 1985(1)4 prohibits conspiracy to prevent a federal officer from performing his duty. 42 U.S.C. § 1985(1). Wisdom alleged that when Casey and Langston met with him after receiving the letter from HUD, they coerced him into resigning in violation of that section. The district court dismissed on the basis that Wisdom had alleged no racial or class-based discrimination; the court relied on Jones v. United States,

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713 F.2d 422, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wisdom-v-department-of-housing-urban-development-ca8-1983.