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Child Support Recovery Services Inc. v. Inn at the Waterfront (8/18/00) sp-5307
Child Support Recovery Services Inc. v. Inn at the Waterfront (8/18/00) sp-5307
Notice: This opinion is subject to correction before publication in
the Pacific Reporter. Readers are requested to bring errors to the
attention of the Clerk of the Appellate Courts, 303 K Street,
Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
CHILD SUPPORT RECOVERY )
SERVICES, INC., ex rel. S.C., )
A Minor, )
) Supreme Court No. S-8691
Appellant, )
) Superior Court No.
v. ) 1JU-89-377 CI
)
INN AT THE WATERFRONT, INC., ) O P I N I O N
)
Appellee. ) [No. 5307 - August 18, 2000]
______________________________)
Appeal from the Superior Court of the State of
Alaska, First Judicial District, Juneau,
Larry Weeks, Judge.
Appearances: Kenneth Kirk, Anchorage, for
Appellant. Dennis C. Bailey, Dillon &
Findley, Juneau, for Appellee. Diane L.
Wendlandt, Assistant Attorney General,
Anchorage, and Bruce M. Botelho, Attorney
General, Juneau, for Amicus Curiae State of
Alaska, Department of Revenue, Child Support
Enforcement Division.
Before: Matthews, Chief Justice, Eastaugh,
Fabe, Bryner, and Carpeneti, Justices.
PER CURIAM
BRYNER, Justice, with whom EASTAUGH, Justice,
joins, concurring.
Child Support Recovery Services, Inc. (CSRS) appeals the
grant of summary judgment by the superior court in favor of Inn at
the Waterfront, Inc. For the reasons stated in Judge Larry Weeks's
thorough and thoughtful summary judgment decision, relevant
portions of which we set out in Appendix A, we affirm the grant of
summary judgment. We add the following with respect to points
specifically raised on the appeal:
1. At oral argument, counsel for appellant CSRS
abandoned reliance on AS 25.27.260(b). Accordingly, we have
excised Judge Weeks's analysis of the legislature's 1994 amendment
of AS 25.27.260, which added subsection (b).
2. CSRS first appeared in this case in 1993 when the
Child Support Enforcement Division assigned its enforcement right
to CSRS. The sole defendant at the time, Cullinane, did not object
to this substitution, and the superior court allowed it. No
question of CSRS's standing to pursue this case was raised until
the superior court's summary judgment ruling. There, Judge Weeks
ruled:
Finally, AS 25.27.260(b) which permits
recovery by an individual as opposed to the
state, was not enacted until a year after the
last [order to withhold and deliver] was
served in this case. The court believes that
this fact precludes the individual plaintiff
CSR[S] from recovery.
CSRS appealed the superior court's conclusion that it lacked
standing to bring this action and argued in this court that Inn at
the Waterfront should be equitably estopped from arguing lack of
standing. Because at oral argument CSRS abandoned reliance on AS
25.27.260(b), and because we conclude that summary judgment was
properly granted on the merits, we do not address CSRS's argument
that Inn at the Waterfront should be equitably estopped from
arguing that CSRS did not have the right to maintain its action.
For this reason, and because the parties have not briefed the
issue, we decline to address whether the state may assign its
enforcement right to a private collection agency such as CSRS.
The judgment entered by the superior court is AFFIRMED.
APPENDIX A**
MEMORANDUM AND ORDER
I. INTRODUCTION
This case is before the court on defendant Inn at the
Waterfront's motion for summary judgment, or in the alternative,
for relief from judgment under Civil Rule 60(b)(5), and for costs
and fees. CSRS opposes both motions. Resolution of the pending
issues depends on the court's interpretation of AS 25.27.260: Civil
liability upon failure to comply with an order or lien.
1. Factual Background
In 1981, a Nevada court established a child support
obligation for William J. Cullinane, the non-custodial parent of a
minor child, S.C. In 1986, the Alaska Child Support Enforcement
Division (CSED) began efforts to collect unpaid child support due
under the Nevada order. Those efforts included the issuance of
three Orders to Withhold [Income] and Deliver Property (WIDs) to
Inn at the Waterfront, Inc., based on CSED's understanding that Inn
was Cullinane's employer. The WIDs were issued pursuant to AS
25.27.250, formerly AS 47.23.250.3
The first WID, dated May 12, 1988, instructed Inn inter
alia to withhold and deliver to CSED all of Cullinane's real or
personal property in its possession, fifty-five percent of his
wages and earnings when payable, and fifty percent of any
unemployment insurance benefits when payable, up to $23,321.74, the
amount of arrearage, interest and penalties due as of the date of
the WID. The second WID, dated April 5, 1989, set forth the same
withholding instructions but raised the maximum allowable
withholding to $31,307.74 to reflect Cullinane's arrearage,
interest and penalties due as of the date of the second WID. The
third WID, dated September 30, 1993, instructed Inn to withhold and
deliver by the same terms as the first two WIDs, with the exception
that Inn should withhold sixty percent of Cullinane's wages and
earnings when payable, up to $57,455.05, the amount of arrearage,
interest and penalties due as of the date of the third WID. The
legal sufficiency of the WIDs has not been argued. Likewise, Inn
has not argued about whether it received the WIDs or whether it
failed to withhold or deliver Cullinane's income or assets in its
possession as required by the terms of the WIDs. On a motion for
summary judgment the court infers CSRS prevails on this issue.4
CSED initiated litigation in 1989 against Cullinane.
Additional parties, including Inn, Ann House and Cullinane
Corporation, were joined in the litigation as a result of their
association with Cullinane. Prosecution of the case was assumed by
CSRS in 1993. On February 27, 1995, in the context of a cross
motion for summary judgment on the issue of liability, this court
determined Inn was "liable for any unpaid WIDs accruing from the
time the first WID was served."
Cullinane's outstanding arrearage obligation was reduced
to judgment on January 2, 1996. On July 22, 1996, Cullinane paid
$70,653.33 in full satisfaction of the outstanding judgment for
child support arrearage plus interest and costs of execution.5
CSED issued a notice of intent to close the case, addressed to
Cullinane, on November 6, 1996. CSED filed notice of full
satisfaction of the judgment against Cullinane on November 15,
1996. On March 12, 1997, CSED notified Inn that the September 30,
1993 withholding order (WID No. 3) was terminated.
2. Summary of Parties' Arguments
Inn argues summary judgment is appropriate in this case
because it was liable only for "unpaid WIDs" which no longer exist.
Inn interprets AS 25.27.260 to impose joint and several liability
on the obligor-employee and his or her employer for the accrued and
unpaid support arrearage indicated in the WIDs. According to Inn,
this court's January 1996 judgment was "fully executable either
against Mr. Cullinane or Inn to the extent of the unpaid WIDs."
According to Inn, satisfaction of the underlying judgment against
Cullinane necessarily relieves Inn of continuing liability.
CSRS argues Inn's liability for failure to comply with
the WIDs in violation of AS 25.27.260 is continuing and independent
of Cullinane's liability. It says that Inn's liability may be as
much as $70,653.33. According to CSRS, Cullinane's satisfaction of
the underlying arrearage obligation terminated the withholding
requirement of the WIDs but did not erase Inn's liability based on
its previous non-compliance.
Inn also argues AS 25.27.260 should not be construed as a
penalty absent express legislative intent. Inn argues against
permitting a double recovery or a civil penalty in excess of the
criminal fine provided in AS 11.51.122 for "aiding the nonpayment
of child support."6 CSRS argues AS 25.27.260 should be construed
as a penalty in that its purpose is to encourage employers to obey
WIDs. According to CSRS, employers should not be permitted to
disobey WIDs without consequence.
Inn argues a construction of AS 25.27.260 which permits
double recovery is inconsistent with other provisions of the child
support enforcement act and the statute's express purpose of
enforcing the child support obligations of responsible parents.
CSRS argues it does not seek a double recovery from the same
person. CSRS also argues the policies underlying the legislative
enactment of strong enforcement mechanisms would warrant a double
recovery.
As an alternative to summary judgment, Inn argues the
full satisfaction of the arrearage obligation underlying the WIDs
operates as a release of Inn's liability and Inn should therefore
be granted relief from judgment pursuant to Civil Rule 60(b)(5).
CSRS argues relief from judgment under Civil Rule 60(b)(5) is
inappropriate because no judgment yet exists against Inn from which
the court can give it relief.
3. Summary Judgment and Civil Rule 60(b) Standards
The court may grant summary judgment pursuant to Civil
Rule 56 when there are no genuine issues of material fact and the
moving party is entitled to judgment as a matter of law.7 Once the
moving party establishes by competent evidence the absence of
genuine issues of material fact, the non-moving party must clearly
and specifically demonstrate that it can produce admissible
evidence disputing the moving party's evidence.8 All reasonable
inferences of fact are drawn in favor of the non-moving party.9
Civil Rule 60(b)(5) provides for relief from a final
judgment, order, or proceeding where "the judgment has been
satisfied, released, or discharged, or a prior judgment upon which
it is based has been reversed or otherwise vacated, or it is no
longer equitable that the judgment should have prospective
application."
II. ISSUE
Is Inn's civil liability under AS 25.27.260
for failure to comply with the WIDs continuing
and independent of or joint and several with
the full satisfaction of William Cullinane's
child support judgment?
III. DISCUSSION
The legislative intent of AS 25.27.260 is
ambiguous, but suggests that Inn's liability
for failure to comply with the WIDs is joint
and several with William Cullinane's support
obligation.
In the context of a prior summary judgment motion by
defendant Ann House, this court found Inn liable for its failure to
comply with the terms of the three WIDs it received concerning
Cullinane. That finding was based on application of AS 25.27.260
to facts in this case which are not in dispute. Alaska Statute
25.27.260 provides:
Civil liability upon failure to comply with an
order or lien. (a) If a person, political
subdivision, or department of the state (1)
fails to make an answer to an order to
withhold and deliver within the time
prescribed in AS 25.27.250; (2) fails or
refuses to deliver property in accordance with
an order issued under AS 25.27.250; (3) pays
over, releases, sells, transfers, or conveys
real property subject to a lien recorded under
AS 25.27.230 to or for the benefit of the
obligor or any other person; (4) fails or
refuses to surrender upon demand property
attached; or (5) intentionally fails or
refuses to honor an assignment of wages or an
income withholding order under AS 25.27.062
that was served by the agency through personal
service by a process server or through
certified mail, return receipt requested, the
person, political subdivision, or department
of the state is liable to the agency in an
amount equal to 100 percent of the amount
constituting the basis of the lien, order to
withhold and deliver, attachment, or
withholding of wages or income, together with
costs, interest, and reasonable attorney fees.
(Emphasis added.)
Inn's liability arose from its failure to answer and to withhold
and deliver income and property in accordance with the three WIDs
issued pursuant to AS 25.27.250.10 Inn does not contest its
liability for "unpaid WIDs" as established in this court's order of
February 1995, but argues its liability has since been extinguished
by Cullinane's payment in full of his child support arrearage. The
legislative intent behind Chapter 27 of Title 25 and the meaning
conveyed by the statute's language and context are ambiguous, but
do support a finding of joint and several liability.
1. Legislative Intent
In interpreting a statute, the court's goal is to give
effect to the intent of the law-making body with due regard for the
meaning that the language employed in the statute conveys to
others.11 Alaska Statute 25.27.260 is one of numerous enforcement
provisions enacted in 1977 by the state legislature to increase the
effectiveness of child support collections. The express purpose of
the 1977 act is as follows:
PURPOSE. Common law and statutory procedures
governing the remedies for enforcement of
support for financially dependent minor
children by responsible parents have not
proven sufficiently effective or efficient to
cope with the increasing incidence of
financial dependency. The increasing workload
of courts, district attorneys, and the
attorney general has made such remedies
uncertain, slow and inadequate, thereby
resulting in a growing burden on the financial
resources of the state which is required to
provide public assistance grants for basic
maintenance requirements when parents fail to
meet their primary obligations. The state,
therefore, exercising its police and sovereign
power, declares that the common law and Alaska
statutes pertaining to the establishment and
enforcement of child support obligations shall
be augmented by additional remedies in order
to meet the needs of minor children. It is
declared to be the public policy of this state
that this Act be construed and administered to
the end that children shall be maintained from
the resources of responsible parents, thereby
relieving, at least in part, the burden
presently born by the general citizenry
through welfare and welfare-related programs.12
Subsequent amendments to the provisions of Chapter 27 have been
accompanied by similar statements of purpose and intent:
LEGISLATIVE FINDINGS AND PURPOSE. (a) The
legislature finds that the effect on the
general public of the failure of parents to
support their children is vast and far
reaching. The harmful effects of unpaid child
support touch not only the poor but reach far
beyond, diminishing the overall quality of
life for all Alaskans. The purpose of the
amendments in this Act is to enhance the
efforts of those persons who seek to enforce
the payment of child support obligations by
noncustodial parents having the duty of
support.
. . . .
(c) The legislature also finds that the
hardship experienced by children in families
who may rely on support from a noncustodial
parent should not be a necessary condition
that must be endured by those families.
Statutory tools have been provided to enable
the child support enforcement agency to
collect unpaid child support owed by a parent,
including the authority to order an employer
to withhold and deliver part of an employee's
earnings. This tool, however, is not usable
against a self-employed parent who owes child
support. The legislature finds that if
delinquency in making child support payments
could be reflected in a person's credit
history, an effective collection and deterrent
tool would exist - a tool that would be
effective against those self-employed parents
who owe child support.13
The Senate adopted the following letter of intent to accompany the
1994 amendments to the Act:
Apart from the statutory changes enacted in
this bill, the legislature wishes to convey
its intent that the Child Support Enforcement
Division distinguish between obligors,
employers and others who voluntarily meet
their support, withholding or other
obligations under this chapter and those who
do not. To the extent allowed by this chapter
and federal law, this distinction should be
actively reflected in all agency
communications as well as in the nature,
extent and timing of enforcement actions,
subject to reasonable precautions to avoid
uncollectability of funds necessary for
support.14
Chapter 27 as amended was enacted to satisfy the federal mandate
for compliance with 42 U.S.C. 651 - 667.15 The relevant portion
of the federal statute, 42 U.S.C. 666(b)(6)(C), requires:
The employer must be held liable to the State
for any amount which such employer fails to
withhold from income due an employee following
receipt by such employer of proper notice
under [the previous subparagraph requiring
employers to withhold and deliver the amount
specified in the notice to the agency or other
entity authorized to collect].
Federal regulations promulgated by the federal Office of Child
Support Enforcement also require:
(iv) That the withholding [provision created
by the state] is binding upon the employer
until further notice by the State; . . .
(vi) That, if the employer fails to withhold
wages in accordance with the provisions of the
notice, the employer is liable for the
accumulated amount the employer should have
withheld from the absent parent's wages[.]16
Thus, the express intent of the legislature with regard to the
provisions of Chapter 27 has consistently been to increase the
ability of the state to enforce child support obligations and,
toward that goal, to impose federally mandated liability on
employers who fail to aid in that enforcement effort. The
imposition of joint and several liability on the employer comports
with that intent. The employer becomes a readily available source
of funds in cases where funds are not available from the obligor.
This responsibility on employers is new and significant. It is a
"penalty" even with joint and several liability; the non-compliant
employer ends up paying the employee's child support.
2. Statutory Enforcement Obligations
In effect, the state has recruited employers as private
child support enforcement agencies. The WID statute is one of
several provisions in Chapter 27 which impose enforcement
obligations on employers. For example, AS 25.27.06217 provides for
income withholding orders which must be implemented by employers.
Alaska Statute 25.27.06318 limits an employer's discretion with
regard to health care coverage required under a medical support
order.19 Alaska Statute 25.27.070 provides for assignment of wages
which must be implemented by the employer.20 Alaska Statute
25.27.062(k) requires employers subject to withholding orders to
maintain independent records on obligor-employees and notify CSED
in the event of termination.21 Alaska Statute 25.27.075 requires
employers with 20 or more employees to report hirings to CSED.22
These statutory enforcement obligations are not
voluntary; an employer is subject to civil penalties and liability
for failure to comply. In addition to civil liability under AS
25.27.260, an employer is subject to a civil penalty of up to
$1,000 for failure to comply with the reporting statute.23 An
employer is subject to a maximum $1,000 civil penalty for
retaliatory discharge of an obligor-employee based on receipt of a
withholding or reporting order.24 The WID provision likewise
provides for employer liability for failure to comply. Alaska
Statute 25.27.250(j) provides: "A person, political subdivision, or
department that fails to comply with an order to withhold and
deliver served under this subsection is subject to penalties under
AS 25.27.260." Imposition of this liability is a significant
change to child support enforcement law and provides material
benefit to the state's ability to collect support. The state has
the option of pursuing recovery from the obligor and/or the non-
compliant employer. In either event, the support obligation may be
met.
3. Statute Creates Joint, not Independent Liability
Under AS 25.27.260(a), liability is measured by the
extent of the employer's noncompliance with the WID. A
noncompliant employer is liable "to the agency" for "100 percent of
the amount" due under the WID, plus costs, interest and fees.25
Each of the WIDs expressly state: "this order is binding until you
receive a notice of satisfaction of requirement from the State of
Alaska." Prior to receiving notice of satisfaction, the employer
can satisfy its obligation by "delivery to the agency of the money
or other property due, owing, or belonging to the obligor."26
Property turned over to the state is held in trust for application
against the liability of the obligor or for return to the obligor
depending on a final determination of liability or nonliability
under the chapter.27
The employer's liability for failure to comply therefore
depends on the terms of the WID. In a case where CSED issues a WID
and pursues a recovery against the employer within a relatively
short period of time, the employer's liability would be limited.
The enforcement statute in a case like that would operate like a
civil contempt order; the employer could avoid increased liability
by complying with the WID. This is not that type of case.
In this case, Inn failed to withhold or deliver beginning
in May 1988. Inn's liability under the statute potentially equaled
Cullinane's $70,000 support arrears obligation. To permit CSRS to
recover a windfall of $70,000 from an employer is a new and onerous
burden and should be found only if it is clear that the legislature
intended that burden. Neither the express legislative intent nor
the language of the statute supports this application of the
penalty.
In Alaska, the law tries to avoid double recovery unless
it is clearly intended as a policy matter.28 Reading AS 25.27.260
to create joint and several liability for the unpaid WIDs in this
case is consistent with that policy in the law. The court believes
Inn is liable for unpaid WIDs under the statute. There are now no
unpaid WIDs.
4. Limited Case Law from Other Jurisdictions Suggests
Reluctance to Impose Liability
The Alaska Supreme Court has not construed AS 25.27.260,
and there are very few cases dealing with similar statutes in other
jurisdictions. This may be a function of judicial reluctance to
recognize this form of statutory liability. In any event, the
federal mandate is very broad and the resulting state statutes are
widely variant. As noted below, some state statutes provide for
liability to the obligee instead of or in addition to liability to
the state. Several provide for a specific fine while others appear
to rely on traditional contempt proceedings to enforce the support
orders.
In Dunahee v. Chenoa Welding & Fabrication, Inc., the
court imposed a statutory $100 per day fine on an employer who
failed to timely comply with a withholding order.29 Although the
applicable statute required the employer to forward withheld child
support "within 10 days of paying the employee,"30 the employer
wrote out a check each week but only mailed them once a month to
the obligee.31 The obligee sued to impose the statutory penalty.32
The court considered the statute's legislative history
and the federal mandate of Title 42 before concluding the
imposition of a penalty was appropriate.33 According to the court,
"the penalty will serve to compensate the plaintiff for any
hardship and will deter future noncompliance by the employer."34
The court also noted,
without the application of a penalty,
employers would have an incentive to not send
in a withheld child support payment in a
timely manner. The longer a withheld child
support check is not mailed to the obligee,
the longer those funds are available for the
employer to use to its own advantage.35
In Crenshaw v. Refuse Service, Inc.,36 the Missouri Court
of Appeals considered a case arising from a contempt prosecution by
the county attorney against an employer, Refuse Service, Inc., for
failure to comply with an Order to Withhold and Pay Over issued by
the Division of Child Support Enforcement. In dicta, the court
noted the Missouri statute "imposes liability on an employer who
fails or refuses to withhold or pay over the amounts as ordered.
Under subsection 8, the employer is liable to the party holding the
support rights for the amount which should have been withheld and
paid over under the order."37 The statute authorizes an action by
the director of the enforcement department against the employer or
"other payor."38 The Missouri statute provides for a fine, not to
exceed $500, in addition to potential liability for "the amounts to
be withheld or paid, court costs and reasonable attorney's fees."39
However, the Crenshaw court did not impose either the
fine or the liability. Instead it held the contempt order was not
a "final judgment" until enforced by actual incarceration or
imposition of a per diem fine.40 Therefore, the court found the
order was not amenable to appellate review and dismissed the
appeal.41
In Burrs v. Burrs,42 the Court of Appeals of Ohio, Second
District, affirmed a trial court judgment fining a corporate
employer and holding it civilly liable for failure to obey a
notification requirement of a withholding order issued by the
Montgomery County Bureau of Support. The Ohio statute required an
employer to notify the county enforcement agency of any lump-sum
payments over $500 to be paid to an obligor-employee.43 The holding
focused on the necessary mental state for the corporate employer,
but the court noted a distinction between the fine, which it
considered "in the nature of a criminal contempt, since . . . it is
neither intended to coerce future compliance nor to compensate [the
obligee] for [the employer's] past failure to comply."44 By
contrast, the court noted the employer's statutory liability "would
appear to be in the nature of a civil contempt."45 The employer's
civil liability was measured by the total amount of the arrearage
in child support and alimony.46
Although the court did not directly address the issue,
the Ohio notification statute in Burrs appears to impose joint and
several liability. The purpose of the notification statute is to
prevent disbursements to the obligor-employee which should go to
the obligee under the support order. In the event the employer
does not notify the support enforcement agency and the money is
paid to the obligor, the employer is liable to the extent the money
disbursed could have satisfied the arrearages. Arguably, the same
logic could be applied to the Alaska WID statute.
These cases illustrate the difficult situation courts
face when construing statutes like AS 25.27.260. The Alaska
legislature provided for a specific penalty amount in addition to
other duties in AS 25.27.062(j), the income withholding order
statute. If they had wanted to make sure AS 25.27.260 provided for
an additional penalty above and beyond joint liability the
legislature could have said so. It did not. The lack of guidance
from other jurisdictions reinforces this court's conclusion to not
find independent liability or allow a double recovery in this case
under that statute absent clear legislative direction.
. . . .
IV. CONCLUSION
An employer or other person, political subdivision, or
department of the state is liable to the state under AS
25.27.260(a) for failure to comply with a WID. Given the lack of a
clear legislative intent that the statute should be construed to
impose liability independent of the support obligation, the court
finds Inn's liability for failure to comply with the WIDs regarding
William Cullinane was joint and several with Cullinane's. Summary
judgment as to CSRS's claim under AS 25.27.260 is GRANTED.
/s/ Larry Weeks
Larry Weeks
Superior Court Judge
BRYNER, Justice, with whom EASTAUGH, Justice, joins, concurring.
I agree with the court's decision to affirm the summary
judgment but would rely on a narrower ground for affirming.
In the present case, counsel for CSRS substituted for the
attorney general's office as plaintiff's counsel of record and,
contemporaneously, substituted CSRS for CSED as the nominal
plaintiff. In so doing, counsel for CSRS made it clear that CSRS
was serving in the capacity of a private collection agency
representing the obligee parent, Nancy Bowen. And counsel
represented that "[t]he State of Alaska has always been merely a
nominal party in this matter, prosecuting on behalf of the
custodial parent and the dependant [sic] child. This substitution
of parties is intended only to replace the nominal party."
The attorney general's office confirmed the narrow scope
of the substitution, indicating that this case was one of "several
collection cases" prosecuted by CSED with the attorney general's
representation, that CSED had instructed the attorney general's
office to cooperate with CSRS and CSRS's attorney "in turning
collection of the child support arrearages in this case over to
CSRS," and that the attorney general's office agreed, "[t]oward
that end," that substitution of counsel and of the nominal party
was appropriate "in this instance."
By the explicit and unambiguous terms of this
substitution agreement, the state authorized CSRS to replace CSED
and to assert the agency's legal interests only to the extent that
CSED had acted in Bowen's stead to collect her past due child
support; the stipulation unequivocally contemplated that CSRS would
only assert Bowen's right to collect "child support arrearages."
Assuming, then, that AS 25.27.260(a) goes beyond creating
joint and several liability and literally holds noncompliant
employers liable for a penalty equivalent to the amount of
outstanding child support arrearages, CSRS simply had no authority
to prosecute an action to enforce this penalty. Any penalty
authorized by AS 25.27.260(a) under joint and several employer
liability could not plausibly be characterized as "child support
arrearages." Under AS 25.27.260(a), this penalty would be payable
to the state, and would not be due or owed to Bowen. CSED's right
to recover the penalty for the state thus differs markedly from its
right to recover past due child support for Bowen. Accordingly, I
would affirm on this narrow basis: no matter how broad
AS 25.27.260(a)'s penalty might be, the penalty action belonged to
the state, the state never assigned it to CSRS, and CSRS had no
right to pursue it under the substitution agreement.1
Interpretation of AS 25.27.260(a) presents a close and
difficult question that we need not answer here. In my view, we
would best leave the question open for a case in which we must
decide it.2
The principal effect of this provision, for purposes of
this discussion, was to permit recovery by an individual, as
opposed to the state. Alaska Statute 25.27.260(b) provides:
(b) A person, political subdivision, or
department of the state that intentionally
fails or refuses to honor a properly served
income withholding order under AS 25.27.062
that is not being enforced by the agency is
liable to the obligee in an amount equal to
100 percent of the amount ordered to be
withheld together with costs, interest, and
reasonable attorney fees.
** As reprinted in this Appendix, the superior court's
summary judgment order has been redacted to delete extraneous
discussion. The original labeling of the section headings of the
superior court order has been retained, but footnotes and page
numbers have been renumbered. The order has also been technically
edited in accordance with this court's Manual of Technical Rules
for Publication. In addition, quotations of relevant statutory
provisions have been added in some footnotes.
3 CSED may issue a WID upon "reason to believe that there
is in the possession of a person, political subdivision, or
department of the state property that is due, owing or belonging to
the obligor." AS 25.27.250(c). The WID must be properly served
and contain all necessary information. See AS 25.27.250(d). The
recipient of the WID is given 14 days to respond. This gives the
employer an opportunity to communicate to the state in the event
the employer no longer employs the obligor or for some other reason
does not believe it should be bound by the WID. The state
expressly assumes liability "for such actions [by] people
withholding or delivering money or property to the agency in
accordance with this section." Former AS 25.27.250(h).
4 See Sea Lion Corp. v. Air Logistics of Alaska, Inc., 787
P.2d 109, 116 (Alaska 1990).
5 According to Ann House, president and principal owner of
defendant Inn, Cullinane obtained the funds to satisfy the judgment
as part of a $100,000 loan assumed by Inn in July 1996. See
Affidavit of Ann House, filed December 15, 1997 in support of Inn's
reply to motion for summary judgment.
6 Inn does not indicate whether or not it has been
criminally fined.
7 See Geolar, Inc. v. Gilbert/Commonwealth Inc. of Mich.,
874 P.2d 937, 940 n.5 (Alaska 1994) (citations omitted).
8 See Southeast Alaska Constr. Co. v. State, Dep't of
Transp. and Pub. Facilities, 791 P.2d 339, 342 (Alaska 1990)
(citations omitted).
9 See Sea Lion Corp., 787 P.2d at 116 (citation omitted).
10 At oral argument CSRS argued the basis for Inn's
liability under AS 25.27.260 was Inn's wilful and intentional
failure or refusal to obey the WIDs. The "intentional" language in
(a)(5) refers to wage assignment and income withholding orders
under AS 25.27.062, not WIDs. The court finds Inn's liability
arises under AS 25.27.260(a)(1) and (2).
11 See Muller v. BP Exploration (Alaska) Inc., 923 P.2d 783,
787 (Alaska 1996) (citation omitted); Cook v. Botelho, 921 P.2d
1126, 1129 (Alaska 1996) (citation omitted).
12 Ch. 126, 1, SLA 1977. The court does not agree with
Inn's argument that the language in this statement precludes a
recovery from someone other than the "responsible" obligor-parent.
This position is also in conflict with Inn's argument that AS
25.27.260 imposes joint and several liability on an employer.
13 Ch. 144, 1, SLA 1984. The 1984 act added AS 25.27.273,
Reporting of payment information concerning delinquent obligors.
14 Committee Substitute for Senate Bill (C.S.S.B.) 190, 18th
Leg. 2d Sess. (1994), 1994 Senate Journal 3463.
15 Alaska's receipt of federal funding for Aid to Families
with Dependent Children has been conditioned on compliance with the
child support enforcement provisions of federal Title 42 and the
regulations promulgated thereunder.
16 45 C.F.R. 303.100(f)(iv), (vi) (1997).
17 AS 25.27.062 provides, in relevant part:
(a) A judgment, court order, or order of
the agency under this chapter providing for
support must contain an income withholding
order. Except as provided in (m) of this
section, the income withholding order must
provide for immediate income withholding if
the support order is
(1) being enforced by the agency and
was issued or modified on or after July 8,
1994; or
(2) not being enforced by the agency
and was issued on or after July 8, 1994.
(b) An income withholding order must
direct the obligor, the obligor's employer,
future employer, and any person, political
subdivision, or department of the state to
withhold money due or to be due the obligor
and pay the money to the agency, in an amount
determined under (i) of this section. A court
that issues a support order on or after July
8, 1994 shall send a copy of the order to the
agency.
18 AS 25.27.063 provides:
(a) A medical support order issued under
AS 25.27.020(a)(9) or 25.27.060(c) must
require that the obligor provide health care
coverage for the child to whom the duty of
support is owed.
(b) If an obligor who is required to
provide health care coverage under a medical
support order is eligible for family health
coverage through an employer, the court or
agency issuing the medical support order shall
send a copy of the medical support order to
the employer. If the agency has notice that
the obligor has changed or will be changing
employment and is or will be eligible for
family health coverage through the new
employer, the agency shall send a copy of the
medical support order to the new employer.
(c) An employer who receives a copy of a
medical support order under (b) of this
section
(1) shall allow the employee named
in the order to enroll the child under the
family coverage without regard to restrictions
relating to enrollment periods if the child is
otherwise eligible and is not already enrolled
under the family coverage;
(2) shall, if the employee fails to
apply for enrollment of a child under (1) of
this subsection, enroll the child under the
employee's family coverage upon application by
the child's other parent or custodian, the
child support enforcement agency, or the
Department of Health and Social Services;
(3) may not disenroll or eliminate
coverage of the child while the employee is
still employed by the employer unless the
employer has eliminated family health coverage
for all of its employees or has received
written evidence that
(A) the employee is no longer
required by court order or administrative
order to provide the child's insurance
coverage; or
(B) the child is or will be
enrolled in comparable health coverage through
another insurer that will take effect not
later than the effective date of the
disenrollment or elimination of coverage; and
(4) shall withhold from the
employee's compensation the employee's share,
if any, of premiums for health coverage to the
extent permitted under 15 U.S.C. 1673(b)
(Consumer Credit Protection Act) and pay the
withheld amount to the appropriate insurer;
if federal regulations allow the employer to
withhold less than the employee's share of the
insurance premium, the employer may withhold
the lesser amount and pay it to the
appropriate insurer.
Effective July 1, 2001, subsection (b) will provide:
(b) If an obligor who is required to
provide health care coverage under a medical
support order is eligible for family health
coverage through an employer doing business in
the state, the court or agency issuing the
medical support order shall send a copy of the
medical support order to the employer.
Ch. 132, 54(b), SLA 1998.
19 The employer must permit enrollment regardless of
restrictions relating to enrollment periods and cannot disenroll or
eliminate a child's coverage without satisfying certain statutory
requirements.
20 AS 25.27.070 provides:
(a) In a proceeding in which the court
has ordered either or both parents to pay for
the support of a child, the court may, on its
own motion or motion of a party or the agency
on behalf of a party, after notice and an
opportunity for hearing, order either parent
or both parents to assign to the custodian of
the child that portion of salary or wages of
either parent due them currently and in the
future sufficient to pay the amount ordered by
the court for the support, maintenance,
nurture and education of the child.
(b) The order of assignment is binding
upon an employer upon service of a copy of the
order upon the employer and until further
order of the court. The employer may, for
each payment made under the order, deduct $1
from other wages or salary owed to the
employee.
(c) The assignment made under court order
has priority as against an attachment,
execution or other assignment unless otherwise
ordered by the court.
(d) An employer may not terminate an
employee's employment because wages of the
employee are subject to an order under this
section.
21 AS 25.27.062(k) provides:
An employer who is withholding income of an
obligor under an order that provides that the
withheld income shall be paid to the agency
shall notify the agency promptly when the
obligor gives or receives notice of
termination of employment and provide to the
agency the obligor's last known home address
and the name and address of the obligor's new
employer, if known. The employer shall keep a
record of the order to withhold income from
the obligor for three years after the employer
notifies the agency that the obligor has
terminated employment. If, within that
three-year period, the obligor is reemployed
by the former employer, the employer shall
immediately implement the order against the
obligor's earnings unless the employer has
received notice from the agency that the order
is no longer applicable to the obligor. If
the obligor is reemployed by the former
employer after that three-year period, the
employer is not required to implement a
withholding order against the obligor's
earnings until the employer receives a new
order to withhold the obligor's income under
this chapter.
22 AS 25.27.075 provides, in relevant part:
(a) An employer doing business in the
state shall report to the agency the hiring,
rehiring, or return to work of each employee.
The report shall be made within the time
limits set out in (b) of this section. The
report must contain the name, address, and
social security number of the newly hired
employee, the name and address of the
employer, and the identifying number assigned
to the employer by the United States
Department of the Treasury, Internal Revenue
Service.
23 See Ch. 132, 54(b), SLA 1998 (stating the amended AS
25.27.075(h), which becomes effective July 1, 2001).
24 AS 25.27.062(f).
25 AS 25.27.260(a).
26 AS 25.27.250(g); see also AS 25.27.253(a) ("A person,
political subdivision, or department of the state shall withhold
the earnings of the obligor subject to an order or lien at each
succeeding interval of payment until the entire amount of the debt
stated in the order to withhold and deliver has been withheld.").
27 See AS 25.27.250(f).
28 See Maynard v. State Farm Mut. Auto. Ins. Co., 902 P.2d
1328, 1334 (Alaska 1995) (citation omitted). See also State Farm
Fire & Cas. Co. v. Nicholson, 777 P.2d 1152, 1159-60 (Alaska 1989);
Murray v. Feight, 741 P.2d 1148, 1160 (Alaska 1978); Schreiner v.
Fruit, 519 P.2d 462, 466 (Alaska 1974).
29 652 N.E.2d 438 (Ill. App. 1995). Here, the employer paid
the withheld wages directly to the obligee -- this is essentially a
wage assignment although the court uses the term "withholding."
30 Id. at 441.
31 Id. at 445.
32 See id. at 440.
33 See id. at 442-45.
34 Id. at 444.
35 Id. at 444-45.
36 908 S.W.2d 845 (Mo. App. 1995).
37 Id. at 846.
38 Mo. Rev. Stat. 454.505.1 (1994).
39 Id. 454.505.8.
40 Crenshaw, 908 S.W.2d at 846.
41 See id.
42 585 N.E.2d 918 (Ohio App. 1991).
43 See id. at 919.
44 Id. at 920.
45 Id.
46 See id. at 919-21.
1 As the court correctly notes, CSRS has disclaimed
reliance on AS 25.27.260(b)'s provision giving Bowen the right to
maintain a direct penalty action. See Opinion at 2.
2 The court's decision to resolve this question when it
could be readily avoided seems particularly unfortunate because the
question is one of great significance to CSED, which is not a party
here. Although CSED has filed an amicus brief forcefully arguing
that the superior court's interpretation of the statute is unduly
narrow, and although the superior court did not have the benefit of
this briefing when it ruled, this court today adopts by reference
the superior court's decision without addressing CSED's arguments,
thus precluding full consideration of the agency's position.
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