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State, Dept of Revenue, CSED v. Button (8/18/00) sp-5309

     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.


OF REVENUE, CHILD SUPPORT     )    Supreme Court No. S-8792/8942
                              )    Superior Court No.
          Appellant and       )    3AN-96-1372 CI
          Cross-Appellee,     )
     v.                       )    O P I N I O N  
RICHARD C. BUTTON,            )    [No. 5309 - August 18, 2000]
          Appellee and        )  
          Cross-Appellant.    ) 

          Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage,
                      Karen L. Hunt, Judge.

          Appearances:  Diane L. Wendlandt, Assistant
Attorney General, Anchorage, and Bruce M. Botelho, Attorney
General, Juneau, for Appellant/Cross-Appellee.    Mary-Ellen
Zalewski, Anchorage, for Appellee/Cross-Appellant.

          Before: Matthews, Chief Justice, Eastaugh,
          Fabe, Bryner, and Carpeneti, Justices.

          BRYNER, Justice.

          Richard Button acknowledged his paternity of Vickie
Hansen [Fn. 1] in 1986 because he erroneously believed he was her
father.  Nine years later, the Child Support Enforcement Division
(CSED) served Button with a Notice and Finding of Financial
Responsibility assessing support arrears in excess of $40,000. 
Button pursued an administrative appeal and disestablished his
paternity in superior court.  Because CSED's support order remained
open to review, and because Button rebutted the presumption of
paternity created by his legal acknowledgment at his first formal
opportunity, we affirm the superior court's decision prohibiting
CSED from collecting arrears.
          Richard Button acknowledged paternity of Vickie in 1986,
shortly after she was born, based on his former fiance's
assertions that Vickie was his child.  Subsequently, Vickie's
mother, Cathy Hansen, applied for public assistance on Vickie's
behalf.  On the application forms, Hansen provided conflicting
information about Vickie's father.  First, she asserted that he was
unknown.  Then she identified Button as the father.  Finally, in
July 1991, Hansen named Bryan Roussell as the father, and specified
that Button was not.
          Initially, Button treated Vickie as his child, visiting
her and voluntarily paying child support.  But in 1988, Button
received an anonymous tip that he was not Vickie's biological
father.  He then met with a friend of Hansen's, who largely
confirmed his doubts.  By 1991 at the latest, Button resolved that
Vickie was not his child, and decided to end their relationship. 
          In 1995 CSED learned from Hansen that Button was listed
as Vickie's father on her birth certificate -- though Hansen
indicated, again, that Roussell, not Button, was Vickie's
biological father.  Based on this information, CSED issued Button
a Notice and Finding of Financial Responsibility (NFFR) for ongoing
support of $587 per month and arrears of $40,684 for public
assistance paid on Vickie's behalf.  Button timely appealed this
administrative notice and filed a complaint to disestablish
paternity in superior court. [Fn. 2]
          After paternity tests demonstrated that Button was not
Vickie's biological father, the superior court disestablished
paternity, relieving Button of any ongoing child support duty.  The
court also held that Button was not liable for arrears because, due
to Button's pending administrative appeal, CSED never issued a
final support order.
          CSED appeals the superior court's decision that Button
owes no child support arrears.
     A.   Standard of Review
          Two issues are raised by this appeal: (1) whether there
was a valid support order in effect before Button disestablished
his paternity; and (2) if no support order was in effect, whether
an independent duty of support exists based on Button's formal
acknowledgment of paternity.  Because these are issues of law, we
exercise our independent judgment and "adopt the rule of law that
is most persuasive in light of precedent, reason, and policy." [Fn.
     B.   CSED Never Issued a Final Support Order.
          The superior court found that Button was not required to
pay arrears that accrued before the disestablishment order because
no final support order had been in effect.  In reaching this
decision, the court ruled that Button's appeal of the agency's
informal conference decision prevented CSED's support order from
becoming final.  CSED argues that this decision was erroneous,
because an informal conference decision is a final order regardless
of pending administrative or judicial appeals.
          Alaska Statute 25.27.170(b) resolves this question in
Button's favor:
          If a request for a formal hearing under (a)[
[Fn. 4]] of this section is made, the execution under AS 25.27.062
and 25.27.230-25.27.270 may not be stayed unless the obligor posts
security or a bond in the amount of child support that would have
been due under the finding of financial responsibility pending the
decision on the hearing.  If no request for a hearing is made, the
finding of responsibility is final at the expiration of the 30-day
period.[ [Fn. 5]]
A plain reading of AS 25.27.170(b) indicates that a support order
becomes final after thirty days only if no formal hearing is
requested.  Indeed, if an informal conference decision were a final
order, then any change in support pursuant to a formal hearing
would be a prohibited retroactive modification of child support.
[Fn. 6] 
          The legislative history of AS 25.27.170 supports this
plain reading of the statute.  As originally enacted in 1977,
former AS 47.23.170(b) (now AS 25.27.170) provided:
          If a request [for a hearing] under (a) is
made, the execution under secs. 230-270 of this chapter shall be
stayed pending the decision on the hearing, or the decision of a
court, if appealed. If no request for a hearing is made, the
finding of responsibility is final at the expiration of the 30-day
period.[ [Fn. 7]]

Thus, the statute at its inception explicitly provided that a
support order was not final pending administrative or judicial
review.  In 1994 the legislature substituted the current version of
AS 25.27.170 -- inserting the requirement that a bond be posted --
in order to comply with requirements for federal funding. [Fn. 8] 
A CSED representative testified at a state house committee hearing
that the 1994 changes to the Alaska statute were aimed at complying
with federal law; there was no suggestion that the amendment was
designed instead to make a statute intended to stay the execution
of a support order pending appeal into a provision that had the
opposite effect. [Fn. 9] 
          CSED's second argument -- that AS 25.27.170(b) pertains
only to NFFR appeals, not to appeals of informal conference
decisions, which are immediately enforceable -- is contradicted by
the administrative regulations governing the hearing process. 
Those regulations provide that a putative obligor may request a
formal hearing after an informal conference decision. [Fn. 10]  The
regulations state that informal conference decisions are final "for
purposes of appeal to a formal hearing" but not for purposes of
appeal to superior court. [Fn. 11]  Thus, AS 25.27.170(b) serves to
convert a NFFR or an informal conference decision into a final
order only if no formal hearing is requested. 
          Because Button appealed the informal conference decision
within thirty days, and his administrative appeal was stayed
pending a decision by the superior court, the superior court
correctly held that there was never an enforceable support order.
[Fn. 12]
     C.   Button's Legal Acknowledgment Created No Duty of Support. 
          CSED argues that Button nevertheless has a duty of
support stemming from his formal acknowledgment of paternity.  It
is true that an acknowledgment of paternity presumptively
establishes a legal parent-child relationship regardless of
biological parenthood and even in the absence of a court order
requiring child support payments. [Fn. 13]  But CSED confuses this
presumption of paternity with a paternity judgment.  A duty of
support may be conclusively imposed on a father by an order of
support or a paternity judgment, since such judgments and orders
are entered in formal proceedings that provide the father with
notice and an opportunity to be heard on the paternity issue.  By
contrast, before being served with the NFFR notifying him of
arrears in excess of $40,000 -- nine years after he acknowledged
paternity -- Button had no notice that the state would seek arrears
or future child support.  Until then, he was a presumptive father,
but his duty of support had not been established.  This was
Button's first formal opportunity to rebut the presumption, which
he did in a timely manner.  Absent notice of CSED's claim for
support and arrears and an opportunity to be heard on the issue,
Button's earlier acknowledgment of paternity alone did not suffice
to convert his presumptive parent-child relationship into an
established duty of support. [Fn. 14]
          In appropriate circumstances, CSED still might have
asserted that Button was estopped from denying his child support
debt.  But a successful claim of paternity by estoppel requires
proof of reasonable reliance and economic prejudice. [Fn. 15] 
Here, CSED claims that it could not have sought reimbursement from
the biological father until Button, the presumed father,
disestablished his paternity.  But we rejected an identical claim
in State, CSED v. Kovac, allowing biological fatherhood to be
established independently of -- and before -- disestablishment of
presumptive fatherhood. [Fn. 16]  A biological father's duty of
support arises at the birth of his child and does not depend upon
the lack of a legally presumed father. [Fn. 17]  We thus find no
merit to CSED's claim that Button's acknowledgment of paternity
prevented it from pursuing the biological father for reimbursement
of child support arrears.
          Because Button rebutted the presumption of paternity
raised by his legal acknowledgment of paternity at his first formal
opportunity and before a final support order was issued, the
judgment of the superior court is AFFIRMED.


Footnote 1:

     We use pseudonyms for the names of the mother and child.

Footnote 2:

     CSED issued Button a Notice and Finding of Financial
Responsibility on December 12, 1995.  Button appealed that order by
requesting an informal conference within 30 days. SeeAS 25.27.170(b).  
He also timely appealed the informal conference
decision affirming his support obligation.  See id.; see also
former 15 Alaska Administrative Code (AAC) 05.030(a)(1994).  On
February 22, 1996, the day before he filed his administrative
appeal of the informal conference decision, Button filed a
complaint to disestablish paternity in superior court.  The court
granted a stay of enforcement of the support order pending
resolution of the paternity issue.  The Department of Revenue
remanded the administrative appeal to CSED until the court
determined that Button was the father, or determined that the stay
should be lifted.  Because paternity was disestablished and the
court found that Button owed no support arrears, no further action
was taken on Button's administrative appeal. 

Footnote 3:

     Guin v. Ha, 591 P.2d 1281, 1284 n.6 (Alaska 1979); see also State, 
Dep't of Revenue, CSED v. Gerke, 942 P.2d 423, 425 (Alaska

Footnote 4:

     AS 25.27.170(a) provides:

          A person served with a notice and finding of
financial responsibility is entitled to a hearing if a request in
writing for a hearing is served on the agency by registered mail,
return receipt requested, within 30 days of the date of service of
the notice of financial responsibility.

Footnote 5:

     AS 25.27.170(b) (emphasis added).

Footnote 6:

     See Alaska R. Civ. P. 90.3(h)(2); 42 U.S.C. sec. 666(a)(9)
(1994).  By "final order" we mean one no longer subject to direct
administrative or judicial review.  Any modification that occurs on
direct review, or in timely parallel proceedings that are
functionally the equivalent of direct review, is not retroactive in
the prohibited sense.  We recognize that in the absence of a stay
CSED's informal conference decision was an enforceable order while
further review was pending.  AS 25.27.170(b). 

Footnote 7:

     Ch. 126, sec. 29, SLA 1977.

Footnote 8:

     See Committee Minutes, Alaska House State Affairs Standing
Committee (May 3, 1994) (testimony of Phillip Petrie, CSED). 
Federal law requires states to enact

          [p]rocedures which require that a noncustodial
parent give security, post a bond, or give some other guarantee to
secure payment of overdue support, after notice has been sent to
such noncustodial parent of the proposed action and of the
procedures to be followed to contest it (and after full compliance
with all procedural due process requirements of the State).

42 U.S.C. sec. 666(a)(6) (Supp. III 1998).

Footnote 9:

     See Committee Minutes, Alaska House State Affairs Standing
Committee (May 3, 1994).

Footnote 10:

     See former 15 AAC 05.030 (1994).

Footnote 11:

     See former 15 AAC 05.020 (1994).

Footnote 12:

     Because there was no final support order issued against
Button, Civil Rule 90.3(h)(2) and 42 U.S.C. sec. 666(a)(9) do not
bar the court from modifying or extinguishing his arrears.  See Kilpper
v. State, CSED, 983 P.2d 729, 734 n.17 (Alaska 1999). In Kilpper,
we noted that altering child support arrears does not amount to a
retroactive modification of child support if no support order is in
effect during the period covered by the judgment establishing the
arrears.  See id.

Footnote 13:

     See id. at 732.

Footnote 14:

     See State, Dep't of Revenue, CSED v. Maxwell, ____ P.2d _____,
Op. No. 5306 at 11-12 (Alaska, August 18, 2000) (presumed father
must be given opportunity for fair and impartial hearing before
support order becomes final).

Footnote 15:

     See B.E.B. v. R.L.B., 979 P.2d 514, 516, 520 (Alaska 1999).

Footnote 16:

     See 984 P.2d 1109, 1112 (Alaska 1999).

Footnote 17:

     See id.