Opinion
Supreme Court No. S-10923.
November 24, 2004.
Appeal from the Superior Court of the State of Alaska, Third Judicial District, Homer, M. Francis Neville, Judge, Superior Court No. 3HO-01-00109 Civil.
David R. Edgren, Edgren Law Offices, LLC, Anchorage, for Appellant.
William T. Ford, Attorney at Law, Anchorage, for Appellee.
Before: Bryner, Chief Justice, Matthews, Eastaugh, Fabe, and Carpeneti, Justices.
MEMORANDUM OPINION AND JUDGMENT
Entered pursuant to Appellate Rule 214.
FACTS PROCEEDINGS
In 1989 Gail and Jeff Murphy divorced. Jeff gained legal and physical custody of the couple's three children: Jeffery, born in 1983; Michael, born in 1985; and Christopher, born in 1988. In 1992 the parties stipulated that Gail would pay $460 per month for the next five years in child support for the three children. A year later, Gail and Jeff entered into a new stipulation in which Gail "voluntarily" agreed to pay "the sum of $1,521.43 per month, commencing on the first of May, 1993 and continuing for a total of 96 months." This amount was to be paid by Gail from the monthly proceeds of the sale of her interest in the Driftwood Inn located in Homer.
The parties have previously appealed other issues in this divorce to this court. Murphy v. Murphy, 812 P.2d 960 (Alaska 1991).
Id. at 961.
The stipulation was entered as a final order by the superior court.
Gail had a stream of income from the earlier sale of the Driftwood Inn, which she was awarded in the divorce settlement. Murphy, 812 P.2d at 962, 964.
The parties recognized in the stipulation that the new amount of child support they agreed to was "greater in aggregate than the child support payments [then] due and owing for the remaining minority of the three minor children, based upon the . . . monthly payment amount of $460.00." They agreed to this accelerated child support arrangement because "the children [were] in their most formative years and . . . their circumstances [were] particularly needy at [that] time, and . . . the children's best interests would be furthered by an increase in current child support to be offset against future child support." Gail and Jeff agreed that after Gail made ninety-six of the $1,521.43 payments, Gail would have "no further obligation to pay [Jeff] any child support" for the three boys. Under this arrangement, payment was scheduled to end on May 1, 2001.
In July 1996, after the stipulation was apparently followed for a little more than three years, Jeff withdrew $87,056.58 from the escrow account in full satisfaction of Gail's remaining child support obligation. Gail did not protest the lump sum payment or bring it to the court's attention at that time and no further child support was requested by or paid to Jeff.
The lump sum payment occurred as a result of the buyers of the Driftwood Inn paying off their remaining balance in a single payment.
On December 29, 2000, Gail sought an ex parte domestic violence protective order against Jeff. The superior court granted a twenty-day protective order and awarded Gail emergency custody of the three children. After a hearing on January 17, 2001, which Jeff and Gail both attended, the superior court granted a six-month protective order and ordered Jeff to pay Gail "$371.81 as child support for [the] 20 days of [the] ex parte order." In the six-month order, the superior court declined to address custody, visitation, and support issues, informing the parties that such issues should be addressed in the divorce case.
On April 2, 2001, Gail filed a motion to change custody and child support. As construed by the superior court, Gail's motion sought primary custody of Michael and Jeffery and fifty percent custody of Christopher. In her motion Gail claimed that Michael had been living with her "since the beginning of 2000," and that Jeffery moved in with her in June 2000. Gail sought a change in child support due to the change in the residency of the children and also sought interim custody of Michael and Jeffery and interim child support.
On August 11, 2001, after a two-day hearing, the superior court granted Gail interim custody of Jeffery but denied her interim custody of Michael or Christopher. The court noted that Christopher, the youngest son, was living "in a long-term residential treatment program in Utah" due to his behavioral problems and found that Jeff had "been exercising his custody rights very appropriately." The superior court determined that "it would not be in Christopher's best interest . . . to grant a change in custody," and ordered that Jeff retain physical and legal custody of Christopher pending trial.
With respect to Michael, the superior court found that in Gail's care, "Michael [was] not supervised consistently and [was] led to believe that he [could] make his own decisions concerning his health care, his education, and other matters." Although the court considered Michael's desire to continue to live with Gail, it pointed out that "[i]t is not surprising that, at 15 years of age, [Michael] would rather live in a home where there is no set schedule, where he does not have to do school work, and where he can play computer games unsupervised in a separate apartment," and concluded that awarding Gail custody of Michael would not be in his best interests. The court ordered Jeff to retain legal and physical custody of Michael pending trial and instructed that "Michael [was] to be returned to Jeff's home with his belongings no later than August 18, 2001."
The superior court found that Jeffery, the oldest son, "demonstrate[d] an appropriate level of maturity in his decisions and [was] generally doing well" living with Gail and that he was "better equipped than Michael to live with the independence and lack of supervision at Gail's home." The court granted Gail interim legal and physical custody of Jeffery. The superior court did not address Gail's motion for interim child support other than to order Jeff to "file a Child Support Guidelines Affidavit (Form DR-305) and . . . supporting documentation no later than August 27, 2001."
On October 4, 2001, Gail, who had obtained counsel, filed a motion for child support nunc pro tunc "for the period from February 1, 2000 through [October 4, 2001] . . . [and an] order requiring [Jeff] to reimburse her for her overpayments of child support during [that] period." In her memorandum in support of the motion, Gail argued that "orders are necessary to (1) award [Gail] back child support for the period February 1, 2000 through August 1, 2001, (2) require [Jeff] to reimburse [Gail] for the overpayments made during this same period, and (3) establish a future, divided custody support order."
In this memorandum, Gail asserts that Michael came to live with Gail "[o]n or about February 1, 2000."
Gail's April 2, 2001 motion was again considered at a hearing held on March 1, 2002. The superior court entered an order for modification of child support on March 2, 2002, finding that Gail had primary physical custody of Jeffery beginning April 2, 2001, and of Michael from April 2, 2001 through August 11, 2001. The superior court directed Jeff to pay Gail child support for Jeffery from April 2, 2001 "until Jeffery's 18th birthday or custody change," and for Michael from April 2001 through July 2001. The superior court also ordered Jeff to continue child support payments for Jeffery after he turned eighteen as long as he was still attending school. Jeff was ordered to pay Gail $728 per month in child support for the four months in 2001 when she had custody of both Michael and Jeffery, and $582 per month for all the months thereafter for Jeffery's support.
On July 26, 2002, the superior court ruled on Gail's motion to modify custody. The superior court noted that Jeffery was nearly nineteen years old and was no longer attending high school, making his custody and visitation issues moot. Michael's and Christopher's custody and visitation were still at issue. The court determined that Gail had met her threshold burden of showing a significant change in circumstances since the prior custody order by proving that Jeffery and Michael "had actually been living with her for a lengthy period of time in spite of the decree giving physical custody . . . to Jeff." Noting that a finding of significant change in circumstances alone does not mandate modification of a custody order, the superior court went on to consider the best interests of the children.
It seems that Jeffery had just failed to complete his final semester of school at the time of the superior court's ruling; he apparently returned to school in the fall of 2002 and graduated in January 2003.
In addressing Christopher's placement the court described how for the past few years, Christopher had been exhibiting behavioral and mental health problems requiring extensive treatment both in Alaska and Utah. The court approved of Jeff's consistent reliance "on the advice of school and mental health professionals in dealing with Christopher's special needs," and found that Jeff "ha[d] provided a stable and satisfactory home environment for Christopher for nearly his entire life." The court also noted the fact that Christopher had not lived with Gail since the divorce "except for a few weeks after the court issued an ex parte domestic violence protective order. . . ." The court ordered Jeff to retain sole legal and physical custody of Christopher, with Gail's visitation proceeding in accordance with the recommendation of Christopher's mental health therapist.
Turning to Michael, the court discussed how even though Michael continued to express his desire to live with Gail, the lack of structure, supervision, and stability at Gail's home convinced the court that it would not be in Michael's best interest to award custody of him to Gail. The court ordered that Jeff continue to retain legal and physical custody of Michael with Gail having visitation every other weekend and unlimited telephone communication with Michael.
On November 19, 2002, the superior court denied Gail's motion for reimbursement. The superior court ordered:
[Gail] is not entitled to any reimbursement of child support or any visitation credit. When the parties stipulated to modify child support in March 1993, they expressly acknowledged that the prepaid child support agreed to was greater than the previously ordered child support. The stipulation, approved by the court, superceded and replaced the April 1992 order and the provision for visitation credit. Child support under a divided custody formula has never been appropriate in this case.
[Jeff]'s child support obligation in the March 2, 2002 child support order should have been based on a net annual income of $43,717.00. The court's order continuing child support for Jeffery while he is 18 years old, living with [Gail], and enrolled in school remains in effect. The court's July 26, 2002 decision was not intended to vacate that order, but was simply a statement of the facts available to the court at the time of the decision.
A corrected order for modification of child support was entered on January 27, 2003 nunc pro tunc March 2, 2002. In it the court ordered Jeff to pay Gail $983.63 per month for the period when Gail had custody of both Michael and Jeffery from April 2001 to July 2001, and $728.62 per month through the subsequent period in which Jeffery was in school and living with Gail. Gail appeals.
ISSUES AND DECISION
Gail raises two points on this appeal. We set them out below along with our decision concerning each.
Issue I. Did the court err in failing to order reimbursement of prepaid child support?Decision. We conclude that Gail should have received reimbursement for (1) supporting Michael from the date she served her April 2, 2001 motion until her interim custody of Michael terminated on August 11, 2001; and (2) supporting Jeffery from the date the April 2, 2001 motion was served until June 1, 2002, the approximate date Jeffery would have graduated from high school had he attended continuously. Once Gail had properly moved to modify child support, she should not have to pay Jeff child support for the periods when Jeffery and Michael were in her custody.
Explanation. A child support award may be modified upon a showing of a "material change of circumstances." A material change occurred here when Gail acquired de jure custody over the children, which happened in December 2000, when the superior court granted Gail emergency custody. In denying reimbursement, the superior court seemed to rely on the fact that Gail prepaid her child support obligations, and that she voluntarily agreed to make payments greater than the child support initially ordered. But in our view the key issue is that Gail's prepayments to Jeff were intended to compensate Jeff for supporting the children throughout their minority, and were premised on Jeff's retaining custody. Since Jeff did not retain custody, Gail is entitled to a partial refund for the periods when she, rather than Jeff, had de jure custody of some of the children, assuming a prompt motion by her to modify the child support order.
Karpuleon v. Karpuleon, 881 P.2d 318, 320 (Alaska 1994). The general rule is that a change in de facto custody, but not de jure custody, is not sufficient to justify modifying a child support order. The rule seeks to preclude attempts by parents to reduce their child support obligations through the expedient of obtaining de facto custody. Bennett v. Bennett, 6 P.3d 724, 727 (Alaska 2000).
Jeff cites Epperson v. Epperson, 835 P.2d 451 (Alaska 1992), for the proposition that, absent exceptional circumstances, previous voluntary contributions to the custodial spouse are not a sufficient basis to reduce future child support obligations. But the voluntary contributions in Epperson were simply overpayments of past support obligations, rather than pre-payments intended to cover expenses expected to be borne in the future by the custodial parent. Where (as here) the circumstances show a prepayment of future expenses that are still accruing but not being paid by the recipient of the pre-payment, the person who has made the payment is entitled to reimbursement.
But even though Gail might have moved successfully for modification of the child support order in December 2000, the fact that she waited to do so until April 2001 means that her reimbursement is limited to the amounts of prepaid child support that accrued after she served her April 2001 motion. This is because courts may not, except in circumstances not applicable here, modify child support arrearages that accrue prior to service of a modification motion. And although Gail is seeking reimbursement of prepaid child support rather than the cancellation of an arrearage, the principle is the same: in both cases, the idea is that the obligee parent is entitled to the amount of child support that accrues to his or her benefit under the original child support order, until a motion to modify that order is served. To distinguish between a retroactive request to cancel arrearages and a retroactive request for reimbursement, as Gail urges in her reply brief, would be an arbitrary distinction; it would (for example) permit parents to wipe out pre-motion arrearages by paying the arrearage and then seeking reimbursement.
Alaska R. Civ. P. 90.3(h)(2). Rule 90.3(h)(2) was adopted to bring the state into compliance with federal law. See 42 U.S.C. § 666(a)(9); Karpuleon, 881 P.2d at 321. The federal rule was enacted because state laws permitting retroactive modification did not place "any diligence requirement on the absent parent to petition in a timely manner to reduce the order, if for some reason his or her ability to comply with the order had changed. Such laws further permitted arguments to be made about changed circumstances in prior periods at a time when evidence may not have been easily attained or available." Prohibition of Retroactive Modification of Child Support Arrearages, 54 Fed. Reg. 15,757, 15,758 (1989). To remedy this situation, federal law and Rule 90.3(h)(2) establish a bright-line rule against cancelling past payment obligations.
Cf. State, Child Support Enforcement Div. v. Bromley, 987 P.2d 183, 193 (Alaska 1999) (relying in part on Rule 90.3(h)(2) to reject claim for retroactive reimbursement of child support overpayments). Another potential source of support for Gail is Civil Rule 90.3(h)(3), which precludes a parent who is owed child support from collecting arrears where the obligor can prove that the children covered by the support order have in fact been living with the obligor for more than nine months, with the obligee parent's acquiescence or permission. This section is based on principles of equitable estoppel, see Alaska R. Civ. P. 90.3, Commentary X.C, and would give Gail a defense if Jeff were seeking to collect child support arrears that had not yet been paid. But there is nothing in the section or in the underlying equitable principle that would permit using the defense as means of obtaining retroactive reimbursement of child support prepayments, particularly where the prepayments may have been spent by the recipient years ago.
Gail also argues that the rule against retroactive modifications (whether applied to her reimbursement claim or her child support claim) does not apply where there is only a minor time gap between the change in de facto custody and the motion to modify, or where child support is prepaid in a lump sum. In support of this argument, she cites Boone v. Boone and Vachon v. Pugliese, but these cases are not on point. In Vachon, we held that child support payments could be awarded retroactively, but the holding was based on the fact that (unlike this case) there had never been a final child support order. Gail argues that her final child support order was "in effect" dissolved in 1996 when she prepaid her obligation in a lump sum, but obeying an order does not dissolve it, and permitting Gail to get reimbursement for pre-motion periods would also offend the policy precluding cancellation of obligations that have already come due. In Boone, we held that Mr. Boone should get child support arrears for supporting two children, even though his motion to modify the child support order sought modification with respect to only one child. The temporary omission of the second child from Mr. Boone's motion was immaterial, because both parents had agreed to postpone resolving child support issues during the period in which the second child moved in with Mr. Boone. These unusual facts are not present here, and in any event the case does not say that arrears can be paid for periods prior to the filing of any motion. Neither case deviates from the core rule that a parent has an unmodifiable obligation to pay all the court-ordered child support payments that accrue prior to the date the parent serves a motion to modify that order.
960 P.2d 579 (Alaska 1998).
931 P.2d 371 (Alaska 1996).
Id. at 382.
Under these principles, and under our view that the prepaid child support was intended to support the children throughout their minority, Gail is entitled to partial reimbursement for the period after her motion was served when she, rather than Jeff, was supporting Jeffery and Michael. The start of the period will be the date Gail served her April 2 motion. With Michael, the period ends on August 11, 2001, the date the superior court ordered Gail to relinquish custody of Michael to Jeff. With Jeffery, the end date is less clear, since the superior court found that Gail was entitled to post-majority support for Jeffery until he stopped going to high school or turned nineteen. Although the parties have not briefed this question, it seems fair to assume that, under the prepaid child support arrangement, the parties anticipated paying Jeff to support Jeffery through the date he would have graduated from high school had he attended regularly, as opposed to the date that he turned eighteen (October 9, 2001) or the date on which he actually graduated, after apparently partially skipping his last spring semester and then re-enrolling the next fall (January 17, 2003). The superior court may request additional briefing on this point, make its own findings, or, in the interests of finality, simply order reimbursement for Jeffery's support using June 1, 2002 as the end date. The superior court will also have to develop a method for converting Gail's prepaid child support into payments covering the periods and children for which Gail assumed responsibility from Jeff. Many methods of making this determination may be reasonable, and we leave the choice to the superior court.
In the absence of a submission by either party on this point, we assume that the motion was served on the same date it was filed, i.e., April 2, 2001.
AS 25.24.170(a).
Issue II. Did the court err in calculating the period during which support must be paid by Jeff?Decision. No. The parties' stipulation of March 4, 1993, as approved by the court was the governing child support order. Where there is a de facto shift in custody and a child support order exists, the rule prohibiting retroactive modification of child support prohibits modification of support owed prior to the date of a motion to modify. Thus the starting date for Jeff's obligation was properly determined to be the date of Gail's motion to modify.
CONCLUSION
The judgment of the superior court is AFFIRMED in part, REVERSED in part, and REMANDED for further proceedings in accordance with this memorandum opinion and judgment.