California Family Law Report

Case of the Month Archive

Justices express concern over DCSS’s handling of this case and advise against repeat performance . . .

In affirmance, Fifth District holds that trial court did not err by releasing levy that DCSS made on bank account of child-support obligor whose only income was from SSDI benefits

Noncustodial father Danny Hopkins Jr. was ordered to pay $600 a month in child support from the social security disability insurance (SSDI) benefits that were his sole source of income. In December 2006, the Kern County Department of Child Support Services (DCSS) obtained a wage assignment order that required the Social Security Administration (SSA) to withhold $750 a month from Danny’s benefits to pay current support and arrearages. The following May, the DCSS learned that his kids were receiving $742 a month from the SSA by reason of his SSDI benefits, payable to the mother, Shannon Hopkins, who had also received a retroactive payment of $2,322. The trial court reduced Danny’s support obligation to zero, effective May 1, 2007, because the monthly SSA payments exceeded his support obligation.

After the DCSS credited the retroactive payment Shannon received against the existing arrearages, it determined that as of May 2007, the remaining arrearages totaled $10,804. The department amended the withholding order to require the SSA to withhold $150 a month from Danny’s benefits to apply to the arrearages; that amount was withheld in June and July 2007. In August, the SSA made two payments, one on August 3 (for August), and a second on August 31 (for September). The DCSS later claimed that no payment had been made for September, and thus Danny was in default. Acting pursuant to Fam C §17450 et seq. [collecting child-support deficiencies], the department levied on a bank account that Danny held with his fiancée, Melissa Bruhanski, which yielded $10,746. Danny and Melissa believed that all or part of the levied funds were exempt; they signed a claim of exemption form, which stated that at least some of the funds in the account were from Melissa’s unemployment payments.

At the December 2007 hearing on Danny’s exemption claim, the trial court asked the DCSS if it had been giving Danny a credit of $142 a month toward the arrearages, “as required by law,” for the amount that the SSA payments exceeded the support order. In response, the DCSS claimed that it was “unaware of its obligation to do so.” Danny testified about the two payments in August 2007 and the source of the funds in the levied account, most of which represented Melissa’s support payments for her three kids and her unemployment benefits; a small amount, he said, was from his severance pay. Danny also told the court that after the levy, he’d contacted the DCSS about his payments and was informed that they were current. When the hearing concluded, the court found that the root of the DCSS’s complaint was its receipt of the September 2007 payment “ ‘a few days too early,’ ” but that did not amount to a “ ‘missed payment which triggers the right to then levy on a bank account.’ ” In addition, the court pointed out that the DCSS “ ‘seems to have overlooked the Social Security Act,’ ” which requires that excess payments be applied to arrearages. The court denied Danny’s exemption claim, but found that the DCSS “ ‘improperly took the money,’ ” and that Danny was “ ‘not out of compliance’ ” with his arrearage payments when the funds were seized. The court ordered the department to refund all of those funds to Danny.

The DCSS moved to vacate that order and for a new trial, claiming that its failure to credit Danny with the excess payments and the accuracy of the levy were issues not properly before the trial court, and that the court lacked a legal basis for releasing the levy after denying Danny’s claim. At the hearing on the motion, the DCSS asserted that Danny was subject to levy for the arrearages even though he was in compliance with the existing order, and that the court should have given Danny a $3,500 exemption instead of releasing the levy. The DCSS also stated that after giving Danny credit for the excess payments, his arrearages still totaled $8,711. In opposition, Danny reiterated that most of the levied funds belonged to Melissa. The court noted that the levy would not have occurred if the DCSS had properly credited the excess payments; thus, “ ‘equity’ and ‘justice’ required the prior order to stand.” Accordingly, the court denied the motion.

The DCSS appealed, but the Fifth District affirmed.

No can do . . .
The DCSS contended, as it had below, that under the Financial Institution Data Match System [FIDMS; Fam C §17450 et seq.], it could levy on Danny’s assets to collect child-support arrearages even if his payments were current. The justices acknowledged that such authority exists under Fam C §17453(j), but they pointed out that the first $3,500 of an obligor’s assets are exempt. “What the Department ignores,” the panel continued, is §17450(c)(2), which the DCSS failed to consider in making its levy and did not discuss until the appellate court asked it to. That subsection, the justices explained, precludes a local child-support agency from taking any collection action against a disabled child-support obligor who meets the federal income standard, receives SSDI payments (or would be eligible but for excess income), and furnishes proof of receiving such payments. Moreover, the subsection prohibits an agency from taking any collection action against such an obligor, and requires the agency to rescind or withdraw a collection action if one has been initiated. The panel gave short shrift to the DCSS’s contention that Danny failed to meet two of the four parts of the eligibility test under §17450(c)(2), finding that no obligor could possibly meet both because the two “are mutually exclusive.” In addition, interpreting the statute in the manner advocated by the DCSS “makes no sense,” the justices said. As they saw it, “the only logical interpretation” of §17450(c)(2) is that it exempts from collection efforts a disabled obligor who has provided proof of receipt of SSDI benefits, and they noted that the legislative history supports that interpretation. The panel also noted that Fam C §17400.5, which has “substantially similar” language, clearly requires a local child-support agency to prepare and file a motion to modify the support obligation of an obligor who notifies the agency that he or she has met the SSI resource test and receives SSI/SSP or SSDI benefits, or would but for excess income. In addition, a corresponding statute, R&T C §19271(e)(3), precludes referral of a child-support delinquency under §17400.5 to the Franchise Tax Board for collection, and requires withdrawal of one already begun. Accordingly, the justices concluded that the DCSS should not have levied on Danny’s bank account, and it should have rescinded the collection action once it began. Thus, the trial court did not err by releasing the levy.

What were they thinking? . . .
The panel closed by expressing its concern over the DCSS’s handling of this case. The justices noted that the department was moved to begin its collection action when it received two payments in August (instead of one each in August and September), then levied on Danny’s bank account without allowing the statutory $3,500 exemption. The DCSS also failed to credit Danny with the excess SSDI benefits until ordered to do so by the trial court, and it continued to assert its right to collection, in “clear violation” of Fam C §17450(c)(2). When that subsection was raised in Danny’s responsive brief, the DCSS neither responded nor addressed the subsection in its reply brief. Finally, when the justices asked about the applicability §17450(c)(2), the DCSS responded with a “nonsensical position.” The panel recognized that the actions of the DCSS affected not just Danny, but Melissa and her three kids as well, as most of the seized funds represented Melissa’s support and unemployment payments. “We hope this does not happen again,” the justices said, and they affirmed the trial court’s orders.