Brooks v. Consolidated Freightways Corp. of Delaware
| Decision Date | 17 September 1992 |
| Docket Number | CA-CV,No. 1,1 |
| Citation | 839 P.2d 1111,173 Ariz. 66 |
| Parties | In re the Marriage of Lois M. BROOKS, n/k/a Schneider, Petitioner-Appellee, Donald R. Brooks, Respondent-Appellee, v. CONSOLIDATED FREIGHTWAYS CORPORATION OF DELAWARE, a Delaware corporation, Co-Respondent-Appellant. 90-628. |
| Court | Arizona Court of Appeals |
Consolidated Freightways ("Freightways") appeals from a judgment denying it relief under Arizona Rules of Civil Procedure 60(c) from an order of assignment that required Freightways to pay fifty percent of respondent-appellee's ("Husband's") workers' compensation benefits to petitioner-appellee ("Wife"). The central issue presented is whether workers' compensation disability benefits are exempt from assignment under Ariz.Rev.Stat.Ann. § 23-1068(B) (1983). We hold that where the assignment of benefits is to satisfy Husband's obligation under a dissolution decree to pay Wife a lump sum settlement on a monthly basis, the order of assignment is valid. We therefore affirm the judgment denying Freightways relief under Rule 60(c).
Two parallel proceedings are involved in this matter. The procedural history of this case reflects Wife's attempt to enforce, through post-divorce proceedings beginning in January 1986, the provision in the divorce decree awarding her a "lump sum settlement" to be paid in monthly installments. Wife obtained several orders directing Husband to make the prescribed monthly payments. However, after Husband consistently violated these orders, Wife sought an assignment of Husband's wages for the purpose of satisfying the obligation. After Husband's work injury and disability, Wife obtained from the court an assignment of fifty percent of Husband's workers' compensation disability benefits.
Husband's employer (Freightways) initially complied with the order of assignment to Wife but discontinued payments after Husband successfully challenged the assignment before the Industrial Commission. Freightways chose to comply with the directive of the Industrial Commission rather than the superior court's assignment order.
In this appeal, Freightways seeks relief from the superior court's finding that held it in contempt and from the superior court's refusal to vacate the order of assignment. Its defense on the merits is that the order of assignment of the disability benefits was invalid because the workers' compensation laws protect such benefits from assignment to satisfy property settlements, and that this lump sum settlement is a property settlement.
Wife petitioned to dissolve her marriage with Husband in 1984. Her petition requested spousal maintenance; Husband's response resisted this request. In April 1985, the marriage was dissolved.
The decree recites that the court provided for "spousal maintenance, division of community property, apportionment of community debts and payment of attorney's fees." The decree specifically divided the parties' property, allocated their debts, and required each to pay her or his own costs and fees. In addition, the decree required Husband to pay Wife "as and for a lump sum settlement the sum of Nineteen Thousand Two Hundred ($19,200.00) Dollars, payable at Four Hundred ($400.00) Dollars per month, with no interest." The decree does not reveal whether this lump sum settlement was for spousal maintenance or was a division of property and thus creates an ambiguity that in part is responsible for this litigation.
Husband failed to make the mandated monthly payments. Wife filed a petition for a show cause order. The superior court issued an order requiring Husband to pay the arrearage and rescheduling a monthly payment of $500.00.
Husband failed to comply with this order as well. Husband also petitioned to modify his obligation to pay what he characterized as spousal maintenance. This petition was denied.
In October 1987, Husband suffered an industrial injury while working for Freightways. Freightways, a self-insured employer for workers' compensation, has paid Husband monthly workers' compensation disability benefits since this injury.
In April 1988, Wife filed in superior court a request for assignment of workers' compensation disability benefits and identified Freightways as payor. The superior court issued an order of assignment of $400.00 a month and directed payment to the Yavapai County Superior Court. The court subsequently issued a judgment and an order of assignment to Freightways for "the highest amount of non-exempt earnings...."
Wife's attorney then submitted to the court a second order of assignment of fifty percent of Husband's workers' compensation disability benefits. The order directed payment to the Yavapai County Courthouse, Child Support Division. On July 21, 1988, the court signed this second order of assignment; this order of assignment is one of the orders from which Freightways appeals.
Freightways initially complied with the assignment and allegedly paid some $6,250 to the Yavapai County Court over the next fifteen months. During this period, Husband's attorney questioned the Industrial Commission about the assignment. Commission personnel contacted Freightways and were told that the assignment was for child support. Husband's attorney then documented that the assignment was not for child support and demanded termination of an improper assignment. 1 Commission personnel subsequently directed Freightways to discontinue the assignment, and Freightways followed this directive.
In January 1990, the second set of proceedings began. Husband challenged the assignment of his compensation benefits for spousal maintenance before the Industrial Commission. The Administrative Law Judge ("ALJ") subsequently issued an award granting Husband relief. The basis for the award was that workers' compensation disability benefits are fully exempt from assignment under A.R.S. § 23-1068(B) unless the assignment is for child support, that the assignment in this case was solely for spousal maintenance, and therefore that the July 1988 order of assignment "is barred by A.R.S. § 23-1068 B...." The ALJ ordered Freightways to resume paying workers' compensation to Husband and also to repay Husband the disability benefits that it had diverted from him to Wife.
Freightways requested review of the Industrial Commission award. It agreed that A.R.S. § 23-1068(B) barred the assignment but argued that the ALJ had exceeded his authority by ordering Freightways to repay Husband for disability benefits it had paid for his benefit to Wife under an apparently valid superior court order of assignment. The ALJ summarily affirmed the award, and Freightways requested appellate review.
Also in January 1990, Wife sent Freightways a letter demanding reinstatement of the assignment. When Freightways did not reinstate payments, Wife filed a petition in superior court for an order to show cause to enforce the July 1988 order of assignment. Husband was a respondent and Freightways a co-respondent, and both were served with the order to show cause.
Three weeks after the Industrial Commission hearing in which the ALJ found Husband's benefits not subject to assignment, the superior court issued an order in the civil contempt proceeding filed by Wife. The order indicates that both Wife and Husband were represented and appeared at the show cause hearing, but that Freightways neither appeared in person nor by counsel. The court found Freightways in "abject contempt" and ordered it to pay to Wife the amount of the arrearage that had accumulated since Freightways discontinued payments. Later, the court also ordered Freightways to pay Wife's and Husband's costs and attorneys' fees. See generally A.R.S. § 12-2454(O). Freightways appeals from these two orders.
Wife subsequently filed a second petition for an order to show cause and alleged that Freightways had simply ignored the previous contempt order. Freightways filed a response and moved to set aside under Rule 60(c) the July 1988 order of assignment, the order finding Freightways in contempt, and the order directing Freightways to pay costs and attorneys' fees of both Husband and Wife in the show cause proceeding.
Freightways asserted that these challenged orders were void for lack of subject matter jurisdiction because workers' compensation disability benefits are exempt from assignment unless the assignment is to pay child support. It argued the orders were to pay spousal maintenance. Freightways also contended that even if the statutory exception for child support were extended to spousal maintenance, the lump sum settlement in this case was neither: the settlement was intended to equalize the division of Husband's and Wife's property and debts.
In Wife's reply, she asserted that the superior court had jurisdiction to assign Husband's workers' compensation disability benefits, that the lump sum settlement was for spousal maintenance, that the exception to the exemption of workers' compensation disability benefits from assignment should be extended to spousal maintenance, and that the Industrial Commission award was an invalid collateral attack on the superior court order of assignment.
The superior court denied the motion to vacate the order of assignment and the previous contempt and attorneys' fees orders. The court also ordered Freightways to pay the arrearage plus interest, Wife's attorney's fees plus interest, and $100.00 a day until this order and the orders to pay attorney's fees were fully satisfied. Freightways timely appealed this judgment.
This court sua sponte questioned its jurisdiction. But after reviewing Freightways' response, the court issued an order acknowledging...
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