Florida Asset Financing v. Commission

• Citation: 147 P.3d 1189,2006 UT 58
• Decision Date: 29 September 2006
• Docket Number: No. 20040802.,20040802.
• Parties: FLORIDA ASSET FINANCING CORPORATION, a Florida corporation, Petitioner, v. UTAH LABOR COMMISSION; Employers' Reinsurance Fund; and Robert W. Williams, an individual, Respondents.
• Court: Supreme Court of Utah

147 P.3d 1189

2006 UT 58

FLORIDA ASSET FINANCING CORPORATION, a Florida corporation, Petitioner, v. UTAH LABOR COMMISSION; Employers' Reinsurance Fund; and Robert W. Williams, an individual, Respondents.

No. 20040802.

Supreme Court of Utah.

September 29, 2006.

Mark R. Gaylord, Craig H. Howe, Matthew L. Moncur, Salt Lake City, for petitioner.

Alan Hennebold, Salt Lake City, for respondents.

On Certiorari to the Utah Court of Appeals

DURHAM, Chief Justice:

INTRODUCTION

¶ 1 In this case, Petitioner Florida Asset Financing Corporation (Florida Asset) seeks to force Respondent Utah Labor Commission (the Commission) to send disability compensation payments owed to Robert W. Williams (Williams) to a trust established by Williams and in which Florida Asset holds a beneficial interest. We accepted certiorari to address the proper interpretation and application of section 34A-2-422 of the Utah Code (section 422), which governs disability compensation payments. We hold that section 422 does not prohibit an employee entitled to disability compensation payments from requesting that the Commission direct his or her payments to a trust in which a third-party creditor is the beneficiary. However, if the employee asks the Commission to redirect the disability compensation payments to him or her, the Commission must comply because section 422 requires that the Commission pay only the employee. Accordingly, a third-party creditor cannot compel the Commission to direct an employee's payments against the employee's wishes.

BACKGROUND

¶ 2 In 1990, Williams was injured in an accident during the course of his employment as a truck driver, suffering serious injuries to his head, back, shoulders, and knees. In 1994, the Commission awarded Williams permanent disability benefits, which entitled him to receive monthly disability compensation payments for the rest of his life or until otherwise determined by the Commission.

¶ 3 In 1995, Williams took a series of steps toward obtaining a loan from Florida Asset. Williams first created the Robert W. Williams Irrevocable Trust (the Trust). He then sent an "Irrevocable Letter of Direction" to the Commission requesting that the Commission send his disability compensation payments directly to the Trust. An employee of the Commission signed the Irrevocable Letter of Direction and drafted a document stating that the Commission would honor Williams' request. Williams also signed a promissory note in favor of Florida Asset in exchange for a loan of $68,706.06. To secure the note, Williams signed a security agreement assigning his beneficial interest in the Trust and the Irrevocable Letter of Direction to Florida Asset. The terms of the note required Williams to pay back the loan in monthly installments until April of 2012.¹ The Commission asserts—and the record appears to support—that the sum of the monthly payments would equal $236,624.78. Finally, Williams stipulated to a "Consent Final Judgment" (First Florida Judgment) filed in the Alachua County Florida Circuit Court that required him to specifically perform in accordance with the Irrevocable Letter of Direction until he paid the note in full.

¶ 4 Over the next four years, the Commission sent Williams' compensation payments directly to the Trust. In 1997, Williams defaulted on the promissory note and the security agreement.² As a result, a Florida court entered a "Second Amended Final Judgment" (Second Florida Judgment) against Williams, ordering him to pay $216,933.71 then due under the note and $1100 in attorney fees.³ In 1999, Williams instructed the Commission to stop paying the Trust and send the payments directly to him. The Commission followed Williams' instructions. Florida Asset then sought to enforce the First and Second Florida Judgments by filing suit in Utah in the Fifth Judicial District Court of Washington County. Williams did not appear at the scheduled court hearings, and the court issued a bench warrant for his arrest. Subsequently, Williams was arrested and incarcerated for contempt. The court ultimately ordered Williams to sign a letter directing the Commission to send his compensation payments to the Trust.

¶ 5 Florida Asset presented the court-ordered letter to the Commission. The Commission, however, refused to redirect Williams' payments to the Trust because Williams had since filed for bankruptcy and a statutorily imposed automatic stay was in place. In August of 2001, Florida Asset received an order granting relief from the automatic stay from the bankruptcy court, and it again presented the court-ordered letter to the Commission. The Commission notified Florida Asset that it would comply with Williams' directions and send his payments to the Trust, but that it would not do so until December of 2001 because it had given Williams a six-month advance on his compensation payments. However, in November of 2001 the Commission notified Florida Asset that Williams had once again directed the Commission to send his payments directly to him and that the Commission intended to honor his request.

¶ 6 In July of 2002, Florida Asset filed an action against Williams and the Commission in the Third Judicial District Court of Salt Lake County. In its complaint, Florida Asset asserted claims for breach of contract, promissory estoppel, and enforcement of its security interest. Williams did not respond to the complaint, and the court entered a default judgment against him. With respect to the Commission, the court granted Florida Asset's motion for partial summary judgment and ordered the Commission to send Williams' benefit payments to the Trust.

¶ 7 The Commission appealed the district court's judgment to the Utah Court of Appeals. The court of appeals reversed, holding that Florida Asset could not force the Commission to pay the Trust. Fla. Asset Fin. Corp. v. Utah Labor Comm'n, 2004 UT App 273, ¶¶ 24-25, 98 P.3d 436. The court of appeals noted that section 422 does not specifically prohibit the assignment of compensation benefits. Id. ¶ 14. However, the court held that the Commission must follow Williams' instructions regarding his disability compensation payments because section 422 directs the Commission to make payments only to the employee entitled to them. Id. ¶ 23. Therefore, the court concluded that Florida Asset could not force the Commission to direct Williams' payments to the Trust, but must instead proceed against Williams directly. Id. ¶ 24. We accepted certiorari to review the court of appeals' decision, which we now affirm. We have jurisdiction pursuant to Utah Code section 78-2-2(3)(a) (2002).

STANDARD OF REVIEW

¶ 8 "On certiorari, we review the decision of the court of appeals, not the trial court." John Holmes Constr., Inc. v. R.A. McKell Excavating, Inc., 2005 UT 83, ¶ 6, 131 P.3d 199 (citing Salt Lake County v. Metro W. Ready Mix, Inc., 2004 UT 23, ¶ 11, 89 P.3d 155). As the decision of the court of appeals rests on questions of statutory interpretation, we review it for correctness, affording no deference to the court of appeals' legal conclusions. R.A. McKell Excavating, Inc. v. Wells Fargo Bank, N.A., 2004 UT 48, ¶ 7, 100 P.3d 1159 (citing Stephens v. Bonneville Travel, Inc., 935 P.2d 518, 519 (Utah 1997)).

ANALYSIS

¶ 9 We granted certiorari in this case to consider two issues: (1) whether section 34A-2-422 of the Utah Code proscribes payments to a trust employed to facilitate an assignment of those payments to a creditor, and (2) whether the Labor Commission may be obligated to direct payments to a trust for subsequent transfer to a creditor. The resolution of both issues turns on the proper interpretation of Utah Code section 34A-2-422 (2001). Section 422 states that "[c]ompensation before payment shall be exempt from all claims of creditors, and from attachment or execution, and shall be paid only to employees or their dependents."⁴ Id. Under our established rules of statutory construction, we look first to the plain meaning of the pertinent language in interpreting this section; only if the language is ambiguous do we consider other sources for its meaning. See J. Pochynok Co. v. Smedsrud, 2005 UT 39, ¶ 15, 116 P.3d 353 (citing Stephens v. Bonneville Travel, 935 P.2d 518, 520 (Utah 1997)). Moreover, we interpret the plain language of this section "in harmony with other statutes in the same chapter and related chapters." Mountain Ranch Estates v. Utah State Tax Comm'n, 2004 UT 86, ¶ 11, 100 P.3d 1206 (quoting Miller v. Weaver, 2003 UT 12, ¶ 17, 66 P.3d 592). Our overall goal "is to give effect to the legislative intent, as evidenced by the [statute's] plain language, in light of the purpose the statute was meant to achieve." Foutz v. City of S. Jordan, 2004 UT 75, ¶ 11, 100 P.3d 1171 (quoting State v. Burns, 2000 UT 56, ¶ 25, 4 P.3d 795). With these rules in mind, we consider the first issue.

¶ 10 Section 422 does not, on its face, prohibit a trust arrangement designed to facilitate the assignment of disability compensation benefits to a creditor, such as the arrangement at issue here. Rather, section 422 merely prevents creditors from claiming a right to an employee's compensation payments before those payments are made to the employee by forbidding creditors to attach or execute on these payments. The plain meaning of this language indicates that section 422 is designed to prevent creditors from garnishing an employee's compensation payments.⁵ However, nothing in section 422 prevents an employee entitled to compensation payments from asking the Commission to send the payments to a trust. In such a situation, the employee is merely exercising the right to control the disposition of the payments. This type of arrangement does not run counter to the plain meaning of section 422 because the payments are, pursuant to the employee's directions, being "paid only to employees." Id. Moreover, this conclusion does not change if the employee then assigns the beneficial interest in the trust to a...