Hilliards v. Jackson
Decision Date | 10 November 1998 |
Docket Number | Record No. 2460-97-4. |
Citation | 28 Va. App. 475,506 S.E.2d 547 |
Parties | Katherine D. HILLIARDS v. Larry D. JACKSON, Commissioner, Virginia Department of Social Services. |
Court | Virginia Court of Appeals |
John E. Whitfield (Blue Ridge Legal Services, Inc., on briefs), Harrisonburg, for appellant.
Donald G. Powers, Assistant Attorney General (Mark L. Earley, Attorney General; Ashley L. Taylor, Jr., Deputy Attorney General; Siran S. Faulders, Senior Assistant Attorney General, on brief), for appellee.
Present: FITZPATRICK, C.J., BENTON, J., and DUFF, Senior Judge.
Katherine D. Hilliards appeals the Page County Circuit Court's decision affirming an administrative decision of the Virginia Department of Social Services. The Department ruled that Hilliards was eligible to receive ten dollars per month in food stamps. Hilliards contends the Department erroneously included the proceeds from the sale of her mobile home as income when calculating her food stamp benefits. For the following reasons, we reverse.
On December 10, 1990, Hilliards and her husband bought a mobile home, which they financed with a $15,000 consumer note from Crestar Bank.1 They subsequently moved from Shenandoah County to Page County and, on April 23, 1992, sold the mobile home to Virginia Tusing for its fair market value of $10,000. At the time, the Hilliards had no equity in the mobile home, which was fully encumbered by the Crestar note. Tusing was unable to obtain credit to purchase the mobile home, so the parties entered into a contract, which provided, in pertinent part:
Tusing was responsible for providing and paying for all utilities. The parties also agreed to execute any other documents necessary to perfect the transaction, including, but not limited to, an application for transfer of title. Tusing also contracted with Hilliards to rent the lot on which the mobile home was located for $85.08 per month.2
On October 6, 1992, Hilliards, her husband, and Tusing executed a modification agreement "to more clearly reflect their original intentions without changing the substance of the original transaction."3 The modification agreement specified that Tusing was responsible for paying all property taxes assessed on the mobile home. The agreement also explained as follows:
[I]n in the event of default, the Purchaser shall in all respects hold all of the rights and be responsible for all of the liabilities of the Sellers, as set forth in the various provisions of the [Crestar Bank] note and security agreement ... as well as the provisions of Article Nine of the Uniform Commercial Code as enacted by the Commonwealth of Virginia.
Crestar was not a party to either agreement. The Department concedes that Hilliards did not enter into this agreement with the intent to evade food stamp eligibility limits.
On April 27, 1992, Hilliards applied for food stamp benefits in Page County. The local Department of Social Services included neither the mobile home nor the property on which it was located as resources for purposes of calculating Hilliards' eligibility. The Department did, however, treat Tusing's monthly payments of $214.92 as unearned rental income attributable to Hilliards. The Department advised Hilliards that she was entitled to deduct her interest expenses from this "income," but Hilliards failed to provide documentation to support any such deduction.
Hilliards appealed the Department's initial determination to an administrative hearing officer. The hearing officer found that Tusing's payments constituted vendor payments because she was making payments on a household expense directly to Hilliards' creditor. But, because Tusing's payment was "legally obligated and otherwise payable to the household," it was not excludable from Hilliards' income. Without providing any rationale, the hearing officer affirmed the Department's initial determination that the sale proceeds constituted unearned rental income. The State Board of Social Services and the Page County Circuit Court both subsequently affirmed the hearing officer's decision.
Under the Virginia Administrative Process Act, Code §§ 9-6.14:1 through 9-6.14:25, the party complaining of an agency action has the burden of demonstrating an error of law subject to review. See Code § 9-6.14:17. See also Johnston-Willis, Ltd. v. Kenley, 6 Va. App. 231, 241, 369 S.E.2d 1, 6 (1988). The appellate court must review the facts in the light most favorable to the agency, with due consideration of "the presumption of official regularity, the experience and specialized competence of the agency, and the purposes of the basic law under which the agency has acted." Code § 9-6.14:17. See also Bio-Medical Applications of Arlington, Inc. v. Kenley, 4 Va.App. 414, 427, 358 S.E.2d 722, 729 (1987). A review of the agency's decision regarding a claimant's eligibility for food stamps "shall be based solely upon the agency record, and the court shall be limited to ascertaining whether there was evidence in the agency record to support the case decision of the agency acting as the trier of fact." Code § 9-6.14:16(B).
We accord great deference to an administrative agency's interpretation of the regulations it is responsible for enforcing. See Arellano v. Pam E. K's Donuts Shop, 26 Va.App. 478, 483, 495 S.E.2d 519, 521 (1998). See also Jackson v. W., 14 Va.App. 391, 400-01, 419 S.E.2d 385, 390 (1992). Our review is limited to determining whether the administrative agency's interpretation of its own rules was reasonable. See Classic Floors, Inc. v. Guy, 9 Va.App. 90, 93, 383 S.E.2d 761, 763 (1989). But "the reviewing courts should not abdicate their judicial function and merely rubber-stamp an agency determination." Johnston-Willis, 6 Va.App. at 243, 369 S.E.2d at 7-8. We will overturn the Department's interpretation of the rules and regulations governing food stamp eligibility if it is arbitrary and capricious. See Life Care Center of New Market v. Dept. of Medical Assistance Services, 25 Va.App. 513, 521, 489 S.E.2d 708, 712 (1997).
The facts in this case are not in dispute. The issue is the agency's application of the food stamp eligibility regulations to Hilliards' situation. Because this is an area within the special expertise of the Department, we owe deference to its interpretation of the eligibility requirements. Nevertheless, to determine whether the Department correctly applied the law to the facts in this case, we must look to the laws and regulations governing food stamp eligibility.
The purpose of the food stamp program is to provide assistance to individuals with limited incomes and resources to ensure that their basic nutritional needs will be met. See 7 U.S.C.A. §§ 2011 and 2014(a). In determining whether an individual is eligible for food stamps, the Department must look to the applicant's resources, see 7 C.F.R. § 273.8, and income. See 7 C.F.R. § 273.9.4 "Household income for purposes of the food stamp program shall include all income from whatever source...." 7 U.S.C.A. § 2014(d). The statute specifically excludes from income "any gain or benefit which is not in the form of money payable directly to a household." 7 U.S.C.A. § 2014(d)(1).
The statutory definition of income is mirrored by the definition of income found in the food stamp regulations promulgated by the United States Department of Agriculture. "Income" includes the gross income from any self-employment enterprise, and the ownership of rental property is considered a self-employment enterprise. See 7 C.F.R. § 273.9(b)(1)(ii). If an individual is actively engaged in managing the rental property less than twenty hours each week, then the rental income is considered as unearned income. See id.
The regulations provide that the only permissible exclusions from income are those specifically identified by regulation. See 7 C.F.R. § 273.9(b) and (c). The federal regulations list those items that are excluded from an applicant's income, and provide that "[o]nly [these] items shall be excluded from household income and no other income shall be excluded." 7 C.F.R. § 273.9(c).
One exclusion identified in the regulations is for "vendor payments." See 7 C.F.R. § 273.9(c)(1). "Money payments that are not payable directly to a household, but are paid to a third party for a household expense, are vendor payments...." See id. "For example, if a relative or friend, who is not a household member, pays the household's rent directly to the landlord, the payment is considered a vendor payment and is not counted as income to the household." 7 C.F.R. § 273.9(c)(1)(i). But the regulations include as income payments "legally obligated and otherwise payable to the...
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