In re State

• Decision Date: 15 June 2007
• Docket Number: Nos. 2006–329,2006–334.,s. 2006–329
• Citation: 926 A.2d 825,155 N.H. 565
• Court: New Hampshire Supreme Court
• Parties: In the Matter of STATE of New Hampshire and ESTATE OF Frank S. CRABTREE, III. In the Matter of Katherine Crabtree and Estate of Frank S. Crabtree, III.

155 N.H. 565

926 A.2d 825

In the Matter of STATE of New Hampshire and ESTATE OF Frank S. CRABTREE, III.

In the Matter of Katherine Crabtree and Estate of Frank S. Crabtree, III.

Nos. 2006–329

2006–334.

Supreme Court of New Hampshire.

Argued: March 21, 2007.

Opinion Issued: June 15, 2007.

Kelly A. Ayotte, attorney general (Karen A. Schlitzer, assistant attorney general, on the brief, and Elyse S. Alkalay, assistant attorney general, orally), for the New Hampshire Division of Child Support Services.

Gawryl & MacAllister, of Nashua (Janine Gawryl, on the brief and orally), for the respondent.

BRODERICK, C.J.

In these appeals, the respondent, Estate of Frank S. Crabtree, III (estate), challenges two recommendations of the Master (Love, M.), approved by the Superior Court (Hampsey, J.), to deny requests for injunctive relief and dollar for dollar credit toward child support obligations based upon payments of Social Security dependency benefits to the children for whom the decedent, Frank S. Crabtree, III (Crabtree), was obligated to provide child support. We affirm in part, vacate in part and remand.

I

The record supports the following. At the beginning of 2003, Crabtree was under court orders to pay child support of $101 per week to Katherine Crabtree and $70 per week to Reba Slade. Crabtree had two children with Katherine and one child with Slade. Because Katherine received TANF (Temporary Assistance to Needy Families) benefits, she assigned her right to collect child support to the State. Crabtree's obligation to Slade was payable through the New Hampshire Division of Child Support Services (division), and Slade specifically asked the division to enforce her child support order.

Crabtree became disabled and unable to work in November 2003. He applied for Social Security disability insurance benefits, which were awarded in June 2005. He received his first monthly benefit check that month, along with a lump-sum payment of retroactive benefits. At the same time, all three of Crabtree's children received lump-sum payments of retroactive Social Security dependency benefits and began receiving monthly benefit checks due to Crabtree's disability.

At the same time Crabtree was pursuing Social Security disability benefits, he was also seeking to reduce his child support obligations. In July 2004, he moved to modify both of his child support orders, informing the court that his circumstances had changed because he was "unemployed and [had] filed for disability." In May 2005, the trial court approved uniform support orders modifying Crabtree's support obligations. Specifically, the court ordered Crabtree to pay $50 per month plus an arrearage "to be determined by agreement" for the support of his children with Katherine and to pay $50 per month for the support of his child with Slade. Although Crabtree was in arrears on his obligation to Slade, the new order pertaining to Slade's child did not address that arrearage. Both modifications were retroactive to October 5, 2004, the date of service.

Shortly after the trial court approved the modifications of Crabtree's child support obligations, the division began taking various actions against Crabtree to collect both his ongoing child support obligations and his arrearages. At issue here are two collection actions: (1) the division's garnishment of Crabtree's own direct Social Security disability benefits; and (2) its lien on his Bank of America checking account.

In response to the division's collection actions, and in reliance upon our decision in In the Matter of Angley–Cook & Cook, 151 N.H. 257, 855 A.2d 431 (2004), Crabtree asserted his right to have the division give him credit toward his ongoing and past due child support obligations based upon the Social Security dependency benefits his children were receiving. Among other things, he argued that because his children received monthly benefits in excess of the amount he was obligated to provide in child support, his ongoing support obligations and arrearages were effectively satisfied by those benefits. However, neither Crabtree nor the division ever requested the trial court to modify his child support obligations.

The relevant facts concerning the lien on Crabtree's bank account demonstrate that in August 2005, the division's office of child support provided Crabtree with affidavits of arrearages reflecting $6,735.36 owed to Slade and $10,311.24 owed to Katherine.

In two letters dated October 19, 2005, the division informed Crabtree of a $14,006 TANF arrearage and a $3,190 non-TANF arrearage. As to enforcement of those obligations, the letters discussed referral to the federal government for collection by administrative offset and/or federal tax refund offset. Crabtree contested both arrearages and requested administrative review.

By letter dated October 21, 2005, the Bank of America informed Crabtree that it had "been served with a tax levy/child support notice in the amount of $6885.36 naming [him] as judgment debtor." The letter also said that the bank was required to charge his account for up to the amount of the levy, and that he was subject to a fifty-dollar service charge. According to Crabtree's December 12, 2005 account statement, "a transaction posted on October 21, 2005 showed the levy of $4,673.62 [and][a] further transaction posted on November 3, 2005 showed the funds being returned to his account."

By ex parte order dated November 3, 2005, and issued in response to the motion that gave rise to this appeal, the trial court restrained the division from taking further collection actions against Crabtree and vacated the lien against his bank account. In an order dated November 8, 2005, issued following a hearing, the trial court reinstated the lien, with the proviso that Crabtree "shall be able to access $1,500 per month to pay for his own living expenses pending hearing on his [motion]." Crabtree's monthly Social Security benefit was $1,467 per month.

After the trial court reinstated the lien on Crabtree's bank account, the division served him with two notices of lien. According to those notices, the liens arose under RSA 458:17 (2004) (current version at RSA 461–A:14 (Supp. 2006)). The notices also informed Crabtree that his bank had been served with the notice of lien and an "order to withhold against all money ... in [its] possession that is due, owing or belonging to [him]," and that if he did not make satisfactory arrangements to pay the stated arrearages within twenty days, the division would "demand that BANK OF AMERICA, N.A. deliver all withheld property or money that is not exempt from attachment, to [the division]." As authority for the order to withhold and deliver, the division cited RSA 161–C:12 (2002). Crabtree contested both notices of lien and requested administrative review. According to the division, Crabtree's account statement indicated "that a transaction posted on November 18, 2005 showed a levy of $2,837.70." As of February 13, 2006, "those funds [were] still on hold at the bank, and have not yet been disbursed to the State of [New Hampshire]." The record contains no further information regarding the precise status of the funds that are "on hold," and it does not appear from the record that the division has yet served the bank with a demand to deliver the withheld funds.

The trial court order that gave rise to this appeal resulted from Crabtree's "verified motion for ex parte injunction, accounting and to determine arrearages (if any)." In that motion, Crabtree argued that: (1) he was paying substantially more than the court-ordered $50 per month per order, due to his children's receipt of Social Security dependency benefits coupled with his entitlement to a dollar for dollar credit toward his child support obligations on account of those benefits; (2) the division's garnishment of his direct Social Security benefits to pay his child support obligations was "without legal authority"; and (3) the division's lien on his bank account was unlawful. Subsequently, Crabtree also filed an ex parte motion to enjoin the deduction of child support from his Social Security benefits in which he argued that his children's dependency benefits covered his ongoing obligations to them and were sufficient to eliminate all of the arrearage he owed Katherine and some of the arrearage he owed Slade, the balance of which was more than covered by the lien on his bank account.

After a hearing, the trial court ruled that in the absence of any judicial modification, Crabtree was subject to two support orders, each requiring payments of $50 per month and until he sought judicial modification of those support orders, he was not entitled to any credit for his children's Social Security dependency benefits toward either his ongoing support obligations or his arrearages. Regarding the lien, the court explained:

[The division] was within its right to have a lien placed on the monies in the respondent's Bank of America account. There was no evidence to support the petitioner's contention that the monies were withdrawn at the direction of [the division]. As a result of the lien, Bank of America forwarded [a] check to [the division] in the sum of $4,673.62 on October 21, 2005 and [the division] returned those funds on November 3, 2005. The evidence also showed that a second transaction was posted on November 18, 2005 showing a levy in the sum of $2,873.70. These funds are still on hold at the bank.

The court also denied Crabtree's request for bank charges, attorney's fees and costs. This appeal followed.

During the pendency of this appeal, Crabtree died, and his estate replaced him as a party. According to the estate, the appeal is not moot because Crabtree's claims in this case are assets of the estate. On appeal, the estate argues that the trial court erred by: (1) ruling that Crabtree was obligated to seek modification of his child support obligations before he was entitled to credit for his children's Social Security dependency...