McMahan v. Missouri Dept. of Social Services, Div. of Child Support Enforcement

• Decision Date: 20 October 1998
• Docket Number: No. 73267,73267
• Citation: 980 S.W.2d 120
• Parties: Lloyd McMAHAN, Sr. and Mary McMahan, Respondents, v. MISSOURI DEPARTMENT OF SOCIAL SERVICES, DIVISION OF CHILD SUPPORT ENFORCEMENT, Appellant.
• Court: Missouri Court of Appeals

Page 120

980 S.W.2d 120

Lloyd McMAHAN, Sr. and Mary McMahan, Respondents, v. MISSOURI DEPARTMENT OF SOCIAL SERVICES, DIVISION OF CHILD

SUPPORT ENFORCEMENT, Appellant.

No. 73267.

Missouri Court of Appeals,

Eastern District,

Hillsboro Division.

Oct. 20, 1998.

Kenard L. Jones, Michael S. Kisling, Jefferson City, for appellant.

V. Kenneth Rohrer, Farmington, for respondent.

RICHARD B. TEITELMAN, Judge.

The State of Missouri, Department of Social Services, Division of Child Support Enforcement ("the State") appeals from a judgment awarding Lloyd and Mary McMahan ("plaintiffs"), who were prevailing parties in their petition for judicial review of the State's underlying agency action, attorney's fees pursuant to Section 536.087 RSMo 1994. ¹ On appeal, the State argues that the fee award was error because (1) even though the State did not ultimately prevail in the dispute its position was substantially justified; (2) the underlying agency action was not an "agency proceeding" within the meaning of the statute; (3) the hourly rate which the court granted exceeded that which the statute allows; (4) plaintiffs failed to properly plead they were eligible to receive a fee award; and (5) the court did not state in writing its reasons for the fee award as the statute requires. We reverse and remand.

Factual and Procedural Background

This case involves the State's efforts to establish child support from plaintiffs, and whether the State was substantially justified in refusing to make any adjustment in the amount of support for plaintiff Lloyd McMahan in light of his limited income and extraordinary expenses related to his medical disability.

Plaintiffs, who live together, are the parents of Cleveland McMahan (hereinafter, "the minor"), born on December 21, 1978. Trixie Martin is an adult relative of the minor and is his nonparent caretaker. In the fall of 1995, after the minor had begun living with her, she completed forms requesting assistance from the State in obtaining support of a minor child.

Thereafter, pursuant to Section 454.470, the State issued a separate "Notice and Finding of Financial Responsibility" to both Mary and Lloyd McMahan respectively, finding an obligation of support for the minor on the part of each parent. Their income-proportionate amounts of support were found to be $71.00 for Mrs. McMahan and $290.00 for Mr. McMahan; in addition, the State determined both parents would be responsible for providing medical insurance for the minor. These Notices were styled and captioned in the form of legal pleadings, and were served on plaintiffs by the sheriff. The Notices informed plaintiffs that they had the right to respond by requesting an administrative hearing if they wished to contest the findings contained therein, and that if they failed to respond to the Notices within twenty days after receipt, the State would enter legally binding orders against them establishing support in the amount stated in the Notices.

Plaintiffs did respond by requesting an administrative hearing, which was held on March 18, 1996. Present at the hearing in addition to the hearing officer were the plaintiffs; their attorney, Mr. Kenneth Rohrer; Trixie Martin; and Mr. Bill Schmidt, a child support enforcement investigator and Agency witness for the State. ² The Agency presented its Form 14 and other evidence concerning plaintiffs' income. Plaintiffs did not dispute the accuracy of their stated income; Mrs. McMahan earned $772.00 per month at a part-time minimum wage job, and Mr. McMahan received $1,593.00 per month from a Railroad Retirement pension based on medical disability. However, plaintiffs also presented medical records concerning Mr. McMahan's medical condition and testimony regarding extraordinary expenses necessitated by that condition, including special diet needs and required frequent trips to St. Louis for medical treatment, which totaled approximately $400.00 per month. Based on these expenses, plaintiffs' requested an adjustment from the standard guideline amount in the support obligations of Mr. McMahan.

On April 25, 1996, the administrative hearing officer issued his order and decision. ³ In it, applying standard Rule 88.01 and Form 14 guidelines, he determined that the plaintiffs' total amount of required child support, including $102.91 per month for medical insurance for the minor that Mrs. McMahan was ordered to maintain, would be $533.91. Of this, Mrs. McMahan was ordered to pay support in the amount of $71.00 per month plus the medical insurance; and Mr. McMahan was ordered to pay support in the amount of $360.00 per month. The hearing officer further concluded, without explanation, that the extraordinary expenses related to Mr. McMahan's medical condition did not justify a deviation from the guidelines with respect to child support.

Pursuant to Section 536.110, plaintiffs then filed a petition for judicial review of the final decision and order rendered by the hearing officer. In their petition plaintiffs alleged that the Agency had acted arbitrarily and unreasonably by ignoring uncontroverted evidence regarding Mr. McMahan's medical disability and the extraordinary expenses resulting from it, and by rigidly applying the Rule 88.01 and Form 14 guidelines rather than finding them to be unjust and inappropriate in light of the circumstances. The petition prayed for an order requiring the Agency to set "an amount of child support less than the presumed child support for Lloyd C. McMahan, Sr., by taking into account the things and matters that the Agency failed to do...."

The case was heard by the trial court on December 5, 1996. Later that month the court entered its judgment in favor of plaintiffs. It found, inter alia, that the Agency's decision and order with regard to the amount of child support for Lloyd McMahan was unreasonable, unsupported by competent and substantial evidence upon the whole record, and constituted an abuse of discretion. It ruled that following the Rule 88 and Form 14 child support guidelines was unjust and inappropriate as to Mr. McMahan in light of his medical disability and the expenses associated with the disability, and ordered that his child support be reduced by $100.00 per month. The court's judgment reserved jurisdiction to consider an application by plaintiffs for an award of attorney's fees from the Agency.

On January 23, 1997, plaintiffs filed an application for reasonable attorney's fees and expenses pursuant to Section 536.087.

Section 536.087.1 provides:

A party who prevails in an agency proceeding or civil action arising therefrom, brought by or against the state, shall be awarded those reasonable fees and expenses incurred by that party in the civil action or agency proceeding, unless the court or agency finds that the position of the state was substantially justified or that special circumstances make an award unjust.

Section 536.087.2 provides:

In awarding reasonable fees and expenses under this section to a party who prevails in any action for judicial review of an agency proceeding, the court shall include in that award reasonable fees and expenses incurred during such agency proceeding unless the court finds that during such agency proceeding the position of the state was substantially justified, or that special circumstances make an award unjust.

The statute further provides that a party seeking such an award must submit his or her fee application within thirty days of any final decision in an agency proceeding or final judgment in a civil action. Section 536.087.3. The application must show that the applicant is a prevailing party and is "eligible to receive" such an award, must include an itemized statement of the fees and expenses sought, and must allege that the position of the State was not substantially justified. Id. The decision of a court or agency on an application for fees and expenses made under this section must be in writing, and must include written findings and conclusions concerning the reason or basis for the decision. Section 536.087.6.

Plaintiffs' fee application alleged prevailing party status and eligibility to receive an award, alleged that the position of the State had not been substantially justified, and included a properly itemized statement reflecting the actual hours expended and hourly rate at which fees were computed. The application sought fees in the amount of $2,500.00 and expenses in the amount of $198.04. On February 7, 1997, the State filed an Answer to plaintiffs' fee application. The Answer consisted of simply a blanket general denial of the allegations contained in the application, together with an affirmative prayer requesting that the court refuse to award fees and instead find "that the State was substantially justified or that special circumstances make an award unjust."

A hearing on the application for fees and expenses was held on May 15, 1997. The transcript of that hearing reflects that despite having prior notice, counsel for the State failed to appear at the hearing. The court took judicial notice of its entire file at the hearing, reviewed the fee application and attached itemized billing statement, and heard testimony from Mr. Rohrer concerning his experience as an attorney and that based upon his experience he felt the amount sought was reasonable, necessary, fair and customary. At the conclusion of the hearing the court stated on the record that plaintiffs had prevailed in the action, that the position of the State had not been substantially justified, and that the full amount of fees and expenses requested ($2,698.00) would be granted. Other than a brief docket sheet minute entry signed by the judge, however, which merely noted that plaintiffs' application for attorney's fees had been called and sustained, the court's fee award decision and the reasons or basis for it were never stated in writing.

The State now appeals only the court's decision to award attorney's fees and...