Nusbaum v. Nusbaum

• Citation: 243 Md.App. 653,221 A.3d 1107
• Decision Date: 20 December 2019
• Docket Number: No. 0480, Sept. Term, 2018,0480, Sept. Term, 2018
• Parties: Paul W. NUSBAUM, Jr. v. Marsha R. NUSBAUM, et al.
• Court: Court of Special Appeals of Maryland

243 Md.App. 653

221 A.3d 1107

Paul W. NUSBAUM, Jr.

v.Marsha R. NUSBAUM, et al.

No. 0480, Sept. Term, 2018

Court of Special Appeals of Maryland.

December 20, 2019

Argued by: Chad G. Spencer (Spencer & Stahl, on the brief), Columbia, MD, for Appellant.

Argued by: Karen H. Rohrbaugh (Brian E. Frosh, Atty. Gen., Baltimore, MD), Amy M. Feldman (Feldman Law, LLC, Towson, MD), on the briefs, for Appellee.

Panel: Nazarian, Wells, Sally D. Adkins (Senior Judge, Specially Assigned) JJ.

Wells, J. Appellant, Paul Nusbaum, asked the Circuit Court for Carroll County to order the Carroll County Office of the Maryland Child Support Administration to reallocate the money he had previously paid for child support and alimony solely to his child support account. After a hearing on the issue, the circuit court ruled that Mr. Nusbaum was judicially estopped from the requested reallocation because Mr. Nusbaum had previously claimed part of the money as "alimony paid" and taken an income tax deduction. Consequently, the court ruled that he could not re-characterize those payments exclusively as child support.

Mr. Nusbaum took a timely appeal and presents two questions for our review:

1. Did the circuit court err in declaring that Mr. Nusbaum was judicially estopped from claiming that the amounts he claimed as alimony on his tax returns should be reallocated toward his child support arrears with the [Carroll County Office of Child Support Enforcement (OCSE) ]?

2. Did the Circuit Court err in not reaching a decision as to whether the allocation of support funds paid to a former spouse should be first paid to current child support and child support arrears, prior to any payment of funds toward spousal support?

We hold that although the circuit court erred in its application of judicial estoppel to prevent the reallocation, the circuit court could not have legally ordered the reallocation in any event. We, therefore, affirm the circuit court.

FACTUAL AND PROCEDURAL BACKGROUND

When they divorced in 2005, the Circuit Court for Carroll County ordered Paul Nusbaum to pay his former wife, Marsha Nusbaum, $3,250.00 per month in non-modifiable alimony. Mr. Nusbaum was also ordered to pay Ms. Nusbaum $1,422.00 per month in child support for the benefit of their four children. At Ms. Nusbaum's request, Mr. Nusbaum was required to pay both sums via an Earnings Withholding Order through the Carroll County Office of Child Support Enforcement ("OCSE"), the local branch of the Maryland Child Support Administration ("MCSA"), the state agency charged with collecting child and spousal support.

Around 2008, Mr. Nusbaum moved to Georgia. The OCSE duly registered the Earnings Withholding Order in Georgia, obligating Georgia to collect Mr. Nusbaum's alimony and child support payments and forward them to Maryland.

It is important to note that during this time, although Mr. Nusbaum's wages were garnished, he did not pay the full monthly amount of either child support or alimony because what he earned could not fully satisfy either obligation. Consequently, by 2010, when Mr. Nusbaum asked the court to modify his monthly child support payment, he owed $36,264.60 in unpaid child support and $117,127.22 in unpaid alimony. Nevertheless, because of the emancipation of two of the Nusbaums' children, the court reduced his child support payment to $941.00 per month from January 2010 through August 2010, at $835.00 per month for September 2010, and established the child support payment at $929.00 per month starting in October 2010.

Sometime in early 2016, Mr. Nusbaum noticed that Georgia allocated his monthly payments differently from Maryland. Whereas Maryland declared his child support arrears were $80,905.25, Georgia said his child support arrears were approximately $30,000.00. Mr. Nusbaum discovered that this was because Georgia allocated a higher percentage of his monthly payment to child support, rather than alimony. Maryland did almost the opposite, allocating 70% of his payments to alimony and 30% to child support. Armed with this information, Mr. Nusbaum returned to Maryland.

On April 16, 2016, Mr. Nusbaum filed a motion asking the circuit court to order OCSE to do an audit and establish his arrears for both alimony and child support. Mr. Nusbaum also requested the court to modify his on-going child support payment because another of the Nusbaums' children had emancipated.¹ At a hearing before a Magistrate, Mr. Nusbaum argued that the circuit court should order OCSE to perform an audit to determine exactly how much he had paid for both obligations. After the audit, he wanted OCSE to credit all the money he paid be put toward his child support obligation until that obligation was satisfied. Only then, so Mr. Nusbaum argued, should any excess amount be credited against his alimony obligation. Ms. Nusbaum opposed the reallocation request.

The Magistrate, in a written set of findings, reduced Mr. Nusbaum's on-going monthly child support obligation to $481.00 per month, plus $120.25 toward his arrears, due to the emancipation of one of the children. More importantly, the Magistrate determined that the circuit court did not have the authority to: (1) order OCSE to perform an audit, nor, (2) order OCSE to reallocate Mr. Nusbaum's prior total payments to exhaust his child support obligation before satisfying his alimony obligation. "Your Magistrate reviewed the statutes cited by the parties, testimony presented, Plaintiff's Exhibit 3, and [case cited], and finds that there is no authority given to this Court to alter the Audit in the manner requested by [Mr. Nusbaum]." Surprisingly however, the Magistrate recommended "that upon entry of this Order, that child support current and arrearage payments should be given priority over the alimony obligation, as it is in the best interests of the parties' minor child." OCSE filed Exceptions to the Magistrate's recommendations.

At the Exceptions hearing, the attorneys for OCSE² and Mr. Nusbaum set forth their positions. Mr. Nusbaum wanted all past payments to Ms. Nusbaum reallocated to satisfy his child support obligation first, rather than be apportioned between alimony and child support, as OCSE had done. Additionally, he wanted any future payments apportioned to first satisfy child support, then child support arrears, and alimony last. In Mr. Nusbaum's view, it was in the children's best interests to prioritize the allocation of payments in this way.

Ms. Nusbaum and OCSE disagreed. The attorney for OCSE noted that Mr. Nusbaum desired the reallocation because Georgia was "coming after" him for not making full payments to either child support or alimony. More importantly, OCSE's counsel explained that under current procedures, child support and spousal support are given equal priority, as the payments are for the benefit of the children and the former spouse. Additionally, counsel for OCSE explained that it would be too onerous for them to have to manually adjust each monthly payment and apportion it solely to child support.

Seven days after the hearing, in an oral ruling, the judge "grudgingly" found that the Magistrate erred. The judge, essentially, agreed with Mr. Nusbaum and ordered OCSE to perform an audit and "allocate and prioritize all payments first and foremost to the child support obligation as well as any child support arrears." "Any other remaining payments... shall then be credited towards [Mr. Nusbaum's] alimony obligation and any outstanding arrearage."

Ms. Nusbaum immediately filed a motion to alter or amend the court's order. Simultaneously, OCSE filed a motion to reconsider. Ms. Nusbaum argued that there was no evidence presented at the hearing to suggest that the ordered reallocation was in the children's best interests, as Mr. Nusbaum claimed. Additionally, both Ms. Nusbaum and OCSE argued that the circuit court should reverse itself because the reallocation was contrary to "Maryland [l]aw and federal and state regulations regarding child support." OCSE specifically argued that the court's order placed OCSE in direct violation of federal law, since they were obligated pursuant to federal statutes and the state's "distribution matrix" to collect spousal and child support without prioritizing one over the other. Mr. Nusbaum opposed altering the court's order in any way.

The court held a hearing on Ms. Nusbaum's motion to alter or amend judgment and OCSE's motion to reconsider, after which the court took the matter under advisement. Later, the court issued an "Opinion and Order" which was a legal analysis of the arguments advanced at the motions hearing. For reasons not entirely clear, the court re-evaluated Ms. Nusbaum's request for counsel. The record is ambiguous as to whether the court denied her request or found it to be moot. In any event, the record is clear that Ms. Nusbaum was represented by counsel at the motions hearing. The court also revisited its in-court ruling denying Ms. Nusbaum's request to allow expert testimony at the hearing. The court determined that it properly excluded expert testimony.

In its analysis of what the court termed "Motion 2," the reallocation issue, the judge admitted that at the end of the Exceptions hearing he was "uncomfortable" ordering OCSE to perform an audit and reallocate Mr. Nusbaum's payments giving priority to satisfying his child support obligation. The judge recalled that he found OCSE's allocation method, giving equal priority to spousal and child support, to be "inconsistent with the best interests of the child standard." Based on his reasoning at that time, the judge concluded that Mr. Nusbaum could not be "estopped" from getting what he wanted. Now, the judge noted that at prior hearings on Mr. Nusbaum's requests to modify child support, Mr. Nusbaum provided his income tax returns. The judge found that on those tax returns, Mr. Nusbaum "claimed a deduction from taxable income, the amount of alimony deemed ‘paid’ by [OCSE]."

In other words, he benefited from an income

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