State, Dept. of Family Services v. Peterson

• Decision Date: 08 May 1998
• Docket Number: No. 97-202,97-202
• Citation: 957 P.2d 1307
• Parties: STATE of Wyoming, DEPARTMENT OF FAMILY SERVICES, Appellant (Petitioner/Respondent), v. Randy Jay PETERSON, Appellee (Defendant/Petitioner).
• Court: Wyoming Supreme Court

Page 1307

957 P.2d 1307

STATE of Wyoming, DEPARTMENT OF FAMILY SERVICES, Appellant (Petitioner/Respondent), v. Randy Jay PETERSON, Appellee (Defendant/Petitioner).

No. 97-202.

Supreme Court of Wyoming.

May 8, 1998.

William U. Hill, Attorney General; Michael L. Hubbard, Deputy Attorney General; and Donna A. Murray, Special Assistant Attorney General, for Appellant (Petitioner/Respondent).

Robert O. Anderson, Riverton, for Appellee (Defendant/Petitioner).

Before TAYLOR, C.J., and THOMAS, MACY, GOLDEN and LEHMAN, JJ.

MACY, Justice.

Appellant State of Wyoming, Department of Family Services (the State) appeals from the order which the district court entered in favor of Appellee Randy Peterson (the father). The district court found that the oral modification agreement entered into fourteen years earlier by the father and the custodial grandparent to lower the father's child support obligations was valid even though the custodial grandparent was receiving public assistance.

We reverse and remand.

ISSUE

The State presents a single issue for our review:

Did the district court err when it determined that the Department of Family Services was bound by an oral modification of child support between a non-custodial parent and the custodial grandparent when the custodial grandparent was the recipient of public assistance?

FACTS

The father and Michelle Peterson married each other on April 20, 1977. Two children were born during the marriage. Irreconcilable differences arose, and the parties were granted a divorce on May 11, 1982. The divorce decree awarded custody of the children to the maternal grandmother and ordered the father to pay support in the amount of $380 per month. Without ratification by the court, and at about the time when the divorce decree was entered, the grandmother and the father entered into an oral modification agreement to reduce the father's child support obligations to $250 per month. The father began making the monthly $250 payments before the divorce decree was entered.

The grandmother began receiving Aid to Families with Dependent Children (AFDC) benefits in January of 1987. In exchange for the state aid, the grandmother assigned her rights to child support, whether accrued, present, or future, to the State of Wyoming. In the assignment notice, the State requested copies of the divorce decree and the payment record. The State subsequently sent a delinquency notice to the father on July 16, 1992, informing him that he was delinquent for the difference between the $380 per month that he was ordered to pay and the $250 per month that he had been paying. The delinquency notice also informed the father that an income withholding order would be entered. The father filed a petition to stay service of the withholding order. On June 10, 1996, the father petitioned the district court to ratify the oral modification that he and the grandmother had agreed to fourteen years earlier.

The district court ratified the modification agreement between the father and the grandmother as of June 1, 1982. It found that the assignment of rights to the State did After a hearing on the matter, the district court entered a second order which stated that the modification agreement was enforceable and that, under equitable principles, the modification agreement was in effect until the State filed its delinquency notice. The district court found that the father had paid regularly in accordance with the oral agreement. It then held that arrearages began to accrue when the State filed its delinquency notice because the father was "on notice [at that time] that this oral modification with [the grandmother] now involved a third party and was disputed." The State appeals to this Court.

not go into effect until the grandmother actually began receiving state aid. The State moved to have the order set aside because it was not a party to the action and because the judgment had been entered without proper service being given. The district court vacated the order and made the State a party to the proceeding so that it could respond to the father's pleadings.

DISCUSSION

The State claims that the district court erred by ratifying the father and grandmother's oral agreement to reduce the child support obligations because the agreement interfered with the reimbursement of state benefits which had been paid on the children's behalf. The father responds that the State was only entitled to the child support payments provided for by the modification agreement because the agreement had been entered into long before the grandmother began collecting state aid.

AFDC is a cooperative federal and state public assistance program in which the federal government provides matching funds to the participating states to provide assistance to the needy dependent child and to the relative caretaker. In order to qualify for matching funds, a state must have in effect a plan approved by the Social Security Act, and must operate its child support program in conformity with that plan.

State ex rel. Southwell v. Chamberland, 361 N.W.2d 814, 818 (Minn.1985). Subchapter IV of the Social Security Act outlines the plan that each state must implement in order to receive grants from the federal government for aid to needy families with children. Under that plan, recipients must assign their rights to support to the State:

A State plan for aid and services to needy families with children must--

...

(26) provide that, as a condition of eligibility for aid, each applicant or recipient will be required--

(A) to assign the State any rights to support from any other person such applicant may have (i) in his own behalf or in behalf of any other family member for whom the applicant is applying for or receiving aid, and (ii) which have accrued at the time such assignment is executed[.]

42 U.S.C. § 602(a)(26)(A) (1988).

In order for Wyoming to be eligible for federal AFDC money, the legislature enacted the Child Support Enforcement Act, WYO. STAT. §§ 20-6-101 to -402 (1994), a statutory scheme designed to aid the State in enforcing child support obligations. The relevant statutes which were in effect when this controversy presented itself are set out below.

WYO. STAT. § 20-6-103(a) (1997) requires the State to establish a child support enforcement program:

(a) The department shall establish a program of enforcement services in cooperation with the federal government pursuant to Title IV-D and other applicable federal regulations, to aid in enforcing support obligations owed by obligors to their children, in locating obligors, in establishing parentage and in obtaining child support.

WYO. STAT. § 20-6-105(a)(i) (1994) (amended 1997) required, as a condition of eligibility for state aid, the applicants to assign their rights to child support payments to the division which implemented the program:

(a) Child support enforcement services shall be provided to:

(i) Those recipients of aid to families with dependent children who, as a condition of eligibility under federal law, are WYO. STAT. § 20-6-106 (1994) (amended 1995 & 1997) provided in relevant part that, in addition to the rights to support being assigned by operation of law, the State was subrogated as a recipient entitled to any debt created by the court ordered child support:

required to assign their rights to support to, and cooperate with, the division in the establishment of parentage and the enforcement of support obligations; ...

(a) By signing an application for, or being a recipient of, aid to families with dependent children, a support obligee assigns to the department, by operation of law, all rights that person and all other members of the household have to child and spousal support, whether accrued, present or future, and their right to medical support.

(b) The department shall have a cause of action against an obligor with respect to any child on behalf of whom public assistance has been paid to recover support due to that child, or to establish parentage for the dependent child if born out of wedlock. The action may be brought and maintained either in the department's own name or in the name of the obligee or obligor.

....

(d) For purposes of prosecuting any civil action under this act or other applicable state statutes relating to the enforcement of child support obligations, the department is the assignee of support rights to the extent of any public assistance provided to an obligee. No act of the obligee shall prejudice these rights of the department or the dependent child.

(e) No agreement between any obligee and any obligor purporting to relieve the obligor of any duty of support or to settle past, present or future support or obligations either as settlement or prepayment will reduce or terminate any rights of the department to recover from the obligor for support provided by the department unless the department has consented to the agreement in writing or unless it has been approved by the court.

....

(g) If a court orders support to be paid by an obligor, the department shall be subrogated to the debt created by the order. This subrogation interest shall apply to all orders of support including temporary spouse support orders, family maintenance and alimony orders to the extent of the amounts paid by the department in public assistance to or for the...