Title: State, Dept. of Family Services v. Peterson

State: wyoming

Issuer: Wyoming Supreme Court

Document:

State, Dept. of Family Services v. Peterson1998 WY 64957 P.2d 1307Case Number: 97-202Decided: 05/08/1998Supreme Court of Wyoming

STATE 
of Wyoming, DEPARTMENT OF FAMILY SERVICES, Appellant 
(Petitioner/Respondent),

v.

Randy Jay PETERSON, Appellee 
(Defendant/Petitioner).

 

Appeal from the District Court, Fremont County, Nancy 
J. Guthrie, J.

 

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.

 

[¶1] 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.

 

[¶2] We reverse and 
remand.

 

        
                                      ISSUE

 

[¶3] 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

 

[¶4] 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.

 

[¶5] 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.

 

[¶6] 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 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.

 

[¶7] 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.

 

                                           
DISCUSSION

 

[¶8] 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.  

 

[¶9] 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.

 

[¶10] 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).

 

[¶11] 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.

 

[¶12] 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 
required to assign their rights to support to, and cooperate with, the division 
in the establishment of parentage and the enforcement of support obligations; . 
. .

 

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:

 

(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 
benefit of a dependent child and the amount of medical support provided by or 
through another division of the department or the department of health or the 
department of family services.

 

[¶13] We agree with the way 
other jurisdictions have handled similar situations. The Connecticut Appellate 
Court has addressed the question of whether a custodial parent assigns his/her 
rights to past, current, and future support payments in exchange for receiving 
public assistance. Langan v. Weeks, 37 Conn. App. 105, 655 A.2d 771 (1995). In 
Langan, the appellate court held that the mother assigned all her rights to 
support obligations, including past due arrearages, when she applied for the 
state aid. 37 Conn. App. 105, 655 A.2d  at 782. The Utah Supreme Court held in 
Gulley v. Gulley, 570 P.2d 127, 128-29 (Utah 1977), that, even though the 
parents had entered into an agreement two years before the mother applied for 
state aid to extinguish all child support obligations in exchange for a lump 
sum, the father was obligated to reimburse the state for the public aid which 
had been given for his children's benefit. In Martinez v. Martinez, 98 N.M. 535, 
650 P.2d 819, 823 (1982), the New Mexico Supreme Court held that a father could 
not be relieved of his duty to support his children while the children were 
receiving AFDC benefits. The New Mexico court opined:

 

Public policy dictates that the primary obligation 
for support and care of a child is by those who bring a child into the world 
rather than on the taxpayers of the state. Therefore, parents have a duty to 
support their children and cannot rid themselves of it by transferring the duty 
to someone else.

 

98 N.M. 535, 650 P.2d  at 
823.

 

[¶14] The State also asserts 
that the retrospective ratification of the oral modification agreement between 
the grandmother and the father was improper because the agreement had not been 
timely submitted to the district court for ratification.

 

While agreements and stipulations between the 
divorced parties are presumed fair and favored by the courts, such agreements 
must be promptly submitted to the district court having jurisdiction to revise 
the original decree. The parties may not independently revise the decree, only 
the district court can do that, when warranted.

 

McKenzie v. Shepard, 814 P.2d 701, 702 (Wyo. 1991) (citations omitted). WYO. STAT. § 20-2-113(a)(i) 
(1997) provides in pertinent part:

 

(a) . . . An order for child support is not subject 
to retroactive modification except:

 

          
(i) Upon agreement of the parties; or

 

(ii) The order may be modified with respect to any 
period during which a petition for modification is pending, but only from the 
date notice of that petition was given to the obligee, if the obligor is the 
petitioner, or to the obligor, if the obligee is the 
petitioner.

 

The father argues that this 
was not a retroactive modification but was a ratification of an oral 
modification made when support became due and that a support obligation can be 
modified by agreement of the parties pursuant to § 
20-2-113(a)(i).

 

[¶15] We do not agree with 
the distinction that the father attempts to make. This Court has held that 
district courts do not have the authority to retrospectively modify divorce 
decrees with respect to child custody obligations.

 

If a court could retrospectively modify the rights of 
a party under a decree incorporating a settlement agreement, the agreement 
becomes virtually worthless. This development would violate well-established 
Wyoming law favoring settlement agreements.  Furthermore, allowing retrospective 
modifications of divorce decrees may encourage default. A party might decide to 
stop payment and allow arrearages to accrue to a substantial amount, with the 
hope and anticipation that the court will cancel the accrued payments owed to 
the receiving party. We prefer a rule which encourages a party to seek 
modification of a divorce decree at the moment his financial situation 
changes.

 

Parry v. Parry, 766 P.2d 1168, 1170 (Wyo. 1989) (citations omitted). See also McKenzie, 814 P.2d  at 702. 
Furthermore, the State, which was one of the parties, did not agree to a 
retrospective ratification of the modification agreement.

 

[¶16] Finally, the father 
suggests that the State should be estopped from challenging the oral 
modification agreement because it waited approximately five years before 
complaining about it. We have previously addressed claims of equitable estoppel 
against state agencies. In Seaman v. Big Horn Canal Association, 29 Wyo. 391, 
398, 213 P. 938 (1923), we stated:

 

[O]ne who by his acts or representations 
intentionally or through culpable negligence induces another to believe certain 
facts to exist, and the latter, not knowing the facts, acts on such belief to 
his substantial prejudice, the former is, in equity, estopped to deny the 
existence of such fact.

 

In more recent cases, we 
have said that equitable estoppel requires some misrepresentation and is 
generally applied to prevent fraud, either constructive or actual. Griess v. 
Office of the Attorney General, Division of Criminal Investigation, 932 P.2d 734, 739 (Wyo. 1997); B & W Glass, Inc. v. Weather Shield Mfg., Inc., 829 P.2d 809, 813 (Wyo. 1992); Squaw Mountain Cattle Company v. Bowen, 804 P.2d 1292, 1297 (Wyo. 1991). Equitable estoppel against a governmental agency 
requires even more egregious conduct.

 

Equitable estoppel should not be invoked against a 
government or public agency functioning in its governmental capacity, except in 
rare and unusual circumstances and may not be invoked where it would serve to 
defeat the effective operation of a policy adopted to protect the 
public.

 

Big Piney Oil & Gas 
Company v. Wyoming Oil and Gas Conservation  Commission, 715 P.2d 557, 560 (Wyo. 
1986). See also Griess, 932 P.2d  at 739. We have also stated the proposition in 
this way: Equitable estoppel "does not apply to governmental or sovereign 
functions, especially where it would defeat the public interest. [Furthermore,] 
the state may not be estopped for the unauthorized acts or errors of its 
officers or employees." State Highway Commission of Wyoming v. Sheridan-Johnson 
Rural Electrification Association, 784 P.2d 588, 592 (Wyo. 1989) (citation 
omitted).

 

[¶17] The father did not 
establish any of the special facts which might have entitled him to claim 
equitable estoppel. The record does not demonstrate that the State induced the 
father to believe that certain facts existed or that the father acted on that 
belief to his prejudice; nothing in the record shows  misrepresentation or 
fraud, either actual or constructive; and no egregious conduct or any rare and 
unusual circumstance has been shown which would justify an exception to the 
rule. Furthermore, equitable estoppel, if it were applied in this instance, 
would defeat the application of a policy which has been adopted to protect the 
public.

 

                                           
CONCLUSION

 

[¶18] The district court 
erred when it retroactively ratified the father and the grandmother's oral 
modification agreement that they had entered into fourteen years earlier. The 
State is entitled to be reimbursed, from the arrearages that have accrued since 
the 1982 divorce decree was entered, the amount that it has paid in state aid 
for the children's benefit.

 

[¶19] Reversed and 
remanded.