Opinion ID: 1199728
Heading Depth: 2
Heading Rank: 3

Heading: Does the Agreement Violate 42 U.S.C. Sec. 407?

Text: 42 U.S.C. Sec. 407 states, in relevant part: Section 407. Assignment; amendment of section (a) The right of any person to any future payment under this title (42 U.S.C. Section 401 et seq.) shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under the title (42 U.S.C.S. Section 401 et seq.) shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law. (b) No other provision of law, enacted before, on, or after the date of the enactment of this section (enacted Apr. 20, 1983), may be construed to limit, supersede, or otherwise modify the provisions of this section except to the extent that it does so by express reference to this section. The magistrate judge interpreted the provisions of the agreement between Mr. and Mrs. Phipps to constitute a transfer or assignment of Mr. Phipps' Social Security benefits, which is prohibited by Sec. 407. The record illustrates that the magistrate judge relied on one case which holds that Sec. 407 of the Social Security Act imposes a broad bar against the use of any legal process to reach all social security benefits. Philpott v. Essex County Welfare Bd., 409 U.S. 413, 93 S.Ct. 590, 34 L.Ed.2d 608 (1973). The plain language of the Phipps agreement, however, does not refer to Mr. Phipps' Social Security benefits. Instead, the agreement only specifies that Mr. Phipps shall pay to Mrs. Phipps one-third of his total retirement benefits. It was the oral agreement between the parties that resulted in Mr. Phipps agreeing to divide his retirement funds as he did. Mr. Phipps now wishes to use this oral agreement as a means of escaping his obligations under the divorce settlement. In Philpott, an individual named Wilkes applied for assistance from Essex County, New Jersey. As a condition for receiving this assistance, the Essex County Welfare Board required Wilkes to execute a reimbursement agreement. Under New Jersey law, such agreements have the force and effect of a judgment, allowing the Board to obtain reimbursement from property of Wilkes that was subsequently discovered or acquired. After Wilkes began receiving assistance from the Board, he received a lump-sum disability payment under the Social Security Act. When he declined to reimburse the Board, the Board sued to reach the bank account where Wilkes had deposited his benefit check. The Supreme Court held that Sec. 407 on its face prevented the Board from reaching Wilkes' Social Security funds. Philpott, 409 U.S. at 415, 93 S.Ct. at 592. Philpott is distinguishable from the case at bar. Unlike the agreement signed by Wilkes, the agreement between Mr. and Mrs. Phipps did not specify the source of Mr. Phipps' payments. The agreement did not subject his Social Security benefits to legal process, or transfer the receipt or control of his Social Security benefits to Mrs. Phipps. For example, she did not receive and cash his checks. [1] Furthermore, the agreement did not provide for the attachment of Mr. Phipps' Social Security benefits. If he again fails to comply with the agreement, Mrs. Phipps can seek attachment of Mr. Phipps' Boilermaker benefits. [2] In short, the only importance of Mr. Phipps' Social Security receivable benefits is that they serve as a guide for his monthly payments to Mrs. Phipps. Mr. Phipps next argues that because the administrators of his Boilermakers retirement fund began to send Mrs. Phipps one-third of such fund each month after she sent them a copy of the agreement, the agreement is an assignment of Mr. Phipps' Social Security benefits. We are unpersuaded by this contention. Neither on its face nor in practice did the agreement assign Mr. Phipps' Social Security interests. The treatment of Mr. Phipps' Boilermaker funds was a wholly separate matter. Because we decide that the agreement is and has been enforceable, it is not necessary for us to address Mrs. Phipps' argument that Mr. Phipps' shortfall in his obligation stemmed from his Boilermaker funds.