NOTICE: THIS OPINION HAS NOT BEEN RELEASED FOR PUBLICATION. UNTIL
RELEASED, IT IS SUBJECT TO REVISION OR WITHDRAWAL.
Facts & Procedural History
¶1 Debbie Roca, now Debbie Houston, and Carlos Roca were divorced by a
consent decree entered on March 12, 1990. The decree of divorce included a child
support computation which obligated Roca to pay the sum of $403.70 each month.
After ten years of non-payment Houston cited Roca for contempt, alleging Roca
had willfully failed to comply with the decree's child support mandates. A jury
found the defendant guilty of indirect civil contempt, and he was sentenced to
six months incarceration. Additionally, the trial judge imposed a judgment for
past due child support in the amount of $85,392.77. In its September 13, 2000
judgment, the trial court determined that the principal arrearage owed was
$55,400.27. This sum was set as the purge amount. Additionally, the judgment
imposed statutory interest on the principal arrearage at a rate of ten percent
per year. Neither party appealed this ruling.
¶2 Following his incarceration, Roca paid $5,000 of the purge fee and was
released from custody. The trial court conditioned Roca's release on his payment
of $850.00 per month toward current and past due child support beginning October
1, 2000.1
¶3 Roca made payments for approximately two years, and on April 16, 2003, the
trial court entered an order establishing a reduced purge fee of $40,215.87. The
parties also entered into an agreed order lowering Roca's monthly child support
payment to $193.74 per month. This order became effective May 1, 2003. The trial
court lowered the cumulative monthly payment for current and past due child
support from $850.00 to $600.00. Additionally, the trial judge required all
future payments to be posted through the Oklahoma Centralized Support
Registry.2 The
Oklahoma Department of Human Services began administering child support
collections for the Roca case in June of 2003. Roca made monthly payments of
$600.00 between June 2003 and August 2009.3 His current monthly child support
obligation terminated at the end of May 2005, when the parties' child reached
the age of majority.
¶4 On August 26, 2009, Roca filed a motion asking the district court to enter
an order finding he had satisfied the principal child support arrearage; he
further requested termination of the wage assignment. Roca later withdrew the
motion and submitted a notice which asserted "all of his court-ordered child
support payments" had been paid. The notice acknowledged owing some amount of
accrued interest, but maintained that the remainder of his child support
obligation had been paid in full. Spreadsheets included in the record reflected
child support payments of $52,168.00 were made by Roca between June 2003 and
August 2009.4
Houston filed an objection, claiming for the first time that all of Roca's
previous payments should have been applied in the following order: (1) current
child support, (2) interest on the judgment, and finally (3) the principal
arrearage. According to Houston's calculations, Roca still owed $84,147.26. On
September 21, 2009, a default order was entered adopting the figures presented
by Houston.5
Roca sought to vacate the default order, and on November 10, 2009, the trial
court sustained Roca's motion to vacate.
¶5 On March 19, 2010, the trial court entered a final order resolving the
issues surrounding allocation of payments. After being presented with the
respective pleadings on the issue, and arguments from both parties, the trial
judge determined: (1) payments applied against the judgment rendered July 11,
2000, should be credited first to current support (including medical expenses
and child care), second to unpaid child support arrearages, and third to
interest; (2) Roca's current child support obligation terminated at the end of
May 2005, when the parties' child reached majority; (3) Roca had paid all sums
owed for current and past due child support, excluding interest on the
obligation; (4) Roca's remaining obligation was $54,818.77, representing unpaid
interest on the child support obligations; (5) $54,818.77 should be set as the
new purge fee; and (6) the remaining unpaid liability should not accrue further
amounts of interest.
¶6 Houston appealed the lower court's ruling and COCA reversed. COCA
concluded that the facts of this case required application of the common law
rule also known as the United States Rule. By applying the United States Rule,
COCA found that Roca's payments should be credited first to current child
support, second to accrued interest, and last to the principal balance of
past-due child support. Roca sought review in this Court, and we granted
certiorari to resolve this question of first impression.
Standard of Review
¶7 Whether monthly payments covering current child support, past-due child
support, and accumulated interest should be allocated by applying the United
States Rule is solely a legal issue for this Court to resolve. See
generally Phillips v. Hedges, 2005 OK 77, ¶ 8, 124 P.3d 227, 230-231. Questions of
law mandate application of the de novo standard of review, affording this Court
with plenary, independent, and non-deferential authority to examine the issues
presented. Harmon v. Cradduck, 2012 OK 80, ¶ 10, 286 P.3d 643, 648.
Analysis
¶8 The sole issue presented in this case is how payments should be allocated
between current child support, accumulated arrearages, and interest on past due
amounts. COCA concluded this question was controlled by the United States Rule,
thereby requiring Roca's payments applied first to current child support;
second, to interest on past due child support; and finally to the principal
balance of child support arrearages. Because we find Oklahoma statutes and DHS
rules provide the method of allocating and distributing payments in this case,
we reverse and hold that the United States Rule does not control this
proceeding.
¶9 Deriving from common law, the United States Rule requires "partial
payments of a debt be applied first to unpaid interest due and thereafter to the
principal debt." 28 Williston on Contracts § 72:20 (4th ed.). Its purpose is to
encourage full and prompt payment of indebtedness. Id. While the policy
rationale behind application of the United States Rule to consumer loans or
civil money judgments is sound, we believe COCA erroneously applied it to this
child support proceeding. We have previously condoned use of the United States
Rule for purposes of allocating payments toward ordinary civil money judgments.
Landess v. State ex rel. Comm'rs of Land Office, 1958 OK 295, ¶¶ 10-11, 335 P.2d 1077, 1079. However, we
have never been called upon to decide the Rule's application to a judgment
procured from unpaid child support.
¶10 There are significant differences between a child support debt and a
civil money judgment which require application of distinct allocation principles
for payments toward the child support obligations in this case. Oklahoma's
legislature has adopted specialized enforcement mechanisms to aid in the
collection of child support, as required by Title IV, Part D, of the Federal
Social Security Act, as amended, 42 U.S.C., § 651 et seq.6 These tools include, but are
not limited to, revocation or non-issuance of a driver's or professional license
(43 O.S. 2011 § 139.1);
incarceration or fine for indirect contempt of court (21 O.S. 2011 § 566); imposition of a
statutory lien against real or personal property (43 O.S. 2011 § 135); interception of
the obligor's tax refund (68 O.S.
2011 § 205.2); court ordered bond or other security to ensure compliance
with a child support order (43 O.S.
2011 § 116); felony prosecution for nonpayment of child support (21 O.S. 2011 § 852); and statutory
interest of ten percent per annum (43
O.S.Supp. 2012 § 114). Each of the aforementioned statutes are designed to
facilitate payment of child support and are inapplicable to ordinary money
judgments. Child support in this state is controlled by statute; therefore it is
unnecessary rely on the common law to assess an obligor's liability.
¶11 The unique aspect of a child support collection case sets it apart from
actions involving an ordinary civil money judgment. The Supreme Court of West
Virginia explained this contrast in a similar case:
[C]hild support payments are a legal duty rather than a debt.
Additionally, [Bureau of Child Support Enforcement] maintains that the
Legislature's recognition of the fundamental difference between support
orders and money judgments in the enactment of remedies conforming with
federal requirements for collection of child support . . . are significantly
different from those available for collection of routine money judgments.
The statutes governing interest on support also stand apart from those
relating to money judgments.
Hornbeck v. Caplinger, 712 S.E.2d 779, 783 (W. Va. 2011) (citation
omitted). The Hornbeck Court was presented with a legal scenario
comparable to the one we are asked to decide. Id. at 782. In determining
how payments toward a child support judgment should be credited, the court
weighed administrative rules promulgated by the state's child support
enforcement agency. Id. at 785-786. Those regulations required payment of
sums in excess of current child support obligations to be applied to principal
rather than interest. Id. Affirming application of these rules, the West
Virginia Supreme Court noted the policy rationale behind this method of
allocating payments on child support judgments:
BCSE maintains that this procedure is in keeping with the legislative
intent that parents have a most serious obligation to provide for the
support of the needs of their children. Applying excess payments to child
support principal in arrears merely carries out this priority by providing
that any available assets go toward tending to the needs of a child over and
above payment of interest which would benefit someone other than the
child.
Id. at 785.
¶12 Like West Virginia, Oklahoma has enacted specific statutes which deal
with child support obligations. Furthermore, our Legislature has expressly
vested DHS, as the state's child support enforcement agency, with the authority
to promulgate rules necessary to carry out the requirements imposed by federal
law. See 56 O.S. 2011 §
237(B)(2). In 2000, the Oklahoma Legislature amended 43 O.S. Supp. 2000 § 413 (eff. Nov.
1, 2000), adding subsection (F), which read: "[a]ll payments made through the
[Centralized Support] Registry shall be
allocated and distributed in accordance with Department of Human
Services policy and federal regulations."7 (emphasis added). Utilizing its
statutory authority, DHS implemented rules which govern the allocation and
distribution of child support payments. Because the record indicates Roca began
making his payments through the Centralized Support Registry in June of 2003, §
413 required those payments to be accounted for in conformity with DHS policy
and federal rules.8
¶13 At the time Roca began paying child support through the Registry, DHS
regulations contained several sections which addressed allocation and
distribution of payments received. First, OAC 340:25-5-351 (2003 Supp.) provided
that DHS administered support payments "received by the Centralized Support
Registry for IV-D and non-IV-D cases." According to definitions set forth in the
rules, a non-IV-D case was defined as a private child support case not receiving
IV-D services. See OAC 340:25-1-1.1 (2003 Supp.) On the other hand, a
IV-D case was one involving benefits paid under Title IV, Part D, of the Social
Security Act9.
Id.
¶14 After all current child support was paid, the 2003 version of agency
rules required DHS to apply "collections under payment plans to fixed monthly
past-due support obligations." OAC 340:25-5-351(d).10 Additionally, payments to interest
were controlled by OAC 340:25-5-140.1, which read in part: "(h) CSED applies
payments to interest after current support and all arrears have
been paid in full."11 (emphasis added). OAC 340:25-5-140.1 contained no
limitation on its application, and appears equally relevant to both IV-D and
non-IV-D cases. On the other hand, the rules also contain conflicting language,
suggesting that in non-IV-D cases with only one family support obligation,
"OKDHS pays collections directly to the family without allocating collections to
the various types of support obligations."12 OAC 340:25-5-351(b)(2). To compound
the apparent discord, DHS amended their allocation and distribution rules
multiple times between 2003 and 2009. These inconsistencies require us to employ
rules of construction to determine the objectives of DHS' administrative rules.
Charlson v. State ex rel. Dept. of Public Safety, 2005 OK 83, ¶ 10, 125 P.3d 672, 675. Amendments to
statutes or administrative rules may be used by this Court for the purposes of
discerning ambiguities in the original enactment. See Polymer
Fabricating, Inc. v. Emp'rs Workers' Comp. Ass'n, 1998 OK 113, ¶ 15, 980 P.2d 109, 114 (giving
retrospective effect to legislative amendments intended to clarify uncertainties
in prior version of statute).
¶15 In 2013, DHS amended its rules to clarify agency protocol for allocation
and distribution in IV-D and non-IV-D cases. The current version of OAC
340:25-5-351 (eff. July 1, 2013), now provides in part:
Allocation and distribution of collections
..
(c) Allocation.
(1) In general. Allocation refers to how a payment will be divided among
obligations. Some obligors have more than one child support case and the
rules of allocation determine which case receives all or a portion of the
collection received. A collection is allocated based on the source of the
collection and the type of legal action resulting in a collection.
(2) Allocation models. OCSS divides collections among the obligor's
eligible obligations based on the following models:
(A) Standard Model. All payments not made by income withholding order or
federal income tax refund offset are allocated to eligible obligations in
the following sequence:
(i) prorated to the current child support, cash medical
support, and spousal support;
(ii) prorated to the monthly payment plan on past support;
and
(iii) amounts remaining from the initial collection or additional
collections received during the same month will allocate based on a prorated
share of total arrears owed on all eligible obligations. The allocated
amounts cannot exceed the total arrears due on the cases.
(B) Income Withholding (IWO) Model. Periodic payments from an income
withholding order are allocated to eligible obligations in the following
sequence:
(i) prorated to the current child support, cash medical
support, and spousal support;
(ii) prorated to the monthly payment plan on past support
and other judgment(s), such as judgments for attorney fees or genetic
testing costs; and
(iii) the steps in (1) and (2) of this subsection are repeated for
amounts remaining from the initial collection or additional collections
received during the same month, until the entire collection is
allocated.
(4) Non-Title IV-D cases. In non-Title IV-D cases, OCSS allocates
payments as follows:
(A) payments received from an income withholding order are allocated
using the IWO Model above. Collections are allocated to non-Title IV-D cases
based on the amounts listed in the non-Title IV-D IWO;
(B) all other payments are allocated using the Standard Model above. When
OCSS receives information on processing a specific payment, OCSS may
allocate the payment based on that information.
d) Distribution.
(5) OCSS distributes payments to interest owed after the current
child support and principal arrears balances are paid in full to
each obligation. (emphasis added).13
¶16 The amended version of OAC 340:25-5-351 leaves no doubt that DHS
allocates payments uniformly, regardless of a case's status as IV-D or non-IV-D.
It also firmly establishes that in both types of cases, the principal portion of
past due child support is reduced before accrued interest. Because Roca paid his
child support through the Centralized Support Registry, DHS rules controlled the
method of allocation. Thus, it was error to utilize the United States Rule for
allocating Roca's monthly payments.
Conclusion
¶17 Title 43 O.S. Supp. 2002 §
413 and DHS rules require payments made through the Centralized Support
Registry in this case to be allocated first to current obligations, second to
past due amounts, and finally to interest on the principle balance.14
Accordingly, we vacate the COCA opinion and affirm the trial court's order of
March 19, 2010.
¶18 Reif, V.C.J., Kauger, Watt, Winchester, Edmondson, Taylor, Combs and
Gurich, JJ., concur.
¶19 Colbert, C.J., not participating.
