Kelly v. Off. of Child Enforcement , 227 Md. App. 106 ( 2016 )

REPORTED
IN THE COURT OF SPECIAL APPEALS
OF MARYLAND
No. 2504
September Term, 2014
BYRON ALEXANDER KELLY
v.
MONTGOMERY COUNTY OFFICE
OF CHILD ENFORCEMENT, ET AL.
Kehoe,
Leahy,
Raker, Irma, S.,
(Retired, Specially Assigned)
JJ.
Opinion by Kehoe, J.
Filed: February 24, 2016
Maryland law authorizes a judgment creditor to attach assets of the debtor to
satisfy the judgment. Our attachment law has a number of exemptions. In this case, we
must decide whether one such exemption is available in child support enforcement
actions.
The chain of events giving rise to this appeal began in 2014 when the Montgomery
County Office of Child Support Enforcement (the “Office”) sought to collect a judgment
of $9,866.80 against Byron Alexander Kelly for unpaid child support. At the request of
the Office, the Circuit Court for Montgomery County issued a writ of garnishment
against Capital One Bank, N.A. There were two accounts in Kelly’s name at the bank
with a combined balance of $2,705.05. The bank reported this information to the court
and suspended activity in the accounts pending a court order.
Kelly then filed a motion to release the two accounts from the levy.1 He based his
motion on Courts and Judicial Proceedings Article (“CJP”) § 11-504(b)(5), which
permits a judgment debtor under certain circumstances to elect to exempt up to $6,000 in
cash or other property from a levy to satisfy a money judgment. After an evidentiary
hearing, the Circuit Court for Montgomery County denied Kelly’s motion and separately
ordered Capital One to pay the account proceeds to the Office.
1
Md. Rule 2-643 states in pertinent part (emphasis added):
Rule 2-643. Release of Property from Levy.
****
(c) Upon Motion of Judgment Debtor. Upon motion of the judgment
debtor, the court may release some or all of the property from a levy if it
finds that (1) the judgment has been vacated, has expired, or has been
satisfied, (2) the property is exempt from levy, . . . .
Kelly has appealed both orders and presents four questions to us. We have
consolidated and reworded them as follows:
(1) Did the trial court correctly interpret the exemption contained in CJP
§ 11-504(b)(5) to be inapplicable in actions to collect child support
arrears?
(2) Were the trial court’s findings as to the source of the funds in the accounts
clearly erroneous?
We will affirm the trial court’s judgment.
Analysis
1. Were the account proceeds exempt from garnishment?
1.1. The Applicable Rules of Statutory Construction
In resolving the issues in this appeal, we will pay heed to the following guidelines
of statutory interpretation:
(1) Our purpose is to “ascertain and effectuate the real and actual intent of the
Legislature.” Employees’ Ret. Sys. of City of Baltimore v. Dorsey, 430 Md. 100,
112 (2013);
(2) In this context, “intent” means “the legislative purpose, [that is] the ends to be
accomplished, or the evils to be remedied” by the statute in question, id.;
(3) We usually identify the legislative purpose by considering the plain language
of the statute “within the context of the statutory scheme to which it belongs,
considering the purpose, aim, or policy of the Legislature in enacting the statute.”
State v. Johnson, 415 Md. 413, 421–22 (2010); and
(4) In the process of discerning the “statutory scheme” to which a particular
statute belongs, we bear in mind that, laws passed by the General Assembly are
usually written so that no provision of any statute is superfluous or meaningless.
Moore v. State, 424 Md. 118, 127 (2011).
Finally, “[an] examination of interpretive consequences, either as a comparison of
2
the results of each proffered construction, or as a principle of avoidance of an absurd or
unreasonable reading, grounds the court’s interpretation in reality.” Town of Oxford v.
Koste, 204 Md. App. 578, 586 (2012), aff’d, 431 Md. 14 (2013).
1.2. Two Statutes and Two Statutory Schemes
The question before us is how to reconcile two apparently conflicting statutes. The
first is CJP § 11-504(b)(5).2 The “statutory scheme” which contains § 11-504 sets out
2
To provide context, we set out § 11-504(b) in full (emphasis added):
§ 11-504. Items excluded from execution of judgment.
****
(b) Items exempt from execution on judgment — The following items are
exempt from execution on a judgment:
(1) Wearing apparel, books, tools, instruments, or appliances, in an amount
not to exceed $5,000 in value necessary for the practice of any trade or
profession except those kept for sale, lease, or barter.
(2) Except as provided in subsection (i) of this section, money payable in
the event of sickness, accident, injury, or death of any person, including
compensation for loss of future earnings. This exemption includes but is not
limited to money payable on account of judgments, arbitrations,
compromises, insurance, benefits, compensation, and relief. Disability
income benefits are not exempt if the judgment is for necessities contracted
for after the disability is incurred.
(3) Professionally prescribed health aids for the debtor or any dependent of
the debtor.
(4) The debtor's interest, not to exceed $1,000 in value, in household
furnishings, household goods, wearing apparel, appliances, books, animals
kept as pets, and other items that are held primarily for the personal, family,
or household use of the debtor or any dependent of the debtor.
(5) Cash or property of any kind equivalent in value to $6,000 is exempt, if
within 30 days from the date of the attachment or the levy by the sheriff, the
debtor elects to exempt cash or selected items of property in an amount not
to exceed a cumulative value of $6,000.
(continued...)
3
means by which judgments can be enforced by judgment creditors. Section 11-504(b) lists
various exemptions that judgment debtors may exercise to shelter assets from being
seized to pay the judgment. Section 11-504(b)(5) states (emphasis added):
The following items are exempt from execution on a judgment:
....
(5) Cash or property of any kind equivalent in value to $6,000 is exempt, if
within 30 days from the date of the attachment or the levy by the sheriff, the
debtor elects to exempt cash or selected items of property in an amount not
to exceed a cumulative value of $6,000.
The second statute is Family Law Article (“FL ”) § 10-108.3(b)(1). It provides in
pertinent part (emphasis added):
If an obligor [who is more than $500 in arrears in child support payments]
has not paid child support for more than 60 days, the Administration may
institute an action to attach and seize the amount of the arrearage in one or
more of the accounts of the obligor with a financial institution to satisfy
the amount of arrearage owed by the obligor.[3]
Additionally, and of significance to this appeal, FL § 10-108.3(h)(4) permits an
2
(...continued)
(6) Money payable or paid in accordance with an agreement or court order
for child support.
(7) Money payable or paid in accordance with an agreement or court order
for alimony to the same extent that wages are exempt from attachment
under § 15-601.1(b)(1)(ii) or (2)(i) of the Commercial Law Article.
(8) The debtor's beneficial interest in any trust property that is immune from
the claims of the debtor's creditors under § 14.5-511 of the Estates and
Trusts Article.
(9) With respect to claims by a separate creditor of a husband or wife, trust
property that is immune from the claims of the separate creditors of the
husband or wife under § 14.5-511 of the Estates and Trusts Article.
3
Kelly concedes that he is such an obligor.
4
obligor to “challenge the [collection] actions of the [Office] based on an exemption in
[CJP] § 11-504 . . . or for any other good cause[.]”
Section 10-108.3 inhabits a “statutory scheme” which establishes the Child
Support Enforcement Administration and grants to that agency broad powers to collect
overdue child support payments. Among other things, Subtitle 10 of the Family Law
Article authorizes the Motor Vehicle Administration to suspend the driver’s license of
persons who are 60 days or more behind in their support obligation (FL § 10-119);
authorizes other licensing agencies to suspend licenses for professional occupations for
individuals who are 120 days behind in child support payments (FL § 10-119.3); grants
the Child Support Enforcement Administration, and its local surrogates such as the
Office, the authority to obtain orders withholding up to 25% of salaries and wages in
order to satisfy unpaid child support obligations (FL §§ 10-120–138); and criminalizes
the wilful failure to pay child support (FL § 10-203). Read together, the provisions of
Title 10 of the Family Law Article demonstrate a strong public policy to provide multiple
enforcement tools by which child support orders can be enforced. These orders are
enforced to “preserve and promote the best interests of the child” for whom support is to
be paid (FL § 10-118).
1.3. The Parties’ Contentions
Kelly’s argument is quite simple: he concedes that the Office has the authority to
garnish bank accounts but, pointing to FL § 10-108.3(h)(4), he asserts that he is entitled
to exempt up to $6,000 of personal property pursuant to CJP § 11-504(b)(5). However,
5
we conclude that the exemption in CJP § 11-504(b)(5) does not apply to efforts to collect
unpaid child support payments.
Our conclusion is based on a subtle, but very significant, difference in
terminology between CJP § 11-504 and FL § 10-108.3(b)(1). CJP § 11-504(b) permits a
“debtor” to claim an exemption of up to $6,000. In contrast, FL § 10-108.3 authorizes
the Child Support Enforcement Administration to collect unpaid child support from
“obligors.” In the purview of FL § 10-108.3, Kelly is certainly an “obligor.” Does this
make him a “debtor” for the purposes of CJP § 11-504? The answer to the question is
“no.” Maryland courts have long distinguished between a “debtor,” that is, someone who
simply owes money to another, and an “obligor” who must pay money arising out of a
separate, and separately enforceable, legal duty.
This principle was first applied in Maryland in Safe Deposit & Trust Co. v.
Robertson, 192 Md. 653, 662–63 (1949). At issue in that case was whether income
generated by a spendthrift trust could be attached to collect unpaid alimony. The Court
recognized that income from a spendthrift trust was not subject to attachment for the
beneficiary’s debts, but the Court drew a distinction between the obligation to pay a debt
and the obligation to support a spouse or minor child. The latter obligation “is a duty, not
a debt. . . . We think the rule that gives legal effect to spendthrift provisions as against
contract creditors should not be extended to claims for support or alimony.” Id.
(Emphasis added.)
The distinction between an individual’s debts—owed to third parties—and his or
6
her duty to support dependent children and spouses has been repeatedly recognized in
different legal and factual contexts by the Court of Appeals. See United States v.
Williams, 279 Md. 673, 678 (1977) (Military retirement pay is not subject to attachment
for payment of a debt but is subject to attachment for unpaid alimony because “the
underlying obligation is for intra-familial support and the very purpose of the statutory
exemptions is to protect a family from being deprived of all support by attachment
proceedings brought by an outsider.”) (citing Md. Code Ann. (1975, 2013 Repl.) § 15-
602 of the Commercial Law Article); Pope v. Pope, 283 Md. 531, 537 (1978)
(Unemployment benefits are not subject to attachment for payment of a debt but are
attachable for payment of alimony because “the legislative purpose underlying such
statutes [prohibiting attachment of various benefits] is the protection of the various types
of benefits involved from the claims of creditors not from the claim of a former wife for
alimony, which often, as in Maryland, is not considered a debt.”) (citing what was then
Md. Code (1957, 1969 Repl.), Art. 95A, s 16(c); substantively recodified as Md. Code
Ann. (1991, 2008 Repl.) § 8-106 of the Labor and Employment Article).4
The outcome of most of these cases turned upon the Court’s interpretation of
4
Kelly argues that this line of cases—including Pope, Williams, and Blum v. Blum,
295 Md. 135 (1983)—are inapplicable to the present case because all three of those cases
pertained to claims for alimony rather than child support. The distinction is not
significant. All three cases, although specifically pertaining to alimony, framed their
analyses in terms of “intra-familial support,” see Pope, 283 Md. at 536 (“[T]he
underlying obligation is for intra-familial support . . . .”); Williams, 279 Md. at 678
(same); Blum, 295 Md. at 142 (describing the obligation to provide contractual alimony
as a duty to provide intra-familial support). We conclude their holdings are equally
applicable to claims for child support.
7
statutes authorizing or limiting the enforcement of various types of monetary
obligations.5 In each case, the Court of Appeals distinguished between “debtors” and
“obligors” in the process of construing the statute in question. These decisions lead us to
conclude that, when the General Assembly used the term “debtor” in CJP § 10-504(b)(4),
the Legislature did not intend to permit persons who were obligated to pay child support
to escape their legal duty. See Pye v. State, 397 Md. 626, 635 (2007) (“The General
Assembly is presumed to be aware of this Court's interpretation of its enactments and, if
such interpretation is not legislatively overturned, to have acquiesced in that
interpretation.”) (internal quotation marks and citation omitted.)
Our interpretation of the subsection is consistent with other provisions of CJP §
11-504(b), which extend protections not only to the debtor but the debtor’s family as
well. For example, § 11-504(b)(3) (emphasis added) exempts “[p]rofessionally prescribed
health aids for the debtor or any dependent of the debtor[;]” (b)(4) protects up to $1,000
of household items of the debtor or any dependent of the debtor; (b)(6) protects money
designated for payment of child support; and (b)(7) protects money designated for
payment of alimony.
Our interpretation of CJP § 11-504(b)(5) is similarly in harmony with FL § 10-
108.3(b)(1). Title 10 of the Family Law Article establishes a broad panoply of collection
5
The exception is Safe Deposit, 192 Md. at 658–64, wherein the Court decided,
without analysis of statutory authority, that income from a spendthrift trust could be
subject to attachment for unpaid alimony.
8
techniques that are unavailable to those who collect debts, such as suspending drivers’
and professional licenses. Indeed, a court may even incarcerate a recalcitrant obligor for
unpaid child support as part of a contempt proceeding—a remedy that is specifically
denied to those who seek to collect debts.6 It would be anomalous, to say the least, for the
General Assembly to give the Office such far-reaching powers to collect unpaid child
support from a delinquent parent but to allow that same parent to place $6,000 beyond
the reach of the Office.
Finally, Kelly cites Rosemann v. Salsbury, Clements, Bekman, Marder & Adkins,
LLC, 412 Md. 308 (2010), in support of his argument. Roseman specifically pertained to
a child support enforcement action, where the obligor relied on the personal injury
compensation exemption contained in CJP § 11-504(b)(2)7 to claim that the
6
See Maryland Constitution Article III § 38.
No person shall be imprisoned for debt, but a valid decree of a court of
competent jurisdiction or agreement approved by decree of said court for
the support of a spouse or dependent children, or for the support of an
illegitimate child or children, or for alimony (either common law or as
defined by statute), shall not constitute a debt within the meaning of this
section.
7
CJP § 11-504(b)(2) states:
The following items are exempt from execution on a judgment:
(2) Except as provided in subsection (i) of this section, money
payable in the event of sickness, accident, injury, or death of any
person, including compensation for loss of future earnings. This
exemption includes but is not limited to money payable on account
(continued...)
9
Administration could not collect child support arrears from her settlement proceeds from
a personal injury action. 412 Md. at 313. In that case, the Court concluded that the
reasoning in the Williams line of cases did not apply to this exemption, because the
exemptions discussed in those cases were enacted to “protect a family from being
deprived of all support by attachment proceedings brought by an outsider[,]” while the
exemption in CJP § 11-504(b)(2) was enacted to “make the injured person whole.”
Rosemann, 412 Md. at 325. The Court reasoned that the money from the personal injury
settlement was “not meant to support directly the injured party’s family,” but to “pay
medical bills and compensate for loss of future earnings and pain and suffering.” Id.
Thus, it concluded that the exemption was applicable to claims for intra-familial support.
Id. at 326–37.
We do not believe the reasoning in Rosemann is applicable to the exemption
contained in CJP § 11-504(b)(5) for two reasons. First, the $6,000 exemption in § 11-
504(b)(5) is available only to debtors. There is no similar limitation in subsection (b)(2),
the provision at issue in Rosemann. Second, the General Assembly amended CJP § 11-
504(i)8 in 2011 in response to Rosemann, authorizing the execution of up to 25% of a
7
(...continued)
of judgments, arbitrations, compromises, insurance, benefits,
compensation, and relief. Disability income benefits are not exempt
if the judgment is for necessities contracted for after the disability is
incurred.
8
CJP § 11-504(i) states (emphasis added):
(continued...)
10
personal injury award to be applied to child support arrears.
2. Substantial Evidence
Kelly presents two arguments concerning the trial court’s factual conclusions. We
review the court’s findings for clear error and give deference to the trial court’s
opportunity to gauge the credibility of witnesses. See Md. Rule 8-131(c).
At the hearing, Kelly testified that he was not employed. The trial court stated that
it did not believe his testimony on this issue. We defer to the trial court’s credibility
assessment.
Kelly also asserts that the funds in the two accounts in question did not entirely
belong to him, but were commingled with his mother’s funds. It was his burden to prove
that all or a portion of the funds in the accounts were his mother’s by clear and
convincing evidence. See Morgan Stanley & Co. v. Andrews, 225 Md. App. 181, 189
8
(...continued)
Net recovery defined
(i)(1) In this subsection, “net recovery” means the sum of money to be
distributed to the debtor after deduction of attorney's fees, expenses,
medical bills, and satisfaction of any liens or subrogation claims arising out
of the claims for personal injury, including those arising under:
(i) The Medicare Secondary Payer Act, 42 U.S.C. § 1395y;
(ii) A program of the Department of Health and Mental Hygiene
for which a right of subrogation exists under §§ 15-120 and
15-121.1 of the Health--General Article;
(iii) An employee benefit plan subject to the federal Employee
Retirement Income Security Act of 1974; or
(iv) A health insurance contract.
(2) Twenty-five percent of the net recovery by the debtor on a claim
for personal injury is subject to execution on a judgment for a child
support arrearage.
11
(2015). Kelly’s evidence on this point consisted of his testimony but the trial court found
him not to be a credible witness. Again, we defer to the trial court.
Finally, Kelly argues that the Office withheld “crucial evidence” from the trial
court. He does not specify what that evidence was and we will not speculate on the
matter.
3. Additional Motions
Kelly has filed a motion pursuant to Rule 1-341 to request an award of costs and
expenses. Rule 1-341(a) states the circumstances in which this Court may award costs
and expenses to a party when the opposing party acted in bad faith or without substantial
justification. Normally, this determination is made by the trial court but we can save a
step in this case. There is absolutely no basis to impute bad faith to the Office and it
certainly acted with substantial justification.9 10
THE JUDGMENT OF THE CIRCUIT COURT FOR
MONTGOMERY COUNTY IS AFFIRMED. APPELLANT TO PAY
COSTS.
9
Our denial of Kelly’s Rule 1-341 motion renders moot his pending motion to
defer filing of supporting statements for cost and expense until we have decided his Rule
1-341 motion.
10
This opinion was originally filed as unreported. However, the Office suggested
that it would be in the public interest for the opinion to be reported. We withdraw the
original unreported opinion and file this opinion in its stead.
12