November 15, 2013
Michael P. Friedman, Esq., for petitioner.
Karen A. Rhoades, Esq., for respondent.
W. DENNIS DUGGAN, J.
The Support Magistrate increased the petitioner-father's child support obligation by $1,000 per month. This Court affirmed. [976 N.Y.S.2d 787] The Appellate Division reversed ( Overbaugh v. Schettini, 103 A.D.3d 972, 962 N.Y.S.2d 369, lv. denied 21 N.Y.3d 854, 2013 WL 1831650). Should the father now receive a credit for the excess child support (which may amount to almost $29,000) paid pursuant to the order of the Support Magistrate when that order was affirmed by this Court but vacated by the Appellate Division?
The Court holds that the father should receive the credit allowed by FCA § 439(e) for excess child support paid from the date of filing of the mother's modification petition until the date of this Court's decision that affirmed the Magistrate's decision. The grounds for this ruling are that the reversal order of the Appellate Division created a " new order" of the Family Court within the meaning of the FCA § 439 and payments made in excess of a new order are entitled to be credited against future child support obligations.
The Court also holds that the father should receive a credit for the excess child support paid from the date of this Court's order that affirmed the Magistrate until the date of the Appellate Division order that reversed Family Court's order regardless of whether it can be characterized as a new order. This credit is based on the rulings of the Court of Appeals in Spencer v. Spencer, 10 N.Y.3d 60, 853 N.Y.S.2d 274, 882 N.E.2d 886  and Johnson v. Chapin, 12 N.Y.3d 461, 881 N.Y.S.2d 373, 909 N.E.2d 66  that held in a proper case, a credit should be granted. This is one of those proper cases because not granting a credit to the father would be manifestly unfair.
After the Appellate Division's reversal, the father filed a petition before the Support Magistrate seeking an order that [976 N.Y.S.2d 788] would compel the Support Collection Unit to credit his account for the amounts he paid above the original order that was reinstated by the Appellate Division. The Magistrate dismissed his petition and the father now objects.
The practical result of the Appellate Division's decision was that the father was overcharged for his child support obligation due to the Magistrate's order that was affirmed by this Court. Whether he should be reimbursed for that overcharge is the subject of this decision. The financial aspects of this case can be summarized as follows (amounts are rounded):
Child support paid pursuant to the Magistrate's modification order, from the date of filing of the modification petition to the date of the Appellate Division's reversal. $61,800
Child Support owed pursuant to original judgment of divorce over that same time period: $32,800
Amount of excess child support paid: $29,000
On his motion, the father insists that he is only asking for a " credit." He concedes that recoupment or restitution is against public policy. The mother contends that the father's argument is a wolf in sheep's clothing; that he is trying to pull the wool over the Court's eyes by calling a credit what is clearly a request for recoupment or restitution. The Court finds that this debate in nomenclature is just a rose by any other name. It is the underlying principles of law that entitle the father to a credit not how the relief is labeled.
While the objections and appeal were pending, the father paid the child support in the amount ordered by the Magistrate. The father was paying $1,500 per month for child support pursuant to the judgment of divorce. That amount was increased to $2,500 per month by the Magistrate's order. This increased his child support obligation by $1,000 per month. No request for a stay of the order increasing his support was made either to Family Court or to the Appellate Division. (See CPLR 5519[c]; FCA § 1114.) 
Family Court Act § 439(e) guides our foray into this legal thicket. That section provides in relevant part as follows:
Pending review of the objections and the rebuttal, if any, the order of the support magistrate shall be in full force and effect and no stay of such order shall be granted. In the event a new order is issued, payments made by the respondent in excess of the new order shall be applied as a credit to future support obligations. The final order of a magistrate, after objections and the rebuttal, if any, have been reviewed by a judge, may be appealed pursuant to article eleven of this act (Emphasis added).
[976 N.Y.S.2d 789] This language can implicate the interplay of several orders but ultimately the Court must determine if payments have been made pursuant to a " new order" because the credit applies only to payments made in excess of a new order. It is the father's position that the order of the Appellate Division reinstating the old order makes that old order a new order.
As a general rule, the obligation to pay court ordered child support will be retroactive to the date the petition was filed (FCA § 449 ). If the final order requires a payment higher than what was initially ordered, that higher amount must be paid retroactive to the filing date adjusted for amounts already paid (FCA § 440[a] ). If the final order requires the payment of an amount less than any temporary order, there is generally no right to obtain restitution or recoupment for amounts paid in excess of what was required by the final order. This policy against restitution or recoupment for an overpayment of child support is grounded upon the presumed fact that the monies previously transferred have already been used to support the children, and therefore ordering a forced return of such payments may well cause a hardship (see, e.g., Coleman v. Coleman, 61 A.D.2d 757, 402 N.Y.S.2d 6). For this reason, there is a strong public policy against restitution or recoupment of child support overpayments.
FCA § 439(e) has three basic components, the first two of which are relevant here. First, the Magistrate's support order can not be stayed while objections are under review by the Family Court Judge. Once the Family Court Judge issued his order, that Judge could stay that order pending appeal or a Justice of the Appellate Division could do the same. In such cases, the appellant could be required to file an undertaking or the Support Collection Unit could be required to hold some portion of the payments in escrow (See FCA § 1114, CPLR 5519[c] ).
Second, " in the event that a new order is issued, payments made by the respondent in excess of the new order shall be applied as a credit to future support obligations " (Emphasis added.). Reading the section as a whole, taking into account that during the time frame in question no stay may be granted, a " new order" certainly includes ones issued by the Court or by the Magistrate upon remand. If either of those orders is less than the Magistrate's order which was the subject of the objections, then the payor gets a credit for excess payments made pursuant to the Magistrate's final order. It should be noted that this scheme is unbalanced because no credits are available for any higher amounts paid pursuant to a Magistrate's temporary order. Those funds are presumed to have been spent by the custodian. But that same logic would apply to [976 N.Y.S.2d 790] amounts paid pursuant to the Magistrate's final order for which a credit is available. The question being raised on these objections is whether the Appellate Division's order resurrecting the original support order constitutes a " new order."
In this case, there are four relevant orders. 1. The original order in the parties' divorce decree. 2. The order of the Magistrate modifying that original order. 3. The order of the Family Court Judge affirming the Magistrate's order. 4. The order of the Appellate Division reinstating the original order of support. Which of these orders constitute a " new order" to which the FCA § 439(e) applies and which would then entitle the father to a credit against future support payments?
First, as noted earlier, if any of the orders listed above increased the child support payment, the father would be assessed arrears to the date the modification petition was filed. The order of the Magistrate and the Family Court Judge are, no doubt, new orders by any common sense understanding but the statute allowing a credit does not apply to those orders because the father did not make any payments " in excess of the new order." The father did make payments in excess of the original order. Whether that is now a new order because of the Appellate Divisions's reversal presents a dilemma.
One can see that the credit allowance is a look back provision. If the Court, after reviewing objections, reduces the support obligation, then the payor will receive a credit for any excess amounts paid pursuant to the Magistrate's higher order. This makes sense because the law prohibits a stay of the Magistrate's order so there is no way for a payor to insure himself against the immediate imposition of an order issued in error. So, does the ability to apply for a stay provide sufficient insurance against having to make payments that are later determined to be invalid?
In reviewing the plain language of the statute, it is clear that the only circumstance to which the credit granting language applies is when the Family Court, after reviewing objections from the Magistrate's decision and order, issues a " new order" which reduces the father's child support obligation. In that case, he would receive a credit for any excess payments made between the time the Magistrate issued his final order until the date of the Court's " new order," at which time, he would presumably start paying pursuant to the new order which lowered his support. Based on time requirements set by statute and court rule, the Family Court's final order should normally be no more than about four months from the date of the initial filing. It is that time during which a payor is exposed to an excess payment situation but with a credit applied to future child support payments allowed.
It is clear that this Court, in affirming the Magistrate, did not issue a " new order." Even if this Court's order could be considered to be new, no payments made by the father were in excess of that new order. Accordingly, the triggering event which would entitle the father to a credit pursuant to FCA § 439(e) did not occur in this case— unless the Appellate Division's order can be considered to be new.
While this Court left the Magistrate's order of January, 2012 stand, the Appellate Division, in dismissing the mother's modification of support petition, left the support provisions of the judgment of divorce stand. It would seem to be a sizeable linguistic stretch to consider that [976 N.Y.S.2d 791] an order of reversal by the Appellate Division, which reinstates an old order, creates a new order. However, it is a stretch with merit.
The Appellate Division, in effect, modified the Family Court's new order by granting the father's objection. The new Family Court order now provides that the Magistrate's decision is overruled, the father's objections are granted and the mother's petition is dismissed. This now means that the father paid more than required by the " new order" that Family Court should have issued. Therefore, he should, by any standard of fairness, now be entitled to the credit allowed by FCA § 439(e) for the excess child support he paid. This credit would be applied from the date of the filing of the petition on April 28, 2011, until the date of the Family Court's order on April 17, 2012. Put more simply, the law can not countenance a situation where the father is liable for up to $29,000 in excess child support when Family Court gets it wrong but he would get a credit for up to $29,000 when Family Court gets it right. But what of the $17,000 of that amount in excess that was paid while the appeal was pending? Logic commands that the same result should occur but in this case that logic has been halted. Paris v. Paris, 226 A.D.2d 381, 640 N.Y.S.2d 238 [2nd Dept., 1996] is controlling on this point. " In construing the statute according to its plain language, it is clear that the term new order' refers to an order made by the Judge, or the [Support Magistrate] upon remand, based upon a review of properly filed objections and rebuttal, if any, to a previously issued final order.' Consequently, the crediting process enumerated therein applies in those situations where a final order is objected to, reviewed and subsequently superseded by a new order " ( Paris, at 383-4, 640 N.Y.S.2d 238). The holding in Paris could be considered dicta with respect to the issue raised in this case because the issue of an Appellate Division order being considered a " new order" for child support crediting purposes was not the exact issue under review in Paris . However, because it is a clear statement of the law that is right on point, if FCA § 439(e)'s crediting provision is to be applied to an Appellate Division reversal order, the Appellate Division will have to so hold. This Court finds that it must follow Paris on this issue.
The mother primarily relies on four cases to oppose the father's claim for a credit, the first three of which predate the enactment of FCA § 439(e), the predecessor of which contained no specific crediting language. Grossman v. Ostrow, 33 A.D.2d 1006, 308 N.Y.S.2d 280  is a case where the Family Court's order for temporary spousal support was reversed. Upon remand, a credit was granted to the husband for excess support paid. The Appellate Division then reversed the credit provision, referring to the general public policy against such credits. In a decision contained in just 14 lines, the court said: " Since the husband did not request or obtain a stay of the Family Court order, restitution or recoupment of payment made pursuant to it is not proper" ( Grossman, at 1006, 308 N.Y.S.2d 280). This statement appears to be dicta but because of the brevity of the decision, one can not tell for sure. In any event, the Court could not have meant that just requesting a stay makes recoupment or restitution proper so it is not clear what the rule of law is on this point. Finally, this decision pre-dates Court of Appeals holdings that allow a credit in a proper case.
In Rodgers v. Rodgers, 98 A.D.2d 386, 470 N.Y.S.2d 401 , the Court upheld the retroactive application of a maintenance award. In noting the general rule, " that temporary payments made pursuant to a subsequently nullified court order could not be recovered either directly by [976 N.Y.S.2d 792] restitution or indirectly by recoupment, " the Court went on to say, " while the Court possesses some discretion, a retroactive reduction should not be granted in favor of an individual who had wilfully flouted such an order " ( Rodgers, at 390, 470 N.Y.S.2d 401). This statement clearly suggests that in a proper case, the granting of a credit would be a provident exercise of discretion.
In Foxx v. Foxx, 114 A.D.2d 605, 494 N.Y.S.2d 446 , the husband sought a credit for maintenance and support payments he voluntarily made during a time when they were not owed. The Court reiterated the standard rule that DRL § 236(B)(6)(a) and (7)(a) requires a court to provide for retroactive payments of permanent maintenance and support only where the award is in excess of payments required by any temporary order. Notably, the court went on to say that the cited section does " not require the granting of credits, " as opposed to saying that the section " prohibits the granting of credits." This again suggests that in a proper case, an award of credits could be justified.
In Baraby v. Baraby, 250 A.D.2d 201, 681 N.Y.S.2d 826 , the Third Department determined how the CSSA should be applied to shared custodial arrangements in accordance with the Court of Appeals decision in Bast v. Rossoff, 91 N.Y.2d 723, 675 N.Y.S.2d 19, 697 N.E.2d 1009 which disapproved the use of the " proportional offset" method of computing child support in those situations. (See also, Matter of Holmes v. Holmes, 184 A.D.2d 185, 592 N.Y.S.2d 72). On this issue, the Court held that the higher earning spouse " should be identified as the noncustodial' parent for the purpose of support ..." ( Baraby, at 204, 681 N.Y.S.2d 826). This case is significant to the extent of its holding that " the CSSA does not alter the strong public policy against restitution or recoupment of support overpayments evident in prior case law; " but then cites to Foxx , Rodgers and Grossman decisions for support. ( Baraby at 205, 681 N.Y.S.2d 826). As noted, those three cases also lend support for the proposition that in a proper case, an exception to public policy should be made.
This, however, does not end the discussion because no public policy is absolute. Courts, as the repository of justice, must not abide manifest unfairness and that is why every rule has exceptions. The Court of Appeals has recognized that the law does allow exceptions to this public policy. In Spencer v. Spencer, 10 N.Y.3d 60, 853 N.Y.S.2d 274, 882 N.E.2d 886 , the Court of Appeals decided that New York had no jurisdiction to issue an order of child support for an 18 year old who was most recently covered by an order of the State of Connecticut. The Court held that even though Connecticut ends a parent's child support obligation when the child turns 18, as opposed to New York's age 21, a New York court could not " modify" Connecticut's order because it had no jurisdiction under the interstate compacts and Federal law. The father paid child support pursuant to Family Court's order while the matter was winding its way through the New York courts. The Court of Appeals, as a result of its main holding, also held that the father could seek a credit for the support he paid pursuant to the invalid New York order and that Family Court had the authority to order that credit. " The father's request to recoup payments he made to the mother as a result of the child support order issued by Family Court cannot be determined on this record and should, on remittal, be addressed by Family Court (including all offsets due the mother) " ( Spencer, at 69, 853 N.Y.S.2d 274, 882 N.E.2d 886).
In Johnson v. Chapin, 12 N.Y.3d 461, 881 N.Y.S.2d 373, 909 N.E.2d 66 , it [976 N.Y.S.2d 793] was determined at trial that the husband's income was significantly less than that upon which the temporary orders for maintenance and child support were based. The Court of Appeals approved the crediting of the excess maintenance against the equitable distribution award. However, it upheld the denial of a credit against excess child support, noting the strong public policy against such crediting. The Court did imply that in the right case (such as Spencer, no doubt), a credit could be granted. It stated, " nothing in this record shows it was error to deny that relief" ( Johnson, at 466, 881 N.Y.S.2d 373, 909 N.E.2d 66). This obviously suggests that a proper record would support an order crediting for excess child support.
To date, there is little appellate guidance for Family Court to determine what type of record would support an order crediting a parent for excess child support. The Court of Appeals has clearly held a credit should be ordered when the Family Court was without jurisdiction to issue the order in the first place. Would such a credit be called for when there is no child in the other parent's household to benefit from the order, such as if a father continued to pay for support for a child who died or if the child became emancipated and was self supporting? Would the public policy considerations still prevent the granting of a credit if a high temporary child support order was based on fraudulent income information supplied by the custodial parent? These questions need not be answered in this case but they illustrate an underlying principle; a credit should be allowed when it would be manifestly unfair to deny it. This is such a case and it closely parallels the circumstances that supported the granting of a credit in Spencer.
In Spencer, the Court of Appeals held, in effect, that both the Family Court and the Appellate Division misread the applicable law when support was ordered. In this case, the Appellate Division similarly held that this Court misread the law when it ordered an increase in child support. It would seem to be too thin a distinction to permit a credit based on what law was misread (in Spencer, the Uniform Interstate Family Support Act; in this case, FCA § 451[a] ) because the results are the same; a windfall for the custodial parent and a manifest unjustness for the non-custodial parent. Certainly, the public policy that supports the rule that credits should generally not be granted is at play in both Spencer and in this case in the same way. That is, one can presume that the custodial parent in each case spent the child support for its intended purpose and that requiring a payback could work a harm on the child. That is a proper consideration to be sure but in this Court's view, it does not support the ratification of an extra-legal transfer of as much as $29,000 from one parent to another. As for harm to the child, the Family Court is quite capable of conducting a hearing to determine how any credit should be applied so that the child does not suffer harm.
A well known canon of statutory interpretation holds that what is included must therefore exclude that which is not ( Expressio unius est exclusio alterius, Statutes § 240). If applied in this case, one could conclude that because the Legislature determined that a credit should be allowed only in the limited circumstances covered by FCA § 439(e), that must mean that no credit may be applied in any other circumstance. However, there are sound reasons why this principle should not be applied and the Court of Appeals in Spencer laid down a blueprint. The mandatory credit allowance of FCA § 439(e) is a departure from the stated public policy that disallows such credits. In not allowing a stay but permitting a credit, the law recognizes [976 N.Y.S.2d 794] that the time between when the Magistrate issues his order and when Family Court issues its order is relatively short. This Court finds little to support an interpretation that would validate a policy that a child support payor in effect gets the credit if he obtains a stay but he gets no credit if, for example, he can not get a stay because he can not afford an undertaking. " Justice should not only be done, but should manifestly and undoubtedly be seen to be done" (Lord Chief Justice Gordon Hewart, Ex Parte McCarthy, 1 KB 256,  All ER Rep. 233). In this case, reversing and reinstating the original order without granting the father a credit would mean that justice was neither done nor seen to be done.
The Court will conduct a hearing to determine the actual amount in controversy, the amounts to be credited and the schedule to apply those credits that will not work a hardship on the child.
This constitutes the Decision of the Court.