Preview:

ATTORNEY FOR APPELLANT Jane G. Cotton Anderson, Indiana

ATTORNEY FOR APPELLEE Patrick R. Ragains Anderson, Indiana

______________________________________________________________________________

In the

Indiana Supreme Court
_________________________________ No. 48S04-0509-CV-404 DANNY E. BROWN, JR., Appellant (Respondent below), v. GINGER A. BROWN, Appellee (Petitioner below). _________________________________ Appeal from the Madison Superior Court III, No. 48D03-0004-DR-00249 The Honorable Stephen Clase, Judge _________________________________ On Petition to Transfer from the Indiana Court of Appeals, No. 48A04-0402-CV-66 _________________________________ June 29, 2006 Sullivan, Justice.

Because of Danny Brown's disability, his son received a lump-sum distribution of retroactive Social Security disability benefits as well as monthly benefits going forward. Brown seeks credit for the lump-sum payment against an accumulated child support arrearage and credit for the monthly benefits against his future support obligation. Following precedent from this State and others, we hold that a disabled parent is entitled to credit against the parent's child support obligations for Social Security disability benefits paid to a child, effective as of the date the parent files a petition to modify a support order. The petition may be filed upon application for disability benefits.

Background

Danny and Ginger Brown's marriage was dissolved on December 14, 2000. The decree awarded Mother custody of the parties' son and ordered Father to pay weekly support of $110. Over the next two years, Father failed to make his support payments and this prompted additional orders from the court. During at least a portion of this time, the court in its orders noted that Father was unable to work due to back injuries and surgery.

By May 20, 2003, Father's arrearage had grown to $7,595. The trial court found Father to be in contempt for failure to pay support and ordered that he pay $50 per week in child support and $10 per week towards the arrearage. The May 2003 order also noted that Father would soon have back surgery and had applied for Social Security disability benefits in October, 2002.

On June 3, 2003, after Father's application for Social Security benefits had been approved, his son received a lump-sum check from the Social Security Administration in the amount of $10,377 as a retroactive payment for benefits he was entitled to as Father's dependent. The son also began to receive monthly benefits. Before learning of this lump-sum payment to his son, Father had petitioned the trial court on June 5, 2003, to modify his child support obligation on the basis that his impending back surgery and his application for Social Security disability benefits constituted substantial changes of circumstances to merit a modification.

When Father learned of the retroactive payment to his son, he filed a Trial Rule 60(B) motion for relief from the May 20, 2003 order establishing his support arrearage. Father argued he was "entitled to reimbursement of $10,377 for support overpayment," after having paid $7,545 in back support towards his arrearage.

The trial court held that the retroactive payment to the child "[was] not child support and [that] Father [was] not entitled to a credit for it against his child support arrearage." Appellant's App. at 54. Father subsequently appealed; the Court of Appeals affirmed the trial court. Brown

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v. Brown, 823 N.E.2d 1224 (Ind. Ct. App. 2005). Father sought, and we granted, transfer. Brown v. Brown, 841 N.E.2d 183 (Ind. 2005).

Discussion

Father seeks a determination that the retroactive lump-sum distribution of social security disability benefits paid to his son be credited as child support either to satisfy the accumulated arrearage or prospectively against future support obligations. 1

I

In Poynter v. Poynter, 590 N.E.2d 150 (Ind. Ct. App. 1992), trans. denied, a mother who was the custodial parent of a couple's two children asked the trial court to offset her child support obligation by the amount of Social Security disability benefits paid directly to her children as a result of her disability. Instead, the trial court reduced the total support obligation of both parents by the amount of the benefits paid to the children before determining each parent's share. "Following the majority rule of other jurisdictions," the Court of Appeals reversed. Id. at 152. It held that a disabled parent is entitled to have the Social Security disability benefits received by the child because of that parent's disability credited against their child support obligations. Id.

Father argues that we should follow Poynter and allow him the same credit that the mother received in that case. The Court of Appeals did not follow Poynter, largely based on its analysis of our subsequent opinion in Stultz v. Stultz, 659 N.E.2d 125 (Ind. 1995). 2 Brown, 823 N.E.2d at 1226-28. In Stultz, a father, the non-custodial parent of a couple's two children, asked the trial court to offset his child support obligation by the amount of Social Security retirement benefits paid directly to his children as a result of his retirement. (Note that Stultz involved SoThe parties seek no determination as to whether Social Security disability benefits paid to a child credited against the disabled parent's support obligation must be included in the parent's gross income for purposes of determining the amount of the child support obligation under the Child Support Guidelines. Other states have held that it is. See Jenkins v. Jenkins, 704 A.2d 231, 234 (Conn. 1998); Michael A. DiSabatino, "Right to Credit on Child Support Payments for Social Security or Other Government Dependency Payments Made for Benefit of Child," 34 A.L.R. 5th 447 (1995 & 2005). 2 Judge Riley dissented, arguing that Poynter should be followed. Brown, 823 N.E.2d at 1228 (Riley, J., dissenting).
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cial Security retirement benefits, whereas Poynter and the case before us involve Social Security disability benefits.) The trial court denied the requested credit; following Poynter, the Court of Appeals reversed.

We granted transfer in Stultz and reinstated the judgment of the trial court. Acknowledging the cases from other jurisdictions cited by the Court of Appeals in Poynter, we nevertheless found "ample case law holding that such a credit is not automatic and that the presence of social security benefits [was] merely one factor for the trial court to consider in determining the child support obligation or modification of the obligation." Stultz, 659 N.E.2d at 128 (citations omitted). Given this case law, we concluded that deference to the trial court was appropriate, particularly given "our state's strong emphasis on trial court discretion in determining child support obligations and our regular acknowledgement of the principle that child support modifications will not be set aside unless they are clearly erroneous." Id. (citing Kinsey v. Kinsey, 640 N.E.2d 42, 44 (Ind. 1994)).

Stultz, then, turned primarily on the trial court's discretion to make the determination it did, i.e., to refuse to credit father's child support obligation by the amount of Social Security retirement benefits paid to his children as a result of his retirement. Stultz did not turn on any distinction between Social Security retirement benefits and Social Security disability benefits. However, we did say in Stultz that the treatment for child support purposes of payments made on behalf of a Social Security disability recipient might well present a stronger case for allowing a credit than a retirement recipient. See id. at 129 & n.6. We deferred a definitive holding on that point for a case squarely presenting the issue.

II

Now presented with just such a case, we have reviewed the rationale of both Poynter and that of other courts that have examined the question. We find this authority persuasive that a disabled parent is entitled to have Social Security disability benefits paid to a child because of that parent's disability credited against their child support obligations. See Williams v. Williams, 727 N.E.2d 895, 897 (Ohio 2000) ("the underlying intent behind Social Security payments

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to a child is to provide support that the disabled parent is unable to provide. Thus, Social Security benefits are characterized as a substitute for the disabled parent's earnings rather than gratuities from the federal government"); Holmberg v. Holmberg, 578 N.W.2d 817, 827 (Minn. Ct. App. 1998) aff'd, 588 N.W.2d 720 (Minn. 1999) ("child support and social security benefits paid on behalf of a child due to a support obligor's disability have almost identical purposes"); Frens v. Frens, 478 N.W.2d 750 (Mich. Ct. App. 1991); Michael A. DiSabatino, Annotation, "Right to Credit on Child Support Payments for Social Security or Other Government Dependency Payments Made for Benefit of Child," 34 A.L.R. 5th 447 (1995 & 2005).

Although we hold that a disabled parent is entitled to have child support obligations credited with the Social Security disability benefits received by the child because of that parent's disability, we see no reason to revisit our holding in Stultz with respect to the discretion of the trial court when presented with a request for a credit for Social Security retirement benefits. Disability impacts a parent's earning capacity and, therefore, a child's standard of living, in a fundamentally different way than does retirement. The trial court is in the best position to assess the impact of retirement in any particular case.

III The general rule enunciated in Part II is that a disabled parent is entitled to have Social Security disability benefits paid to a child because of that parent's disability credited against the parent's child support obligations. As such, a disabled parent with respect to whom Social Security disability benefits are paid to the parent's child is entitled to petition the court for modification of the parent's child support to reflect a credit for the amount of the payments. The credit takes effect as of the date of the petition.

In this case (as will often be the case because of delays in making Social Security disability determinations), a lump-sum payment of retroactive Social Security disability benefits was paid to the son. We set forth some general principles on the handling of lump-sum payments of retroactive Social Security disability benefits paid to children of disabled parents and then remand this matter to the trial court to apply the principles to the facts of this case.

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A

We begin with the mandate of our statute that expressly prohibits a court from "retroactively modify[ing] an obligor's duty to pay a delinquent support payment." Ind. Code

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