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Docket Number

No. 61609.

Advocates

Daniel J. Pingelton, Columbia, for petitioner/appellant. Christine Carpenter, Sapp, Woods, Orr, Bley, Carpenter Eng, Columbia, for respondent/respondent.

Judges

CRANE, Judge.

Acts

Labor — Regulatory Provisions — Employee Retirement Income Security Program — Protection Of Employee Benefit Rights — Participation And Vesting — Form And Payment Of Benefits

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Smart Summary

Baird v. Baird, No. 61609 (Mo. Ct. App. Dec. 15, 1992) — Summary

Factual and Procedural Background

Janice Delores Baird (mother) and Harry Lanning Baird (father) were divorced in April 1979. The dissolution decree awarded mother custody of the parties' two minor children and ordered father to pay monthly maintenance and child support (initially $100 maintenance and $160 child support, increased to $190 in December 1980). In May 1984 the trial court placed on the record a "Tentative Findings and Order" (the "Tentative Order") reflecting a verbal agreement reducing child support and altering maintenance. The trial court later found the May 23, 1984 "Tentative Order" binding; mother sought relief and an appeal resulted in an appellate decision holding the trial court's ruling a nullity and not a final judgment (Baird v. Baird). From May 23, 1984 through March 5, 1991 father made payments according to the Tentative Order rather than the 1980 judgment.

On October 3, 1991 mother sought enforcement of the 1980 judgment by requesting issuance of a Qualified Domestic Relations Order (QDRO) for past-due maintenance and child support. Father moved to quash the QDRO application. After an evidentiary hearing the trial court found father had been awarded his retirement account as property and concluded (1) any QDRO issued after the original decree would unlawfully modify the property division, and (2) equity barred charging interest on delinquent payments for the period May 23, 1984 through March 5, 1991. The court determined father to be in arrears in principal ($11,234.91) and awarded interest of $1,187.50 (from March 5, 1991 forward). Mother appealed these rulings.

Legal Issues Presented

Whether the trial court erred in refusing to award interest on all delinquent child support payments under § 454.520 RSMo 1986.
Whether the trial court erred in dismissing mother's application for a QDRO on the ground that issuing a QDRO would unlawfully modify the property division portions of the original divorce decree.

Arguments of the Parties

Appellant's (Mother's) Arguments

Section 454.520 RSMo 1986 mandates that all delinquent child support and maintenance payments "shall draw interest," so the trial court erred in declining to award interest for the full delinquent period.
State and federal law (including ERISA and its QDRO provisions) permit use of a QDRO to enforce a delinquent child support judgment against a pension plan; mother's proposed QDRO satisfies ERISA's statutory requirements.

Respondent's (Father's) Arguments

Equity warranted denying interest for the period May 23, 1984 through March 5, 1991 because father paid in good faith in reliance on what he believed was a valid court order (the Tentative Order).
Cites Kessinger for allowance of judicial set-off against interest and cites § 408.040 and Fohn to argue that mandatory interest statutes may not apply where the amount due was not known.
Argues that issuing a QDRO would unlawfully modify the original property division that awarded the pension plan to father.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Baird v. Baird, 804 S.W.2d 836, 838 (Mo.App. 1991)	Held the trial court's ruling regarding the 1984 "Tentative Order" was a nullity and did not transform it into a final judgment.	Explains procedural history and why father paid pursuant to the Tentative Order even though it was not a final modification of the 1980 judgment.
Missouri Soc'y of Am. College v. Roderick, 797 S.W.2d 521, 524 (Mo.App. 1990)	Use of "shall" in a statute indicates mandatory, non-discretionary action.	Supports conclusion that § 454.520's use of "shall" requires awarding interest on delinquent support without judicial discretion.
Laughlin v. Boatmen's Nat'l Bank of St. Louis, 189 S.W.2d 974, 979 (Mo. 1945)	An award of interest compensates for the use of or loss of the use of money.	Used to explain the compensatory purpose of awarding interest on delinquent support.
Denton Const. Co. v. Missouri State Highway Comm'n, 454 S.W.2d 44, 59-60 (Mo. 1970)	Where a statute provides that interest "shall" be paid or received, court has no discretion to refuse to award interest as directed.	Reinforces that the trial court lacked discretion to decline awarding statutory interest under § 454.520.
Kessinger v. Kessinger, 829 S.W.2d 658 (Mo.App. 1992)	Trial court did not abuse discretion in making a set-off against interest owed.	Cited by father; court distinguished Kessinger as allowing set-offs but not permitting refusal to award interest on the full delinquent amount.
Fohn v. Title Ins. Corp. of St. Louis, 529 S.W.2d 1, 5 (Mo. 1975)	Interpreted § 408.040 to not apply for prejudgment interest on an unliquidated claim where amount is unknown.	Court held Fohn concerns prejudgment interest on unliquidated claims and is inapplicable to post-judgment child support under § 454.520.
Buttrey v. Buttrey, 622 S.W.2d 708, 710 (Mo.App. 1981)	Under § 408.040 a trial court is required to award interest on the full amount of child support determined to be in arrears.	Supports the principle that interest must be awarded on delinquent child support amounts.
Sheets v. Sheets, 632 S.W.2d 80, 82 (Mo.App. 1982)	Same principle as Buttrey regarding mandatory interest on arrears.	Reinforces the requirement to award interest on delinquent support.
Reimers v. Frank B. Connet Lumber Co., 273 S.W.2d 348, 349 (Mo. 1954)	Under § 408.040, statutory interest is due from the date of judgment.	Supports awarding interest from the date the underlying judgment is effective.
Smith v. Mirman, 749 F.2d 181, 182 (4th Cir. 1984)	ERISA was enacted to protect pension plan participants and beneficiaries.	Used to introduce ERISA's purpose and background for QDRO analysis.
American Tel. Tel. Co. v. Merry, 592 F.2d 118, 121-25 (2d Cir. 1979)	Federal courts were divided on whether dependents/former spouses could alienate pension benefits to satisfy family support obligations.	Provides context for the congressional enactment of the Retirement Equity Act creating the QDRO exception to ERISA's spendthrift provision.
Hopkins v. Hopkins, 626 S.W.2d 389, 393 (Mo.App. 1981)	A pension plan qualifies as property against which a judgment for maintenance or support may be enforced through execution or garnishment.	Supports the proposition that a pension may be reached to satisfy support judgments.
Rohrbeck v. Rohrbeck, 318 Md. 28, 566 A.2d 767, 774 (1989)	ERISA permits QDROs to be used to enforce an earlier-entered support judgment and collect delinquent maintenance and child support payments against a pension fund.	Cited as authority that QDROs are an appropriate mechanism to enforce support judgments against pension benefits.

Court's Reasoning and Analysis

The court addressed each contested issue separately.

Interest on Delinquent Child Support

The court construed § 454.520 RSMo 1986, which provides that "all delinquent child support and maintenance payments ... shall draw interest." The court emphasized the statutory "shall" language denotes a mandatory duty, citing Missouri Soc'y of Am. College v. Roderick and Denton Const. Co. to support that the trial court had no discretion to refuse to award statutory interest.
The court explained the compensatory purpose of interest awards (citing Laughlin) and rejected father's reliance on Fohn as inapplicable because Fohn pertains to prejudgment interest on unliquidated claims, whereas this case concerns post-judgment child support collection.
The court distinguished Kessinger, noting that while Kessinger permits set-offs against interest, it does not authorize a trial court to refuse awarding interest on the full delinquent amount.
Relying on precedent applying § 408.040 before § 454.520's effective date (Buttrey, Sheets, Reimers), the court explained statutory interest is due on the amount determined to be in arrears.
Accordingly, the court concluded the trial court misapplied the law by denying interest for the May 24, 1984–March 5, 1991 period, and under Rule 84.14 the appellate court modified the trial court's order to award interest of $11,588.94 on the delinquent child support payments.

QDRO and Garnishment of Pension Benefits

The court reviewed ERISA's spendthrift rule and the Retirement Equity Act's exception permitting assignment of pension benefits only through a QDRO, then set out ERISA's statutory requirements for a domestic relations order to qualify as a QDRO (names/addresses, amount/percentage, number/period of payments, identifying the plan, and prohibitions on requiring benefits not provided by the plan).
The court found mother's proposed QDRO met ERISA's requirements: it sought collection of a state court judgment for delinquent support and maintenance, identified the parties and plan, requested a lump-sum disbursement from the plan's current value, and did not request increased benefits or benefits under an earlier QDRO; mother asserted the participant was over age 50, satisfying ERISA timing concerns for certain benefit forms.
The court rejected the trial court's application of § 452.330.5 RSMo (Cum.Supp. 1989) as barring a QDRO on the theory it would unlawfully modify the original property division. The appellate court explained that mother sought to collect an enforcement judgment—not to redivide marital property—and noted state law permits attachment or execution against a debtor spouse's property to enforce maintenance or support (§ 452.140), and that pension plans may be garnished to satisfy support judgments (Hopkins). The court also cited Rohrbeck to show ERISA permits QDROs to enforce support judgments against pension funds.
Therefore, the trial court erroneously declared the law by denying the QDRO on the ground that it would unlawfully modify the property division; the appellate court reversed that portion and remanded for further proceedings on the QDRO application.

Holding and Implications

Core Ruling: The appellate court (1) modified the trial court's judgment to award interest on all delinquent child support payments in the amount of $11,588.94, and (2) reversed the dismissal of mother's application for a QDRO and remanded for further proceedings on that application.

Implications:

Direct effect: Mother is awarded additional interest on delinquent child support totaling $11,588.94 (the court modified the trial court's interest award accordingly). The trial court's dismissal of the QDRO application is reversed and the matter is remanded for further proceedings to consider and, if appropriate, enter a QDRO consistent with ERISA and state law.
The opinion does not purport to establish a novel rule beyond application of existing statutory mandates and federal ERISA/QDRO provisions; it affirms that statutory language requiring interest ("shall") is mandatory and that QDROs may be used to enforce delinquent support judgments when the order satisfies ERISA's requirements.

Panel: CRANE, J.; CRIST, P.J., and AHRENS, J., concur.

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JANICE DELORES BAIRD, PETITIONER/APPELLANT, v. HARRY LANNING BAIRD, RESPONDENT/RESPONDENT.

CRANE, Judge.

Mother appeals those portions of an order of the trial court denying her interest on certain delinquent child support payments and dismissing her application for a Qualified Domestic Relations Order (QDRO). We modify the judgment by entering an award of interest in the amount of $11,588.94 on the ground that under § 454.520 RSMo 1986, mother is entitled to interest on all delinquent child support payments. We reverse the dismissal of mother's application for a QDRO and remand for further proceedings because the trial court erroneously declared the law by concluding that a QDRO would result in an unlawful modification of the property division portions of the original divorce decree.

Janice Delores Baird (mother) and Harry Lanning Baird (father) were divorced in April 1979. The initial dissolution decree awarded mother the custody of the parties' two minor children. Father was ordered to pay $100 monthly maintenance and $160 monthly child support. In December 1980, father's child support obligation was increased to $190 per month.

Subsequently, mother filed a motion for contempt against father for failure to comply with the 1980 modified decree. The motion was heard on May 23, 1984, and, on the same day, the court placed on the record "Tentative Findings and Order." This "Tentative Order" restated a verbal agreement, presented to the court by counsel for the parties, which reduced monthly child support to $125 per child and increased monthly maintenance to $125.

Mother then filed a "Motion to Construe the Tentative Findings and Order as a Nullity." After a hearing, the circuit court found the May 23, 1984 "Tentative Order" to be a binding and enforceable order. Mother appealed. We dismissed the appeal, holding that the trial court's ruling was a nullity and did not transform the 1984 "Tentative Order" into a final judgment. Baird v. Baird, 804 S.W.2d 836, 838 (Mo.App. 1991). We suggested that the more prudent course of action would have been for the mother to enforce the 1980 judgment. Id. From May 23, 1984, the date of the "Tentative Order," through March 5, 1991, the date of the court of appeals decision, father made payments in accordance with the "Tentative Order," and not in accordance with the 1980 judgment.

On October 3, 1991, mother sought to enforce the 1980 judgment by requesting the court to enter a QDRO for past due maintenance and child support. Father moved to quash mother's application for a QDRO and requested a hearing.

After an evidentiary hearing, the trial court issued "Findings of Fact, Conclusions of Law and Order." The court found that father had been awarded his retirement account as his share of marital property and child support payments had not been ordered paid from this account. The court further found that father had been making child support payments from May 23, 1984 through March 5, 1991 in reliance on the "Tentative Order." The court concluded that 1) any qualified domestic relations order entered subsequent to the original decree would constitute an unlawful modification of the property division provisions under § 452.330 RSMo 1986 and 2) in the interest of equity, father should not be charged interest on delinquent support payments during the period of May 23, 1984 through March 5, 1991. The court determined father to be in arrears for child support payments totalling $11,234.91 in principal and $1,187.50 in interest. Mother appeals from this judgment.

For her first point, mother asserts the trial court erroneously declared and applied the law as set out in § 454.520 RSMo 1986, which requires a court to charge interest on all delinquent child support and maintenance payments. This section provides:

1. All delinquent child support and maintenance payments which have accrued based upon judgments or orders of courts of this state entered prior to September 29, 1979, shall draw interest at a rate

. . . . .

(emphasis added). The court awarded $1,187.50 in interest on delinquent support from March 5, 1991, the date of the court of appeals decision, through the date of the hearing on the enforcement action. However, the court refused to award interest on the delinquent payments from the period May 24, 1984, the date of the "Tentative Order," until March 5, 1991. If interest had been awarded on those payments, the total interest award would have been $11,588.94.

We agree that the trial court erred. Even though father made reduced child support payments in good faith and in reliance upon what he understood to be a valid court order, the trial court had no discretion to decline to award interest on all delinquent child support payments. Section 454.520 requires that all delinquent child support payments "shall draw interest." The use of the word "shall" in a statute indicates that an action is mandatory and not discretionary or permissive. Missouri Soc'y of Am. College v. Roderick, 797 S.W.2d 521, 524 (Mo.App. 1990). An award of interest compensates an individual for the use of or loss of the use of money. Laughlin v. Boatmen's Nat'l Bank of St. Louis, 189 S.W.2d 974, 979 (Mo. 1945). Where a statute provides that interest "shall" be paid or received, a court has no discretion to refuse to award interest as directed by the statute. Denton Const. Co. v. Missouri State Highway Comm'n, 454 S.W.2d 44, 59-60 (Mo. 1970).

Kessinger v. Kessinger, 829 S.W.2d 658 (Mo.App. 1992), cited by father, does not call for a different result. In Kessinger we held that the trial court did not abuse its discretion in making a set-off against interest owed. Id. at 662. We did not hold that a trial court had discretion to refuse an award of interest on the full amount of the delinquent child support.

Father also argues that § 408.040 RSMo (Cum.Supp. 1991), which governs interest rates on past due judgments and is written in mandatory language, had been interpreted to not apply where the party does not know the amount due on a judgment, citing Fohn v. Title Ins. Corp. of St. Louis, 529 S.W.2d 1, 5 (Mo. 1975). Fohn applies to prejudgment interest on an unliquidated claim and is inapplicable to a post-judgment child support case. Child support cases decided under § 408.040 before § 454.520 was effective hold that a trial court is required to award interest on the full amount of child support determined by the court to be in arrears. Buttrey v. Buttrey, 622 S.W.2d 708, 710 (Mo.App. 1981); Sheets v. Sheets, 632 S.W.2d 80, 82 (Mo.App. 1982). Under § 408.040, statutory interest is due from the date of judgment. Reimers v. Frank B. Connet Lumber Co., 273 S.W.2d 348, 349 (Mo. 1954) (interest due from date of original judgment even though trial court granted motion for new trial that subsequently was reversed on appeal).

The trial court misapplied the law by refusing to award interest on all delinquent child support payments. Under Rule 84.14, we will enter the order the trial court should have entered by modifying the order and awarding interest on the delinquent child support payments in the amount of $11,588.94.

For her second point mother contends the trial court erroneously declared the law in dismissing her application for a QDRO on the ground that issuing a QDRO would result in an unlawful modification of the property division portions of the original decree which awarded the pension plan to father. Mother asserts that state and federal law permit a QDRO to be used to enforce a delinquent child support judgment. We agree.

The Employee Retirement Income Security Act of 1974 (ERISA) was enacted to protect pension plan participants and their beneficiaries. Smith v. Mirman, 749 F.2d 181, 182 (4th Cir. 1984). To secure the financial well-being of employees and their dependents, ERISA contains a spendthrift provision which prevents assignment or alienation of pension plan benefits. 29 U.S.C.A. § 1056(d)(1) (Supp. 1992). However, federal courts became divided on the question of whether dependents, including former spouses, could alienate pension benefits to satisfy family support obligations. See American Tel. Tel. Co. v. Merry, 592 F.2d 118, 121-25 (2d Cir. 1979). In response, in 1984 Congress carved out an exception to the spendthrift provision by passing the Retirement Equity Act, which amended ERISA to permit a pension plan participant to alienate or assign benefits, but only under a QDRO. 29 U.S.C.A. § 1056(d)(3)(A) (Supp. 1992) (effective Jan. 1, 1985).

ERISA sets out specific requirements which a domestic relations order must meet in order to be considered a QDRO. First, a QDRO must be a domestic relations order, which is a judgment, decree or order concerning child support or maintenance payments to a child or former spouse which is issued pursuant to a state's domestic relations law. 29 U.S.C.A. § 1056(d)(3)(B)(ii) (Supp. 1992). Second, a QDRO must clearly specify 1) the names and addresses of the participant and the alternate payee covered by the order, 2) the amount or percentage of the participant's benefits to be paid by the plan to the alternate payee, 3) the number of payments or the period covered by the order, and 4) the pension plan covered by the order. 29 U.S.C.A. § 1056(d)(3)(C) (Supp. 1992). Finally, a QDRO must not require a pension plan 1) to provide any type or form of benefit, or any option, not otherwise provided under the plan, 2) to provide increased benefits or 3) to pay benefits to an alternative payee under an order previously determined to be a QDRO. 29 U.S.C.A. § 1056(d)(3)(D) (Supp. 1992).

Even if a domestic relations order requires a type or form of benefit not provided for under the plan, it will still qualify as a QDRO where the order requires benefits to be paid to an alternative payee 1) after the participant reaches the earliest retirement age (in cases where the participant has not yet retired), 2) as if the participant had retired on the date such payment is to begin under the order (taking into account the current value of accrued benefits) and 3) in any form in which benefits may be paid under the plan. 29 U.S.C.A. § 1056(d)(3)(E)(i) (Supp. 1992). The term "earliest retirement age" includes anytime after the participant reaches age 50. 29 U.S.C.A. § 1056(d)(3)(E)(ii)(II) (Supp. 1992).

Mother's proposed QDRO satisfies these statutory guidelines. It is an order seeking collection of a state court judgment against father for delinquent child support payments owed to father's children and for delinquent maintenance payments owed to his former spouse. The proposed QDRO sets out mother's name and address, father's name and address, and the amount requested. It states that the amount is to be paid in a single lump-sum disbursement and describes father's pension plan. Mother does not ask for increased benefits or ask for benefits payable to someone else under a prior QDRO. Mother requests a lump-sum distribution from the plan's current value and asserts that father is over 50 years of age.

The trial court rejected mother's QDRO on the theory that under § 452.330.5 RSMo (Cum.Supp. 1989) any QDRO entered subsequent to the original decree would constitute an unlawful modification of the original property division. This conclusion is erroneous. Mother is not seeking to redivide marital property, but is instead attempting to collect a judgment for delinquent maintenance and child support payments.

Section 452.140 RSMo 1986 allows a spouse to attach or execute against any of the debtor spouse's property to enforce a decree for maintenance or child support. Property awarded a spouse pursuant to a division of marital property enjoys no special exemption from attachment or execution. Once a judgment is rendered, the prevailing party may garnish any property in the hands of a third party. Rule 90.01.02; § 525.010 RSMo 1986. A pension plan qualifies as property against which a judgment for maintenance or support may be enforced through execution or garnishment. Hopkins v. Hopkins, 626 S.W.2d 389, 393 (Mo.App. 1981). ERISA permits QDRO's to be used to enforce an earlier entered support judgment and collect delinquent maintenance and child support payments against a pension fund. Rohrbeck v. Rohrbeck, 318 Md. 28, 566 A.2d 767, 774 (1989).

The trial court erroneously declared the law in finding that mother could not garnish father's pension as a means of enforcing her judgment for delinquent maintenance and child support payments. Mother was entitled to garnish property in the hands of any third party. Her proposed QDRO satisfied ERISA's requirements. The trial court erred in refusing to issue a QDRO which would assign pension benefits to satisfy her judgment on the ground the QDRO constituted an unlawful modification of the original property division. We reverse the portion of the order dismissing mother's application for a QDRO and remand for further proceedings on the application for a QDRO.

That portion of the judgment of the trial court awarding interest is modified to show an award of interest in the amount of $11,588.94. That portion of the judgment of the trial court sustaining the motion to dismiss mother's application for a QDRO and denying the same is reversed. The case is remanded for further proceedings on the application for a QDRO.

CRIST, P.J., and AHRENS, J., concur.

BAIRD v. BAIRD