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Case Summary: Proudfit v. O'Neal, Docket No. 135465 (Mich. Ct. App. Apr. 7, 1992)

Factual and Procedural Background

The parties were never married. Plaintiff is the mother and defendant is agreed to be the father of a severely handicapped child who is the subject of a temporary child support order. Defendant is disabled and unemployed. The trial court determined defendant's weekly income at $177.46 by considering the following monthly amounts: (1) Supplemental Security Income (SSI) of $198.20; (2) Social Security Disability benefits of $238; (3) a $250 rent subsidy; and (4) possibly an $84 utility allowance (which defendant contended was a one-time grant). Based on that calculation the trial court ordered defendant to pay $48 per week in child support. When defendant failed to pay, an income withholding order was issued against his disability benefits. Defendant appealed from an order refusing to modify the temporary child support order. The Court of Appeals reversed and vacated the child support and income withholding orders and remanded for further proceedings.

Legal Issues Presented

  1. Whether means‑tested public assistance benefits (specifically SSI and other subsidies) may be treated as income for child support purposes and whether those benefits are subject to income withholding.
  2. Whether the trial court erred in refusing to modify a temporary child support order when the defendant did not plead or prove changed circumstances.
  3. Whether the trial court on remand must apply the amended provisions of the Michigan Child Support Guideline Manual (including the indigency definition and formula) that took effect October 10, 1990, or explain any departure in writing or on the record.

Arguments of the Parties

Defendant's Arguments

  • Most of the benefits he receives (other than the social security disability payments) are inalienable and therefore may not be considered income for child support purposes nor attached through an income withholding order. He cites MCL 400.63; MSA 16.463 (regarding inalienability of general assistance benefits).
  • Defendant is disabled and unemployed, and the benefits he receives are means‑tested assistance that should not be treated as available income for support.

Plaintiff's Arguments

  • Plaintiff agrees only the disability payments may be attached, but contends that the other benefits were properly considered as income by the trial court.
  • Plaintiff contends that, because defendant neither pleaded nor proved changed circumstances, the trial court did not err in refusing to modify the support order.
  • Plaintiff also argued that the amended compliance provisions of the Michigan Child Support Guideline Manual do not apply to this case (the opinion notes the plaintiff's argument but the Court nonetheless discusses and applies the amended manual provisions on remand).

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Lapeer Co Dep't of Social Services v Harris, 182 Mich. App. 686, 453 N.W.2d 272 (1990) Means‑tested benefits (e.g., GA) are not income for child support purposes and are not subject to withholding. The court cited Lapeer as authority that means‑tested benefits should not be treated as income or subjected to income withholding, supporting reversal of the trial court's treatment of such benefits as income.
Joslin v LaVance, 154 Mich. App. 501, 398 N.W.2d 453 (1986) Arrearage can be reduced by the amount of support that accrued while a father was on public assistance (ADC) and unable to work. Referenced to support the principle that means‑tested assistance should not count as income for support and that courts may reduce arrearages under such circumstances; the Court noted Joslin when explaining that means‑tested benefits are neither income nor subject to withholding.
Gonzalez v Gonzalez, 121 Mich. App. 289, 328 N.W.2d 365 (1982) A father's petition to reduce support should be granted where Aid to Dependent Children (ADC) was his only income. Used to illustrate prior holdings that where public assistance is the only income, reduction of support is appropriate; supports the rule excluding means‑tested benefits from consideration as income.
Causley v LaFreniere, 78 Mich. App. 250, 259 N.W.2d 445 (1977) There would be a conflict in requiring support payments when a father's only income was ADC and he could show inability to find odd jobs to meet the small payment. Cited for the proposition that forcing support from means‑tested assistance can create untenable conflicts, reinforcing the Court's conclusion that such benefits are not income for support.
Pyke v Dep't of Social Services, 182 Mich. App. 619, 453 N.W.2d 274 (1990) The fact that means‑tested benefits may be considered in determining eligibility for other welfare programs does not make those benefits income for child support purposes. The Court relied on Pyke to reject the argument that eligibility‑determination uses of benefits transform them into attachable income; this supported reversal of the trial court's calculation.
Thompson v Merritt, 192 Mich. App. 412, 481 N.W.2d 735 (1991) Retroactive modification of temporary child support orders is permissible; the court also held that amendment to the Child Support Guideline Manual was procedural and therefore applies retroactively. The Court invoked Thompson to explain that retroactive modification of the temporary support order is allowed and that the trial court must follow the amended Michigan Child Support Guideline Manual (or explain departures), applying Thompson's retroactivity analysis to this case and remand instructions.
Frens v Frens, 191 Mich. App. 654, 478 N.W.2d 750 (1991) Defendant should receive credit for monies received by the child by reason of the defendant's disability. The Court directed that on remand the defendant be credited for monies withheld thus far and for any amounts the child received because of the defendant's disability, citing Frens for that crediting principle.

Court's Reasoning and Analysis

The Court of Appeals based its decision primarily on the Michigan Child Support Guideline Manual and on prior Michigan appellate decisions discussing means‑tested benefits. The Manual (1989 and 1992 revisions) expressly provides that means‑tested assistance, including SSI, AFDC, GA, and Food Stamps, "should not be considered as income to either parent for the purposes of determining child support" except in inapplicable special circumstances. The court summarized the defendant's income sources and noted that, under the Manual, the only item properly considered income was the social security disability payment.

The court reviewed controlling precedent that consistently treated means‑tested benefits as neither income for child support purposes nor subject to withholding (citing Lapeer, Joslin, Gonzalez, Causley, and Pyke). It concluded the trial court erred as a matter of law by including the means‑tested benefits in the income calculation and by issuing an income withholding order against those benefits. Because of that legal error the Court reversed and vacated the support and income withholding orders.

On the question of modification and retroactivity, the court explained that retroactive modification of temporary support orders is permissible under Thompson v Merritt and statutory provisions. The court rejected plaintiff's reliance on defendant's failure to plead or prove changed circumstances as a bar to relief, noting that courts may modify for "proper cause or because of change of circumstances" and that the question of law can be reviewed de novo even if changed circumstances were not pleaded (citing Joslin). The court additionally instructed that the trial court on remand must apply the amended provisions of the Michigan Child Support Guideline Manual that took effect October 10, 1990 (including indigency definitions and formula), unless it explains any departure in writing or on the record.

Finally, the court addressed credits: defendant should be credited with monies withheld thus far and with any amounts the child received by reason of defendant's disability (citing Frens).

Holding and Implications

Holding: The Court of Appeals reversed the trial court's decision, vacated the child support and income withholding orders, and remanded the case for further proceedings consistent with the opinion.

Implications and direct effects:

  • The trial court's inclusion of means‑tested benefits (such as SSI, GA, rent subsidy, and similar assistance) in defendant's income calculation was held to be erroneous as a matter of law; such means‑tested benefits are not income for child support purposes and are not subject to income withholding (except for the disability payment, which may be attached).
  • The case was remanded for a determination of the proper amount of child support, with instructions that the trial court may retroactively modify the temporary support order, must follow the amended Michigan Child Support Guideline Manual (effective October 10, 1990) or explain any departure in writing or on the record, and must credit defendant for monies already withheld and for amounts received by the child due to defendant's disability.
  • No broader new precedent was proclaimed by this opinion; the court applied existing Michigan precedent and the Child Support Guideline Manual to resolve the case and remand for recalculation consistent with those authorities.

Disposition: The decision below was reversed, the support and income withholding orders were vacated, and the case was remanded. The Court did not retain jurisdiction.

PROUDFIT v O'NEAL

PER CURIAM.

Defendant appeals as of right from an order refusing to modify a temporary child support order. The parties have never been married, but agree that defendant is the father and plaintiff is the mother of the severely handicapped child who is the subject of the support order. Defendant is disabled and unemployed. We reverse and vacate the child support and income withholding orders.

Defendant's entire income relevant to this appeal consisted of: (1) supplemental security income benefits (SSI) of $198.20 a month; (2) social security disability benefits of $238 a month; (3) a rent subsidy of $250 a month; and, perhaps, (4) a utility allowance of $84 a month, which defendant insists was a one-time-only grant. The trial court considered all these amounts, determined that defendant's income was $177.46 a week, and ordered him to pay $48 a week in child support. When defendant did not pay, an income withholding order was issued against his disability benefits.

Defendant argues that the benefits he receives, except for the disability payments, are inalienable and therefore may not be considered as income for child support purposes and may not be attached through an income withholding order, citing MCL 400.63; MSA 16.463, which provides that general assistance benefits are inalienable. Plaintiff agrees that only the disability payments may be attached, but argues that all the other benefits were properly considered as income. Plaintiff further argues that, because defendant did not plead or prove changed circumstances, the trial court did not err in refusing to modify the support order and that the amended compliance provisions of the Michigan Child Support Guideline Manual do not apply to this case.

Under the Michigan Child Support Guideline Manual, the only item of assistance received by defendant that properly may be considered income is the disability payment. See Manual (1989 rev), p 2 and Manual (1992 rev), p 2. The other benefits defendant receives are "[m]eans tested sources of income such as Aid to Families with Dependent Children (AFDC), General Assistance (GA), Food Stamps, and Supplemental Social Security Income (SSI)[,] [which] should not be considered as income to either parent for the purposes of determining child support" except in circumstances not applicable to defendant. See Manual (1989 rev), p 5 and (1992 rev), p 4 (emphasis in the original). Accordingly, this Court has held that means-tested benefits are neither income nor subject to income withholding. Lapeer Co Dep't of Social Services v Harris, 182 Mich. App. 686, 688-691; 453 N.W.2d 272 (1990) (GA benefits are not income and are not subject to withholding); Joslin v LaVance, 154 Mich. App. 501, 504-505; 398 N.W.2d 453 (1986) (arrearage reduced by amount of support that accrued while father on ADC and unable to work); Gonzalez v Gonzalez, 121 Mich. App. 289, 291-292; 328 N.W.2d 365 (1982) (father's petition to reduce support should have been granted because ADC was his only income); Causley v LaFreniere, 78 Mich. App. 250, 251-254; 259 N.W.2d 445 (1977) (conflict would exist if father was required to pay support while his only income was ADC and he could show that he was unable to find odd jobs to meet the $5 a month payment). The fact that means-tested benefits may be considered in determining eligibility for other social welfare programs does not change this result. Pyke v Dep't of Social Services, 182 Mich. App. 619, 625, 627-628; 453 N.W.2d 274 (1990). The trial court's decision is therefore erroneous as a matter of law. We remand the case to the circuit court for a determination of the proper amount of child support.

For the trial court's guidance on remand, we note that retroactive modification of temporary child support orders, such as the one at issue here, is permissible. See Thompson v Merritt, 192 Mich. App. 412, 421-422; 481 N.W.2d 735 (1991); see also MCL 552.603(6); MSA 25.164(3)(6) ("this section [precluding retroactive modification] shall not apply to an ex parte support order or a temporary support order"). This is true even though, as noted by plaintiff, defendant neither pleaded nor proved changed circumstances in his petition for modification. See Joslin, supra at 504 (question of law reviewed de nova despite failure to plead or prove changed circumstances); see also MCL 722.27(1)(c); MSA 25.312(7)(1)(c) (the court may "[m]odify or amend its previous judgments or orders for proper cause or because of change of circumstances" [emphasis added]). We also note that the trial court is bound to follow the amended provisions of the Michigan Child Support Guideline Manual that took effect on October 10, 1990, which include a definition and formula for indigency cases, or explain its departure in writing or on the record. See Thompson, supra at 416-418 (amendment is procedural and therefore applies retroactively); see also MCL 552.15(2); MSA 25.95(2) (divorce act); MCL 552.452(2); MSA 25.222(2)(2) (Family Support Act); MCL 722.3(3); MSA 25.244(3)(3) (emancipation of minors and rights of parents act); MCL 722.27(2); MSA 25.312(7)(2) (Child Custody Act); MCL 722.717(3); MSA 25.497(3) (Paternity Act). In addition to being credited with monies withheld thus far, defendant also should be credited with any amounts received by his child by reason of defendant's disability. See Frens v Frens, 191 Mich. App. 654; 478 N.W.2d 750 (1991).

The decision below is reversed, the support and income withholding orders are vacated, and the case is remanded for further proceedings consistent with this opinion. We do not retain jurisdiction.

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PROUDFIT v. O'NEAL
(Apr 7, 1992)