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Child Support Enforcement Div. v. Mitchell (1/17/97), 930 P 2d 1284
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Notice: This opinion is subject to correction before publication in
the Pacific Reporter. Readers are requested to bring errors to the
attention of the Clerk of the Appellate Courts, 303 K Street,
Anchorage, Alaska, 99501, telephone (907) 264-0607, fax (907) 264-
0878.
THE SUPREME COURT OF THE STATE OF ALASKA
STATE OF ALASKA, DEPARTMENT )
OF REVENUE, CHILD SUPPORT ) Supreme Court No. S-6890
ENFORCEMENT DIVISION, ex rel.)
P. M., ) Superior Court No.
) 2KB-90-21 CI
Appellant, )
) O P I N I O N
v. )
) [No. 4461 - January 17, 1997]
ENOCH L. MITCHELL, )
)
Appellee. )
______________________________)
Appeal from the Superior Court of the State of
Alaska, Second Judicial District, Kotzebue,
Richard H. Erlich, Judge.
Appearances: David L. Brower, Assistant
Attorney General, Nome, and Bruce M. Botelho,
Attorney General, Juneau, for Appellant.
H. Conner Thomas, Larson, Timbers & Van
Winkle, Inc., for Appellee.
Before: Compton, Chief Justice, Rabinowitz,
Matthews, Eastaugh, and Fabe, Justices.
EASTAUGH, Justice.
I. INTRODUCTION
The Alaska Department of Revenue Child Support
Enforcement Division (CSED) appeals a superior court order
requiring CSED to reimburse Enoch Mitchell for child support he
paid pursuant to a 1990 default judgment that the court set aside
in 1993. We conclude that it was not error to order CSED to
reimburse Mitchell those amounts which the State retained, but that
it was error to order CSED to reimburse Mitchell for those amounts
the State paid as Aid to Families with Dependent Children (AFDC).
We therefore affirm in part and reverse in part and remand for
modification of the judgment.
II. FACTS AND PROCEEDINGS
A. Allegations Regarding Paternity
Peter Marks was born in May 1987. In July 1989 his
mother, Ellen Marks (Marks), signed a CSED paternity affidavit
naming Enoch Mitchell as the child's father; it was filed with CSED
in Anchorage. (EN1) In early November 1989 Mitchell completed an
Aid to Families with Dependent Children (AFDC) paternity statement
declaring that he was not Peter's father. At the bottom of the
statement Marks agreed with Mitchell's denial of paternity; she
signed the statement November 6. Marks later claimed that she
signed the statement at Mitchell's request "because he didn't want
to pay child support." The AFDC statement was filed with the
Alaska Department of Health and Social Services, Division of Public
Assistance (DPA), in Kotzebue in November 1989. CSED claims it did
not receive a copy of the AFDC statement until the Kotzebue
superior court sent it to CSED in June 1993.
B. The Default Judgment
In March 1990 CSED filed a complaint alleging that
Mitchell was Peter's father and owed a duty to provide child
support as required by law. Mitchell did not answer or appear
after he was served. CSED applied for an entry of default and a
default judgment in July. Superior Court Judge Paul B. Jones
entered a default judgment establishing paternity on July 23. The
clerk entered default on August 9.
After the default judgment adjudicated Mitchell to be
Peter's father, CSED began to collect child support from Mitchell
pursuant to AS 25.27.020(2)(C)(iii)(4). In November 1990 the
superior court ordered Mitchell to pay CSED monthly child support
of $752.
As of September 1994 CSED had collected $14,461 from
Mitchell. (EN2) Of that amount, the State retained $3,945 for
public assistance and passed $9,146 through to Marks, the custodial
parent. It refunded the remaining $1,369 to Mitchell pursuant to
a court order discussed below.
C. The Rule 60(b) Motion to Set Aside
In June 1993 Carol Wesley, acting as Mitchell's friend,
apparently conversed by telephone with Kotzebue Clerk of Court May
Pannick and then wrote Pannick a letter enclosing a copy of the
November 1989 AFDC statement signed by Mitchell and Marks. Wesley
and Mitchell signed the letter. It was filed in the Kotzebue
superior court on June 7, 1993.
In apparent response to the court's receipt of the
November 1989 AFDC statement, Superior Court Judge Richard H.
Erlich conducted a hearing at Kotzebue in September 1993 and set
aside the default judgment pursuant to Civil Rule 60(b). (EN3) The
court stated that "[b]ased upon the AFDC Paternity Statement filed
herein the court finds good cause to grant Defendant's Civ. R.
60(b) Motion to set aside . . . ." The court also ordered that a
hearing be held December 1, 1993, in anticipation of the
availability of blood test results. Because Marks was
uncooperative, blood testing was not completed by December 1. On
December 1 the court orally dismissed the action without prejudice.
The court continued the hearing until May 1994.
In May 1994 Mitchell, now represented by counsel, moved
for return of all money collected from him pursuant to the default
judgment. CSED did not initially respond. The court granted the
motion May 31 and ordered the State to reimburse all money
collected pursuant to the default judgment.
In late June the State filed, with the court's
permission, a late response to Mitchell's motion. The State
asserted that it had failed to oppose because it had erroneously
assumed that the reimbursable amount did not include the money sent
directly to Marks. In addition, the State asked that the May 31
order of reimbursement be held in abeyance until paternity could be
decided on the merits. The court denied the State's request and
affirmed the order setting aside the default judgment and the oral
order dismissing the action without prejudice. The State
subsequently opposed reimbursement, arguing that the default
judgment was valid and that CSED should not have to reimburse money
collected in reliance on a valid court order. Mitchell argued in
response that by providing the court with only Marks's CSED
affidavit and not the Mitchell-Marks AFDC statement, the State had
misled the court, "whether intentionally or not,"and that the
default judgment consequently was not valid.
At about the same time, blood tests established that
Mitchell was not Peter's father.
In January 1995 the superior court held that the AFDC
statement put the State on notice of Mitchell's denial of
paternity, whether or not AFDC forwarded the statement to CSED.
The court reasoned that because the State was on notice of this
denial, it was obligated to notify the court before the default
judgment was issued. The court ordered CSED to reimburse Mitchell
for his payments, including money retained by CSED and money passed
through to Marks as the custodial parent. The court stated,
Given the fact that the State was aware of Ms.
[Marks's] equivocation, the fact that her
agreement to the denial resulted in a
withdrawal of the allegation, the fact that
the State is the one who prosecuted this
matter and did not properly advise the court
of the exculpatory Denial and the fact that
the reality is that Mr. Mitchell is not the
father, it is ordered that the state shall
reimburse Mr. Mitchell the funds forwarded to
the mother.
CSED appeals.
III. DISCUSSION
A. The Validity of the Default Judgment
Although CSED does not argue that it was error to set
aside the default judgment under Rule 60(b), (EN4) it maintains
that the default judgment was valid and that CSED consequently
should not have been ordered to reimburse any funds collected from
Mitchell pursuant to that judgment.
Mitchell argues that "the issue is not whether the Court
acted improperly when it entered the default judgment, but, rather,
what should happen after a default judgment is set aside."
In our view, the appropriate starting point is the one
suggested by Mitchell. Because the default judgment was set aside
without objection by CSED and CSED does not argue on appeal that it
was error to set it aside, the legal question is whether Mitchell
is entitled to full reimbursement. (EN5) This question raises only
legal issues. (EN6)
Given our resolution of the remedy issues presented, it
is not necessary to decide whether the judgment was the result, as
Mitchell argues, of negligence or fraud attributable to the State.
B. Mitchell's Remedy
CSED advances various theories why it was error to order
CSED to reimburse Mitchell.
It first argues that Mitchell waived any claim for
reimbursement. It candidly admits it did not argue waiver in the
superior court. As CSED recognizes, we will not ordinarily
consider arguments not raised below. Arnett v. Baskous, 856 P.2d
790, 791 n.1 (Alaska 1993). We will, however, review arguments not
raised below if the issue is "'1) not dependent on any new or
controverted facts; 2) closely related to the appellant's trial
court arguments; and 3) could have been gleaned from the
pleadings,' or if failure to address the issue would propagate
'plain error.'" Sea Lion Corp. v. Air Logistics of Alaska, Inc.,
787 P.2d 109, 115 (Alaska 1990) (citing State v. Northwestern
Constr., Inc., 741 P.2d 235, 239 (Alaska 1987)). CSED cites Sea
Lion and relies on plain error as justification for reaching the
waiver issue.
Because waiver was not raised in the superior court, the
parties did not explore whether Mitchell had intentionally
relinquished a known right by making payments for three years after
the default judgment was entered. Waiver would ordinarily have
been a logical basis for opposing both the motion to set aside a
default judgment and the motion for reimbursement, but would also
ordinarily raise fact disputes about what the payor intended and
knew. CSED's failure to object to setting aside the default
judgment and to raise the waiver issue in opposing reimbursement is
fundamentally inconsistent with its attempt to raise the issue for
the first time on appeal.
Waiver is potentially dependent on new unresolved fact
questions, is not closely related to CSED's arguments below, and
could not have been gleaned from the pleadings. CSED did not in
some other way put into issue Mitchell's intentions or knowledge.
Nor can we say it was plain error for the superir must
affect substantive rights and be 'obviously prejudicial.'" Burford
v. State, 515 P.2d 382, 383 (Alaska 1973). As we stated in Miller
v. Sears, 636 P.2d 1183, 1189 (Alaska 1981), "[p]lain error exists
where an obvious mistake has been made which creates a high
likelihood that injustice has resulted." See also Evron v. Gilo,
777 P.2d 182, 186 (Alaska 1989); In re L.A.M., 727 P.2d 1057, 1059
(Alaska 1986). Under these circumstances, we cannot say that it
was plain error for the trial court to fail to raise sua sponte a
theory not raised by CSED. (EN7)
We consequently do not reach the waiver issue. (EN8)
CSED also asserts that the superior court should have
conditioned the vacation of the default judgment on not depriving
CSED of payments received pursuant to the default judgment. The
State did not ask that vacation of the default judgment be
conditioned upon any limitation on a future claim for
reimbursement. The State did not oppose vacation of the default
judgment and initially did not oppose Mitchell's motion for
reimbursement. Even after the default was set aside and the court
ordered reimbursement, CSED took the position that "the issue of
return of properly collected child support"should await a
determination of paternity. It did not argue that vacation should
be conditioned on relinquishment of a reimbursement claim as to any
or all of the amounts collected from Mitchell.
It was not plain error to fail sua sponte to condition
vacation of the default judgment on relinquishment of any
reimbursement claim.
The question should be whether CSED demonstrated any
factual basis for denying or limiting Mitchell's reimbursement
claim. As of the time the court first ordered reimbursement, CSED
had made no argument supported by facts which would resolve the
waiver and estoppel issues or from which its present arguments
could be gleaned. Only after the court vacated the default
judgment and ordered full reimbursement did CSED allege facts which
arguably touch on the waiver, estoppel, and condition issues. Even
then CSED's assertions could not permit resolution of the waiver
and estoppel issues as a matter of law; they could be resolved now
only if there were a remand and Mitchell were given a full
opportunity to offer evidence bearing on the elements of those
doctrines. Further, Mitchell timely moved for reimbursement after
the court set aside the default judgment without objection from
CSED. After the court vacated the default judgment, Mitchell did
nothing to waive a reimbursement claim or to estop him from
asserting such a ate remedy. CSED squarely raised the separate
question of the actual scope of the remedy after the court vacated
the default judgment. CSED, among other things, distinguished
between collected amounts that were retained by CSED, and collected
amounts that were paid to Marks and consequently not retained by
the State.
Mitchell seeks restitution from the State of all moneys
paid pursuant to the default judgment. "A person who has been
unjustly enriched at the expense of another is required to make
restitution to the other." Restatement of Restitution  1 (1937).
This principle is in accord with our decision in Alaska Sales and
Serv., Inc. v. Millet, 735 P.2d 743, 746 (Alaska 1987); accord
George v. Custer, 862 P.2d 176 (Alaska 1993); Darling v. Standard
Alaska Prod. Co., 818 P.2d 677 (Alaska 1991). In Alaska Sales, we
set forth three essential elements for a claim of unjust enrichment
sounding in quasi-contract:
1) a benefit conferred upon the defendant by
the plaintiff;
2) appreciation by the defendant of such
benefit; and
3) acceptance and retention by the defendant
of such benefit under such circumstances that
it would be inequitable for him to retain it
without paying the value thereof.
Id. at 746 (emphasis added). These equitable principles apply here
because Mitchell seeks restitution from the State for benefits he
conferred pursuant to the default judgment.
It is one thing to require the State to disgorge moneys
held by it after the default judgment was set aside. Absent any
limiting condition on the order vacating the default judgment or
any other intervening principle, as between Mitchell and the State,
the State should not be allowed to retain proceeds collected
pursuant to a judgment which was set aside. See Restatement of
Restitution  1 (1937). Mitchell moved to set aside the judgment
on the theory he was not Peter's father. The State did not object.
The only justification for ordering Mitchell to pay was paternity;
if Mitchell was not adjudicated to be Peter's father, CSED could
not have obtained any payments from him. The State would be
unjustly enriched if it were allowed to retain moneys paid by
Mitchell under the vacated judgment. Thus, moneys retained by the
State must be returned to Mitchell.
Those moneys which the State paid to Marks before the
judgment was vacated and before collections ended stand in a
different posture. The State paid those moneys to Marks as
required by federal law. 42 U.S.C.  657 (1989); 45 C.F.R. 
302.51 (1995). Here the question is whether the State or Mitchell
should bear the loss of collected moneys the State necessarily paid
Marks pursuant to federal law. As to these funds the State's
position is analogous to that of an agent whose duty is to remit
funds to a disclosed principal. In such circumstances the agent is
not liable for a return of the funds if the agent did not have
knowledge at the time of payment to the principal of the other
party's right to recover the funds. 3 C.J.S. Agency  363 (1973)
("An agent is not liable to a person who is entitled to the return
of money paid to the agent in his representative capacity, if the
latter has in good the money over to his principal . . . .").
Moreover, under the standard set forth in Alaska Sales, in order
to find unjust enrichment entitling a party to restitution, the
"enriched party"must accept and retain the benefits conferred by
the other party. Alaska Sales, 735 P.2d at 746. The State no
longer retains those moneys, and consequently cannot be ordered to
make restitution. (EN9)
It is not unjust that as between Mitchell and the State,
Mitchell bear this loss. Mitchell could have, by responding to the
complaint or communicating directly with CSED, put paternity into
issue when he was first sued. He thus might have easily prevented
the State from disbursing those amounts to Marks until the issue
was resolved and indeed might have prevented collections. As to
these amounts, restitution by the State is impossible because the
State paid them out and did not retain them. Further, Mitchell has
a potential source of recovery for the moneys the State paid over
to Marks. Under Matthews v. Matthews, 739 P.2d 1298 (Alaska 1987),
Mitchell, having provided child support which others owed, has a
potential reimbursement claim.
We also conclude that the record does not create a
genuine dispute about whether the State's actions in filing the
complaint and obtaining a default judgment contributed more to the
disbursements to Marks than Mitchell's failure to contest
paternity. Mitchell argues that CSED's knowing reliance on the
Marks paternity affidavit when obtaining the default judgment and
CSED's failure to advise the court of the November 1989 Mitchell-
Marks statement works a fraud on the court that prevents the court
from ordering the State to reimburse all collected moneys to
Mitchell. Assuming that intentional reliance by CSED on a false or
disputed affidavit contradicted by the mother's recantation would
entitle Mitchell to full reimbursement, the record does not support
any such inference. There is no indication beyond unsupported
surmise that CSED was aware of the November 1989 statement filed
with the DPA. CSED is a division of the State Department of
Revenue. DPA is a division of the State Department of Health and
Social Services. The CSED affidavit was filed in Anchorage; the
AFDC statement was filed in Kotzebue. Mitchell has not established
the existence of a genuine fact dispute to be explored on remand.
IV. CONCLUSION
For these reasons, we AFFIRM in part and REVERSE in part,
and REMAND for entry of a corrected order requiring reimbursement
of only those amounts retained by the State.
ENDNOTES:
1. "Peter Marks"and "Ellen Marks"are pseudonyms.
2. The State apparently retained Mitchell's permanent fund
dividends from 1990 to 1993, obtained some of his "income tax"
(presumably refunds) and his unemployment benefits, and garnished
fifty-five percent of his wages.
3. The court seems to have raised the Rule 60(b) motion sua
sponte, as Mitchell and Wesley did not request that relief in their
June 3 letter. Apart from the June Wesley-Mitchell letter to
Pannick, the appellate record does not memorialize the existence or
substance of the Wesley-Pannick conversation. The superior court
seems to have considered the November 1989 AFDC statement
sufficient to raise the relief issue without formal motion.
Rule 55(e) provides that "if a default judgment has been
entered, [the court] may . . . set it aside in accordance with Rule
60(b)."
4. In its statement of points on appeal, CSED contested the use
of Rule 60(b) to set aside the default judgment, asserting that the
June 1993 letter was insufficient to constitute a Rule 60(b) motion
and untimely by Rule 60(b) standards, and that it was error to
grant relief on Mitchell's pre-complaint paternity denial.
Because CSED did not raise these issues below or argue them in
its brief, we do not reach them. "[W]here an issue is not briefed
on appeal, it will not be considered." Kenai Peninsula Borough v.
English Bay Village Corp., 781 P.2d 6, 9 (Alaska 1989).
5. CSED does not argue that Mitchell is not entitled to any
remedy, only that his recovery should be limited to that part of
the collections that CSED retained, and that he should not be
reimbursed by the State for amounts the State paid to Ellen Marks.
6. We review questions of law de novo. Langdon v. Champion, 752
P.2d 999, 1001 (Alaska 1988). We "adopt the rule of law that is
most persuasive in light of precedent, reason, and policy." Guin
v. Ha, 591 P.2d 1281, 1284 n.6 (Alaska 1979).
7. CSED also argues that it would have been pointless to make
this argument below, as the trial court considered the AFDC
paternity statement to be an answer, and would have rejected any
waiver argument. Under the circumstances of this case, we do not
assume it would have been futile for the State to have raised this
argument.
8. CSED also asserts that Mitchell is equitably estopped from
seeking reimbursement. CSED has not substantively briefed the
elements of equitable estoppel. Apart from its failure to preserve
the issue in the superior court, its failure to brief the issue on
appeal waives the issue. Adamson v. University of Alaska, 819 P.2d
886, 889 n.3 (Alaska 1991) ("[W]here a point is given only a
cursory statement in the argument portion of a brief, the point
will not be considered on appeal.").
9. Given Mitchell's three-year delay in contesting the default
judgment, it could be argued under Restatement of Restitution sec.
74 that it would be inequitable for Mitchell to seek restitution of
amounts justifiably paid out by the State to Marks. Section 74
states, "[a] person who has conferred a benefit upon another in
compliance with a judgment . . . is entitled to restitution if the
judgment is reversed or set aside, unless restitution would be
inequitable . . . ." Restatement of Restitution sec. 74 (1937).
Given our conclusion that the State need not reimburse Mitchell for
moneys passed through to Marks because the State was not unjustly
enriched, we need not address whether Mitchell's conduct would make
his restitution claim against the State inequitable.
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