Lyddy v. Lyddy

Citation: 7 Ohio App. Unrep. 186Docket: Case No. L-89-245

Court: Ohio Court of Appeals; October 19, 1990; Ohio; State Appellate Court

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The court is reviewing an appeal regarding a qualified domestic relations order (QDRO) issued on July 19, 1989, following a divorce decree between Leo L. Lyddy and Veronica M. Lyddy from November 19, 1981. Initially, Leo was ordered to pay Veronica $900 per month in alimony, subject to review after five years. Leo Lyddy sought to modify this alimony in 1986, but his request was denied, and he subsequently stopped making payments. Veronica Lyddy filed motions for enforcement and was awarded a default judgment for $8,550 in arrears on November 16, 1987. The court mandated Leo to resume alimony payments and pay an additional $500 per month toward his arrears, while also joining the General Motors pension fund administrator as a party-defendant. A second QDRO was issued on June 10, 1988, to ensure payments from Leo's pension, but it was not accepted, leading to further default judgments against Leo for additional arrears totaling $21,150 by December 15, 1988. Veronica filed another motion in April 1989 due to continued non-payment, prompting a nunc pro tunc QDRO on May 2, 1989. As of July 4, 1989, Leo's total alimony arrears amounted to $29,250.

On July 19, 1989, the trial court issued a final Qualified Domestic Relations Order (QDRO) directing the Administrator to pay Veronica Lyddy $900 per month in alimony and $500 monthly towards a $29,250 arrearage, following the Administrator's rejection of a prior QDRO. The Administrator accepted this order on August 1, 1989. Leo Lyddy appealed the trial court's QDRO, raising three assignments of error: 

1. He claimed the QDRO, based on Ohio Revised Code Section 3113.21, was unconstitutional. 
2. He argued that the QDRO violated his due process rights under both Ohio and federal law due to inadequate notice. 
3. He contended the trial court erred by failing to determine the maximum amount that could be withheld from his pension under the Consumer Protection Act.

The document reinforces that a QDRO recognizes an alternate payee's right to receive part of a participant's retirement benefits without violating anti-assignment provisions under ERISA. Lyddy asserted that the retroactive application of the relevant statutes constituted an unconstitutional taking of his vested property rights. However, it was noted that retroactive legislation that provides a new remedy for existing rights does not necessarily violate constitutional prohibitions against retroactive laws. The court referenced previous rulings indicating that, as of 1981, laws allowing attachment of pension benefits for alimony were already established, and ERISA's provisions were not intended to protect pension benefits from such enforcement actions.

In the divorce decree between Leo and Veronica Lyddy in 1981, Leo was awarded his pension benefits, which were subject to garnishment for alimony non-payments. Recent laws (R.C. 3113.21 and Section 1056(d)(3), Title 29, U.S. Code) provide a means to enforce existing support obligations but do not alter the original terms. The trial court's Qualified Domestic Relations Order (QDRO) issued on July 19, 1989, was deemed constitutional and not retroactive, as it aligned with Ohio Supreme Court precedent allowing attachment of pension benefits for enforcing support orders (referencing Taylor v. Taylor, 1989). 

Leo Lyddy's first assignment of error was dismissed as the trial court was authorized to issue the QDRO. In his second assignment, he claimed a violation of due process regarding notification of alimony arrears, asserting he was only liable for an earlier default judgment of $8,550. However, the trial court had entered a subsequent default judgment of $21,150 due to his absence at a hearing for which he had been notified. Under Ohio law, no further notice is necessary for final judgments against a defaulting party. Consequently, Leo's due process argument was rejected, as he waived his right to contest the order by failing to appear.

Despite this, the court identified procedural irregularities in the CSEA's processes that led to the QDRO. On July 18, 1989, the CSEA reported Leo's alimony arrears of $29,250 to the trial court, which issued the QDRO the next day. Due process generally mandates notice and a hearing in cases of property seizure under state procedures, highlighting the necessity for procedural safeguards against wrongful deprivation.

Ohio's R.C. 3113.21 allows for the garnishment of an obligor's pension benefits to satisfy support obligations while ensuring due process through mandatory pre-deprivation notice and hearings. The statute mandates that in support order proceedings, the court must instruct the child support enforcement agency (CSEA) to investigate the obligor’s employment status and arrears before any modifications to withholding orders are made. Upon completing the investigation, the CSEA must notify both the obligor and obligee, providing detailed information about arrears, types of orders to be issued, and the implications for the obligor's income.

The notice to the obligor must include findings from the investigation, details of any arrears, types of withholding orders, and the process for contesting the orders if the obligor believes there has been a mistake. If the obligor does not request a hearing within ten days of receiving notice, the agency may proceed with the orders, including arrears. The procedure for serving notice can be executed via personal delivery or first-class mail, with evidence of mailing required for court records.

In the case at hand, the CSEA failed to provide the required notice to Leo Lyddy about its report, and the trial court issued a Qualified Domestic Relations Order (QDRO) immediately after the report was filed, preventing Lyddy from requesting a hearing. This lack of notice and opportunity to contest the arrearage amount led to a violation of his due process rights, particularly regarding the court's finding of arrears exceeding $21,150.

The appellant's second assignment of error is upheld, leading to a remand for Leo Lyddy to contest the CSEA's determination of his arrearage as $29,250 as of July 4, 1989. In the third assignment of error, Lyddy argues that the trial court failed to adhere to R.C. 3113.21 regarding limitations on withholding in its QDRO from July 19, 1989. R.C. 3113.21(D)(3)(a) allows the domestic relations court to attach pension benefits for support obligations but restricts the total withholding to comply with the Consumer Credit Protection Act, specifically 15 U.S.C. 1673(b). This statute sets maximum garnishment limits based on whether the individual supports a spouse or dependent child, with certain adjustments for prior support obligations. Lyddy contends that the trial court's QDRO did not specify which percentage limit applied, claiming this omission constitutes reversible error.

However, R.C. 3113.21 does not mandate that the withholding order explicitly state compliance with the Consumer Credit Protection Act limits. Furthermore, ERISA outlines specific requirements for QDROs, including identifying participants and alternate payees, the amount or percentage to be paid, and the applicable period and plans. Consequently, while R.C. 3113.21 mandates adherence to the Act's limits, a QDRO need not explicitly state this, making the court's omission non-reversible.

Lyddy also argues that the $1,400 withheld from his pension exceeds the allowable percentages of his disposable earnings, but there is no evidence of his monthly income at the time of the QDRO. The trial court relied on the CSEA report for withholding decisions but failed to notify Lyddy of the report or allow him to request a mistake of fact hearing, violating R.C. 3113.21(G)(1). This lack of notification deprived Lyddy of the opportunity to contest the withholding amount and its compliance with the Consumer Credit Protection Act limits. Thus, the appellant's third assignment of error is also found well-taken.

The court determined that substantial justice was not achieved for the complaining party, resulting in a partial affirmation and partial reversal of the judgment from the Lucas County Court of Common Pleas, Domestic Relations Division. The case is remanded for further proceedings consistent with this decision, and both parties are ordered to bear their own appeal costs. Judges GLASSER and RESNICK concur with the decision, while J. ABOOD concurs only in the judgment. Relevant legal statutes include R.C. 3105.011, which grants the court jurisdiction over domestic relations matters, and R.C. 3105.18(B), which outlines factors to consider when determining alimony, including the retirement benefits of the parties. Additionally, Section 1056(d)(1) of Title 29, U.S. Code states that pension plan benefits cannot be assigned or alienated.