May 29, 2014 by Robert Franklin, Esq.
On more than one occasion I’ve pointed out that the system we have for paying child support to the state that then (supposedly) disburses it to the custodial parent for the benefit of the child is one that should legally create certain rights and obligations on the part of the state and the custodial parent. Now it turns out at least one Ohio father agrees and has filed suit to make his point. More important, a state court has ruled that his lawsuit states a claim in which, if the facts support it, he can prevail. What that means is that, in Ohio at least, I was right on the law.
The legal background is that, whenever one person receives money for the benefit of a second person, the first person is required to use the money for the second person and not something else. Think of a trustee who receives money for a child or an adult who’s mentally disabled. Into the bargain, the first person becomes a fiduciary which means his/her use of the money will be scrutinized by the courts more closely than any other behavior anywhere. Failure to use the money for the benefit of the second person can result in both civil and criminal liability on the part of the first person fiduciary. Civil liability can result in an award of punitive as well as compensatory damages. When it comes to fiduciaries, the law isn’t kidding around.
And that of course is precisely what the child support system does. Child support funds are the child’s, not the custodial parent’s. The state accepts the funds and therefore becomes a fiduciary, meaning it’s required to deliver them to the custodial parent. When that’s done, the custodial parent should in turn become a fiduciary and be required to use the funds for the benefit of the child. To my knowledge, no one has tested this legal theory against a custodial parent, i.e. filed suit demanding s/he prove the money was used for the child and not some other purpose.
But Matthew J. Dunlop of Franklin County, Ohio is in the process of testing the theory against the Ohio Department of Job and Family Services, and at this point all he has to do is produce facts to prove his case, and he’s due a lot of money. More importantly, other non-custodial parents in the state will be able to keep close tabs on the Department and require it to behave as a fiduciary is required to under the law.
What Dunlop alleges is that the ODJFS overcharged him when it deducted child support from his paycheck. He informed the Department of the overcharge, but it continued doing the same thing and refused to reimburse him the money it overpaid, plus interest. If he’s got facts to back up his claim, the Department owes him everything it’s overcharged. My guess is that, since his claim includes causes of action not only for breach of fiduciary duty, but other intentional civil wrongs, he’s probably claiming punitive damages as well.
Whatever the case, the trial is scheduled for July 14, so we’ll know soon enough. But whatever happens in Dunlop’s case (my guess is the Department will settle prior to trial to avoid an appellate court ruling that would constitute legally-binding precedent), we now know that, when child support agencies don’t deal appropriately with the money they’re paid, they incur real legal consequences. It turns out they’re not above the law. That should have been obvious all along, but they often behave like they’re a law unto themselves.
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