Alaska USA Federal Credit Union v. The Sayer Law Group, P.C.; State of Alaska, Department of Revenue, Child Support Services Division; Janelle Earls, in her official capacity as Acting Commissioner of the Department of Revenue; Troy R. Lewis; and Shanda M. Lewis

Summary

The Alaska Supreme Court held that a child-support withholding order was ineffective because the foreclosure surplus was not property "due, owing, or belonging" to the child-support obligor. The court further held that Alaska Statute 25.27.230(d) prohibited the trustee from transferring surplus foreclosure proceeds to a judgment lienholder after receiving actual notice of a CSSD lien, effectively giving the CSSD lien priority over competing judgment liens. The court affirmed the superior court's decision affirming the district court's judgment.

Holdings

1. A CSSD withholding order issued under AS 25.27.250 is ineffective when the third party possesses no property that is due, owing, or belonging to the child-support obligor at the time the order is issued. Because the surplus was insufficient to satisfy the competing liens, none of it was due, owing, or belonging to Lewis.
2. AS 25.27.230(d) applies to judgment lienholders in nonjudicial foreclosure proceedings, including judgment lienholders whose liens were recorded before the CSSD lien.
3. Sayer Law complied with the governing statutes by satisfying CSSD's lien before transferring the remaining surplus to Alaska USA, even though Alaska USA's judgment lien was recorded earlier.

Questions Presented

1. Whether a CSSD withholding order issued under AS 25.27.250 is effective when the property held by the third party is not due, owing, or belonging to the child-support obligor because competing liens exhaust the surplus.
2. Whether the prohibitions in AS 25.27.230(d) apply to judgment lienholders in nonjudicial foreclosure proceedings, including judgment liens recorded before the CSSD lien.
3. Whether CSSD's lien therefore had effective priority over Alaska USA's earlier-recorded judgment lien in the distribution of foreclosure surplus proceeds.

Disposition

affirmed