In re Watterworth
| Decision Date | 30 April 2003 |
| Docket Number | No. 2002-240.,2002-240. |
| Citation | 821 A.2d 1107 |
| Parties | In the Matter of Bradford WATTERWORTH and Julie Watterworth. |
| Court | New Hampshire Supreme Court |
Marshall Law, of East Kingston (Keri J. Marshall on the brief), for the petitioner.
John A. Macoul, of Salem, by brief for the respondent.
The respondent, Julie Watterworth (Wife), appeals the orders of the Portsmouth Family Division (DeVries, J.) approving the final divorce decree recommended by the Marital Master (Stephanie T. Nute, Esq.). She objects to the trial court's calculation of child support and division of marital assets. We affirm in part, vacate in part and remand.
Wife married the petitioner, Bradford Watterworth (Husband), in September 1982. The parties separated in 1997 and have three school-aged daughters born in 1988, 1990 and 1994, respectively. Husband is an orthodontist. Since 1986, he has been a part owner of Pingree & Watterworth, P.A., an orthodontic practice. Over a five-year period, he purchased one-half of the shares of this professional association for approximately $21,000. Wife has an undergraduate degree in medical technology and has not worked outside the home since before the couple's first child was born.
Husband commenced no fault divorce proceedings in March 2000. Following a four-day hearing, the court issued a final divorce decree. The court awarded Wife $3,000 per month in alimony and required Husband to pay $4,000 per month in child support.
The court found that the total value of the marital estate was $1,402,260. It ruled that an equal distribution of the marital estate was equitable. It awarded assets valued at $807,708 to Husband and assets valued at $594,552 to Wife and required Husband to pay Wife the sum of $106,578 to equalize the distribution. As a result, each party received $701,130 in assets. Among the assets Wife received were the equity in the marital home ($410,000), which is unencumbered by a mortgage, and significant cash assets, including her individual retirement account ($33,656), money market account ($22,000), checking account ($20,000), and investment account ($85,125).
Among the assets Husband received was the value of his interest in the orthodontic practice, which the court, accepting the testimony and report of Husband's expert witness, valued at $75,148. Husband was also awarded the value of his pension account in the orthodontic practice's defined contribution pension plan, which the court valued at $450,382 as of the date of the final hearing. Husband also received the value of his profit-sharing account in the orthodontic practice's profit-sharing plan, which the court valued at $41,445 as of the date of the final hearing.
Wife moved for reconsideration. Following an additional hearing, the court modified the final divorce decree in ways that neither party challenges on appeal and otherwise denied Wife's motion. This appeal followed.
In the Matter of Crowe & Crowe, 148 N.H. 218, 221, 804 A.2d 455 (2002) (citation omitted).
Wife first argues that the court miscalculated the child support award. RSA chapter 458-C governs the calculation of child support awards. To determine the total support obligation of the parties, the trial court must multiply their net income by a percentage that corresponds to the number of children they have. See RSA 458-C:3 (Supp.2002). Net income is the parents' "combined adjusted gross income" less certain statutorily described deductions. RSA 458-C:2, VI (Supp.2002). Adjusted gross income is gross income less: (1) court-ordered or administratively-ordered support "actually paid to others, for adults or children"; (2) 50% of "actual self-employment tax paid"; (3) "[m]andatory, not discretionary, retirement contributions"; (4) "[a]ctual state income taxes paid"; and (5) "[a]mounts actually paid by the obligor for allowable child care expenses or medical insurance coverage for the minor children to whom the child support order applies." RSA 458-C:2, I (Supp.2002).
When calculating child support, the trial court excluded from Husband's gross income contributions the orthodontic practice made on his behalf to his pension and profit-sharing accounts. The court found that these plans were "mandatory" and thus subject to exclusion under RSA chapter 458-C. Wife argues that this was error. We agree.
In matters of statutory interpretation, we are the final arbiter of legislative intent as expressed in the words of the statute considered as a whole. See Crowe, 148 N.H. at 224, 804 A.2d 455. We first examine the language of the statute and ascribe the plain and ordinary meanings to the words used. See id. "[W]hen a statute's language is plain and unambiguous, we need not look beyond it for further indication of legislative intent, and we refuse to consider what the legislature might have said or add language that the legislature did not see fit to incorporate in the statute." In re Baby Girl P., 147 N.H. 772, 775, 802 A.2d 1192 (2002). "Furthermore, we interpret statutes in the context of the overall statutory scheme and not in isolation." In the Matter of Coderre & Coderre, 148 N.H. 401, 403, 807 A.2d 1245 (2002) (quotation omitted).
We assume, without deciding, that both the pension and profit-sharing plans were "retirement" plans. We note, however, that RSA 458-C:2, I, does not distinguish between retirement plans that are "mandatory" or "discretionary." Rather, it refers to retirement plan contributions that are either "mandatory" or "discretionary." In context, we hold that the phrase "[m]andatory, not discretionary, retirement contributions" refers to contributions the divorcing party has made to a retirement plan, not contributions that the party's employer has made on the party's behalf. All of the amounts to which RSA 458-C:2, I, refers are those that the obligor "actually paid," not amounts that were paid on his or her behalf. In context, an obligor's gross income and corresponding child support obligation is lowered only by mandatory retirement contributions. In this way, the legislature ensured that an obligor could not avoid or diminish his or her child support obligation by making large discretionary contributions to retirement.
Both the pension and profit-sharing plans provided by the orthodontic practice to Husband and other employees are funded entirely by the practice. Because Husband did not contribute out-of-pocket to either his pension or profit-sharing account, it was error for the trial court to deduct from his gross income the practice's contributions to these accounts.
Wife asserts that the trial court also excluded from Husband's gross income $3,000 he received annually from the practice for medical expense reimbursement. Husband counters that this point is "moot" because he included the $3,000 as income in his support affidavit and the trial court accepted his income figures. We cannot resolve this factual dispute on appeal and direct the trial court to resolve it on remand.
Wife also argues that the trial court impermissibly deviated from the child support guidelines. RSA 458-C:5 (Supp.2002) permits the trial court to adjust a child support award upon finding special circumstances. Among the special circumstances the statute recognizes is "[t]he opportunity to optimize both parties' after-tax income by taking into account federal tax consequences of an order of support." RSA 458-C:5, I(f).
The trial court calculated the amount due under the uniform child support guidelines as $6,125 per month, but deviated from the guidelines by allocating some of the child support to alimony to achieve tax benefits. Accordingly, the trial court reduced Husband's monthly child support obligation to $4,000 and ordered him to pay $3,000 in monthly alimony. This too was error.
Just as "[a]limony should not be awarded under the guise of child support," child support should not be awarded under the guise of alimony. Coderre, 148 N.H. at 406, 807 A.2d 1245. Alimony and child support serve different public policies, are governed by different statutes, are awarded based upon different factors, and are terminated for different reasons. See id.; see also RSA 458:17,:19 (Supp.2002). Because we hold that the trial court erroneously allocated child support to the alimony award, we vacate both awards and do not address Wife's argument that the alimony award was insufficient under RSA 458:19.
Wife next argues that the court inequitably divided the parties' assets by valuing Husband's interest in the orthodontic practice pursuant to a "buy-out" provision in the shareholders' agreement (Agreement) between Husband and Dr. Pingree, and valuing Husband's pension and profit-sharing plans as of the date of the final hearing. Wife further contends that an equal distribution of assets was not equitable, and asserts that the court should have awarded her a greater percentage of the parties' assets.
Both parties submitted expert testimony as to the fair market value of Husband's interest in the orthodontic practice. "Fair market value is defined as the price at which the property would change hands between a willing buyer and a willing seller when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, both parties having reasonable knowledge of relevant facts." G. Skoloff et al., Valuation and Distribution of Marital Property § 29.05[2] (2003); see Rattee v. Rattee, 146 N.H. 44, 50, 767 A.2d 415 (2001). Both experts assumed that the practice would continue as a going concern.
Wife's expert valued Husband's interest in...
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