In the Matter of Landgraf & Landgraf

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THE SUPREME COURT OF NEW HAMPSHIRE

___________________________

2nd Circuit Court-Lebanon Family Division
Case No. 2022-0693
Citation: In the Matter of Landgraf & Landgraf, 2024 N.H. 41

IN THE MATTER OF GREGORY LANDGRAF AND NATASHA LANDGRAF

Argued: September 19, 2023
Opinion Issued: August 13, 2024

Law Office of Joshua L. Gordon, of Concord (Joshua L. Gordon on the
brief), and Atwood & Cherny, of Boston, Massachusetts (Mary Beth L. Sweeney
and Catharine V. Blake on the brief, and Mary Beth L. Sweeney orally), for the
petitioner.

Shaheen & Gordon, PA , of Nashua (Andrew J. Piela on the brief and
orally), for the respondent.

BASSETT, J.

¶1 The respondent, Natasha Landgraf (wife), and the petitioner, Gregory
Landgraf (husband), are parties in a current divorce proceeding and have two
minor children together. In this interlocutory appeal, the wife challenges
orders of the Circuit Court (Mace, J.) determining the amount of the husband’s
temporary child support obligation. See Sup. Ct. R. 8. The interlocutory
appeal statement approved by the trial court sets forth two questions related to
whether irregular income the husband received is available for child support.
We answer both interlocutory questions in the affirmative and remand for
further proceedings consistent with this opinion.

¶2 We accept the statement of facts as presented in the interlocutory
appeal statement and rely upon the record for additional facts as
necessary. See In the Matter of Liquidation of Home Ins. Co., 175 N.H. 363,
364 (2022). In 2018, the trial court issued a final divorce decree, which
included a child support award. The wife appealed the decree to this court,
which vacated and remanded the trial court’s determination as to the
percentage of the husband’s irregular income that he should pay as child
support.

¶3 In 2020, on remand from this court, the circuit court issued a new
temporary child support order. The circuit court ordered that, if the husband
receives irregular income, he must pay the wife a percentage of that income as
child support. See RSA 458-C:2, IV(c) (2018). It ordered the husband to pay a
percentage of his irregular income in child support that is less than the
applicable percentage set forth in the child support formula. See RSA 458-C:3,
I(a) (2018). The wife moved for reconsideration, arguing that the court erred by
requiring the husband to pay a lower percentage of his irregular adjusted gross
income than the applicable percentage calculated under the child support
guidelines that applied to their “net income.” The husband also moved for
clarification and reconsideration. He requested that the court clarify that the
cash distributions he received from New England Industries (NEI), a
subchapter S corporation of which he is a 50% shareholder, to offset his
shareholder tax liability, and from which no taxes were withheld by NEI, were
not income for child support purposes. See In the Matter of Albert & McRae,
155 N.H. 259, 264 (2007) (S corporation’s income tax liability is paid by its
individual shareholders allowing the corporation to avoid income tax liability);
26 U.S.C. §§ 1361(a)(1), 1362(a) (defining “S corporation”), 1366(a)-(b) (2018) (S
corporation “[p]ass-thru” of shareholder tax liability).

¶4 The trial court denied both parties’ motions. The court stated that it
had not erred when — in reaching its temporary support award — it treated
NEI’s distributions to the husband to offset his shareholder tax liability as
“gross income.” It explained that the child support formula is based upon a
parent’s “net income,” see RSA 458-C:2, VI (2018), which it interpreted as
adjusted gross income minus taxes. It clarified that its downward deviation
from the percentage of net income provided in the child support formula as
applied to the husband’s irregular income “was meant to represent” the
husband’s “share of the couple’s ‘net income’” adjusted for an approximation of
the husband’s “tax burden on those distributions.” The court also invited the
parties to prepare an interlocutory appeal statement on those issues.

¶5 Before the interlocutory appeal was filed, the wife moved for
contempt because the husband had not paid child support on two irregular

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payments he received through payroll and from which federal taxes and
Medicare were withheld. The husband objected, arguing that these payments
should not be deemed income for child support purposes because they were
intended to reimburse him for premiums paid for a “succession insurance”
policy that in the event of the death of the other 50% shareholder would
provide funds sufficient to enable him to purchase the remaining shares in the
company. The Circuit Court (Tenney, J.) denied the motion for contempt. It
did not address whether these irregular payments were income for child
support purposes. The circuit court instructed the parties to prepare an
interlocutory appeal statement. The parties each submitted to the circuit court
similar proposed interlocutory appeal statements, the circuit court signed the
wife’s proposed statement, and the wife submitted it to this court.

¶6 The questions presented in this interlocutory appeal are:

Question One: Are cash distributions received by a corporate shareholder
that are necessary to pay [that] shareholder’s personal tax liability as a result
of corporate earnings monies available to the shareholder for support
purposes?

Question Two: Are distributions made under a corporate instrument
requiring [succession] insurance payments monies available to a shareholder
for support purposes?1

We answer both questions in the affirmative.

¶7 Resolving the questions presented requires us to engage in statutory
interpretation. The interpretation of a statute presents a question of law,
which we review de novo. State v. Parr, 175 N.H. 52, 55 (2022). We examine
the statute’s language, ascribing to its words their plain and ordinary
meanings, and interpret it in the context of the overall legislative scheme and
not in isolation. In the Matter of Jerome & Jerome, 150 N.H. 626, 628-29
(2004).

¶8 We first address the question of whether the two types of
distributions the husband received are gross income “available” to the husband
for child support purposes. See RSA 458-C:2, IV(c). Neither party argued that
the distributions intended to be used to pay the husband’s tax liability
constitute dividends. Nonetheless, we conclude as a matter of law based upon
the record before us that those payments are dividends — an enumerated
source of gross income under RSA 458-C:2, IV. We additionally determine that

1 While the interlocutory appeal statement characterizes the insurance policy as “key man” life

insurance, at oral argument the parties agreed that it is better characterized as succession
insurance. Accordingly, for accuracy and consistency, we have replaced the reference to key man
life insurance in the interlocutory questions presented.

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the distributions the husband received to cover the cost of the succession
insurance premiums were bonuses, another enumerated source of gross
income under RSA 458-C:2, IV.

¶9 The child support statute defines “gross income,” in relevant part, as
“all income from any source, whether earned or unearned, including but not
limited to wages,” self-employment income, dividends, and bonuses, but does
not define each type of enumerated income source. See RSA 458-C:2, IV
(2018). When a term is not defined in the statute, we look to its common
usage, using the dictionary for guidance. Appeal of Town of Lincoln, 172 N.H.
244, 248 (2019). Black’s Law Dictionary defines “dividend” as a “portion of a
company’s earnings or profits distributed pro rata to its shareholders,” usually
“in the form of cash or additional shares.” Black’s Law Dictionary 601 (11th
ed. 2019). Here, the record shows that when NEI transitioned to an S
corporation in 2018, it “changed its shareholder payout procedure [for available
and excess profits] from a bonus scheme to that of paying dividends” to pay the
shareholders’ tax liability. The payments the husband received were
distributed to him and his brother — the other 50% shareholder — in
proportion to their ownership interests in the company. Therefore, under the
plain meaning of the child support statute, we conclude that these
distributions are dividends — an enumerated source of income under RSA 458-
C:2, IV. As to the payments the husband received to cover the cost of the
succession insurance premiums, NEI characterized those payments as a
“[b]onus” on the husband’s paystubs. Bonuses are an enumerated source of
gross income. See RSA 458-C:2, IV.

¶10 To be deemed “gross income,” however, even specifically
enumerated sources of income must be available to the obligor parent for
payment of child support. See In the Matter of Doherty & Doherty, 168 N.H.
694, 700 (2016). When determining whether funds are available for child
support purposes, the critical inquiry is whether the obligor actually received
the funds. Compare Jerome, 150 N.H. at 629 (concluding that annuity
payment wife received was “gross income” despite being intended to make wife
whole for personal injuries), with Albert, 155 N.H. at 262-65 (concluding that
obligor parent’s cash draw from LLC was available for child support purposes,
whereas income that LLC paid directly to mortgage lender, and obligor parent
never received, was not available), and In the Matter of Giacomini & Giacomini,
150 N.H. 498, 501 (2004) (concluding payments made by the obligor parent’s
employer to cover his state and federal taxes were not available for child
support where obligor parent never had constructive receipt of the funds).
Here, because the husband received the funds, they were available for child
support. Although the husband argues that spending these funds for another
purpose would violate his contractual and corporate obligations, this argument
fails to account for the fact that the husband — not the corporation — is liable
for the succession insurance policy premiums and the shareholder income tax.

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Notably, once the husband received the funds, he could use them as he
pleased, and these personal obligations could be satisfied using other funds.

¶11 Having determined that the distributions at issue in this case are
“available” for child support purposes, our analysis of the two questions
presented is complete. However, in the interlocutory appeal statement, the
trial court also raised a question as to the meaning of “net income” for child
support purposes including the phrase “which an employer withholds” in RSA
458-C:2, VI. Because this issue is likely to arise on remand, and since the
parties have briefed it, we will address it. “Net income” is defined as:

[T]he parents’ combined adjusted gross income less standard
deductions published on an annual basis by the department of
health and human services and based on federal Internal Revenue
Service withholding table amounts for federal income tax, F.I.C.A,
and Medicare, which an employer withholds from the monthly
income of a single person who has claimed a withholding allowance
for 2 people.

RSA 458-C:2, VI (emphasis added). “Adjusted gross income” is defined as
“gross income” less certain, actually paid, specified expenses, which neither
party claims are at issue in this case. See RSA 458-C:2, I (2018).

¶12 We read the definition of “net income” as “adjusted gross income”
less the applicable amount for that year published in the New Hampshire
Department of Health and Human Services (NHDHHS) Bureau of Child Support
Services Child Support Guidelines, which is calculated “using the withholding
table . . . published in . . . Department of Treasury Internal Revenue Service
(IRS) Publication 15-T.” State of New Hampshire Department of Health and
Human Services Bureau of Child Support Services, Child Support Guidelines,
glossary at 4 (2024),
https://www.dhhs.nh.gov/sites/g/files/ehbemt476/files/documents2/css-
guidelines-book.pdf (last visited August 12, 2024). We read the phrase “which
an employer withholds” as part of the description of the IRS table amounts that
NHDHHS uses to calculate its standard deductions. Therefore, the calculation
of “net income” for child support purposes does not turn on the particular
employer’s withholding of taxes, F.I.C.A., and Medicare, or on the amount of
those withholdings. Rather, the standard deduction published by NHDHHS
will apply to adjusted gross income to calculate net income regardless of actual
employer withholding.

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 [¶13] In sum, we answer both of the interlocutory appeal questions in the
affirmative: the distributions intended to pay the husband’s succession
insurance and shareholder income tax obligations are both “available” for child
support purposes. We remand for further proceedings consistent with this
opinion.

Remanded.

DONOVAN and COUNTWAY, JJ., concurred; HANTZ MARCONI, J., sat
for oral argument but did not participate in the final vote.

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