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2011-483, In the Matter of Nancy E. Woolsey and Grant E. Woolsey
Martin, Lord & Osman, P.A.
Opinion Issued: October 30, 2012 Argued: June 7, 2012
IN THE MATTER OF NANCY E. WOOLSEY AND GRANT E. WOOLSEY
No. 2011-483 Plymouth Family Division
recreational vehicles at a salary of $50,000 per year. Before working as a truck driver, the respondent had been employed selling materials from April to December and plows snow in the winter and spring. the name Fox Ridge Reliance (the business). He transports construction , of Franklin (Lexie Rojas fourteen. The respondent is a self-employed truck driver, doing business under The parties have two daughters who, at the time of the order, were seventeen and The trial court found, or the record supports, the following relevant facts.
reporter@courts.state.nh.us
the petitioner, Nancy E. Woolsey. We reverse and remand. ___________________________ Plymouth Family Division (Rappa, J.) modifying his child support obligation to HICKS, J. The respondent, Grant E. Woolsey, appeals an order of the THE SUPREME COURT OF NEW HAMPSHIRE
orally), for the respondent. Seufert, Davis & Hunt, PLLC on the brief and to press. Errors may be reported by E-mail at the following address: and orally), for the petitioner.
, of Laconia (Judith L. Homan on the brief
editorial errors in order that corrections may be made before the opinion goes Hampshire, One Charles Doe Drive, Concord, New Hampshire 03301, of any Readers are requested to notify the Reporter, Supreme Court of New
page is: http://www.courts.state.nh.us/supreme. a.m. on the morning of their release. The direct address of the court's home
. Opinions are available on the Internet by 9:00
well as formal revision before publication in the New Hampshire Reports. NOTICE: This opinion is subject to motions for rehearing under Rule 22 as virtually the same as the income that was considered by the Court in 2008.” See and “[h]is gross income from that business was $49,624.86 in 2010, which is change in circumstances because he continued to operate the same business The trial court found that the responde nt had failed to show a substantial
and had not been current since 2004. 2 week in child support. At the time of the hearing, he was $12,907.00 in arrears Under the 2008 order, the respondent was obligated to pay $189.00 per discounted, the respondent’s claim that his business needs a “cash cushion” to balance in his checking account.” The court acknowledged, but presumably [r]espondent did not pay his child support in spite of having a significant positive $6,000.00 at the end of 2010 and that “[t]here were many months that the not credible.” It specifically found that his checking account balance was over The court found “tha t the [r]espondent’s claims of financial hardship [were]
that he is financially capable of paying his original support obligation. respondent did not show signs of financial hardship, and asked the court to find reporting to the Internal Revenue Service or to the court. She argued that the he is underemployed, and alleged that he had additional income he was not The petitioner questioned the respondent’s business expenses, argued that
of order “without the need to show a substantial change of circumstances”). circumstances. See id. (party may apply for modification three years after entry petitioner was entitled to review without a showing of a substantial change of entry of the support order under review, the court acknowledged that the circumstances”). Nevertheless, because the hearing took place three years after for a modification [of child support order] based on substantial change of RSA 458-C:7, I(a) (Supp. 2012) (party not prohibited from applying “at any time
the economy. horrible.” In addition, he testified that his fuel expense had gone up because of did no hauling for that company in 2010 “because the economy had gotten so although he had regularly received work from Ambrose Brothers in the past, he circumstances due to the economic downturn. For instance, he testified that order issued on January 28, 2008. He alleged a substantial change in On December 8, 2010, the respondent moved to modify a child support
expenses, leaving $24,971.89 for the respondent’s income. profit and loss statement showed $49,624.86 in gross income, and $24,652.97 in $25,044.23, which the respondent again took as personal income. For 2010, the $50,601.08; after expenses of $25,556.85 were deducted, the net was personal income. The 2009 profit and loss statement showed gross income of were deducted, was $27,947.79. The respondent took that amount as his had gross income of $70,451.48; the net, after business expenses of $42,947.79 According to his bu siness’s 2008 profit and loss statement, the business Appeal of Kat Paw Acres Trust
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the entire statutory scheme. statutory language in light of the policy sought to be advanced by legislature’s intent, and therefore better able to understand the purposes. We review the trial court’s statutory interpretation de the statute as a whole. In so doing, we are better able to discern the we interpret RSA 458-C:2, IV, which defines gross income for child support merely look at isolated words or phrases, but instead we consider calculating his child support obligation. “Resolution of this issue requires that did not see fit to include. As we examine the language, we do not equating the gross income of his business with his gross income for purposes of what the legislature might have said or add language the legislature We first address the res pondent’s claim that the trial court erred in legislative intent from the statute as written and will not consider citations omitted). Hampshire] [C]onstitution.”, 156 N.H. 536, 537-38 (2007) (quotations and order constituted an “inequitable application of the law in violation of [the New upward adjustment to the guideline support obligation; and (5) the trial court’s finding as to the credibility of the respondent could not be used to support an 458-C:2, IV (2004) so as to impose a confiscatory order; (4) the trial court’s of the respondent’s self-employment tax; (3) the trial court misinterpreted RSA RSA 458-C:2, I, in finding that the only expense it could deduct was fifty percent the same as the business’s gross income; (2) the trial court incorrectly applied that his gross income for purposes of calculating his child support obligation was On appeal, the respondent argues that: (1) the trial court erred by finding plain and ordinary meaning to the words used. We interpret When examining the language of the statute, we will ascribe the
266 (2006) (quotations and citation omitted). statute considered as a whole.” In the Matter of Fulton & Fulton, 154 N.H. 264, the final arbiters of the legislature’s intent as expressed in the words of the
novo. We are
calculated the respondent’s support obligation to be $233.00 per week. income of $3,917.40 per month. Applying the child support guidelines, the court deduction under RSA 458-C:2, I (Supp. 2012), resulting in an adjusted gross self-employment taxes per month, entitling him to a $218.00 per month $49,624.86 – that is, $4,135.40 per month. It found that he paid $436.00 in The trial court found that the re spondent’s 2010 gross income was
other expenses.” start “at the beginning of the spring and to deal with unexpected repairs and 4
child support. See legitimate business expenses, and is therefore unavailable for the payment of of a sole proprietorship when a portion of that money is payable to others as the term “self-employment income” in RSA 458-C:2, IV to mean the gross receipts We conclude that it is similarly impr obable that the legislature intended We explained that, as the facts of that case demonstrated, “income tax returns under our child support guidelines. Albert, 155 N.H. at 263 (quotation omitted). purposes is “of little relevance” to determining what is includable as gross income N.H. 259 (2007), we noted that the definition of income for federal income tax to the obligor for child support. Thus, in In the Matter of Albert & McRae, 155 omitted)). Our prior cases recognize the importance of the availability of income (noting that “[w]e interpret a statute to lead to a reasonable result” (quotation
In the Matter of Rupa & Rupa, 161 N.H. 311, 319 (2010)
ability to pay support.” Dobbins, 397 N.Y.S.2d at 414. such as gross income or receipts, which had no relation to the [obligor’s] actual that “[i]t is improbable that the parties would agree upon a measure of income, v. Cannan, 436 N.Y.S.2d 133, 134 (App. Div. 1981). The Dobbins court reasoned Dobbins, 397 N.Y.S.2d 412, 414 (App. Div. 1977) (citation omitted); see Cannan net income that must be referred to in determining his ability to pay.” Dobbins v. gross receipts less business expenses related thereto, because it is the [obligor’s] context of alimony and child support, ‘income’ is ordinarily construed to mean the purpose of interpreting separation agreements, have noted that “[i]n the 458-C:2, IV, but does not define that term. Other courts, however, at least for The statute also includes as gross income “self-employment income,” RSA
of business expenses from business income. at 1520. In using the term “profits,” the legislature contemplated the deduction and expenses usu[ally] for a given period and losses allocable to the period.” Id. defined as “the balance of gross income remaining after deducting related costs International Dictionary 1811 (unabridged ed. 2002). Net income, in turn, is a business) usu[ally] for a given period of time.” Webster’s Third New over expenditure in a transaction or series of transactions” or “net income (as in the gross business income.” We agree. Profit is defined as “the excess of returns necessitates that in order to calculate profits one must remove the expenses from statute must be net of expenses because “the very definition of the word ‘profit’ The respondent argues that the “b usiness profits” includable under the
C:2, IV. bonuses, and payments from [certain] other government programs.” RSA 458rental income, self-employment income, alimony, business profits, pensions, income, lottery or gambling winnings, interest, dividends, investment income, net wages, salary, commissions, tips, annuities, social security benefits, trust from any source, whether earned or unearned, including, but not limited to, The statute defines “gross income” to mean, in pertinent part, “all income than his business creditors, and, likewise, the form of his business entity as a We agree with the respondent. His theo retical ability to pay himself rather
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salary. If he fails to put fuel in his truck, he does not earn a salary.” instance, [that] he cannot choose between fueling his dump truck or receiving a , 908 N.E.2d 858 (Mass. App. Ct. 2009), the of actual control he has over paying his business expenses, arguing, “[f]or business is a d/b/a/, not a corporation.” The respondent disputes the amount noting that “the [r]espondent is a sole proprietor of his business. The trucking payments to him. The trial court appears to have used the same reasoning, respondent operates a sole proprietorship, payments to the business are support.” The argument implicitly rests upon the ground that because the control over the distributions made to himself, his creditors, and to [her] for child The petitioner argues that the resp ondent “exercised total individual
respondent’s self-employment income. reverse the trial court’s decision to use gross business receipts as the expenses incurred for the purpose of earning that income. Accordingly, we employment income” means self-employment income net of legitimate business income.” Id. We find it similarly implicit in RSA 458-C:2, IV that the term “selfmay be deducted where they are reasonable and necessary for the production of from self-employment income, the court found it “implicit that such expenses Notwithstanding the lack of explicit authorization to deduct business expenses employment’ as well as, by way of comparison, ‘net rental income.’” Id. at 866. list[ed] in the definition of income from whatever source both ‘income from self- C:2, IV’s definition of gross income. Id. at 865 n.16. “Indeed, these guidelines contained a broadly-worded definition of income roughly comparable to RSA 458nevertheless allow such a deduction. Whelan, 908 N.E.2d at 866. The guidelines deduction of business-related expenses from self-employment income” to the statutory meaning of the term. In Barber v. Cahill court interpreted child support guidelines that did “not specifically provide for language denoting self-employment income in separation agreements to construe Similarly, in Whelan v. Whelan Courts in other jurisdic tions have also relied upon the interpretation of N.Y.S.2d at 739 (citation omitted). Family Court erred in not allowing [such] business expenses.” Barber, 658 deduct the business expenses of a self-employed individual from income . . . [the] although the child support “statute itself contain[ed] no explicit authorization to 304, 306 (App. Div. 1993). Relying upon that precedent, the court held that 658 N.Y.S.2d at 739 (quotation omitted); see Bottitta v. Bottitta, 598 N.Y.S.2d settlement to mean “gross income less allowable business expenses.” Barber, Div. 1997), the court cited a case construing the term “earnings” in a divorce
, 658 N.Y.S.2d 738 (App.
at 2 64 (emphasis added). are an unreliable guide to the income available for child support purposes.” Id. 6
DALIANIS, C.J.
, and CONBOY and LYNN, JJ., concurred.
Reversed and remanded.
decision, we need not address the respondent’s remaining arguments. remand to the trial court to make that determination in this case. In light of our In re Marriage of Crowley meet those criteria. See, e.g., Whelan, 908 N.E.2d at 8 67. Accordingly, we N.E.2d at 866. It is for the trial judge to determine whether claimed expenses at 414, and “reasonable and necessary” for producing income, Whelan, 908 business expenses must be “actually incurred and paid,” Dobbins, 397 N.Y.S.2d purposes of determining “self-employment income” under RSA 458-C:2, IV, Dobbins, 397 N.Y.S.2d at 414. We similarly hold that to be deductible for incurred and paid which were directly related to the production of that income.” are costs incurred by the taxpayer in earning gross income.” Thayer v. Thayer source derived, and by deducting therefrom all losses and expenses actually We have noted that “[u]nlike personal living expenditures, business . . . expenses “should be measured by taking into account all of his income, from whatever These concepts also info rm what constitute legitimate business expenses. ruled that the obligor’s support obligation under his separation agreement the production of income.” Whelan, 908 N.E.2d at 866. In Dobbins, the court related expenses “may be deducted where they are reasonable and necessary for Whelan court found it implicit in the child support guidelines that businesscalculating self-employment income for child support purposes. Thus, the where it was no longer a viable, going concern. business expenses in determining whether they are deductible for purposes of eventual loss of all income when the business reached the point 425 (2006). Other courts similarly focus upon the income-producing role of resources, in circumstances such as are present here, would be the superseded support is paid. The inevitable result of such a disposition of by statute as stated in In the Matter of Clark & Clark, 154 N.H. 420, 119 N.H. 871, 873 (1979) (decided before adoption of child support guidelines),
,
, 663 P.2d 267, 269 (Colo. Ct. App. 1983).
with the production of income be held in abeyance until the child could create the untenable situation that the expenses associated precedence over the self-employed obligor’s business expenses] . . . To embrace . . . a rule [that a child support obligation takes
Colorado Court of Appeals stated: above, it presupposes the deduction of legitimate business expenses. As the necessitates determining an actual ability to pay, and, therefore, as indicated context. We believe that calculating a parent’s ability to pay child support “d/b/a” (doing business as) rather than a corporation, are irrelevant in this