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THE SUPREME COURT OF NEW HAMPSHIRE
___________________________
9th Circuit Court-Nashua Family Division
No. 2019-0734
IN THE MATTER OF MICHAEL GREENBERG AND ANNE GREENBERG
Argued: November 10, 2020
Opinion Issued: March 24, 2021
Brennan, Lenehan, Iacopino & Hickey, of Manchester (William J. Quinn
on the brief and orally), for the petitioner.
Smith-Weiss Shepard & Spony, P.C., of Nashua (Robert M. Shepard on
the brief and orally), for the respondent.
HICKS, J. The petitioner, Michael Greenberg (Father), appeals an order
of the Circuit Court (Derby, J.) that modified his child support obligation as it
pertains to his shares of vested restricted stock and ordered him to pay child
support arrearages of nearly $91,000 to the respondent, Anne Greenberg
(Mother). We affirm.
I. Facts
The following facts are derived either from the trial court’s order or the
content of documents in the appellate record. The parties were married in
2003. Their final divorce decree was entered in December 2015. They have
two sons, one born in May 2004 and another born in May 2006.
Since approximately June 2015, Father has worked at a publicly-traded
company that periodically awards him shares of restricted stock. When Father
first joined the company, he was awarded 5,000 such shares. He has since
received additional restricted stock awards.
The shares of restricted stock vest over time: after one year (assuming
Father has remained with the company), the company releases one-fourth of
the shares to him, less an amount the company withholds to pay some of the
taxes owed on the shares; over the next three years (assuming Father’s
continued employ by the company), the company releases one-sixteenth of the
shares on a quarterly basis. When the shares are released to Father, they are
put into a brokerage account for him to keep or sell, as he pleases. If the
shares are released during a “blackout period,” Father cannot sell them until
the blackout period is over. Father usually sells the shares as soon as he is
able to do so. Since the parties’ December 2015 divorce, Father has netted
$324,856.63 from the sale of vested restricted stock.
The shares of vested restricted stock are listed as “taxable benefits” on
his paystub. Father testified that the restricted stock awards are “part of [his]
total compensation,” and that the Internal Revenue Service treats his vested
restricted stock as income. According to Father, the purpose of the restricted
stock awards is to provide employees with an incentive to remain with the
company. In addition to receiving periodic restricted stock awards, Father
participates in an employee stock purchase program and a discretionary bonus
program.
As pertinent to the instant matter, the parties’ final divorce decree
awarded Father “any stock options he may have an interest in with [his current
employer] free of any interest on the part of [Mother].” The uniform support
order issued with the decree required Father to pay Mother “28% of any bonus
he may receive within 3 days of receipt” as child support in addition to regular
monthly child support.
Neither the decree nor the uniform support order expressly referred to
Father’s restricted stock awards. Father did not include the initial 5,000
shares of restricted stock he received on his financial affidavit submitted
during the parties’ divorce proceedings; none of those shares had vested as of
the time of the decree. Nor did he voluntarily disclose to Mother when he sold
restricted stock. He also did not pay any portion of those proceeds as child
support.
In May 2019, Mother filed a motion to modify child support “based upon
a three (3) year review and possibly based upon a significant change of
financial circumstances.” Mother alleged that “upon information and belief,
[Father] [had] obtained a significant increase in income since the divorce
became final” in December 2015. After further pleadings, the court held a
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hearing on “whether the money [Father] has earned by selling the [restricted
stock] over the years should be treated as a bonus upon which he should have
paid child support . . . , or whether the [restricted stock] fall[s] under [the]
property division” set forth in the parties’ December 2015 final divorce decree.
Following the hearing, the trial court ruled that the restricted stock
awards function like retention bonuses, rewarding key employees such as
Father for remaining at the company for one year or more, and, therefore, upon
vesting, constitute income for child support purposes. See RSA 458-C:2, IV
(2018). The trial court calculated that, since the parties’ December 2015
divorce through September 2019, Father had realized $324,856.63 in proceeds
from the sale of vested restricted stock. Consistent with the parties’ divorce
decree, the court ordered him to pay 28% of that amount ($90,959.86) as child
support.
Going forward, the court ordered Father to pay, as child support, a lesser
percentage, 26%, of the net proceeds from the sale of any vested restricted
stock. The court stated that if Father did not sell the vested restricted stock
“within 14 days of the first date after [the stock’s] release and outside the
blackout period when he could sell [it], child support will be paid at 26% of the
actual shares released to [Father] (exclusive of the shares held back for taxes)
at the intraday average between the high and low price for the stock on the first
trading day when [he] could sell the stock.” The court ordered Father to make
payments on April 1, August 1, November 1, and January 1 of each year.
Father moved for reconsideration, arguing, among other things, that: (1)
because Mother’s motion to modify child support did not mention his restricted
stock awards, he had no notice that his failure to pay child support on the
proceeds from the sale of vested restricted stock would be at issue; and (2) the
court erred “in applying its order retroactively to 2015” given that Mother’s
motion to modify was filed in May 2019. The trial court denied these aspects of
Father’s motion. This appeal followed.
II. Analysis
A. Standards of Review
Trial courts have broad discretion in reviewing and modifying child
support orders. In the Matter of Ndyaija & Ndyaija, 173 N.H. 127, 140 (2020).
They are in the best position to determine the parties’ respective needs and
their respective ability to meet those needs. In the Matter of Feddersen &
Feddersen, 149 N.H. 194, 196 (2003). We will not disturb the trial court’s
rulings regarding child support absent an unsustainable exercise of discretion
or an error of law. Ndyaija, 173 N.H. at 140. We review only whether the
record establishes an objective basis sufficient to sustain the discretionary
judgment made, and we will not disturb the trial court’s determination if it
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could reasonably have been made. In the Matter of Summers & Summers, 172
N.H. 474, 479 (2019). Our standard of review is not whether we would rule
differently than the trial court, but whether a reasonable person could have
reached the same decision as the trial court based upon the same evidence. Id.
We will not substitute our judgment for that of the trial court. Id. Nor will we
reweigh the equities. Id.
The trial court’s discretion necessarily extends to matters such as
assigning weight to evidence and assessing the credibility and demeanor of
witnesses. Id. Conflicts in the testimony, questions about the credibility of
witnesses, and the weight assigned to testimony are matters for the trial court
to resolve. Id. The trial court’s factual findings are binding upon this court if
they are supported by the evidence and are not legally erroneous. Id. “If the
court’s findings can reasonably be made on the evidence presented, they will
stand.” In the Matter of Letendre & Letendre, 149 N.H. 31, 36 (2002).
However, to the extent that resolving a modification issue requires that we
interpret pertinent statutes, we review the trial court’s statutory interpretation
de novo. Summers, 172 N.H. at 479.
B. Requiring Father to Pay Percentage of Value of Vested Restricted
Stock as Child Support
Father first challenges the trial court’s order that he pay a percentage of
the value of his vested restricted stock to Mother as child support, even if he
chooses not to liquidate the stock. He argues, in effect, that his vested
restricted stock constitutes an asset that is not includable as income for child
support purposes. He contends that it does not become income for such
purposes until he sells it.
“Gross income” for child support purposes is defined as “all income from
any source, whether earned or unearned, including, but not limited to, wages,
salary, commissions, tips, annuities, social security benefits, trust income,
lottery or gambling winnings, interest, dividends, investment income, net rental
income, self-employment income, alimony, business profits, pensions,
bonuses,” and payments from certain government programs. RSA 458-C:2, IV.
RSA 458-C:2, IV(c) allows a court, “in its discretion,” to “order that child
support based on one-time or irregular income be paid when the income is
received, rather than be included in the weekly, bi-weekly, or monthly child
support calculation.” Under RSA 458-C:2, IV(c), “[s]uch support shall be based
on the applicable percentage of net income.”
Assets are not specifically included in this statutory definition, and we
have consistently held that “[t]he child support guidelines turn on the obligor
parent’s income available for support, and not on the parent’s net worth.” In
the Matter of Hampers & Hampers, 166 N.H. 422, 436 (2014); see RSA 458-C:3
(2018) (establishing formula for calculating child support obligation based
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upon net income, not assets); see also In the Matter of Jerome & Jerome, 150
N.H. 626, 632 (2004) (“Under our legislative scheme, assets are not ‘income’ for
child support purposes.”); In the Matter of Plaisted & Plaisted, 149 N.H. 522,
525 (2003) (“If the legislature had intended to allow courts to consider assets
when calculating child support, it could have broadened the guidelines to so
provide . . . .”). Thus, we have held that “the trial court cannot consider a
parent’s assets when calculating child support.” Plaisted, 149 N.H. at 523,
525.
Contrary to Father’s assertions at oral argument, liquidity is not
dispositive as to whether something is characterized as an “asset” or as
“income for child support purposes.” In Plaisted, for instance, although the
obligor’s savings account contained $50,000, we held that it constituted an
asset and, therefore, that the trial court erred by including it as income for
child support purposes. Id. at 523, 526.
We find our decision in Dolan instructive. See In the Matter of Dolan
and Dolan, 147 N.H. 218, 222 (2001). The stock options in Dolan allowed the
petitioner to purchase his employer’s stock at a set price; to exercise them, he
purchased stock at that price. Id. at 220. We explained that “[u]pon the
exercise of the options, the petitioner may realize a paper profit, which is the
difference between the set price and the market price when he exercised the
option.” Id. We further explained that “[o]nce the stocks are sold, the
petitioner may realize an actual profit, which may be more or less than the
paper profit he realized when he exercised the option.” Id.
We held that the petitioner’s exercised stock options “must be included
as income for the purposes of calculating child support” because “such options
are analogous to a ‘bonus’” and “are also included within the phrase ‘all income
from any source.’” Id. at 221 (quotation omitted). We explained that treating
the petitioner’s exercised stock options as income was “necessary to meet the
policy goals of the child support laws,” which are to “minimize the economic
consequences of divorce on the children and ensure that they enjoy a standard
of living equal to that of the [parent’s] subsequent family.” Id. at 222; see RSA
458-C:1 (2018).
We apply the same reasoning to this case. The restricted stock awards
here are part of Father’s compensation package, just as the stock options in
Dolan were part of the petitioner’s compensation package. See Dolan, 147 N.H.
at 221-22. Father’s vested restricted stock awards, similar to the petitioner’s
exercised stock options in Dolan, see id., operate like a bonus, and, therefore,
expressly meet the broad statutory definition of “gross income” for child
support purposes. See RSA 458-C:2, IV. Because Father’s vested restricted
stock awards constitute income for child support purposes, we necessarily
reject his assertion that, by requiring him either to liquidate his vested
restricted stock and pay a percentage of the liquidated amount as child support
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or to retain the stock and pay a percentage of its value as child support, the
trial court “disallow[ed] him any discretion with respect to assets acquired after
the divorce.”
To the extent that Father argues that the trial court’s child support order
impermissibly modified the parties’ divorce decree, we disagree. Even if we
were to agree with him that the restricted stock awards were distributed to him
in the divorce as property, doing so would not preclude the trial court from
treating vested restricted stock as income for child support purposes. Under
New Hampshire law, an asset may be equitably distributed to a party and the
income from the asset may be used to determine child support. See Rattee v.
Rattee, 146 N.H. 44, 49 (2001). For instance, in Jerome, where a personal
injury settlement was paid out as an annuity, we noted that “even if the parties
had agreed that the personal injury settlement was marital property, the trial
court would not be precluded from treating it as income for child support
purposes” because “property division and child support serve different
functions and are governed by different requirements.” Jerome, 150 N.H. at
633.
To the extent that Father intimates that the trial court was somehow
biased against him, we note that “[a]dverse rulings against [a party] in the
same or a prior judicial proceeding do not render the judge biased,” and
otherwise decline to address his argument because it is insufficiently developed
for our review. State v. Bader, 148 N.H. 265, 271 (2002) (quotation omitted).
Father argues that requiring him “to pay child support based on the
value” of his vested restricted stock forces him to “incur taxes”; however,
“[g]enerally, [an] employee must recognize taxable income . . . when the
restricted stock vests, whether or not it is simultaneously sold.” Brian C.
Vertz, In the Money or Under Water?, 41 Fam. Advoc. 39, 40 (2018) (emphasis
added). Thus, regardless of whether Father liquidates his vested restricted
stock, the value of the stock is taxable to him.
C. Arrearage
Father next challenges the trial court’s order that he pay nearly $91,000
in past due child support. Father argues that he had no notice that his failure
to pay child support would be addressed in the modification proceedings
because “[t]here was nothing in the pleading suggesting [Mother] was seeking
review of past due child support, nor did any pleading reference [his]
. . . restricted stock units, or any claim that [he] owed her child support from
the liquidation of the restricted stock.”
We are not persuaded. Father had notice from the divorce decree itself
that he was required to pay 28% of all bonuses as child support. Father had
notice, as well, from the language of the pertinent statute, that the statutory
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definition of “gross income” for child support purposes includes bonuses, see
RSA 458-C:2, IV. As the trial court aptly ruled:
[T]he record seems clear that [Father] took a calculated risk when
he did not pay any child support on the [restricted stock awards]
he received and promptly sold after the final decree. He did not
voluntarily disclose the sales when they happened, and then he
. . . apparently resisted discovery on the subject for a short period.
Based on how the [restricted stock awards] worked and the
amount of money at stake, the court finds that [Father] was well
aware (and had actual notice) long before [Mother] brought the
matter forward that he would be called upon to defend his decision
not to pay any child support on the money he received when the
[restricted stock awards] vested and were sold. Nothing came as a
surprise and the issue was framed and thoroughly presented to the
court at the final hearing.
Father cannot claim lack of “notice” when his own conduct prevented Mother
from knowing that he had failed to pay child support on the net proceeds he
realized from the sale of the vested restricted stock.
Father next contends that “[t]he issue of a retroactive award of child
support is, by its nature, not an action under NH RSA 458-C:7,” the statute
governing motions to modify child support, “because that relief is expressly
prohibited.” He argues that, for Mother to obtain that relief, she “would have
had to have filed another request, under a different statute or theory of
recovery.”
Father’s argument misperceives what occurred in this case. The trial
court did not issue a “retroactive award of child support.” Nor did it
retroactively modify the child support originally ordered in the parties’ final
decree. Rather, the court enforced the child support order entered as part of
the parties’ final divorce decree, which ordered Father to pay Mother as child
support 28% of any bonus he received. To the extent that Father contends
that the finding of an arrearage under the terms of the original order is not
relief Mother requested and/or is not relief available in a proceeding to modify
a child support order, based upon our review of the record, we conclude that
Mother’s motion to modify was constructively amended and that Father has
failed to demonstrate any unfair prejudice from the amendment. See Miller v.
Slania Enters., 150 N.H. 655, 659-60 (2004) (concluding that the trial court did
not err by awarding damages under a theory not pleaded by the tenant where
the landlord did not object to evidence or argument on the theory, responded to
the theory in a post-trial memorandum, and otherwise failed to demonstrate
any unfair prejudice arising from the court’s consideration of the issue).
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III. Conclusion
For all of the above reasons, therefore, we uphold the trial court’s order
modifying Father’s child support obligation as it pertains to his shares of
vested restricted stock and requiring him to pay child support arrearages to
Mother.1
Affirmed.
BASSETT, HANTZ MARCONI, and DONOVAN, JJ., concurred.
1 On November 16, 2020, the petitioner filed a “Motion to Correct the Record of the November 10,
2020 Oral Argument” in which he challenged certain statements made by counsel for the
respondent at oral argument. As the court did not rely upon either challenged statement in
deciding this appeal, the motion is denied as moot.
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