Court Opinion

ID: 4402846
Source: CourtListenerOpinion
Date Created: 2019-06-03 16:45:39.069725+00
Date Added: 2024-06-11T07:49:54.597886
License: Public Domain

June 3, 2019

                                                                  Supreme Court

                                                                  No. 2017-123-Appeal.
                                                                  (P 14-484)

                Joel Trojan                  :

                     v.                      :

               Denise Trojan.                :

               NOTICE: This opinion is subject to formal revision before publication in
               the Rhode Island Reporter. Readers are requested to notify the Opinion
               Analyst, Supreme Court of Rhode Island, 250 Benefit Street, Providence,
               Rhode Island 02903, at Tel. 222-3258 of any typographical or other
               formal errors in order that corrections may be made before the opinion is
               published.
                                                                Supreme Court

                                                                No. 2017-123-Appeal.
                                                                (P 14-484)

                Joel Trojan                   :

                     v.                       :

              Denise Trojan.                  :

              Present: Suttell, C.J., Goldberg, Flaherty, Robinson, and Indeglia, JJ.

                                          OPINION

       Justice Flaherty, for the Court.           The defendant, Denise Trojan, appeals from a

judgment of the Family Court ordering the plaintiff, Joel Trojan, to pay $1,796 per month in

child support for their minor child, Tiffany, who was born in July 2001. 1 Denise argues that the

trial justice erred when he did not order Joel to pay interim and retroactive child support. Denise

also contends that the trial justice erred in determining Joel’s gross income for the purpose of

calculating his child support obligation because the trial justice did not include income and

distributions from an “S” corporation, of which Joel is the sole shareholder. This case came

before this Court for oral argument pursuant to an order directing the parties to appear and show

cause why the issues raised in this appeal should not summarily be decided. After hearing the

arguments of counsel and examining the memoranda filed on behalf of the parties, we are of the

1
  To protect the minor child’s privacy, we have given her a pseudonym. We also note that the
parties have an adult child who is not the subject of this appeal. Additionally, for the sake of
clarity, we refer to the parties and others by their first names; we intend no disrespect.

                                               -1-
opinion that cause has not been shown, and we proceed to decide the appeal at this time without

further briefing or argument. For the reasons set forth in this opinion, we affirm in part and

vacate in part the judgment of the Family Court.

                                                 I

                                         Facts and Travel

                                                 A

                              The Underlying Divorce Proceeding

       The parties married in July 1990. In March 2014, Joel filed for divorce and alleged that

there were irreconcilable differences which had led to the irremediable breakdown of the

marriage. Denise thereafter filed a counterclaim for divorce, which sought, inter alia, child

support for Tiffany. On December 16, 2015—the first day of trial—the parties entered into a

consent order in which they agreed to the following: (1) joint custody of Tiffany, with physical

placement with Denise; (2) that Joel would be awarded all reasonable rights of parenting time

with Tiffany; (3) that the marital estate—after allocating for certain cash withdrawals that Denise

previously had made—would be divided equally between the parties; and (4) that neither party

would address the conduct or fault of the other in connection with the court’s consideration of

equitable distribution and alimony.

       On that same date, Denise was heard on a motion for temporary allowances, which she

had filed just two weeks before, on November 30, 2015. Her counsel argued before the trial

justice that, during the course of the divorce action, the parties had shared a joint marital account

that Denise had been using to support herself and Tiffany. However, she alleged that the account

had become depleted approximately one month before the trial began, and that Joel had stopped

depositing money into it. Denise’s counsel then represented to the trial justice that, based on her

                                                -2-
calculations, Joel was earning $1.8 million per year. Consequently, Denise asserted that she

would be entitled to $16,000 per month in child support pursuant to the child support guidelines

worksheet and this Court’s decision in Tamayo v. Arroyo, 15 A.3d 1031 (R.I. 2011).

       In response, Joel’s counsel argued that there was “at least a million dollars” in the joint

account, and that the parties had agreed to divide that account equally. As a result, according to

Joel, Denise received $505,000 from the joint marital account in late November, which was

around the same time that she filed her motion for temporary allowances. Additionally, Joel

argued that Denise’s calculation of his earnings was incorrect because it reflected certain pass-

through income that he received from Century Drywall, Inc. (Century), an S corporation of

which he was the sole shareholder. 2 Joel also alleged that, after the joint marital account was

equally divided, he offered to pay Denise half his monthly salary to support her and Tiffany.

This amount, according to Denise’s counsel, was approximately $7,000 per month. Denise had

rejected that offer, and chose to pursue child support in the amount of $16,000 per month

because, according to Denise, Joel was receiving distributions—in addition to a salary—from

Century.

       The trial justice asked Denise’s counsel whether Tiffany needed the amount of child

support that she was requesting; Denise’s counsel replied: “Well, the child doesn’t need

2
   As we have previously mentioned, “[a]n ‘S’ corporation is a preexisting, closely held
corporation that elects to be taxed under Subchapter S of the Internal Revenue Code.” DiLuglio
v. Providence Auto Body, Inc., 755 A.2d 757, 763 n.4 (R.I. 2000). “Generally, once the Internal
Revenue Service grants this special tax designation to a corporation, the ‘Subchapter S’
corporation’s income ‘is not taxed at the corporate level but is passed through and taxed to its
shareholders, in a similar fashion as a partnership.’” Id. (quoting 18 Am. Jur. 2d Corporations §
40 (1985)). “The primary advantage of a ‘Subchapter S’ corporation is the avoidance of double
taxation on both individual shareholder and corporate income.” Id. “Although the ‘Subchapter
S’ corporation avoids paying income tax on corporate net income, the individual shareholders are
taxed on the income they derive from the corporation, including any salaries and dividends.” Id.
“Thus, certain income, deductions, and losses pass through a ‘Subchapter S’ corporation to the
individual tax returns of each shareholder.” Id.

                                              -3-
[$]16,000 a month.”       The trial justice pointed out that some states have said it becomes

“ludicrous” when an amount that high is requested for child support; he said that counsel could

“negotiate with [Joel’s counsel] if you’d like, concerning an interim payment; but, if you think

this particular judge is going to award on an interim basis $16,000 in child support on a monthly

basis, you’re sorely mistaken[.]” The trial justice questioned whether Denise was even in need

of child support at that time, considering that, according to Joel’s counsel, she had just received

$505,000 from the division of the joint marital account, and she was using those funds to support

herself and Tiffany during the pendency of the divorce action.

        Nevertheless, the trial justice concluded that he was “not going to entertain a motion for

temporary allowances in anticipation of the divorce hearing[,]” that he was going to “hear it all at

the same time[,]” and that he would be willing to award child support retroactively if necessary.

Thereafter, from January 2016 until final judgment entered in December 2016, Joel voluntarily

paid Denise $2,444 per month in child support.

        The divorce case was tried on the merits on various dates between December 2015 and

July 2016. Relevant to this opinion, during the trial, Joel testified that Century originally had

three shareholders: himself, his brother John Trojan, and his brother-in-law Michael Elliott.

From January 2012 to December 2013, however, Joel purchased the interests of both John and

Mr. Elliott, and he became the sole shareholder of Century. Joel also testified that he had

received distributions from Century to pay off his personal note obligations to John and Mr.

Elliott for their interests in the corporation.

        At the conclusion of the divorce trial, the parties entered into a marital settlement

agreement in which they disposed of all of the marital assets and liabilities, “with the exception

of child support and medical[.]” The trial justice reviewed and approved the marital settlement

                                                  -4-
agreement. On August 19, 2016, a decision pending entry of final judgment was entered, which

incorporated, but did not merge, the marital settlement agreement and continued the child

support issue. Neither party sought review of that decision.

                                                B

                                  The Child Support Hearing

       Thereafter, on September 28, 2016, the parties reconvened for a hearing on the issue of

child support. The trial justice heard testimony from Joel, Denise, and Justin Amico, CPA, who

was the accountant for Century and who had prepared the parties’ personal income tax returns in

the past. Mr. Amico testified that, for the period December 31, 2013, through December 31,

2015, Century retained its excess revenues, thus increasing its stockholder equity. Specifically,

Mr. Amico said that Century’s total stockholder equity, as of December 31, 2014, was

$7,310,276, and according to an “Equity Rollforward Sheet” that was introduced into evidence at

the hearing, by the close of 2015, the stockholder equity had increased to $8,361,919. He also

testified that, in 2015, Alliant Insurance Services, Inc., a bonding company, required that

Century increase its equity to $10 million. Mr. Amico explained that, if Century failed to meet

that requirement, the company “could be denied the ability to get a bond which could jeopardize

the employment of the 500 to 700 men that Century Drywall employs.” It was Mr. Amico’s

opinion that complying with such a requirement was a legitimate business interest because there

was a risk that the company would not be able to secure bonds as it bid on future work if it was

undercapitalized. It was therefore imperative, according to Mr. Amico, that Century retain as

much of its working capital and equity as possible.

       Mr. Amico further testified that, with respect to 2015, Century had $2,692,793 in net

income. Of that amount, $1,641,150 was distributed to Joel; he used those funds to pay for taxes

                                              -5-
on the corporation’s net income, the note payment obligations to John and to Mr. Elliott, and a

premium on his life insurance policy.         Mr. Amico testified that the remainder of the

corporation’s 2015 net income, which was approximately $1 million, was retained by the

corporation to increase its stockholder equity. It was Mr. Amico’s opinion that the distributions

that were made to Joel for tax liabilities, as well as the note payments for buying out former

shareholders, did not inure to Joel’s personal benefit. Moreover, Mr. Amico opined that he never

detected any use of Century’s revenues for any purpose other than the distributions as set forth in

the balance sheet.

       The trial justice then asked Mr. Amico directly what the court should use to determine

Joel’s gross income, to which Mr. Amico replied: “His W-2 wages, his interest and dividends

from his brokerage accounts, and any other rental income.” After the court further inquired as to

whether Century’s distributions should be included in Joel’s gross income, Mr. Amico specified

that Century’s profits were never distributed to enhance lifestyles and that, based on his

experience with Century, including the distributions in Joel’s gross income for child support

purposes “would significantly enhance [Tiffany’s] standard of living beyond what’s been

provided to date[.]” Mr. Amico further explained that, if Century began to distribute profits to

Joel, thus making them available for his personal use, the bonding company might well reject

Century’s future bond requests because Century would be “too big and under-capitalized,” which

would force the company to shrink and would jeopardize the jobs of its workers.

       Joel was next to testify; he said that, just a month prior, he had paid Tiffany’s school

tuition bill, which was $21,800.     He also testified that, as part of the marital settlement

agreement, he had just recently paid Denise the sum of $2 million. Further, before that payment,

he had remitted $274,000 to her for her interest in certain real estate, and $251,048, representing

                                               -6-
half of the former couple’s 2015 tax refund. Moreover, Joel testified that, under the terms of the

recently signed marital settlement agreement, he was also obligated to make, and fully

anticipated making, a payment to Denise for $180,000 on October 1, 2016, as well as another

payment of $10,000 on that same date and every month thereafter for a period of 120 months.

He confirmed that, in total, Denise had received $2,725,660 in cash from him, in addition to the

interest she retained in various bank accounts, brokerage accounts, real estate, and other

investments.

       Joel further testified that, after Denise filed her motion for temporary allowances, he had

begun to make voluntary monthly child support payments to Denise in the amount of $2,444 per

month. That figure, according to Joel, was based on the 2014 wages that were included in his

W-2 form, which was $299,325, as well as $257 per month in taxable interest that he received on

the joint marital account. With respect to 2015, Joel stated that his wages were $278,344, or

$23,195 per month, plus $246 per month in taxable interest on the joint marital account. To

compute Joel’s gross income for child support purposes, the 2015 figures were used by Joel’s

counsel to complete a child support guideline worksheet that was introduced into evidence. In

finalizing that worksheet, Joel also suggested that a four percent return could be expected on the

$2,725,660 that had been transferred to Denise when the marital assets were distributed. 3 Based

on that worksheet, Joel maintained that his child support obligation should be $1,765 per month.

He also testified that, prior to 2011, there were years where he had taken personal distributions

3
 In calculating the four percent return, Joel’s counsel introduced into evidence a page from The
Wall Street Journal newspaper for interest rates as of September 27, 2016. That page was
entered as a full exhibit. On the other hand, Denise testified that, at the time of the hearing, she
was receiving less than a one percent return on her share of the marital assets. Those assets were
being held in certificates of deposit through two financial advising firms.

                                               -7-
from Century; however, he said that none of the distributions since that time had inured to his

personal benefit.

       When Denise took the witness stand, she provided the court with an extensive list of

expenses that she alleged were needed to maintain Tiffany’s lifestyle.           Included in those

expenses were the following: $700 to $800 per month to spend at the mall and for other activities

with her friends; $575 every four to six weeks for hair extension maintenance; over $200 per

month for hair products; $275 per month on manicures, pedicures, and acrylic nails; $150 to

$200 every two weeks on cosmetics; $150 to $200 per month on foot reflexology and massages;

between $10,000 to $11,000 per year for vacations, including the cost of bringing one of

Tiffany’s friends along; $425 per month on clothing and shoes; and $150 per month for functions

attended by Tiffany.

       On December 14, 2016, the trial justice rendered a bench decision. He first made note of

the payments that Denise had received, as well as the payments that remained due to her as a

result of the marital settlement agreement. The trial justice then found that Joel’s gross salary for

2015 was $278,344, and that he was the 100 percent shareholder of Century. Furthermore, he

made a finding that Century’s 2015 net income of $1,051,643 was retained by the corporation as

working capital for a legitimate business reason, and that the retained earnings were not used to

shield or manipulate Joel’s income in an effort to reduce or avoid his child support obligation. In

arriving at his conclusion, the trial justice relied upon the testimony that Mr. Amico had given at

the child support hearing. He found that testimony to be “uncontradicted” and “very informative

and quite credible[.]”

       He also found that Century’s total distributions to Joel in 2015 did not inure to Joel’s

benefit and that they should not be included in Joel’s gross income calculation for child support

                                                -8-
purposes.   Specifically, the court held that the 2015 distribution to Joel in the amount of

$1,235,846, which had been used to satisfy Century’s tax obligations, was reported on Joel’s

income tax return because of the corporation’s classification under Subchapter S of the Internal

Revenue Code, and that Joel actually had received no portion of that distribution, nor had the

distribution inured to his personal benefit in any way. The trial justice also found that a separate

2015 distribution to Joel that had been used to make payments on the promissory notes to the

two former shareholders did not inure to Joel’s benefit. Similarly, the trial justice held that Joel

had not received any portion of another 2015 distribution to him that had been used to pay his

life insurance premium. Finally, the trial justice determined that no profits from Century had

been dispensed to enhance Joel’s lifestyle since the year 2011.

       With respect to Denise’s original request for an order on interim child support, the trial

justice summarized the proceedings as follows:

               “[T]here was some confusion at the time this case initiated relative
               to a request for temporary orders, as there had not been one earlier,
               in that the parties had apparently accomplished that by some type
               of payment of moneys through an account that they both had
               control over; but, in any event, the Defendant, in fact, filed a
               motion for temporary allowances, wherein child support was
               requested on November 30 of 2015. Plaintiff, in fact, filed an
               objection thereto, and a hearing was held on both the motion and
               objection back in December, almost exactly to the date, December
               16th, 2015. A consent order was filed, but there there [sic] was no
               child support obligation set forth in that order because of the prior
               practice of * * * the parties * * *; however, the Court notes for the
               record that the Plaintiff has been paying the sum of $2,444 per
               month in child support, pursuant to a Guideline prepared by
               Plaintiff’s counsel, at least since January of this particular year.”

       The trial justice also found that there had been no evidence submitted that would indicate

that Tiffany had any financial resources other than from her parents, that the parties’ standard of

living “was sustained for the most part solely by [Joel’s] wages and the parties’ taxable interest

                                               -9-
received on investments[,]” and that there was no evidence that Tiffany’s lifestyle had changed

since the parties separated in 2013. Moreover, the court found that the “number of expenses

introduced by [Denise] relative to the minor child” were “not only incredulous, but outrageous in

some fashion, concerning hair extensions, acrylic nails, foot reflexology, the clothing amount per

month, and a number of other expenses.” 4 The trial justice also found that a majority of Joel’s

assets were not liquid, as opposed to Denise’s assets, which Joel was paying to her in cash.

       The trial justice then found that, based on Joel’s 2015 tax returns, Joel’s income consisted

of the following: “$23,195 per month in wages and $246 per month in taxable interest from

various moneys that were in a joint Schwab account, for a total of $23,441” per month.             He

calculated Denise’s gross income to be $6,750 per month, which was based on a three percent

rate of return on Denise’s share of the marital estate. 5

       Final judgment was entered on December 19, 2016, and an order summarizing the factual

findings of the trial justice’s decision was entered on December 28, 2016. On that same day,

Denise timely appealed the December 19, 2016 judgment. 6

                                                  II

                                        Standard of Review

       At the outset, we will address an argument raised by Denise in her Rule 12(A) Statement

regarding the applicable standard of review. She argues that the trial justice’s “misinterpretation

4
  Denise argues that the trial justice, in his bench decision, failed to address numerous expenses
that her child incurs. However, by referencing “a number of other expenses” and referring to her
expenses broadly in the order, it is clear that the trial justice considered all of Tiffany’s expenses.
5
  The court also found that a $62,371 taxable refund was reported on the parties’ 2015 tax return
and $19,752 in a taxable portion of the parties’ health insurance were not included in either
party’s gross income calculation for child support purposes. Moreover, in calculating Denise’s
monthly gross income, the trial justice did not include $246 per month that Denise receives in
taxable interest from the joint Schwab account. However, whether these amounts should have
been included as gross income are not before us in this appeal.
6
  We note that Tiffany will be turning eighteen years old in July 2019.

                                                 - 10 -
and disregard of the formula set forth in the R.I. Child Support Guidelines is a question of law

subject to de novo review by this Court.” We disagree. It is axiomatic that “[q]uestions of law

in an appeal from the Family Court * * * are reviewed de novo.” Vieira v. Hussein-Vieira, 150
A.3d 611, 615-16 (R.I. 2016) (quoting Palin v. Palin, 41 A.3d 248, 253 (R.I. 2012)). However,

in Vieira, the plaintiff claimed, inter alia, that the trial justice erred in calculating his child

support obligation by not considering the child support guidelines because an appropriate

worksheet was not filed during the course of the divorce proceedings. Id. at 618. We reviewed

the trial justice’s determination—his failure to consider the child support guidelines—under an

abuse of discretion standard. Id. The same holds true here with respect to all the arguments

made by Denise in this appeal.

          “General Laws 1956 § 15-5-16.2(a) provides that the Family Court shall order either or

both parents owing a duty of support to a child to pay an amount based upon a formula and

guidelines adopted by an administrative order of the Family Court.” Vieira, 150 A.3d at 618

(brackets omitted) (quoting Waters v. Magee, 877 A.2d 658, 665 (R.I. 2005); see § 15-5-16.2(a).

“Moreover, ‘we consistently have held that § 15-5-16.2, in conjunction with the support

guidelines, requires the trial justice to review the worksheet to determine the base level of child

support that the noncustodial parent is required to pay.’” Id. (brackets omitted) (quoting

Cardinale v. Cardinale, 889 A.2d 210, 221 (R.I. 2006)).          “It is well established that the

appropriate award of child support is to be determined by the trial justice in his or her sound

discretion, and we shall not disturb such a determination on review absent a clear abuse of that

discretion.” Tamayo, 15 A.3d at 1035 (quoting Mattera v. Mattera, 669 A.2d 538, 542 (R.I.

1996)).

                                              - 11 -
                                                III

                                            Discussion

       On appeal, Denise argues that the trial justice’s decision ran afoul of § 15-5-16.2(a)

because he failed to properly calculate and order temporary child support while the divorce

proceeding was pending on December 16, 2015, the first day of the trial, and on July 26, 2016,

the day the marital settlement agreement had been entered. Moreover, Denise argues that the

trial justice erroneously calculated Joel’s child support obligation by excluding Century’s 2015 S

corporation income and distributions from Joel’s gross income.

                                                 A

                            Interim and Retroactive Child Support

       Denise first argues that the trial justice did not adhere to § 15-5-16.2 because he did not

formally award child support until December 2016—one year after she first requested interim

support. Specifically, she argues that, on the first day of trial, December 16, 2015, her motion

for temporary allowances was set down for hearing. She contends that the trial justice erred

when he prematurely and peremptorily denied her request for $16,000 per month in child support

without first calculating child support under the guidelines. Moreover, she avers that the trial

justice repeated that error at the July 26, 2016 hearing, at which the trial justice approved the

parties’ marital settlement agreement but failed to enter a provisional child support order.

       It is our opinion that the trial justice did not abuse his discretion in not awarding child

support on December 16, 2015. On that date, Denise’s counsel conceded to the trial justice that

the minor child, Tiffany, did not require $16,000 per month in child support. Additionally,

Denise’s counsel acknowledged that Denise had been using funds derived from the joint marital

account to support herself and Tiffany while the divorce proceedings were pending. According

                                               - 12 -
to Joel’s counsel, that account had been divided equally between the parties a mere week before

Denise’s counsel moved for temporary allowances. It was represented to the court that Denise

had received approximately $505,000 from the division of that account. It is our opinion that

Denise has failed to prove that the trial justice erred in any way by not ordering an interim child

support award at that time. We conclude that the trial justice acted well within the bounds of his

discretion when he ruled that ample funds were available to Denise to support herself and

Tiffany during the remainder of the divorce proceeding. 7

       Furthermore, we are of the opinion that Denise’s second argument—that the trial justice

erred in failing to order retroactive or interim child support at the July 26, 2016 hearing—was

not properly raised below and therefore has been waived. On December 16, 2015, the trial

justice told Denise’s counsel that she could negotiate an interim payment with opposing counsel.

However, he forewarned her that, “if you think this particular judge is going to award on an

interim basis $16,000 in child support on a monthly basis, you’re sorely mistaken[.]” In so

doing, the trial justice cited to caselaw outside this jurisdiction for the proposition that “a child

only deserves three ponies[.]”8 Nonetheless, he concluded with the following:

7
  Denise had also been using that same account to support herself and Tiffany before the parties
divided the account.
8
  In his bench decision on December 14, 2016, the trial justice asserted that he was “a proponent
of the theories advanced” in Downing v. Downing, 45 S.W.3d 449 (Ky. App. Ct. 2001). In that
case, which concerned a modification of child support, the Court of Appeals of Kentucky
scrutinized a “share the wealth” approach, which suggests that a court does not need to make
findings regarding the children’s needs when child support exceeds the maximum guidelines.
Downing, 45 S.W.3d at 455. The appellate court refused to incorporate this approach, finding
that, “[b]eyond a certain point, additional child support serves no purpose but to provide
extravagance and an unwarranted transfer of wealth.” Id. at 456. It recognized that this
reasoning is referred to as the “Three Pony Rule,” which is, “no child, no matter how wealthy the
parents, needs to be provided more than three ponies.” Id. (citing Matter of Marriage of
Patterson, 920 P.2d 450, 455 (Kan. Ct. App. 1996)). Denise claims that by relying on Downing
at the December 16, 2015 hearing, the trial justice peremptorily ruled that such a child support
amount would be inequitable to Joel. Even though the trial justice’s reference to Downing at

                                               - 13 -
               “I’m not going to entertain a motion for temporary allowances in
               anticipation of the divorce hearing. I’ll hear it all at the same
               time. If I have to retroactively make an award of child support at
               the time of the decision, if you folks can’t agree, I’ll be delighted
               to do that; but I’m not convinced that your client can’t support
               herself pending this trial, however months or years it goes, quite
               honestly.” (Emphasis added.)

Clearly, the trial justice deferred awarding interim child support in anticipation that the parties

would agree upon it. The parties did in fact agree, and there is nothing in the record indicating

that Denise raised the issue again at the July 26, 2016 hearing. 9 “[I]n accordance with this

Court’s longstanding ‘raise-or-waive’ rule, if an issue was not properly asserted, and thereby

preserved, in the lower tribunals, this Court will not consider the issue on appeal.” Adams v.

Santander Bank, N.A., 183 A.3d 544, 548 (R.I. 2018) (quoting Miller v. Wells Fargo Bank, N.A.,

160 A.3d 975, 980 (R.I. 2017)). For this reason, we are satisfied that Denise has waived this

argument.

       In the face of that waiver, however, it is worth noting that, in January 2016, Joel

voluntarily agreed to pay, and Denise accepted, $2,444 per month in interim child support while

the divorce proceeding was pending. Those payments continued until December 2016, when

final judgment was entered. 10

such an early stage of the proceeding may have been premature, we do not conclude that it
approaches reversible error. Moreover, we note that the trial justice’s eventual finding regarding
the parties’ combined gross income did not exceed the Family Court child support guidelines.
9
   We also note that that argument was not raised at the September 28, 2016 hearing, which
centered solely on the issue of child support. Furthermore, after the September 28, 2016 hearing,
the parties were given thirty days to submit memoranda to the court supporting their respective
positions on the issue. Although Joel filed a memorandum with the court, Denise never did.
10
    Moreover, in the course of his bench decision on December 14, 2016, the trial justice
reiterated that Denise had been receiving those interim payments from Joel.

                                              - 14 -
                                                 B

                           Century’s Net Income and Distributions

       Denise next contends that the trial justice wrongfully excluded Century’s net income and

distributions to Joel when he calculated Joel’s gross income for the purpose of determining his

child support obligation. She argues that the definition of gross income found in the applicable

Family Court administrative order is broad enough to encompass income and distributions from

an S corporation. She also avers that the trial justice had a “mandatory obligation” to follow the

formula set forth in the Family Court administrative order and this Court’s reasoning in Tamayo

and, had he done so, he would have properly imputed Century’s income and distributions to

Joel’s gross income.

       Section 15-5-16.2(a) states, in pertinent part:

               “In a proceeding for * * * child support, the court shall order either
               or both parents owing a duty of support to a child to pay an amount
               based upon a formula and guidelines adopted by an administrative
               order of the family court. If, after calculating support based upon
               court established formula and guidelines, the court, in its
               discretion, finds the order would be inequitable to the child or
               either parent, the court shall make findings of fact and shall order
               either or both parents owing a duty of support to pay an amount
               reasonable or necessary for the child’s support after considering all
               relevant factors including, but not limited to:

                       “(1) The financial resources of the child;

                       “(2) The financial resources of the custodial parent;

                       “(3) The standard of living the child would have enjoyed
                       had the marriage not been dissolved;

                       “(4) The physical and emotional condition of the child and
                       his or her educational needs; and

                       “(5) The financial resources and needs of the non-custodial
                       parent.”

                                               - 15 -
Moreover, Family Court Administrative Order No. 12-05, which governs when and how the

child support guidelines shall be used by the Family Court, provides a definition of monthly

gross income. That definition states, in pertinent part:

               “For purposes of these Guidelines, ‘income’ is defined as actual
               gross income of the parent, if employed to full capacity or potential
               income if unemployed or underemployed. Gross income includes,
               but is not limited to, income from salaries, wages, commissions,
               bonuses, dividends, severance pay, pensions, interests, trust
               income, annuities, capital gains, social security benefits, worker’s
               compensation benefits, unemployment insurance benefits,
               disability insurance benefits, gifts, prizes, and alimony or
               maintenance received, and all other forms of earned/unearned
               income. Specifically excluded are benefits received from means-
               tested public assistance programs * * *.

               “For income from self-employment, rents, royalties, proprietorship
               of a business, or joint ownership of a partnership or closely held
               corporation, gross income is defined as gross receipts minus
               ordinary and necessary expenses required for self-employment or
               business operation. In general, income and expenses from self-
               employment or operation of a business should be carefully
               reviewed to determine an appropriate level of gross income
               available to the parent to satisfy a child support obligation. In
               some instances, this amount will differ from a determination of
               business income for income tax purposes.

               “Expense reimbursements or in-kind payments received by a
               parent in the course of the employment, self-employment, or
               operation of a business should be counted as income if they are
               significant and reduce personal living expenses.” (Footnotes
               omitted.)

       “We consistently have stated that ‘the guiding principle in setting a child-support award

is to balance the needs of the child against the financial ability of the absent parent.’” Tamayo,
15 A.3d at 1036 (brackets omitted) (quoting Paradiso v. Paradiso, 122 R.I. 1, 3, 404 A.2d 60, 61

(1979)). “A court may consider all relevant factors, including the financial resources and needs

of the child and each of the parents and the Family Court may consider every factor that would

serve to reveal in totality the circumstances and conditions bearing on the welfare of the

                                               - 16 -
children.” Id. (brackets and deletion omitted) (quoting Sullivan v. Sullivan, 460 A.2d 1248, 1250

(R.I. 1983)). “This Court defines a parent’s ability to pay very broadly, to ‘provide the child or

children with the greatest possible support.’” Id. (quoting Lembo v. Lembo, 624 A.2d 1089, 1090

(R.I. 1993)).

       We first note that, upon cursory review, the child support guidelines appear to require

that all sources of income, whether earned or unearned, should be included in a parent’s gross

income for purposes of calculating child support.        However, with respect to “income and

expenses from * * * operation of a business[,]” the administrative order clarifies that the trial

justice must conduct a “careful[] review” of the income and expenses of a business “to determine

an appropriate level of gross income available to the parent to satisfy a child support obligation.”

The trial justice in this case was therefore required to conduct a careful review of Century’s

income and expenses that passed through to Joel. See Tamayo, 15 A.3d at 1037.

       In Tamayo, we held that the trial court’s determination of a father’s gross income was

insufficient because the trial justice should have included the father’s National Guard pay and

income from rental properties in his assessment. Tamayo, 15 A.3d at 1036, 1037. This was so

because the trial justice overlooked an abundance of evidence and testimony on those items. Id.

at 1037. Instead, the trial justice in that case relied solely on what was reported on the father’s

income tax return, which did not include some of the father’s National Guard income and income

derived from his rental properties. Id. at 1036-37. Here, although Century’s 2015 net income

and distributions were included on Joel’s income tax return, the trial justice looked beyond that

document and considered the abundance of testimony from Mr. Amico to find that Century’s net

income and distributions to Joel should not have been included as a part of Joel’s gross income

calculation. We are therefore satisfied that the trial justice conducted a “careful[] review” as

                                               - 17 -
required by the child support guidelines and our holding in Tamayo. See id. at 1037. Thus, we

must determine only whether the conclusions that the trial justice drew after such a review were

clearly wrong. See id. at 1035.

       On appeal, Denise argues that the trial justice erroneously excluded Century’s 2015 net

income from Joel’s gross income. She also claims that distributions made in 2015 from the S

corporation to Joel were used to pay for his personal income taxes, sole ownership in Century,

and personal expenses, including a personal life insurance premium. We shall address each of

those arguments below.

                                                1

                                  Century’s 2015 Net Income

       Denise argues that, because Joel is the sole shareholder of Century, 100 percent of

Century’s 2015 net income should be attributable to Joel for the purposes of calculating his child

support obligation. She contends, therefore, that the trial justice erred when he found that the S

corporation’s net income should not be included in Joel’s gross income, even though it was

included on his W-2 form. According to the trial justice, those funds were retained by Century

for a legitimate business purpose in order to meet the working capital threshold set by Century’s

bonding company. Denise points out to this Court that nowhere in the child support guidelines’

inclusive definition of gross income is there a “legitimate business purpose” exception for

corporate profits.

       In his decision, the trial justice relied heavily on J.S. v. C.C., 912 N.E.2d 933 (Mass.

2009), a decision rendered by the Massachusetts Supreme Judicial Court. In that case, a father

appealed a child support judgment, arguing that the trial judge erroneously included

undistributed earnings of a closely held S corporation—of which he was a majority

                                              - 18 -
shareholder—in calculating his gross income with respect to his child support obligation. J.S.,
912 N.E.2d at 940. He argued that the “pass-through earnings” from the S corporation on his

income tax return should not have been included because those earnings “were likely to be

retained by the corporation rather than distributed to him.” Id. at 941.

       In J.S., the Supreme Judicial Court took note of new guidelines that had been adopted in

Massachusetts since that case commenced; those new guidelines contain the very same definition

of gross income as do our current child support guidelines. 11 The court reasoned:

               “The New Guidelines thus suggest that, when setting child support,
               the judge should determine the income of an S corporation
               shareholder not by including automatically the pass-through
               income reported on the shareholder’s tax return, but rather by
               making a specific determination about what portion (if any) of that
               pass-through income realistically and fairly is or should be
               deemed available to the shareholder for purposes of paying child
               support.” J.S., 912 N.E.2d at 941 n.13 (emphasis added).

Recognizing that other jurisdictions had grappled with this same issue of whether retained

earnings should be included as gross income for the purposes of calculating child support, the

court held:

               “[T]he better reasoned decisions require a case-specific, factual
               inquiry and determination * * *.

               “We follow the lead of these cases, and similarly conclude that a
               determination whether and to what extent the undistributed
               earnings of an S corporation should be deemed available income to
               meet a child support obligation must be made based on the
               particular circumstances presented in each case. Such a fact-based
               inquiry is necessary to balance, inter alia, the considerations that a
               well-managed corporation may be required to retain a portion of its
               earnings to maintain corporate operations and survive fluctuations

11
  Denise argues that the trial justice erred in relying on J.S. v. C.C., 912 N.E.2d 933 (Mass.
2009), because it relied on a prior version of the Massachusetts guidelines. We disagree.
Although the Supreme Judicial Court recognized that new guidelines had been adopted since that
case commenced, the court expressly noted that its reasoning was in line with the new
guidelines. See J.S., 912 N.E.2d at 941 n.13, 942.

                                               - 19 -
               in income, but corporate structures should not be used to shield
               available income that could and should serve as available sources
               of child support funds.” J.S., 912 N.E.2d at 942.

       The court then delineated relevant factors that a trial justice should consider in

determining what portion of undistributed earnings may be available to a shareholder for a child

support obligation. J.S., 912 N.E.2d at 942-43. Those factors included: (1) “the shareholder’s

level of control over corporate distributions” as measured by his or her ownership interest; (2)

“the legitimate business interests justifying” the decision to retain corporate earnings—if the

purpose was to maintain the business, the Court concluded that those earnings should not be

included in gross income; and (3) whether there was “affirmative evidence of an attempt to

shield income by means of retained earnings.” Id. at 942-43, 943 n.15. The court further held

that the shareholder, regardless of his or her ownership interest, has the burden of proving that

retaining the corporation’s earnings was for a legitimate business purpose because he or she has

greater access to relevant information about the corporation. Id. at 943-44. After determining

that the trial court had not given any specific consideration to any particular facts or

circumstances in ruling that all of the corporation’s income should be attributed to the father, the

Supreme Judicial Court remanded the case for a new decision that would be in line with its

opinion. Id. at 944.

       We are persuaded by the reasoning set forth in J.S., and observe that the reasoning in that

case emanates from a definition of gross income that mirrors our own. The reasoning in that

case is instructive in determining whether undistributed pass-through earnings from an S

corporation should be attributable to a shareholder’s gross income for calculating child support.

See J.S., 912 N.E.2d at 942, 943, 944; see also Tuckman v. Tuckman, 61 A.3d 449, 458 (Conn.

2013) (citing with approval J.S. and incorporating its factors in determining whether pass-

                                               - 20 -
through income from an S corporation should be available for child support purposes). Here, the

trial justice examined the relevant factors set forth in J.S. and applied them to this case. He

determined that Joel was the sole shareholder of Century and that “all evidence demonstrated

that Century Drywall’s retained earnings had been used for legitimate business reasons in the

past and were in no way used to shield or manipulate [Joel’s] income to reduce or avoid his child

support obligation.” He further opined that, according to Mr. Amico’s testimony, Century had

capitalization issues and that the company was required to retain its earnings to maintain

sufficient working capital, as required by its bonding company. The court then concluded that,

based on Mr. Amico’s uncontradicted testimony, which the trial justice found to be “very

informative and quite credible,” the decision to retain earnings “was certainly a legitimate

business purpose.” 12 We conclude that the trial justice acted within his discretion in applying a

“legitimate business purpose” analysis to find that Century’s retained earnings should not be

included in Joel’s gross income for the purposes of determining his child support obligation.

       Denise further argues that the trial court “misconceived and overvalued [Mr.] Amico’s

testimony, ignoring more credible evidence” in the process of conducting the legitimate business

purpose test outlined above. Specifically, she claims that, in May 2015, Century’s bonding

company advised Century that it needed to maintain $7 million in working capital for 2015, and

that it was not until May 2016 that the bonding company increased the minimum retention

requirement to $10 million. Denise also points out that Mr. Amico testified that Century’s net

worth increased to $8,361,919, which, according to Denise, means that Century actually

exceeded its retention requirement in 2015 by $1,361,919. Thus, she contends, it was error for

12
   We note that, at the September 2016 hearing on child support, Denise never called any
witnesses to contradict Mr. Amico’s testimony.

                                              - 21 -
the trial justice to even consider the decision to retain net income as a legitimate business

purpose when Century had already met its retention requirements for 2015.

        During the divorce trial, in April 2016, Joel testified that Century was required to hold $7

million in equity. A month later, Mr. Amico elaborated that the amount that the bonding

company required Century to hold in equity was ten percent of the total sales revenue of the

corporation. He further testified that, because Century was in such a volatile industry, the

company’s business was subject to fluctuation and, thus, “the equity target can be a moving

number.” In fact, Mr. Amico later testified in September 2016 that the minimum bonding

requirement that Century was required to hold in equity reserves increased to $10 million. He

also said that the corporation was undercapitalized and that, as a result, the company could be

denied the ability to obtain bonding for future projects if it failed to raise its equity.

        With respect to whether Century’s 2015 net income was properly excluded from Joel’s

gross income calculation, we are of the opinion that the trial justice did not abuse his discretion.

Although there was evidence indicating that, at some point in 2015, the corporation was required

to hold at least $7 million in equity and that, by the end of 2015, the corporation exceeded that

amount by $1,361,919, Mr. Amico was clear in his testimony that the bond requirement was not

static and that the figure was completely dependent on the company’s total sales revenue, which

was subject to considerable fluctuation in the construction industry. Indeed, according to the

testimony, Century’s minimum bonding requirement rose from $7 million to $10 million over a

two year period. For all those reasons, we see no error in the ruling of the trial justice to exclude

                                                 - 22 -
Century’s undistributed pass-through income from Joel’s gross income for calculating his child

support obligation. 13

                                                2

                                  2015 Distribution for Taxes

       Denise also argues that the trial justice erroneously excluded from Joel’s gross income a

distribution of $1,235,846 that Joel used to pay his “personal” income taxes. She alleges that the

Family Court must determine an appropriate level of gross income available to a parent to satisfy

a child support obligation, and that gross income necessarily would include nontaxable portions

owed or deducted as personal income tax liability. She further contends that nothing in the child

support guidelines suggests that income must inure to one’s benefit or be actually received by a

parent to be included as income, because the child support guidelines require that all sources of

earned or unearned income be considered.

       However, there was evidence presented at trial that this distribution was used to pay taxes

on the pass-through income that Joel received from Century. “Courts in several jurisdictions

have held that the portion of a distribution designated to pay taxes on earnings legitimately

retained by the corporation is not available to a shareholder parent to satisfy a child support

obligation.” J.S., 912 N.E.2d at 944 n.18 (citing McHugh v. McHugh, 702 So. 2d 639, 642 (Fla.

13
   Denise additionally argues that the trial justice’s reliance on Hubbard County Health and
Human Services v. Zacher, 742 N.W.2d 223 (Minn. Ct. App. 2007), was in error because that
case had been deemed inapposite by the Minnesota Supreme Court in Haefele v. Haefele, 837
N.W.2d 703 (Minn. 2013). Although we note that Haefele did rule most of the Zacher opinion
inapposite, the trial justice in the case before us relied on Zacher for the proposition that a
parent’s ownership interest in an S corporation could be a resource that should be taken into
consideration in determining his or her ability to pay child support. Haefele did not deem this
portion of the Zacher opinion inapposite; in fact, Haefele supported that proposition at the end of
its opinion. See Haefele, 837 N.W.2d at 714 (“[T]he district court [is allowed] to consider,
among other things, the extent to which the parent’s gross income is actually available to him or
her to pay support.”) (emphasis in original). Therefore, the trial justice’s reliance on Zacher for
considering Joel’s ability to pay was not in error.

                                              - 23 -
Dist. Ct. App. 1997); Tebbe v. Tebbe, 815 N.E.2d 180, 184 (Ind. Ct. App. 2004); Walker v.

Grow, 907 A.2d 255, 270 (Md. Ct. App. Spec. 2006)). As previously discussed above, the pass-

through income that Joel received and on which he paid taxes was actually retained by the

corporation for a legitimate business purpose and was not distributed to him. The trial justice

found that that income was not available to Joel and that it did not inure to his benefit. We agree,

and therefore hold that the trial justice correctly excluded Century’s distribution to Joel that was

used to pay the company’s tax liabilities. 14

                                                  3

                               2015 Distribution for Stock Buyouts

       Denise next argues that the trial court failed to quantify and erroneously excluded

distributions used by Joel to buy out his partners and acquire sole ownership interest in Century.

According to Denise, those distributions were used to pay what were essentially Joel’s personal

debts to his former partners. To support this claim, Denise points to Joel’s testimony that he

incurred a “personal debt” in the buyout, that he was paying down debt to acquire a marital asset,

and that Century itself was not obligated on the note. Denise also notes that Mr. Amico testified

that the buyout debts were “outside the business” and enhanced the value of the marital estate.

        We agree with Denise and hold that distributions used by Joel to satisfy his personal

obligation in purchasing the sole ownership in Century should have been included in his gross

income calculation to determine his child support obligation. Joel testified that, on January 1,

14
   Denise alleges in her brief that the parties confirmed at trial that Joel paid $1,082,544 in
personal taxes in 2015, not $1,235,846, and that therefore, the trial justice did not conduct a
“careful review” as required by the child support guidelines. Even if the amount was in error,
this argument is a nonstarter because that distribution was to pay for the corporation’s taxes, not
Joel’s personal taxes. For this reason, we reiterate what has been stated above: that none of the
distribution, no matter the amount, should have been included in Joel’s gross income to calculate
his child support obligation.

                                                - 24 -
2012, Mr. Elliott sold his shares of stock to Joel and John.     According to Joel, Mr. Elliott’s

interest was purchased for $2.5 million, and John and Joel were equally obligated on the

payment to Mr. Elliott; therefore, Joel’s obligation to Mr. Elliott was $1.25 milion. Joel’s

obligation to Mr. Elliott was to be satisfied in two ways: by a $650,000 promissory note payable

at four percent interest, with payments to be made quarterly for ten years, and a $600,000 one-

time no-interest “balloon payment” due in 2021.

       Joel further testified that, in December 2013, approximately two years after the

agreement with Elliott, he purchased John’s ownership in Century for $7.2 million, leaving Joel

as the sole shareholder of the corporation. Joel testified that the obligation to John was too much

for him to bear as a personal debt, so the brothers agreed that John would be paid in three ways.

First, Joel assigned John his one-third membership interest in ARK Properties, LLC, a company

owned jointly by Joel, John, and Mr. Elliott that had an ownership interest in multiple property

investments. In their purchase and sale agreement, Joel and John valued Joel’s interest in ARK

at $2,890,691. 15 Second, Joel executed a promissory note to John in the amount of $3,425,931,

with a ten year term, at four percent interest. Third, Joel assumed John’s obligations for Mr.

Elliott’s buyout, which was valued at $883,378.

       Joel testified that his obligation to both John and Mr. Elliott are obligations for which he

“solely [is] personally liable[,]” and that Century is not liable in any way for the payments.

Moreover, Joel signed the promissory notes in his personal capacity. Mr. Amico also testified

that the buyouts were cross-purchases between shareholders, that Joel acted in his individual

capacity in completing those transactions, and that Century did not owe Mr. Elliott or John any

15
  Joel testified that to complete the transaction, he also conveyed his interest in another company
called JMJ, LLC. However, the stock purchase and sale agreement between Joel and John only
mentioned Joel’s interest in ARK as consideration for the sale.

                                              - 25 -
moneys regarding the buyouts. Mr. Amico described the buyouts as Joel’s “personal debt held

out of convenience to perpetuate a succession plan to maximize surety credit.”

       Although we have acknowledged our well-settled rule that “a witness’s uncontroverted,

positive testimony ordinarily is conclusive upon the trier of fact[,]” nevertheless, we also have

held “‘that a trial justice may refuse to accept the uncontroverted testimony of proffered

witnesses’ under certain circumstances.” Pelletier v. Laureanno, 46 A.3d 28, 39 (R.I. 2012)

(quoting Paradis v. Heritage Loan and Investment Company, 701 A.2d 812, 813 (R.I. 1997)

(mem.)).   One of those circumstances is when positive uncontroverted testimony “contains

inherent improbabilities or contradictions, which alone, or in connection with other

circumstances, tend to contradict it.” Id. (quoting Laganiere v. Bonte Spinning Co., Inc., 103 R.I.
191, 194, 236 A.2d 256, 258 (1967)).

       As noted above, in his bench decision, the trial justice found Mr. Amico’s testimony to be

uncontradicted and “very informative and quite credible[.]”         There was, however, ample

evidence presented that Joel was receiving money from Century to satisfy what are indisputably

strictly personal obligations to the former shareholders.      Joel himself testified that “[t]he

[p]romissory [n]otes are held by just me * * * not the company.” At the child support hearing on

September 28, 2016, an Equity Rollforward Sheet, created by Mr. Amico, was entered as a full

exhibit. Mr. Amico testified that the sheet detailed Century’s stockholder equity from December

31, 2013, through December 31, 2015.          The document also revealed that Century made

distributions for John’s buyout and Mr. Elliott’s note payments in 2014, as well as note payments

to Mr. Elliott and John in 2015. Mr. Amico further testified that those note payments were for

the buyouts.

                                              - 26 -
       Also, during the trial, Joel testified that, when he received a distribution from Century, he

would use that money to write a check to John and to Mr. Elliott to satisfy his obligations under

the note payments. Furthermore, Mr. Amico testified that he knew that Joel was current on his

payments to John and Mr. Elliott because, in addition to preparing his returns, he could “see the

payments going through his distributions at the company level.” Mr. Amico further testified that

the distributions from Century that were reflected on the tax returns of Joel and Denise amounted

to approximately $1.5 million, that Joel used the money from that distribution to satisfy his

buyout obligation, and that, as a result of the acquisition of the company solely in Joel’s name,

the marital estate would be enhanced. The following exchange occurred during Mr. Amico’s

cross-examination:

              “[DENISE’S COUNSEL:] * * * Now, just to be clear, it’s your
              testimony that for these distributions for payments that went to
              Michael Elliott and John Trojan, what would transpire is Century
              Drywall would cut a check personally to Joel Trojan; and it’s your
              understanding and testimony that Joel Trojan would then deposit
              the check into his personal account and then cut out a check to
              Mike Elliott and John Trojan to pay this personal debt, is that
              correct?

              “[MR. AMICO:] Yes.”

       It is thus clear from the evidence that Joel’s obligation to pay Mr. Elliott and John for the

purchase of their stock in Century was personal in nature and that Joel used distributions from

Century to meet that personal obligation. Importantly, at the September 28, 2016 hearing, Mr.

Amico, when asked by the trial justice if he should include the distributions in Joel’s gross

income calculation, responded:

              “[MR. AMICO:] The distributions – if the goal is to maintain the
              same level of living – standard of living for this child, historically,
              the profits from Century Drywall have never been distributed to
              enhance the life-style. They’ve always been pretty much retained
              within the organization. So, factoring that into the equation would

                                              - 27 -
               significantly enhance her standard of living beyond what’s been
               provided to date, based on my understanding of the company and
               the distribution history.”

Based on the evidence presented to the trial justice, Mr. Amico was incorrect when he testified

that “factoring [the note payment distribution] into the equation would significantly enhance

[Tiffany’s] standard of living beyond what’s been provided to date[.]”          Because the note

payments are Joel’s personal obligation, he would ordinarily pay them with his own money, i.e.,

his salary and interest payments he receives from the joint marital account. However, by using

Century’s funds to pay for his own personal obligation, Joel no longer is required to pay that debt

with his own money. Tiffany’s lifestyle therefore had already been enhanced when Joel received

that distribution because the portion of his salary that would otherwise have been used to pay for

his personal obligation to the former shareholders became available to Joel to be used for other

purposes. The Family Court administrative order is clear: “gross income is defined as gross

receipts minus ordinary and necessary expenses required for self-employment or business

operation.”   Joel’s purchase of John’s and Mr. Elliott’s shares was not an “ordinary and

necessary expense[]” for Century. Rather, it was a personal obligation that Joel incurred to

secure his sole ownership of the company. The distribution that Joel received from Century to

pay for that personal debt he owes to John and Mr. Elliott with respect to their buyouts should

therefore be considered when calculating Joel’s gross income.

       Although we acknowledge that the trial justice considered all relevant factors such as the

needs of the child and each of the parents’ financial resources, we nonetheless take this time to

stress that “[t]his Court defines a parent’s ability to pay very broadly, to ‘provide the child or

children with the greatest possible support.’” Tamayo, 15 A.3d at 1036 (quoting Lembo, 624
A.2d at 1090). Consequently, it is our opinion that the distributions that Joel received from

                                              - 28 -
Century to satisfy the note payments to Mr. Elliott and John should have been considered to be

part of Joel’s gross income under the child support guidelines. It is for this reason that we hold

that the trial justice erred when he excluded those moneys from Joel’s gross income. We

therefore remand this case for a hearing to consider and recalculate the assets and income

available to satisfy the child support obligation.

                                                     4

        2015 Distribution for Life Insurance Premium and Other Personal Expenses

       Denise further argues that the trial justice erred when he excluded from Joel’s gross

income a $61,375 distribution from Century that Joel used to pay an annual premium on a

personal life insurance policy that named his daughters as beneficiaries. She points out that Joel

testified that he received distribution checks from Century, deposited them into his own personal

account, and wrote personal checks to pay the premium. We agree with Denise’s argument.

       In our opinion, the distribution used to pay Joel’s personal life insurance premium should

have been considered to be gross income in the calculation for Joel’s child support obligation.

At trial, Joel testified that he purchased a life insurance policy and created an irrevocable trust,

under which his two daughters are beneficiaries. He said that he funded the trust in that manner

so that, in the event of his death, the policy would protect his daughters from having to pay his

estate taxes. He further testified that, upon his passing, the policy benefit of $5 million would be

deposited into that trust account. According to Joel, the annual premium on that life insurance

policy is $61,375, and his brother, John, is the trustee of the irrevocable trust. On cross-

examination, Joel testified as follows:

               “[DENISE’S COUNSEL:] So, basically, you take a distribution for
               this amount from Century Drywall, and you cut a check to your
               brother John so he can make the [life insurance] payment, is that
               accurate?

                                                - 29 -
               “[JOEL:] Yes.”

        Mr. Amico also confirmed at the September 28, 2016 child support hearing that the

Equity Rollforward Sheet indicated that Century made a distribution to Joel “for life insurance

for his trust.” In our opinion, the money distributed to Joel to fund the life insurance premium

should have been included as gross income because that distribution was used to satisfy a

personal debt that Joel chose to take on himself. See Tamayo, 15 A.3d at 1036. There was no

evidence introduced at trial that payment of Joel’s insurance premium was an “ordinary and

necessary expense” of Century.

        Denise also avers that the Family Court erred in excluding certain other “substantial

financial perks” Joel enjoyed, including luxury automobiles, car insurance, gasoline, country

club memberships, cell phones, and other expenses that he financed through distributions from

Century. She argues that the trial justice allowed extensive testimony that Denise used marital

assets to pay her legal fees, but precluded evidence on whether Joel did the same. Denise further

claims that the trial justice should have considered that Century had access to an $8 million line

of credit.

        The record reflects that evidence of those “perks” was presented to the Family Court

during the divorce trial to calculate the marital estate. Eventually, a marital settlement agreement

was entered into by the parties which resolved any issues outstanding with respect to the marital

estate. In fact, the only issue remaining after the Family Court approved the marital settlement

agreement was “child support and medical[.]” It is our opinion that Denise was therefore

required to present that evidence again at the September 28, 2016 hearing in order to calculate

Joel’s child support obligation. No such evidence of “substantial financial perks,” legal fees, or

Century’s line of credit was presented to the trial justice at the child support hearing, nor does the

                                                - 30 -
record reflect that Denise’s counsel directed the court to prior testimony of that evidence for

purposes of calculating child support. The only distributions that Denise’s counsel raised at the

child support hearing were distributions amounting to $1,641,150 in 2015, which, according to

Mr. Amico’s testimony and the Equity Rollforward Sheet, included distributions made by

Century to Joel to pay for taxes on the corporation’s income, the notes payable to the former

shareholders, and Joel’s life insurance premium. We therefore hold that, because the “substantial

financial perks,” legal fees, and line of credit were not properly raised at the child support

hearing on September 28, 2016, Denise’s argument that the trial justice erred when he did not

consider those expenditures in calculating Joel’s gross income for child support purposes has

been waived on appeal in accordance with our well-established raise-or-waive rule. 16 See Adams,
183 A.3d at 548.

                                                  IV

                                             Conclusion

       For the foregoing reasons, we affirm in part and vacate in part the judgment entered by

the Family Court. The record shall be remanded to that tribunal for further proceedings in

accordance with this opinion. We direct the trial justice to conduct a hearing in which he shall

16
   Denise also briefly argues in her memorandum to this Court that the trial justice erred when he
allocated future income from her share of the marital estate to her gross income. The trial justice
determined that Denise could expect to receive a three percent rate of return on the portion of the
marital estate that she received, and he employed that rate of return as her gross income for the
purpose of calculating her child support obligation. However, Denise does not cite to any
authorities for support and thus that argument does not merit our consideration. We have
consistently held that, “under our raise-or-waive rule, ‘even when a party has properly preserved
its alleged error of law in the lower court, a failure to raise and develop it in its briefs constitutes
a waiver of that issue on appeal and in proceedings on remand.’” Terzian v. Lombardi, 180 A.3d
555, 557 (R.I. 2018) (brackets omitted) (quoting McGarry v. Pielech, 108 A.3d 998, 1005 (R.I.
2015)). Moreover, “we will not give life to arguments that [a party] has failed to develop on his
[or her] own.” Id. at 558 (quoting McMahon v. Deutsche Bank National Trust Co., 131 A.3d 175,
176 (R.I. 2016) (mem.)). We therefore have no other choice but to find that that argument has
been waived.

                                                 - 31 -
consider and recalculate the assets available to satisfy Joel’s child support obligation. However,

we note that, after the trial justice includes the stock buyout distribution and insurance premium

as part of Joel’s gross income, the trial justice “may then deviate from the worksheet guidelines

‘only if he or she finds that the recommended child support order would be inequitable to the

child or to either parent.’” Vieira, 150 A.3d at 618 (brackets and deletion omitted) (quoting

Cardinale, 889 A.2d at 221). We also reiterate that the child support order must reflect “an

amount reasonable or necessary for the child’s support[.]” Section 15-5-16.2(a).

                                              - 32 -
STATE OF RHODE ISLAND AND                                  PROVIDENCE PLANTATIONS

                         SUPREME COURT – CLERK’S OFFICE

                                 OPINION COVER SHEET

Title of Case                        Joel Trojan v. Denise Trojan.
                                     No. 2017-123-Appeal.
Case Number
                                     (P 14-484)
Date Opinion Filed                   June 3, 2019
                                     Suttell, C.J., Goldberg, Flaherty, Robinson, and
Justices
                                     Indeglia JJ.
Written By                           Associate Justice Francis X. Flaherty

Source of Appeal                     Providence County Family Court

Judicial Officer From Lower Court    Associate Justice John E. McCann, III
                                     For Plaintiff:

                                     Laura E. Ruzzo, Esq.
Attorney(s) on Appeal                Jerry L. McIntyre, Esq.
                                     For Defendant:

                                     Patrick O’Connor, Esq.

SU‐CMS‐02A (revised June 2016)