The instance provided here exemplifies the "Subjunctive mood" i.e. here, a wish that "If you were ........happy". This mood expresses the wishes, proposals, suggestions or imagined situations. A verb in the subjunctive mood emerges in the first clause while the indicative would be in another. Thus,we may conclude here that the subjunctive verb used here is 'were' as it suggests that the statement is mere a wish of the speaker contrary to the reality.
