October 19, 2017

Colorado Supreme Court: Attorneys’ Charging Liens May Attach to Spousal Maintenance Awards

The Colorado Supreme Court issued its opinion in Stoorman & Associates, P.C. v. Dixon on Monday, May 15, 2017.

Attorneys’ Liens—Dissolution of Marriage.

In this case, the supreme court considered whether attorneys’ charging liens may attach to spousal maintenance awards under Colorado’s attorney’s lien statute. The court applied the plain language of the attorney’s lien statute, C.R.S. § 12-5-119, which provides that attorneys shall have a lien on “any judgment they may have obtained or assisted in obtaining,” and held that an attorney’s charging lien may attach to an award of spousal maintenance. Accordingly, the court reversed the court of appeals’ judgment and remanded this case to that court with instructions to return the case to the trial court for proceedings consistent with this opinion.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Court Overrides Presumption of Fit Parent by Specifying Methods to be Used for Punishment

The Colorado Court of Appeals issued its opinion in In re Marriage of Dean and Cook on Thursday, April 20, 2017.

Parenting TimeContemptEvidenceTranscriptsMagistrateExceeding AuthorityHearingAttorney FeesReasonableness.

Dean (mother) and Cook (father) divorced in 2006. Father filed a contempt motion on the basis that mother denied his parenting time. On May 19, 2014, the court set the contempt hearing over and ordered mother to engage in therapy. On November 3, 2014, the court found mother in contempt of court, ordered that she could purge the contempt by allowing father to have the children during their 2014 Thanksgiving break, and ordered her to pay father’s attorney fees. Sentencing occurred on January 8, 2015, at which time the court ordered mother to pay father’s attorney fees.

On appeal, mother first contended that the magistrate improperly reconsidered the May 19 order when, on November 3, she changed the nature of the sanctions imposed. On May 19, the magistrate simply adopted the parties’ stipulation for mother to engage in therapy; the order was not imposed to force mother to comply with the parenting time stipulation. No sanctions were imposed until November 3, when the magistrate found mother guilty of remedial contempt.

Mother also challenged the evidence presented at the contempt and sentencing hearings, the weight the magistrate placed on that evidence, and the findings and inferences the magistrate made in her orders. Mother failed to provide a copy of the transcripts from the contempt and sentencing hearings to the district court when she sought review of the magistrate’s orders under C.R.M. 7(a). Therefore, it is presumed that the record supports the magistrate’s orders that mother failed to comply with the parties’ stipulation and was thus in remedial contempt.

Mother also contended that the magistrate exceeded her authority when she ordered mother to restrict the children’s privileges if they did not comply with her instructions to go to father’s home for parenting time. By specifying the methods mother must employ to obtain the children’s compliance, the magistrate’s order improperly disregards the presumption that fit parents act in the best interests of their children. Therefore, that portion of the order was stricken.

Mother further argued that the magistrate demonstrated bias against her and should have been disqualified. Mother’s allegations were based only on the magistrate’s legal rulings and the resolution of conflicting evidence, which are not bases for disqualification. Further, mother did not seek to have the magistrate disqualified under C.R.C.P. 97.

Lastly, mother argued that the magistrate should have held a hearing on the reasonableness of father’s attorney fee affidavit. Mother objected to father’s fee affidavit on the basis that it was ambiguous and lacked clarity, and she requested a hearing on the issue of reasonableness. Once she raised these assertions, the magistrate should have held a hearing on this issue.

The judgment was affirmed in part and reversed in part, and the case was remanded with directions.

Summary provided courtesy of The Colorado Lawyer.

Colorado Supreme Court: District Court Must Take Active Role in Managing Discovery Request of Non-Party in Dissolution Proceeding

The Colorado Supreme Court issued its opinion in In re Marriage of Gromicko on Monday, January 9, 2017.

In 2015, Lisa Dawn Gromicko (Wife) filed a petition for dissolution of marriage, naming Nickifor Nicholas Gromicko (Husband) as respondent. The petition requested equitable division of marital assets and debts. In order to evaluate Husband’s income, Wife requested records from Husband’s employer, InterNACHI, a nonprofit organized as a § 501(c)(6) trade association. Although Husband initially stated he would not object to the production of certain records, he did not provide them, and Wife requested a status conference. Husband’s counsel, who was also InterNACHI’s general counsel, filed a motion in response to Wife’s discovery request, arguing (1) the only InterNACHI relevant to the divorce proceeding were those reflecting Husband’s compensation and expense reimbursements; (2) the court could not consider InterNACHI a marital asset because Wife did not allege grounds in her dissolution petition to pierce the corporate veil; and (3) the court could authorize Wife to serve a subpoena duces tecum on InterNACHI to produce the relevant documents. The court held the status conference but did not rule on the discovery issues.

Wife then served a subpoena duces tecum on InterNACHI requesting (1) Husband’s employment and compensation; (2) the employment by InterNACHI of any person related to Husband; (3) InterNACHI’s bookkeeping, accounting, and tax return or Form 990 preparation; and (4) InterNACHI’s conflict-of-interest policy. InterNACHI moved to quash the subpoena, arguing that many of the requested documents were privileged, confidential, and irrelevant to the dissolution proceeding. InterNACHI also renewed its motion that Wife did not allege any grounds sufficient to claim that InterNACHI was Husband’s alter ego and pierce the corporate veil. The court denied InterNACHI’s motion to quash, and it filed a C.A.R. 21 interlocutory appeal.

On appeal, InterNACHI argued that the district court abused its discretion in refusing to quash or modify Wife’s subpoena because (1) Wife was required to, but did not, plead in her dissolution petition a claim for piercing InterNACHI’s corporate veil and (2) certain of Wife’s discovery requests were irrelevant to her veil-piercing claim and thus were outside the scope of discovery permitted by C.R.C.P. 26. The court first analyzed the discovery requirements in domestic relations cases, which are governed by C.R.C.P. 16.2, and found that Wife was not required to plead in her dissolution petition a claim seeking to pierce InterNACHI’s corporate veil. However, the supreme court concluded the district court did not use the correct standard in evaluating InterNACHI’s objection to the requested discovery.

The court compared C.R.C.P. 16.2 to the discovery requirements in civil cases, governed by C.R.C.P. 26. The court found the two rules analogous. The court found that its holding in DCP Midstream, LP v. Anadarko Petroleum Corp., 2013 CO 36, applied in this case and required the district court to take an active role in managing discovery. The supreme court found that the district court should initially have granted Wife only such discovery as would reasonably have been necessary to allow her to attempt to establish the existence of the alter ego relationship that she claimed. The supreme court noted that if, after receiving limited discovery, Wife could prove that InterNACHI was Husband’s alter ego, she may then be entitled to receive the information in her initial request, but the court must actively monitor discovery pursuant to DCP Midstream.

The supreme court made its rule to show cause absolute and returned the case to the district court for further proceedings.

Colorado Court of Appeals: Posting Bond is Necessary but Insufficient Condition to Stay Dissolution Proceedings

The Colorado Court of Appeals issued its opinion in In re Marriage of Finn on Thursday, December 30, 2016.

Post-Dissolution Marriage Proceeding—Request for Stay—Romero v. City of Fountain.

Husband and wife had entered into a marital agreement. Wife later filed for dissolution of the marriage, and the trial court subsequently issued a detailed order directing husband to make certain payments to wife within 20 days. Husband filed a motion for post-trial relief pursuant to C.R.C.P. 59 and 60, which was denied. Husband appealed and also filed a motion for stay with the trial court and requested approval of his supersedeas bond; both requests were denied.

Pursuant to C.A.R. 8, husband sought a stay of the trial court’s orders requiring him to pay wife certain sums of money and to return her artwork and other personal property. Husband presented a redacted copy of a cashier’s check in the amount necessary for a supersedeas bond and represented that his counsel would deposit the check if his motion were granted.

Stays pending appeal are controlled by C.A.R. 8(a). Romero v. City of Fountain adopted a four-part test for determining whether a stay should be issued under CAR 8: (1) whether the moving party has made a strong showing that it is likely to prevail on the merits, (2) whether the moving party will suffer irreparable harm if a stay is not granted, (3) whether other interested parties would be harmed by granting the stay, and (4) whether the public interest will be harmed by granting the stay. Romero involved a motion to stay an order denying an injunction. Husband argued that Romero does not apply here.

A stay is an exercise of judicial discretion and not a matter of right. The Colorado Court of Appeals first concluded that posting a supersedeas bond alone is insufficient to mandate a stay in a family law case. As to both the monetary and nonmonetary orders, the court then determined that a court considering a stay of that part of a judgment involving marital and separate property must consider the first three Romero factors; the fourth factor, harm to the public interest, is ordinarily not relevant in the context of a dissolution of marriage. The court found that (1) husband had not made even a cursory showing as to why his appeal was likely to succeed on the merits; (2) husband’s contention that he faces “clear” irreparable harm if a stay is not granted was unpersuasive; and (3) wife would be harmed by the issuance of a stay, because she would be denied benefits she negotiated in the marital agreement.

The motion for stay was denied.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Distribution of Cryopreserved Embryos in Dissolution Proceeding Subject to Contract and Balancing Approaches

The Colorado Court of Appeals issued its opinion in In re Marriage of Rooks on Thursday, October 20, 2016.

Dissolution of Marriage—Possession of Cryogenically Frozen Embryos.

The parties had three children together, and it was undisputed that wife used her last eggs to create embryos. The parties’ storage agreement with the fertility clinic provided that in the event of a dissolution of marriage, unless they could agree on who would get the embryos, the trial court would award the embryos. In their dissolution of marriage proceeding, wife argued that the embryos should remain frozen so that she could have another child in the future, and husband argued they should be discarded. The trial court entered a lengthy, detailed, and carefully reasoned decision awarding the embryos to husband. Wife appealed.

This appeal presented an issue of first impression in Colorado: how to determine the disposition of a couple’s cryogenically frozen embryos on their dissolution of marriage. Because there is not case law in Colorado on this issue, the Colorado Court of Appeals reviewed the three different approaches adopted by other jurisdictions for determining the disposition of divorcing spouses’ cryopreserved embryos: (1) the contract approach, which enforces a valid agreement entered into between the parties as to disposition of the embryos; (2) the balancing of interests approach, which the court applies when there is no such agreement between the parties; and (3) the contemporaneous mutual consent approach, under which the court will not allocate the embryos in the absence of an agreement between the parties (the embryos are left in storage indefinitely until the parties can agree to their disposition). The trial court had applied the contract and balancing of interests approaches in awarding the embryos to husband.

On appeal, wife argued that the trial court erred in interpreting the written storage agreement. The court agreed, but concluded that the storage agreement left it to the dissolution court to decide which party should receive the embryos in the event of dissolution of their marriage. Because the contract gave no guidance for this decision, the court construed it to require the trial court to exercise its inherent equitable powers if the parties could not agree. Because the trial court had to apply its equitable discretion, it necessarily had to use the balancing of interests approach.

Wife also argued that some factors the trial court applied in its balancing approach were legally erroneous and others violated her constitutional rights. Based on its review of the record, the court found the trial court’s conclusion that husband’s interest in not producing additional offspring prevailed over wife’s interest in having a fourth child to be reasonable.

The judgment was affirmed.

Summary provided courtesy of The Colorado Lawyer.

Colorado Supreme Court: Laches Can Apply as Defense to Child Support Claim

The Colorado Supreme Court issued its opinion in In re Marriage of Johnson on Monday, September 26, 2016.

Interest on Child Support Debt—Laches.

The Supreme Court considered whether a father may rely on the doctrine of laches to defend against a mother’s claim for the interest on his child support debt. The Court concluded that laches may be asserted as a defense to a claim for interest on child support arrearages. The Court therefore reversed the judgment of the Court of Appeals, which had concluded otherwise, and remanded this case for further proceedings consistent with this opinion.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Statutory Maintenance Guideline Formula Advisory, Not Mandatory

The Colorado Court of Appeals issued its opinion in In re Marriage of Vittetoe on Thursday, May 5, 2016.

Dissolution of MarriageMarital PropertySeparate Property—Gift—MaintenanceGuideline.

In this dissolution of marriage proceeding, the primary issues at the permanent orders hearing concerned the division of the marital estate and wife’s maintenance request.

On appeal, wife contended that the district court misclassified a home as marital property and thus erred in including it as part of the marital estate. Specifically, wife argued that the home was her separate property by virtue of a resulting trust, or, alternatively, that the home was a separate gift and the court should have divided only the marital increase in value. Wife’s mother (mother) lived in the home throughout the parties’ marriage, and her 1977 will stipulated that her real property be held in trust and “used in the manner that is most beneficial to my children.” In 2005, mother recorded a quitclaim deed that listed herself and wife as joint tenants. When mother died, the home passed to wife. Wife argued to the district court that in executing the quitclaim deed, mother intended for wife to hold the home in trust for the siblings but did not intend for wife to obtain any beneficial interest in the home. There was sufficient evidence in the record to support the district court’s conclusion that no resulting trust formed and that mother intended for wife to take a beneficial interest in the home. However, the district court’s findings on whether the home was a gift are insufficient. The case was remanded for reconsideration, directing the district court to make specific findings, by clear and convincing evidence, on whether the home was a gift to the marriage or wife’s separate property, and further findings consistent therewith, if necessary.

Husband’s sole contention on cross-appeal was that the district court erred when it awarded wife maintenance in an amount that exceeded the statutory “cap” under C.R.S. § 14-10-114(3)(b)(I). Husband asserted that the plain language of the statute prohibited the court from entering a maintenance award that exceeded 40% of the parties’ combined monthly adjusted gross income. By describing the guideline formula as advisory and not presumptive, and by requiring the district court to consider other financial factors before awarding maintenance, the General Assembly indicated that it did not intend to “cap” the amount of maintenance available to a spouse. Therefore, under the new maintenance statute, the district court must consider the guideline formula and make findings concerning the relevant factors cited in the statute. After it has done so, the court, in its discretion, may award maintenance that exceeds the guideline formula amount if appropriate under the circumstances.

The judgement was affirmed in part and vacated in part, and the case was remanded.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: District Court Not Statutorily Required to Grant De Novo Review of Arbitrator’s Decision

The Colorado Court of Appeals issued its opinion in In re Marriage of Vanderborgh on Thursday, March 25, 2016.

Parenting Time Dispute—Arbitration Agreement—De Novo Hearing—Constitutional Rights.

The parties submitted their post-dissolution parenting time disputes to an arbitrator pursuant to their agreement in their Parenting Plan. After the third decision by an arbitrator, father moved for a de novo hearing, under CRS § 14-10-128.5(2), on his motion to modify the parenting time schedule. The court denied father’s request for a de novo hearing and confirmed the arbitrator’s decision.

On appeal, father first contended that the district court erred by denying him a de novo hearing on his request for equal parenting time during the school year because CRS § 14-10-128.5(2) mandates such a hearing whenever a party requests one. The plain language of this statute, however, gives the court discretion to grant or deny a party’s motion for a de novo hearing, and the Court of Appeals concluded that the court did not abuse that discretion.

Father next argued that CRS § 14-10-128.5(2) is unconstitutional as the district court applied it because it “allows an arbitration decision on parenting time, a constitutionally protected interest, without procedural safeguards and only discretionary review.” Father agreed to arbitrate the issue of parenting time, and his right to challenge the arbitration award under the Colorado Uniform Arbitration Act and to request (but not necessarily receive) a de novo hearing under CRS § 14-10-128.5 sufficiently protect his rights to procedural due process.

Father also argued that the parties’ child was denied equal protection because he does not have the same rights as children whose parents do not choose arbitration for parenting time disputes. The Court determined that the child’s rights were adequately protected under the dissolution statutes.

The order was affirmed and the case was remanded to determine mother’s request for appellate attorney fees.

Summary and full case available here, courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Student Loan Debt Improperly Characterized as Income for Maintenance Determination

The Colorado Court of Appeals issued its opinion in In re Marriage of Morton on Thursday, January 14, 2016.

In this dissolution action, husband and wife were married for approximately six years. During the marriage and after the parties separated but before permanent orders entered, wife attended school to become a radiological technologist and later took a sonogram course. She took out student loans for her schooling. In dividing marital property, the trial court concluded that wife’s student loan debt was her separate debt because it was incurred after the parties’ separation and it was not “fair or equitable” to treat the debt as marital. Wife contended this was an abuse of discretion, and the court of appeals agreed, finding any debt incurred during a pre-decree separation was marital. The court remanded for the district court to first treat the student loan debt as marital and then decide equitable distribution as part of the overall property distribution.

Wife also contended the trial court erred by considering her student loans a financial resource in determining the maintenance award, and the court of appeals again agreed. By considering the loan proceeds as income, the trial court ignored the need for the loans to be repayed with interest. The court determined that by allowing loan proceeds to be counted as income, the trial court thwarted the purpose of the maintenance statute. The court of appeals remanded for reconsideration of the maintenance award without considering the student loans as a financial resource or income of any kind.

Wife further contended the trial court erred in determining the maintenance award before fully dividing the parties’ marital and separate property, and the court of appeals again agreed, noting that the maintenance award depends on its findings and order dividing property. Without first dividing the property, the court cannot reasonably determine the requesting party’s maintenance needs.

Because the court remanded on the issues of maintenance and the division of marital property, it set aside the trial court’s attorney fee award. On remand, after dividing property and determining a maintenance award, the trial court could reconsider an award of attorney fees. The court of appeals instructed the trial court to base its decision on the parties’ financial circumstances at the time of remand.

Colorado Supreme Court: Fee Award Determined Based on Financial Circumstances at Permanent Orders Hearing

The Colorado Supreme Court issued its opinion in In re Marriage of de Koning on Monday, January 11, 2016.

Divorce—Attorney Fees.

In this divorce action under the Uniform Dissolution of Marriage Act, CRS §§ 14-10-101 to -133, the trial court postponed the attorney fees hearing until months after the permanent orders hearing and issuance of the decree dissolving the marriage. The trial court did not permit the parties to obtain evidence of changed financial circumstances between the issuance of the decree and the attorney fees hearing. The court of appeals reversed, holding that the trial court must determine the attorney fees award based on the parties’ financial circumstances at the time of the hearing on attorney fees.

The Supreme Court reversed the court of appeals’ decision and held that for the purpose of deciding whether to award attorney fees under CRS § 14-10-119, a trial court should consider the parties’ financial resources as of the date of the issuance of the decree of dissolution or the date of the hearing on disposition of property, if such hearing precedes the date of the decree.

Summary and full case available here, courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Parties to Dissolution Have Affirmative Duty to Disclose Information Under Rule 16.2

The Colorado Court of Appeals issued its opinion in In re Marriage of Hunt on Thursday, May 7, 2015.

Legal Separation—Business Valuation—CRCP 16.2(e)—Mandatory Disclosures—Reallocation.

In July 2012, wife petitioned for legal separation of the parties’ marriage. One month later, husband filed a certificate of mandatory disclosures under CRCP 16.2. In September 2012, based on an agreement reached in mediation, the parties entered into a memorandum of understanding (MOU) dividing the marital value of a business, Big R Construction Company (Big R), owned and operated by husband. In March 2013, wife filed a motion for relief from the MOU provisions relating to Big R, which was denied.

On appeal, wife contended that husband violated CRCP 16.2(e) by not disclosing mandatory financial information regarding Big R, and therefore, the district court erred by not granting her motion to reopen the property division under CRCP 16.2(e)(10). Husband had an affirmative duty to disclose financial information regarding Big R, and he violated CRCP 16.2(e) by failing to disclose all personal and business financial statements prepared in the last three years; loan applications and agreements from 2011 and 2012; a 2010 appraisal of Big R’s real property; and a 2012 appraisal of its equipment. Without husband having violated the disclosure requirements of CRCP 16.2, wife would have been bound by her decision to enter into the MOU, acknowledging the uncertain value of Big R. Because husband violated CRCP 16.2(e), however, the plain language of CRCP 16.2(e)(10) applies, which allows a five-year period within which to reallocate “material assets or liabilities, the omission or non-disclosure of which materially affects the division of assets and liabilities. Accordingly, the district court should have applied CRCP 16.2(e)(10) and granted wife’s motion to reopen the property division, despite the MOU language. The district court’s order was reversed and the case was remanded.

Summary and full case available here, courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Wife’s Failure to Disclose Financial Records Not Fraud or Misconduct Under Rule 16.2(b)(2)

The Colorado Court of Appeals issued its opinion in In re Marriage of Roddy and Betherum on Thursday, July 31, 2014.

Modification of Child Support—Abuse of Discretion—Financial Disclosures—CRCP 16.2(e)(10)—CRCP 60(b)(2) and (5).

When the parties’ 2003 decree of dissolution was entered, the court adopted their stipulation that wife would be the primary residential parent for the parties’ minor child and husband would pay her $3,000 in monthly child support. Eight years later, husband moved to modify child support on the bases that his parenting time had increased and his income had decreased since the order. After a hearing, the district court increased husband’s child support obligation to $4,604 per month.

On appeal, husband contended that the district court erred in its child support calculation. Because husband’s appeal from the child support order was untimely, this part of husband’s appeal was dismissed.

Husband also argued that the district court abused its discretion when it denied his motion for post-trial relief after he established that wife had withheld financial information. The plain language of CRCP 16.2(e)(10) does not allow a court to re-determine a child support award. Further, although husband’s post-hearing evidence demonstrated that wife was “inconsistent” insofar as her finances were concerned, the court already made a finding at the child support hearing that wife’s testimony in that regard was “inconsistent” and “incredible.” Additionally, the parties did not dispute that their combined gross incomes exceed the uppermost guideline limits. Therefore, an exact income for wife was not required, because the court had discretion to deviate from the guidelines and enter an appropriate support order. As a result, the district court did not err by denying husband’s motion for relief.

Husband further argued that the court should have granted relief under CRCP 60(b)(5). Because husband alleged that wife either fraudulently failed to disclose or misrepresented her income, his motion fell squarely under CRCP 60(b)(2). In such cases, the residual provision of CRCP 60(b)(5) is not applicable. The appeal from the child support order was dismissed and the post-decree order was affirmed.

Summary and full case available here, courtesy of The Colorado Lawyer.