June 16, 2019

Colorado Supreme Court: In re Marriage of Thornhill

on June 1, 2010.

Divorce—Disposition of Property—Marketability Discounts—Maintenance.

Antoinette F. Thornhill (wife) and Chuck Thornhill (husband) separated after twenty-seven years of marriage. In a temporary orders hearing, the magistrate awarded wife temporary maintenance, taking into consideration the significant increase in the parties’ standard of living in the final years of the marriage due to husband’s formation of an oil and gas company. The trial court adopted the temporary maintenance award as part of its permanent orders and, after hearing expert testimony on the appropriateness of a marketability discount, found enforceable a separation agreement between the parties that valued husband’s ownership interest in the oil and gas company, subject to a 33 percent marketability discount.

The court of appeals reversed the trial court’s award of temporary maintenance on the ground that the magistrate’s findings were unclear and conflicting, and because the magistrate improperly considered the parties’ standard of living in the threshold test for determining maintenance entitlement under CRS § 14-10-114(3). Additionally, after finding the separation agreement unconscionable, the court of appeals rejected an argument by wife that marketability discounts are never appropriate when valuing a closely held corporation in marriage dissolution proceedings.

The Supreme Court affirmed the court of appeals’ determination with respect to marketability discounts, holding that trial courts may in their discretion apply marketability discounts when valuing an ownership interest in a closely held corporation in marriage dissolution proceedings. The Court found that the court of appeals erred in reversing the maintenance award. The Court held that the threshold inquiry under § 14-10-114(3) contemplates that a trial court will consider the particular circumstances surrounding the marriage, including the parties’ standard of living. The case is remanded for further proceedings.

Summary and full case also available here.

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