August 23, 2019

Archives for January 29, 2014

Reasonably Ascertainable Value of Accrued Vacation and Accrued Sick Leave May Be Divided in Dissolution of Marriage

PFM Individual Photos LWMBy Lesleigh W. Monahan

On January 13, 2014, the Colorado Supreme Court issued its opinion in In re Marriage of Cardona and Castro. The supreme court granted certiorari review in this case to consider whether accrued vacation and sick leave may be considered marital property subject to division under C.R.S. § 14-10-113 of the Uniform Dissolution of Marriage Act (UDMA). The court considered this issue a matter of first impression in Colorado, noting, as did the court of appeals, that courts in other jurisdictions are split on this issue.

In Marriage of Cardona and Castro, wife raised the issue of husband’s accrued leave. The husband’s accrued leave had been reflected in his most recent pay stub, which indicated the total number of hours of vacation time and sick time that had accrued up until the date of dissolution. The pay stub did not indicate the cash value of the accrued leave or whether husband was entitled to cash payment for any portion of the leave. At the permanent orders hearing, the wife did not establish, nor did the husband render an opinion as to, whether husband was entitled to cash payment for any portion of the leave. In fact, the husband’s statements at the permanent orders hearing were somewhat vague and ambiguous as to his expectations—other than that he would be entitled to some form of pay for his accrued leave at the time of his termination.

The wife thereafter took the position that the husband’s accrued leave should be valued at $23,230.00. The trial court chose to divide the value of husband’s accrued vacation and sick leave as part of its division of the marital estate and required husband to pay wife $11,616.00 for “her interest in this pay.”

On appeal (which included additional issues other than those raised in the most recent supreme court opinion), the husband argued that accrued leave is not marital property. The divided panel of the court of appeals agreed and reversed. The majority reasoned that husband’s accrued leave was analogous to unvested stock options or an interest in a discretionary trust and “is thus not property subject to distribution on dissolution.” The case was remanded with direction to the trial court to reconsider the property division without considering husband’s accrued vacation and sick time. A petition for writ of certiorari, filed by wife, was granted on the following issue: “Whether the Court of Appeals erred in finding that accrued vacation and sick leave time is not marital property subject to division pursuant to section 14-10-113, C.R.S. (2010).”

The supreme court, in considering case law from other jurisdictions and relevant Colorado precedent, concluded that where a spouse has an enforceable right to be paid for accrued vacation or sick leave, as established by an employment agreement or policy, such accrued leave earned during the marriage is marital property for purposes of the UDMA. The court clarified that the value of such accrued leave at the time of dissolution must be equitably divided as part of the marital estate as long as such value can be reasonably ascertained at the time of dissolution. Alternatively, when a court cannot reasonably ascertain the value of such leave at the time of dissolution, the court should consider a spouse’s right to such leave as an economic circumstance of the parties when equitably dividing the marital estate. The supreme court found that there was not any competent evidence presented in the Cardona and Castro matter to establish that husband had an enforceable right to payment for his accrued leave and, accordingly, determined the trial court erred in considering the purported cash value of such leave as part of the marital estate. The court of appeals judgment was affirmed on narrower grounds.

The importance of this case to practitioners is clear in terms of trial preparation. As with other marital assets such as real estate, businesses, and retirement plans, it is essential for the practitioner to obtain accurate documentation and/or testimony from reliable sources such as the employer (as witness) and employer policies and procedures (as exhibits) relative to valuation of accrued sick time and leave. Based upon the detailed analysis in the supreme court decision, it will be critical for the trial court to assess whether the “value” of accrued vacation or sick leave, at the time of dissolution, may be so difficult to ascertain as to be speculative. Under many employment policies, different types of leave may be combined in one comprehensive paid time off plan, whereas other policies split vacation leave, sick leave, and personal leave into separate plans. Some employers allow leave to accrue and “roll over” from year to year, while others adopt a “use it or lose it” approach, under which accrued leave is forfeited if the employee does not take time off. Therefore, under this ruling, it is clear that accurate, demonstrative, and probative evidence must be presented to the trial court as to whether the value of accrued leave can be determined through a reasonable dollar estimate. If such an estimate cannot be demonstrated, it is clear that the accrued leave has speculative value that could lead a trial court to treat such leave as an “economic circumstance” under C.R.S. § 14-10-113(1)(c).

Justice Boatright concurred in the opinion but wrote separately to express two perceived errors in the reasoning of the majority opinion. The first relates to the inequity of “double counting” of accrued leave as both income and property. The second concern articulated by Justice Boatwright is that the ruling presents a contradiction in that “unlike calculating the present value of a pension, it will be nearly impossible to determine the present value of accrued leave.” Analysis would require consideration of a “bevy of speculative and indeterminate factors such as future illness, vacations, company policy, lifestyle changes, job changes, family needs and retirement.” In summary, the difficulties of valuing accrued leave led Justice Boatwright to the conclusion that it should be treated as income if the court orders child support and maintenance. Alternatively, if the court does not order child support or maintenance, it should only consider accrued leave as an “economic circumstance.”

Lesleigh W. Monahan, Esq. is a partner in the Lakewood firm of Polidori, Franklin & Monahan, LLC. Ms. Monahan has been practicing law exclusively in domestic relations since 1988. She received her Juris Doctor degree from the University of Colorado School of Law in 1987. Ms. Monahan has repeatedly been recognized for her accomplishments, and is a frequent speaker at continuing legal education programs. She was admitted as a Fellow in the American Academy of Matrimonial Lawyers in 2004 and was president of the Colorado chapter in 2011/2012. Ms. Monahan is also a member of the CBA Family Law Section, and was chair of that section’s executive council in 2002-2003.

The opinions and views expressed by Featured Bloggers on CBA-CLE Legal Connection do not necessarily represent the opinions and views of the Colorado Bar Association, the Denver Bar Association, or CBA-CLE, and should not be construed as such.

Deadline Extended to Nominate Individuals for DBA Awards

The Denver Bar Association seeks nominations for its annual awards – the DBA Award of Merit, Judicial Excellence Award, Young Lawyer of the Year, Volunteer Lawyer of the Year, and Education in the Legal Community awards. The deadline for nominations has been extended to Monday, February 3, 2014.

Nominate an attorney by submitting a statement of why the nominee deserves the honor. The statement need not be a complete essay; just provide a few salient points and the committee will follow up with the nominator and nominee for complete details. You can complete and submit a nomination form online or send your nomination by email to Heather Clark. The committee will consider involvement with the DBA, community contributions outside the bar associations, career history and accomplishments. 

Click here for more information on the DBA awards and for links to nomination forms.

Tenth Circuit: Summary Judgment for Employer Reversed on FMLA and ADA Claims

The Tenth Circuit Court of Appeals published its opinion in Smothers v. Solvay Chemicals, Inc. on Tuesday, January 21, 2014.

Steven Smothers worked for Solvay Chemical, Inc. (“Solvay”) for 18 years until Solvay fired him, ostensibly because of a first-time safety violation and a dispute with a coworker. He sued Solvay, claiming the company’s true motivations were retaliation for taking medical leave from work, in violation of the Family Medical Leave Act (“FMLA”), and discrimination on the basis of his medical disability, in violation of the Americans with Disabilities Act (“ADA”). He also brought a state law claim for breach of implied contract. The district court granted summary judgment for Solvay on his FMLA and ADA claims and on his state law claim for breach of implied contract.

Smothers sought and was granted FMLA leave from Solvay for intermittent absences caused by severe neck and back pain. Solvay considered him an excellent, reliable mechanic with strong job knowledge, but managers and coworkers complained about his FMLA-protected absences.

The Tenth Circuit held that Smothers met his prima facie burden on his FMLA and ADA claims and presented a genuine dispute of material fact as to whether Solvay’s stated purpose for firing him was pretextual. After viewing the evidence in Smothers’ favor, it showed that: (1) Solvay treated Smothers differently from similarly situated employees who committed comparable safety violations; (2) Solvay’s investigation into Smothers’ quarrel with Mahaffey was inadequate; and (3) Solvay managers previously took negative action against Smothers because of his FMLA-protected absences. Together these grounds create a triable issue of fact as to whether Mr. Smothers’ FMLA leave was a substantial motivation in Solvay’s decision to fire him.

The court rejected Solvay’s argument that the group of decision makers who fired Smothers was different from groups that disciplined other employees. The court held that requiring absolute congruence of decision maker members “would too easily enable employers to evade liability for violation of federal employment laws. The district court erroneously rejected Mr. Smothers’ pretext argument by insisting that the composition of the decision maker groups be precisely the same in every relevant disciplinary decision. We disagree because there is more than enough overlap to conclude the employees identified here were similarly situated to Mr. Smothers.”

The court also rejected Solvay’s argument that evidence of previous negative comments and actions about Smother’s FMLA leave were irrelevant to support his FMLA claims as they did not qualify as adverse employment actions. These incidents were relevant to a pretext inquiry, even if they could not be used to directly support a retaliation claim.

The court reversed the grant of summary judgment to Solvay on the FMLA and ADA claims, and affirmed on the state law claim of breach of contract as Smothers failed to show how the decision to discharge him violated the terms of Solvay’s handbook.

Tenth Circuit: Traffic Stop and Search Did Not Violate Fourth Amendment

The Tenth Circuit Court of Appeals published its opinion in United States v. Harmon on Tuesday, January 21, 2014.

Mr. Harmon, the appellant in this case, was driving a car across New Mexico with drugs in his spare tire. After weaving within his lane and crossing the fog line, Officer Lucero decided to stop the car on suspicion of violating a New Mexico statute that requires a driver to stay in his or her lane. During the traffic stop, the officer discovered the drugs, and Mr. Harmon was arrested and charged with possession with intent to distribute 500 grams or more of cocaine and possession with intent to distribute 50 kilograms of marijuana.

He moved to suppress the evidence before trial, but the district court denied that motion. On appeal, the Tenth Circuit was asked to decide, among other things, whether the stop was reasonable under the Fourth Amendment.

On appeal, Mr. Harmon made the following arguments: (1) that Officer Lucero lacked sufficient reasonable suspicion to make the initial traffic stop; (2) that the scope of the search exceeded the initial justification for the stop; (3) that his motion to reopen ought to have been granted in light of Officer Lucero’s behavior in another case the Officer was involved in; and (4) that he received ineffective assistance of counsel in entering into his plea agreement.

First, the Tenth Circuit agreed with the district court that Officer Lucero had reasonable suspicion to stop the vehicle on suspicion of impairment under New Mexico law. A traffic stop is a seizure for purposes of Fourth Amendment analysis, and the “reasonable suspicion” standard from Terry v. Ohio applies. An investigatory stop is justified at its inception if the specific and articulable facts and rational inferences drawn from those facts give rise to a reasonable suspicion a person has or is committing a crime. The court looks to the totality of circumstances to determine whether reasonable suspicion exists.

The Tenth Circuit held that Officer Lucero had reasonable suspicion that Mr. Harmon violated the New Mexico statute of driving while impaired when the tires of Mr. Harmon’s car crossed the white fog line that separates the right lane of the interstate from the shoulder. The statute states in part that “a vehicle shall be driven as nearly as practicable entirely within a single lane and shall not be moved from such lane until the driver has first ascertained that such movement can be made with safety.” Under these facts, Officer Lucero could have had a reasonable suspicion of impairment.

Mr. Harmon also argued that Officer Lucero’s investigatory stop exceeded the scope of the initial justification, thereby violating the Fourth Amendment and entitling him to suppression of the drugs discovered in the car. Not only must the initial stop be justified, but the scope of the resulting detention must remain reasonably related to the initial justification. Once the officer has satisfied his initial reasonable suspicions, unless the officer obtains a new and independent basis for suspecting the detained individual of criminal activity, his investigation must end. However, counsel conceded during oral argument that the search was consensual.

Mr. Harmon also contended that the district court improperly denied his motion to reopen and reconsider the previous denial of the motion to suppress. In that motion, he also claimed that evidence regarding Officer Lucero’s omission in a report in an unrelated case constituted impeachment material that should have been disclosed prior to the suppression hearing. The Tenth Circuit found this argument unavailing for several reasons. First, Officer Lucero did not violate the Fourth Amendment in the other case. Second, there was no obligation that the report be exhaustive. Third, law enforcement may at times have legitimate reasons to keep certain information confidential. The court concluded that the district court did not abuse its discretion in deciding that the evidence from the other case did not possess impeachment value and was unlikely to change the outcome of the suppression hearing.

The court rejected Mr. Harmon’s argument that he received ineffective assistance of counsel.

AFFIRMED.

Tenth Circuit: Unpublished Opinions, 1/28/14

On Tuesday, January 28, 2014, the Tenth Circuit Court of Appeals issued three published opinions and three unpublished opinions.

Jameson v. Samuels

White v. State of Oklahoma

Baca v. Rodriguez

Case summaries are not provided for unpublished opinions. However, published opinions are summarized and provided by Legal Connection.

SB 14-038: Eliminating Governor’s Authority to Restrict Sale of Firearms During Disaster

On Wednesday, January 8, 2014, Sen. Scott Renfroe introduced SB 14-038 – Concerning Eliminating the Governor’s Authority to Restrict the Distribution of Firearms During a State of Disaster Emergency. This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

The bill eliminates the governor’s authority to suspend or limit the sale, dispensing, or transportation of firearms during a state of disaster emergency. The bill is assigned to the State, Veterans, & Military Affairs Committee.

SB 14-042: Eliminating 10-Year Limit on Term of Business Incentive Agreements

On Wednesday, January 8, 2014, Sen. Mark Scheffel introduced SB 14-042 – Concerning the Elimination of the Limit on the Term of a Business Incentive Agreement that a Local Government Enters into with a Taxpayer who Pays Business Personal Property Tax. This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

A county, municipality, or special district (local government) is currently authorized to negotiate an incentive payment or credit with a taxpayer that pays business personal property tax and that establishes a new business facility, expands an existing business facility, or if there is a substantial risk that the taxpayer will relocate an existing facility out of state. These payments or credits are included in agreements that are commonly known as business incentive agreements.

The bill eliminates a 10-year limit on the term of a business incentive agreement and grants the governing body of the local government the discretion to determine the term of the agreement. The bill is assigned to the State, Veterans, & Military Affairs Committee.

SB 14-044: Creating Flat Registration Fee and Ownership Tax for Motor Vehicle Owners 65 Years of Age and Older

On Wednesday, January 8, 2014, Sen. Owen Hill introduced SB 14-044 – Concerning an Alternative to Required Payments to Register a Motor Vehicle for Older Coloradans. This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

Currently, owners of motor vehicles pay specific ownership tax and several registration fees, some of which are based on the age and weight of the vehicle. The bill authorizes people who are 65 years of age or older and who have lived in Colorado for five years to pay a flat registration fee of $34.10 and specific ownership tax of $15.90, instead of the normal fees and tax. The fees are apportioned as follows:

  • The department or county clerk who issues the registration may retain $2 for costs;
  • $1.50 is for the county road and bridge fund;
  • 50¢ is for the Colorado state titling and registration account in the highway users tax fund;
  • $2.50 is for the license plate cash fund;
  • 50¢ is for the AIR account in the highway users tax fund;
  • 10¢ is for the motorist identification account in the highway users tax fund;
  • $13 is for the statewide bridge enterprise special revenue fund;
  • $2 is for the emergency medical services account in the highway users tax fund;
  • $12 is for the highway users tax fund.

The bill is assigned to the State, Veterans, & Military Affairs Committee.