In re Marriage of Powell

• Decision Date: 05 February 2009
• Docket Number: No. 06CA1369.,06CA1369.
• Citation: 220 P.3d 952
• Parties: In re the MARRIAGE OF Carol POWELL, Appellee, and David Powell, Appellant.
• Court: Colorado Court of Appeals

220 P.3d 952

In re the MARRIAGE OF Carol POWELL, Appellee, and

David Powell, Appellant.

No. 06CA1369.

Colorado Court of Appeals, Div. III.

February 5, 2009.

Dale E. Johnson, P.C., Dale E. Johnson, Louisville, Colorado, for Appellee.

Stevens, Littman, Biddison, Tharp & Weinberg, LLC, Andrew C. Littman, Craig A. Weinberg, Boulder, Colorado, for Appellant.

Opinion by Judge ROY.

David Powell (husband) appeals from the trial court's permanent orders in the dissolution of marriage action between him and Carol Powell (wife) relating to property division, maintenance, and attorney fees. We vacate the property division, maintenance, and attorney fees orders, and remand the case for further proceedings consistent with the views expressed in this opinion.

I. Preliminary Matters

A. Preparation of Permanent Orders

At the outset, we agree with husband's argument that we must carefully scrutinize the permanent orders because the trial court adopted orders prepared by wife's counsel without, or with only minor, revision.

A trial court's adoption of one party's proposed findings and conclusions is not necessarily improper and does not require reversal unless the findings themselves are inadequate. C.R.C.P. 121 § 1-16; In re Marriage of Martinez, 77 P.3d 827, 830 (Colo.App.2003). Here, we have extensively reviewed the record, including the testimony of the parties, the testimony of the experts, the exhibits, and the permanent orders. With the exceptions noted later in this opinion, the record supports the findings, conclusions, and orders of the trial court.

B. Waiver

Further, wife argues that husband has waived his right to appeal the property division in the permanent orders by accepting his share of the marital property. We disagree.

Wife's argument reflects the general rule that one who has accepted the benefits of a judgment may not seek reversal of that judgment on appeal. That rule is not strictly applied in dissolution of marriage cases, In re Marriage of Burford, 950 P.2d 682, 684 (Colo.App.1997), and it does not apply here because husband seeks a greater share of the property division, and his rights to the benefits already received would not be affected. See In re Marriage of Antuna, 8 P.3d 589, 592 (Colo.App.2000).

II. Stock Options

Husband first argues that the trial court erred in classifying a portion of wife's stock options granted during the marriage as separate property and in valuing them. We agree with the first argument and under the circumstances do not address the latter.

A. The Facts

The parties were married September 23, 2000, and the decree dissolving the marriage was entered June 22, 2006, nunc pro tunc May 1, 2006. At the time of the marriage, wife was the chief financial officer of a division of a chain of department stores, from which she retired when her position was eliminated on May 30, 2003. Her compensation included annual stock options; however, only those options granted on February 27, 2001 (the 2001 options) are in dispute here.

The fiscal year of the department store company is February 1 through January 31 of the following calendar year. The 2001 options granted wife options to purchase 5,747 shares of stock for $19 per share: 1,437 options vesting each year on February 27, 2002, 2003, and 2004, and 1,436 vesting on February 27, 2005, with all expiring February 27, 2011. There was a two-for-one stock split in 2005, which modified the 2001 options to 11,494 shares at $9.50 per share.

B. Standard of Review

In reviewing a trial court's division of property, an appellate court must recognize that the trial court has great latitude to effect an equitable distribution based upon the facts and circumstances of each case. Thus, on review, an appellate court can not disturb a trial court's decision regarding division of property unless there has been a clear abuse of discretion. In re Marriage of Balanson, 25 P.3d 28, 35 (Colo.2001). The standard of review with respect to the trial court's findings of fact is clearly erroneous. Boulder Meadows v. Saville, 2 P.3d 131 (Colo.App.2000). However, the interpretation of a contract, here a stock option plan, is a question of law which is reviewed de novo. Rhino Fund, LLLP v. Hutchins, 215 P.3d 1186, 1190 (Colo.App. 2008).

C. Marital Property versus Separate Property

Once a court determines an interest constitutes property, it must determine whether the property is marital or separate. All property acquired during the marriage is presumed to be marital property, unless it falls within the listed exceptions. § 14-10-113(2)-(3), C.R.S.2008. As pertinent here, "an asset of a spouse acquired prior to the marriage . . . shall be considered as marital property, for purposes of this article only, to the extent that its present value exceeds its value at the time of the marriage." § 14-10-113(4), C.R.S.2008. Property must be realistically classified based on the nature of the asset. In re Marriage of Holmes, 841 P.2d 388, 389 (Colo.App.1992).

The issue as framed by husband is whether the 2001 options to purchase 7,356 shares—that is, options to purchase 11,494 shares prorated from February 1, 2000 to September 22, 2000—granted to wife on February 27, 2001 by the department store company, are marital or separate property. The matter was litigated in the trial court primarily on the issue of whether the options were granted for past or future services.

1. Trial Court Proceedings

Wife testified that a portion of the 2001 options was "earned" prior to the marriage and should be treated as separate property. She also testified that the 2001 options survived her retirement and would continue to vest and remain vested.

Wife's expert testified that the 2001 options were for past services, and, based on the stock option plan and a conversation with a company official, the options remained hers after her retirement. Wife's expert classified all of the 2001 options as marital.

Husband's expert witness testified that there were 15,056 options granted prior to the marriage and 20,336, including the 2001 options, granted after the marriage. He also testified that, in his opinion, the 2001 options were granted for future services.

In her written closing argument, wife argued that "[t]here are 15,056 vested (and unexercised) stock options that were granted shortly before the marriage (February 1999 and February 2000). There are also 20,336 vested (and unexercised) that were granted during the marriage." (Emphasis supplied.) Wife's closing argument did not ask for a proration of the 2001 options.

In its first post-hearing order, the trial court held that the 2001 options were granted for past services and that those "acquired prior to the marriage [7356 shares] but not yet vested were wife's separate property." (Emphasis added.) In its second order, the trial court stated:

The Court adopts the arguments propounded by [wife's] counsel in whole, with the following exception pertaining to the 22,412 premarital [department store company] options [i.e., 15,056 options granted before the marriage and 7,356 of the options granted in 2001], which the Court has determined to be the separate property of [wife]. In finding and concluding that these options are the separate property of [wife], the Court is also cognizant that there is a marital component to [wife's] separate property to the extent that there may have been an appreciation in the value of those options during the course of the parties' marriage.

In summary, there appears to be no dispute that the 15,056 options granted to wife prior to the marriage through February 2000 are her separate property, and that the 2001 options to purchase 11,494 shares were granted after the marriage in February 2001. The trial court concluded that the 2001 options were awarded for services rendered in 2000; prorated them to the date of the marriage as wife urged in her testimony; and concluded that of the options to purchase 11,056 shares, 7,356 were wife's separate property.

2. The Stock Option Plan

The department store company had a non-qualified stock option plan effective May 20, 1997 and terminating May 19, 2007, subject to the rights and obligations granted under the plan and then in effect. The plan governed the grant to wife made on February 27, 2001.

The plan document provided that the plan was to be administered by a committee of the board of directors. With respect to grants, "non-qualified stock options may be granted by the Committee at any time and from time to time prior to the termination of the Plan to [certain] employees of the Company." (Emphasis added.) In addition: (1) the committee would establish the option price; (2) each option granted would be exercisable in such manner and at such times as determined by the committee but no later than ten years after the grant; (3) the options were not transferable except by will; and (4) the committee was authorized to include other provisions not inconsistent with the stated terms, provided no option would give the optionee any right to continued employment or limit the company's right to terminate his or her employment. Further, termination of the plan would not affect the rights and obligations granted under the plan. And, finally, in the event the shareholders of the company agreed to sell all of the outstanding shares or all of the assets of the company, or a similar transaction, the granted options were immediately exercisable.

The literature with respect to the stock option plan advised employees that: (1) one quarter of the options granted would vest annually in each of four years; (2) if the employee was terminated for cause, all unexercised options expired on the date of termination; and (3) if the employee's employment was terminated by disability, retirement, or death, the employee or his or her estate had twelve months to exercise the vested options, subject to the ten-year term of the options. Neither the plan nor the literature stated...