Cardona v. Castro, 09CA1996.

• Decision Date: 09 December 2010
• Docket Number: No. 09CA1996.,09CA1996.
• Citation: 321 P.3d 518
• Parties: In re the MARRIAGE OF Marta Doris CARDONA, Appellee, and Jaime Felipe CASTRO, Appellant.
• Court: Colorado Court of Appeals

321 P.3d 518

In re the MARRIAGE OF Marta Doris CARDONA, Appellee,

and

Jaime Felipe CASTRO, Appellant.

No. 09CA1996.

Colorado Court of Appeals,

Div. III.

Dec. 9, 2010.

Antolinez Miller, L.L.C., Joseph H. Antolinez, Melissa E. Miller, Littleton, Colorado, for Appellee.

Karin Johnson Chatfield, L.L.C., Karin Johnson Chatfield, Denver, Colorado, for Appellant.

Opinion by Judge J. JONES.

Jaime Felipe Castro (husband) appeals from the permanent orders entered in conjunction with his legal separation from Marta Doris Cardona (wife). We affirm in part, reverse in part, and remand for further proceedings.

I. Property Distribution

Pursuant to section 14–10–113(1), C.R.S.2010, a trial court divides marital property, without regard to marital misconduct, in such proportions as it deems just, considering the factors listed in the statute. A trial court has great latitude to effect an equitable distribution based upon the facts and circumstances of each case, and we will not disturb the court's decision unless there has been a showing of a clear abuse of discretion. In re Marriage of Balanson, 25 P.3d 28, 35 (Colo.2001).

When dividing marital property, the trial court must first set apart separate property to each spouse. § 14–10–113(1); In re Marriage of Rodrick, 176 P.3d 806, 814 (Colo.App.2007). The classification of property as marital or separate is a legal determination that is dependent on the resolution of factual disputes. In re Marriage of Williamson, 205 P.3d 538, 540 (Colo.App.2009). Thus, we defer to the trial court's factual findings, absent a showing of an abuse of discretion, and independently review its resolutions of questions of law. See id.

A. The Marital Home

Husband contends that the trial court abused its discretion by setting aside to wife $80,000 of the proceeds from sale of the marital home as reimbursement for her contribution of separate property toward purchasing the home. We agree.

Marital property does not include property that a party acquired prior to the marriage. See§ 14–10–113(2), C.R.S.2010; In re Marriage of Stedman, 632 P.2d 1048, 1050 (Colo.App.1981). Premarital property that is placed in joint tenancy by a spouse during the marriage, however, reflects an intent by the donor spouse to make a gift to the marriage, and such property is presumed to be marital absent clear and convincing evidence to the contrary. In re Marriage of Balanson, 25 P.3d at 37;see also In re Marriage of Moncrief, 36 Colo.App. 140, 141–42, 535 P.2d 1137, 1138 (1975).

Here, the trial court awarded wife the first $80,000 in proceeds from the sale of the marital home as her separate property and then divided the remainder of the proceeds between the parties as marital property. Wife testified that during the marriage she sold a condominium that she had purchased before marriage and placed the $100,000 proceeds from that sale into a joint account with husband, and that the funds were then used to purchase the marital home and for landscaping on the home. Wife further testified that the condominium had increased in value about $60,000 during the marriage and before sale. Wife did not present evidence that the parties intended for the proceeds from the sale to remain her separate property. Although, as wife notes, the record is not complete, she indicates that it is only part of husband's testimony, and not hers, that is missing. Additionally, the trial court made no findings explaining why the funds remained separate even though wife placed them in joint tenancy.

Accordingly, on remand the trial court must reconsider the division of the marital home. Although in making an equitable division of this asset, the court may consider wife's contribution of her separate property, it may not set aside her contribution as separate property without further findings explaining why the presumption that wife intended to make a gift to the marriage does not apply. Additionally, the court should consider the marital increase in value of wife's separate property before she sold it. See In re Marriage of Burford, 26 P.3d 550, 555 (Colo.App.2001) (“[A]n asset acquired prior to the marriage shall be considered as marital property to the extent that its present value exceeds its value at the time of the marriage.”).

Reconsideration of this asset will require the trial court to reexamine the entire property division. See In re Marriage of McCadam, 910 P.2d 98, 100 (Colo.App.1995). The court should reconsider the property division based on the parties' economic circumstances existing on remand. See In re Marriage of Wells, 850 P.2d 694, 697 (Colo.1993); In re Marriage of Powell, 220 P.3d 952, 961 (Colo.App.2009).

Although we have remanded for reconsideration of the property division, we address other property issues raised by husband to the extent they may arise again on remand. See In re Marriage of Simon, 856 P.2d 47, 51 (Colo.App.1993).

B. Husband's Separate Property

Husband further contends that the trial court abused its discretion in valuing the marital portion of his separate property by considering not only the increase in value of the property during the marriage, but also the amount of marital funds that were used to pay down the mortgage. We disagree.

When a spouse uses marital income to pay down the debt on separate property, thereby increasing its equity, the increased equity is equitably divided in the marital property division. See In re Marriage of Burford, 26 P.3d at 558–59. We reject husband's contention that In re Marriage of Burford applies only when separate property has not increased in value. Rather, the amount of equity in husband's separate property is not only a function of its increase in value during the marriage, but also of husband's use of marital funds to pay down the debt. Thus, the trial court did not abuse its discretion in considering both factors when determining the marital portion of the property.

We are not persuaded otherwise by husband's contention that the decrease in debt should not have been considered because he used rental income from the property to pay down the mortgage. Income earned from separate property during the marriage is marital property. See id. at 558. Thus, the rental income that husband used to pay down the mortgage was marital income, and the trial court did not abuse its discretion by considering the mortgage reduction.

We are also not persuaded otherwise by husband's contention that the trial court's treatment of the parties' separate property was inequitable because the mortgage on wife's separate property was also paid during the marriage. Husband does not cite to a portion of the record where he raised this contention in the trial court, and our review of the record indicates that he did not argue at the hearing that the court should consider that wife's mortgage was reduced using marital funds. Accordingly, we will not consider that contention on appeal. See In re Marriage of Atencio, 47 P.3d 718, 722 (Colo.App.2002) (declining to consider contention not raised first in the trial court).

C. Husband's Vacation and Sick Leave Time

Husband further contends that the trial court erred by dividing the value of his accrued vacation and sick leave time as part of the marital estate. We agree.

Husband testified that he had accrued vacation and sick leave at his employment and that he would be paid for the unused time only if and when he left his job. He further testified that he accumulated the time, in part, because he anticipated needing it in the future to exercise his parenting time. The trial court awarded the leave time, which was valued at $23,232, to husband, but required him to pay wife $11,616 for her share of the asset.

We review de novo the legal question whether husband's accrued leave time is a marital asset that is divisible on dissolution. See In re Marriage of Williamson, 205 P.3d at 540 (division reviewed de novo whether spouse's military disability pay was divisible as a marital asset).

The question presents an issue of first impression in Colorado. Courts in other jurisdictions are split on the issue. Compare In re Marriage of Abrell, 236 Ill.2d 249, 337 Ill.Dec. 940, 923 N.E.2d 791, 801 (2010) (“[W]e find that accrued vacation and sick days are not marital property subject to distribution in a dissolution of marriage action.”); Akers v. Akers, 729 N.E.2d 1029, 1032–33 (Ind.Ct.App.2000) (reversing trial court's treatment of unused sick days as a marital asset); Bratcher v. Bratcher, 26 S.W.3d 797, 801 (Ky.Ct.App.2000) (“[W]e hold that accrued holiday and vacation entitlement is not marital property.”); and Thomasian v. Thomasian, 79 Md.App. 188, 556 A.2d 675, 681 (1989) (same), with Schober v. Schober, 692 P.2d 267, 268 (Alaska 1984) (holding that unused leave, a portion of which was convertible to cash on a yearly basis, was a marital asset); Dye v. Dye, 17 So.3d 1278, 1281 (Fla.Dist.Ct.App.2009) (“[T]he cash value of unused sick leave and vacation time is a marital asset subject to equitable distribution.”); Lesko v. Lesko, 184 Mich.App. 395, 457 N.W.2d 695, 699 (1990) (holding that banked leave days were a divisible marital asset), disagreed with on other grounds by Booth v. Booth, 194 Mich.App. 284, 486 N.W.2d 116 (1992); and In re Marriage of Williams, 84 Wash.App. 263, 927 P.2d 679, 683 (1996) (same).

In Colorado, “enforceable contractual rights constitute property, [while] interests that are merely speculative are mere expectancies.” In re Marriage of Balanson, 25 P.3d at 35. Accordingly, for example, employee stock options constitute property for purposes of dissolution proceedings only when the employee has a vested and enforceable right to them, even if that right is not presently exercisable. See id. at 39–40;see also In re Marriage of Balanson, 107 P.3d 1037, 1045 (Colo.App.2004) (property right is vested, or is more than a mere expectancy, when there is legal or equitable title to the present or future enjoyment of the property)....