In re Gromicko, Supreme Court Case No. 16SA199

• Decision Date: 09 January 2017
• Docket Number: Supreme Court Case No. 16SA199
• Citation: 2017 CO 1,387 P.3d 58
• Parties: IN RE the MARRIAGE OF Lisa Dawn GROMICKO, Petitioner, and Nickifor Nicholas Gromicko, Respondent.
• Court: Colorado Supreme Court

387 P.3d 58

2017 CO 1

IN RE the MARRIAGE OF Lisa Dawn GROMICKO, Petitioner, and Nickifor Nicholas Gromicko, Respondent.

Supreme Court Case No. 16SA199

Supreme Court of Colorado.

January 9, 2017

Attorneys for Petitioner International Association of Certified Home Inspectors: Inman Flynn Biesterfeld & Brentlinger, P.C., Frank Lopez, Denver, Colorado

Attorneys for Respondent Lisa Dawn Gromicko: Michael E. Miner Boulder, Colorado Gill & Ledbetter, LLP, Anne Whalen Gill, Castle Rock, Colorado

No appearance by or on behalf of Nickifor Nicholas Gromicko.

En Banc

Rule Made Absolute

JUSTICE GABRIEL delivered the Opinion of the Court.

¶1 In this original proceeding, we consider whether the Boulder County District Court erred in ordering petitioner International Association of Certified Home Inspectors ("InterNACHI") to produce a wide range of business records that may relate to a pending dissolution of marriage proceeding between respondent Lisa Dawn Gromicko ("Wife") and Nickifor Nicholas Gromicko ("Husband"). In the underlying dissolution proceeding, the district court granted broad discovery from Husband's employer, non-party InterNACHI, based in large part on Wife's allegation that InterNACHI might be Husband's alter ego and thus might constitute marital property subject to equitable division. InterNACHI petitioned this court for review pursuant to C.A.R. 21, and we issued a rule to show cause why the district court's discovery orders should not be vacated. We now make the rule absolute.

¶2 As an initial matter, we reject InterNACHI's argument that Wife was required to plead a veil-piercing claim in her petition for dissolution of marriage. We perceive no such requirement in the applicable statutes, and we may not add one.

¶3 We further conclude, however, that when InterNACHI objected to the scope of Wife's subpoena, the district court did not take the active role in managing discovery that DCP Midstream, LP v. Anadarko Petroleum Corp., 2013 CO 36, 303 P.3d 1187, requires. Specifically, although InterNACHI timely objected to the scope of discovery sought from it, the district court made no findings about the appropriate scope of discovery in light of the reasonable needs of the case, nor did it make any attempt to tailor discovery to those needs. Instead, the court granted Wife the broad range of discovery to which she might be entitled had she actually proved that InterNACHI was, in fact, Husband's alter ego, a fact that Wife had then (and has to date) merely alleged.

¶4 Because we conclude that the district court abused its discretion in so ruling, we vacate the portion of the court's order compelling production of InterNACHI's business records on an alter ego theory, and we remand this case with instructions that the court reconsider InterNACHI's motion to quash pursuant to the standards set forth in this opinion.

I. Facts and Procedural History

¶5 In September 2015, Wife filed a petition for dissolution of marriage. The petition named Husband as the respondent and requested, as pertinent here, spousal maintenance and an equitable division of the marital assets and debts.

¶6 In order to evaluate Husband's income and assets, Wife sought information from Husband's employer, InterNACHI. Founded by Husband in 2004, InterNACHI is a Colorado nonprofit corporation with tax-exempt status as a trade association under section 501(c)(6) of the Internal Revenue Code. Husband serves on InterNACHI's four-member board of directors, and Wife alleges that Husband is currently employed as InterNACHI's Chief Operating Officer.

¶7 Although Husband initially indicated that he would not object to InterNACHI's making certain records available to Wife, he subsequently refused to produce them, contending that he was merely an employee of InterNACHI and had no authority to provide its records. As a result of Husband's apparent change of position, Wife requested a status conference to address the outstanding discovery issues.

¶8 The court set a status conference, and the day before the conference, Husband's counsel, who also served as InterNACHI's general counsel, filed a brief on behalf of InterNACHI regarding access to that entity's records. In this brief, counsel argued that (1) the only InterNACHI records relevant to the dissolution proceeding were those reflecting Husband's compensation and expense reimbursements; (2) the court could not consider InterNACHI as a marital asset because Wife had not alleged in her dissolution petition grounds to pierce InterNACHI's corporate veil; and (3) if InterNACHI would not voluntarily produce the pertinent documents, then the court should authorize Wife to serve a subpoena duces tecum on InterNACHI for those records.

¶9 The status conference proceeded as scheduled, but the district court declined to rule on the foregoing discovery issues. The court, however, continued the permanent orders hearing based on the unresolved discovery disputes and the complexity of the case.

¶10 Thereafter, on March 31, 2016, Wife served a subpoena duces tecum on InterNACHI. In this subpoena, Wife sought to discover all matters concerning (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.

¶11 InterNACHI moved to quash this subpoena, arguing, as pertinent here, that many of the requested documents were privileged, confidential, and irrelevant to the dissolution proceeding. InterNACHI also renewed its assertion that Wife's dissolution petition did not allege any basis, including fraud, on which to claim that InterNACHI was Husband's alter ego and therefore a marital asset.

¶12 Wife responded that the discovery requested in her subpoena was relevant to both spousal maintenance and the division of marital property. She argued that she was "clearly entitled" to discovery regarding Husband's "true income," including any distributions that he received from InterNACHI in addition to his salary and expense reimbursements, particularly given that Husband had allegedly told Wife that he had received such distributions. Wife further argued that because the court could classify InterNACHI as a marital asset if it found sufficient evidence to pierce the corporate veil, she was entitled to discovery to try to establish that InterNACHI was, in fact, Husband's alter ego. In support of this assertion, Wife alleged fourteen facts that she claimed showed that InterNACHI was Husband's alter ego.

¶13 The district court denied InterNACHI's motion to quash. In so ruling, the court rejected InterNACHI's argument that Wife had failed to plead fraud, concluding that such an allegation was unnecessary. In addition, the court noted that it could consider InterNACHI to be "property" for purposes of the equitable division of marital assets based on a finding that InterNACHI was Husband's alter ego. The court thus concluded "that discovery may be propounded under the ‘alter ego’ theory, subject to a protective order." In so ruling, however, the court provided no analysis and made no findings regarding InterNACHI's scope-of-discovery objections.

¶14 InterNACHI then filed a motion pursuant to C.R.C.P. 60(a), seeking a ruling on the confidentiality and privilege claims that it had raised in its motion to quash. Wife opposed this motion, and the district court ultimately denied it, reaffirming its prior order. Specifically, the court observed that (1) "the information and records sought by [Wife] are relevant to the issue[s] of whether InterNACHI is [Husband's] alter ego ... and to [Husband's] true income" and (2) Wife "has made sufficient assertions that the information sought may lead to such evidence."

¶15 InterNACHI then petitioned this court for review under C.A.R. 21, and we issued a rule to show cause why the district court's discovery orders should not be vacated.

II. Original Jurisdiction and Standard of Review

¶16 Exercise of our original jurisdiction under C.A.R. 21 is within our sole discretion. Fognani v. Young, 115 P.3d 1268, 1271 (Colo. 2005). Although discovery orders are generally interlocutory in nature and thus are reviewable only on appeal, this court has exercised its original jurisdiction "to review whether a trial court abused its discretion in circumstances where a remedy on appeal would be inadequate." Gateway Logistics, Inc. v. Smay, 2013 CO 25, ¶ 11, 302 P.3d 235, 238 (quoting Weil v. Dillon Cos., 109 P.3d 127, 129 (Colo. 2005) ).

¶17 Here, the district court ordered InterNACHI to produce a wide range of business records that InterNACHI claims are confidential and irrelevant to the underlying dissolution proceeding. Damage to InterNACHI from the erroneous production of such records could not be cured by appeal "because the damage would occur upon disclosure to [Wife] ‘regardless of the ultimate outcome of any appeal from a final judgment.’ " Id. at ¶ 12, 302 P.3d at 239 (quoting Johnson v. Trujillo, 977 P.2d 152, 154 (Colo. 1999) ). We therefore conclude that the exercise of our original jurisdiction is appropriate in this case.

¶18 We review a district court's discovery orders for an abuse of discretion. Id. at ¶ 13, 302 P.3d at 239. A district court abuses its discretion when its decision is manifestly arbitrary, unreasonable, or unfair. Id.

III. Analysis

¶19 InterNACHI contends 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. We address these issues in turn.

A. Pleading Requirements

¶20 Dissolution of marriage in Colorado is governed by Colorado's Uniform Dissolution of Marriage Act ("the Act"), §§ 14–10–101 to –133, C.R.S. (2016). The...