Marriage of Aldrich, In re, 96SC317

• Decision Date: 22 September 1997
• Docket Number: No. 96SC317,96SC317
• Citation: 945 P.2d 1370
• Parties: In re the MARRIAGE OF Pamela ALDRICH, n/k/a Pamela Thompson, Petitioner, and Wayne R. Aldrich, Respondent.
• Court: Colorado Supreme Court

Page 1370

945 P.2d 1370

In re the MARRIAGE OF Pamela ALDRICH, n/k/a Pamela Thompson,

Petitioner,

and

Wayne R. Aldrich, Respondent.

No. 96SC317.

Supreme Court of Colorado,

En Banc.

Sept. 22, 1997.

Smith & Lillie, LLC, Michael W. Lillie, Englewood, for Petitioner.

David N. Bolocofsky, P.C., David N. Bolocofsky, Denver, for Respondent.

Justice BENDER delivered the Opinion of the Court.

This case arises from a motion to modify child support filed by Wayne Aldrich (the father). After holding an evidentiary hearing, the district court denied the father's motion and granted attorney fees to the mother.

The court of appeals in In re the Marriage of Aldrich, No. 95CA693 (Colo.App. Feb. 29, 1996) (not selected for official publication), held that the district court failed to make adequate findings of fact on both the motion to modify child support and the request for attorney fees and costs and remanded the case for further findings. The mother petitioned for certiorari review. ¹ We reverse in part and affirm in part.

We hold that the district court's findings of fact adequately support the denial of the father's motion for modification, and that under the facts of this case, the district court was not required to raise, sua sponte, issues related to modification not raised by the father. We hold that additional findings are necessary to support the district court's award of attorney fees in this case. We therefore reverse in part, affirm in part, and remand to the court of appeals with instructions to return this case to the district court for additional findings on the issue of attorney fees.

I.

The mother and the father married on August 5, 1973. A son was born in 1977 and a daughter was born in 1986. On March 23, 1988, the district court issued a decree of dissolution incorporating a separation agreement under which the mother and the father agreed to joint legal custody of the two minor children, with the mother serving as the primary residential custodian for both children. On August 18, 1990, the district court approved a stipulated amendment to the separation agreement and permanent orders that provided that the father would be the primary residential custodian of the son, and that the mother would be the primary residential custodian of the daughter. Included in this stipulation was the requirement that the father pay the mother $615 per month in child support. This child support order was based in part on the day care expenses for the daughter of $326 per month, the mother's reported income of $1,040 per month, and the father's reported income of $3,467 per month.

In December of 1993 the father filed a motion to modify child support, alleging that he was no longer able to pay the $615 per month and claiming a substantial and continuing downward change in his financial circumstances. Thereafter, the father requested by motion that the district court consider the issue of work-related child care costs at the hearing because the mother was no longer working and incurring these costs. The parties presented evidence at a hearing on February 7, 1995 on the father's motion for modification.

At the hearing the mother testified that for part of 1992 and all of 1993, she was a full-time homemaker and incurred no work-related child care expenses. The mother testified that in 1994 she worked approximately twelve hours per week at a part-time job, earning an annual total of $2,200.

The father testified that in 1992 he and his new wife started a corporation (Power logics) in which they were the only shareholders, each holding fifty percent of the stock, and the sole officers of the company. In 1993, the father and his wife declared an adjusted gross income of $27,713, with $14,000 attributed to the father. However, their joint bank statements reflected approximately $111,000 in deposits for 1993. In his testimony the father was unable to explain satisfactorily the source of these deposits. In addition, the couple purchased a $164,000 home with a $140,000 mortgage and financed a $19,000 automobile in 1993. Also in 1993, the father resigned as an officer of the corporation, declared himself an employee, lowered his salary, reduced his share of the company to thirty percent, and raised his wife's share to seventy percent. In 1994, the couple declared a combined adjusted gross income of $46,323, with $20,350 allocated to the father.

The district court allowed the attorneys for both parties to present closing arguments. The attorneys focused their arguments on whether the father's income had in fact decreased. ² The attorneys presented no argument on the issue of work-related day care.

At the conclusion of the hearing the district court denied the father's motion finding that the father had not met his burden of showing a substantial and continuing change in circumstances which would result in a ten percent or more modification in child support. The court did not determine the current incomes of the parties and did not specifically assess the impact of the termination of work-related child care expenses. The court found:

In 1992, Power logics was one thing and became another when 70 percent of the business was given over to his wife, Jennifer. It is clear, based on Mr. Aldrich's testimony, he could have done just about anything he wanted.

....

This is a case in which the income that they declare and the income that they appear to be taking is completely inconsistent with their actual income for 1993 and with the money that came in and out of their joint bank account. He clearly had unfettered decision-making power, he and his wife, with regard to how they would divide up the ownership of the company.

....

The Court finds, based upon observing the demeanor of the petitioner and examining this case in the context of the 1993 tax return and the testimony of the petitioner that he is not credible with regard to his income for 1993 and for various other years.

The Court finds that the substance of the motion to modify child support is no more than accounting flummery. There is no substance to the motion. It is disappointing that the Court is asked to believe that somehow this responsibility to his shareholders, that he and his new wife are somehow required that his income be in the teens when $111,000 is going through his bank account and he is living in a new home with a healthy mortgage and managing to pay for it; and that this reorganization was somehow for any purpose other than defeating and defying the order of this court with regard to child support.

Based on that testimony, the Court cannot make a finding based on Colorado Revised Statutes 14-10-122 or 14-10-115 read in conjunction that the petitioner has met his burden of showing any changed circumstance that is substantial and continuing. There is nothing here to suggest that there is a ten percent or more change in the finances involved in the child support that would be deemed to be substantial and continuing.

At this point, the mother's attorney requested attorney fees incurred in the defense of the motion for modification. The father's attorney responded by requesting that the court allow each party to pay its own counsel. The court continued:

[The] Court finds this ... motion ... to modify child support and visitation was frivolous and vexatious within the meaning of the statute. There is no merit to either of these motions that were brought before it except for the purpose of avoiding the responsibility that was the result of the separation agreement of the parties and an order of the Court.

The Court finds absolutely no substance to the motion to modify child support.... The Court awards all attorney's fees and costs to the respondent.

On February 16, 1995, the mother filed an affidavit claiming attorney fees in the amount of $15,485 and costs in the amount of $984.82. She also filed a proposed written order reflecting the district court's oral ruling awarding fees and costs in all respects except for the inclusion of section 14-10-119, 5 C.R.S. (1997), as an additional basis for the award.

Thereafter, the father filed a motion objecting to the reasonableness of the amount of fees claimed by the mother, stating that no more than $8,000 would be reasonable. Additionally, the father objected to the proposed order because it included section 14-10-119 as a basis for the award when the court did not include this provision among its stated reasons for the award. The father did not specifically request a hearing on the reasonableness of the fees to be awarded.

The district court approved the proposed order without conducting a hearing, and reduced the fees from $15,485 to $10,000 without further explanation. The father appealed.

The court of appeals reversed, holding that despite the father's failure to prove a decrease in income, the district court should have made findings regarding the parties' current incomes and that the district court should have applied the guidelines to support its decision that the father had not met his burden of showing a substantial and continuing change of financial circumstances. The court of appeals reasoned that if the father was unwilling to be candid and disclose accurately his financial circumstances, then the district court should have calculated an amount representing the father's income by drawing reasonable inferences from the father's financial documents presented as evidence at the hearing.

On the issue of attorney fees, the court of appeals held that the district court failed to make adequate factual findings under section 13-17-102, 5 C.R.S. (1997), and under section 13-17-103, 5 C.R.S. (1997), which contains eight factors to consider for an award of attorney fees and costs under section 13-17-102. Finally, the court concluded that if the attorney fees were awarded under section 14-10-119, then the district court was required to determine, at a minimum, the parties' respective incomes. The court of...