Marriage of Seely, In re, 82CA0579

• Decision Date: 17 May 1984
• Docket Number: No. 82CA0579,82CA0579
• Citation: 689 P.2d 1154
• Parties: In re the MARRIAGE OF Arthur W. SEELY, Appellee and Cross-Appellant, and Carrie Glenn Seely, Appellant and Cross-Appellee. . I
• Court: Colorado Court of Appeals

Page 1154

689 P.2d 1154

In re the MARRIAGE OF Arthur W. SEELY, Appellee and Cross-Appellant and Carrie Glenn Seely, Appellant and Cross-Appellee.

No. 82CA0579.

Colorado Court of Appeals Div. I.

May 17, 1984.

Rehearing Denied June 14, 1984.

Certiorari Denied Nov. 5, 1984.

Karsh & Fulton, P.C., Alan E. Karsh, Denver, for appellee and cross-appellant.

Richard O. Pittam, Denver, for appellant and cross-appellee.

PIERCE, Judge.

Both the husband and wife appeal from permanent orders entered in a dissolution of marriage proceeding. The permanent orders were entered after the trial court had granted the wife's C.R.C.P. 60(b) motion to set aside the property division provisions of a separation agreement that had previously been incorporated into the dissolution of marriage decree. We affirm the orders of the trial court.

The parties met in California in early 1975 and shortly thereafter began living together. In December 1975, they moved to Denver, where the husband was employed as a paramedic and the wife as an emergency medical technician. When they arrived in Denver, both of the parties were in their early twenties and neither had assets of substantial value.

In early 1976 the husband began investing in real estate in the Denver area. Initially, he acquired several single family residences that were badly in need of repair. Although both of the parties worked on the properties, title to the properties was held solely in the husband's name.

The small down payment on the first property came from the husband's savings account. Thereafter, over a period of time, the husband's mother contributed a total of $10,000 to the husband's real estate ventures and, in exchange, received a fifty percent partnership interest in all the real estate the husband acquired. Additionally, funds were obtained from bank borrowings against equity and from the sale of properties earlier acquired.

On May 26, 1978, the parties were married. By this time, the husband had acquired a number of apartment buildings, various other rental properties, and a single family residence in which the parties lived. In September 1978, the husband was injured in an automobile collision and was unable to continue working as a paramedic. Thereafter, he worked full time on his real estate ventures.

In December 1978, the husband transferred title to all of the properties he had acquired, including the parties' residence, to Real Equity Investments, Inc., (R.E.I.) a corporation that he formed with his half brother. The husband and his half brother each received fifty percent of the stock of R.E.I.; however, the husband's shares were subject to the fifty percent partnership interest of his mother. A stock offering circular prepared shortly after R.E.I. was formed contained an unaudited balance sheet that posited a stockholder's equity of $1,507,055. The circular noted that 100 shares of stock had been issued and that 50 additional shares were being offered at $15,000 per share.

On April 6, 1979, the husband filed a petition for the dissolution of the parties' marriage. Several days later, the wife accompanied the husband to his attorney's office, where she signed a waiver of service and a separation agreement. This agreement provided, among other things, that the husband would retain as his separate property the R.E.I. stock and would pay the wife maintenance of $1,000 per month for a period of ten months. The parties contemplated that the maintenance payments would permit the wife to complete nursing school. The separation agreement further provided that each party would retain the household furniture and personal effects in their respective possessions; that the husband would retain all funds in his separate bank accounts ($11,000) and an encumbered 1976 Porsche; and that the wife would receive a small sum in the parties' joint bank account. The only other asset of the parties was a coin collection which the husband had acquired before the parties met.

On July 10, 1979, a hearing on permanent orders was held before a referee. The wife did not appear at the hearing and was unrepresented by counsel. No financial affidavits were filed by the husband as required by a local rule of the court, and no testimony or other evidence was introduced concerning the financial condition of the parties or the circumstances surrounding the execution of the separation agreement. After brief pro forma testimony by the husband, the referee recommended that a dissolution of marriage decree be granted, and that the separation agreement, found to be not unconscionable, be incorporated into the decree. Although the decree was dated July 10, 1979, and was apparently signed and entered by a district court judge (not Judge Rothenberg) on that date, it was not entered in the registry of actions until August 22, 1979.

After the dissolution of marriage decree was entered, the wife continued to live in the marital residence, and the husband claimed that he was entitled to receive $650 per month from the wife as rental for the property. The husband offset this amount against the $1000 per month maintenance payments provided for in the separation agreement and ultimately only paid the wife $4,299 in maintenance.

On January 25, 1980, the wife consulted an attorney regarding her right to collect the balance of the $10,000 in maintenance payments provided for in the separation agreement. At this time the wife was in nursing school and had no other source of income. On March 12, 1980, after her attorney had investigated the matter and upon his recommendation, the wife filed a motion for relief from judgment pursuant to C.R.C.P. 60(b) to set aside the provisions of the separation agreement.

In granting the wife's motion, the trial court found that, at the time the separation agreement was executed, the wife was in an extremely agitated emotional state, had no understanding of her legal rights or of the value of the parties' assets, and erroneously believed that the husband's attorney was representing both of the parties. The trial court further found that the husband had deliberately misled the wife both as to her legal rights and the value of the R.E.I. stock, and had perpetrated a fraud upon the court by not filing a financial affidavit or otherwise disclosing the nature and extent of his assets at the hearing on permanent orders.

In entering new permanent orders, the trial court rejected the wife's claim that the parties had entered into a common law marriage when they moved to Denver; however, the court did find that, both before and after the parties were married, the wife had made substantial contributions to the husband's acquisition of the real estate that was then exchanged for the R.E.I. stock. The trial court further determined that the net equity value of the husband's real estate on the date of the parties' marriage, excluding the fifty percent partnership interest of his mother, was $80,700; that the value of other non-marital assets of the husband on that date was $15,000; and that the value of the husband's R.E.I. stock on the date the decree was executed, again excluding the fifty percent interest of his mother, was $375,000. Thus, the court determined that the value of the husband's non-marital assets had increased in value during the parties' marriage by $279,200 and that this increase in value was marital property subject to division between the parties pursuant to § 14-10-113(4), C.R.S.

Concluding that the husband had committed a fraud upon the court, the trial court set aside the separation agreement based on C.R.C.P. 60(b)(3) and (5). Then after noting that no children had been born of the marriage and that the wife had no significant assets, the court awarded the husband the R.E.I. stock valued at $375,000 and the wife the sum of $135,301, payable by the husband within 90 days of the court's order. The court also directed the husband to pay the wife's attorney $27,000 in legal fees.

Because we conclude that the trial court's reliance on C.R.C.P. 60(b)(5) was justified, we make no determination as to the propriety of the trial court's reliance on C.R.C.P. 60(b)(3) or its determination that the husband had committed a fraud upon the court.

I.

A. Time Limits of C.R.C.P. 60(b)

The husband contends here that the wife's motion for relief from judgment was barred by the six-month time limitation applicable to C.R.C.P. 60(b)(1) and (2), and that the trial court improperly circumvented this six-month time limitation by relying on other provisions of the rule. We disagree.

Once property division provisions of a separation agreement have been incorporated into a dissolution of marriage decree, they may not be set aside or modified unless the conditions of C.R.C.P. 60 are met. In re Marriage of Stroud, 631 P.2d 168 (Colo.1981). Further, if relief from judgment is sought on the grounds set forth in C.R.C.P. 60(b)(1), i.e., "mistake, inadvertence, surprise or excusable neglect," or C.R.C.P. 60(b)(2), "fraud ... misrepresentation or other misconduct of an adverse party" a motion therefor must be filed within six months of the entry of judgment or it is barred. Schaffer v. District Court, 172 Colo. 43, 470 P.2d 18 (1970). Motions under other provisions of C.R.C.P. 60(b) must be filed within a "reasonable time."

Also, C.R.C.P. 60(b)(5) "is a residuary clause covering extreme situations not covered by the preceding clauses in the Rule" and reliance on that portion of the rule is precluded if the only grounds for relief established are covered by clause (1) of the rule. Atlas Construction Co., Inc. v. District Court, 197 Colo. 66, 589 P.2d 953 (1979). Further, a motion under C.R.C.P. 60(b) cannot be treated as an independent action to obtain equitable relief from a prior judgment. Atlas Construction Co., supra. Thus, where the only grounds for relief established are those covered by either C.R.C.P. 60(b)(1) or (2), the six-month time limitation applicable to these...