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Colorado Supreme Court Opinions || January 11, 2016 Colorado Supreme Court -- January 11, 2016
 The Supreme Court of the State of Colorado 2016 CO 2
Supreme Court Case No. 14SC152
In re the Marriage of
Judgment Reversed January 11, 2016
Attorney for Petitioner: Boulder, Colorado
Attorney for Respondent: Denver, Colorado JUSTICE HOOD delivered the Opinion of the Court.
¶1        After a two-day permanent orders hearing in this divorce action, at which the parties presented extensive evidence regarding their finances, the trial court felt it lacked sufficient information to allocate attorneyâs fees under section 14-10-119, C.R.S. (2015), the provision governing such awards under the Uniform Dissolution of Marriage Act (UDMA). Therefore, the court chose to issue the decree dissolving the marriageâalong with permanent orders addressing parental responsibilities, child support, division of marital property, and spousal maintenanceâbut postponed its determination on attorneyâs fees. Approximately six months after the original hearing, the court conducted a hearing on fees. ¶2        During the gap between the original hearing and the fees hearing, Wifeâs counsel requested additional documents regarding Husbandâs fluid financial circumstances. Husband objected and requested a protective order, which the trial court issued, thereby confining its consideration of the partiesâ financial circumstances to the evidence that existed at the time of the original hearing. The court ultimately ordered each party to pay his or her own fees and costs. ¶3        Wife appealed from this order, and a division of the court of appeals reversed. It reasoned that because the permanent orders proceedings were not complete until entry of the fee award, evidence of the partiesâ finances should not have been âfrozenâ as of the date of the decree of dissolution, but instead assessed as of the date of the fees hearing. Thus, the court of appeals concluded the trial court should have permitted additional discovery in order to ensure an equitable determination of attorneyâs fees. ¶4        We disagree with the court of appealsâ conclusion, and instead hold that for the purpose of deciding whether to award attorneyâs fees under section 14-10-119, a trial court should consider the partiesâ financial resources as of the date of the issuance of the decree of dissolution or the date of the hearing on disposition of property, if such hearing precedes the date of the decree. Accordingly, we reverse and remand to the court of appeals to reinstate the trial courtâs protective order and its order instructing the parties to pay their own attorneyâs fees. I. Facts and Procedural History ¶5        In 2011, after eleven years of marriage and the birth of their three children, Petitioner Kendrik de Koning (Husband) and Respondent Melissa de Koning (Wife) squared off in an acrimonious dissolution proceeding. By the time the dust settled in 2012, the parties had expended $180,000 in attorneyâs fees and costsânearly forty percent of the value of their marital estate at the time the decree of dissolution entered. Ultimately, Wife incurred a total of more than $90,000 in attorneyâs fees and just shy of $9,500 in costs. Husband incurred the balance. ¶6&        After a temporary orders hearing in September 2011, the trial court ordered Husband to pay $20,000 to Wifeâs attorney to assist her with attorneyâs fees. The court also ordered Husband to pay Wife $8,500 per month in temporary unallocated family support, âunallocatedâ meaning the monthly sum was to encompass both spousal maintenance and child support. ¶7        The court then scheduled a two-day permanent orders hearing for March 2012. In the joint trial management certificate filed in advance of the hearing, both parties requested that the court address attorneyâs fees. Wife asserted she had borrowed $42,500 for fees and costs and expected to owe approximately $28,000 by the end of the trial and issuance of permanent orders; she also asserted she had no ability to pay those debts. Husband requested each party pay his or her own attorneyâs fees and costs. ¶8        At the outset of the March hearing, the court divided the allotted time evenly between the parties and instructed them to monitor their own time. Neither party objected. Though both parties had requested that the court address attorneyâs fees, each devoted little time to the issue at the hearing. ¶9        In April 2012, the trial court issued a decree dissolving the marriage and entered permanent orders. The court methodically allocated parental responsibilities, divided the marital estate, and directed Husband to pay Wife child support and maintenance. But the court did not resolve the issue of attorneyâs fees, noting that neither party had adequately addressed the issue at the March hearing. The court then set a second hearing six months after the first to allow the parties to present more complete evidence regarding the fees they had incurred, whether those fees were reasonable and necessary, and how they should be equitably divided. ¶10        Three months after the entry of the decree, Wife served Husband with a request for production of documents, demanding updated financial information. Specifically, she asked for documents related to his personal and business bank accounts and credit cards, his businessesâ financial reports, and copies of executed leases. ¶11        Husband moved for a protective order to block the request. He insisted that the partiesâ financial resources at the time of the permanent orders hearing in March, not at the time of the impending hearing in September, governed the fee determination. The trial court agreed with Husband and issued the protective order, reasoning the attorneyâs fees award was âpart and parcelâ of the final orders it had already issued. Therefore, the court rejected Wifeâs request for additional discovery, considering it irrelevant. ¶12        At the September fees hearing, Wife asked the court for a continuance and again urged the court to consider changes in the partiesâ financial resources since the March permanent orders hearing. She claimed Husbandâs mutual fund business had attracted a much larger investment pool in the intervening months and that his rapidly improving circumstances enabled him to pay her fees. The court again denied Wifeâs request to obtain updated financial information. ¶13        In its order allocating attorneyâs fees, the trial court reiterated its obligation to consider the partiesâ financial situation as of the time of the March hearing. It determined that Husbandâs share of the marital estate was much less liquid than Wifeâs and, although his income was significantly higher than Wifeâs, so too were his financial obligations resulting from the courtâs other orders. Consequently, the court ordered each party to pay his or her own fees and costs. ¶14        Wife appealed the protective order and the order denying her attorneyâs fees. She argued section 14-10-119 requires a court to consider the partiesâ âcurrentâ financial resources, and thus the trial court erred in prohibiting her from presenting evidence of changed financial circumstances at the time of the September hearing. Husband responded that because courts consider the marital property division and maintenance and attorneyâs fees awards in tandem, a continued hearing to address fees and costs should be predicated on the partiesâ financial resources as they existed on the date of the permanent orders hearing. ¶15        The court of appeals rejected the partiesâ assumption that two distinct hearingsâ a complete permanent orders hearing and a separate attorneyâs fees hearingâhad occurred. In re Marriage of de Koning, 2014 COA 4, ¶ 11, __ P.3d __. Instead, the court decided the latter hearing was merely an extension of the former. It held that until the trial court entered an order on attorneyâs fees, the permanent orders were incomplete, and updated evidence of the partiesâ finances âwas not only relevant but was necessary for the court to determine whether wife was entitled to fees under section 14-10-119.â Id. at ¶ 12. The court of appeals vacated the protective order, id. at ¶ 29, and reversed and remanded to the trial court to reconsider Wifeâs request for attorneyâs fees based on the partiesâ financial resources at the time of the hearing on remand, id. at ¶ 25. ¶16        We granted Husbandâs petition for certiorari.1 II. Standard of Review ¶17        We review a trial courtâs findings of fact for clear error or abuse of discretion, but we review the legal conclusions the trial court drew from those findings de novo. E-470 Pub. Highway Auth. v. 455 Co.,3 P.3d 18, 22 (Colo. 2000); accord In re Marriage of Gallegos & Baca-Gallegos, 251 P.3d 1086, 1087 (Colo. App. 2010) (âWe review the district courtâs decision to award attorney fees and costs for an abuse of discretion, but we review the legal conclusions forming the basis for that decision de novo.â). III. Analysis ¶18        The UDMA, §§ 14-10-101 to -133, C.R.S. (2015), contains separate sections governing the major financial components of a dissolution proceeding. Section 14-10-113 governs the disposition of marital property. Section 14-10-114 governs the award of spousal maintenance. Section 14-10-115 governs the payment of child support. And section 14-10-119 governs the award of attorneyâs fees. 2 ¶19        The UDMA requires the trial court âto make separate property, maintenance, and attorney fees orders based on separate considerations.â In re Marriage of Huff, 834 P.2d 244, 248 (Colo. 1992). Nonetheless, we have long recognized the statutory interrelationship of these separate computations. See In re Marriage of Jones, 627 P.2d 248, 251 (Colo. 1981) (â[W]here an appeal has been taken from the property division, maintenance and attorneyâs fee provisions of a dissolution of marriage decree as a whole, we have held that they must be considered together to determine whether the trial court abused its discretion.â). As the court of appeals has often said, the issues of property distribution, maintenance, and attorneyâs fees are âinextricably intertwined.â In re Marriage of Hill,166 P.3d 269, 272 (Colo. App. 2007) (quoting In re Marriage of Antuna, 8 P.3d 589, 595 (Colo. App. 2000)). ¶20        The fact that they are intertwined, however, does not resolve the issue before us. Therefore, we take this opportunity to clarify how these sections intertwine and what that means for a trial courtâs consideration of partiesâ financial circumstances when it conducts an attorneyâs fees hearing after the entry of the decree. ¶21        The UDMA and our case law contemplate a specific sequence in which the division of property, maintenance, and attorneyâs fees computations should occur. First, the court must divide the marital property. Huff, 834 P.2d at 248. It does so based on a number of factors, including the âeconomic circumstancesâ of the parties âat the time the division of property is to become effective.â § 14-10-113(1)(c). Critically, âproperty shall be valued as of the date of the decree or as of the date of the hearing on disposition of property if such hearing precedes the date of the decree.â § 14-10-113(5). This property division is final and generally non-modifiable. § 14-10-122(1)(a). ¶22        Second, the court must determine whether maintenance is necessary to provide for the reasonable needs of the party seeking spousal support. Huff, 834 P.2d at 248. Such a maintenance order âentered at the time of permanent ordersâ shall be established after considering the financial resources of the party seeking maintenance, including marital property apportioned to him or her. § 14-10-114(4), C.R.S. (2013).3 After calculating the maintenance award, the court may determine child support obligations. See § 14-10-115(5)(a)(I)(Y) (listing â[a]limony or maintenance receivedâ as a source of income to be considered for purposes of the child support guidelines). ¶23        Finally, the court may, in its discretion, order one party to pay the otherâs reasonable attorneyâs fees after considering both partiesâ âfinancial resources.â § 14-10-119; Huff, 834 P.2d at 248. Courts must consider a request for fees âin light of [section 119âs] equitable purpose.â In re Marriage of Aldrich, 945 P.2d 1370, 1378 (Colo. 1997). The purpose of any fee award under section 119 is to ensure neither party suffers âundue economic hardshipâ as a result of the dissolution. Id. at 1377; In re Marriage of Ikeler, 161 P.3d 663, 669 (Colo. 2007). ¶24        The statute allows the court to award attorneyâs fees âfrom time to time,â § 14-10-119, but nowhere does it define that phrase. Notably, the statute does not feature the word âcurrent.â This undercuts Wifeâs assertion that the UDMA establishes a test based on the partiesâ âcurrentâ financial circumstances (by which Wife means the circumstances that exist at the time of any hearing on attorneyâs fees). Wife presents a string of court of appeals decisions that she alleges support this proposition. But none of those cases implicated the question presented here or had need to consider the date to which âcurrentâ refers. Thus, despite using the word âcurrent,â those cases offer little help to Wifeâs argument or to our resolution of this case. Instead, this case presents for us an issue of first impression. ¶25        Though the statute lacks guidance on the meaning of âfrom time to time,â Colorado Rule of Civil Procedure 16.2, which governs court-facilitated management of domestic relations cases, offers some insight into the propriety of reopening discovery to obtain updated financial information, as requested by Wife here. Paragraph (f) provides that after an initial status conference, or as agreed to in a stipulated case management plan, each party may serve interrogatories and requests for production on the other. C.R.C.P. 16.2(f)(3). It also requires that all discovery âbe initiated so as to be completed not later than 28 days before [the] hearing.â C.R.C.P. 16.2(f)(5). The ruleâs statement of purpose and scope advises that it is intended to âprovide a uniform procedure for resolution of all issues in domestic relations cases that reduces the negative impact of adversarial litigation wherever possible.â C.R.C.P. 16.2(a). While the trial court retains discretion to grant discovery and tailor it to the particular needs of the case, id.; see also C.R.C.P. 16.2(f)(4), Rule 16.2 indicates a preference for limiting discovery in time and in scope in order to further the efficient resolution of domestic relations cases. ¶26        As demonstrated by the framework outlined above, awards of spousal maintenance and attorneyâs fees flow from the property distribution, which is typically the linchpin of financial permanent orders. When a trial court is required to revisit a property division, it must also reevaluate maintenance and attorneyâs fees awards in light of the updated property division, because the issues are interdependent. In re Marriage of Balanson,25 P.3d 28, 43 (Colo. 2001); see also Jones, 627 P.2d at 251â52; Hill, 166 P.3d at 272; Antuna, 8 P.3d at 595. But we have never indicated that the need for reevaluation works in both directionsâto the contrary, we have suggested that when a trial court reconsiders an attorneyâs fees award on remand, it need not reexamine the partiesâ financial resources. See Jones, 627 P.2d at 252 (â[W]hen neither party contests a trial courtâs division of property it is not necessary that the court be able to reconsider the property division in order to correct error in the provisions for maintenance and attorneyâs fees.â); accord In re Marriage of Rieger, 827 P.2d 625, 626 (Colo. App. 1992) (âThe permanent orders do reflect a thorough review of the partiesâ financial resources, and . . . the trial court need not reopen that issue on remand.â). ¶27        And, as we have previously stated, âan award of attorney fees must be reviewed in light of the partiesâ financial resources after the property division and any maintenance award.â Huff, 834 P.2d at 248; see also In re Marriage of Wells, 850 P.2d 694, 696 (Colo. 1993) (âWe hold that section 14-10-113(1)(c) requires a trial court to consider the economic circumstances of the respective spouses at the time any hearing relating to the division of marital property is held . . . .â (emphasis added)); In re Marriage of Renier, 854 P.2d 1382, 1386 (Colo. App. 1993) (detailing partiesâ financial circumstances as they existed âat the time of permanent orders,â and remanding for trial court to reconsider attorneyâs fees award in light of those earlier circumstances). ¶28        The centrality of property division to determining awards of maintenance and attorneyâs fees leads us to conclude that partiesâ financial circumstances must be assessed as of the date of the decree or the date of the hearing on disposition of property if such hearing precedes the date of the decree (here, the March hearing)â even if the attorneyâs fees hearing is postponed. This conclusion recognizes the fact that the attorneyâs fees and maintenance awards rely on the property distribution and must be revisited if it is discarded. ¶29        This conclusion also reflects a simple truth of divorce proceedings: once the decree is entered, the marriage is dissolved. Consideration of the partiesâ financial resources as of the date the marriage ended is logical. After that decree is issued, the parties are no longer married, and there is no longer a reason to consider their âeconomic livesâ as âclosely intertwined,â see § 14-10-114(1); it is therefore appropriate for an assessment of the partiesâ financial circumstances as of that date to inform not only the property division, but also any attorneyâs fees award, even if an attorneyâs fees hearing occurs after the property disposition hearing and entry of the dissolution decree. ¶30        Furthermore, practical considerations militate against adopting the court of appealsâ approach. Prolonging divorce litigation is particularly undesirable because it increases the emotional toll on parties and their children. See § 14-10-102(2)(b) (stating that an underlying purpose of the UDMA is â[t]o mitigate the potential harm to the spouses and their children caused by the process of legal dissolution of marriageâ). Permitting additional discovery and renewed evaluation of the partiesâ financial circumstances, as Wife requested here, would impose added emotional costs on the parties by allowing settled issues to be re-litigated.4 ¶31        Of course, as a matter of practice, these situations should be relatively rareâcourts should endeavor to hear all issues incident to a marital dissolution at a single permanent orders hearing and enter complete orders that resolve all issues before the court. The Colorado Rules of Civil Procedure also endorse this approach. C.R.C.P. 121 § 1-22, cmt. 2 (âUnless otherwise ordered by the court, attorney fees under C.R.S. 14-10-119 should be heard at the time of the hearing on the motion or proceeding for which they are requested.â). This will bring about finality and avoid the precise type of complication that arose here. ¶32        Nonetheless, the trial court correctly limited its consideration of the partiesâ financial resources to those that existed at the hearing in March. IV. Conclusion ¶33        We hold that for the purpose of deciding whether to award attorneyâs fees under section 14-10-119, a trial court should consider the partiesâ financial resources as of the date of the issuance of the decree of dissolution or the date of the hearing on disposition of property, if such hearing precedes the date of the decree. Accordingly, we reverse and remand to the court of appeals to reinstate the trial courtâs protective order and its order instructing the parties to pay their own attorneyâs fees. 1 We granted certiorari to review the following issue: Whether the court of appeals erred when it reversed the trial court and held that when a dissolution-of-marriage permanent orders hearing is held, and the issue of an award of attorneyâs fees pursuant to section 14-10-119, C.R.S. (2013), is not heard until a later date, the court must consider the partiesâ financial circumstances as they exist at the date of the later attorneyâs fees hearing, and not the date of the permanent orders hearing. 2 Because marriage dissolution proceedings are civil cases, it is permissible to award attorneyâs fees under section 14-10-119, under section 13-17-102, C.R.S. (2015), which generally governs the award of attorneyâs fees in civil cases, or under both provisions. In re Marriage of Aldrich, 945 P.2d 1370, 1377 (Colo. 1997). Only section 14-10-119 is at issue in this case. 3 Effective January 1, 2014, the maintenance statute includes non-presumptive guidelines for amount and duration of support. § 14-10-114, C.R.S. (2015). Subsection (3)(a)(I)(B) requires that a courtâs maintenance determination include a finding regarding the marital property apportioned to each party. Subsection (3)(d) states that the trial court shall award maintenance only âif it finds that the spouse seeking maintenance lacks sufficient property, including marital property apportioned to him or her, to provide for his or her reasonable needs.â Thus, the changes to the maintenance statute do not alter the sequence we describe here. 4 Our holding applies in the limited context of deciding whether to award attorneyâs fees when entering permanent orders. We do not consider an attorneyâs fees request in the context of a post-decree motion to modify. These opinions are not final. They may be modified, changed or withdrawn in accordance with Rules 40 and 49 of the Colorado Appellate Rules. Changes to or modifications of these opinions resulting from any action taken by the Court of Appeals or the Supreme Court are not incorporated here. Colorado Supreme Court Opinions || January 11, 2016 Back |