2014 COA 147
Colo. Ct. App.2014Background
- Husband Nevan Corak and Amy Corak entered into a prenuptial agreement identifying preexisting separate property, including the Shoshone property, to remain separate.
- One month after marriage they bought the Pinyon property and husband pledged the Shoshone property as collateral for a home equity line of credit used for the Pinyon down payment and remodeling.
- From the line of credit, $16,000 was allocated to retire one of Amy's premarital debts; the parties agreed Amy would make payments toward the line of credit.
- Amy testified she paid all line-of-credit payments during the marriage, including amounts beyond retiring her separate debt, and paid down other premarital debts.
- Husband testified he paid down his separate debt but did not disclose it in the prenuptial agreement; the trial court found a portion of Shoshone property became marital due to collateral use.
- On appeal, the court reverses the portion of the trial court’s ruling that treated part of Shoshone as marital and remands for reallocation, while also addressing abandonment of the related argument about funds used to retire Amy's separate debt.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did pledging separate property as loan collateral make it marital property? | Wife argued Shoshone became marital because pledged for the marital loan. | Corak contends Shoshone remained separate; no transfer of title or commingling. | No; pledged collateral did not convert Shoshone into marital property. |
| Should funds Amy spent to retire her separate debt be included in the marital estate? | Husband sought restoration of those funds to the marital estate for unequal division. | Husband abandoned this argument; court should not adjust for those funds. | Husband abandoned the argument; no adjustment on remand. |
Key Cases Cited
- In re Marriage of Krejci, 297 P.3d 1035 (Colo.App. 2013) (state law on property classification and de novo legal review)
- In re Marriage of Cardona, 316 P.3d 626 (Colo. 2014) (first-impression issue; deference to factual findings; collateral issues)
- In re Marriage of Jorgenson, 143 P.3d 1169 (Colo.App. 2006) (define marital vs. separate property; division of marital estate)
- Layman v. Layman, 742 S.E.2d 890 (Va. App. 2013) (use of separate property as collateral for marital debt not transmuting property)
- Gardner v. Harris, 923 P.2d 96 (Alaska 1996) (separate bonds used for marital purposes remained separate)