Lead Opinion
Opinion by
Jaime Felipe Castro (husband) appeals from the permanent orders entered in conjunction with his legal separation from Marta Doris Cardona (wife). We affirm in part, reverse in part, and remand for further proceedings.
I. Property Distribution
Pursuant to section 14-10-118(1), C.R.S.2010, a trial court divides marital property, without regard to marital misconduct, in such proportions as it deems just, considering the factors listed in the statute. A trial court has great latitude to effect an equitable distribution based upon the facts and cireum-stances of each case, and we will not disturb the court's decision unless there has been a showing of a clear abuse of discretion. In re Marriage of Balanson,
When dividing marital property, the trial court must first set apart separate property to each spouse. § 14-10-113(1); In re Marriage of Rodrick,
A. The Marital Home
Husband contends that the trial court abused its discretion by setting aside to wife $80,000 of the proceeds from sale of the marital home as reimbursement for her contribution of separate property toward purchasing the home. We agree.
Marital property does not include property that a party acquired prior to the marriage. See § 14-10-113(2), C.R.S.2010; In re Marriage of Stedman,
Here, the trial court awarded wife the first $80,000 in proceeds from the sale of the marital home as her separate property and then divided the remainder of the proceeds between the parties as marital property. Wife testified that during the marriage she sold a condominium that she had purchased before marriage and placed the $100,000 proceeds from that sale into a joint account with husband, and that the funds were then used to purchase the marital home and for lаnd-seaping on the home. Wife further testified that the condominium had increased in value about $60,000 during the marriage and before sale. Wife did not present evidence that the parties intended for the proceeds from the sale to remain her separate property. Although, as wife notes, the record is not complete, she indicates that it is only part of husband's testimony, and not hers, that is missing. Additionally, the trial court made
Accordingly, on remand the trial court must reconsider the division of the marital home. Although in making an equitable division of this asset, the court may consider wife's contribution of her separate property, it may not set aside her contribution as separate property without further findings explaining why the presumption that wife intended to make a gift to the marriage does not apply. Additionally, the court should consider the marital increase in value of wife's separate property before she sold it. See In re Marriage of Burford,
Reconsideration of this asset will require the trial court to reexamine the entire property division. See In re Marriage of McCadam,
Although we have remanded for reconsideration of the property division, we address other property issues raised by husband to the extent they may arise again on remand. See In re Marriage of Simon,
B. Husband's Separate Property
Husband further contends thаt the trial court abused its discretion in valuing the marital portion of his separate property by considering not only the increase in value of the property during the marriage, but also the amount of marital funds that were used to pay down the mortgage. We disagree.
When a spouse uses marital income to pay down the debt on separate property, thereby increasing its equity, the increased equity is equitably divided in the marital property division. See In re Marriage of Burford,
We are not persuaded otherwise by husband's contention that the decrease in debt should not have been considered because he used rental income from the property to pay down the mortgage. Income earned from separate property during the marriage is marital property. See id. at 558. Thus, the rental income that husband used to pay down the mortgage was marital income, and the trial court did not abuse its discretion by considering the mortgage reduction.
We are also not persuaded otherwise by husband's contention that the trial court's treatment of the parties' separate property was 'inequitable because the mortgage on wife's separate property was also paid during the marriage. Husband does not cite to a portion of the record where he raised this contention in the trial court, and our review of the record indicates that he did not argue at the hearing that the court should consider that wife's mortgage was reduced using marital funds. Accordingly, we will not consider that contention on appeal. See In re Marriage of Atencio,
C. Husband's Vacation and Sick Leave Time
Husband further contends that the trial court erred by dividing the value of his acerued vacation and sick leave time as part of the marital estate. We agree.
Husband testified that he had accrued vacation and sick leave at his employment and that he would be paid for the unused time only if and when he left his job. He further testified that he accumulated the time, in
We review de novo the legal question whether husband's accrued leave time is a marital asset that is divisible on dissolution. See In re Marriage of Williamson,
The question presents an issue of first impression in Cоlorado. Courts in other jurisdictions are split on the issue. Compare In re Marriage of Abrell,
In Colorado, "enforceable contractual rights constitute property, [while] interests that are merely speculative are mere expectancies." In re Marriage of Balanson,
Analogizing to these authorities, we conclude husband's accumulated unused leave time is more akin to an employee's unvested stock options or an interest in a discretionary trust, and is thus not property subject to distribution on dissolution. It is not just the value of the unused leave time, which is calculated based on husband's salary, that is uncertain, but the very existence of the time. If husband becomes seriously ill, he may have to use all his accrued time. Thus, husband's right to be paid for the accrued time is not vested, but rather is uncertain and could disappear completely. As stated recently by the Illinois Supreme Court:
[The husband] had no present right to be paid for his sick and vacation days absent retirement or termination of his employment. - Further, while [he] had acerued 115 sick days and 42 vacation days at the time of trial, those days may or may not remain at the time [he] retires or terminates his employment. If [he] uses any of the sick or vacation days awarded to him prior to retirement or termination of his employment, [(he] will never collect payment for those days. In that case, the award of the*524 value of those days to [him] in the property distribution would be fllusory. As [he] has argued, if this court reinstates the trial court's finding that the accumulated vacation and sick days are marital property, [his] share of the marital estate will be diminished every time he uses a sick day or vacation day before his retirement or termination, while [the wife's] cash payout will remain the same. Consequently, we find that although [the husband] accumulated his vacation and sick days during his marriage to [the wife}, the accumulation of those days had only a future value that was indeterminate and speculative. For that reason, we find that the accrued vacation and sick days differ from pension plans, stock options and deferred compensation.
In re Marriage of Abrell,
The Maryland court in Thomasian similarly distinguished acerued leave time from other types of deferred compensation, which are considered marital property:
We just are not persuaded that accrued holiday and vacation entitlement is the same as a pension or retirement benefits, а form of deferred compensation; since it replaces wages on days when the worker does not work, it is really only an alternative form of wages. It need not be liquidated by the payment of cash; it may be, and often is, dissipated when the person entitled to do so, takes vacation or holiday time. Thus, it is far from as tangible as, and much more difficult to value, not to mention more personal than, a pension or retirement benefits.
Thomasian,
We are not persuaded otherwise by cases from other jurisdictions in which the distribution of the value of a spouse's acerued leave was deferred until the spouse retired and became entitled to payment for the leave. See Arnold,
Here, wife and the child were relocating to Florida, and husband testified that he had banked vacation time, in part, in anticipation of needing it to exercise parenting time. Under these cireumstances, not only would it be undesirable to create an incentive for husband not to accumulate leave time, it would also be particularly speculative to award wife the value of the leave time at dissolution when husband had specific plans to use it in order to exercise parenting time with the parties' child. Accordingly, we reject a delayed distribution approach with regard to husband's accrued leave time, and instead conclude that due to the uncertain nature of this bеnefit, the better-reasoned approach is not to treat a spouse's accrued leave time as marital property on dissolution. See In re Marriage of Abrell,
Husband further contends that the trial court's valuation of wife's vehicle was not supportеd by the evidence. We agree that further findings are necessary as to this asset.
In dividing marital property, the court must determine the approximate current value of the property owned by the parties. In re Marriage of Zappanti,
Here, the trial court valued wife's vehicle at $5,500. Husband testified that he believed the vehicle was worth $20,000 and that the parties owed about $8,000 on it. Wife testified that the vehicle was worth $11,000 to $12,000, but did not indicate what the parties owed on the vehicle at the time of the hearing. Althоugh the court could determine its own reasonable value for the vehicle, the court made no findings here explaining the basis for the $5,500 value. Thus, on remand, the court should make more specific findings sufficient to give this court a clear understanding of the basis of its order. See id.
II. Maintenance
Because the issues of property division and maintenance are inextricably interwoven, the trial court must reconsider maintenance in conjunction with its review of the property distribution on remand. See In re Marriage of Nevarez,
III. Child Support
Because we are remanding for a redeter-mination of property division and maintenance, we also remand for a redetermination of child support. See § 14-10-115(5)(a)(D), (¥), C.R.S.2010 (providing that maintenance received is includable in gross income for purposes of applying the child support guidelines). But because the issues husband raises with respect to child support are unaffected by our cоnclusions as to the other issues husband raises on appeal, and are unlikely to be affected directly by the redeterminations of property division and maintenance on remand, we will address them.
We review child support orders for abuse of discretion because the issue of the parents' financial resources is factual in nature. In re Marriage of Atencio,
A. Husband's Income
Husband contends that the trial court erred in calculating his income for child support purposes. We disagree.
Child support obligations are determined by applying the statutory guideline in section 14-10-115(7), C.R.S.2010, to the combined adjusted gross incomes of the parents. See In re Marriage of Nimmo,
Here, the trial court used husband's actual gross income to calculate child support without deducting the amount he pays into his employer's cafeteria plan to pay for the children's day care and health insurance. We reject husband's argument that this was error. The child support statute does not exclude such amounts, which are part of husband's wages that he elects to set aside for a particular purpose, from his gross income. Husband cites no authority, and we are not aware of any, that would exclude these amounts from a parent's income for child support purposes. To the contrary, the child support statute defines income very broadly to include sources beyond those specifically listed in the statute. See In re A.M.D.,
Thus, we perceive no error by the trial court in calculating child support using husband's gross income. Contrary to husband's argument, the court did not ignore his contribution to the children's day care. Rather, the court properly allocated this expense according to the parties' incomes, as provided by section 14-10-115(9)(a), C.R.98.2010.
B. Travel Expenses
Husband further contends that the trial court erred in refusing to award him his travel expenses for exercising parenting time. We disagree.
First, husband provides no legal basis for an award of his travel expenses. While the child support statute provides that the cost of transporting a child, or a child and a parent if the child is under twelve years of age, between the homes of the parents shall be divided in proportion to income, there is no such provision relating to a parent's expenses. See § 14-10-115(11)(a)(II), C.R.S. 2010.
Additionally, husband has not provided a complete record of the evidencе presented in the trial court. It is the appellant's responsibility to designate the record on appeal, including such parts of the trial proceedings as are necessary for purposes of the contentions on appeal. People v. Wells,
Here, the final day of testimony was apparently not recorded and husband has not followed the procedure in C.AR. 10(c) to reconstruct the record. Accordingly, we are unable to review his contention that "there was no evidence presented whatsoever" that travel expenses were paid by his employer, and we must assume that the missing record would support the court's order.
C. Dependency Exemption
Husband contends that the trial court erred by allocating the dependency tax exemption for the children inconsistently with its previous order and contrary to seetion 14-10-115(12), C.R.S.2010. We agree, and remand for reallocation of the exemption in accordance with the statute.
Pursuant to section 14-10-115(12), a trial court must divide the dependency tax exemption between the parties in proportion to their contributions to the costs of raising the child, which means according to the percentage of income attributed to each parent for child support purposes. See S.F.E. in Interest of T.I.E.,
Here, at husband's request, the trial court entered an order before the hearing allocating the dependency exemption to him for both children in even numbered years аnd for one child in odd numbered years. The order does not indicate that it is intended to
We acknowledge that the trial court is free to revise an interlocutory order on final orders. See Pearson v. Dist. Court,
IV. Attorney Fees
Husband further contends that the trial court abused its discretion by awarding wife $10,000 in attorney fees as a sanction against him for nondisclosure. We agree.
C.R.C.P. 16.2(J) permits the trial court to impose appropriate sanctions if a party fails to comply with any provision of C.R.C.P. 16.2. "Considerable discretion is vested in the trial court to determine whether noncompliance with mandatory pretrial procedures justifies the imposition of sane-tions against the nonecomplying party." People v. Milton,
Here, the trial court awardеd wife attorney fees under C.R.C.P. 16.2 and 37. We reject wife's contention that fees were also awarded under section 14-10-119, C.R.S.2010. Although the court cited this statute in an introductory paragraph of its order, it did not cite the statute as a basis for the attorney fees award, and it made no accompanying findings concerning the relative financial circumstances of the parties to support an award under section 14-10-1119.
The court found that sanctions in the form of attorney fees were appropriate because of husband's "substantial lack of disclosure throughout this case." The trial court reсord does not support this finding, however. During the pendency of the case, between the time that husband filed his certificate of compliance with C.R.C.P. 16.2(e) mandatory disclosures and the permanent orders hearing, wife filed one motion to compel relating to discovery or disclosure issues. That motion was granted and wife was contemporaneously awarded the attorney fees she sought. Wife filed no other motions relating to nondisclosure. Although wife's attorney noted at the beginning of the hearing that husband's counsel did not cooperate in filing a joint trial management certificate, the record reflects that the parties filed separate certificates right before the hearing. Wife indicated in her certificate the difficulties in conferring with husband. She did not request sanctions or fees, however.
Accordingly, because the trial court's basis for sanctioning husband is not supported by the record, the resulting award of attorney fees to wife cannot stand.
We do not view husband's appeal as lacking substantial justification. Thus, we deny wife's request for attorney fees incurred on appeal under section 18-17-101, C.R.S8.2010.
The portions of the judgment allocating the dependency tax exеmption for the children, dividing the marital property, awarding maintenance, awarding child support, and assessing attorney fees as a sanction against husband are reversed. The case is remanded for further proceedings on the issues of property division, maintenance, and, to the extent affected by any changes in maintenance, child support, including the dependen-ey exemption, as provided herein. In all other respects, the judgment is affirmed.
Notes
. We acknowledge that this issue is a difficult one. In light of the differing opinions on the
Concurrence in Part
concurring in part and dissenting in part.
I concur in all but part I(C) of the majority's opinion. Initially, I acknowledge that the issue of how to treat unused sick and vacation time in a dissolution action is a very difficult one to resolve. See Lesko v. Lesko,
Nonetheless, like the trial court, I would hold that an employee's vacation and sick time accrued during the course of a marriage is a marital asset subject to division in a dissolution of marriage case.
The majority aptly notes the split of authority in other jurisdictions regarding this issue and finds persuasive those cases holding an employee's accrued interest in sick and vacation time not to be a marital asset. The majority reaches this conclusion based on "the uncertain nature of this [sick and vacation leave] benefit." The majority characterizes the benefit as having an "uncеrtain nature" due to (1) the possibility that husband may have to use all his accrued time in the event of a serious illness, and (2) husband's present plan to use accrued leave time for exercising parenting time with the parties' child.
I disagree that an accrued leave benefit is too speculative to be treated as a marital asset. As the majority acknowledges, in Colorado, we have recognized, as property rights subject to division in a dissolution action, analogous interests involving a right to future enjoyment but subject to divestment and even uncertain value. See, e.g., In re Marriage of Balanson,
Further,
[the essence of leave is that it is a benefit of employment and, whether considered a benefit in addition to salary, or somehow an aspect of salary, it has independent value. If taken during marriage, leave time devoted to vacation or to recovery from illness benefits the community. If not taken, leave that accumulates will be available to benefit the community in the future. If the community ends, the accumulated leave attaches to the employee. Unless some equitable distribution is made or the asset is divided upon dissolution of marriage, the employee takes the full community asset and benefit,. We see no policy reason or persuasive rationale why the employee, Husband in the case before us, should end up with the full value of the community asset or why the leave assets should not be divided.
Arnold v. Arnold,
Finally, the nature of an accrued leave benefit is not too speculative to be valued. An accrued leave benefit may rationally be valued based on the employee's present salary; the possibility that its value could increase or decrease after it is awarded is of no moment. See In re Marriage of Abrell,
For these reasons, I perceive no error in the trial court's treatment of husband's accrued leave time as marital property.