In re Medeiros

534 P.3d 531

2023 COA 42 M

IN RE the MARRIAGE OF Kirsten MEDEIROS, n/k/a Kirsten Scheig, Appellee, and Matthew Douglas Medeiros, Appellant.

Court of Appeals No. 21CA1317

Colorado Court of Appeals, Division II.

Announced May 18, 2023

As Modified on Denial of Rehearing August 31, 2023

Caplan and Earnest, LLC, Craig A. Weinberg, Boulder, Colorado, for Appellee

Aitken Law, LLC, Sharlene J. Aitken, Denver, Colorado, for Appellant

Opinion by JUDGE WELLING

¶ 1 Matthew Douglas Medeiros (husband) appeals the district court's judgment dissolving his marriage with Kirsten Scheig, formerly known as Kirsten Medeiros (wife).

¶ 2 This case raises the question of a district court's authority to reopen the evidence after the conclusion of a permanent orders hearing but before the court has issued permanent orders. Husband sought to reopen the evidence eight months after the permanent orders hearing but before the court had issued permanent orders or dissolved the parties’ marriage. He did so on the basis that wife's economic circumstances had substantially changed in the intervening eight months due to an inheritance (or expected inheritance) that hadn't been (and couldn't have been) anticipated at the time of the permanent orders hearing. The court rejected husband's request to reopen on the grounds that it lacked the authority to do so. We conclude that this was error.

¶ 3 Husband also challenges the district court's characterization and valuation of certain marital property, as well as its award of maintenance to wife. We conclude that the district court properly characterized and valued the property but erred in its determination of maintenance. Accordingly, we affirm the judgment in part, reverse the judgment in part, and remand the case for further proceedings.

I. Background

¶ 4 In 2019, wife petitioned the district court to dissolve the parties’ twenty-five-year marriage.

¶ 5 The district court held a two-day permanent orders hearing on June 30 and July 1, 2020. At the hearing, the parties vigorously contested the characterization, valuation, and division of property, as well as wife's request for maintenance and her request for an award of attorney fees under section 14-10-119, C.R.S. 2022. Following the close of evidence, the court took the case under advisement and informed the parties that, given the extensive evidence and the numerous upcoming trials on the court's docket, it would be "a long time" before the court would enter a final order.

¶ 6 In March 2021, before the court issued its final orders dissolving the marriage, husband filed a motion to reopen the evidence. As discussed in more detail below, he asserted that, in February 2021 (seven months after the permanent orders hearing), wife's father had died, and husband alleged that wife was an heir to her father's estate and was entitled to a substantial inheritance. In the motion to reopen, husband requested that the court direct wife to provide additional information on her inheritance and hold a hearing to consider the evidence of wife's changed economic circumstances. Concluding that it lacked the authority to reopen the evidence, the court denied husband's motion.

¶ 7 In May 2021, about three weeks after denying husband's motion to reopen, the district court issued a decree dissolving the marriage and entered permanent orders. The court divided the parties’ marital estate by allocating each party net equity worth over $1 million. In doing so, the court awarded husband his ownership interest in Institute for Wealth Management Holdings, Inc. (IWH)—a financial investment services company he operated and in which he owned an interest. It valued his interest in IWH at $1,451,500. The court also found that husband had been involved in a car accident a few months before wife filed the dissolution petition. It determined that, although husband hadn't yet filed a personal injury lawsuit, any judgment or settlement from this potential claim was marital property, and it awarded wife 25% of any recovery husband eventually received.

¶ 8 Moving to maintenance, the district court found that wife's income as a real estate agent had recently decreased but that her earning ability had rebounded. The court found that wife could earn a "gross income" of $100,000 per year (or $8,333 per month). It then deducted her business expenses and attributed to her an income of $5,333 per month for the purpose of maintenance. The court found that husband had an income of $19,538 per month, and it ordered him to pay wife maintenance in the amount of $4,200 per month for fifteen years.

¶ 9 The court also denied wife's request for attorney fees under section 14-10-119.

II. Motion to Reopen the Evidence

¶ 10 Husband contends that the district court erred by denying his motion to reopen the evidence to consider a change in wife's economic circumstances, which occurred after the permanent orders hearing but before the court issued the decree and final orders. We agree that the district court erred.

A. Additional Facts

¶ 11 In husband's motion to reopen, he contended that wife was an heir to her recently deceased father's estate and stated that, while wife had failed to disclose to him any details of her anticipated inheritance, he believed wife's interest in her father's estate "is substantial, and may exceed the net value of the marital estate," which had been valued at over $2 million. Husband acknowledged that wife's inheritance was her separate property but argued that her right to a substantial inheritance was a relevant "economic circumstance" that would have a material effect on the court's yet to be decided final orders on property division, maintenance, and attorney fees. He asked the court to order additional disclosures and accept additional evidence on wife's inheritance and to consider this economic change and its impact on the issues pending before the court.

¶ 12 In response, wife acknowledged that her father had died and didn't dispute husband's allegation that she was entitled to receive an inheritance. However, she urged the court to deny the motion, arguing that there had been no actual change to her economic circumstances because, at the time of husband's motion, she hadn't yet received any inheritance. She further argued that, when considering her economic circumstances, the court must focus on her circumstances as of the date of the permanent orders hearing.

¶ 13 The district court denied the motion to reopen the evidence. The court noted that property division, maintenance, and attorney fees are intertwined and that property issues are generally determined at the time of the hearing. The court stated that neither party gave it "any authority that allows the trial court to reopen a case that is not final in order to consider new evidence of changed circumstances, even though the changed circumstances (the inheritance) would have been relevant at the permanent orders hearing." It also noted that reopening the evidence "would open the door to any number of changes that would have to be considered while the court was drafting its order and start a never[-]ending chain of events."

¶ 14 The district court later divided the marital estate and awarded wife maintenance based on the evidence from the permanent orders hearing without reference to wife's inheritance.

B. Discussion

¶ 15 In a dissolution of marriage proceeding, the court must equitably divide the parties’ marital property, and it may award maintenance or attorney fees. See § 14-10-113(1), C.R.S. 2022; § 14-10-114(2), C.R.S. 2022; § 14-10-119. To determine these issues, the court considers, as relevant here, each party's economic circumstances and resources. § 14-10-113(1)(c) ; § 14-10-114(3)(a)(I)(C), (3)(c)(I)-(II) ; § 14-10-119. When the court has not yet entered a decree dissolving the marriage, it conducts its assessment of the parties’ economic circumstances as of the date of the hearing at which the last evidence was presented to the court on the matter. See § 14-10-113(1)(c), (5) ; In re Marriage of de Koning , 2016 CO 2, ¶¶ 21, 28, 364 P.3d 494 ; In re Marriage of Wells , 850 P.2d 694, 696–97 (Colo. 1993) ; In re Marriage of Femmer , 39 Colo. App. 277, 279, 568 P.2d 81, 83 (1977).

¶ 16 The district court concluded that it lacked the legal authority to reopen the evidence after the completion of the permanent orders hearing. We disagree and conclude that the district court did have the inherent power, in the exercise of its discretion, to reopen the evidence. While neither party presented the court with legal authority directly addressing the specific situation here, "[i]t is always within the discretion of the [district] court to permit the reopening of a case for the purpose of allowing additional evidence." Plummer v. Struby-Estabrooke Mercantile Co. , 23 Colo. 190, 194, 47 P. 294, 295 (1896) ; accord People v. Hall , 2021 CO 71M, ¶¶ 16, 24, 496 P.3d 804 ; see also In re Marriage of McSoud , 131 P.3d 1208, 1222 (Colo. App. 2006) ("A trial court may in its discretion permit a party who has rested to reopen a case for the purpose of presenting further evidence."); Carter v. Carter , 201 N.E.3d 230, 237-38 (Ind. Ct. App. 2022) (affirming a court's ruling reopening the evidence after the permanent orders hearing).

¶ 17 Therefore, even though the scheduled permanent orders hearing had long ago concluded, nothing prevented the court from acting within its discretion and reopening the evidence to allow the parties to present evidence of wife's allegedly changed circumstances when "the ends of justice [could] be advanced." Plummer , 23 Colo. at 194, 47 P. at 295 ; accord Hall , ¶ 24 ; see also Femmer , 39 Colo. App. at 279, 568 P.2d at 83 ; In re B.S.O. , 225 N.C.App. 541, 740 S.E.2d 483, 484 (2013) (acknowledging a court's discretion to reopen the evidence weeks after the original hearing). Indeed, allowing the court to do so under the appropriate circumstances furthers the policy underlying the Colorado Uniform Dissolution of...