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Docket Number

No. 82CA0071

Attorney(S)

Roath Brega, P.C., Charles F. Brega, Jack W. Berryhill, for Appellant. Robert Bugdanowitz, P.C., Robert Bugdanowitz, for Appellee. Division I.

Judges

Opinion by JUDGE STERNBERG.

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Smart Summary

Case Summary — In re the Marriage of Robert W. Sarvis and Julie Sarvis, No. 82CA0071 (Colo. Ct. App. Nov. 8, 1984)

Factual and Procedural Background

The parties were undergoing a dissolution of marriage. At the time of the marriage the husband owned a condominium worth approximately $100,000; by the time of dissolution its value had appreciated by $35,800. The parties also owned a house purchased after the marriage, valued at $305,000, and corporate stocks of considerable value, most of which constituted marital property. The trial court ordered the husband either (1) to transfer title to the condominium to the wife, receiving an offset for the condo's equity against the total award to the wife, or (2) to sell both the condominium and the house and pay the wife a portion of the proceeds. The husband appealed. The Court of Appeals (Opinion by Judge Sternberg) reviewed the propriety of the trial court's property division and also addressed the award of attorney and accountant fees. The judgment of the trial court was reversed and the cause remanded.

Appeal from the District Court of the City and County of Denver (Hon. John F. Sanchez). Opinion by Judge Sternberg; Judges Pierce and Babcock concurred.

Legal Issues Presented

Whether the trial court's order requiring the husband to convey his premarital condominium to the wife (or alternatively ordering sale of both the condominium and the house) was permissible under the statutory scheme governing division of marital and separate property (section 14-10-113, C.R.S.).
Whether the trial court erred in awarding attorney fees and accountant fees without adequate proof of the reasonableness of those fees (e.g., hours worked, services rendered, prevailing rates).

Arguments of the Parties

Appellant (Husband)

Asserted that it was error for the trial court to order transfer of his condominium (his separate property acquired before marriage) to the wife or, alternatively, to require sale of both the condominium and the house.
Contended that the award of attorney and accountant fees was improper because the record lacked proof of the number of hours the accountant spent and lacked indication of the reasonableness of the attorney fees.

Appellee (Wife)

Argued, citing In re Marriage of Weaver, that a court may order sale of all real property even though a portion of it was the husband's separate property.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
In re Marriage of Faulkner, 652 P.2d 572 (Colo. 1982)	That a trial court has broad discretion to effect an equitable division of marital property.	The court invoked this precedent to acknowledge the trial court's general discretion in dividing property but proceeded to analyze that discretion in light of statutory limits.
In re Marriage of Weaver, 39 Colo. App. 523, 571 P.2d 307 (1977)	That a court may order sale of property and distribution of proceeds, including sale of both separate and marital property if necessary to achieve an equitable division (but only after appropriate findings).	The court distinguished Weaver: in Weaver the trial court expressly found no other equitable method existed; no such finding appears here, so Weaver did not justify sale of the husband's separate condominium in this case.
In re Marriage of Campbell, 43 Colo. App. 72, 599 P.2d 275 (1979)	Interpreted in relation to statutory limits on awarding separate premarital property to the other spouse.	The court cited Campbell to support the conclusion that ordering the husband to convey his premarital condominium to the wife violated the statute's requirements regarding separate property.
In re Marriage of Nichols, 38 Colo. App. 82, 553 P.2d 77 (1976)	Standards for awarding attorney fees — need for proof of reasonableness based on amount charged, time spent, services rendered, and prevailing community rates.	The court relied on Nichols to require that on remand any award of attorney (and accountant) fees be supported by evidence showing reasonableness under these considerations.

Court's Reasoning and Analysis

The court began by identifying the principal issue as the propriety of the trial court's order giving the wife the condominium that was the husband's separate property, or alternatively ordering sale of all property including that condominium. The opinion sets out the relevant facts about values of the condominium (premarital value ~ $100,000; appreciation $35,800), the house (purchased after marriage, valued at $305,000), and corporate stocks largely marital.

The court acknowledged that trial courts possess broad discretion to effect an equitable division of marital property (citing Faulkner) and may order sale of property and distribution of proceeds (citing Weaver). It then turned to the statutory framework: section 14-10-113(1) requires the court to set apart each spouse's property and divide marital property, and subsection (4) treats premarital assets as marital only to the extent of appreciation in present value over value at the time of marriage.

Applying the statute, the court held that ordering the husband to convey the condominium to the wife violated the statutory requirement to set apart a spouse's separate property. The alternative ordering sale of both the condominium and the house likewise violated the statutory directive to set aside the husband's separate property. The court distinguished Weaver: Weaver permitted sale of separate property only after a finding that no other way existed to value and equitably divide property. Here no such finding was made, and the presence of substantial corporate stock made such a finding unlikely; the record indicated the trial court could make an equitable division without selling the non-marital condominium.

Regarding fees, the court agreed with the husband that the award of attorney and accountant fees lacked adequate proof of reasonableness. Citing Nichols, the court explained that on remand any fee award must be predicated on proof addressing the amount charged, time expended, services rendered, and prevailing rates in the community.

The court noted other contentions were without merit but did not detail them. The court concluded that the judgment must be reversed and remanded with instructions to determine an equitable division of property using values as of the date of the original decree (citing § 14-10-113(5), C.R.S.) and to determine any attorney and accountant fees with appropriate evidentiary support. The court further instructed that if the trial court on remand finds it cannot equitably divide property without ordering sale of a non-marital asset, it must make an explicit finding to that effect before ordering such a sale.

Holding and Implications

Holding: The Court of Appeals reversed the trial court's property-division order and remanded for further proceedings. The court held that the trial court erred in (1) ordering the husband to convey his premarital condominium to the wife and (2) alternatively ordering sale of both the condominium (a non-marital asset) and the house without making the necessary statutory findings.

Implications:

The direct effect is reversal of the trial court judgment and remand for a hearing to: (a) determine an equitable division of property based on values as of the date of the original decree (per § 14-10-113(5), C.R.S.), and (b) determine any award of attorney and accountant fees supported by evidence of reasonableness (amounts, time, services, prevailing rates).
The court required that if a sale of a non-marital asset is to be ordered on remand, the trial court must make an explicit finding that an equitable division cannot otherwise be made. The opinion does not purport to announce a new, broader rule beyond application of existing statute and precedent.

Show full summary ...

In re the Marriage of: Robert W. Sarvis, Appellant, and Julie Sarvis, Appellee.

Opinion by JUDGE STERNBERG.

The principal issue in this dissolution of marriage action is the propriety of the trial court's order giving to the wife a condominium which was the separate property of the husband, or alternatively ordering that all property be sold, including that separate property, and the proceeds be divided. We hold that this property division order is in error and therefore reverse the judgment.

At the time of their marriage, the husband owned a condominium which was worth approximately $100,000. At the time of the dissolution it had increased in value by $35,800. The parties owned a house valued at $305,000 which had been purchased after the marriage. They also owned corporate stocks having considerable value, most of which constituted marital property.

In its order the trial court gave the husband the choice of either transferring title to the condominium to the wife and receiving an offset for the equity against the total award made to the wife, or selling both the condominium and the house and paying the wife a portion of the proceeds. The husband asserts that this was error, and we agree.

A trial court has broad discretion to effect an equitable division of marital property, In re Marriage of Faulkner, 652 P.2d 572 (Colo. 1982), including ordering the sale of property and the distribution of the proceeds. In re Marriage of Weaver, 39 Colo. App. 523, 571 P.2d 307 (1977). However, § 14-10-113(1), C.R.S., requires that "the court shall set apart to each spouse his property and shall divide the marital property . . . ." and subparagraph (4) provides that "an asset of a spouse acquired prior to the marriage . . . shall be considered as marital property . . . to the extent that its present value exceeds its value at the time of the marriage. . . ."

Consequently, we hold that the portion of the order that the husband convey the condominium to the wife is violative of the terms of the statute. See In re Marriage of Campbell, 43 Colo. App. 72, 599 P.2d 275 (1979). We also hold that the alternative given the husband to sell both the condominium and the house violates the statutory requirement that the court set aside to the husband his separate property.

Citing In re Marriage of Weaver, supra, the wife argues that a court may order sale of all real property even though a portion of it was the husband's separate property. We see no conflict between our holding and Weaver. In Weaver, only after concluding that there was no other way to value and divide the property equitably, did the trial court order sale of both separate and marital property. No such finding was made in this case, and, in light of the substantial value of the corporate stock, such a finding would not appear to have been appropriate. Here, in contrast to Weaver, the record indicates that the trial court can make an equitable division of property without requiring sale of the non-marital asset, the condominium.

The husband also asserts that the trial court erred in its award of attorney fees and accountant fees because there was no proof of the number of hours the accountant spent in performing services and there was no indication in the record of the "reasonableness" of the attorney fees. On remand, as a predicate to an award of such fees there must be proof of reasonableness premised upon considerations of the amount of the fees charged, the time spent by the attorney, the services rendered, and the prevailing rates in the community. See In re Marriage of Nichols, 38 Colo. App. 82, 553 P.2d 77 (1976).

The other contentions of error are without merit.

The judgment is reversed and the cause is remanded for a hearing to determine an equitable division of property based on values as of the date of the original decree, see § 14-10-113(5), C.R.S., and for determination of the amount of attorney and accountant's fees, if any, to be awarded. On remand, if the court is unable to make an equitable division of property without ordering sale of a non-marital asset, it must make a finding to that effect before so ordering.

JUDGE PIERCE and JUDGE BABCOCK concur.

IN RE MARRIAGE OF SARVIS