It seems the issue of what counts as a financial resource in a contempt or maintenance case still results in seemingly contradictory decisions from the courts. We recently wrote a post discussing the Sheehan1In re: Marriage of Sheehan, 2022 COA 29. case, where the Colorado Court of Appeals held that a trial judge could not find a payor had the ability to pay and hold him in contempt based upon imputing income to him, nor based upon the fact that in the past he always managed to “find” money when he needed it.
Fast forward a couple of months, and we have a different decision on financial resources in the Troyer2In re: Marriage of Troyer, No. 21CA0277 (Colo.App. Feb.17, 2022) (Unpublished Decision). case. At the parties’ dissolution in 2010, the husband, who earned about $6600/mo, was ordered to pay the wife $1200/mo maintenance after a 27-year marriage.
Nine years later the husband filed a motion to terminate or modify maintenance, based upon a reduction in income after being terminated from his prior employment. The court found that he was making about $4000/mo as a commercial truck driver, but prior to this had voluntarily left a different commercial truck driving position where he earned $5700/mo. It imputed income to him at that $5700/mo, plus found that “husband had experienced consistent access to other financial resources.” Troyer.3In re: Marriage of Troyer, No. 21CA0277 (Colo.App. Feb.17, 2022), ¶ 5 (Unpublished Decision). Based upon this financial resource finding, The trial court only very slightly reduced the husband’s maintenance obligation from $1200/mo to $1100/mo.
The problem for the husband was that he had stopped paying maintenance for the seven months between the time he filed his motion and the court conducted its maintenance modification and contempt hearing. (Never a good idea – making at least some good faith payments is better than paying nothing). The court therefore found the husband in remedial contempt, and ordered him to pay the arrears plus the wife’s attorney’s fees.
The husband appealed.
Voluntarily Unemployment Counts for Maintenance Modification
Citing Colorado precedent, the Court of Appeals held that “the court may use a party’s potential income when considering a request to modify if it finds that the party is voluntarily underemployed.” Troyer.4In re: Marriage of Troyer, No. 21CA0277 (Colo.App. Feb.17, 2022), ¶ 12 (Unpublished Decision).
Moreover, “whether a party is voluntarily underemployed is typically a question of fact for the district court, and we will not disturb that determination when it is supported by the record.” Troyer.5In re: Marriage of Troyer, No. 21CA0277 (Colo.App. Feb.17, 2022), ¶ 13 (Unpublished Decision). And in this case, the trial court discussed extensively the husband’s age, job skills, and his activities after losing his original job, before concluding that he was voluntarily underemployed.
The trial judge also found that the husband’s “complete financial picture” included consistent access to other financial resources, such as tax returns, he had retirement assets, and other “significant deposits” into his bank account over time. The appellate court upheld this determination. Troyer.6In re: Marriage of Troyer, No. 21CA0277 (Colo.App. Feb.17, 2022), ¶¶ 2024 (Unpublished Decision).
Tax Refunds are Financial Resource for Maintenance
Of particular interest was the trial court’s finding that the husband’s tax refunds, while not income, counted as a financial resource from which he could pay maintenance. His combined state & federal income tax refunds for the past several years were all in the $10K to $18K range. The husband argued that the tax refunds were due to an adoption subsidy tax break he would no longer be receiving, but the court found “it did not receive complete and credible evidence” for the refunds.
“Given all this, the district court did not err by considering husband’s tax refunds as a relevant financial resource in its review of the totality of the circumstances. The evidence showed that husband had consistently received a significant tax refund for six years, and this money had allowed him to meet his financial needs.
Still, husband asserts that the consideration of his tax refunds improperly inflated his financial resources. In his view, the tax refunds represented money that was previously withheld from his gross income; thus, it cannot be counted twice — first as gross income and then second as a tax refund. But the relevant issue for the court when determining whether to modify maintenance was husband’s ability to meet his own needs while also paying maintenance. Although the amount of husband’s tax refund encompassed, at least in part, taxes withheld from his gross income, husband’s income was relevant only to the extent it was indicative of his ability to meet his needs. These refunds provided him with additional financial resources available to meet his needs. By contrast, the amount of husband’s gross income withheld for taxes was a financial resource that was generally unavailable for husband to use toward his needs. We therefore are not convinced that the court improperly double counted this money because the only relevant consideration for the court was the availability of these funds for husband’s use to meet his needs and until he received the tax refund, he could not use this money to do so.”Troyer.7In re: Marriage of Troyer, No. 21CA0277 (Colo.App. Feb.17, 2022), ¶¶ 24-25 (Unpublished Decision) (Cleaned Up).
New Spouse’s Resources also a Financial Resource
There was an interesting, but brief discussion of the extent to which a court may consider a new spouse’s financial resources for a maintenance modification. The general rule, set forth in the Colorado Supreme Court’s Nimmo8In re: Marriage of Nimmo, 891 P.2d 1002 (Colo. 1995). decision more than a quarter century ago is that if a party has remarried, the new spouse’s income is neither discoverable, nor does it count as income for purposes of child support. However, Nimmo did allow some consideration of the new spouse’s resources only to the extent that the party is receiving financial gifts from that spouse – but that excludes payment of household bills or other payments to third parties by the new spouse, even if the party benefited from those payments.
Shortly after Nimmo, the Court of Appeals held in Bowles9In re: Marriage of Bowles, 916 P.2d 615 (Colo.App. 1995). that while a new spouse’s financial resources must be excluded from the payor spouse’s income calculation and as a source of payment for maintenance, those resources may be relevant in determining whether there has been a substantial and continuing change in circumstances when the payor is seeking to modify maintenance. And in Bowles, since the payor was asserting he could not work due to disability, it was relevant on the issue of voluntary underemployment to inquire whether the real reason for not working was that he was choosing to live off his new spouse’s financial resources instead.
Back to the case at hand. The husband argued that a portion of the tax refunds the court considered as a financial resource belonged to his current spouse, but the appellate court held it was proper to consider them: “the court is not prohibited from considering a third party’s resources as a relevant factor when determining whether to modify maintenance.” Troyer.10In re: Marriage of Troyer, No. 21CA0277 (Colo.App. Feb.17, 2022), ¶ 26 (Unpublished Decision).
Financial Resources Show Ability to Pay for Remedial Contempt
An essential element of remedial contempt is a finding that the payor has the present ability to pay, and thereby purge the contempt. Noting that the husband had assets of over $230K in addition to his $3900/mo actual income and consistent tax refund of over $10K/yr, the trial court found that the husband had the ability to pay the maintenance arrears and purge his contempt. Troyer.11In re: Marriage of Troyer, No. 21CA0277 (Colo.App. Feb.17, 2022), ¶ 37 (Unpublished Decision).
The trial judge included in the finding of ability to pay the fact that the husband had a potential income of $5700/mo, well above his actual income of $3900/mo. And the court of appeals seems to have accepted that as part of the finding, without questioning whether it was proper to consider potential income, seemingly contradicting the decision in Sheehan.12In re: Marriage of Sheehan, 2022 COA 29.
The takeaway? I would hesitate before relying upon Troyer to argue that imputed income counts as a financial resource in a remedial contempt case for a couple of reasons:
- Troyer was not selected for publication. Though an unpublished case may be cited as persuasive authority, a published case, such as Sheehan13In re: Marriage of Sheehan, 2022 COA 29. is binding precedent, not just persuasive.
- The Troyer court only mentioned the imputed income in passing, as one of a laundry list of factors in determining the payor’s ability to purge the contempt. But in Sheehan, there was a lengthier discussion, and a more explicit holding that even bad faith failure to find employment did not imply the payor had the ability to pay.
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