In re Marriage of Thorstad

          Jefferson County District Court No. 01DR2710 Honorable Dennis J. Hall, Judge.

          Elizabeth Henson, Attorney Mediator P.C., Elizabeth Henson, Greenwood Village, Colorado, for Appellee

          Schaffner Law LLC, Jennifer A. Schaffner, Denver, Colorado, for Appellant

          OPINION

          BERNARD CHIEF JUDGE

         I. Introduction

         ¶ 1 Colorado statutes establish how courts set, modify, and terminate maintenance orders. The decision to modify or to terminate a maintenance order is often governed by the effect of changed circumstances on the payor spouse's ability to pay.

         ¶ 2 More specifically, section 14-10-122(1)(a), C.R.S. 2018, states that, subject to certain enumerated exceptions, "the provisions of any decree respecting maintenance may be modified . . . only upon a showing of changed circumstances so substantial and continuing as to make the terms unfair." When deciding whether changes have been sufficiently substantial and continuing as to render a maintenance order unfair, "the court is required to examine all circumstances pertinent to awarding maintenance" under section 14-10-114, C.R.S. 2018. In re Marriage of Nelson, 2012 COA 205, ¶ 26.

         ¶ 3 This case examines the statutory structure that courts apply when dealing with the effect of one potential substantial and continuing changed circumstance upon a maintenance order: a payor's decision to retire. We recognize that, in some cases, there could be an ulterior motive behind this decision: to reduce or to eliminate the obligation to pay maintenance by reducing or eliminating the payor's income. The law gives a name to such an ulterior motive: "voluntary underemployment or unemployment."

         ¶ 4 Courts frown on voluntary underemployment and unemployment because these stratagems constitute an attempt to avoid paying maintenance. They may counter such stratagems by, for example, considering "whether [a payor] spouse is voluntarily underemployed in determining whether reduced income is a substantial and continuing circumstance that would justify modification or termination of his [or her] maintenance obligation." In re Marriage of Swing, 194 P.3d 498, 500 (Colo.App. 2008); see also In re Marriage of Barnthouse, 765 P.2d 610, 613 (Colo.App. 1988)("[W]e find no error in the court's [finding] that the father . . . was voluntarily earning less than he was capable of earning. Therefore, there is no merit to the father's contention that the . . . maintenance award[] [was] erroneous.").

         ¶ 5 There is also the prospect that a payor's decision to retire was not the product of an ulterior motive, but was, instead, a product of good faith. See § 14-10-114(8)(c)(V)(B) ("[A] party shall not be deemed 'underemployed if . . . [t]he employment is a good faith career choice . . . ."); cf. § 14-10-115(5)(b)(III)(B), C.R.S. 2018 ("[A] parent shall not be deemed 'underemployed' if . . . [t]he employment is a good faith career choice that is not intended to deprive a child of support and does not unreasonably reduce the support available to a child . . . ."). In those situations, the decision to retire may nonetheless pose a dilemma for the payor - which we shall call the "payor's dilemma" - prompting him or her to worry, "If I decide to retire, thus reducing my income, will a court view my retirement as voluntary underemployment or unemployment when deciding whether to grant my motion to modify or to terminate my maintenance obligation?" This dilemma may be especially problematic when decisions to retire are irrevocable.

         ¶ 6 Swing addressed this concern. The division first recognized the payor's dilemma: "Unless the effect of retirement on maintenance has been addressed in the parties' separation agreement, a spouse contemplating retirement who is either paying or receiving maintenance faces considerable uncertainty." Swing, 194 P.3d at 500. The uncertainty is generated, on the one hand, by the reduction in income that almost "irrevocably" accompanies retirement, and, on the other hand, by the lack of Colorado law "assur[ing] that maintenance will be modified based on the retiree's lower wage income." Id.

         ¶ 7 To ameliorate the payor's dilemma, the division surveyed decisions from other states, and it discovered a majority rule: "[R]educed income due to a spouse's objectively reasonable decision to retire, made in good faith and not with the intention of depriving the other spouse of support, should be recognized as a basis for modifying maintenance." Id. at 501. The division then concluded that a court should not find a payor to be voluntarily underemployed if the payor's decision to retire (1) "was made in good faith, meaning not primarily motivated by a desire to decrease or eliminate maintenance," id.; and (2) "was objectively reasonable based on factors such as the [spouse's] age . . . [and] health, and the practice of the industry in which the [spouse] was employed," id.

         ¶ 8 Apparently following the division's lead, the legislature took a similar approach to solving the payor's dilemma when, in 2013, it amended section 14-10-122(2)(a), (b), and (c). Ch. 176, sec. 2, § 14-10-122(2)(a), (b), (c), 2013 Colo. Sess. Laws 652.

          ¶ 9 As a result of the amendments, subsection 122(2)(a) now states that,

[u]nless otherwise agreed in writing or expressly provided in the decree, the obligation to pay future maintenance is terminated upon the earlier of:

(I) The death of either party;

(II) The end of the maintenance term, unless a motion for modification is filed prior to the expiration of the term;

(III) The remarriage of or the establishment of a civil union by the party receiving maintenance; or

(IV) A court order terminating maintenance.

         ¶ 10 Subsection 122(2)(b) adds that "[a] payor spouse whose income is reduced or terminated due to his or her retirement after reaching full retirement age is entitled to a rebuttable presumption that the retirement is in good faith." Subsection 122(2)(c) defines the term "full retirement age" to be "the payor's usual or ordinary retirement age when he or she would be eligible for full United States social security benefits, regardless of whether he or she is ineligible for social security benefits for some reason other than attaining full retirement age." But, according to subsection 122(2)(c), "'[f]ull retirement age' shall not mean 'early retirement age' if early retirement is available to the payor spouse, nor shall it mean 'maximum benefit retirement age' if additional benefits are available as a result of delayed retirement."

         ¶ 11 We must next make a point about the statutes that we consider in this appeal. In 2013, section 14-10-114 was repealed and reenacted. Ch. 176, sec. 1, 14-10-114, 2013 Colo. Sess. Laws 639-52. The considerations relevant to determining maintenance in this case used to appear in subsections (3) and (4) before the 2013 amendments, but they now appear in subsection (3).

         ¶ 12 The petition for dissolution of marriage in this case was filed on September 17, 2001, so the new version of section 14-10-114 applicable to petitions filed on or after January 1, 2014, does not apply. See § 14-10-114(9). Rather, "[a]ctions filed before January 1, 2014, are determined pursuant to the provisions of this section as it existed at the time of the filing of the action." Id. This means that from this point on, unless otherwise noted, when we refer to any of the subsections of section 14-10-114, we are referring to those that existed in September 2001.

         ¶ 13 Section 14-10-122 does not contain similar language. So, when we discuss any of the subsections of section 14-10-122, we are concerned with those in existence when husband filed his motion to terminate his maintenance obligation in May 2017.

         ¶ 14 Turning to this case, a former husband, Ronald L. Thorstad, suffered from some health problems, which contributed to his decision to retire from his job. He therefore asked a magistrate to terminate his maintenance obligation to his former wife, Randie J. Thorstad, who is now known as Randie J. Randell. (For readability purposes, we shall dispense with the adjective "former" and simply call the parties to this appeal "husband" and "wife.") The magistrate granted husband's request; wife sought the district court's review; and the district court denied her petition. (Because the district court denied wife's petition, essentially affirming the magistrate's decision, ...