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In re Parental Responsibilities Concerning N.J.C.

Court of Appeals of Colorado, First Division

October 10, 2019

In re the Parental Responsibilities Concerning N.J.C., a Child, and Concerning N.E., Appellant, and V.J.C., Appellee.

          Douglas County District Court No. 12JV77 Honorable Natalie T. Chase, Judge.

          Fairfield and Woods, P.C., Lee Katherine Goldstein, Michael R. McCurdy, Denver, Colorado, for Appellant

          James J. Keil, Jr., Denver, Colorado, for Appellee

          OPINION

          TAUBMAN, JUDGE.

         ¶ 1 As a matter of first impression, N.E. (mother) urges us to conclude that deferred compensation in a nonqualified plan[1] is income for child support purposes if it is being earned during a period when a parent is obligated to pay child support. We disagree with her arguments, and therefore affirm the juvenile court's order adopting the magistrate's order modifying mother's child support award from V.J.C. (father). We also affirm the juvenile court's order denying mother's request to reallocate costs paid for parental responsibilities evaluations (PRE).

         ¶ 2 However, we reverse the portion of the juvenile court's order denying mother's request for attorney fees, and we remand the case to the juvenile court for it to determine the amount. We further remand for the juvenile court to consider mother's request for appellate attorney fees under section 19-4-117, C.R.S. 2019.

         I. Appellate Standard of Review

         ¶ 3 This case arises out of the Uniform Parentage Act (UPA), sections 19-4-101 to -130, C.R.S. 2019. Magistrates may preside over UPA actions, but parties have the right to seek a judge's review of the magistrate's findings and rulings. § 19-1-108(1), (4)(b), (5.5), C.R.S. 2019.

         ¶ 4 "We defer to the magistrate's and district courts' findings of fact if they are supported by the evidence and we review conclusions of law de novo." In re B.J., 242 P.3d 1128, 1132 (Colo. 2010).

         II. Father's Deferred Compensation Plan

         A. Relevant Facts

         ¶ 5 Mother and father are the unmarried parents of one child, N.J.C. In 2013, and as part of the initial paternity proceeding in this case, father's child support calculation was based on the salary he earned working as a cardiologist for his own medical practice.

         ¶ 6 In 2016, father closed his practice and accepted a job with Healthy Connections, Inc. (HCI), a health care center providing medical, dental, and outreach services to impoverished communities. Believing that father's income had gone up at his new job, mother moved to increase child support. Father, however, responded that his income had actually decreased.

         ¶ 7 Evidence presented at a hearing on mother's motion showed that father's compensation package with HCI consisted of a $150, 000 annual salary and $200, 000 of yearly deferred compensation in a nonqualified plan. Father, who was then fifty-two years old, testified that he would only receive the deferred compensation after he retired from HCI at age sixty-five. HCI's CEO, his brother, agreed that father "does not receive - physically receive $200, 000 above his salary," and he described the deferred compensation as "an obligation at a future date and time for [father's] benefit providing that he meets the criteria after his retirement."

         ¶ 8 The CEO explained that the deferred compensation plan allowed HCI to attract and retain qualified medical doctors, like father, that it could not otherwise afford. He testified that half of the ten to thirteen medical doctors on HCI's staff were employed under the deferred compensation plan. According to the CEO, while each plan was tailored to the employee, they all had the same payout structure - the employee had to retire from HCI at a certain age before he or she would receive any deferred funds, which would then be paid over ten years. As of the hearing date, the CEO said that the deferred compensation plan was unfunded; in fact, the CEO stated there was not even an account established with which to pay deferred compensation.

         ¶ 9 Regarding father's specific deferred compensation plan, the CEO submitted a letter to father's counsel (admitted at the hearing as Exhibit A) detailing that father had no control over the funds or the plan; the deferred amounts belonged to HCI and were not protected in case of insolvency or creditor claims; the deferred amounts were subject to forfeiture if father was fired, quit, or retired before age sixty-five; father would not be fully vested until he worked at HCI for five years; and the funds were not taxable until received by the employee.

         ¶ 10 Arguing that it was significant that father earned the money, even if he did not actually receive it, mother asked the magistrate to include the deferred compensation as income to father. The magistrate declined to do so, based on the restrictive provisions of father's plan described above. The magistrate then modified father's child support obligation, including in father's income only his salary and nominal dividend and interest income.[2]

         ¶ 11 The juvenile court judge adopted the magistrate's decision not to include the deferred compensation, pointing out the magistrate's reasoning that father could not contribute to the plan, had no control over the funds, and had no guarantee he would ever receive the money.

         B. Deferred Compensation is Not Income

         ¶ 12 Section 14-10-115, C.R.S. 2019, applies to child support obligations established or modified under the UPA. § 19-4-129, C.R.S. 2019. We review child support orders for an abuse of discretion. In re Marriage of Garrett, 2018 COA 154, ¶ 8, 444 P.3d 812, 815. However, we review de novo the legal standard applied by the court. In re Marriage of Tooker, 2019 COA 83, ¶ 12, 444 P.3d 856, 859.

         ¶ 13 A child support calculation begins with a determination of the parties' combined gross incomes. See § 14-10-115(1)(b)(I), (5)(a). A parent's gross income for child support purposes is "income from any source[.]" § 14-10-115(5)(a)(I).

         ¶ 14 The statute, however, neither specifically includes nor excludes "deferred compensation" as gross income available to a parent. See id. (nonexclusive list of income included in definition of gross income); § 14-10-115(5)(a)(II) (excluding certain income from definition of gross income).

         ¶ 15 No Colorado case has addressed this specific issue. Thus, we look to other Colorado appellate decisions addressing whether financial benefits or contributions not specifically defined by the statute are income for child ...


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