Family Law, 0916 COBJ, Vol. 45, No. 9

AuthorDawn Rodgers, J.

45 Colo.Law. 8

Family Law

Vol. 45, No. 9 [Page XX]

The Colorado Lawyer

September, 2016

Dawn Rodgers, J.

CRCP 16.2 Mandatory Disclosure in Domestic Cases

This article was authored by a young lawyer and jointly reviewed by Heidi Ruckriegle, CBA YLD coordinating editor, and Patricia Cooper, Family Law coordinating editor. The CBA YLD aims to help young lawyers gain experience and exposure by writing for The Colorado Lawyer in partnership with attorneys experienced in different substantive law areas. Young lawyers interested in writing for The Colorado Lawyer are encouraged to contact Heidi Ruckriegle, who will connect YLD authors with coordinating substantive editors for encouragement, guidance, and feedback on their YLD article.

CRCP 16.2(e) requires parties to domestic cases to disclose information that is material to the case without the other party having to request it. This article discusses the requirements of the rule and the consequences of failing to comply with it.

This article addresses the CRCP 16.2(e) disclosure requirements, the purpose of the rule, and potential consequences for failure to follow the rule. It also briefly discusses recent case law on reopening a divorce case for failure to comply with CRCP 16.2(e) as it relates to property division, child support, and maintenance.

Purpose and Scope of CRCP 16.2

CRCP 16.2 applies to domestic cases.1 It recognizes that family members stand in special relation to each other and the court.2 The rule explicitly states that its purpose is to create a uniform procedure for resolving issues in domestic relations cases.3 It further explains that the uniform procedure is intended to reduce the negative impact of adversarial litigation to the extent possible.4 The rule requires the court to manage and facilitate cases5 and allows the court to tailor disclosure requirements, discovery, and hearings to the needs of the case.6 The rule applies to all domestic cases filed under Articles 10, 11, and 13 of Title 14, including post-decree actions.7 However, the Child Support Enforcement Unit (CSEU) is exempt from this rule unless CSEU enters its appearance in an ongoing case.8 The parties to a case may request or the court on its own volition may order that the rule also applies to juvenile, paternity, or probate cases, where allocation of parental responsibilities is at issue.9

Full and Honest Disclosure Required

CRCP 16.2(e) requires the parties to a domestic case to provide full and honest disclosure of all facts that materially affect the parties’ rights and interests and those of the children involved in the case.10 The parties have an affirmative duty to disclose all information that is material to the case without the need for the other party to request it, which includes full disclosure of all material assets and liabilities.11 The rule demands that the parties’ disclosures be in accord with the duty of candor owed to the court and each other.12 The specific mandatory disclosures required by CRCP 16.2 are set forth in CRCP Form 35.1 in the Appendix to Chapters 1 to 17A.[13] Form 35.1 requires the parties to provide an accurate copy of:

• the last three years of business and personal tax returns,

• the last three years of personal financial statements,

• the last three years of business financial statements,

• real estate documents,

• personal debt (not applicable to post-decree motions unless ordered by the court),

• investments,

• employment benefits,

• retirement plans (not applicable to post-decree motions unless ordered by the court),

• bank and financial institution accounts,

• income documentation,

• employment- and education-related child care (only applicable if child support is an issue),

• insurance documentation (not applicable to post-decree motions unless ordered by the court or if child support is an issue), and

• extraordinary children’s expenses (only if child support is an issue).14

The Form 35.1 list is not exhaustive, and all material information must be disclosed whether or not it is specified.15 The required financial disclosures are not applicable to post-decree motions that raise only issues of decision-making and parenting time, unless the court orders otherwise.16

The parties are also required to provide to each other sworn financial statements (Form 35.2) and supporting schedules (Form 35.3), if applicable.17 The parties are required to file these documents and child support worksheets with the court.18 This information is supposed to be exchanged no later than 42 days after the service of the petition or post-decree motion, and to the extent possible, prior to the initial status conference. 19

The parties are also required to file a certificate of compliance with the court that signifies that to the best of the party’s knowledge, information, and belief, formed after reasonable inquiry, the mandatory disclosures made at the time are accurate and complete.20 Further, the parties have an on-going duty to timely amend and supplement their disclosures.21

Sanctions for Failure to Comply with the Rule

The court has the authority to sanction a party who does not timely provide financial disclosures or otherwise fails to comply with Rule 16.2.22 The sanction imposed may include excluding nondisclosed witnesses or exhibits from a hearing, if the non-complying party fails to demonstrate good cause for the omission.23 If a party’s disclosure contains misstatements or omissions, the trial court retains jurisdiction for five years after the final decree or judgment is entered to allocate material assets or liabilities, the omission or nondisclosure of which materially affects the original allocation of assets or debts.24 The rule expressly states that CRCP 60 will not bar a motion by either party to allocate or reallocate such assets or liabilities.25 Further, the rule states that it does not bar other remedies that may be available to a party by law.26 The sanction imposed by the court should not prejudice the complying party.27

Five-Year Look Back Period

The five-year look back provision in CRCP 16.2 took effect in 2005.28 Thereafter, the Colorado Supreme Court reviewed three Colorado Court of Appeals’ opinions concerning the scope of the five-year look back period.29 In In re Marriage of Schelp, the Supreme Court considered whether the revised rule permits domestic trial courts to reopen property divisions in cases that were originally filed before the new rule went into effect.30 The Court first reviewed the language and the purpose of the recently revised rule,31 and stated specifically that the rule requires parties to a domestic case to affirmatively disclose all information that is material to the resolution of the case without awaiting inquiry from the other party, in both pre-decree and post-decree cases filed after the effective date of the new rule.32 The Court also opined that the five-year retention of records does not commence until entry of the decree or final judgment.[33] The Court reasoned that the plain language of the rule states that the five-year period applies after the entry of any decree or judgment and that the rule operates in tandem with the affirmative disclosure requirements of the new rule.34 The Court clarified that if the current Rule 16.2 disclosure duties apply to the case, the five-year retention clause also applies, but if the Rule 16.2 disclosure duties do not apply, the five-year look back provision does not apply.35 Current Rule 16.2 disclosure requirements and the five-year look back provision apply to both pre-decree and post-decree cases filed after 2005.36

Reopening Property Division

In In re Marriage of Hunt, prior to entry of permanent orders, the parties entered into a Memorandum of Understanding (MOU) dividing the value of a business owned and operated by the husband.37 The parties’ MOU specifically stated: “[t]he parties agree that [wife’s] 50% marital share of the business, Big R Construction, Co., Inc. will be $250,000. Neither attorney is offering or endorsing valuation of the business and each party has had the opportunity to perform any due diligence with regard to the value of the business as they so desire.”38 At the request of the parties, the district court entered the parties’ MOU as partial permanent orders.39

Several months later, wife learned through discovery that husband’s business was more valuable.[40] Wife’s expert valued husband’s business at $2,165,000; husband’s expert valued it at $740,000.41 After learning this information, wife moved the district court to reopen the property division related to husband’s business under CRCP 16.2(e)(10)42 Relying on the language in the parties’ MOU, the district court denied her request and found that there was no violation of CRCP 16.2 because the parties made the choice to move forward with the MOU without seeking additional information.43

Wife appealed the district court’s order, arguing that husband violated CRCP 16.2(e) by not disclosing mandatory financial information...

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