In re the Marriage of Capparelli

The summaries of the Colorado Court of Appeals published opinions
constitute no part of the opinion of the division but have been prepared by
the division for the convenience of the reader. The summaries may not be
cited or relied upon as they are not the official language of the division.
Any discrepancy between the language in the summary and in the opinion
should be resolved in favor of the language in the opinion.

SUMMARY
September 19, 2024

2024COA103

No. 23CA1114, In re the Marriage of Capparelli — Family Law
— Dissolution — Disposition of Property — Property Purchased
During the Marriage — Marital Debt — Maintenance

In this dissolution of marriage case, husband challenges the

district court’s allocation of property and award of maintenance. A

division of the court of appeals concludes that the district court

erred when it classified a portion of a jointly titled asset as wife’s

separate property and designated a portion of a debt acquired

during the marriage as husband’s separate debt. With respect to

the jointly titled asset, the division concludes that although wife

presented evidence tracing a portion of the jointly titled asset back

to her separate premarital property, she failed to present any

evidence beyond tracing that the parties intended for any portion of

the jointly titled asset to remain her separate property. Based on
this, the division concludes that wife failed to overcome, by clear

and convincing evidence, the presumption that the jointly titled

property is marital property.

Based on these errors, the division reverses the district court’s

judgment and remands the case for the district court to reconsider

the entire property and debt allocation. And because property

division and maintenance are inextricably intertwined, the division

also remands the case to the district court for it to reconsider the

maintenance award based on the new property and debt allocations

and the parties’ current economic circumstances.
COLORADO COURT OF APPEALS 2024COA103

Court of Appeals No. 23CA1114
Boulder County District Court No. 21DR30454
Honorable Bruce Langer, Judge

In re the Marriage of

Marcello Capparelli,

Appellant,

and

Catherine Cho Capparelli,

Appellee.

JUDGMENT REVERSED AND CASE
REMANDED WITH DIRECTIONS

Division I
Opinion by JUDGE WELLING
J. Jones and Richman*, JJ., concur

Announced September 19, 2024

Dietze and Davis, P.C., Tucker M. Katz, Boulder, Colorado, for Appellant

Aitken Law, LLC, Sharlene J. Aitken, Denver, Colorado, for Appellee

*Sitting by assignment of the Chief Justice under provisions of Colo. Const. art.
VI, § 5(3), and § 24-51-1105, C.R.S. 2024.
¶1 Marcello Capparelli (husband) appeals the permanent orders

entered on the dissolution of his marriage to Catherine Cho

Capparelli (wife). Husband contends that the district court erred

when (1) allocating the parties’ property and debt by (a) classifying

$288,609 from the sale of the parties’ marital home as wife’s

separate property, (b) designating $63,077 of debt from a line of

credit to him as his separate debt, and (c) dividing the remaining

marital property roughly equally despite his lack of income due to

his Parkinson’s disease; and (2) awarding him maintenance after

(a) imputing income to him and (b) averaging wife’s gross income.

Because we agree with husband’s contentions involving the court’s

classification of the proceeds from the sale of the marital home and

its allocation of the line of credit debt, we reverse the order on those

grounds and remand the case for the district court to reconsider the

entire property and debt allocation.

¶2 And because property division and maintenance are

inextricably intertwined, we also reverse the district court’s

maintenance order and direct the district court on remand to

reconsider the maintenance award based on the new property and

debt allocations and the parties’ then-current economic

1
circumstances. We also, however, address husband’s arguments

regarding the calculation of the parties’ respective incomes for

determining maintenance because the issues he raises are likely to

arise on remand in a similar posture.

I. Background

¶3 Husband and wife were married for sixteen years. During the

last ten years of their marriage, husband wasn’t employed.

However, after inheriting nearly $1.5 million upon his mother’s

death, husband invested those proceeds and earned income from

those investments. Wife, on the other hand, was employed

throughout the marriage, earning over $195,000 a year during the

two years immediately preceding the dissolution of the marriage.

¶4 In January 2023, the district court dissolved the parties’

marriage and entered permanent orders. Before dividing the

marital estate, the court considered whether the proceeds from the

sale of the marital home and the line of credit debt against one of

husband’s investment accounts should be considered marital

property. With respect to the proceeds from the marital home, the

court found that wife had presented sufficient evidence to trace

funds used to purchase the marital home to her pre-marriage

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ownership of another property and gifts from her mother, and it

awarded her a separate property interest of $288,609 in the marital

home. As for the line of credit debt, the parties disputed whether

$163,077 of that debt was marital or separate debt. The court

found that husband used part of it to pay for his living expenses,

but that his spending was far in excess of any reasonable needs.

Thus, the court found that $63,077 of that debt was husband’s

separate debt.

¶5 Once it had distributed the marital property, the court

awarded husband maintenance of $2,195 per month for eight years

and two months. In arriving at the maintenance figure, the court

found that wife’s monthly income was $16,512.75, based on

averaging wife’s yearly gross income from the two prior years, and

that husband’s monthly income was $6,130, based on an estimate

of his monthly income from investments and an imputed income of

$3,033.

II. Property Division

¶6 Husband contends that the district court erred when

classifying the parties’ property and debt by designating

(1) $288,609 of the proceeds from the sale of the marital home as

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wife’s separate property and (2) $63,077 of the line of credit debt as

husband’s separate liability. We agree with both contentions.

A. Standard of Review and Applicable Law

¶7 In general, the court has broad discretion to determine an

equitable division of the marital assets and debts, and we won’t

disturb its decision absent a showing that the court abused that

discretion. In re Marriage of Balanson, 25 P.3d 28, 35 (Colo. 2001).

¶8 The classification of property and debt as either marital or

separate is an issue of law that is based on the district court’s

factual findings. In re Marriage of Vittetoe, 2016 COA 71, ¶ 17; In re

Marriage of Morton, 2016 COA 1, ¶ 5. While we defer to the court’s

factual findings when supported by the record, we review de novo

its legal determinations. Vittetoe, ¶ 17; Morton, ¶ 5.

¶9 When dividing a marital estate, a district court must first

determine whether an asset or debt is marital or separate.

§ 14-10-113(1), C.R.S. 2024. The court must then enter findings as

to the approximate value of the parties’ property, In re Marriage of

Wright, 2020 COA 11, ¶ 4, and marital debt, In re Marriage of

Jorgenson, 143 P.3d 1169, 1172 (Colo. App. 2006). Finally, after

setting aside any separate property, the court must divide the

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marital property in such proportion as it deems just, ensuring an

equitable, but not necessarily equal, division of the estate. Wright,

¶ 4; see § 14-10-113(1); see also Balanson, 25 P.3d at 38 (“[T]he

disposition of marital property requires (1) a determination as to

whether an interest constitutes property; (2) if so, a classification of

such property as marital or separate; and lastly (3) an equitable

distribution of the marital property after considering a variety of

factors, including the economic circumstances of each spouse.”).

Whether a district court applied the correct legal standard is an

issue we review de novo. In re Marriage of Fabos, 2022 COA 66,

¶ 15.

¶ 10 When dividing the marital estate, a statutory presumption

exists that property purchased during the marriage is marital

property. § 14-10-113(3); see also In re Marriage of Zander, 2021

CO 12, ¶ 16; In re Marriage of Moncrief, 535 P.2d 1137, 1138 (Colo.

App. 1975). However, this marital property presumption may be

overcome by evidence establishing that the property in question was

(1) acquired by gift, bequest, devise, or descent; (2) acquired in

exchange for property acquired prior to the marriage or in exchange

for property acquired by gift, bequest, devise, or descent;

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(3) acquired after a decree of legal separation; or (4) excluded by

valid agreement of the parties. § 14-10-113(2)(a)-(d), (3). The

spouse claiming that property existing at dissolution is separate

because it was owned prior to the marriage has the burden of proof

to trace the property back to the original premarital asset. In re

Marriage of Dale, 87 P.3d 219, 227 (Colo. App. 2003). Thus, as long

as assets received during the marriage are traceable to specific

premarital property, the assets may remain separate property. See

id. But tracing alone isn’t sufficient to establish that jointly titled

property maintains its separate character.

¶ 11 Indeed, when a spouse places separate property in joint

ownership during the marriage, it’s presumed both that the donor

spouse intended the property to be a gift to the marriage and that

the gifted property is marital property absent clear and convincing

evidence to the contrary. In re Marriage of Krejci, 2013 COA 6, ¶ 4;

see also Moncrief, 535 P.2d at 1138 (“[W]hen one spouse causes

title to be placed jointly with the other spouse a gift is presumed

and the burden to show otherwise is upon the donor.”). Thus, while

tracing is necessary to support a finding of separate property, it’s

not sufficient, standing alone, to rebut the presumption that

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separate property placed in a jointly titled marital asset was a gift to

the marriage. Instead, the fact of separate property must be proved

by clear and convincing evidence. Krejci, ¶ 4.

B. Wife’s Separate Interest in the Marital Home

¶ 12 Numerous exhibits were admitted at the permanent orders

hearing detailing the parties’ financial transactions. In addition,

with respect to her claim that $288,609 of the proceeds from the

sale of the parties’ third marital home (Onyx Circle home) was her

separate property, wife testified as follows:

• Before the parties were married, wife owned a

condominium in New Jersey, and she used $188,806

from the sale of that property as a down payment on the

parties’ first marital home (Lucille Court home).

• The couple sold the Lucille Court home to buy their

second marital home (Spring Creek Circle home), and

they used the proceeds from the Lucille Court home,

plus another $100,000 wife received as a gift from her

mother, for the down payment on that house, which was

placed in joint tenancy.

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• While trying to sell the Spring Creek Circle home, the

couple purchased the Onyx Circle home, which was also

placed in joint tenancy. A portion of the purchase price

of the Onyx Circle home came from a Morgan Stanley

line of credit in husband’s name; after they sold the

Spring Creek Circle home, they used the proceeds from

that sale to repay the portion of the Morgan Stanley line

of credit used to finance the purchase of the Onyx Circle

home.

¶ 13 In its permanent orders, the district court indicated that it

heard testimony from wife regarding funds from “[premarital] gifts

and real estate sales and received Exhibits F, G, and H supporting a

tracing of the funds.” The court expressly found wife credible and,

without elaborating, found that the evidence supported a finding

that wife had a separate property interest of $288,609 in the

proceeds from the sale of the Onyx Circle home.

¶ 14 It was undisputed that the Onyx Circle home was acquired

during the parties’ marriage. Thus, it and the proceeds from its

sale are presumed to be marital property. See Zander, ¶ 16; see

also § 14-10-113(3). Still, wife could begin to overcome this

8
presumption by tracing the proceeds from the Onyx Circle home

sale back to an original premarital asset or gift. See Dale, 87 P.3d

at 227. However, because wife used those separate assets to help

purchase the jointly titled Lucille Court and Spring Creek Circle

homes, she would also need to prove that she didn’t intend to make

a gift to the marriage. See Krejci, ¶ 4; In re Marriage of Cardona,

321 P.3d 518, 521 (Colo. App. 2010) (“Premarital property that is

placed in joint tenancy by a spouse during the marriage . . . reflects

an intent by the donor spouse to make a gift to the marriage, and

such property is presumed to be marital absent clear and

convincing evidence to the contrary.”), aff’d on other grounds, 2014

CO 3; Moncrief, 535 P.2d at 1138.

¶ 15 By crediting wife’s testimony and allocating $288,609 of the

proceeds from the Onyx Circle home sale as separate property to

her, the district court implicitly found that wife (1) sufficiently

traced the assets back to the home she owned before the marriage

and to a gift from her mother and (2) proved by clear and

convincing evidence that she didn’t intend to gift that money to the

marriage. The record, however, is bereft of any evidence regarding

the latter point.

9
¶ 16 Although afforded the opportunity to do so, wife failed to

present any evidence, let alone clear and convincing evidence, that

she didn’t intend for the proceeds from the sale of her premarital

home and the $100,000 gift from her mother to be gifts to the

marriage when she used that money to purchase each of the three

jointly titled marital homes. This lack of evidence is fatal to her

claim that any portion of the proceeds of the Onyx Circle home sale

is her separate property. See In re Marriage of Stumpf, 932 P.2d

845, 848 (Colo. App. 1996) (“[I]n the absence of appropriate

evidence that the property was excluded from being marital

property by a valid agreement of the parties, such a transfer must

be understood as evidencing an intention to transfer the property to

the marital estate.”) (citations omitted).

¶ 17 Simply put, the evidence presented at the permanent orders

hearing — which focused exclusively on tracing funds but not the

parties’ intent — was inadequate to overcome the strong

presumption that the jointly titled homes, including the Onyx Circle

home, were marital property. Accordingly, the evidence doesn’t

support the court’s finding that $288,609 of the Onyx Circle home’s

proceeds are wife’s separate property. Therefore, we reverse the

10
property division and remand the case for the court to reclassify the

proceeds from the sale of the Onyx Circle home as a marital asset

and to equitably redivide the marital estate in accord with section

14-10-113.

C. Allocation of Separate Debt to Husband

¶ 18 The process for allocating debts is similar to that for dividing

assets. Like with assets, before the court may divide the marital

estate it must also determine whether a party’s debt is marital and

subject to the court’s equitable division or separate and shielded

from division. See § 14-10-113(1); In re Marriage of Corak, 2014

COA 147, ¶ 9; see also Jorgenson, 143 P.3d at 1171-72 (recognizing

that the allocation of marital debts is in the nature of property

division). “Marital liabilities include all debts that are acquired and

incurred by [the parties] during their marriage.” Jorgenson, 143

P.3d at 1172.

¶ 19 The classification of a debt as marital or separate is a legal

determination based on the court’s factual findings. Morton, ¶ 5.

While we defer to the factual findings when supported by the

record, we review de novo the court’s legal determination. Id.

11
¶ 20 During the parties’ marriage, husband accessed a line of credit

secured by one of his investment accounts. When the court entered

the permanent orders, that debt was $733,077. In his property

division spreadsheet and during his testimony at the hearing,

husband stipulated that $570,000 of this debt was his separate

debt that he had incurred to purchase his current, nonmarital

home. Thus, we don’t further address the court’s decision to

categorize that part of the line of credit debt as husband’s separate

debt.

¶ 21 As for the remaining $163,077 of the line of credit debt, the

court found that husband had incurred it to pay for his living

expenses during the pendency of the divorce proceedings, but that

his spending was “far in excess of any ‘reasonable needs.’” Thus,

the court found that $100,000 of the $163,077 debt would be

considered marital debt and the $63,077 balance was husband’s

separate debt.

¶ 22 Although the court may consider the economic fault of the

parties when dividing marital property, see Jorgenson, 143 P.3d at

1173, that concept shouldn’t be applied when characterizing

whether an asset or debt is marital or separate. The character of a

12
debt as marital depends on when it was acquired. And debt

incurred during a marriage is marital debt. See In re Marriage of

Speirs, 956 P.2d 622, 624 (Colo. App. 1997). Because the line of

credit debt was incurred during the marriage, it is marital debt.

See Jorgenson, 143 P.3d at 1172; Speirs, 956 P.2d at 624.

¶ 23 The court based its decision that $63,077 of the line of credit

debt was husband’s separate debt on its finding that husband

“accessed the account to support an extravagant lifestyle” and that

husband’s spending was far in excess of any reasonable needs.

Although wife testified at the hearing about husband’s excessive

spending after they separated and provided some supporting

documentation, the court failed to make any detailed findings to

explain how it came up with the $100,000/$63,077 split after

accounting for the portion of that debt solely related to husband’s

new home.

¶ 24 Consequently, to the extent the court made findings about

how husband spent money in excess of his reasonable needs, such

consideration relates to the court’s determination of an equitable

allocation of the marital debt, but it doesn’t permit the court to

exclude the debt from the marital estate. Husband’s line of credit

13
debt, aside from the $570,000 he agreed was his separate debt

because it financed his current home, was marital debt, and the

court was required to allocate it in its division of the marital estate.

See § 14-10-113(1) (The court “shall divide the marital property.”).

¶ 25 Treating that portion of the line of credit debt that wasn’t used

to purchase husband’s current home as marital debt in no way

forecloses the district court’s ability to allocate such debts to the

spouse actually incurring them. See id.; Wright, ¶ 3 (an equitable

division of the marital property need not be equal). Rather,

including such debts in the class of marital liabilities enhances the

trial court’s ability to enter the most equitable distribution of the

marital estate based on all of the circumstances affecting the

parties’ situations at the time of dissolution. See Speirs, 956 P.2d

at 624; cf. Balanson, 25 P.3d at 37-38 (reversing the court of

appeals’ determination that the misclassification of an asset as

separate was harmless based on the district court’s “alternative

finding that even as separate property, the gifts constituted an

economic circumstance of Wife that was relevant in determining an

equitable property division”).

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D. Summary of Challenges to Property and Debt Allocation

¶ 26 Based on our resolution of the issues discussed above, we

reverse the permanent orders and remand the case to the district

court for it to re-examine the property allocation. In doing so, the

court must reclassify both the proceeds from the sale of the Onyx

Circle home and $163,077 of the line of credit debt as marital

property. But because no party challenged the valuation of any

marital asset — and because the marital estate is valued as of the

date of the decree of dissolution, see § 14-10-113(5) (“[P]roperty

shall be valued as of the date of the decree or as of the date of the

hearing on disposition of property if such hearing precedes the date

of the decree.”); In re Marriage of Finer, 920 P.2d 325, 331 (Colo.

App. 1996) — the court should use the same property and debt

valuations it found in its permanent orders.1 Because that

reclassification will materially change the overall value of the

1 To be clear, the record is similarly close on the question of

whether other assets or debts are classified as marital or separate.
Both parties had a full and fair opportunity to present evidence
regarding this issue. And because the relevant time of the parties’
intent regarding jointly titled property is at the time of the
acquisition of such property, there is no basis for permitting either
party to have a second bite at this apple.

15
marital estate at the time of the decree, the court must re-examine

the entire property division on remand based on the parties’ current

economic circumstances. See Krejci, ¶ 18 (noting that change in

the composition of the marital estate requires reconsideration of the

entire property distribution); Cardona, 321 P.3d at 522 (“The court

should reconsider the property division based on the parties’

economic circumstances existing on remand.” (first citing In re

Marriage of Wells, 850 P.2d 694, 697 (Colo. 1993); and then citing

In re Marriage of Powell, 220 P.3d 952, 961 (Colo. App. 2009))).

Consequently, we don’t separately address husband’s claim that the

court erred by dividing the marital estate equally.

III. Maintenance

¶ 27 Husband also contends that, in determining the amount of

maintenance to award, the district court erred when it (1) averaged

wife’s annual salary for the two years immediately preceding the

permanent orders hearing and (2) imputed income to him.

¶ 28 Because we have reversed the property and debt division and

remanded the case to the district court to reconsider that issue, the

court must also reconsider maintenance “in light of the updated

property division,” In re Marriage of de Koning, 2016 CO 2, ¶ 26,

16
taking into account the revised property division and the parties’

current health and economic circumstances, see Wells, 850 P.2d at

697-99; see also Cardona, 321 P.3d at 525 (“Because the issues of

property division and maintenance are inextricably interwoven, the

trial court must reconsider maintenance in conjunction with its

review of the property distribution on remand.”). And the court,

within its discretion, may receive additional evidence on this issue.

See Corak, ¶ 21.

¶ 29 Nevertheless, because the issues husband raises regarding

averaging wife’s income and imputing income to him are likely to

arise in a similar posture on remand, we briefly address those

arguments below. See Jorgenson, 143 P.3d at 1173.

A. Standard of Review

¶ 30 We review the district court’s award of maintenance for an

abuse of discretion. Vittetoe, ¶ 14. We defer to the district court’s

factual findings unless they are clearly erroneous. In re Marriage of

Connerton, 260 P.3d 62, 66 (Colo. App. 2010).

¶ 31 Whether potential income should be imputed to a spouse is a

factual issue, and the district court’s factual findings are entitled to

deference on review if supported by the record. People v. Martinez,

17
70 P.3d 474, 480 (Colo. 2003). The district court must make

specific findings to inform an appellate court of the basis of its

income imputation order. In re Marriage of Campbell, 140 P.3d 320,

324 (Colo. App. 2006).

B. Wife’s Income

¶ 32 When determining maintenance, the district court must

determine the parties’ actual gross incomes. § 14-10-114(3)(a)(I)(A),

(8)(a)(II), C.R.S. 2024. Bonuses and commissions are to be included

in a determination of income. § 14-10-115(5)(a)(I)(C), (E), C.R.S.

2024. In situations where a party’s income fluctuates or there is

conflicting evidence regarding the income amount, the district court

may, in its discretion, consider and use an average of the party’s

past income. See In re Marriage of Salby, 126 P.3d 291, 299 (Colo.

App. 2005).

¶ 33 At the permanent orders hearing, wife testified that her income

fluctuates based on bonuses and commissions and testified

regarding her fluctuating income in the two years immediately

preceding the hearing. Based on this testimony, the court found

that the best measure of wife’s income could be reached by

averaging her total income over the two years immediately

18
preceding the permanent orders hearing. There was nothing

improper in the district court’s approach to calculating wife’s

income based on the evidence that was before it at the permanent

orders hearing. Of course, whether this same approach is

warranted on remand depends on the evidence presented, including

whether wife’s income has continued to fluctuate.

C. Imputed Income to Husband

¶ 34 If a party is voluntarily unemployed or underemployed,

maintenance is calculated based on the party’s potential income.

§ 14-10-114(8)(c)(IV).

¶ 35 “Potential income” is the amount a party could earn from a

full-time job commensurate with the party’s demonstrated earning

ability. People in Interest of A.R.D., 43 P.3d 632, 637 (Colo. App.

2001). In determining potential income, the district court may

consider several factors, including the party’s historical income,

education, and work experience. See id.

¶ 36 It is undisputed that husband has Parkinson’s disease, a

progressively physically debilitating condition. Conflicting

testimony was presented at the permanent orders hearing regarding

19
husband’s ability to work as a guitar instructor and his earning

potential as an instructor or in some other capacity.

¶ 37 While the court acknowledged that husband has physical

limitations, it nonetheless found that he was voluntarily

unemployed and imputed income to him based on an assumption

that he could work twenty hours a week as a guitar instructor.

Based on the record that was before the court at the time of

permanent orders, we don’t discern any abuse of discretion. See id.

But given the degenerative nature of husband’s condition, the court

will have to consider the husband’s circumstances at the time of the

post-remand hearing in determining whether imputing income is

warranted and, if so, how much income to impute.

IV. Disposition

¶ 38 The district court erred by determining that wife had a

separate property interest in the proceeds from the Onyx Circle

home sale and that $63,077 of the line of credit debt was husband’s

separate debt, not marital debt. Therefore, the property division

portion of the permanent orders is reversed, and the case is

remanded to the district court for reconsideration of that issue and

20
of maintenance based on the revised property division and the

parties’ then-current physical and economic circumstances.

JUDGE J. JONES and JUDGE RICHMAN concur.

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