Lucero v. Morales

• Court: Colorado Court of Appeals
• Decided: July 3, 2024
• Docket: 23CA0847
• Status: Unknown

Opinion

23CA0847 Lucero v Morales 07-03-2024

COLORADO COURT OF APPEALS

Court of Appeals No. 23CA0847

Weld County District Court No. 22CV30111

Honorable Shannon D. Lyons, Judge

Vincent John Lucero,

Plaintiff-Appellant,

v.

J. Pedro Morales,

Defendant-Appellee.

JUDGMENT AFFIRMED

Division IV

Opinion by JUDGE NAVARRO

Pawar and Johnson, JJ., concur

NOT PUBLISHED PURSUANT TO C.A.R. 35(e)

Announced July 3, 2024

Law Office of Leonard R. Higdon, PLLC, Leonard R. Higdon, Greenwood Village,

Colorado, for Plaintiff-Appellant

Lucero & Associates, R. Antonio Lucero, Denver, Colorado, for Defendant-

Appellee

1

¶ 1 Plaintiff, Vincent John Lucero, appeals the district court’s

judgment partitioning real property that he owned jointly with

defendant, J. Pedro Morales. We affirm.

I. Factual and Procedural History

¶ 2 In May 1996, defendant purchased the subject commercial

property and added plaintiff (his stepson) to the title as a joint

tenant. Defendant operated a repair business, L&M Auto, on the

property. After the business was closed, the parties disagreed

about the disposition of the property. Plaintiff then brought this

lawsuit, seeking severance of the joint tenancy and equitable

partition of the property.

¶ 3 The district court held a bench trial and then issued a written

order. According to the evidence admitted at trial and the court’s

factual findings, the property was purchased for $55,000 in May

1996. Defendant was the only person to contribute to the down

payment of $16,000, providing a check for $3,000 and a car valued

at $13,000. The remaining $39,000 was supplied via a loan as

documented by a promissory note executed by both parties in their

individual capacities. Defendant made monthly payments on the

promissory note until March 2001, when he took out a loan on his

2

residence to pay off the remaining balance. The promissory note

was cancelled on March 12, 2001.

¶ 4 Plaintiff testified that the funds defendant used to pay the

mortgage came from business proceeds of L&M Auto, to which both

parties were entitled. But the court did not find plaintiff’s

testimony credible, instead finding that he did not make any

contribution to the down payment or pay anything toward the

mortgage and that defendant made the mortgage payments out of

his own funds.

¶ 5 Defendant testified that, from 1996 to 2020, he and his wife

paid the property taxes and that plaintiff did not contribute to those

payments. Although plaintiff testified to the contrary, claiming that

he paid property taxes and bills with business funds, the court

found defendant’s testimony more credible because plaintiff failed

to present written evidence showing that the business had paid

those taxes.

¶ 6 Regarding L&M Auto, plaintiff testified that he was responsible

for the “business aspects” and that defendant did the mechanical

work. Plaintiff gave varied testimony about the ownership of L&M

Auto, testifying that it was a sole proprietorship but also that it was

3

a partnership he co-owned with defendant. But plaintiff presented

no documentary evidence of such a partnership. After weighing the

conflicting testimony, the court found that defendant was the

“principal in the business” and that plaintiff was only “peripherally

involved” in it.

¶ 7 The court concluded that the parties owned the property in

joint tenancy, and the court considered the contributions of each

party to equitably divide the proceeds from a future sale. The court

found that defendant paid the entire purchase price and property

taxes without any contribution from plaintiff. The court therefore

decided that defendant’s contribution was $55,000 (purchase price)

plus $91,988.20 (property taxes) for a total of $146,988.20.

Because plaintiff’s claim was based only “upon his position as a co-

owner under joint tenancy,” the court found plaintiff’s contribution

to the property was “essentially zero.”

¶ 8 In particular, the court found the “existence of L&M [Auto] and

the purported business partnership” between plaintiff and

defendant was not relevant to the disposition of the property. This

was true because (1) the property was owned in both party’s

individual capacities (not by a business entity); (2) to the extent

4

L&M Auto might have paid expenses that improved the condition of

the property, they were not well documented; and (3) there was

evidence that both plaintiff and defendant drew a distinction

between the property and the business. No credible evidence was

presented showing that the business paid the mortgage or the

property taxes. Instead, the court found that the business paid

rent to defendant for use of the property and paid compensation to

plaintiff “as an officer of L&M [Auto].”

¶ 9 The court further concluded as follows:

Given the length of time since the property was

acquired, the fact that Defendant was the more

responsible party who made all the payments

on the mortgage and paid all the property

taxes on the property, and the principles

concerning the time-value of money, the Court

finds it is equitable to quadruple the amount

of Defendant’s purchase price paid and to

double the amount of the overall property

taxes paid. Therefore, the Court shall credit

Defendant with $55,000 (purchase price) x 4 =

$220,000 plus $91,988.20 (property taxes) x 2

= $183,976.40, for a total credit of

$403,976.40. Neither party is entitled to any

special credits for other maintenance or

property improvements.

Thus, upon sale of the property, after payment

of closing costs and commissions, Defendant

shall receive the first $403,976.40. Thereafter

each party shall receive 50% of remaining

5

proceeds after payment of closing costs and

commissions. The parties shall split payment

of all closing costs and commissions 50/50.

¶ 10 On appeal, plaintiff argues that the district court erred by

(1) concluding that his alleged ownership of the business and

asserted partnership with defendant was irrelevant “to the issue of

contribution and equitable division”; and (2) crediting defendant

with quadruple the amount of contributions to the acquisition of

the property and double the amount of property taxes paid.

II. Credit for Contributions

¶ 11 As best as we can understand plaintiff’s first argument, he

contends that, because defendant’s payments toward the property’s

mortgage and taxes derived from the profits of their so-called

partnership, the district court should have found that such a

partnership existed and then credited plaintiff with an equal portion

of those payments when measuring the parties’ contributions to the

property. Given the evidence before the court, we are not

persuaded that it abused its discretion.

A. Relevant Principles

¶ 12 “A court’s function when deciding a partition action is not to

create new interests in property held by tenants in common[] but is

6

merely to sever the unity of possession owned by the tenants.”

Martinez v. Martinez, 638 P.2d 834, 836 (Colo. App. 1981). Thus,

when partitioning property held by tenants in common, who each

possess an undivided one half interest, the court may only assign

one half interest in the property to each tenant, not a greater share

to either. Id. The district court concluded, and the parties concur,

that these same principles apply to partitioning property held in

joint tenancy. Having discovered no contrary authority, we also

agree.

¶ 13 A partition suit is an equitable proceeding, and a court must

make a “complete adjudication as to the rights of all persons to the

property.” Id. Under section 38-28-110, C.R.S. 2023,

The court at any time may make such orders

as it may deem necessary to promote the ends

of justice to completely adjudicate every

question and controversy concerning the title,

rights, and interest of all persons whether in

being or not, known or unknown, and may

direct the payment and discharge of liens and

have the property sold free from any lien or

may apportion any lien among the persons to

whom the partition is made.

After the court has divided the property, the court may then, to

reach an equitable result, “compute the contribution of each tenant

7

and offset any amount owing against the one half share held by

each tenant.” Martinez, 638 P.2d at 836.

¶ 14 We review a trial court’s fashioning of an equitable remedy for

an abuse of discretion.

1

See Young Props. v. Wolflick, 87 P.3d 235,

237 (Colo. App. 2003). A court abuses its discretion only where it

misapplies or misconstrues the law, or if its decision is manifestly

arbitrary, unreasonable, or unfair. Gagne v. Gagne, 2019 COA 42,

¶ 16.

B. Application

¶ 15 We first emphasize that this action was brought simply to

partition real property. Plaintiff did not bring a cause of action

accusing defendant of misappropriation of profits from an alleged

partnership or any other misconduct related to the alleged

1

We disagree with plaintiff that de novo review is appropriate. His

contention does not require us to interpret a statute but merely to

review the district court’s equitable remedy.

8

partnership.

2

So we assume that defendant was fully entitled to

whatever money he received from the business. According to the

district court’s findings, defendant then used his own funds —

including taking out a mortgage on his home — to pay the mortgage

on the subject property and the property taxes. Plaintiff, although

paid compensation by the business, contributed nothing toward the

mortgage or the property taxes. On this record, we cannot conclude

that the court abused its discretion by crediting defendant with the

contributions at issue.

¶ 16 First, the evidence shows that defendant paid the full down

payment for the property. Plaintiff did not indicate that he

contributed anything to the down payment.

¶ 17 Second, as to the mortgage payments, the court noted that

numerous receipts evidenced payments from defendant to the prior

2

As the district court aptly put it at the bench trial,

[T]o the extent that anybody feels like they

were taken advantage of, or did not receive

their due compensation or business interests

out of the business, I’m really not

interested. . . . [I]t’s not something I’m going to

decide in this case. There’s not a lawsuit

about that. . . . I’m only divvying up the

property.

9

owners and that no evidence showed that the business made any of

those payments. And defendant testified that plaintiff did not give

him money for those payments. While plaintiff testified to the

contrary, the court credited defendant’s testimony over plaintiff’s.

As noted, defendant obtained a loan on his home to pay off the

mortgage early, also without contribution from plaintiff. Plaintiff

testified that he knew the loan was paid in full at some point but

did not know specifics, and the record showed it was paid off while

he was incarcerated.

¶ 18 Third, although plaintiff testified that he used business

proceeds to pay property taxes, no other evidence supported his

claim. Instead, defendant testified that he and his wife paid all

property taxes, which testimony the court found more credible than

plaintiff’s claim. Hence, the court determined that defendant was

the only one to contribute to property taxes for the duration of

property ownership.

¶ 19 To calculate the total of defendant’s contributions for property

taxes, the court relied on property tax records and receipts showing

the actual and assessed value of the property. While no evidence

was presented of property taxes paid from 1996 to 2007, the court

10

extrapolated the amount of property taxes paid for those years by

using the average amount of taxes paid from 2009 through 2021.

And the court included its calculations as an attachment to the

order.

¶ 20 The court had wide discretion in this partition action. See

Young Props., 87 P.3d at 237. Given that the court’s factual

conclusions are supported by the record, we do not see an abuse of

discretion and will not disturb the court’s findings. See E.S.V. v.

People in Interest of C.E.M., 2016 CO 40, ¶ 24 (“The credibility of

witnesses, the sufficiency, probative effect and weight of the

evidence, and the inferences and conclusions to be drawn therefrom

are all within the province of the district court, and we will not

disturb that court’s conclusions on review unless they are so clearly

erroneous as to find no support in the record.”).

¶ 21 Finally, even if some company funds were used to pay

expenses related to the property, that assumed fact would not

bolster plaintiff’s claim. The court found not credible his assertion

that he was significantly involved in the business. Instead, the

court found that defendant was the principal (if not, sole) owner of

11

the business. Because it has record support, we must defer to this

finding. See Young Props., 87 P.3d at 237.

¶ 22 Accordingly, we conclude that the court did not abuse its

discretion by crediting defendant for his contributions to the

purchase of the property and payment of property taxes.

III. Scaling of Contributions

¶ 23 Plaintiff next contends that the district court erred by crediting

defendant with quadruple the amount of his actual contributions

for the cost of purchasing the land and double the amount of actual

contributions for the property taxes. Given the court’s broad

discretion over this equitable matter, we see no reason to reverse.

A. Relevant Principles

¶ 24 To repeat, a partition suit is an equitable proceeding and after

the court has divided the property, it may “compute the

contribution of each tenant and offset any amount owing against

the one half share held by each tenant.” Martinez, 638 P.2d at 836.

Determining those contributions falls within the court’s discretion.

Young Props., 87 P.3d at 237.

¶ 25 In this process, a court typically begins with the value of the

property being partitioned and assigns half to each party. Martinez,

12

638 P.2d at 837. The court then subtracts one half of the plaintiff’s

contribution from the defendant’s share and adds one half of the

plaintiff’s contribution to the plaintiff’s share. Id. This is repeated

by subtracting one half of the defendant’s contribution from the

plaintiff’s share and adding one half of the defendant’s contribution

to the defendant’s share. Id.

B. Relevant Facts and Application

¶ 26 The court quadrupled defendant’s attributed contributions to

the purchase price of the property from $55,000 to $220,000 and

doubled defendant’s attributed contributions for the payment of

property taxes from $91,988.20 to $183,976.40. The court found it

equitable to increase defendant’s contributions in light of “the

length of time since the property was acquired, the fact that

Defendant was the more responsible party who made all the

payments on the mortgage and paid all the property taxes on the

property, and the principles concerning the time-value of money.”

The court therefore ordered that defendant receive the first

$403,976.40 of any sale proceeds and each party receive 50% of the

remaining proceeds after payment of closing costs and

commissions.

13

¶ 27 The record and common sense support the court’s rationale.

Even though the court did not know the exact value of the property

because it had not yet been sold (and no party asserted an

estimated value through an appraisal), the property’s value would

necessarily have appreciated over the prior twenty-seven years, so

the value of defendant’s contributions would have increased.

3

Because the court was tasked with finding an equitable remedy, it

could consider each party’s involvement and responsibility as it

related to the property’s value. Because the district court enjoys

wide powers while sitting in equity, we may not substitute our

judgment for the court’s. See In re Estate of Owens, 2017 COA 53,

¶ 22 (“We ‘may not reweigh evidence or substitute [our] judgment

for that of the trial court.’” (quoting Target Corp. v. Prestige Maint.

USA, Ltd., 2013 COA 12, ¶ 24)). And because the court supplied a

reasonable justification for its decision, we see no abuse of

discretion.

3

The record contains property valuations for tax purposes and an

agreed-upon listing price of $650,000 from an exclusive right-to-sell

listing contract executed before the lawsuit, although the parties

did not end up listing the property at that time. This information

supports a finding that the property’s value substantially

appreciated over the relevant time.

14

¶ 28 Additionally, when the parties do not present thorough

evidence to assist a court in partitioning the property, or where

there is no final sale amount, a court must rely on the evidence

presented to it to the best of its ability. See In re Marriage of

Rodrick, 176 P.3d 806, 815 (Colo. App. 2007) (“It is the parties’ duty

to present the trial court with the data needed to allow it to value

the marital property, and any failure by the parties in that regard

does not provide them with grounds for review.”); see also In re

Marriage of Nordahl, 834 P.2d 838, 842 (Colo. App. 1992)

(upholding business valuation where neither party provided expert

evidence and the trial court assessed value based on the only

evidence before it). Here, the court sufficiently considered the

evidence presented to determine defendant’s contributions and then

multiplied those values in accordance with the court’s discretionary

powers.

¶ 29 We also note that, while the court might not have followed

precisely the calculation process outlined in Martinez, this is likely

due to the fact that the court was not presented with the actual

value of the property. That is, the court did not have a precise

figure at which to begin the calculations. Cf. Martinez, 638 P.2d at

15

837 (accepting the parties’ stipulated value of the property at the

time of trial and using that to calculate the final interests). In

practice, however, the court’s order will reach the same outcome as

the method outlined in Martinez when the property is sold.

¶ 30 The court found that defendant is entitled to the first

$403,976.40 of profit from the sale and any remaining amount

would be split equally between the parties (because plaintiff is not

entitled to any contributions). This order accounts for defendant’s

contributions at the outset, rather than after the sale proceeds have

been evenly divided. Regardless of what the final sale price is,

however, the amounts allocated to each party remain the same

under either calculation method. And the court acted appropriately

by considering the parties’ contributions first and only then

considering the equitable remedy of increasing defendant’s share of

the property’s value. Practically, the court could not divide the

actual net equity of the property because there was no sale before

trial or stipulated value of the property. But the court’s order will

achieve the same financial division once the property is sold.

¶ 31 Consequently, we do not discern an abuse of discretion.

16

IV. Conclusion

¶ 32 The judgment is affirmed.

JUDGE PAWAR and JUDGE JOHNSON concur.