Marriage of Heil

• Court: Colorado Court of Appeals
• Decided: February 27, 2025
• Docket: 23CA1517
• Status: Unpublished

Opinion

23CA1517 Marriage of Heil 02-27-2025

COLORADO COURT OF APPEALS

Court of Appeals No. 23CA1517 Jefferson County District Court No. 11DR199 Honorable Jason Carrithers, Judge

In re the Marriage of

Greggory Steuart Heil,

Appellee,

and

Carolynn Lynn O’Rourke,

Appellant.

JUDGMENT AFFIRMED AND CASE REMANDED WITH DIRECTIONS

Division II Opinion by JUDGE LUM Fox and Berger*, JJ., concur

NOT PUBLISHED PURSUANT TO C.A.R. 35(e) Announced February 27, 2025

Haddon, Morgan and Foreman, P.C., Adam Mueller, Denver, Colorado, for Appellee

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

*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 Carolynn Lynn O’Rourke (wife), formerly married to Greggory

Steuart Heil (husband), appeals the district court’s judgment

granting husband’s post-decree motion for declaratory judgment

and denying her motion to reconsider. We affirm.

I. Background

¶2 Husband and wife married in 2003. Before the dissolution of

their marriage, husband founded Encoding.com, a cloud-based

media storage and processing company. During the dissolution

proceedings, the parties entered into a separation agreement that

provided for the division of their marital property, including

husband’s shares of Encoding.com. The provision dividing the

value of husband’s Encoding.com shares (encoding provision) reads

as follows:

With regard to Encoding.com, Husband agrees to transfer to Wife the cash equivalent of the value of one half of his interest in the shares of Encoding.com which vested as of May 1, 2011, when those shares are subject to liquidation. The husband agrees to pay the wife the cash equivalent of 50% of his Encoding.com stock options which vested May 1, 2011. The cash equivalent to be paid be [sic] will be determined by taking the market value for the stock on the day of determination times the number of options due the wife reduced by the cost of the options and the estimated taxes

1 that would have been incurred if the options had been exercised and sold on the day of determination. Specifically, Husband agrees to either: (1) transfer to Wife one-half of the net cash proceeds from each block of shares sold, repurchased and/or liquidated of his interest in the shares of Encoding.com which vested as of May 1, 2011, when those shares are subject to sale, repurchase and/or liquidation, [“Option 1”] (2) transfer to Wife the cash equivalent of the value as of May 1, 2011 of each block of shares of one-half of his interest in the shares of Encoding.com which vested as of May 1, 2011, if such shares are converted into any other type of security of any nature in the Company (including any transfer or conversion of shares made pursuant to a statutory merger or statutory consolidation of the Company with or into another corporation(s)/entity(ies)) when those shares are converted and subject to liquidation [“Option 2”], or (3) Husband agrees to hold for Wife at her option if possible and allowable, one-half of the shares of Encoding.com which vested as of May 1, 2011, if the Wife elects to sell, repurchase and/or liquidate each block of shares at a different time period or at a different price per share then [sic] Husband’s timing and sales price point [“Option 3”]. Husband shall not transfer, assign, gift, trade, exchange, etc. any share/s that does not result in the Wife receiving one-half of the net cash equivalent or value of each block of shares awarded to her under this Separation Agreement that are vested as of May 1, 2011.

2 ¶3 As of May 1, 2011, husband had 2,132,612 vested shares.

According to a valuation report performed for the company, the

shares were worth $0.163 each on that date.1

¶4 The decree of dissolution of marriage was entered in

September 2011. In May 2022, Encoding.com merged with another

company. Husband emailed wife his understanding that the

merger triggered his duty to pay her the value of her half of the

shares under Option 2 of the encoding provision. However,

disputes arose between the parties about, as relevant here, the

amount of the payment. Specifically, the parties disputed the date

as of which the shares would be valued. Husband contended that

the valuation date was May 1, 2011. Wife contended that the

shares should be valued as of the date of the merger, at which time

they were worth far more. Both parties’ arguments were based on

the language of the encoding provision.

¶5 Eventually, husband filed a motion for declaratory judgment

seeking a declaration from the court that wife was entitled to

1 The valuation report values the shares at $0.163 as of April 30,

2011. However, both parties treat this value as the May 1, 2011, value.

3 $128,724.46 — an amount he reached by multiplying 1,066,306

(the number of shares due to wife) by $0.16 (the value of the shares

as of May 1, 2011) and subtracting applicable taxes.

¶6 The district court largely granted husband’s motion,

concluding that wife was entitled to $131,138.05.2 The court

concluded that the separation agreement was “ambiguous but not

indecipherable as to the amount owed to [wife].” It elaborated that

the “preliminary sentences of [the encoding provision] discussing

the ‘date of determination’ are readily harmonizable with the plain

language of Option 2,” and that, under the applicable language, the

“‘date of determination’ is May 1, 2011.”

¶7 Wife filed a motion to reconsider, arguing that because the

district court had determined that the separation agreement was

ambiguous, an evidentiary hearing was required to determine the

parties’ intent based on extrinsic evidence. The district court

denied the motion, explaining that while the “individual contractual

provision in question was ambiguous . . . the ambiguity could be

2 As best we can discern, the difference in husband’s payoff number

and the one reached by the court stems from husband’s use of a “rounded down” value of $0.16 per share, while the court used the value of $0.163 per share as detailed in the valuation report.

4 resolved through review of the four corners of the Separation

Agreement.” It also concluded that wife had waived her right to

request an evidentiary hearing by failing to request one in her

response to husband’s motion for declaratory judgment and by

agreeing that the court could rule on the pleadings during a status

conference.

¶8 Wife appeals.

II. Interpretation of Encoding Provision

¶9 Wife contends that the district court erred by concluding that

May 1, 2011, was the “day of determination” for Option 2. We

disagree.

A. Standard of Review and Applicable Law

¶ 10 We review a district court’s decision to issue a declaratory

judgment for abuse of discretion. Nautilus Ins. Co. v. 8160 S. Mem’l

Drive, LLC, 436 F.3d 1197, 1199 (10th Cir. 2006); Mendoza v.

Pioneer Gen. Ins. Co., 2014 COA 29, ¶ 9.3 However, we review the

substance of the judgment as we would any other district court

decision. Nautilus, 436 F.3d at 1199 n.1.

3 Neither party contests the court’s decision to enter a declaratory

judgment.

5 ¶ 11 Whether a written contract is ambiguous is a question of law

that we review de novo. Lake Durango Water Co. v. Pub. Utils.

Comm’n, 67 P.3d 12, 20 (Colo. 2003). We also review de novo the

district court’s interpretation of an unambiguous contract. Ad Two,

Inc. v. City & Cnty. of Denver, 9 P.3d 373, 376 (Colo. 2000).

¶ 12 “The primary goal of contract interpretation is to determine

and give effect to the intent of the parties.” Id. We determine the

parties’ intent “primarily from the language of the instrument itself.”

Id. A contract that is unambiguous “will be enforced according to

[its] plain language.” Id. “In construing a contract, we interpret the

contract in its entirety, seeking to harmonize and give effect to all of

its provisions so that none will be rendered meaningless.” People ex

rel. Rein v. Jacobs, 2020 CO 50, ¶ 43.

¶ 13 The terms of a contract are ambiguous when they are

“susceptible [of] more than one reasonable interpretation.” Ad Two,

9 P.3d at 376. However, the mere fact that the parties disagree

about the interpretation of the contract does not itself create

ambiguity. Id. at 377.

6 B. Analysis

¶ 14 While the encoding provision is certainly difficult to decipher,

we conclude that the provision unambiguously says that May 1,

2011, is the appropriate valuation date for purposes of calculating

wife’s payout under Option 2. Accordingly, we affirm the district

court’s declaratory judgment in favor of husband.4 See Deutsche

Bank Tr. Co. Ams. v. Samora, 2013 COA 81, ¶ 38 (“An appellate

court may affirm the trial court’s ruling based on any grounds that

are supported by the record.”).

¶ 15 The encoding provision can be broken into two major sections.

The first section initially describes what husband must transfer to

wife: “the cash equivalent of the value of one half of his interest in

the shares of Encoding.com which vested as of May 1, 2011.” (For

4 We observe that the district court’s conclusions regarding

ambiguity are somewhat conflicting. While the court said that the agreement was “ambiguous,” it didn’t appear to conclude that there was more than one reasonable interpretation of the day of determination in Option 2. Instead, it concluded that the day of determination was May 1, 2011, based on the agreement’s plain language and explained that “the ambiguity could be resolved through review of the four corners” of the agreement. This suggests that the court actually concluded that the agreement was unambiguous. However, because we review de novo, Lake Durango Water Co. v. Pub. Utils. Comm’n, 67 P.3d 12, 20 (Colo. 2003), we need not reconcile these inconsistencies.

7 ease of reference, we will refer to “[husband’s] interest in the shares

of Encoding.com which vested as of May 1, 2011” as “the marital

shares.”). It also describes, as a general matter, when husband has

to make the transfer: when the marital shares “are subject to

liquidation.” Finally, the first section describes how to calculate the

cash equivalent:

The cash equivalent to be paid . . . will be determined by taking the market value for the stock on the day of determination times the number of options due the wife reduced by the cost of the options and the estimated taxes that would have been incurred if the options had been exercised and sold on the day of determination.

The parties and the district court appear to agree (as do we) that

“day of determination” refers to the day as of which the marital

shares will be valued for the purpose of determining the cash

equivalent due to wife.

¶ 16 The second section outlines three categories of liquidation

events that trigger husband’s duty to pay wife:

• Option 1: the sale, repurchase or liquidation of “each

block” of marital shares;

8 • Option 2: the conversion of the shares to a different type

of security, including “transfer or conversion . . . made

pursuant to a statutory merger”; and

• Option 3: wife’s election to sell, repurchase, or liquidate

her shares at a different time and price point than

husband.5

For purposes of this appeal, the parties agree that payment to wife

is governed by Option 2.

¶ 17 The encoding provision doesn’t define “day of determination,”

indicating that it may vary depending on which payment option is

triggered. As relevant here, Option 2 specifies, “Husband agrees

to . . . transfer to Wife the cash equivalent of the value as of May 1,

2011 . . . of one-half of [the marital shares].” (Emphasis added.)

When read in conjunction with the first section of the encoding

provision, this language unambiguously says that when payment to

wife is made under Option 2, the day of determination — the day as

of which the shares are valued — is May 1, 2011. This

5 From the language of the encoding provision, it appears that the

third triggering event could only occur if it was permissible for husband to treat wife’s half of the options differently than his half.

9 interpretation harmonizes the definition of “cash equivalent” in the

first section of the provision with the specific valuation date

provided in Option 2 and gives effect to both sections. See Rein,

¶ 43.

¶ 18 Nevertheless, wife broadly contends that the day of

determination should be interpreted to be the date of the merger

rather than May 1, 2011. We disagree.

¶ 19 The fundamental problem with wife’s argument is that it reads

out of the agreement Option 2’s clear directive that husband

transfer the cash equivalent of the “value as of May 1, 2011.” See

Rein, ¶ 43 (noting that courts must construe contracts to give effect

to all provisions). To the extent wife attempts to give effect to that

language by arguing that “cash equivalent of the value as of May 1,

2011,” refers to the vest date of the shares rather than the

valuation date, we disagree. Option 2 contains two references to

“May 1, 2011.” The first refers to the “value as of May 1, 2011.”

The second refers to the shares that “vested as of May 1, 2011.”

Wife’s construction (1) changes the language “value as of” to “vested

as of” and (2) renders superfluous Option 2’s reference to the

“vested” shares, both of which are impermissible. See id.; see also

10 Radiology Pro. Corp. v. Trinidad Area Health Ass’n, 577 P.2d 748,

751 (Colo. 1978) (“Courts possess no authority to rewrite

contracts . . . .”).

¶ 20 Wife also contends that other parts of the encoding provision

compel a conclusion that the day of determination for Option 2

cannot be May 1, 2011. If this were true, then the encoding

provision would be irreconcilably inconsistent, and thus,

ambiguous. People v. Johnson, 618 P.2d 262, 266 (Colo. 1980)

(noting that conflicting contractual clauses indicate an ambiguity

that may be resolved by resort to extrinsic evidence to determine

the parties’ intent). We therefore consider, and reject, each of wife’s

arguments in turn.

¶ 21 Wife first argues that the part of the encoding provision

defining the calculation for the cash equivalent entitles her to

exactly half of husband’s total payout from any liquidation event.

We disagree because we see nothing in the plain language to

support such a conclusion. True, the parties’ payouts would be

equal if the day of determination were the same day as the

liquidation event, but nothing in the language mandates an equal

payout.

11 ¶ 22 Next, wife argues that if the parties had intended May 1, 2011,

to be the day of determination for Option 2, they would have simply

inserted the payoff amount because they knew the value of the

shares on that date and the number of shares due to wife. But the

fact that the parties could have used more efficient language doesn’t

mean that Option 2 is ambiguous or that the day of determination

for that option is something other than May 1, 2011.

¶ 23 Similarly, wife contends that the parties would not have used

the flexible term “day of determination” if they meant to fix Option

2’s valuation date as May 1, 2011. This argument, however,

ignores that the day of determination for Option 1 or Option 3 may

well be different than the day of determination for Option 2.6 And

we aren’t persuaded by wife’s argument that it is “illogical” for

Options 1 and 3 to have different days of determination than Option

2. While we can’t say exactly why the parties chose to value the

shares as of May 1, 2011, for Option 2 while potentially valuing the

shares as of a different date in Options 1 and 3, there is nothing

6 We need not — and do not — express any opinion about the day of

determination for Option 1 or Option 3.

12 inherently illogical about choosing to apportion risks and benefits

differently for different liquidation events.

¶ 24 For all these reasons, we conclude that the agreement

unambiguously states that May 1, 2011, is the day of determination

for Option 2.

III. Waiver of Evidentiary Hearing

¶ 25 Because we conclude that the contract is unambiguous, we

need not address wife’s contention that she was entitled to an

evidentiary hearing to determine the parties’ intent. USI Props. E.,

Inc. v. Simpson, 938 P.2d 168, 173 (Colo. 1997) (“Extraneous

evidence is only admissible to prove intent where there is an

ambiguity in the terms of the contract. Absent such ambiguity, we

will not look beyond the four corners of the agreement in order to

determine the meaning intended by the parties.”) (citations omitted).

IV. Appellate Attorney Fees and Costs

¶ 26 Wife requests her appellate attorney fees under C.A.R. 39.1

and section 14-10-119, C.R.S. 2024, because of the disparity in the

parties’ finances. Because the district court is in a better position

than we are to make findings about the parties’ financial

circumstances, we direct the court to consider wife’s appellate fee

13 request on remand based on the parties’ relative financial

circumstances at the time of the remand proceedings. See C.A.R.

39.1; In re Marriage of Martin, 2021 COA 101, ¶ 42.

¶ 27 Husband requests his appellate costs under C.A.R. 39.

Because we affirm the judgment, husband is entitled to his costs.

C.A.R. 39(a)(2).

V. Disposition

¶ 28 We affirm the judgment and remand the case to the district

court to determine whether wife should receive her reasonable

appellate attorney fees under section 14-10-119.

JUDGE FOX and JUDGE BERGER concur.