     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
                                                                  July 3, 2019

                               2019COA104

No. 18CA0250, In re Marriage of Gibbs — Family Law — Post-
dissolution — Modification and Termination of Provisions for
Maintenance, Support, and Property Disposition — Imputed
Income

     This opinion answers the unresolved question of whether a

district court can, for the purpose of calculating maintenance,

impute to a party rental income from that party’s primary residence

when the primary residence has never been used as a rental

property. A division of the court of appeals concludes that a district

court cannot impute rental income to a party when that party has

never used the residence as an income-producing asset.
COLORADO COURT OF APPEALS                                           2019COA104


Court of Appeals No. 18CA0250
Larimer County District Court No. 12DR408
Honorable Devin R. Odell, Judge


In re the Marriage of

Carl Joseph Gibbs,

Appellant,

and

Joellen Elizabeth Gibbs,

Appellee.


              ORDER AFFIRMED IN PART, REVERSED IN PART,
                AND CASE REMANDED WITH DIRECTIONS

                                     Division IV
                            Opinion by JUDGE LIPINSKY
                        J. Jones and Martinez*, JJ., concur

                             Announced July 3, 2019


Thomas & Associates Law Firm LLC, Joseph G. Williams, Greenwood Village,
Colorado, for Appellant

Alison Ruttenberg, Louisville, Colorado; Vigil Law Offices, P.C., Frank G. Vigil,
Lakewood, 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. 2018.
¶1    Three years after the district court entered permanent orders

 in his dissolution of marriage case, husband, Carl Joseph Gibbs,

 sought to modify or terminate his maintenance obligation to wife,

 Joellen Elizabeth Gibbs, under section 14-10-122(1)(a), C.R.S.

 2018. Husband argued that his alleged loss of income resulting

 from a shoulder injury he incurred three years following the entry of

 the permanent orders constituted a substantial and continuing

 change in his circumstances that warranted a decrease in his

 maintenance payments.

¶2    The district court denied husband’s motion based on its

 calculation of husband’s monthly income, including imputed rental

 income from husband’s primary residence.

¶3    We affirm the portion of the decision addressing husband’s

 self-employment income and reverse the portion imputing rental

 income to him because husband never used the residence as an

 income-producing asset. We remand to redetermine husband’s

 maintenance obligation without considering imputed rental income.

                          I.    Background

¶4    The parties’ marriage ended in 2013. In the permanent

 orders, the district court awarded wife $1,850 in monthly


                                   1
 maintenance until the death of either party, the remarriage or civil

 union of wife, or further court order.

¶5     In September 2016, husband moved to modify or terminate his

 maintenance obligation. He alleged that, as a result of a severe

 shoulder injury, he was no longer able to perform labor-oriented

 work. He further alleged that he had been diagnosed with stenosis,

 which would require surgery and affect his ability to work for the

 rest of his life.

¶6     Following a hearing at which husband, wife, and a physician

 testified, the court found that husband had not shown a

 substantial and continuing change in his circumstances and,

 therefore, denied husband’s motion.

                        II.   Husband’s Income

¶7     Husband contends that the district court abused its discretion

 in determining that his income was $6,500 per month for purposes

 of calculating maintenance.

                       A.     Standard of Review

¶8     We review a district court’s order continuing or modifying

 maintenance for an abuse of discretion. In re Marriage of Kann,

 2017 COA 94, ¶ 75, ___ P.3d ___, ___. A district court abuses its


                                    2
  discretion when its decision is manifestly arbitrary, unreasonable,

  or unfair. In re Marriage of Gromicko, 2017 CO 1, ¶ 18, 387 P.3d

  58, 61.

¶9     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). The district court must make sufficiently explicit

  findings of fact to give the appellate court a clear understanding of

  the basis of its order. In re Marriage of Rozzi, 190 P.3d 815, 822

  (Colo. App. 2008).

                       B.   Self-Employment Income

¶ 10   Husband argues that the district court miscalculated his self-

  employment income because it did not accurately calculate the

  ordinary and necessary business expenses that needed to be

  deducted from his gross receipts, as required by section

  14-10-114(8)(c)(III)(A), C.R.S. 2018. We disagree.

¶ 11   In applying the maintenance guidelines, an individual’s gross

  income from self-employment is calculated by deducting from gross

  receipts the ordinary and necessary expenses required to produce

  income. Id. Ordinary and necessary expenses do not include

  business expenses that the district court finds are “inappropriate


                                    3
  for determining gross income.” § 14-10-114(8)(c)(III)(B). A self-

  employed party’s gross income includes expense reimbursements

  or in-kind payments received in the course of self-employment if

  they are significant and reduce personal living expenses.

  § 14-10-114(8)(c)(I)(X).

¶ 12   The record reflects that, when the district court entered the

  permanent orders, husband performed the manual labor of a

  framer for his own construction company. As a result of husband’s

  shoulder injury and pain from stenosis, he transitioned to a

  supervisory position at his girlfriend’s construction company.

¶ 13   The court found that husband earned a $5,000 monthly salary

  as a supervisor. The court acknowledged that husband was

  required to use a portion of his salary to pay for certain business

  expenses, including a cell phone, general liability insurance, and

  auto insurance. However, the court found that these business

  expenses were offset by his ability to use a company vehicle and the

  cell phone for personal purposes.

¶ 14   The record supports the district court’s finding that husband’s

  business expenses were offset by the value of the vehicle and cell

  phone. Husband testified that his business expenses for his cell


                                      4
  phone, general liability insurance, auto insurance, and loan

  payment totaled $1,057 per month. He also testified that he was

  provided the vehicle at no cost to himself and was allowed to use

  the vehicle for personal use. Husband estimated that the monthly

  loan payment on his vehicle was around $800 and that he spent

  around $300 per month in fuel. Husband further said that his

  construction company paid his cell phone bills. His monthly cell

  phone bill was $123.

¶ 15   In finding that husband’s business expenses were offset by the

  in-kind payments he received from his girlfriend’s construction

  company, the court essentially added those payments to his salary,

  see § 14-10-114(8)(c)(I)(X); see also In re Marriage of Long, 921 P.2d

  67, 69 (Colo. App. 1996) (noting that in-kind payments might

  include a company car, free housing, or reimbursed meals), and

  then deducted his business expenses from his salary, see

  § 14-10-114(8)(c)(III)(A). Because his monthly business expenses

  ($1,057) were nearly the same as the monthly in-kind payments for

  the vehicle, fuel, and cell phone ($1,223), we discern no abuse of

  discretion in the district court’s calculation of husband’s self-

  employment income.


                                     5
                       C.   Imputed Rental Income

¶ 16   Husband argues that the district court erred in imputing

  $1,500 per month in rental income to him. We agree.

¶ 17   The record reflects that husband continued living in the

  marital residence following the dissolution of the parties’ marriage.

  His monthly mortgage payment on the five-bedroom, 2,500-square-

  foot home was $2,552 at the time of the modification hearing.

  Husband lived in the home with his girlfriend and her three

  children. They lived there together as a family. Husband testified

  that he paid the mortgage and, although his girlfriend did not pay

  rent, she paid for the utilities and groceries.

¶ 18   The district court found that this arrangement was not a fair

  market exchange because husband’s portion of the utilities and

  groceries was only a small fraction of these costs. In addition, the

  district court imputed to husband rental income from the house,

  noting that husband “owns a large house — the former marital

  residence — that he could use to generate rental income. . . . [T]he

  property . . . is much larger than he needs for himself.”

¶ 19   The district court “estimate[d] that fair rental value would be

  at least $1,500 per month for a house of that size.” It therefore


                                     6
  concluded that husband was “essentially receiving at least $1,500

  in income that he is gifting to [his girlfriend] and her children.” The

  district court found that “[t]he fact that [husband] chooses to forgo

  this income from an asset should not be used to penalize [wife].”

  The district court added the $1,500 in imputed rental income to

  husband’s $5,000 monthly salary for a total income of $6,500 per

  month.

¶ 20   For purposes of calculating maintenance, potential income is

  properly imputed to a party who is voluntarily unemployed or

  underemployed. See § 14-10-114(8)(c)(IV); see also People v.

  Martinez, 70 P.3d 474, 476-81 (Colo. 2003) (discussing imputing

  income to an unemployed or underemployed parent for purposes of

  calculating child support). Unrealized income from an investment

  asset that earns interest or distributes dividends is also properly

  imputed to a party. See In re Marriage of Bregar, 952 P.2d 783,

  786-87 (Colo. App. 1997) (interest imputed on portion of capital

  gain from stock sale used to reduce margin account debt); In re

  Marriage of Laughlin, 932 P.2d 858, 861-62 (Colo. App. 1997)

  (interest imputed on portion of capital gain from sale of business

  used to construct addition to home and to pay mortgages); In re


                                     7
  Marriage of Tessmer, 903 P.2d 1194, 1196 (Colo. App. 1995)

  (interest and dividends on a retirement account were income,

  although not withdrawn and subject to penalty if withdrawn); In re

  Marriage of Armstrong, 831 P.2d 501, 503-04 (Colo. App. 1992)

  (income earned on portion of inheritance imputed to the father).

¶ 21   But no Colorado statute addresses whether potential rental

  income can be imputed to a party for purposes of calculating

  maintenance. Nor does any Colorado statute address whether

  potential rental income from a party’s primary residence that has

  never before earned rental income can be imputed to that party for

  purposes of calculating maintenance. We answer this second, and

  more narrow, question “no.”

¶ 22   No evidence in the record shows that the residence ever

  produced income. There is also no evidence indicating that

  husband was acting in bad faith by staying in the residence to

  inflate his monthly expenses and avoid paying maintenance to wife.

  By imputing rental income to husband, the court effectively

  recharacterized husband’s home from a primary residence to an

  income-producing rental property. This was, in our view, an abuse

  of discretion.


                                   8
¶ 23   In In re Marriage of Mugge, 66 P.3d 207 (Colo. App. 2003), a

  division of this court considered a parent’s unrealized income in the

  form of an undistributed retirement account. Mugge held that it

  was improper to “consider unrealized income for child support

  purposes solely because a parent could liquidate an asset or change

  its character into an asset capable of producing income.” Id. at

  212. Like the father’s undistributed retirement account in Mugge,

  husband’s primary residence in this case would not generate

  income unless its character were changed. Id. Moreover, we are

  unaware of any case holding, in effect, that a party in a dissolution

  of marriage case may be compelled to relocate to a smaller

  residence or to rent a portion of his or her home.

¶ 24   For these reasons, we conclude that, where a party has not

  historically earned rental income from his or her primary residence,

  potential rental income from that asset cannot be imputed to the

  party for purposes of calculating maintenance. See id. at 213

  (noting that several other statutory income categories expressly

  require payment to the recipient).




                                       9
¶ 25   We therefore remand this case to the district court to

  redetermine maintenance without imputing to husband potential

  rental income from his primary residence.

       III.   Husband’s Argument that He Is Not Underemployed

¶ 26   We next turn to husband’s contention that the district court

  erred in finding him underemployed.

¶ 27   The district court found that husband “has chosen a position

  that is comfortable and familiar to him, but there is no evidence

  that he has attempted to find the highest paying position possible

  given his experience.” But the district court did not make findings

  regarding the amount of additional income husband could be

  earning. Thus, the district court did not impute any income to

  husband on grounds of underemployment, and we need not

  address husband’s argument on this point.

                   IV.   Husband’s Other Arguments

¶ 28   Because the district court must redetermine maintenance

  based on the parties’ circumstances at the time of that hearing, we

  need not address husband’s arguments that he has experienced a

  substantial decrease in his income warranting a modification of




                                   10
  maintenance and that he would be impoverished if the district court

  does not modify his maintenance obligation.

                            V.    Conclusion

¶ 29   We affirm the portion of the district court’s order calculating

  husband’s self-employment income, reverse the portion imputing

  rental income to husband, and remand the case for redetermination

  of maintenance, as provided herein.

       JUDGE J. JONES and JUSTICE MARTINEZ concur.




                                    11
