Marriage of Rangel
Marriage of Rangel
Marriage of Rangel
Opinion
23CA1222 Marriage of Rangel 08-22-2024
COLORADO COURT OF APPEALS
Court of Appeals No. 23CA1222
Weld County District Court No. 22DR30047
Honorable Randall C. Lococo, Magistrate
In re the Marriage of
Anel Rangel,
Appellee,
and
Joel Rene Vazquez Vargas,
Appellant.
JUDGMENT REVERSED AND CASE
REMANDED WITH DIRECTIONS
Division V
Opinion by JUDGE HARRIS
Brown and Lum, JJ., concur
NOT PUBLISHED PURSUANT TO C.A.R. 35(e)
Announced August 22, 2024
Melusky Law, LLC, David J. Melusky, Greeley, Colorado, for Appellee
Donald E. Janklow, Greeley, Colorado, for Appellant
1
¶ 1 In this dissolution of marriage proceeding involving Joel Rene
Vazquez Vargas (husband) and Anel Rangel (wife), husband appeals
permanent orders as they relate to the property division.
Specifically, he contends that the magistrate erred in valuing his
business. We reverse the judgment and remand the case for further
proceedings.
I. Relevant Facts
¶ 2 In January 2022, after seventeen years of marriage, wife filed a
petition for dissolution. At that time, husband was self-employed
through his remodeling and concrete business, and wife was
unemployed.
¶ 3 On May 30, 2023, the magistrate issued a dissolution decree
and entered permanent orders. The court made the following
findings:
• Husband’s business was marital property. It was formed in
2015 and had a “good reputation based on [husband’s] hard
work and reputation.”
2
• The value of the business’s equipment was uncertain given
the limited testimony.
• All real property in the marital estate, including a mobile
home, owned, in whole or in part, by husband’s business
was marital property subject to equitable division and
excluded from the business’s value.
• Husband’s business was worth only its goodwill, which was
valued at $351,238.
• Husband was receiving significantly more income from the
business than he claimed, evidenced by the fact that his
alleged income did not cover his reported business and
personal expenses. Husband’s actual monthly income was
$11,300.
¶ 4 From those findings, the court (1) allocated the business to
husband; (2) ordered husband to pay wife an “equalization”
payment of $175,000; and (3) directed husband to pay wife monthly
maintenance of $2,325 for 110 months.
3
II. Property Division
¶ 5 Husband asserts that the magistrate improperly valued the
business’s goodwill and, as a result, the property division cannot
stand. We agree.
A. Relevant Legal Principles and Standard of Review
¶ 6 “The value of goodwill has long been accepted as an attribute
of a business relevant to determining its value.” In re Marriage of
Medeiros, 2023 COA 42M, ¶ 41. Goodwill generally refers to those
intangible assets of a business, such as reputation and on-going
relationships with customers and suppliers. See In re Marriage of
Nichols, 43 Colo. App. 383, 385, 606 P.2d 1314, 1315 (1979) (“A
professional, like any entrepreneur who has established a
reputation for skill and expertise, can expect his patrons to return
to him, to speak well of him, and upon selling his practice, can
expect that many will accept the buyer and will utilize his
professional expertise. These expectations are a part of goodwill,
and they have a pecuniary value.”); see also In re Marriage of
Banning, 971 P.2d 289, 292 (Colo. App. 1998) (location, reputation,
4
customer base, and customer relations constitute the goodwill of a
business).
¶ 7 The court has considerable discretion to achieve an equitable
property division, and absent an abuse of that discretion, we will
uphold the court’s decision. Medeiros, ¶ 28. The court abuses its
discretion when its decision is manifestly arbitrary, unreasonable,
or unfair, or when it misapplies the law. See id.
¶ 8 Valuing property is also within the court’s discretion, and we
will not disturb the court’s valuation if it is reasonable in light of
The court may select the valuation of one spouse over that of the
other spouse, or make its own valuation, and the court’s
determination will be upheld on appeal unless clearly erroneous,
meaning no evidence in the record supports it. See id.; see also
Van Gundy v. Van Gundy, 2012 COA 194, ¶ 12.
5
B. Discussion
¶ 9 Neither party called an expert to opine on the value of the
business.
1
Husband testified that the business had a value of
$15,000 or $20,000. Wife, who acknowledged that she had no
“experience with running a business” and no “accounting
experience,” offered only that the business was worth “a lot.”
¶ 10 Despite husband’s testimony that the business had some
value, his proposed findings and conclusions did not include any
value for the business. On the other hand, while wife was unable to
provide any evidence of the business’s value during the hearing, her
proposed findings and conclusions asserted that the business was
worth over $1,000,000, including $351,238 of goodwill. In
calculating goodwill, she applied what she called the “average
profits method.” According to wife, under that method, “goodwill is
1
Wife explained in her written closing argument that she had
suggested that the parties hire an expert to value the business, but
husband rejected that idea. She said she could not afford to hire
an expert on her own, so no valuation expert was retained. Wife did
not request that the court appoint an expert under C.R.C.P. 16.2(g)
or otherwise bring her request for an expert to the court’s attention
before her closing argument.
6
equal to the average profits for a set time period, multiplied by the
number of years.” She averaged the business’s profits over seven
years (2016 through 2022), multiplied that number by seven, and
arrived at a value of $351,238.
¶ 11 The magistrate adopted wife’s valuation in part. The court
first found that the value of the business was all goodwill. It
explained that although the business had some property —
equipment, real property, and a mobile home — it had allocated
that property “elsewhere” as part of its division of the marital estate.
Then, using wife’s “average profits method,” it valued the goodwill at
$351,238.
¶ 12 We recognize that the magistrate was at a distinct
disadvantage in valuing the business given the state of the
evidence. Nevertheless, we conclude that the magistrate erred by
accepting wife’s proposed “average profits method” to value the
business’s goodwill. See Medeiros, ¶ 28.
¶ 13 True, the business’s annual profits were introduced into
evidence through tax returns. But there was no evidence presented
7
that multiplying a business’s average profits by a number of years
would yield an accurate value of its goodwill.
¶ 14 Nor did the court make any finding based on the evidence that
the “average profits method” was a reasonable way to calculate
goodwill. And there is no case law, in Colorado or elsewhere,
indicating that this method is a reliable and recognized method to
determine business goodwill.
¶ 15 Indeed, under this method, the court effectively equated the
business’s actual net income over seven years with the value of the
business’s goodwill. But “goodwill is a property or asset which
supplements the earning capacity of . . . a business . . . and
therefore, it is not the earning capacity itself.” In re Marriage of
Graff, 902 P.2d 402, 405 (Colo. App. 1994) (emphasis added).
¶ 16 Though wife suggests that the court’s valuation might be
justified based on husband’s underreporting of income, she does
not dispute that the court’s methodology was flawed. On appeal,
she concedes that “[i]t has to be acknowledged . . . that the method
used by the [t]rial [c]ourt is suspect.”
8
¶ 17 Because the magistrate erred in valuing husband’s business,
we reverse this portion of the permanent orders and remand the
case for the court to revalue the business and redetermine an
equitable property division. See In re Marriage of Corak, 2014 COA
147, ¶ 31; see also Krejci, ¶ 18. On remand, the court may take
additional evidence concerning the value of the business as of the
date of the decree. See In re Marriage of Mohrlang, 85 P.3d 561, 564
(Colo. App. 2003); see also § 14-10-113(5), C.R.S. 2024 (property
must be valued at the time of the decree or of the hearing on
disposition, whichever is earlier).
¶ 18 Also, the court must allow the parties to present evidence
concerning their economic circumstances at the time of the remand
proceedings. See § 14-10-113(1)(c) (the court considers the parties’
economic circumstances at the time the property division “is to
become effective”); In re Marriage of Powell, 220 P.3d 952, 961 (Colo.
App. 2009) (court required to consider the parties’ financial
circumstances existing at the time of remand when reconsidering
property division and maintenance).
9
III. Maintenance
¶ 19 Because the court on remand must redetermine the property
division, the court must also reconsider wife’s maintenance award.
See Medeiros, ¶ 25 (court must reconsider the issue of maintenance
on remand of the property division); see also In re Marriage of de
Koning, 2016 CO 2, ¶ 26. And given that maintenance is based on
the parties’ financial circumstances at the time the order is entered,
on remand, the court should consider the parties’ current
circumstances for this purpose as well. See In re Marriage of
Stradtmann, 2021 COA 145, ¶ 35.
IV. Appellate Attorney Fees
¶ 20 Wife seeks her appellate attorney fees under section 14-10-
119, C.R.S. 2023. Apart from citing the statute, she provides no
basis for the request, and as a result, we must deny it. See C.A.R.
39.1 (a party seeking appellate attorney fees must explain the legal
and factual basis for the award; “[m]ere citation to th[e] rule or to a
statute, without more, does not satisfy the legal basis
requirement”); In re Marriage of Newell, 192 P.3d 529, 538 (Colo.
App. 2008).
10
V. Disposition
¶ 21 The judgment relating to the value of husband’s business is
reversed and the case is remanded to the district court to
reconsider the issue. The court on remand may take additional
evidence on the value of the business as of the date of the decree.
Mohrlang, 85 P.3d at 564; see also § 14-10-113(5). In light of its
new valuation finding, the court must reconsider the entire property
division to achieve an equitable result. See Corak, ¶ 31; see also
Krejci, ¶ 18. The court on remand should also reconsider the issue
of maintenance. The court must consider the parties’ economic
circumstances at the time of the remand when dividing the marital
property and determining maintenance. See Powell, 220 P.3d at
961; see also Stradtmann, ¶ 35.
JUDGE BROWN and JUDGE LUM concur.
Case-law data current through December 31, 2025. Source: CourtListener bulk data.