Assessing Rule 16.2—Part 1

15 Years and Counting

July 2020 By David M. Johnson

CRCP 16.2 was adopted to facilitate case management and discovery in family law cases. This article examines the rule’s genesis more than 15 years ago and assesses its effect on family  law practice today.

Colo. R. Civ. P. 16.2 is one of the most important results of the effort begun more than 15 years ago to address how family law-related cases are handled in Colorado courts. This article examines the history, application, and real-world impacts of Rule 16.2 in two parts. This Part 1 covers the rule’s genesis and history and discusses case law interpreting it.

The Genesis of Rule 16.2

Families come into contact with Colorado courts in a variety of ways. Whether it is through a divorce proceeding, a dependency and neglect matter, or juvenile delinquency, to name only a few, the Colorado courts have become intimately involved in the lives of tens of thousands of Colorado families. In recent years, the involvement of courts in the lives of families has risen significantly; such that over 50 percent of the cases on Colorado’s court dockets are family-related matters. The Judicial Branch has made substantial efforts to address these needs over the past several years; however, the Branch recognizes that, as family-related cases increase and the unique needs of families in the courts become more complex, a more comprehensive approach is needed.1

It’s hard to believe, but these words were written almost 20 years ago in the introduction to the May 2001 report by the Court Improvement Committee for the newly established Supreme Court Commission on Families in the Colorado Courts (Commission).2 Even in the year 2000 the Colorado judicial system was aware of the unique nature of family law cases and was looking for ways to improve how the courts handle those cases.

Following the May 2001 report’s issuance, Chief Justice Mary Mullarkey assigned the Commission to conduct a statewide study of how family law cases in Colorado are handled.3 Over the course of 18 months in 2001 and 2002, the Commission held nine public hearings and a number of special meetings with family law practitioners.4 Those efforts resulted in a final report in August 2002 that made 77 recommendations organized according to 12 themes.5 Practitioners often refer to this final report as the “Onion Report” because it peeled back the layers of how family law cases were processed in Colorado courts.6 The Onion Report included the following recommendations:

• Implement a central case management system for cases involving families.7
• Establish protocols to identify cases that will be in the family law system, and articulate the accelerated or non-adversarial procedures to be used in managing those cases, including which procedures require the professionals involved to meet before a hearing to provide the court with the most complete and accurate information.8 The goal of this case management system is to help provide an efficient and cost-effective process.9
• Amend current court rules and state statutes to provide non-adversarial alternatives where possible.10
• Encourage the legal profession to be more professional and collegial.11
• Implement the recommendations and provide oversight through the Supreme Court Standing Committee on Family Issues (Committee).12

The Supreme Court established the Committee in October 2002, and its first chair was Justice Rebecca Kourlis.13 The author had the honor of being appointed to the Committee. Two of the Committee’s first agenda items were revisions to then Rule 16.2 and Rule 26.2. These rules addressed case management and discovery in domestic cases. These tasks were prioritized to address the recommendation that court rules be amended to provide efficient, cost-effective, and non-adversarial alternatives for family law cases.14

The “Bad Old Days”

Practitioners sometimes refer to the practice of family law before the adoption of current Rule 16.2 as the bad old days. Under prior Rule 16.2, there was no affirmative duty to make full disclosures; only limited disclosures were required. These disclosures were made on sworn financial statement forms created by different judicial districts, so the forms were inconsistent, and their usefulness varied. Disclosures were also provided through responses to discovery requests under the old Rule 26.2, which made their usefulness subject to the skills of individual practitioners. Interrogatories and requests for production of documents were often met with oblique objections, or vague or incomplete answers, or they were ignored. A party had to seek out information, and it was often like pulling teeth. The use of a single expert for an issue was rare. Motions of all types were common. Case management by the court was minimal and cases often lingered on dockets for many months. The system was adversarial, drawn out, and expensive, and it did not focus on the children’s best interests.15 Judges in family law cases lacked training on the issues that came before them, especially on child-related matters.16 Attorney conduct was seen as unprofessional and fees were exorbitant.17 In short, the system was not serving families well.

The Adoption of Rule 16.2

From 2003 to 2004 the Committee’s subcommittee on the amendments to then Rule 16.2 and Rule 26.2 did its work. It determined that a completely new Rule 16.2 was appropriate, given its unique application to domestic relations cases.18 The subcommittee considered many drafts and solicited input from the bench and bar.19 The resulting new Rule 16.2 represented a completely new approach to case management and discovery in family law cases.20 It addressed the Onion Report’s recommendations by

• emphasizing the parties’ affirmative duty to make full disclosure of all material information in the case21 and requiring the parties to supplement or amend those disclosures in a timely manner as provided for in Rule 26(e);22
• authorizing a five-year period for the court to retain jurisdiction over any undisclosed assets or liabilities;23
• authorizing family court facilitators to assist the parties and to conduct status conferences;24
• limiting motions practice;25
• encouraging the use of a single expert whenever possible;26 and
• encouraging the court, the parties, and counsel to “evaluate each case at all stages to determine the scheduling of that individual case, as well as the resources, disclosures/discovery and experts necessary to prepare the case for resolution or hearing.”27

The state bar gave some resistance to the rule’s mandatory disclosure provisions out of a concern that the disclosure rules would require attorneys to violate attorney-client confidentiality.28 However, Rule 16.2 is clear that the duty to make disclosures belongs to the client, not the attorney. No harm to the attorney-client relationship was intended and none has resulted. In September 2004 the Supreme Court had a public hearing on the new rule and approved it unanimously. Rule 16.2 became effective on January 1, 2005.29

Cases Construing Rule 16.2

Since 2005 cases involving Rule 16.2 have steadily percolated through the trial and appellate courts, and there is now a significant body of case law that interprets and applies the rule’s provisions. The seminal cases are discussed below.

The first reference to Rule 16.2 in the appellate courts was in In re Marriage of Thornhill,30 but the reference was brief and simply cited the rule for the affirmative duty of spouses to make full disclosure of their material assets and liabilities in dissolution cases.

Affirmative Duty to Disclose and Five-Year Review Period

In re Marriage of Schelp31 offered the first detailed analysis of the new rule by the Colorado Supreme Court. Schelp was a consolidation of three lower court decisions, all addressing the issue of when the provisions of Rule 16.2(e)(10) became effective and would thus allow the trial court to reopen a case within a five-year period if there were omitted assets or liabilities.32

Schelp reviewed the history of the new rule and stated:

The Colorado Supreme Court enacted the current version of C.R.C.P. 16.2 to provide a uniform procedure for the resolution of all domestic relations cases and to reduce the negative impact of adversarial litigation. C.R.C.P. 16.2(a). Toward these ends, the court made certain changes to the previous rule. The new rule contains new case management procedures; heightened affirmative disclosure requirements; and a five-year retention provision to reallocate assets and liabilities after material misstatements or omissions have been made under the new heightened disclosure requirements.33

The Court noted that the rule’s purpose was to allow courts more flexibility with case management: “This new case management system, designed to ‘provide the parties with a just, timely and cost effective process,’ establishes a more active and flexible case management system” giving “the trial court, attorneys, and parties the ability to tailor a case management order to meet the specific needs of each case.”34

Further, the new rule introduced the affirmative duty of disclosure, which did not previously exist; the parties had no obligation to disclose all material facts. The Court pointed out that “[a]s a result, the responsibility for verifying that these documents were complete and accurate fell on the party receiving the documents. The new disclosure duties, in contrast, shift the responsibility for omissions or misstatements from the party receiving the documents to the party submitting them.”35 The Court determined that because the new affirmative duties for disclosure were a significant change in the law, the five-year review period in Rule 16.2(e)(10) could only be applied to cases filed after the new rule went into effect.36

Schelp is important because it emphasized the shift of the affirmative duty of disclosure to the parties that ended the need for a party to go in search of relevant information via more traditional discovery methods. Referencing Rule 16.2(e)(1), the Court stated:

This provision embraces the principle that spouses are in a fiduciary relationship with each other. These new affirmative disclosure requirements depart from the previous, traditional discovery procedures, which required the spouse receiving the discovery to resort to formal discovery devices if disclosures made under the old rules appeared inadequate. The new rule specifically repealed C.R.C.P. 26.2, which governed discovery under the old rules. Like the new case management procedures, the new heightened disclosure requirements were designed to reduce the adversarial nature of domestic relations litigation.37 (Emphasis added.)

In re Marriage of Hunt was the next case to include a detailed analysis of Rule 16.2’s impact and resulted in a decision that truly put the teeth into the duty of full disclosure.38 In Hunt, the divorcing couple agreed in mediation to value husband’s construction business at $500,000 and that wife would receive half that value. Both parties were represented by counsel and signed a memorandum of understanding (MOU) that was approved by the district court as partial permanent orders.39 Wife then retained new counsel and filed a motion under Rule 16.2(e)(10) to set aside the MOU and reopen the property division on grounds that husband had failed to make full disclosure about the value of the business. Wife alleged that husband had omitted mandatory disclosures, including financial statements, appraisals, and tax returns for the business. Wife claimed, based on discovery subsequent to the MOU, that the value of the business was over $2 million. The trial court relied on the MOU’s provisions to deny wife’s motion.40

The Court of Appeals reversed and held that husband had failed to comply with Rule 16.2’s mandatory disclosure provisions, and such a failure was fatal to any agreement on the value of the business. The Court explained that the district court erred by not granting wife’s motion because Rule 16.2(e)(10) allows either party to move to “allocate material assets or liabilities” that were not disclosed when the nondisclosure “materially affects the division of assets and liabilities.” Here, it was undisputed that husband violated the rule’s disclosure requirements regarding his business, Big R, so the five-year retention provision applied. Further,

[w]ithout husband having violated the disclosure requirements of C.R.C.P. 16.2, wife would have been bound by her decision to enter into the MOU, acknowledging the uncertain value of Big R. In that situation, she would have had all the information she was entitled to receive under the rule and, thus, could have knowingly and intelligently waived her right to conduct any further due diligence as to the value of Big R. But, as wife points out, had she received the documents husband withheld, she might not have entered into the MOU in the first place.41

The Court noted that wife did not have the burden to request these documents before entering into the MOU:

Rather, it was husband’s affirmative duty to provide them to her. . . . [T]he circumstance [wife] alleges here is exactly what the new version of C.R.C.P. 16.2 was designed to prevent—husband was in possession of documents relevant to the value of a significant marital asset, and wife was not. Yet, he did not provide the documents to her in connection with their marital dissolution proceedings and settlement negotiations.42

In a concurring opinion, Judge Jones noted that parties in a dissolution of marriage case could settle a dispute about the division of marital assets and liabilities and waive the right to move to set aside the decree under CRCP 16.2(e)(10). But such a waiver would have to be very explicit, unlike the one in Hunt.43

Hunt made it clear that the mandatory disclosures outlined in Rule 16.2 are not mere suggestions; they are mandatory and crucial to the integrity of the process. Because husband had failed to make those disclosures, the MOU was set aside.

Motions Practice under Rule 16.2(e)(10)

More recently, two cases dealt with the application of Rule 16.2(e)(10) in connection with the “plausibility standard” set forth in Warne v. Hall:44 In re Marriage of Runge45 and In re Marriage of Durie.46 In Warne, the Colorado Supreme Court held that a complaint must state a plausible claim for relief or risk dismissal under Rule 12(b)(5) for failure to state a claim upon which relief can be granted.

Runge and Durie both involved motions filed by former wives to reopen their asset allocations based on allegations that their former husbands failed to disclose certain business assets or the business value was misrepresented. The issue in both cases was whether the former spouse’s allegations were sufficient for the court to reopen the case and, if so, what (if any) discovery that spouse was entitled to. The Runge and Durie trial courts dismissed the motions on grounds that the allegations were not sufficient to go forward. The Court of Appeals held that the plausibility standard did not apply to Rule 16.2(e)(10) motions in both cases. However, while one panel affirmed the dismissal of wife’s motion in Runge,47 another panel reversed the dismissal of wife’s motion in Durie.48

In Runge, the Court of Appeals determined that wife merely speculated that husband “‘likely’ misrepresented the value” of one of his businesses.49 The Court distinguished the facts from Hunt, noting that in Runge husband had turned over substantial documents for review by wife’s own expert, and wife elected to forego further investigation and enter into a settlement agreement.50

In Durie, the Court of Appeals determined that wife’s allegations made on “information and belief” were sufficient to go forward.51 Wife alleged that husband sold a business for 850% of the value established at the time of the divorce by a combination of experts, and the sale came barely 12 months after the decree entered. Wife also alleged that husband had traveled to the city where the eventual buyer did business before the decree entered, and negotiations were underway before the divorce.52 The Court found these allegations sufficient under the provisions of Rule 8(e).53 Husband sought and obtained a writ of certiorari from the Colorado Supreme Court.

The Supreme Court held in Durie that the plausibility standard does not apply to a Rule 16.2(e)(10) motion; allegations in such a motion must be made with “particularity” pursuant to CRCP 7(b)(1), but such allegations can be made on information and belief, and how much discovery a movant in such cases would be entitled to is a matter left to the sound discretion of the trial court.54

The Court in Durie distinguished motions from pleadings in holding that the plausibility standard does not apply to a motion under Rule 16.2(e)(10). It agreed with the Court of Appeals in Runge that “a Rule 16.2(e)(10) motion is a motion, not a pleading.”55 Further, the standard applicable to motions under Rule 16.2(e)(10) is that in Rule 7(b), which requires that motions “state with particularity the grounds thereof” and “set forth the relief or order sought.”56 Further, such motions must “identify with specificity the grounds in support of it or the reasons relief is warranted.”57 The Court determined that allegations based on “information and belief” are matters of form under Rule 7(b)(2), and nothing in Rule 7(b) or any other rule prohibits allegations based on information and belief in motions in general. The Court found no authority to the contrary.58 In addressing the concern that opening up such cases to allegations based on information and belief would lead to an automatic round of discovery requests, the Court held that the particularity requirement serves to ensure that a moving party doesn’t obtain, post decree, a new bite at the discovery apple by simply relying on vague or speculative assertions.59

On the other hand, the Court disagreed with wife’s argument that a party seeking relief under Rule 16.2(e)(10) was inherently entitled to conduct discovery. The Court found that Rule 16.2 vests the court with considerable discretion in making decisions regarding discovery and in generally managing domestic relations cases.60 The Court stated:

The substantial discretion accorded to district courts in domestic relations cases, both in managing the litigation in general and in establishing the parameters of discovery specifically, informs our decision today. Hence, instead of concluding that a court is required to permit discovery whenever it receives a Rule 16.2(e)(10) motion, we hold that the court, in its discretion, may allow discovery or schedule a hearing (or both) if it concludes that the facts asserted in the motion are sufficient to justify doing so.61

Finally, the Court held that the burden of proof in such motions is a preponderance of the evidence, which is the standard established by the legislature in CRS § 13-25-127(1) for any civil action.62 The Court stated:

[T]he standards and procedures we adopt today are faithful to the bountiful discretion Rule 16.2 confers to district courts and strike the appropriate balance between allowing a deserving party to avail herself of the post-decree remedy in paragraph (e)(10)and the significant interest in finality. . . . The policy favoring finality is particularly pronounced in domestic relations cases. . . . Considering the compelling need for finality, the Runge division characterized the post-decree remedy created by Rule 16.2(e)(10) as “extraordinary” and “very narrow.” We echo that sentiment. District courts must thus take care to reopen a final decree under Rule 16.2(e)(10) only in those cases where it is truly justified.63

Active Case Management

The Supreme Court took up the issue of active case management by trial courts in domestic relations case in In re Marriage of Gromicko.64 There, wife sought certain corporate records for the corporation where husband was employed. The corporation moved to quash the subpoena on grounds that most of the information sought was privileged, confidential, and irrelevant to the dissolution case. The trial court denied the motion to quash and gave wife broad access to the corporation’s records. The corporation sought relief under Rule 21.65 The Supreme Court noted that “the Rule contemplates ‘management and facilitation of the case by the court, with the disclosure requirements, discovery and hearings tailored to the needs of the case’” and “C.R.C.P. 16.2(b) requires the court to provide ‘active case management from filing to resolution or hearing on all pending issues,’ with the intent of the Rule being ‘to provide the parties with a just, timely and cost effective process.’”66

In Gromicko the Court found that the trial court had not properly tailored the discovery to the needs of the case. The Court explained that trial courts must engage in a cost-benefit and proportionality analysis when determining what discovery should be permitted in a case,67 citing its earlier decision in DCP Midstream, LP v. Anadarko Petroleum Corp.68 The Court remanded the case to the trial court with instructions to allow wife access to documents that were relevant to her claim that the corporation was merely the alter ego of husband and, if wife was able to establish that claim, to tailor any further discovery to the needs of the case.69

Conclusion

Rule 16.2 took aim at improving case management and discovery in family law matters. Case law construing the rule since its adoption in 2005 bears out that it broke new ground for family law lawyers and litigants, especially by requiring mandatory disclosures and creating the five-year review period.

Part 2 will look at the results of the author’s informal survey of family law judges and lawyers who have experience working with Rule 16.2. The results offer some insight into the rule’s impact on the real world of family law cases.

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