## Facts

- Husband and Wife were married for about twenty-seven years; Wife worked mainly in low-wage jobs and focused on child care, while Husband worked in the oil industry and later built a successful closely held company, NRG Services, LLC (NRG).
- Husband owned a controlling interest in NRG; Wife had limited independent financial knowledge of the business and relied in part on her father, NRG’s chief financial officer, during negotiations.
- The parties’ standard of living rose substantially in the final years of the marriage, largely due to NRG’s success.
- The parties executed a separation agreement valuing Husband’s NRG interest using a 33% marketability discount and requiring Husband to pay Wife one-half of the discounted value over ten years without interest.
- Wife later repudiated the agreement as unconscionable, citing lack of counsel, limited understanding of the marital estate, and her father’s conflicted role.
- A magistrate awarded Wife temporary maintenance; the district court adopted the temporary maintenance award in its permanent orders and upheld the separation agreement.
- The court of appeals held the separation agreement unconscionable and vacated the permanent orders, but also reversed the temporary maintenance award; it rejected a categorical bar on marketability discounts in dissolution valuations.
- The Colorado Supreme Court granted review only on (1) whether a marketability discount may be applied in valuing a closely held going concern for equitable distribution, and (2) whether the court of appeals erred in reversing the temporary maintenance ruling.

## Issues

1. Whether a trial court may, in its discretion, apply a marketability discount when valuing an ownership interest in a closely held corporation that is a going concern for purposes of equitable distribution under Colorado’s dissolution statutes.
2. Whether the court of appeals erred by reversing the trial court’s ruling upholding the magistrate’s temporary maintenance award, including its treatment of marital standard of living and appellate deference.

## Decision

- The Colorado Supreme Court affirmed the availability of marketability discounts in dissolution valuations, holding trial courts may apply such discounts in their discretion when supported by the facts and evidence.
- The Court rejected a bright-line rule forbidding marketability discounts in divorce cases and extended the relevant valuation considerations applied in closely held corporation valuation outside the divorce context.
- The Court reversed the court of appeals on temporary maintenance and reinstated the trial court’s ruling upholding the magistrate’s temporary maintenance award.
- The Court did not review the court of appeals’ unconscionability holding regarding the separation agreement; the remand for new permanent orders remained in place, subject to the Supreme Court’s clarified rules on valuation and maintenance.

## Legal Principles

- In equitable distribution, valuation of a closely held business interest is fact-specific and committed to the trial court’s discretion; a marketability discount may be applied to reflect illiquidity and the price an outside buyer would pay.
- No categorical rule bars marketability discounts in dissolution proceedings; the propriety and size of any discount must be justified by the circumstances and supported by evidence, with meaningful findings.
- Appellate review of valuation choices and maintenance awards is for abuse of discretion; appellate courts must not substitute their judgment for supported trial-level findings.
- In determining entitlement to temporary maintenance under Colorado’s maintenance statute, the marital standard of living is a relevant factor at the threshold analysis, not only in setting amount and duration.
- Temporary maintenance decisions require consideration of the marriage’s specific circumstances (including length of marriage, earning history, and economic changes following separation) and are entitled to substantial deference on review.

## Conclusion

The Colorado Supreme Court held that trial courts may apply marketability discounts when valuing closely held business interests for property division and that marital standard of living may be considered in determining initial entitlement to temporary maintenance, reinstating the temporary maintenance ruling while leaving intact the remand for new permanent orders.


In re Marriage of Thornhill, 232 P.3d 782 (Colo. 2010)