In the Matter of Brian Colsia and Allana Kelley-Colsia

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THE SUPREME COURT OF NEW HAMPSHIRE

___________________________

9th Circuit Court-Merrimack Family Division
No. 2021-0373

IN THE MATTER OF BRIAN COLSIA AND ALLANA KELLEY-COLSIA

Submitted: February 10, 2022
Opinion Issued: April 6, 2022

Brian Colsia, the petitioner, filed no brief.

Nadeau Legal PLLC, of Biddeford, Maine (Robert M. Nadeau on the brief),
for the respondent.

Bernstein, Shur, Sawyer & Nelson, P.A., of Manchester (Roy W. Tilsley,
Jr. and Hilary H. Rheaume on the brief), for intervenor Wayne Colsia.

North Atlantic Legal, PLLC, of Portsmouth (Jonathan T. McPhee on the
brief), for intervenors Faith Deeter-Macomber and Foxtrot Delta, Inc.

Ford, McDonald, McPartlin & Borden, P.A., of Portsmouth (Marc W.
McDonald on the brief), for the receiver.
 Danielle Colsia, self-represented party, filed no brief.

MACDONALD, C.J. This interlocutory appeal is from an order of the
Circuit Court (Derby, J.) granting the motions to approve settlements filed by
the receiver, Attorney Edmond J. Ford (receiver). See Sup. Ct. R. 8. We affirm
and remand.

The following facts are supported by the record. This divorce proceeding
was initiated in March 2015 by Brian Colsia (husband) against his wife, Allana
Kelley-Colsia (wife). Shortly before and during the divorce, the husband took
several actions to hide marital assets from the wife and the court and/or make
discovery and recovery of the assets so difficult and costly that the wife would
settle for less than that to which she was entitled.

At the wife’s request, in February 2020, the court appointed the receiver
to recover property that had been removed from the marital estate. In its
appointment order, the court identified the scope of the receivership as
including ten “real properties and any and all proceeds thereof, which shall
include any and all inchoate, equitable and/or residual rights, such as the
right to bring suit to set aside fraudulent transfers or otherwise recover
property that has been improperly removed from the marital estate.” In
addition, the receivership encompassed two LLC entities and “any and all real
estate owned thereby, which shall include any and all residual rights”
including “the right to bring suit to set aside a fraudulent transfer or otherwise
recover property that has been improperly removed from the marital estate.”
The receiver was authorized to “take full title to and control of all assets,
accounts and credits of” the LLCs, “to arrange for the liquidation of all such
assets in a commercially reasonable manner forthwith,” and “to initiate and
prosecute such actions and to defend against such actions, as the receiver may
deem reasonable to recover and protect the assets of those entities, and, in
effect, the assets of the marital estate.”

In May 2020, the court granted the receiver’s motion for leave to file a
petition in superior court to challenge the validity of mortgages granted to
Wayne Colsia, the husband’s brother. The circuit court ordered that “[t]he
receiver shall exercise his discretion in prosecuting the case and negotiating a
resolution” and “shall seek [circuit] court approval prior to finalizing any
settlement that does not have the assent of” the husband and wife. Thereafter,
the receiver negotiated a resolution with Wayne and, in October 2020, moved
for the court to authorize and approve the settlement. The resolution released
or discharged “all of Wayne Colsia’s mortgages or claims (in the face amount of
$2,000,000.00) against receivership assets in exchange for the sum of
$300,000.00,” the effect of which “after taxes, and receivership expenses” made
available to the court “for immediate division between the spouses
approximately $2,000,000.00 in cash.”

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 In support of the settlement, the receiver’s motion set forth: (1) a “first
order analysis” of the range of possible financial outcomes of litigating the
fraud claim against Wayne; (2) a “second order analysis” of the time value of
money; and (3) a “third order analysis” of the risk of losing the litigation against
Wayne. Based on these analyses, the receiver concluded that “settlement on
the terms proposed [was] in the best interests of the marital estate.” The
receiver explained that the resolution minimized litigation expense, avoided the
risk of administrative insolvency, and allowed the court to do justice by
imposing the burden of the expenses incurred in resolving the litigation on the
husband in the final allocation of the marital assets.

In addition, in January 2021, the receiver moved for approval of a
settlement agreement with Foxtrot Delta, LLC (Foxtrot), which held two notes
secured by two mortgages on one of the properties listed in the receivership
order. The receiver’s motion explained that the settlement agreement proposed
to resolve what amounted to bona fide debt of the marital estate under terms
that minimized “interest expense” and “attorney’s fees and expenses for which
the Receivership Estate” was liable, and achieved “a reasonably just result.”
The wife objected to both proposed settlements.

Following hearings on the motions, the circuit court approved the
settlements. Regarding the Wayne settlement, the court reasoned that the
receiver had “presented a realistic proposal that will make a significant amount
of unencumbered money available for distribution” and “will also have no
adverse effect on [the wife’s] right to ask [the circuit court] for a property
division that favors her and disfavors [the husband] because of [his] fraudulent
conduct.” The court noted that, although it had pressed the wife’s counsel for
an “alternative scenario or legal theory that . . . would produce a better
outcome than the outcome presented by the receiver,” none was presented.
Rather, the wife maintained her position that the family division lacked
jurisdiction to settle the dispute with Wayne and that she “‘want[ed] her day in
[superior] court.’”

The court concluded that the wife

ha[d] not shown that continuing all of the Superior Court litigation
will make more money available for equitable division than the
amount she could ask to be awarded out of [the husband’s] share
because of what it took to free the marital assets from the
questionable mortgage that [the husband] gave Wayne.

Likewise, regarding the Foxtrot settlement, the court concluded that the
receiver “met his burden of proof in demonstrating that a settlement now and
in the amount proposed is in the best interests of the marital estate” and the
wife “ha[d] not provided the court with any specific realistic alternative path to
a better resolution.”

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 The circuit court subsequently granted the wife’s request for a stay of the
effectuation of the settlements pending appeal, and approved the transfer of the
following questions, proposed by the wife, for our consideration:

1. Does a divorce court that has appointed a receiver for the
marital estate [have] the authority to approve a settlement with
third parties and intervenors where in one instance since long
prior to the receiver’s appointment the spouse objecting to one of
the settlements had been litigating, and remains in litigation in the
superior court regarding, the validity of two mortgages affecting the
marital estate and a related question occasioned by alleged civil
conspiracy-related fraud associated with those mortgages, and
where in the other instance the ostensible intervenor has not at
any time filed an action in the superior court to determine the
validity of two other mortgages affecting the estate?

2. Do third-party mortgagees possess standing to intervene in a
divorce proceeding, to assert and advocate for approval of the
receiver’s settlement of litigation pending in another forum
regarding the validity and enforceability of the mortgages against
the marital estate?

3. Does a receiver appointed by a divorce court have authority to
negotiate and approve a settlement with third parties and
intervenors regarding the aforesaid mortgages over the objections
of a spouse and without review and approval by the superior court,
under the foregoing circumstances?

4. Did the divorce court err in approving the settlements over a
spouse’s objections?

5. Can a party that moved to have a receiver appointed with broad
settlement powers and failed to challenge the Marital Court’s
issuance of an order providing the receiver with such settlement
powers subsequently challenge the receiver’s ability to exercise
such settlement powers?

For the following reasons, we answer the first three questions in the affirmative
and the fourth question in the negative. In light of those answers that address
the wife’s specific challenges, we assume without deciding for purposes of this
interlocutory appeal that, notwithstanding the fact that the wife moved to
appoint a receiver with broad settlement powers and failed to challenge the
circuit court’s appointment order, she could challenge the receiver’s exercise of
his settlement powers.

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 Regarding the first question, the wife asserts that the circuit court
lacked authority to approve the Wayne and Foxtrot settlements because
the superior court has “exclusive authority to determine the validity of
mortgages.” The wife also asserts that there is “no language” in the
appointment order “that conferred any authority upon [the receiver] to
compromise and settle claims against the marital estate” or to “usurp”
the wife’s superior court litigation against Wayne regarding the validity of
the mortgages transferred to him from the husband.

The receiver counters that the circuit court, having the powers of a court
of equity, may appoint a receiver in a divorce proceeding to protect the assets of
the marital estate which, in this case, include: (1) the real estate properties
owned and hidden by the husband; (2) the wife’s right to recover the real estate
properties because they were fraudulently transferred; and (3) the wife’s claims
for damages against Wayne for wrongs done. In addition, the receiver asserts
that the circuit court’s orders clearly authorized the receiver to bring litigation
and negotiate resolutions to recover marital property.

The circuit court exercises exclusive jurisdiction over petitions for
divorce. See RSA 490-D:2, I (2010); RSA 490-F:18 (Supp. 2021) (references in
statutes to the judicial branch family division shall be deemed to be to the
circuit court where it has exclusive subject matter jurisdiction). When subject
matter jurisdiction lies with the circuit court, it “shall have the powers of a
court of equity.” RSA 490-D:3 (2010). Thus, the circuit court has broad and
flexible equitable powers that allow it to shape and adjust the precise relief to
the requirements of a particular situation. See Chase v. Ameriquest Mortgage
Co., 155 N.H. 19, 24 (2007). The propriety of awarding equitable relief rests in
the sound discretion of the trial court, to be exercised according to the
circumstances and exigencies of the case. Id. We will not overturn the circuit
court’s equitable decision absent an unsustainable exercise of discretion. See
In the Matter of Costa & Costa, 156 N.H. 323, 326 (2007).

Pursuant to its equity powers under RSA 490-D:3, the circuit court’s
jurisdiction over a divorce necessarily includes authority to appoint a receiver
to protect the assets of the marital estate. In the Matter of O’Neil & O’Neil, 159
N.H. 615, 624 (2010); see Eastman v. Bank, 58 N.H. 421, 422 (1878)
(explaining that the appointment of a receiver “is a matter resting in the sound
discretion of the court, and when appointed he is virtually an officer of the
court and subject to [its] orders”). The assets of the marital estate include all
tangible or intangible property and assets, real or personal, belonging to either
or both parties, whether title to the property is held in the name of either or
both parties.” RSA 458:16-a, I (2018).

To the extent the wife asserts that the circuit court erred in approving
the settlements because it lacks the authority to determine the validity of
mortgages, this argument misconstrues the court’s order. The court expressly

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stated that, by approving the settlements, it was “not ruling or making any
kind of finding on the actual merits of the fraud or priority claims as they relate
to Wayne.” Rather, in determining the best interests of the marital estate, the
court was “evaluating whether the receiver’s proposed settlement falls within
the realm of reasonableness for a settlement, given the costs, delay and risks of
litigation.”

Likewise, we reject the wife’s argument that the appointment order
contains “no language” conferring authority on the receiver to “hijack” the
wife’s litigation in superior court against Wayne or to “settle claims against the
marital properties” over her objections. The appointment order expressly
provided that the receivership encompassed “any and all inchoate, equitable
and/or residual rights, such as the right to bring suit to set aside fraudulent
transfers or otherwise recover property that had been improperly removed from
the marital estate” and the authority to “initiate and prosecute such actions
and to defend against such actions, as the receiver may deem reasonable to
recover and protect the . . . assets of the marital estate.” Further, the court’s
order granting the receiver’s motion to file suit against Wayne in superior court
to challenge the validity of mortgages granted to him expressly authorized the
receiver to “exercise his discretion in prosecuting the case and negotiating a
resolution.” Accordingly, we conclude that the circuit court had authority to
approve the settlements proposed by the receiver to recover marital property.

The second transferred question asks whether “third-party mortgagees”
possess standing to intervene in a divorce proceeding, i.e., Wayne and Foxtrot.
Rules governing the circuit court provide that “[a]ny person asserting an
interest in the proceedings may seek to intervene as a party in the action by
filing a motion to intervene.” Fam. Div. R. 2.7(A); see Snyder v. N.H. Savings
Bank, 134 N.H. 32, 35 (1991) (explaining that a trial court has discretion to
grant intervenor status when the intervenor has a “right involved in the trial
and his interest [is] direct and apparent” (emphases and quotation omitted)).
Reasoning that “Wayne’s interest in approval of the settlement is sufficiently
direct and apparent to warrant limited intervention on that issue at the trial
court level,” the court granted him status as an intervenor “for the purpose of
defending the receiver’s settlement.” Likewise, Foxtrot was “granted the same
limited intervenor status” in the circuit court.

The wife argues that granting intervenor status to Wayne and Foxtrot
“effectively turn[ed] the marital dissolution proceeding into a creditor’s
proceeding.” In doing so, she incorrectly contends that Wayne and Foxtrot
were granted intervenor status “to permit them to litigate and be heard
regarding their alleged rights of payment and of any rights of compromise
associated with their asserted mortgages” which, she asserts, is solely within
the superior court’s jurisdiction. However, the court’s grant of intervenor
status was expressly limited to defending the proposed settlements, not to
litigating the validity of the mortgages. We agree with the receiver that the

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circuit court did not unsustainably exercise its discretion by allowing the
intervenors “to provide insight into the appropriateness of the receiver’s
business judgment.” Accordingly, we conclude that the circuit court
sustainably exercised its discretion in granting limited intervenor status to
Wayne and Foxtrot.

The third question asks whether the receiver had authority to negotiate
and approve the Wayne and Foxtrot settlements over the wife’s objection and
without the superior court’s approval. The wife, repeating her arguments
above in response to the first question, argues that, by approving the
settlement agreements, the circuit court “usurp[ed]” her efforts in superior
court to litigate the validity of the husband’s mortgages granted to Wayne and
“the authority of the superior court itself.” As the circuit court explained,
however, the wife’s interest in the assets subject to the receivership arose solely
from the court’s statutory power under RSA 458:16-a to equitably divide assets
between divorcing spouses. “To the extent that [the wife] has been granted
standing to participate in various Superior Court actions because she is an
attaching creditor,” the court reasoned, “she is only an attaching creditor
because [it] granted her a pre-judgment attachment to secure her right to
equitable division [of] marital property.” Thus, the court determined, it was
“unable to find and articulate any standing in [the superior court] that [the
wife] would have separate and apart from her interest in an equitable division
of marital property by [the circuit court] in this divorce proceeding.” In the
absence of any legal authority presented by the wife to the contrary, we agree
with the court that both the creation of a receivership at her urging and the
court’s approval of “a settlement of all the claims stemming from Wayne’s
mortgage” were within the court’s equitable jurisdiction.

The fourth question asks whether the circuit court erred in approving the
settlements proposed by the receiver. We will uphold the circuit court’s
decision unless it is unsupported by the evidence or plainly erroneous as a
matter of law. See In re Estate of Locke, 148 N.H. 754, 755 (2002).

In reaching its decision, the court characterized the receiver’s proposed
settlement with Wayne as a “‘litigation costs’ settlement proposal, with an
adjustment for the small risk of an unfavorable outcome and the time value of
money,” and found that there was no evidence that further litigation would
produce a better result. The court concluded that, “without a clear alternative
litigation strategy and a plan for a more advantageous resolution and
collection,” rejecting the proposed settlement “seem[ed] likely to deplete the
marital estate for both parties and further prolong this divorce.” In addition,
the court determined that “the receiver ha[d] presented a realistic proposal that
[would] make a significant amount of unencumbered money available for
distribution. Approving the settlement will also have no adverse effect on [the
wife’s] right to ask [the] court for a property division that favors her and
disfavors [the husband] because of [the husband’s] fraudulent conduct.”

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 Likewise, the court found the proposed settlement with Foxtrot was in
the best interests of the marital estate, determining that the receiver had “met
his burden of proof in demonstrating that a settlement now and in the amount
proposed is in the best interests of the marital estate” and that the wife “ha[d]
not provided the court with any specific realistic path to a better resolution.”
Our review of the evidence supports the circuit court’s findings. The wife does
not challenge the receiver’s analysis or put forth any argument that the court’s
determinations were erroneous. Given that the court’s decision to grant the
motions to approve the settlements is supported by the record and is not
plainly erroneous as a matter of law, we find no error.

Affirmed and remanded.

HICKS, BASSETT, HANTZ MARCONI, and DONOVAN, JJ., concurred.

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