Regulation Agency Valuation Case Summaries
Chosen regulation agency valuation in Tennessee divorce appellate instances summarized.
Julie C.W. v. Frank Mitchell W., Jr.
No. M2019-01243-COA-R3-CV (Tenn. Ct. App. Feb. 26, 2021).
Tennessee Divorce: Regulation Agency Valuation Case Summaries
Husband was accomplice at Bass, Berry & Sims regulation agency, and spouse was a workers legal professional on the similar agency. Spouse’s skilled witness, Vic Alexander, CPA, testified that husband’s curiosity within the agency was 2.0432%, the agency’s fairness was over $24 million, and that husband’s curiosity had a price of $503,567. He additionally testified as to the worth firstly of the wedding, $236,820. He used a “honest worth” evaluation with out making use of reductions. He said that if reductions had been utilized, a 32% discount could be applicable, however that reductions weren’t applicable as a result of the worth represented earned however undistributed revenue. Many of the worth was receivables that will be transformed to money, and the agency had a excessive assortment price.
The husband made a movement to dismiss the spouse’s declare for a share within the enhance of his curiosity within the agency, on the bottom that the spouse had not made a considerable contribution to that enhance. The trial courtroom granted the movement. Although the worth of his curiosity within the agency elevated, the husband’s proportion had decreased throughout the marriage.
The trial courtroom held that the husband’s “fairness curiosity in Bass Berry & Sims has no financial worth … he’ll obtain nothing if he retires or in any other case withdraws his membership within the agency … he would obtain a money payout in accordance along with his capital account solely when Bass Berry & Sims is bought or dissolved. Presently, his capital account has a destructive worth, and there’s no proof that Bass Berry & Sims might be bought or in any other case dissolved within the foreseeable future.”
The Courtroom of Appeals agreed with this discovering.
No. M2018-00405-COA-R3-CV, 2019 WL 3546437 (Tenn. Ct. App. Aug. 5, 2019).
The spouse was an legal professional who obtained her regulation diploma throughout the marriage, the husband having paid for her to attend regulation faculty. Whereas the appellate opinion didn’t deal instantly with valuation points, the continuing was “characterised by ongoing discovery points. Acquiring even essentially the most primary info from Spouse proved troublesome, if not inconceivable.” The spouse was in the end present in legal contempt, and the Courtroom of Appeals affirmed in a first appeal.
At a later listening to, the spouse was ordered to “present further documentation about her regulation observe.” The invention difficulty appears to have been misplaced within the spouse’s movement to have the choose recused, and her legal professional’s movement to withdraw. In any occasion, the case went to trial, regardless of the spouse’s declare that her legal professional had deserted her on the eve of trial. The husband acquired a disproportionately bigger share of the property, primarily based upon the brief length of the wedding.
On attraction, the spouse argued “a generalized violation of [her] Due Course of rights.” The spouse’s conduct throughout discovery was related when the courtroom turned to the decrease courtroom’s award of legal professional charges to the husband. The courtroom discovered that the decrease courtroom’s common award of legal professional’s charges to the husband as alimony in solido was not warranted. Nonetheless, the appeals courtroom held that legal professional’s charges as a sanction for discovery abuse was applicable. Due to this fact, award of legal professional’s charges for the invention violations (presumably together with the documentation about her regulation observe) was applicable, and the appeals courtroom affirmed.
No. M2012-02154-COA-R3-CV (Tenn. Ct. App. Arp. 15, 2014)
Tennessee Divorce: Regulation Agency Valuation Case Summaries
The trial courtroom valued the husband’s fairness in his regulation agency at $37,192, primarily based upon the skilled testimony of the spouse’s skilled, one Mr. Alexander. The husband argued on attraction that the trial courtroom had made a mistake within the computation, which ought to have been set at $31,855. The skilled had primarily based his opinion on the agency’s financials, and the partnership settlement, which said that the husband was entitled to 35% of gross receipts from that accomplice’s accrued billable time, if and when collected. The skilled added the husband’s unpaid invoices and work in progress, and calculated 35% of that quantity.
The husband argued that the general sum included about $15,000 in administrative prices, and that he was not entitled to any compensation for these quantities. The skilled agreed that if these quantities weren’t thought-about, then the husband’s partnership curiosity could be decreased to $31,855, and husband argued that the decrease valuation ought to have been utilized.
The Courtroom of Appeals affirmed, despite the fact that it agreed with the husband as to the worth of his fairness. However since he was awarded the fairness, and the distinction in worth was “insignificant to the division of the marital property,” it didn’t make the division of marital belongings inequitable.
No. E2011-00416-COA-R3-CV (Tenn. Ct. App. Mar. 9, 2012)
Husband was fairness accomplice of regulation agency, however opinion comprises no dialogue of valuation of curiosity.
W2011-01138-COA-R3-CV (Tenn. Ct. App. Jan. 27, 2012)
Husband was an fairness accomplice with Spice, Flynn and Rudstrom regulation agency on the time of his divorce. After the divorce, he married his present spouse, who additionally practiced on the similar agency, however who began a brand new agency. Husband assisted her on quite a lot of regulation fits, which resulted in battle between husband and his companions. He was subsequently expelled from the agency, and executed a departure settlement, below which he acquired a “appreciable sum,” though the quantity was not specified.
The husband then went to work for his spouse, who remained the only proprietor of her agency, knowledgeable company. His revenue with the previous agency was $400,000-$500,000 per 12 months, and his revenue with the brand new spouse’s agency was $130,000. He acquired 45% of the charges he generated, lots of which had been from his previous purchasers. The rest was retained by the spouse’s agency. The trial courtroom had held that the husband was voluntarily underemployed, and the husband argued on attraction that the trial courtroom erred in contemplating the spouse’s agency’s sources.
The appeals courtroom held that it will be applicable for a trial courtroom to think about manipulation of revenue, however that there had been no particular findings to justify a discovering of voluntary underemployment. Due to this fact, it remanded the case for additional proceedings, together with additional discovery.
No. M2009-00248-COA-R3-CV (Tenn. Ct. App. Jan. 28, 2010).
One difficulty on this case was whether or not the legal professional husband was voluntarily underemployed. He had been in personal observe with purchasers within the banking business, and had an annual revenue over $1 million. He closed his observe, nonetheless, and defined that as a result of Sarbanes-Oxley Act, small banks had been consolidating, and new small banks weren’t forming. Because of this, his enterprise dried up. On the time of trial, he was working for a agency with a wage of about $150,000. The Courtroom of Appeals affirmed a discovering of voluntary underemployment, though it conceded the husband’s clarification was believable. (The trial courtroom had discovered that the husband was “so untruthful as to not be believed below oath.”
The trial courtroom did must set a price on the closed regulation observe, and it discovered that the husband’s fairness was $563,433. This included about $315,000 money in financial institution accounts, $250,000 in receivables, $15,000 in exhausting belongings, and about $13,000 in long run debt. On attraction, the husband argued that the one worth was $8761. The trial courtroom had used the financial institution stability as of March, and the husband cited a a lot decrease stability of about $7000 in July. The husband testified that the withdrawn funds had been spent on “taxes, help and marital money owed.”
However the trial courtroom had believed that the husband had manipulated his revenue, and located that the March financial institution assertion had been essentially the most dependable proof.
The Courtroom of Appeals disagreed, and held that the spouse had the burden of proof to point out that there had been any improper conduct between March and July. Within the absence of this proof, the appeals courtroom agreed with the husband that the account, and thus the general worth of the observe, ought to have been valued as of July, the date of trial.
Equally, there was proof that there had been $250,000 in receivables on the finish of 2007. However the husband testified that these had been collected firstly of 2008, and there have been no excellent receivables on the time of trial. Once more, the spouse had did not current any opposite proof. Since belongings are to be valued as of the time of trial, the appeals courtroom held that the trial courtroom had erred in together with the $250,000.
309 S.W.3d 483 (Tenn. Ct. App. 2009), permission to attraction denied (Tenn. 2010).
Husband was fairness accomplice in regulation agency, however valuation of regulation agency was not at difficulty on this attraction, nor on earlier attraction in similar case, Watson v. Watson, No. W2004-01014-COA-R3-CV (Tenn. Ct. App. Aug. 9, 2005).
No. W2007-00992-COA-R3-CV (Tenn. Ct. App. Dec. 31, 2008)
Tennessee Divorce: Regulation Agency Valuation Case Summaries
The husband valued his regulation observe at $33,491. He arrived at this worth by estimating the belongings, together with furnishings, art work, and two automobiles valued at $122,991, and subtracting debt of $89,500. He acknowledged that in previous monetary statements, he had valued it at $100,000, $175,000 and 200,000. He drew a wage from the agency, knowledgeable company, of $8000 monthly. He had additionally drawn over $11,000 from the agency in 2006.
The spouse, alternatively, set the worth of the agency at about $143,000, relying largely upon the monetary statements, and the trial courtroom accepted this worth.
The Courtroom of Appeals affirmed, noting that the monetary statements had been competent proof of worth. It additionally famous that the husband testified at deposition that he anticipated to obtain charges of about $121,000, though at trial he backed away from this testimony. The appeals courtroom famous that the trial courtroom had relied upon earlier income, in addition to earlier financial institution statements displaying the next worth. The appeals courtroom famous that, for these causes, the trial courtroom won’t have credited the husband’s valuation. For the reason that spouse’s worth was throughout the vary supported by the proof (the sooner monetary statements), the Courtroom of Appeals affirmed.
No. M2004-02105-COA-R3-CV, 2005 WL 3555545 (Tenn. Ct. App. Dec. 28, 2005), permission to attraction denied (Tenn. June 26, 2006).
Enchantment discusses solely visitation points, however mentions in passing that the daddy’s private damage regulation observe had been “adversely effected, severely so” by limits positioned on unsolicited mail solicitation by Tennessee Supreme Courtroom.
Crowe v. Crowe,
W2003-02864-COA-R3-CV, 2005 WL 1651650 (Tenn. Ct. App. Jul. 14, 2005)
Events stipulated that the legal professional husband’s gross revenue was $20,000 monthly. There was little dialogue of his agency’s worth, and the courtroom didn’t set a price, however the Courtroom of Appeals affirmed on the next grounds:
The second substantial merchandise of the marital property was Father’s regulation observe. The trial courtroom, after noting the testimony of Father’s accountant that the regulation agency has $25,000.00 in bodily belongings, decided that the regulation agency had excellent money owed within the type of a line of credit score, revenue tax legal responsibility, and extra money owed totaling $49,000.00, $142,055.00, and $37,866.00 respectively. Whereas the trial courtroom famous that the money owed exceeded the bodily belongings, the regulation observe was able to producing a considerable amount of revenue every year. The trial courtroom awarded Father his regulation observe, together with all tangible and intangible belongings.
No. E2004-00822-COA-R3-CV, 2005 WL 1566492 (Tenn. Ct. App. July 6, 2005)
Courtroom of Appeals affirmed holding that husband’s regulation observe was not marital property. Proof confirmed that events couldn’t stay on husband’s employment revenue, however relied on separate belongings of husband. This proof rebutted the presumption that regulation observe, which was fashioned throughout marriage, was marital property.
Black v. Black,
No. W2003-01648-COA-R3- CV, 2004 WL 1563233 (Tenn. Ct. App. Jul. 13, 2004), aff’d, 166 S.W.3d 699 (Tenn. 2005).
Spouse introduced impartial motion for fraud, alleging that ex-husband withheld info for Marital Dissolution Settlement, together with worth of his regulation observe. Trial Courtroom dismissed, and each Courtroom of Appeals and Supreme Courtroom affirmed. Amongst different causes for affirming, Courtroom of Appeals famous that there had been intensive discovery in underlying divorce case, which negated declare of extrinsic fraud.
Day v. Day,
No. M2001-01624-COA-R9-CV (Tenn. Ct. App. Jan. 4, 2002)
Tennessee Divorce: Regulation Agency Valuation Case Summaries
The spouse moved to put aside a Marital Dissolution Settlement, and the grounds included an allegation that the husband’s curiosity in his regulation agency was incorrectly valued at $22,500, an quantity which did not embrace the “money belongings” of the agency, and was not “primarily based on any precise appraisal of the belongings of the regulation agency.” She additionally alleged that the MDA did not consider a charge and expense award of $950,000 days after the judgment, and a receivable of $45,000 owed to the events because of a mortgage the husband made to the agency.
Her criticism was supported by affidavits from two skilled witnesses, appraiser R. Paul Cross, and CPA Richard Blount. For the reason that case additionally included little one help points, the trial courtroom denied the husband’s movement for abstract judgment, because the property and little one help points had been inextricably intertwined.
The courtroom of appeals famous that there was no motive to imagine why the spouse couldn’t have uncovered the alleged errors just by pursuing diligent discovery. Due to this fact, reduction below Rule 60 was improper, and the decrease courtroom ought to have granted the husband’s movement for abstract judgment.
932 S.W.2nd 939 (Tenn. Ct. App. 1996), attraction after remand, No. 03A01-9903-CH-00097, 2000 WL 134335 (Tenn. Ct. App. Feb. 4, 2000)
Within the 1996 attraction, the courtroom held that “[h]usband’s curiosity within the belongings of his regulation observe is a marital asset.” (Emphasis added.) It so held as a result of they had been created or acquired after the wedding. The belongings had been recognized solely as “accounts receivable and different belongings.”
Within the 2002 attraction after remand (not out there on-line—despatched through e-mail), the courtroom reiterated its holding relating to the valuation, and held that this was the regulation of the case. Within the second attraction, the courtroom makes use of considerably completely different language, that “the husband’s regulation observe is a marital asset and was correctly valued at $180,065.00.”
In different phrases, the 2 instances, taken collectively, could be authority for the proposition that “belongings of the regulation observe” and “regulation observe” are equal.
Derryberry v. Derryberry,
No. 03A01-9801-CV-00023, 1999 WL 486863 (Tenn. Ct. App. Jul. 13, 1999).
The husband was awarded “his complete regulation observe together with all receivables, work in progress, and belongings.” The spouse argued on attraction that there have been no findings of reality as to worth upon which a presumption of correctness would connect. However the courtroom said: “By adopting [husband’s] proposed disposition after which making its personal changes, the Trial Courtroom clearly adopted the values … assigned by [husband]; due to this fact, enough findings of reality had been made by the Trial courtroom for the presumption of correctness to connect….”
Although no greenback quantities had been assigned, the Courtroom of Appeals affirmed since “[b]oth events left the wedding with belongings moderately corresponding to these with which they entered the union. We discover no abuse of discretion within the trial choose’s division of marital property.”
909 S.W.2nd 804 (Tenn Ct. App.1995)
Courtroom of appeals affirmed award of regulation observe as separate property when “there is no such thing as a passable proof that the agency is price extra right this moment than it was when the events married.”
Brown v. Brown.,
No. 36, 1990 WL 140912 (Tenn. Ct. App. Oct. 1, 1990).
Mr. Brown owned a worthwhile authorized observe that represented one company consumer virtually solely. Brown v. Brown, 1990 WL 140912 (Tenn. Ct. App. 1990). Mr. Brown’s spouse supported him by means of regulation faculty, however turned a homemaker after the husband started his observe. After twenty-four years of marriage, the events filed for divorce. The trial courtroom held that the web price of the husband’s regulation observe was $125,000. This worth included money, mounted belongings, accounts receivables, and unbilled work. The worth didn’t embrace the goodwill of the observe. The courtroom held that the authorized observe was a marital asset and utilized the worth of the observe to the full division of property between the events. Nevertheless, the belongings of the authorized observe had been left as the only property of Mr. Brown. Mr. Brown appealed the trial courtroom’s ruling, claiming that the trial courtroom erred in declaring his authorized observe as a marital asset. Mr. Brown additionally claimed that if the courtroom was right find the observe was a marital asset, the valuation of the observe was incorrect.
The Tennessee Courtroom of Appeals affirmed the trial courtroom’s holding that the regulation observe was a marital asset. Mr. Brown argued that the trial courtroom incorrectly primarily based its determination on one other Tennessee case the place the lawyer’s spouse labored for her husband’s agency. The Courtroom of Appeals acknowledged the oblique contributions of Mr. Brown’s spouse when she supported him by means of regulation faculty, and later as homemaker. These contributions to the wedding had been enough for the Courtroom to search out the regulation observe was marital property. The Courtroom of Appeals additionally affirmed the trial courtroom’s valuation of the observe. Mr. Brown claimed that the trial courtroom erred when it did not worth the observe as close to to the divorce ultimate listening to date as potential. At trial, an skilled employed by Mr. Brown’s spouse testified that the worth of the observe was $138,604, which included the observe’s money and accounts receivable one month previous to the primary divorce listening to. Mr. Brown’s skilled testified that the worth of the agency was $100,302, which represented the checking account stability of the agency and accounts receivable on the final day of the divorce listening to. Seeking to a Tennessee statute, the Courtroom of Appeals held that the statute didn’t require the trial courtroom to worth the property in accordance with the precise date of the ultimate divorce listening to. Relatively, a valuation needs to be decided by “contemplating all related proof relating to the worth and the trial courtroom [may] . . . place a price on a marital asset that’s throughout the vary of the proof admitted.” The Courtroom of Appeals held that the trial courtroom was inside its discretion when it concluded the worth of the observe was $125,000.
Notice: Smith v. Smith, 709 S.W.2nd 588 (Tenn. Ct. App. 1985), permission to attraction denied (Tenn. 1986) holds {that a} regulation observe is a marital asset, however that skilled good will can’t be included as a part of worth.
Additionally, in Siegel v. Siegel, No. 02A01-9708-CH-00198, 1999 WL 135090 (Tenn. Ct. App. Mar. 5, 1999), husband was awarded regulation agency, however no dialogue of worth.
To study extra, see Valuing a Lawyer’s Authorized Follow & Regulation Agency in Tennessee Divorce Regulation.
