DocketNumber: No. CA 12-331
Citation Numbers: 426 S.W.3d 527, 2013 Ark. App. 151
Judges: Agree, Brown, Glover, Walmsley
Filed Date: 2/27/2013
Status: Precedential
Modified Date: 10/2/2021
| Appellant appeals from the circuit court’s divorce decree and the denial of his motion for a new trial. He argues on appeal that (1) the divorce decree was unlawful because it ordered him to buy corporate shares in a family business from appellee instead of distributing existing property and (2) appellee offered no competent evidence to prove that the business had a fair market value independent of the personal goodwill of appellant’s stepfather. We affirm.
Appellant and appellee were married in July 1996. The two separated in July 2006, and appellant sued for divorce in August 2006. Appellee filed a counterclaim on October 24, 2006.
At a pre-trial deposition,
At trial, Webb testified that he discounted the value of NRS by 10% and not the average Mergerstat value because the three shareholders all had control evidenced by the fact that they each took out money from the company. He did not apply a separate marketability discount, though he testified that the average marketability discount is 35%. He stated that marketability and lack of control are not distinguishable. He further discounted the value by 6%, which factored in the possible sale of HRSI to Capital One, an amount which he thought was high. He applied no personal goodwill discount for he believed Glynn Colquitt was not the owner of NRS and therefore could not hold personal goodwill.
Also testifying at trial was David Potts, a certified public accountant and expert witness for appellant. He testified that he prepared a fair market valuation of 33% of NRS complying with all industry standards. He used an income-based approach, instead of one of two other 14possible approaches because NRS is an operating business
Appellee testified that HSBC, NRS’s one client, had bought HRSI, which had bought Household Bank, the company that NRS initially started doing business with. She acknowledged that Capital One was acquiring HSBC, but she stated that NRS had kept the business with each prior change, presumably implying that the same would happen again. She asserted that compliance with HSBC requirements was extremely important and outweighed any personal relationship. Following ap-pellee’s testimony, all testimony was concluded and the court announced it would decide the issues after reviewing the evidence before it.
| Jn an order filed October 13, 2011, the court accepted the appellant and appellee’s stipulation that appellant owned a 99/300& interest in A.L.S.C.O.F.S., Inc., and NRS.
Appellant filed a timely motion for a new trial on December 22, 2011, objecting to the findings and the award of “alimony in gross” to pay for non-marital personal goodwill. In his brief supporting the motion, he further objected that the decision to award all shares to appellant was not supported by a factual finding as required by Ark.Code Ann. § 9-12-315(a)(l)(B). The motion was deemed denied on January 21, 2012, when the trial judge did not act on it. Appellant filed a timely notice of appeal on February 1, 2012.
Appellant filed a motion to remand the case on May 22, 2012, to complete the record. This court entered an order remanding the matter to the circuit court to settle the record on [ June 20, 2012. The circuit court entered an order on June 21, 2012, finally dismissing all claims by and against Ron Colquitt, Rod Colquitt, Glynn Colquitt, Betty Colquitt, RARO Investments, LLC, and A.L.S.C.O.F.S., Inc. a/k/a National Recovery Specialists, Inc., as third party defendants. The same order ratified the December 8, 2011 divorce decree as its final decree and denied appellant’s motion for a new trial on the record so that is was no longer simply deemed denied.
On June 22, 2012, appellant filed a second timely notice of appeal from the June 21, 2012 order and the December 8, 2011 divorce decree. This court remanded the matter for rebriefing because appellee’s brief was not in compliance with Arkansas Supreme Court Rule 4-2, which requires parties to refer to the appropriate page number in the abstract when citing testimony and other abstracted material. Having submitted a sufficient supplemental abstract, brief and addendum, this court now addresses the merits.
On appeal, divorce cases are reviewed de novo
Appellant’s first argument is that the trial court entered an unlawful decree obliging appellant to buy corporate shares from appellee at their inferential value instead of simply distributing existing marital property. Arkansas Code Annotated section 9-12-315 provides in subsection (a) that all marital property shall be distributed one-half to each party unless the court finds such a division to be inequitable.
the court shall designate in its final order or judgment the specific properly in securities to which each party is entitled, or after determining the fair market value of the securities, may order and adjudge that the securities be distributed to one (1) party on condition that one-half (1/2) the fair market value of the securities in money or other property be set aside and distributed to the other party in lieu of division and distribution of the securities.17
|sThe court has broad powers to distribute properly in order to achieve a distribution that is fair and equitable under the circumstances; it need not do so with mathematical precision.
Alimony and property divisions are complementary devices that a circuit court employs to make the dissolution of a marriage as equitable as possible.
This court has indicated that the characterization of installment payments made pursuant to an award in a divorce decree depends on the circumstances surrounding the award.
the chancellor awarded the wife “alimony” in the amount of $300 per month for a period of one year. The court pointed out that an “award of alimony in a gross sum ¡payable in installments is contrary to its long established rule that alimony should not be a fixed sum but a continuing allowance payable at regular intervals.” The court then concluded that even though the decree referred to the award as alimony, the payments |9were not an award of alimony “in gross,” when all the circumstances were considered.23
The circumstances in this matter are' that neither party requested or testified regarding alimony and the court below made no reference to any economic imbalances in its divorce decree. Like the “alimony” payments in Stout, the payments characterized as alimony here are actually periodic distributions of a court-ordered marital property division. Because the payments are not alimony, we do not address any of appellant’s arguments in support of his argument that the trial court entered an unlawful decree which deal with the court’s alleged error in awarding “alimony.”
While appellant argues that the divorce decree was unlawful because it ordered him to buy corporate shares in a family business from appellee instead of distributing existing property, no evidence was submitted by either party showing that appellee owned any shares. Neither party asserted, or presented any evidence, that appellee owned any interest in the company, only that she was owed 1/2 of appellant’s 1/3 interest as marital property.
| lftAppellant also argues that ap-pellee offered no competent evidence to support her burden that NRS had a “fair market value” independent of the personal goodwill of Colquitt. The valuation of goodwill is a question of fact that depends upon the particular circumstances.
The court heard testimony from appel-lee’s expert witness as to a calculation that didn’t follow the industry standards, but instead applied discounts pursuant to his agreement with appellee. Still, appellee’s expert agreed with appellant’s expert that the value of 100% of the company was $8,028,000. Appellant’s expert witness testified to the company’s fair market value. Furthermore, appellee testified that compliance outweighed personal relationships and appellant testified that HSBC liked NRS because it could make HSBC’s desired changes more quickly than competitors. We find that the circuit court had competent evidence before it to | nshow the fair market value of appellee’s 1/6 interest in NRS; therefore we cannot say that the trial court’s valuation was clearly erroneous.
In any case, appellant was free to present evidence that might reduce the value of the company, such as documents to support his claim that HSBC, NRS’s one client, had reduced NRS’s number of assignments. Or he may have submitted evidence from HSBC that it was downsizing, as testified to by Potts, and that it would affect NRS. Appellant submitted no evidence tending to show that the value of the company was incorrect or that it needed to be reduced. While finding that the circuit court’s award was a division of property and not alimony, this court affirms as modified.
Affirmed as modified.
.Appellee also filed a third party complaint against Rodney Colquitt, Ron Colquitt, Betty Colquitt, and Glynn Colquitt on May 4, 2010. She filed a second third party complaint against RARO Investments, LLC, A.L.S.C.O.F.S., Inc., and National Recovery Specialists, Inc., on August 10, 2010.
. Based on tax returns, the company was actually owned by appellant, his two brothers and their mom. Appellant, according to tax returns, owned 32.67%, Rod Colquitt owned 32.67%, Ron Colquitt owned 32.66%, and Betty Colquitt owned 2% of the business.
. The trial was also for the purpose of determining whether appellant was behind in his payments of previously awarded temporary alimony. This issue is not before us on appeal.
. Webb's testimony from the pre-trial deposition was used in appellant's motion in limine to exclude Webb from testifying at trial.
. Appellant filed a motion in limine on October 7, 2011, to exclude testimony of appellee’s expert, Joe Webb, CPA. The record does not show an order from the court specifically addressing this motion, but Mr. Webb does testify at the trial, so we assume the motion was denied.
. Potts testified that the asset approach is most valid for non-operating businesses.
. Potts testified that the market approach requires sales of comparable businesses.
. In this same order, the court dismissed third party defendants A.L.S.C.O.F.S., Inc., National Recovery Specialists, Betty Colquitt and Glynn Colquitt from the action without prejudice. It specifically stated that the order did not cover RARO Investments, LLC, Ron Colquitt or Rodney Colquitt. Rodney Colquitt and RARO Investments, LLC, were dismissed from the action with prejudice in a separate order filed October 13, 2011.
. Russell v. Russell, 2012 Ark. App. 647, at 1, 2012 WL 5451806.
. Cummings v. Cummings, 104 Ark.App. 315, 323, 292 S.W.3d 819, 823 (2009) (citing Cole v. Cole, 89 Ark.App. 134, 201 S.W.3d 21 (2005)).
. Id. at 324, 292 S.W.3d at 823-824.
. Id. at 324, 292 S.W.3d at 824.
. Hernandez v. Hernandez, 371 Ark. 323, 327, 265 S.W.3d 746, 749 (2007) (citing Farrell v. Farrell, 365 Ark. 465, 231 S.W.3d 619 (2006)).
. Id.
. Id.
. Johnson v. Johnson, 2011 Ark. App. 276, at 8, 378 S.W.3d 889, 895; Ark.Code Ann. § 9-12-315(a)(1)(A) (Repl.2009).
. (Repl.2009).
. Johnson, 2011 Ark. App. 276 at 9, 378 S.W.3d at 895 (citing Coatney v. Coatney, 2010 Ark. App. 262, 377 S.W.3d 381).
. Cummings, 104 Ark.App. at 324, 292 S.W.3d at 825 (2009) (citing Cole, supra).
. Burns v. Burns, 2011 Ark. App. 312, at 4, 383 S.W.3d 458, 460 (citing Harvey v. Harvey, 295 Ark. 102, 747 S.W.2d 89 (1988)).
. Wright v. Wright, 2010 Ark. App. 250; at 7, 377 S.W.3d 369, 374 (citing Hoover v. Hoover, 70 Ark.App. 215, 16 S.W.3d 560 (2000)).
. Snyder v. Snyder, 13 Ark.App. 311, 313, 683 S.W.2d 630, 631 (1985) (citing Stout v. Stout, 4 Ark.App. 266, 630 S.W.2d 53 (1982)).
. Id., 683 S.W.2d at 631-32.
. Appellee was employed by NRS at the time divorce proceedings were initiated by appellant, but was terminated four months later.
. Cole v. Cole, 89 Ark.App. 134, 140-141, 201 S.W.3d 21, 25 (2005) (citing Wilson v. Wilson, 294 Ark. 194, 741 S.W.2d 640 (1987); Williams v. Williams, 82 Ark.App. 294, 108 S.W.3d 629 (2003)).
. Winn v. Winn Enters., Ltd. P’ship, 100 Ark. App. 134, 141, 265 S.W.3d 125, 129 (2007) (citing Killian v. Hill, 32 Ark.App. 25, 795 S.W.2d 369 (1990)).
. Id.
. Cole, 89 Ark.App. at 141, 201 S.W.3d at 25 (citing W. Union Tel. Co. v. Byrd, 197 Ark. 152, 122 S.W.2d 569 (1938)).