September 28, 2023

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: Legislation Agency Valuation Case Summaries

Husband was associate at Bass, Berry & Sims regulation agency, and spouse was a workers legal professional on the identical 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 worth of $503,567.  He additionally testified as to the worth in the beginning of the wedding, $236,820.  He used a “honest worth” evaluation with out making use of reductions.  He acknowledged 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.  A lot of the worth was receivables that may be transformed to money, and the agency had a excessive assortment charge.

The husband made a movement to dismiss the spouse’s declare for a share within the improve of his curiosity within the agency, on the bottom that the spouse had not made a considerable contribution to that improve.  The trial courtroom granted the movement.  Though the worth of his curiosity within the agency elevated, the husband’s share 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 together with his capital account solely when Bass Berry & Sims is bought or dissolved. Presently, his capital account has a detrimental worth, and there’s no proof that Bass Berry & Sims will likely be bought or in any other case dissolved within the foreseeable future.”

The Court docket of Appeals agreed with this discovering.


Odom v. Odom,

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 college.  Whereas the appellate opinion didn’t deal straight with valuation points, the continuing was “characterised by ongoing discovery points.  Acquiring even essentially the most primary info from Spouse proved troublesome, if not unimaginable.”  The spouse was in the end present in felony contempt, and the Court docket of Appeals affirmed in a first appeal.

At a later listening to, the spouse was ordered to “present extra documentation about her regulation observe.”  The invention problem appears to have been misplaced within the spouse’s movement to have the decide 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 obtained a disproportionately bigger share of the property, based mostly upon the brief period of the wedding.

On enchantment, 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.  Subsequently, 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.


Wheeler v. Wheeler,

No. M2012-02154-COA-R3-CV (Tenn. Ct. App. Arp. 15, 2014)

Tennessee Divorce: Law Firm Valuation Case Summaries

Tennessee Divorce: Legislation Agency Valuation Case Summaries

The trial courtroom valued the husband’s fairness in his regulation agency at $37,192, based mostly upon the skilled testimony of the spouse’s skilled, one Mr. Alexander.  The husband argued on enchantment that the trial courtroom had made a mistake within the computation, which ought to have been set at $31,855.  The skilled had based mostly his opinion on the agency’s financials, and the partnership settlement, which acknowledged that the husband was entitled to 35% of gross receipts from that associate’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 lowered to $31,855, and husband argued that the decrease valuation ought to have been utilized.

The Court docket of Appeals affirmed, regardless 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 property inequitable.


Jannerbo v. Jannerbo,

No. E2011-00416-COA-R3-CV (Tenn. Ct. App. Mar. 9, 2012)

Husband was fairness associate of regulation agency, however opinion comprises no dialogue of valuation of curiosity.


Flynn v, Flynn,

W2011-01138-COA-R3-CV (Tenn. Ct. App. Jan. 27, 2012)

Husband was an fairness associate 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 identical agency, however who began a brand new agency.  Husband assisted her on 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 obtained 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 yr, and his revenue with the brand new spouse’s agency was $130,000.  He obtained 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 enchantment that the trial courtroom erred in contemplating the spouse’s agency’s assets.

The appeals courtroom held that it will be applicable for a trial courtroom to contemplate manipulation of revenue, however that there had been no particular findings to justify a discovering of voluntary underemployment.  Subsequently, it remanded the case for additional proceedings, together with additional discovery.


Small v. Small

No. M2009-00248-COA-R3-CV (Tenn. Ct. App. Jan. 28, 2010).

One problem 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 trade, and had an annual revenue over $1 million.  He closed his observe, nevertheless, 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 Court docket 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 have to set a worth 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 onerous property, and about $13,000 in long run debt.  On enchantment, the husband argued that the one worth was $8761.  The trial courtroom had used the financial institution steadiness as of March, and the husband cited a a lot decrease steadiness of about $7000 in July.  The husband testified that the withdrawn funds had been spent on “taxes, assist 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 Court docket 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 in the beginning 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 property 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.


Watson v. Watson

309 S.W.3d 483 (Tenn. Ct. App. 2009), permission to enchantment denied (Tenn. 2010).

Husband was fairness associate in regulation agency, however valuation of regulation agency was not at problem on this enchantment, nor on earlier enchantment in identical case, Watson v. Watson, No. W2004-01014-COA-R3-CV (Tenn. Ct. App. Aug. 9, 2005).


Carpenter v Carpenter

No. W2007-00992-COA-R3-CV (Tenn. Ct. App. Dec. 31, 2008)

Tennessee Divorce: Law Firm Valuation Case Summaries

Tennessee Divorce: Legislation Agency Valuation Case Summaries

The husband valued his regulation observe at $33,491.  He arrived at this worth by estimating the property, together with furnishings, paintings, 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 per 30 days.  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 Court docket 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 earnings, in addition to earlier financial institution statements exhibiting 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 inside the vary supported by the proof (the sooner monetary statements), the Court docket of Appeals affirmed.


Demonbreun v. Demonbreun,

No. M2004-02105-COA-R3-CV, 2005 WL 3555545 (Tenn. Ct. App. Dec. 28, 2005), permission to enchantment denied (Tenn. June 26, 2006).

Attraction discusses solely visitation points, however mentions in passing that the daddy’s private harm regulation observe had been “adversely effected, severely so” by limits positioned on unsolicited mail solicitation by Tennessee Supreme Court docket.


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 per 30 days.  There was little dialogue of his agency’s worth, and the courtroom didn’t set a worth, however the Court docket 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 property, 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 property, 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 property.


LaGuardia v. LaGuardia,

No. E2004-00822-COA-R3-CV, 2005 WL 1566492 (Tenn. Ct. App. July 6, 2005)

Court docket of Appeals affirmed holding that husband’s regulation observe was not marital property.  Proof confirmed that events couldn’t reside on husband’s employment revenue, however relied on separate property of husband.  This proof rebutted the presumption that regulation observe, which was shaped 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 unbiased motion for fraud, alleging that ex-husband withheld info for Marital Dissolution Settlement, together with worth of his regulation observe.  Trial Court docket dismissed, and each Court docket of Appeals and Supreme Court docket affirmed.  Amongst different causes for affirming, Court docket of Appeals famous that there had been in depth 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)

Alternate link for case.

Tennessee Divorce: Law Firm Valuation Case Summaries

Tennessee Divorce: Legislation 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 property” of the agency, and was not “based mostly on any precise appraisal of the property of the regulation agency.”  She additionally alleged that the MDA did not keep in mind a charge and expense award of $950,000 days after the judgment, and a receivable of $45,000 owed to the events on account 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 assist points, the trial courtroom denied the husband’s movement for abstract judgment, because the property and little one assist points had been inextricably intertwined.

The courtroom of appeals famous that there was no cause to imagine why the spouse couldn’t have uncovered the alleged errors just by pursuing diligent discovery.  Subsequently, reduction below Rule 60 was improper, and the decrease courtroom ought to have granted the husband’s movement for abstract judgment.


Jahn v. Jahn,

932 S.W.second 939 (Tenn. Ct. App. 1996), enchantment after remand, No. 03A01-9903-CH-00097, 2000 WL 134335 (Tenn. Ct. App. Feb. 4, 2000)

Within the 1996 enchantment, the courtroom held that “[h]usband’s curiosity within the property 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 property had been recognized solely as “accounts receivable and different property.”

Within the 2002 enchantment after remand (not accessible 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 enchantment, the courtroom makes use of considerably totally 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 “property 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 property.”  The spouse argued on enchantment that there have been no findings of reality as to worth upon which a presumption of correctness would connect.  However the courtroom acknowledged:  “By adopting [husband’s] proposed disposition after which making its personal changes, the Trial Court docket clearly adopted the values … assigned by [husband]; due to this fact, adequate findings of reality had been made by the Trial courtroom for the presumption of correctness to connect….”

Though no greenback quantities had been assigned, the Court docket of Appeals affirmed since “[b]oth events left the wedding with property moderately corresponding to these with which they entered the union. We discover no abuse of discretion within the trial decide’s division of marital property.”


Wright v. Quillen,

909 S.W.second 804 (Tenn Ct. App.1995)

Court docket of appeals affirmed award of regulation observe as separate property when “there isn’t a passable proof that the agency is value extra at this time 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 shopper virtually completely.  Brown v. Brown, 1990 WL 140912 (Tenn. Ct. App. 1990).  Mr. Brown’s spouse supported him by way of regulation college, 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 online value of the husband’s regulation observe was $125,000.  This worth included money, mounted property, 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 whole division of property between the events.  Nonetheless, the property 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 appropriate to find the observe was a marital asset, the valuation of the observe was incorrect.

The Tennessee Court docket of Appeals affirmed the trial courtroom’s holding that the regulation observe was a marital asset.  Mr. Brown argued that the trial courtroom incorrectly based mostly its resolution on one other Tennessee case the place the lawyer’s spouse labored for her husband’s agency.  The Court docket of Appeals acknowledged the oblique contributions of Mr. Brown’s spouse when she supported him by way of regulation college, and later as homemaker.  These contributions to the wedding had been adequate for the Court docket to seek out the regulation observe was marital property.  The Court docket 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 attainable.  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 steadiness of the agency and accounts receivable on the final day of the divorce listening to.   Trying to a Tennessee statute, the Court docket of Appeals held that the statute didn’t require the trial courtroom to worth the property based on the precise date of the ultimate divorce listening to.  Slightly, a valuation must be decided by “contemplating all related proof relating to the worth and the trial courtroom [may] . . . place a worth on a marital asset that’s inside the vary of the proof admitted.”  The Court docket 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.second 588 (Tenn. Ct. App. 1985), permission to enchantment 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 be taught extra, see Valuing a Lawyer’s Authorized Follow & Legislation Agency in Tennessee Divorce Legislation.