Case Title: WILBUR K. WARNICK; DEE J. WARNICK; and WARNICK RANCHES V. RANDALL M. WARNICK

Citation: 

Docket Number: 04-244

State: wyoming

Court: Wyoming Supreme Court

Date: 2006-05-12T00:00:00Z

Document:
WILBUR K. WARNICK; DEE J. WARNICK; and WARNICK RANCHES V. RANDALL M. WARNICK2006 WY 58133 P.3d 997Case Number: 04-244Decided: 05/12/2006
APRIL TERM, 
A.D. 2006

 
 
WILBUR K. 
WARNICK; DEE J. WARNICK; and WARNICK RANCHES,

 
 
Appellants

(Defendants),

 
 
v.

 
 
RANDALL M. 
WARNICK,

 
 
Appellee

(Plaintiff).

 
 
Appeal from the DistrictCourtofSheridanCounty

The Honorable John C. Brackley, 
Judge

 
 
Representing 
Appellants:

Dennis M. Kirven, of Kirven & 
Kirven, P.C., Buffalo, 
Wyoming.

 
 
Representing 
Appellee:

Charles E. Graves, of Graves, Miller 
& Kingston, P.C., Sheridan, Wyoming; Timothy C. Kingston, of Graves, Miller 
& Kingston, P.C., Cheyenne, Wyoming.

 
 
Before HILL, C.J., and GOLDEN, KITE, 
VOIGT, and BURKE, JJ.

 
 
BURKE, 
Justice.

 
 
[¶1]       Wilbur K. 
Warnick, Dee J. Warnick and Warnick Ranches (collectively, Warnick Ranches) 
appeal the district court's determination of the amount owed to a withdrawing 
partner.  Warnick Ranches claims the 
district court should have considered evidence of costs of a hypothetical asset 
sale to reduce the buyout price.  We 
affirm.

 
 
ISSUE

 
 
[¶2]       Warnick 
Ranches states its issue on appeal as:

 
 
Did the District Court abuse its 
discretion in excluding evidence offered by [Warnick Ranches] regarding the 
costs of liquidating partnership assets in determining the buy-out price of a 
dissociated partner under W.S. §17-21-701(b)?

 
 
FACTS

 
 
[¶3]       We have 
previously had occasion to review this matter, issuing our opinion in  Warnick v. Warnick, 2003 WY 113, 76 P.3d 316 (Wyo. 2003) (Warnick I).  That decision sets forth the underlying 
facts, which we will not restate here.  
Generally, this case involves the dissociation of Randall Warnick as a 
partner of Warnick Ranches as of April 14, 1999, and the amount he should 
receive for his interest in the partnership.  

 
 
[¶4]       In Warnick I, we affirmed the district 
court's determination that Randall Warnick was entitled to a remedy as a 
dissociated partner.  Id., ¶ 22.  Because the partnership agreement did 
not specify how the partnership would be valued or how to calculate a partner's 
interest upon withdrawal, the district court determined the value of Randall 
Warnick's interest and entered judgment in his favor.  Id., ¶ 21.  We concluded that the amount of the 
judgment was incorrect because the district court had not properly calculated 
the buyout price.  The source of 
error was the district court's failure to take into consideration advances made 
by each partner to the partnership.  
Id., ¶¶ 
24-25.  We remanded the matter to 
the district court to recalculate the amount to be paid to Randall Warnick as a 
dissociated partner.  Id., ¶ 27.  

 
 
[¶5]       Upon 
remand, with the issue of liabilities largely resolved by Warnick I, the focus turned to another 
aspect of valuing Randall Warnick's share in the partnership.  For the first time, Warnick Ranches 
asserted that for purposes of calculating the buyout price, the value of ranch 
assets should be less than the amount reflected in its appraisal.  Specifically, it requested that the 
district court deduct $50,000 from the appraised value of the ranch assets for 
real estate commissions and expenses of sale, including those associated with 
selling livestock and equipment.  
Randall Warnick objected to a reduced value, claiming the deduction 
amounted to unsupported speculation.

[¶6]       On July 21, 
2004, the district court held an evidentiary hearing on the matter.  At the hearing, the district court 
denied evidence proffered by Warnick Ranches regarding expenses of a 
hypothetical sale of partnership assets.  
On August 12, 2004, the district court issued its decision letter in 
which it noted that it had previously ruled that "possible costs of sale are not 
an offset regarding asset value."   

 
 
[¶7]       Thereafter, 
the district court entered its final order determining the amount to be paid to 
Randall Warnick.  The amount was 
calculated by first valuing the partnership assets and deducting advances made 
to the partnership by each partner to arrive at a net value of the partnership 
of $133,901.68.  Randall Warnick's 
percentage of ownership (34%) was then applied to the net value, to arrive at 
his proportionate share of the partnership of $45,526.57.  Adding this amount to the amount of 
Randall Warnick's loan to the partnership, $70,256.56, the district court 
determined a buyout price of $115,783.13.1  In its order, the district court also 
found "[t]hat any possible costs of sale associated with selling the assets of 
the partnership as an offset to the estimated value of the assets is too 
speculative and inadmissible."  
Warnick Ranches appealed.  

 
 
STANDARD OF 
REVIEW

 
 
[¶8]       Evidentiary 
rulings are left to the sound discretion of the trial court and will not be 
overturned where the record reveals a legitimate basis for the ruling.  Armstrong v. Hrabal, 2004 WY 39, ¶ 10, 
87 P.3d 1226, 1230 (Wyo. 2004).  
Resolution of this case also involves the application of Wyo. Stat. Ann. 
§ 17-21-701(b) (LexisNexis 2003).  
Our principles of statutory interpretation are well 
established:

 
 
In interpreting statutes, our 
primary consideration is to determine the legislature's intent.  [I]n 
ascertaining the meaning of a given law, all statutes relating to the same 
subject or having the same general purpose must be considered and construed in 
harmony. Statutory construction is a question of law, so our standard of review 
is de novo. We endeavor to interpret statutes in accordance with the 
legislature's intent. We begin by making an inquiry respecting the ordinary and 
obvious meaning of the words employed according to their arrangement and 
connection. We construe the statute as a whole, giving effect to every word, 
clause, and sentence, and we construe all parts of the statute in pari materia. When a statute is 
sufficiently clear and unambiguous, we give effect to the plain and ordinary 
meaning of the words and do not resort to the rules of statutory 
construction.

 
 

BP America Production Co. v. Dept. 
of Rev., 2005 WY 
60, ¶ 15, 112 P.3d 596, 604 (Wyo. 2005).  
The statute at issue is part of the Wyoming Revised Uniform Partnership 
Act (RUPA), Wyo. Stat. Ann. §§ 17-21-101 et seq. (LexisNexis 2003).2  RUPA directs that we construe and apply 
its provisions to "effectuate its general 
purpose to make uniform the law with respect to the subject of this chapter 
among states enacting it."  
Wyo. 
Stat. Ann. § 17-21-1001 (LexisNexis 2003).

 
 

DISCUSSION

 

[¶9]       In 
calculating the buyout price for Randall Warnick's interest in the partnership, 
the district court valued the partnership assets without making any deduction 
for expenses that Warnick Ranches argued would be incurred if those assets were 
sold.  On appeal, Warnick Ranches 
claims that the district court should have allowed expert testimony concerning 
costs associated with the sale of ranch assets and challenges the district 
court's ruling that costs of sale were too speculative.  

 
 
Calculation of the buyout price

 
 
[¶10]     The district court was 
charged with calculating the amount owed to Randall Warnick pursuant to the 
applicable provisions of RUPA, Wyo. Stat. Ann. § 17-21-603(a) (LexisNexis 2003) 
and Wyo. Stat. Ann. § 17-21-701.  Warnick I, ¶ 24. That amount, or the 
buyout price, is the amount that would have been paid to the dissociating 
partner following a settlement of partnership accounts upon the winding up of 
the partnership, if, on the date of dissociation, the assets of the partnership 
were sold at a price equal to the greater of the liquidation value or the value 
based on a sale of the business as a going concern without the dissociating 
partner. Wyo. 
Stat. Ann. § 17-21-701(b) and § 17-21-808(b) (LexisNexis 2003); 59A Am. Jur. 2d 
Partnership § 538 (2003).  "[P]artnership assets must first be 
applied to discharge partnership liabilities to creditors, including partners 
who are creditors."  Warnick I, ¶ 24; Wyo. Stat. Ann. § 
17-21-808(b).  The interplay between 
RUPA § 701(b) and § 808(b) requires that obligations to known creditors must be 
deducted before a partner distribution can be determined.  "[T]hus, the buyout price is the net of 
all known liabilities."  John W. 
Larson, Florida's New Partnership Law: 
The Revised Uniform Partnership Act and Limited Liability Partnerships, 23 
Fla. St. U. L. Rev. 201, 234 (1995).  
Stated another way, "[i]n computing the buyout price, the amount the 
dissociating partner receives is reduced by his or her share of partnership 
liabilities."  Donald J. Weidner and 
John W. Larson, The Revised Uniform 
Partnership Act: The Reporters' Overview, 49 Bus. Law. 1, 12 (1993).  

 
 
[¶11]     The purpose of the 
remand was for the district court to consider liabilities  partner advances, 
which had previously been omitted from its calculation.  Warnick I, ¶ 24.  Warnick Ranches makes no argument that 
costs associated with a hypothetical sale of ranch assets should be considered a 
partnership liability.  Its argument 
focuses solely upon the valuation of the partnership's assets under Wyo. Stat. 
Ann. § 17-21-701(b).  Accordingly, 
our review is similarly limited, and we need not consider costs of sale as a 
liability, affecting the amount that would have been "distributable" to Randall 
Warnick under Wyo. Stat. Ann. § 17-21-808(b)3 or the 
settlement of partnership accounts.

 
 
[¶12]     At this juncture, 
Warnick Ranches claims that the district court erred in the first step of its 
calculation of the buyout price by overvaluing the ranch assets.  The asserted error is the district 
court's failure to deduct estimated sales expenses of $50,000 from the value of 
the partnership assets.  As the 
basis for its argument, Warnick Ranches states that the appraiser was prepared 
to testify about the "liquidation value" of the ranch assets.  A common understanding of liquidation is 
"[t]he act or process of converting assets into cash."  Black's Law Dictionary 950 
(8th ed. 2004).  Warnick 
Ranches appears to assume that the liquidation value of the ranch is the amount 
of cash that would remain following a sale.  This assumption is not supported by the 
pertinent statutory language and the circumstances of this 
case.

 
 
[¶13]     Critical to our 
determination in this case is the recognition that the assets of this 
partnership were not, in fact, liquidated.  
Instead, the record reflects that the assets were retained by Warnick 
Ranches.  Randall Warnick's 
dissociation from the partnership did not require the winding up of the 
partnership.  Warnick I, ¶ 20.  We acknowledge that when a business is 
not actually dissolving, "valuation may be difficult and will have to be 
based to some extent on estimates and appraisals."  Lieberman v. Wyoming.com LLC, 2004 WY 1, 
¶ 27, 82 P.3d 274, 284 (Wyo. 2004) (Lehman, J., dissenting, with whom Kite, J., 
joins).  However, the district court 
held its hearing several years after the date of valuation, and there was no 
question that the partnership's ranching operations had continued following 
Randall Warnick's departure.  There 
was no evidence of any actual, intended, or pending sale before the district 
court at the time of dissociation, and, therefore, asset liquidation was only 
hypothetical.  Accordingly, the 
deduction urged by Warnick Ranches is for hypothetical costs.  See Taffi v. United States (In re Taffi), 68 F.3d 306, 309 (9th Cir. 1995) (costs of sale are hypothetical where the property 
is not actually being sold).  As we 
will explain, because of the hypothetical nature of the urged $50,000 deduction, 
we find that the district court's calculation was not 
erroneous.

 

[¶14]     If, in applying Wyo. 
Stat. Ann. § 17-21-701(b), we were to interpret the term "liquidation value" in 
isolation, we might envision an amount representing the net proceeds resulting 
from a distress sale.4  However, that interpretation is 
precluded by the language contained in the statute.  The full text of Wyo. Stat. Ann. § 
17-21-701(b) provides:

 
 
The buyout price of a dissociated 
partner's interest is the amount that would have been distributable to the 
dissociating partner under W.S. 17-21-808(b) if, on the date of dissociation, 
the assets of the partnership were sold at a price equal to the greater of the 
liquidation value or the value based on a sale of the entire business as a going 
concern without the dissociated partner and the partnership were wound up as of 
that date. In either case, the sale price of the partnership assets shall be 
determined on the basis of the amount that would be paid by a willing buyer to a 
willing seller, neither being under any compulsion to buy or sell, and with 
knowledge of all relevant facts. Interest shall be paid from the date of 
dissociation to the date of payment.5

In analyzing this provision, we must 
consider all of the language contained therein:

 
 
We are guided by the full text 
of the statute, paying attention to its internal structure and the functional 
relation between the parts and the whole. Each word of a statute is to be 
afforded meaning, with none rendered superfluous. Further, the meaning afforded 
to a word should be that word's standard popular meaning unless another meaning 
is clearly intended. If the meaning of a word is unclear, it should be afforded 
the meaning that best accomplishes the statute's purpose. 

 
 

Rodriguez v. Casey, 2002 WY 111, ¶ 10, 50 P.3d 323, 
326-27 (Wyo. 2002) (internal citations omitted).  When read as a whole and in a manner 
consistent with its purpose, we find the statute does not support Warnick 
Ranches' proposed meaning of liquidation value.   

 
 
[¶15]     Liquidation value is 
one of two identified methods for valuing the partnership assets.  Application of the two methods to the 
same partnership may yield two distinct values.  The Massachusetts Supreme Court compared 
the two methods, noting: 

 
 
The method of valuation of a 
partnership interest in a going concern necessarily differs from the valuation 
of the same interest at the point of liquidation. The liquidation value looks to 
the value of the partnership's assets less its liabilities and determines each 
partner's appropriate share. When valuing a going concern, however, the market 
value of the partnership interest itself is what is at stake, rather than the 
percentage of net assets it represents. Depending on circumstances, the market 
value of the partnership interest may be more or less than the value of the 
same percentage of net assets.

 
 

Anastos v. Sable, 819 N.E.2d 587, 590-91 (Mass. 2004).  By providing two approaches, Wyo. Stat. 
Ann. § 17-21-701(b) contemplates variations that could result from differing 
appraisal techniques and varying business circumstances.6

[¶16]     Significantly, the 
buyout price under Wyo. Stat. Ann. § 17-21-701(b) involves use of the greater value resulting from the 
alternate valuation methods.  
Warnick Ranches' argument seems to assume that the district court's 
calculation incorporated the liquidation value of the partnership assets.  We see room for disagreement based upon 
the record.7  The district court did not specify which 
valuation method was selected, and it was therefore possible that the value used 
in the buyout price calculation represented the going concern value of the 
ranch.8  Warnick Ranches makes no argument that 
costs of sale should also be deducted from the going concern value because, 
under its rationale, the $50,000 deduction is required only as part and parcel 
of liquidation value.  Were we to 
conclude that the district court used a figure which represented the going 
concern value, our analysis could end here without further discussion of 
hypothetical costs of sale.

 
 
[¶17]     However, even if the 
district court valued the partnership assets using liquidation value, the 
deduction for costs associated with a hypothetical sale would not be 
warranted.  Contrary to the 
interpretation asserted by Warnick Ranches, liquidation value is not the amount 
of the seller's residual cash following a sale.  We find that the meaning of liquidation 
value in the statute is best understood by comparing it to the other method 
provided.  When contrasted with 
"going concern value" it is clear that "liquidation value" simply means the sale 
of the separate assets rather than the value of the business as a whole.  

 
 
[¶18]     Additionally, under 
either valuation method, Wyo. Stat. Ann. § 17-21-701(b) directs that the sale 
price be determined "on the basis of the amount that would be paid by a willing 
buyer to a willing seller, neither being under any compulsion to buy or sell, 
and with knowledge of all relevant facts."  
The legislature chose to supplement the Uniform Laws version of this 
provision by adding this sentence, lending added significance to this 
language.9  This "willing buyer" and "willing 
seller" language does not present a novel legal concept, as it sets forth 
precisely what has long been the legal definition or test of "fair market 
value."  Black's Law Dictionary 1587 
(8th ed. 2004).  "Fair market value is generally defined 
as the amount at which property would change hands between a willing buyer and a 
willing seller, neither being under any compulsion to buy or sell and both 
having reasonable knowledge of the relevant facts."  Lieberman, ¶ 28 n.1 (citing Black's Law 
Dictionary 597 (6th ed. 1990) and Wyo. Stat. Ann § 39-11-101(a)(vi) (LexisNexis 
2001) (defining fair market value as used for taxation purposes)). 

 
 
[¶19]     Warnick Ranches does 
not provide any analysis concerning the fair market value language contained in 
Wyo. Stat. Ann. § 17-21-701(b) and does not explain how it can be reconciled 
with its urged meaning of liquidation value as involving a deduction for costs 
of sale.  That reconciliation may be 
difficult.10 Simply stated, a deduction from 
fair market value yields an amount which is, by definition, less than fair 
market value.  Warnick Ranches cites 
no authority supporting its proposed deduction of hypothetical sales expenses 
and does not contend that the deduction is necessary to arrive at fair market 
value.  Regardless, we have 
expressed disapproval of such a deduction, stating:  "[h]ypothetical costs have no 
relationship to an arms-length sale price which is the value to be established 
by recognized appraisal techniques when no sale occurs."  Appeal of Monolith Portland Midwest Co., 
Inc., 574 P.2d 757, 761 (Wyo. 1978).11  

 
 
[¶20]     Considering the 
language of RUPA § 701(b) as a whole, we conclude that "liquidation value" does 
not have the meaning that Warnick Ranches desires, i.e. the amount a seller 
would "net" upon liquidation.  
Rather, "liquidation value" represents the sale price of the assets based 
upon fair market value.  "It is one 
thing to say that a business is worth little more than its hard assets.  It is quite another to deduct the 
substantial cost of a liquidation which all parties agree will not take 
place."  Chatterton v. Business Valuation 
Research, 951 P.2d 353, 357 (Wash. Ct. App. 1998).  Where it is contemplated that a business 
will continue, it is not appropriate to assume "an immediate liquidation with 
its attendant transactional costs and taxes."  Id.  We therefore hold that, under Wyo. Stat. 
Ann. § 17-21-701(b), purely hypothetical costs of sale are not a required 
deduction in valuing partnership assets.12  We find no error in the district court 
rejecting the $50,000 deduction urged by Warnick Ranches in calculating the 
buyout price.

 
 
Evidentiary ruling

 
 
[¶21]     Having clarified that 
the district court was not required to consider the costs of a hypothetical 
sale, we turn to the remainder of Warnick Ranches' argument that asserts the 
district court abused its discretion by refusing testimony from a qualified 
expert witness.  Warnick Ranches 
claims that it makes no sense that the expert would be allowed to testify about 
some matters and not others, and that the inherent inconsistency of the district 
court's evidentiary ruling demonstrates an abuse of discretion.  We disagree.  

 
 
[¶22]     The expert was a 
certified and experienced appraiser, who prepared a detailed report about his 
appraisal methodology and conclusions concerning ranch assets.  The appraisal report states that the 
appraised value represents the "market value" of the subject property, meaning 
the "most probable price that a property is to bring in a competitive and open 
market under all conditions requisite to a fair sale, the buyer and seller each 
acting prudently and knowledgeably assuming the price is not affected by undue 
stimulus."  The appraisal report 
does not specify an amount for costs associated with a sale and provides no 
indication that the stated market value figure needed further 
adjustment.

 
 
[¶23]     We can find no abuse of 
discretion in the district court's decision to exclude testimony from Warnick 
Ranches' expert concerning hypothetical costs of sale.  The district court determined "[t]hat 
any possible costs of sale associated with selling the assets of the partnership 
as an offset to the estimated value of the assets is too speculative and 
inadmissible."  Again, the hearing 
on valuation took place several years after the April 14, 1999, valuation 
date.  The district court's ruling 
was made in light of the fact that the partnership had continued after Randall 
Warnick's dissociation and no sale had taken place.  Under these circumstances, hypothetical 
costs are speculative.  More 
importantly, the proffered testimony was not pertinent to the district court's 
task of calculating the buyout price of Randall Warnick's partnership interest. 

 
 
[¶24]     
Affirmed.

 
 
FOOTNOTES

 
 

1The actual amount awarded to Randall 
Warnick was $95,767.99, which included interest on the buyout amount from April 
14, 1999, minus an amount of $62,049.00 which had been previously deposited with 
the district court.

 
 

2The Wyoming legislature adopted RUPA in 
1994 as a replacement for the Uniform Partnership Act.  1993 Wyo. Sess. Laws ch. 194.  Warnick I, ¶ 
12.

 
 

3Wyo. Stat. Ann. § 17-21-808 
discusses the settlement of partner accounts, and subsection (b) 
states:

 
 
      
Each partner is entitled to a settlement of all partnership accounts upon 
winding up the partnership business.  
In settling accounts among the partners, the profits and losses that 
result from the liquidation of the partnership assets shall be credited and 
charged to the partners' accounts.  
The partnership shall make a distribution to a partner in an amount equal 
to that partner's positive balance.  
A partner shall contribute to the partnership an amount equal to that 
partner's negative balance only to the extent that negative balance is 
attributable to an obligation for which that partner is personally liable under 
W.S. 17-21-306.

 
 

4Liquidation value can be defined as "1. 
The value of a business or of an asset when it is sold in liquidation, as 
opposed to being sold in the ordinary course of business.  2. See liquidation price. . . ."  Black's Law Dictionary 1587 (8th ed. 
2004).  Liquidation price is "[a] 
price that is paid for property sold to liquidate a debt.  Liquidation price is [usually] below 
market price [fair market value]."  
Id. at 
1227.

 
 

5Wyo. Stat. Ann. § 17-21-701(b) differs 
somewhat from the Uniform Laws version of the same provision, which does not 
include the second to last sentence:

            

The buyout price of a dissociated 
partner's interest is the amount that would have been distributable to the 
dissociating partner under Section 807(b) if, on the date of dissociation, the 
assets of the partnership were sold at a price equal to the greater of the 
liquidation value or the value based on a sale of the entire business as a going 
concern without the dissociated partner and the partnership were wound up as of 
that date. Interest must be paid from the date of dissociation to the date of 
payment.

 
 
Uniform Partnership Act § 701, 6 U.L.A. 
175 (1997).

 
 

6The rationale of the drafters in 
providing these alternative methods of valuation has been 
explained:

 
 
First, it cuts through some of the 
confusion in the cases concerning the term going concern value.  To many, going concern value is a term used to 
explain that assets that are a part of a going concern have greater value than 
the sum of the values of individual assets.  On the other hand, recent partnership 
cases in the estate tax context state that going concern value is lower than 
liquidation value if the assets cannot be liquidated because they are committed 
to a going concern. In effect, dedication to a going concern is considered an 
encumbrance.  [RUPA] [s]ection 701 
is intended to indicate that, however value is perceived, the higher of the two 
values is to be used.  Second, 
valuation of the going concern "without the dissociating partner" is intended to 
emphasize that the partner being bought out need not be paid for his or her 
human capital. 

 
 
Donald J. Weidner and John W. Larson, The Revised Uniform Partnership Act: The 
Reporters' Overview, 49 Bus. Law. 1, 12 (1993) (emphasis in original) 
(footnotes omitted).

 
 

7It does not appear that either party 
presented evidence specifically addressing the going concern value of the ranch. 
It seems that the parties agreed, or acquiesced, to the value established by the 
appraisal as representing the sale price of the ranch without specifying a 
particular valuation method.

 
 

8Although the language of Wyo. Stat. 
Ann. § 17-21-701(b) does not indicate that one method is more likely to yield a 
higher value over the other, courts tend to view going concern value as more 
favorable to the departing business member.  The RUPA provisions allowing the 
district court to determine the buyout price are modeled after dissenters' 
rights remedies in corporate statutes.  
Donald J. Weidner and John W. Larson, The Revised Uniform Partnership Act: The 
Reporters' Overview, 49 Bus. Law. 1, 13 (1993).  Dissenting shareholders are generally 
entitled to a valuation of their shares under a going concern valuation method, 
rather than a liquidation method, unless the corporation is undergoing an actual 
liquidation.  Hansen v. 75 Ranch Co., 957 P.2d 32, 
42-43 (Mont. 1998) (collecting cases).  
By using the going concern value, issues concerning deductions for 
transactional costs are often avoided because if those costs would be incurred 
subsequent to the dissenter's objection, then those costs should not be assessed 
against the dissenting shareholder. Id. at 43.  Under the former version of the Uniform 
Partnership Act, use of the going concern method of valuation has been held to 
be correct as a matter of law when the remaining partners choose to continue the 
business.  Anastos, 819 N.E.2d  at 592 (whether 
liquidation value or going concern value should be used presented issue of first 
impression).  With this 
understanding in mind, Warnick Ranches' assumption that liquidation value was 
used by the district court seems less likely.  

 
 

9This language is similar to that found 
in commentary to RUPA, § 701(b), which provides, in 
part:

Liquidation value is not intended to 
mean distress sale value. Under general principles of valuation, the hypothetical selling price in either 
case should be the price that a willing and informed buyer would pay a willing 
and informed seller, with neither being under any compulsion to deal.  

 
 
Uniform Partnership Act § 701, 6 U.L.A. 
177 (1997) (emphasis added).

 
 
 
 

10As one court 
noted:

 [L]ogic dictates that the "fair 
market value" of an item generally includes a component for costs of sale. When 
the willing, but not obligated, seller determines what price he will accept for 
a certain item of property, he takes into account those costs that he will 
incur in making the sale. These costs drive the seller's bottom line; i.e., the 
price below which he will not go. Therefore, the costs of sale have already been 
factored into the market value of the property when it is placed for sale. To 
allow a blanket deduction for costs of sale gives a windfall to the seller who 
has already accounted for them in his sales price.

 
 
Property v. 
Tokai Financial Services, 767 So. 2d 494, 499 (Fla. Dist. Ct. App. 2000).

 
 

11See also Paskill Corp. v. Alcoma Corp., 747 A.2d 549, 552 (Del. 2000) (lower court properly denied any deduction from 
corporation's net asset value for speculative expenses relating to future sales 
that were not contemplated at valuation date); Shaw v. Charter Bank, 576 So. 2d 907, 908 
(Fla. Dist. Ct. App. 1991) (rejecting costs of disposition, including real 
estate sales commission, five percent sales costs, and additional carrying costs 
as deductions to fair market value).

 
 

12Partners may provide in their 
agreement for different treatment of hypothetical costs of sale.  RUPA only supplies the default rules in 
the absence of an agreement.  Warnick I, ¶ 12; Wyo. Stat. Ann. § 
17-21-103 (LexisNexis 2005).