IN THE SUPREME COURT OF THE STATE OF MONTANA 

IN RE MARRIAGE OF 

JAMES WARREN DeCOSSE, 

and 

DOROTHY ANN DeCOSSE, 

Respondent, Respondent, and Cross-Appellant. 

APPEAL FROM: District Court of the Eighteenth Judicial District, 

In and for the County of Gallatin, 

The Honorable Thomas A. Olson, Judge presiding 

COUNSEL OF RECORD: 

For Appellant: 

Edmund P. Sedivy, Jr.; Sedivy, Bennett & White; 

Bozeman, Montana 

For Respondent: 

Kent M. Kasting; Kasting, Combs & Kauffman; 

Bozeman, Montana 

Submitted on Briefs: January 30, 1997 

Decided: April 15, 1997 

Filed: 
Justice Terry N. Trieweiler delivered the opinion of the Court. 

James Warren DeCosse filed a petition for dissolution of his marriage to Dorothy Ann 

DeCosse in the District Court for the Eighteenth Judicial District ~II Gallatin County. 

Following a nonjury trial, the District Court entered its decree and judgment, m which it 

dissolved the parties' marriage and divided their marital assets. James appeals the District 

Court's valuation of his interest in the business by which he is employed. Dorothy 

cross-appeals the District Court's refusal to consider her need for maintenance in the future, 

and the District Court's refbsal to award her attorney and expert witness fees. We reverse in 

part and affirm in part the judgment of the District Court and remand to that court for 

proceedings consistent with this opinion. 

The following issues are presented by the parties: 

1. Did the District Court err when it valued James's interest in Gallatin Valley 

Fuiniture at $1,060,000 and ordered James to pay Dorothy $522,676 to equalize the marital 

property distribution? 

2. Did the District Court abuse its discretion when it refused to reserve the issue 

of maintenance for future consideration dependent on Dorothy's health? 

3. Did the District Court abuse its discretion when it declined to award Dorothy 

attorney fees and costs which she incurred responding to James's post-trial motions? 

FACTUAL BACKGROUND 

Dorothy and James DeCosse were married on July 14, 1973, and separated on 

May 26, 1993. At the time of their marriage, James was the manager of his father's busmess, 

2 
Gallatin Valley Furniture, and owned thirty-five shares of stock in the company. When 

James's father retired in 1985, Gallatin Valley Furniture entered into a series of redemption 

agreements with James's father and mother. Pursuant to those agreements, each of James's 

parents agreed to sell 1,640 shares of stock to the corporation at a price of $232 per share. 

The total cost was to he paid in installments. Final payment was due by June 28, 2000. In 

return, the remaining shareholders--who were James, and his sister and brother-in-law, 

Michelle and Dennis Cattin-agreed to several restrictions, including an agreement that the 

shareholders would not sell their shares, except to each other, until James's parents were fully 

paid pursuant to the terms of the redemption agreements. In addition, the remaining 

shareholders executed irrevocable proxies with which James's parents could liquidate the 

company in the event of any default in the redemption agreements. 

The value of James's parents' stock was determined at the time of redemption by a 

certified public accountant, Wayne Neil. In valuing the stock, Neil used the income method 

of valuation, which is recommended by the American Institute of Certified Public 

Accountants for the valuation of closely held businesses. Pursuant to the income method, 

Neil weighted the average earnings of Gallatin Valley Furniture for the five years prior to 

redemption, giving the most recent year the greatest weight. He then applied both a high and 

low multiple for a return on investment consistent with reports in the National Home 

Furnishings Association Manual and multiplied it by the weighted average net equity of the 

business to establish normal earnings. By subtracting the normal earnings figure from the 

weighted average earnings figure, Neil calculated the excess earnings. Neil then applied a 

3 
capitalization rate--the rate an investor would expect to receive for his risks in the company-- 

and using both a low of fifteen percent and a high of twenty percent, produced a value for 

the goodwill of the company. When Neil added that figure to the total value of the net 

tangible assets of Gallatin Valley Furniture, he determined a high and low fair market value 

of the business. To determine the per-share value, he divided those figures by the number 

of outstanding shares of stock. Neil arrived at the final figure of $232 per share by taking 

the median of the high and low figures and applying a twenty percent minority shareholder 

discount. 

In 1985, at the time James's parents executed the redemption agreements, James 

owned 466 shares of Gallatin Valley Furniture stock, and Michelle and Dennis Cattin owned 

the remaining 466 shares. On June 28,1985, at the same time the redemption agreement was 

signed, James, Michelle, and Dennis entered into a shareholders' agreement with Gallatin 

Valley Furniture. Pursuant to that agreement, James and Dennis were designated 

"shareholder-employees" and Michelle was designated a "shareholder." The agreement 

provided that all transfers or other dispositions of corporate stock made during the lifetime 

or at the death of a shareholder were subject to restriction. Specifically, the agreement 

provided that if a shareholder-employee attempted a "restrictive transfer" or died, retired, or 

was disabled, the remaining shareholder-employee was given the first option to purchase the 

stock for the price and terms set forth in the agreement. The price per share was originally 

calculated at 5230 per share, but the shareholders' agreement provided that the shareholders 

would review the price each year. In addition, the agreement provided that if the 

A 
shareholders failed to recalculate the price of the stock on a yearly basis, the corporation's 

accountant would value the stock pursuant to the same method used to calculate the original 

stock price. The agreement established fifteen annual installments with an interest rate of 

ten percent as the terms of any purchase from one shareholder by another. 

At each annual shareholders' meeting from 1985 through 1994, Wayne Neil 

recalculated the fair market value of Gallatin Valley Furniture stock pursuant to the income 

method of valuation. Each year, the shareholders and directors of the corporation adopted 

the fair market value calculated by Neil. At their 1994 meeting, which occurred prior to the 

dissolution proceedings at issue in this case, Neil calculated the fair market value of the stock 

at $744.85 per share. At that time, James owned 521 shares of Gallatin Valley Furniture 

stock and Michelle and Dennis owned the remaining 521 shares. 

At the dissolution proceedings in October 1994, Wayne Neil testified for James that 

pursuant to the income valuation method James's share of the stock in Gallatin Valley 

Furniture was worth $388,066.85 prior to a minority shareholders' discount. However, 

Dorothy's business valuation expert, Martin Connell, testified that the value of James's 

one-half interest in Gallatin Valley Furniture ranged from S1,171,026.50 to $1,373,544.00, 

depending on which of four methods of business valuation were employed. In his final 

report, Connell valued the business at $2,650,000. Connell therefore determined that James's 

one-half share was equal to $1,325,000. Connell admitted at trial that he did not take the 

1985 restrictive shareholders' agreement into account in determining the fair market value 

of Gallatin Valley Furniture. 

5 
On May 9,1995, the District Court entered its findings of fact and conclusions of law. 

In its findings regarding James's interest in Gallatin Valley Furniture, the court determined 

that "[tlhe Shareholder's Agreement has no application to these proceedings." The court 

therefore accepted Connell's valuation of Gallatin Valley Furniture, and held that James's 

share of the company was $1,325,000 minus twenty percent for minority shareholders' 

discount and lack of marketability. Accordingly, the court held that James's share of Gallatin 

Valley Furniture was worth $1,060,000. The court awarded James his share of Gallatin 

Valley Furniture and ordered James to pay Dorothy the sum of $522,676 to equalize the 

property distribution. Based on its substantial monetary property cash award to Dorothy, the 

court determined that Dorothy would not be entitled to maintenance. The court further 

determined that each party would be responsible for his or her own attorney and expert 

witness fees. 

ISSUE 1 

Did the District Court err when it valued James's interest in Gallatin Valley Furniture 

at $1,060,000 and ordered James to pay Dorothy $522,676 to equalize the marital property 

distribution? 

This Court reviews the factual findings of a district court relating to the division of 

marital property to determine whether the court's findings are clearly erroneous. In re 

Marriage ofDanelson (1992), 253 Mont. 310,317, 833 P.2d 215,219. We review a district 

court's conclusions of law relating to the division of marital property to determine whether 

those conclusions are correct. Marriage ofDanelson, 253 Mont. at 3 17, 833 P.2d at 219-20. 

6 
On appeal, James maintains that the District Court's findings of fact regarding the 

valuation of his interest in Gallatin Valley Furniture are clearly erroneous. Specifically, 

James asserts that the District Court erred when it refused to apply the 1985 shareholders' 

agreement in its determination of the fair market value of his shares of stock in the company. 

James maintains that he has no interest in Gallatin Valley Furniture other than through his 

stock, which cannot be transferred or sold other than according to the terms of the 

shareholders' agreement. Because the value of his stock is limited by that agreement to 

$310,453.48 for his 521 shares, James contends that the District Court's valuation of his 

interest in the business at $1,060,000 is clearly erroneous. 

This Court has addressed the issue of the effect of a restrictive shareholders' 

agreement on the valuation of an interest in a closely held corporation on two occasions. In 

In re Marriage ofJorgensen (1979), 180 Mont. 294, 590 P.2d 606, we upheld a district 

court's determination of the fair market value of stock in a closely held corporation at a price 

fixed by a restrictive shareholders' agreement. We held: 

In considering the range of values which the evidence offered, it is 

apparent the District Court did not abuse its discretion in fixing the value of 

the shares at . . . the amount decided upon by all the shareholders. 

especially applicable in view of the fact that any shareholder wishing to 

transfer the same is presently bound by the terms of the agreement. As long 

as the agreement is operative no shareholder can go upon the market and 

obtain more for his shares. Each shareholder is restricted to the price and to 

the purchasers set forth in the agreement. 

Marriage ofJorgensen, 180 Mont. at 300, 590 P.2d at 61 0 (emphasis added). In addition, 

in In re Marriage ofMcLean (1993), 257 Mont. 55,61,849 P.2d 1012, 1015-16, we upheld 
a district court's determination that one party's interest in a law firm did not include the value 

of the goodwill of a partnership interest where that party had entered into a good faith 

agreement with the law firm to disclaim any interest in that goodwill. In neither case, 

however, were we faced with the situation, as here, in which the district court did not 

consider the effect of a negotiated shareholders' agreement on a company's value. 

A majority of jurisdictions holds that a restrictive agreement, while not conclusive 

evidence of the value of an interest in a closely held corporation, is a factor that must be 

considered by a trial court in the stock valuation process. See, e.g., in re Marriage of 

Micalizio (Cal. Ct. App. 1988), 199 Cal. App. 3d 662, 675-76; Stearns v. Stearns (Conn. 

1985), 494 A.2d 595, 598; In re Marriage ofPetterson (Minn. Ct. App. 1985), 366 N.W.2d 

685,688; Amodio v. Anzodio (N.Y. 1987), 509 N.E.2d 936,936-37; Poore v. Poore (N.C. 

Ct. App. 1985), 331 S.E.2d 266,270; Buckl v. Buckl (Pa. Super. Ct. 1988), 542 A.2d 65,70; 

Suther v. Suther (Wash. Ct. App. 1% I), 627 P.2d 110,113. In Amodio, the New York Court 

of Appeals held: 

There is no uniform mle for valuing stock in closely held corporations. 

. . . Whatever method is used, however, take into consideration 

inhibitions on the transfer of the corporate interest resulting from a limited 

market or contractual provisions. If transfer of the stock of a closely held 

corporation is restricted by a bona fide buy-sell ageement which predates the 

marital discord. the price fixed by the agreement. although not conclusive. is 

a factor which should be considered. 

Amodio, 509 N.E.2d at 936-37 (citations omitted) (emphasis added). In that case, the New 

York Court of Appeals held that the trial court properly disregarded the testimony of the 
plaintiff's expert, who did not consider the restrictions set forth in the shareholders' 

agreement in his analysis of the value of the corporate stock. Because the only other 

evidence of the corporation's value was the stock price value set forth in the shareholders' 

agreement, the New York Court of Appeals held that that value was conclusive as "the only 

evidence in the record of [the corporation's] actual value." Amodio, 509 N.E.2d at 937. 

We agree that James's only ownership interest in the Gallatin Valley Furniture 

business is represented by the stock which has been issued to him. Furthermore, so long as 

the existing shareholders' agreement is in effect, James cannot transfer his stock for more 

than the price set forth in that agreement. Therefore, we hold that if the shareholders have 

employed an accepted method of valuation and there is no evidence that the valuation was 

undertaken in bad faith or for the purpose of avoiding marital or debtorJcreditor 

responsibilities, there is a presumption that the valuation of stock set forth in a shareholders' 

agreement is the real value of a shareholder's interest in a closely held corporation. 

In this case, Dorothy's expert testified that he did not consider the 1985 shareholders' 

agreement in any of the four methods he used to calculate the value of James's interest in 

Gallatin Valley Furniture. Therefore, pursuant to the reasoning of,4inodio, the only evidence 

before the District Court of the stock's "actual value" was Neil's valuation in the amount of 

$3 10,453.48. That value, negotiated in a good faith arms-length transaction, represents the 

price to which James would be limited should he attempt to transfer or sell his stock to 

satisfy the judgment against him. It also represents the amount that would have passed to 
James's estate had he died while married to Dorothy during that period of valuation. See 

Marriage ofJorgensen, 180 Mont. at 300,590 P.2d at 610. 

Therefore, because the District Court accepted Dorothy's expert's valuation, which 

was prepared without reference to the 1985 shareholders' agreement, and because the District 

Court refused to take that agreement into account when it valued James's interest in the 

business, we hold that the District Court's finding that James's interest in Gallatin Valley 

Furniture was $1,060,000 is clearly erroneous. We remand this case to the District Court 

with instructions that James's interest in Gallatin Valley Furniture should be valued at 

$3 10,453.48. We further instruct the District Court to equitably divide the parties' property 

and assets, pursuant to $40-4-202, MCA, based on this valuation, and to reassess Dorothy's 

need for maintenance in light of the corrected value of the marital estate and the manner in 

which it is redivided. Based on our holding that the District Court erred when it valued 

James's interest in Gallatin Valley Furniture without reference to the pre-existing 

shareholders' agreement, we do not reach Dorothy's claim on cross-appeal that she is entitled 

to attorney fees she incurred in connection with this appeal. 

ISSUE 2 

Did the District Court abuse its discretion when it refused to reserve the issue of 

maintenance for future consideration dependent on Dorothy's health? 

We review a court's award of maintenance or failure to award maintenance to 

determine whether the court abused its discretion. In re Marriage of Smith (1993), 260 

Mont. 533, 535, 861 P.2d 189, 190. 
The District Court based its decision to deny maintenance on the following finding: 

In view of the substantial assets being received, most of which are 

income-producing, this is not an appropriate case to award [Dorothy] separate 

maintenance. The distribution of the property coupled with her earnings, will 

enable [Dorothy] to maintain a reasonable standard of living. The court 

declines to keep the issue of Euture maintenance open, as requested by counsel 

for [Dorothy]. 

Although (prior to our decision regarding the valuation of James's business interest), 

Dorothy did not dispute the court's decision not to award her maintenance, she contends that 

the District Court erred when it failed to recognize that her ongoing health problems might 

necessitate a need for maintenance in the future. Dorothy maintains that, based on her health 

problems--which include neuromuscular damage, back problems, a benign tumor in her liver, 

and a chemical imbalance--the District Court should not have precluded her from requesting 

an award of maintenance in the future, depending upon complications which could arise in 

her health situation. We will consider this issue, even though the District Court has been 

instructed to reconsider its maintenance decision, because we do not know what the outcome 

of that reconsideration will be, and because, depending on the District Court's decision, this 

issue may still be relevant. 

Section 40-4-208, MCA, provides that a district court may, in certain instances, order 

a modification of a maintenance provision in a decree of dissolution. That section provides 

in relevant part: 

(1) Except as otherwise provided in 40-4-201(6), a decree may be 

modified by a court as to maintenance or support only as to installments 

accruing subsequent to actual notice to the parties of the motion for 

modification. 
(2) (a) Whenever the decree proposed for modification does not 

contain provisions relating to maintenance or support, modification under 

subsection (1) may only be made within 2 years of the date of the decree. 

(b) Whenever the decree proposed for modification contains provisions 

relating to maintenance or support, modification under subsection (1) may 

only be made: 

(i) upon a showing of changed circumstances so substantial and 

continuing as to make the terms unconscionable; 

(ii) upon written consent of the parties; or 

(iii) upon application by the department of public health and human 

services, whenever the department of public health and human services is 

providing services under Title IV-D of the federal Social Security Act . . . . 

In In re Marriage of Cooper (1985), 216 Mont. 34,37,699 P.2d 1044, 1046, we held: 

A petition for modification with respect to maintenance must be 

considered by the District Court if it is filed within two years of the date the 

decree is rendered, regardless of whether the decree contains provisions for 

maintenance or whether maintenance payments are currently being paid. If 

two years has expired since the dissolution decree was rendered, modification 

is still possible when the decree contains a provision relating to maintenance. 

When maintenance payments are currently mandated under the decree, a 

modification petition must be considered by the District Court. 

(Emphasis added.) 

We conclude that a district court's obligation to entertain a motion to modify its prior 

decision regarding maintenance is defined by statute and not by the decree for which 

modification is sought. 

For example, pursuant to the District Court's original decree of dissolution, entered 

December 1, 1995--which did not contain a provision awarding Dorothy maintenance-- 

Dorothy would have been able to petition that court for modification of its decision not to 

award maintenance until December 1, 1997, regardless of language to the contrary in the 

court's findings of fact and conclusions of law. Section 40-4-208(2)(a), MCA. In light of 
this Court's decision to remand this case to the District Court for reconsideration of marital 

property division and maintenance, however, that date is no longer applicable. If, on remand. 

the District Court reaffirms in its amended decree that Dorothy is not entitled to maintenance, 

Dorothy can still move for modification of maintenance within two years of the date of that 

amended decree, pursuant to (j 40-4-208(2)(a), MCA. If, however, the District Court 

determines in its amended decree that Dorothy is entitled to maintenance, Dorothy will have 

an unlimited time in which to file her motion for modification of maintenance, pursuant to 

(j 40-4-208(2)(b), MCA. In either case, the District Court will be required to entertain 

Dorothy's motion for modification of maintenance, pursuant to (j 40-4-208, MCA. 

Therefore, to the extent that the District Court concluded it did not have to reconsider 

marntenance after the entry of its decree and judgment, we conclude that the court erred. 

However, in light of our resolution of Issue 1, and the fact that any future motion for 

modification is controlled by statute, we conclude that error was harmless. 

ISSUE 3 

Did the District Court abuse its discretion when it refused to award Dorothy attorney 

fees and costs she incurred in her response to James's post-trial motions? 

A district court's decision to award or not to award attorney fees is largely 

discretionary. We will not disturb a district court's judgment related to the issue of attorney 

fees absent an abuse of that discretion. In re Marriage of Swanson (1986), 220 Mont. 490, 

496, 716 P.2d 219,223. 
In this case, Dorothy contends that the District Court abused its discretion when it 

declined to award her attorney and expert witness fees which she incurred in order to respond 

to James's post-trial motion to amend the District Court's findings of fact and conclusions of 

law. Dorothy maintains that the District Court had authority, pursuant to $40-4-1 10, MCA, 

to award her post-trial costs for James's allegedly meritless motion to amend. 

Section 40-4-1 10, MCA, provides: 

The court from time to time, after considering the financial resources of both 

&, may order a party to pay a reasonable amount for the cost to the other 

party of maintaining or defending any proceedings under chapters 1 and 4 of 

this title and for attorney's fees, including sums for legal services rendered and 

costs incurred prior to the commencement of the proceedings or afker entry of 

judgment. The court may order that the amount be paid directly to the 

attorney, who may enforce the order in his name. 

(Emphasis added.) Pursuant to that section, the District Court is required to "consider[] the 

financial resources of both parties" when it decides whether costs and attorney fees should 

be awarded. In the underlying dissolution action in this case, the District Court concluded 

that: 

Each party has been awarded substantial property interests some of 

which have significant fitture earning potential. Consequently, each party has 

the means, resources and ability to pay hisiher own attorney'siexpert witness 

fees and costs without assistance from the other. 

Although we conclude that the District Court did not abuse its discretion when it 

declined to award attorney fees and costs to Dorothy based on its division of property in its 

original decree, we do not know what the parties' property or income will be following the 

amended decree, and therefore, hold that Dorothy is not precluded from raising the issue of 
attorney fees on remand so that it can be considered in light of the parties' actual "financial 

resources." 

CONCLUSION 

We reverse the District Court's valuation of James's interest in Gallatin Valley 

Furniture, and remand to that court for entry of judgment consistent with this opinion, and 

for redistribution of the parties' marital assets and reevaluation of Dorothy's need for 

maintenance, fees, and costs in light of this holding. In addition, we conclude that any future 

application or motion for modification of whatever decision the court makes regarding 

Dorothy's need for maintenance is controlled by § 40-4-208, MCA, notwithstanding language 

to the contrary in the court's decree or judgment. 

We Concur: A 
Justice Karla M. Gray, specially concurring, 

I concur in the Court's opinion on issues two and three and specially concur on issue 

one, regarding the valuation of James' interest in Gallatin Valley Furniture. In that regard, 

I agree with our adoption of the Amodio rationale and, as a result, with our conclusion that 

Neil's valuation of James' interest was conclusive on the District Court because it was the 

only valuation in evidence which took the restrictive shareholders' agreement into account. 

1 disagree, however, with the Court's creation of a presumption that the valuation of 

stock contained in a shareholders' agreement is the real value of a shareholder's interest in 

a closely held corporation if the shareholders have employed an accepted method of 

valuation and there is no evidence that the valuation was undertaken in bad faith or for the 

purpose of avoiding marital or debtoricreditor responsibilities. I see no need for such a 

presumption in light of the fact that there is no uniform rule for valuing stock in closely h 

corporations. See Amodio, 509 N.E.2d at 936. So long as the valuation method used takes 

into consideration inhibitions on the transfer of such stock arising from limited marketability 

or restrictions in a shareholders' agreement, there is no reason for this Court to give favored 

treatment to the valuation contained in the shareholders' agreement by according it a 

presumption of "real value."