IN THE

ARIZONA COURT OF APPEALS

DIVISION ONE

In re the Marriage of:

DANIEL C. SCHICKNER, Petitioner/Appellee,

v.

RENNA M. SCHICKNER, Respondent/Appellant.

No. 1 CA-CV 13-0513 FC

Appeal from the Superior Court in Mohave County

No. S8015DO201000482

The Honorable Charles W. Gurtler, Judge

The Honorable Rick A. Williams, Judge

AFFIRMED IN PART; VACATED AND REMANDED IN PART

COUNSEL

Rowley Chapman & Barney, LTD., Mesa

By Paul S. Rowley and Nathaniel H. Wadsworth

Counsel for Petitioner/Appellee

The Wilkins Law Firm, PLLC, Phoenix

By Amy M. Wilkins

Counsel for Respondent/Appellant
SCHICKNER v. SCHICKNER

Opinion of the Court

2

OPINION

Judge Michael J. Brown delivered the opinion of the Court, in which 

Presiding Judge Samuel A. Thumma and Judge Patricia A. Orozco joined.

B R O W N, Judge:

¶1 Renna M. Schickner (“Wife”) appeals from two provisions of 

the trial court’s decree dissolving her marriage to Daniel Schickner 

(“Husband”). Wife argues the court (1) undervalued two jointly-owned 

business interests, Western Medical Eye Center, LLC (“WME”) and 

Physicians Surgery Center, LLC (“PSC”), and (2) erroneously found she 

was not entitled to one-half of the monies distributed to Husband from 

those business interests during the three-year period between the filing of 

the petition for dissolution and entry of the decree. We conclude that 

sufficient evidence exists in the record supporting the court’s valuation as 

to PSC, but not WME, and therefore vacate and remand the court’s ruling

for a redetermination of the value of WME. Regarding the post-petition 

distributions Husband received, we vacate the court’s ruling and remand 

for further proceedings. 

BACKGROUND

¶2 The parties married in 1998 and have two minor children. 

During the marriage, the parties acquired a 50% community interest in 

WME, located in Kingman, where Husband practices as an 

ophthalmologist. The parties also acquired a 20% community interest in 

PSC, also located in Kingman, where Husband performs surgeries. 

¶3 In June 2010, Husband filed a petition for dissolution of 

marriage. Early in the case, Wife filed a motion for temporary orders 

seeking a declaration that pending a final decree, she was entitled to receive 

a one-half share of all distributions made from WME and PSC. The trial 

court held a hearing on the motion and received testimony from Husband 

and Wife as well as Husband’s certified public accountant, Brandon Bull. 

The court then determined that “no matter how the distributions are 

characterized, the parties must report the same as taxable income. There 

were no reductions in capital accounts. . . . [T]he distributions are 

appropriately characterized as salary or earned income.” The court 

therefore denied Wife’s request for one-half of the distributions made to 
SCHICKNER v. SCHICKNER

Opinion of the Court

3

Husband. As to other issues raised in the motion for temporary orders, the 

court ordered that Husband reimburse Wife for one-half of the mortgage 

payments on the family residence occupied by Wife and pay $7,000 per 

month as spousal maintenance.

¶4 As the matter progressed to trial, the case was re-assigned to

a different judge. The primary contested issues were the valuations of 

WME and PSC for the purpose of determining the amounts Husband owed

to Wife for acquiring her share of the marital community’s interests in the 

two businesses. 

¶5 Through his experts, John Pinto and Stephen Koons, Husband 

presented multiple valuations for the parties’ jointly held 50% business 

interest in WME: (1) $475,000 (Pinto—applying minority share and 

marketability discounts), (2) $620,000 (Koons—applying minority share 

and marketability discounts), and (3) $830,000 (Koons—not applying 

minority share or marketability discounts). As to the parties’ jointly held 

20% interest in PSC, Husband’s experts provided the following values: 

(1) $580,000 (Pinto—applying minority share and marketability discounts), 

(2) $490,000 (Koons—applying minority share and marketability 

discounts), and (3) $540,000 (Koons—not applying minority share or

marketability discounts). Through her expert, Calvin Swartley, Wife 

presented a valuation of WME at $3,233,000 with the community’s 50% 

interest in WME being $1,617,000 and a valuation of PSC at $5,261,000 with 

the community’s 20% interest in PSC being $1,052,000. 

¶6 In general, the three experts testified to the complexity of the 

valuations, explaining that factors such as assets, liabilities, taxes, liquidity, 

depreciation, interest expenses, revenue, cash flow, rents, goodwill, 

operating expenses, management agreements, operating agreements, 

market size and share, capitalization rates, marketability, and control were 

considered in reaching the final calculations. Each of the experts also 

prepared written reports documenting their respective valuations of the 

two businesses. 

¶7 Husband disputed Swartley’s valuation, arguing, among 

other things, that Swartley applied a capitalization rate that was too high

and did not include a discount for lack of marketability and lack of control

as to both businesses. Wife countered that Husband’s experts incorrectly 

approached the valuation question by assessing the marketable value of 

Husband’s interests in WME and PSC as if he were selling to a third party. 

Wife asserted that discounts for lack of marketability and lack of control are 

only considerations if an outside buyer is buying into a practice, and are not 
SCHICKNER v. SCHICKNER

Opinion of the Court

4

appropriate factors when evaluating the value of a present owner “buying 

out” the interest of another present owner. Wife also raised claims 

regarding “inflated rents” and excessive salaries paid to family members. 

¶8 The parties also disputed the character of the distributions 

from the businesses following Husband’s filing of the petition for 

dissolution. Husband argued Wife was not entitled to any of the monies 

paid to him because they were in the nature of salary and earned income 

and thus constituted his separate property. Wife countered that Husband’s 

salary from WME was limited by contract to $250,000 per year and therefore 

all monies he received above this salary amount were community property. 

Wife further argued that all distributions from PSC were community 

property. 

¶9 Brandon Bull, C.P.A., testified that Husband receives a base 

salary of $250,000 from WME, but, as a tax-saving measure implemented in 

early 2010, Husband receives the rest of his compensation for his ”toil and 

labor” as distributions. By way of illustration, Bull explained that Husband 

received “exactly the same” compensation in 2010 as in 2009 ($500,000), but 

elected to change the form of payment from entirely salary to one-half as 

salary and one-half as distributions to avoid paying Medicare tax on the 

“non-salary” portion. 

¶10 After a five-day trial, the court issued a minute entry setting 

forth its findings and conclusions. The court found Pinto’s “zen master” 

approach to valuations “disconcerting,” but noted his credibility was 

bolstered in that he and Koons reached similar valuation calculations. The 

court specifically disagreed with certain “foundations” underlying 

Swartley’s analysis:

First, [Swartley] used an eleven percent (11%) capitalization 

rate which is normally attributable to that of a large publicly 

traded company. This rate resulted in a greater appraised fair 

market value. The court finds it would be improper to take a 

capitalization rate that might be attributed to a large company 

such as Eye Masters or Nationwide Vision and apply it to a 

small company like WME or PSC.

. . . . 

The second concern is that [Swartley] did not evaluate the 

specific community interest of WME and PSC. Instead, 

[Swartley] determined the total value of PSC then divided 

that amount by five (5) and came up with a value. It evaluated 
SCHICKNER v. SCHICKNER

Opinion of the Court

5

WME as a whole and then divided it in half to come up with 

a community property interest. The court finds this led to an 

inflated value. 

The court also noted “that a minority interest has less value than the total 

interest of a company on a per – share basis,” finding “[t]his distinction [] 

significant because the community does not own a controlling interest in 

either business venture.” The court then found that the “fair market value” 

of the community’s 20% interest in PSC is $536,000 and the community’s 

50% interest in WME is $602,000 and ordered Husband to pay Wife $569,000 

for her one-half share of the community interest in the two business 

interests. 

¶11 As to the issue of distributions, the trial court rejected Wife’s 

claim that she was entitled to her one-half share of the payments Husband 

received that exceeded his $250,000 salary, which according to Wife was an 

appropriate amount for an ophthalmologist. Agreeing with temporary 

orders analysis of the issue, the court found that with regard to WME, it is 

a small business that relies on Husband’s toil and labor to remain profitable 

and therefore all the post-filing distributions are his separate property. The 

court did not specifically address distributions Husband received from 

PSC. After the court entered a signed decree of dissolution, Wife filed a 

motion to amend and a motion for reconsideration, which the trial court 

denied. Wife then timely appealed. 

DISCUSSION

A. Valuation of WME and PSC

¶12 Wife contends the trial court undervalued the community’s 

interest in WME and PSC. Specifically, she asserts the court improperly 

applied a minority share discount in contravention of Arizona law.

¶13 We review a court’s determination of the value of a business 

in a divorce proceeding for an abuse of discretion. See Roden v. Roden, 190 

Ariz. 407, 411, 949 P.2d 67, 71 (App. 1997) (holding that trial court did not 

abuse its discretion by accepting the opinion of husband’s expert when 

determining the value of a community business interest). A trial court 

abuses its discretion when it commits an error of law or “reaches a 

conclusion without considering the evidence . . . or the record fails to 

provide substantial evidence to support the trial court’s finding.” Flying 

Diamond Airpark, LLC v. Meienberg, 215 Ariz. 44, 50, ¶ 27, 156 P.3d 1149, 1155 

(App. 2007) (internal quotation omitted). “We defer to the trial court’s 

factual findings unless clearly erroneous.” City of Tucson v. Clear Channel 
SCHICKNER v. SCHICKNER

Opinion of the Court

6

Outdoor, Inc., 218 Ariz. 172, 189, ¶ 58, 181 P.3d 219, 236 (App. 2008). “A 

factual finding is clearly erroneous if no substantial evidence supports it.” 

Id. 

¶14 Pursuant to statute, the trial court must divide community 

property “equitably, though not necessarily in kind[.]” Ariz. Rev. Stat. 

(“A.R.S.”) § 25-318(A). As a general principle, “all marital joint property 

should be divided substantially equally unless sound reason exists to 

divide the property otherwise.” Toth v. Toth, 190 Ariz. 218, 221, 946 P.2d 

900, 903 (1997).

¶15 To support her claim that the trial court should have used a 

different valuation methodology and not applied a minority share discount, 

Wife relies on Pro Finish USA, Ltd v. Johnson, 204 Ariz. 257, 63 P.3d 288 (App. 

2003), and cases from other jurisdictions. As Wife acknowledges, however,

Pro Finish is a dissenters’ rights case applying statutory buy-out provisions 

that require a “fair value buy-out” under specific statutory situations. 204 

Ariz. at 260, ¶¶ 8-9, 63 P.3d at 291; see also A.R.S. §§ 10-1325(A), -1301. 

Because the division of community assets in a marital dissolution 

proceeding is governed by an equitable division principle (a different 

standard), Pro Finish is inapposite. 

¶16 No Arizona case bars a court from applying a minority share 

discount when valuing minority interests in a domestic relations case. 

Consistent with the majority of other jurisdictions that have addressed the 

issue, we decline to adopt such a bright-line rule here. See, e.g., Hanson v. 

Hanson, 125 P.3d 299, 308 (Alaska 2005) (explaining that minority share 

discounts may be “used in proper settings” but need not be “applied in all 

instances”); In re Marriage of Davies, 880 P.2d 1368, 1375 (Mont. 1994) 

(concluding that application of a minority share discount is “appropriate” 

in some cases); cf. In re Marriage of Batt, 945 P.2d 517, 524 (Or. App. 1997) 

(explaining that application of “a marketability discount is an appropriate 

device to use in valuing a party’s interest in an asset under some 

circumstances”). But see Brown v. Brown, 792 A.2d 463, 490 (N.J. App. 2002) 

(holding that the application of a minority share discount “to determine the 

non-owner spouse’s fair share” of marital assets undermines “the purpose 

of equitable distribution” and is therefore inappropriate). 

¶17 Instead, a trial court has discretion to consider whether a 

minority discount is appropriate, on a case-by-case basis, considering 

factors such as the minority shareholder’s degree of control, lack of 

marketability, and the likelihood of a sale of the minority interest in the 

foreseeable future. See Davies, 880 P.2d at 1375 (“A discount for a minority 
SCHICKNER v. SCHICKNER

Opinion of the Court

7

interest is appropriate when the minority shareholder has no ability to 

control salaries, dividends, profit distribution, and day-to-day corporate 

operations.”); In re Marriage of Johnston, 726 P.2d 322, 325 (Mont. 1986) 

(explaining that application of a minority discount may be applied when it 

“accurately reflect[s]” a minority shareholder’s lack of control); In re 

Marriage of Branscomb, 117 P.3d 1051, 1056 (Or. App. 2005) (noting the 

application of a minority share discount is a fact-specific inquiry that must 

be considered “on a case-by-case basis”); In re Marriage of Tofte, 895 P.2d 

1387, 1391 (Or. App. 1995) (explaining a minority discount may be 

inappropriate when no sale of a minority share is imminent or planned). 

Because a minority share discount “is an attempt to take into account the 

difficulty of actually turning an asset into money[,]” its application may be 

inappropriate when underlying assumptions regarding lack of control and 

lack of marketability are not supported by the evidence. See Tofte, 895 P.2d 

at 1392. 

¶18 Applying these principles to WME, the trial court’s valuation 

is not supported by the evidence. Husband owns a 50% membership 

interest in WME, equal to that of the only other member of the limited 

liability company. The record reflects that Husband holds significant 

power regarding financial decisions, as evidenced by his decision to convert 

one-half of his salary to distributions as a tax-saving strategy. Although 

Husband testified he was unable to alter the terms of WME’s rent, which 

were fixed by contract, the record does not otherwise reflect any substantial 

limitations on his joint control of WME as a 50% member. Further, 

Husband presented no evidence he has any plans to sell his interest in the 

business. Thus, for WME, the underlying assumptions justifying the 

application of a minority share discount are not supported by the record. 

See Davies, 880 P.2d at 1376 (concluding that application of a minority share 

discount was inappropriate when the record reflected the minority 

shareholder had “broad powers regarding financial decisions” and had “no 

intention of selling” his interest). 

¶19 The trial court therefore abused its discretion by valuing 

WME at $602,000, substantially below not only Schwartley’s valuation of

$1,617,000, but also Koons’ $830,000 fair value valuation (not applying a 

minority share discount), and even below Koons’ $620,000 valuation that

did apply the discount. Accordingly, we vacate the court’s ruling as to 

WME and remand for a revaluation and equitable distribution of the 

community’s interest in WME. 

¶20 Turning to PSC, we conclude the evidence reasonably

supports the application of a minority share discount. As with WME,
SCHICKNER v. SCHICKNER

Opinion of the Court

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Husband did not testify regarding any intent to sell his interest in the 

business. Husband only owns a 20% share in PSC, however, and Wife has 

not cited, nor has our review of the record revealed, any basis for 

concluding that Husband’s control over PSC is not substantially limited by 

the holder of the 80% interest. Therefore, because the trial court’s

application of a minority share discount and corresponding valuation of 

PSC at $536,000 is supported by the record, we discern no abuse of 

discretion. 

B. Character of WME and PSC Distributions

¶21 Wife argues the trial court improperly classified the WME 

and PSC distributions made subsequent to the filing of the petition for 

dissolution as Husband’s sole and separate property. 

¶22 The characterization of property as separate or community is 

a question of law we review de novo. Bell-Kilbourn v. Bell-Kilbourn, 216 Ariz. 

521, 523, ¶ 4, 169 P.3d 111, 113 (App. 2007). “Property takes its character as 

separate or community at the time of acquisition and retains that character 

throughout the marriage.” Id. at ¶ 5 (internal quotation omitted). As a 

corollary to this principle, the community is generally “entitled to the 

profits and gains attributable to community assets.” In re Marriage of Fong, 

121 Ariz. 298, 305, 589 P.2d 1330, 1337 (App. 1978). Although property

acquired by either spouse after service of a petition for dissolution of 

marriage is the separate property of the acquiring spouse, the service of a 

petition for dissolution does not alter the status of preexisting community 

property. A.R.S. § 25-211(A), (B). Likewise, notwithstanding the filing of a 

petition for dissolution, when community property “is used to acquire new 

property,” the new property is community property. A.R.S. § 25-211(B)(2). 

Because property acquired during marriage is presumed to be community 

property, the spouse seeking to overcome the presumption has the burden 

of establishing the separate character of the property by clear and 

convincing evidence. Brebaugh v. Deane, 211 Ariz. 95, 98, ¶ 6, 118 P.3d 43, 

46 (App. 2005).

¶23 The parties do not dispute that WME and PSC were acquired 

during the marriage and constitute community property. It is also 

undisputed that the WME and PSC operating agreements provide for 

distributions to members in proportion to their percentage interests. 

¶24 Pursuant to Husband’s WME employment agreement, “[a]ll 

fees or other income of any kind attributable to [Husband’s] medical 

services during the [term of employment] shall belong to [WME].” As 
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Opinion of the Court

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compensation for his services, the employment agreement provides that 

WME “shall pay [Husband] a base salary [during the term of employment]” 

of $250,000. The employment agreement further states that Husband’s base 

salary “may be adjusted” upon mutual written agreement of Husband and 

WME. The record does not reflect any written amendment to the 

employment agreement. 

¶25 The parties do not dispute that under his employment 

agreement Husband receives a “base salary” from WME in the amount of 

$250,000 and that amount, since the time Husband filed the petition for 

dissolution, is Husband’s sole and separate property. Wife contends, 

however, that all WME and PSC post-petition distributions in excess of 

$250,000 constitute profits of the community’s businesses and she is 

therefore entitled to one-half of the disbursements Husband received before 

the final decree was entered, when pursuant to court order the character of 

the businesses was transmuted from community property to Husband’s 

separate property. Husband counters that all of the distributions were 

wholly earned income that he received for his toil and labor after his filing 

of the petition for dissolution and thus constitute his separate property. Cf.

Rueschenberg v. Rueschenberg, 219 Ariz. 249, 257, ¶ 31, 196 P.3d 852, 860 (App. 

2008) (“Where either spouse is engaged in a business whose capital is the 

separate property of such spouse, the profits of the business are either 

community or separate in accordance with whether they are the result of 

the individual toil and application of the spouse, or the inherent qualities 

of the business itself.”) (quoting Rundle v. Winters, 38 Ariz. 239, 245, 298 P. 

929, 931 (1931)).

¶26 At trial, Bull testified that notwithstanding the employment 

agreement, Husband received approximately $500,000 as his annual salary 

from WME until 2010, when Bull recommended that Husband instead 

receive $250,000 as salary and the remaining compensation for his labors, 

an additional $250,000, as distributions to avoid paying Medicare tax. 

When asked about Wife’s argument that Husband’s salary for his labor was 

limited to $250,000, Bull disputed her claim and stated that Husband was 

actually compensated $500,000 for his toil and labor. Bull further testified 

that, if Husband received all of his compensation for his labor as “salary,”

his profit distributions would have been “much less,” in the nature of 

$50,000 per year. 

¶27 As noted, the parties agree that Husband’s stated WME salary 

of $250,000 constitutes his sole and separate property as of the filing of the 

petition for dissolution. See Brebaugh, 211 Ariz. at 98, ¶ 7, 118 P.3d at 46 

(recognizing that “compensation for a spouse’s post-dissolution efforts is 
SCHICKNER v. SCHICKNER

Opinion of the Court

10

sole and separate property”). As to the rest of Husband’s compensation, 

because it is derived from a community asset, Husband bears the burden of 

establishing the separate nature of all of the distributions he received. See 

id. at ¶ 6. 

¶28 The operating agreements for WME and PSC provide that 

distributions of cash or other property shall be made to the members in 

proportion to their percentage interests. At trial, Bull testified that before 

2010, Husband consistently earned an annual salary of approximately 

$500,000. In 2010, his compensation was restructured such that he received 

one-half of his compensation as salary and one-half as distributions. 

Although the record reflects this change was made as part of a tax-savings 

strategy and not in anticipation of the divorce, the restructuring is not 

dispositive as to whether all the distributions made by the two businesses 

became Husband’s sole and separate property pending the final decree. See 

Nelson v. Nelson, 114 Ariz. 369, 371, 560 P.2d 1276, 1278 (App. 1977) (“[T]he 

treatment which income receives for tax purposes is not determinative of 

whether the property is community or separate.”). Instead, determining 

the amount of Husband’s compensation, for the purpose of deciding

whether it is sole and separate property, must take into account that the 

source of the compensation is an asset owned by both spouses. Therefore,

the amount must be reasonable given the totality of the circumstances.

¶29 As Bull acknowledged, Husband received a significant 

amount of money as profit distributions each year, but even if Husband did 

not work for the businesses, he nonetheless would have been entitled to 

claim whatever profits or losses were generated by WME and PSC. 

Although speaking in generalities, Bull testified that the profits disbursed 

to Husband, in excess of Husband’s compensation for his labor, were 

approximately $50,000 per year, presumably as to WME. The parties have 

not identified, and our review of the record does not reveal, any evidence 

regarding the reasonable amount of compensation Husband received for 

his toil and labor at PSC. Thus, the trial court’s finding that all monies paid 

to Husband by WME and PSC are Husband’s sole and separate property is 

not supported by the record because it failed to adequately consider Wife’s 

community interest in the two businesses. Nor does the record show that 

the trial court placed the burden on Husband of proving by clear and 

convincing evidence that the distributions he received from both businesses 

over the three-year period should be deemed his sole and separate 

property. 

¶30 We therefore vacate the court’s ruling regarding the character 

of the WME and PSC distributions and remand to determine the amount of 
SCHICKNER v. SCHICKNER

Opinion of the Court

11

compensation Husband reasonably received from WME and PSC for his 

toil and labor. Any distributions Husband received in excess of that 

reasonable amount of compensation are attributable to the community as 

profits derived from existing community assets and subject to equitable 

division. See A.R.S. § 25-211(B)(2).

C. Attorneys’ Fees

¶31 Both parties request an award of attorneys’ fees and costs 

incurred on appeal pursuant to A.R.S. § 25-324, which authorizes such an 

award after consideration of the financial resources of the parties and the 

reasonableness of their positions. In our discretion, we award Wife her 

costs and a portion of her reasonable attorneys’ fees, in an amount to be 

determined upon her compliance with Arizona Rule of Civil Appellate 

Procedure 21(a).

CONCLUSION

¶32 We affirm the trial court’s valuation of PSC but vacate the 

court’s valuation of WME, as well as its rulings on the WME and PCS 

interim disbursements, and remand for further proceedings consistent with 

this decision.