IN THE COURT OF APPEALS OF NORTH CAROLINA

No. COA19-733

Filed: 7 July 2020

Buncombe County, No. 17 CVD 4584

SHELLEY GOULAS STOWE, Plaintiff,

v.

RAYMOND LEE STOWE, Defendant.

Appeal by defendant from judgment and order entered 29 January 2019 by 

Judge Andrea F. Dray in Buncombe County District Court. Heard in the Court of 

Appeals 15 April 2020.

Emily Sutton Dezio for plaintiff-appellee.

Fox Rothschild LLP, by Michelle D. Connell, for defendant-appellant.

TYSON, Judge.

Raymond Lee Stowe (“Defendant”) appeals from an equitable distribution 

judgment and order entered 29 January 2019. We affirm in part, reverse in part, and 

remand. 

I. Background 

Shelley Goulas Stowe (“Plaintiff”) and Defendant were married on 5 October 

1996 and separated on 11 September 2017. Two minor children were born of the 

marriage. The trial court entered a consent order for child custody and child support 
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Opinion of the Court

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on 22 June 2018. The consent order for child custody and child support is not a part 

of this appeal. 

Defendant owned an Allstate Corporation captive insurance agency, which 

sold only Allstate insurance products. Both Plaintiff and Defendant felt that owning 

an independent insurance agency, rather than a captive agency, would better fit the 

family’s needs. They purchased Madison Insurance Group, Inc. (“Madison”), an 

independent insurance agency, during the marriage. Madison is a North Carolina 

sub-S corporation. Madison sells policies issued by approximately thirty different 

vendors, but Allstate is the primary vendor, accounting for nearly one-third of the 

policies written. 

The parties’ equitable distribution trial, centered primarily on the value of 

Madison, began on 29 November 2018. Plaintiff engaged F. Foster Shriner as an 

expert witness to express an opinion of value of Madison. Plaintiff presented two 

letters to Plaintiff’s attorney from Shriner, one dated 25 July 2018 and one dated 28 

November 2018. Shriner’s 25 July 2018 letter valued Madison at $531,435, while his 

later 28 November 2018 letter valued Madison at $511,212. 

Both letters provided a “conclusion of value” of Madison, but stated that the 

records he relied upon were “incomplete, at best.” The 25 July 2018 letter contained 

two additional documents: Madison’s Form 1120S, a U.S. Corporation Income Tax 

Return for an S Corporation, from 2016 and a balance sheet dated 11 September 2017. 
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The 25 July 2018 letter contained the following asset values: $25,987 in cash, 

$26,100 for a note receivable, and $532,958 for goodwill/intangibles against liabilities 

of $53,610 for a note payable. The $532,958 for goodwill/intangibles estimate was 

calculated by multiplying the Madison 2016 revenues of $217,534 by a value of 2.45. 

The total estimated value of Madison was $531,435. 

The 2.45 multiplier Shriner used to calculate estimated value was contained 

in an article sent by Plaintiff and Plaintiff’s father to Shriner, entitled “First Quarter 

2018 Allstate Agency Value Index.” The article was found on PPC Loan’s website, a 

lending company for Allstate Insurance agencies, and was written by its president 

and Chief Executive Officer, Paul Clarke. The article included a chart detailing 

“Allstate Agency Price to New/Renewal Commission Ratio (National Average)” for the 

fourth quarter of 2016, all of 2017, and the first quarter of 2018. 

Shriner’s 28 November 2018 letter reflected assets of: $24,790 in cash, $30,140 

in a note receivable, and $532,958 in goodwill/intangibles against liabilities of 

$76,676 for a note payable. The total estimate of value was $511,212. The 

goodwill/intangibles were calculated using the same revenues and the 2.45 multiple 

as the 25 July 2018 letter. Nowhere in the letters or sheets is there a reference or 

certification the opinion was prepared according to Generally Accepted Accounting 

Principles (“GAAP”) or disclaimer. 
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At the equitable distribution trial, Shriner was tendered as an expert witness 

in business valuation, forensic accounting, and certified public accounting. Shriner 

explained his methodology behind the income-based approach he used to calculate 

Madison’s value, as well as his assigned 2.45 revenue multiplier. Shriner based his 

valuation on four factors: cash assets verified by Quickbooks software, a note 

receivable, a loan taken by Madison, and goodwill. Shriner had the 2017 tax returns, 

most of the bank statements, and a summary book, but not a balance sheet. 

On cross-examination, Shriner testified he understood the difference between 

a captive Allstate agency and an independent agency. Shriner defended his 2.45 

value multiplier from the “Allstate Agency Price to New/Renewal Commission Ratio 

(National Average)” chart, because “[i]t was a document that stated what the market 

rates were in terms of the revenue multiple.” 

Shriner further acknowledged the chart’s valuation was based, in part, on an 

agency that sold as a part of a group merger, and the chart included only captive 

Allstate agency sales transactions. Shriner acknowledged Allstate captive agencies 

have a buy-back provision that an independent agency does not have, which would 

factor positively into the valuation. 

Defendant’s counsel provided Shriner with another article, also written by 

Paul Clarke and PPC Loan, entitled “Allstate Agencies - Why so Valuable?” The 

article states Allstate captive agencies are very unique, as compared to their peers in 
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other service sector industries, because Allstate-only agencies have resources 

available to them that independent agencies do not have. The article provides a chart 

illustrating Allstate captive agencies having a superior multiple, in value, as 

compared to independent agencies. Clarke and PPC Loan valued Allstate captive 

agencies at 2.5 times the annual commissions and valued independent agencies at 

1.5 times the annual commissions. 

Defendant tendered Tom Franks, as an expert witness in certified public 

accounting, business valuation, and forensic accounting. Franks testified he had 

significant experience in the insurance business and had owned an independent 

insurance agency for ten years, from 1978 through 1988. The trial court admitted 

Franks as an expert witness only in certified public accounting. The court found he 

had “minimal business valuation experience, had maintained minimal continuing 

education in business valuation methodologies, and had not prepared more than two 

business valuations for insurance agencies.” 

The trial court entered an equitable distribution order valuing Madison by 

using Shriner’s 28 November 2018 letter’s valuation amount of $511,212, less a 

preliminary distribution to Plaintiff of $21,003.45, giving Madison a net value of 

$490,208.55. Tax consequences of a sale were not factored into the value of Madison. 

The equitable distribution order also distributed IRA and 401(k) accounts. The 

trial court found a 10% penalty would accrue if the accounts were immediately
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withdrawn. The trial court also found there would be a taxable event creating tax 

consequences when the money was withdrawn, and reduced the value of the 

American Traditional IRA from $138,847.65 to 104,135.74, the Lumina Wealth IRA 

from $20,601 to $15,450.75, and the Principal 401(k) from $28,362 to $21,271.50 to 

account for those consequences. Defendant appeals. 

II. Jurisdiction

This Court possesses jurisdiction pursuant to N.C. Gen. Stat. §§ 7A-27(b) and 

50-19.1 (2019).

III. Issues

Defendant argues the trial court erred by: (1) failing to reasonably approximate

the value of Madison by basing the valuation on incompetent evidence; (2) refusing 

to qualify Franks as an expert witness in the field of business valuation; (3) 

calculating early withdrawal penalties for retirement accounts, but not calculating 

imbedded taxes for Madison; and, (4) distributing payments on a note payable to 

Madison to Plaintiff where Madison is not a party to this suit. 

IV. Valuation of Madison

Defendant asserts the trial court’s findings did not reasonably approximate the 

value of Madison and made erroneous conclusions of valuation upon incompetent 

evidence. 

A. Standard of Review
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[T]he standard of review on appeal from a judgment 

entered after a non-jury trial is whether there is competent 

evidence to support the trial court's findings of fact and 

whether the findings support the conclusions of law and 

ensuing judgment. The trial court’s findings of fact are 

binding on appeal as long as competent evidence supports 

them, despite the existence of evidence to the contrary.

The trial court’s findings need only be supported by 

substantial evidence to be binding on appeal. We have 

defined substantial evidence as such relevant evidence as 

a reasonable mind might accept as adequate to support a 

conclusion. As to the actual distribution ordered by the

trial court, when reviewing an equitable distribution order,

the standard of review is limited to a determination of

whether there was a clear abuse of discretion. A trial court

may be reversed for abuse of discretion only upon a

showing that its actions are manifestly unsupported by

reason.

Peltzer v. Peltzer, 222 N.C. App. 784, 786-87, 732 S.E.2d 357, 359-60 (2012)

(citations, quotation marks, and brackets omitted).

“The task of a reviewing court on appeal is to determine whether the approach 

used by the trial court reasonably approximated the net value of the partnership 

interest. If it does, the valuation will not be disturbed.” Poore v. Poore, 75 N.C. App. 

414, 419, 331 S.E.2d 266, 270 (1985) (citation omitted). 

The holding in Poore has been applied to closely-held corporations. Patton v. 

Patton, 318 N.C. 404, 406, 348 S.E.2d 593, 595 (1986) (“the trial court should make 

specific findings regarding the value of a spouse’s professional practice and the 

existence and value of its goodwill, and should clearly indicate the evidence on which 
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its valuations are based, preferably noting the valuation method or methods on which 

it relied.”(citation and quotation marks omitted)). 

B. Analysis 

The equitable distribution order states, in relevant parts: 

33. The Court received testimony from the parties and 

expert witnesses regarding the business entity known as 

Madison Insurance Group, Inc. Based upon the credible 

evidence received, the Court makes the following specific 

findings of fact regarding this asset: 

a. The parties acquired the foregoing business during 

the course of the marriage and prior to the date of 

separation; at the time the parties acquired the 

business, they purchased the business using a 

multiplier of two times the gross revenue of the 

business in order to determine the value of the entity. 

The parties borrowed money from the marital 

residence in order to fund this purchase; that following 

the purchase of the business and until the date of 

separation, the business paid the mortgage associated 

with the residence, and the parties considered the debt 

secured by the residence and associated with the 

purchase of the business to be a business liability. 

b. Madison Insurance Group, Inc. is an insurance 

agency with its primary operating location in Madison 

County, North Carolina. Since the purchase of the 

business and through the present date, the Husband 

has operated this business. 

c. The Husband made an additional purchase of 

another agency in the Buncombe County, North 

Carolina, and folded this business into Madison 

Insurance Group, Inc. This location has been operated 

under the business name of Madison Insurance Group, 
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Inc. since it was acquired by the parties and continues 

to operate at the present time. 

d. The business maintains certain assets, including 

tangible personal property, intangible accounts, 

accounts receivable, renewable contracts, and 

liabilities including but not limited to loans and credit 

card debt. 

e. The business is an independent agency and sells 

policies backed by approximately 30 different vendors. 

The primary vendor, accounting for approximately one 

third of the policies written, is Allstate insurance. 

f. The Husband testified and the Court finds credible 

on this particular issue, that the parties purchased 

Madison Insurance Group, Inc. in order to have an 

insurance agency operated by the parties which was 

not a captive Allstate agency. At the time the parties 

purchased Madison Insurance Group, Inc., the 

Husband owned a captive Allstate agency. It was the 

intention of the parties to acquire Madison Insurance 

Group, Inc. in order to generate greater revenue and to 

have access to different products and vendors. 

g. The Husband testified as to his belief regarding the 

value of this business. The Husband testified that he 

believed the business value to be nominal, based upon 

his belief that the business entity has operated at a loss 

for years. The Court does not find this testimony to be 

competent nor does it find the testimony to be credible. 

Regarding the issue of competency, the Husband was 

not qualified as an expert in business valuations and 

did not provide any business valuation methodology 

appropriate for determining the fair market value of 

the business. Furthermore, regarding credibility, the 

Court finds that the Husband executed a personal 

financial statement on 22 June 2017, approximately 

three months prior to the separation parties (sic), 

where he listed the business as having a value of 
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$400,000 or approximately two times the gross revenue 

of the business. 

. . . 

i. The Wife tendered an expert witness, Mr. Foster 

Shriner, for the purpose of determining a business 

value for Madison Insurance Group, Inc. Mr. Shriner 

was tendered as an expert witness in certified public 

accounting, forensic accounting, and business 

valuations. The Court accepted Mr. Shriner as an 

expert witness in all three areas, and found the witness 

to be competent to testify, and found the testimony of 

the witness to be credible and of assistance to the Court 

in determining the fair market value of the business. 

Pursuant to the testimony of Mr. Shriner, the Court 

makes the following specific findings regarding 

Madison Insurance Group, Inc.:

1. That industry standard for valuing an insurance 

agency considers the use of a multiplier of the gross 

sales of the business; that depending on the type, 

size and volume of the agency, a multiplier of 2 to 

5 times gross sales would be appropriate; 

2. That Madison Insurance Group, Inc. is not a 

captive agency, however, the majority of all policies 

written from any individual vendor are Allstate 

Insurance policies; that Allstate policies account 

for approximately one-third of the sales for 

Madison Insurance Group, Inc. 

3. That Madison Insurance Group, Inc. at the time 

of separation maintained certain cash accounts, 

accounts receivable, had outstanding loans paid to 

third parties (specifically Andy Stowe, brother of 

the Husband), and had certain goodwill; that 

furthermore, the business maintained certain 

debts, including certain liabilities due to a lending 

institution known as Oak Funding. 
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4. That in considering the appropriate multiplier to 

determine the goodwill value of the business, Mr. 

Shriner considered the industry standards, and 

also considered multipliers used by Allstate 

Insurance in valuing agencies considering the size, 

volume and sales. Mr. Shriner further interviewed 

professionals in the industry to determine 

appropriate multipliers. Based upon all sources 

and consideration, and consistent with industry 

standard, Mr. Shriner applied a multiplier of 2.45 

times gross sales to determine the goodwill of the 

business. The Court finds this to be reasonable and 

credible. 

5. Mr. Shriner determined the business to have the 

following assets and liabilities: 

Cash assets, net of funds held in trust: $24,790

Notes receivable from A. Stowe: $30,140

Goodwill and intangibles 2.45 x gross 

sales of $217,534: $532,958

Note payable to Oak Funding: [$](76,676)

Madison Insurance Group, Inc. FMV $511,212

6. That at the time that Mr. Shriner completed his 

evaluation he had requested but had not received 

2018 taxes or business information to update his 

analysis. This information was provided 

approximately three days prior to the hearing. Mr. 

Shriner testified that, upon review of the gross 

sales, the business value would have increased, but 

only slightly and not in any significant amount. 

The Court finds it credible that this value is the 

value of the business as of the date of separation, 

and on the date of the hearing.

. . .
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8. In considering the credible testimony of Mr. 

Shriner, the Court finds Madison Insurance Group, 

Inc. to have a fair market value of $511,212 less the 

preliminary distribution received by the Wife . . . , 

in the amount of $21,003.45 with a resulting net 

value of $490,208.55. 

(brackets and alterations omitted). 

Defendant argues the trial court erred in its valuation of Madison by basing 

its valuation on incompetent evidence, by utilizing an improper valuation 

methodology, which did not approximate the market value of the agency and goodwill, 

and by double-counting revenue in the calculation. 

1. Competent Evidence 

The trial court accepted Shriner’s opinion of valuation of Madison, expressed 

in his 28 November 2018 letter. During the equitable distribution trial, Shriner 

testified towards the basis of this valuation. A critical part of the evidence was Paul 

Clarke’s article from his company’s website entitled “First Quarter 2018 Allstate 

Agency Value Index,” and the included chart: “Allstate Agency Price to New/Renewal 

Commission Ratio (National Average)” for the fourth quarter 2016, all of 2017, and 

the first quarter of 2018. 

Absent from the record or transcript is Paul Clarke’ background or 

qualifications to assert an opinion of value. This is a distinction Shriner 

acknowledged during cross examination and in the record, but is not addressed or 

rectified by either Shriner or the trial court in the equitable distribution order. 
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Paul Clarke and PPC Loan only financed Allstate captive agencies, not 

independent agencies like Madison. Shriner relied upon the chart, providing the 

value of only captive Allstate agencies, to base his opinion. Included in the sample 

data was an Allstate agency sold as a part of a group merger. The trial court 

concluded “that Allstate policies account for approximately one-third of the sales of 

Madison Insurance Group, Inc.” However, this conclusion failed to consider and 

reconcile resources and advantages that a captive Allstate agency has, such as a buyback provision for a prospective seller and other resources to justify and warrant the 

higher revenue multiples over that applied to independent insurance agencies. 

Paul Clarke’s other article, “Allstate Agencies - Why so Valuable?”, recognizes 

the resources and advantages to justify the high multiple of 2.5 for all Allstate captive 

agencies. The article also valued independent agencies at a multiple of 1.5 times the 

commissions. Plaintiff argues Defendant’s own valuation of Madison at a 2.0 

multiplier of sales supports the 2.45 finding to arrive at the value. 

The trial court found Defendant’s testimony of valuation of Madison not to be 

credible, due in part to his not being tendered or accepted as a business valuation 

expert, yet it references this application and value in its order. A business or property 

owner is competent to testify to the value of his business or property. Hill v. Hill, 244 

N.C. App. 219, 229, 781 S.E.2d 29, 37 (2015) (“[L]ay opinions as to the value of the 

property are admissible if the witness can show that he has knowledge of the property 
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Opinion of the Court

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and some basis for his opinion. Unless it affirmatively appears that the owner does 

not know the market value of his property, it is generally held that he is competent 

to testify as to its value.”). The weight given to that testimony is for the finder of fact 

to determine. Phelps v. Phelps, 337 N.C. 344, 357, 446 S.E.2d 17, 25 (1994) (“[T]he 

trial judge, sitting without a jury, has discretion as finder of fact with respect to the 

weight and credibility that attaches to the evidence.”). The evidence and findings do 

not support the trial court’s conclusion on valuation. 

2. Valuation Methodology 

The Internal Revenue Service (“IRS”) provides the following factors to value 

the stock of a closely-held corporation: 

SEC. 4. FACTORS TO CONSIDER.

.01 It is advisable to emphasize that in the valuation of the 

stock of closely held corporations or the stock of 

corporations where market quotations are either lacking or 

too scarce to be recognized, all available financial data, as 

well as all relevant factors affecting the fair market value, 

should be considered. The following factors, although not 

all-inclusive are fundamental and require careful analysis 

in each case:

(a) The nature of the business and the history of the

enterprise from its inception.

(b) The economic outlook in general and the condition and

outlook of the specific industry in particular.

(c )The book value of the stock and the financial condition

of the business.

(d) The earning capacity of the company.
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(e) The dividend-paying capacity.

(f) Whether or not the enterprise has goodwill or other

intangible value.

(g) Sales of the stock and the size of the block of stock to be

valued.

(h) The market price of stocks of corporations engaged in

the same or a similar line of business having their stocks

actively traded in a free and open market, either on an

exchange or over-the-counter.

Rev. Rul. 59-60, 1959-1 C.B. 237 (January 1, 1959) (emphasis supplied). 

This Court’s precedents provide further guidance on valuation. Specifically, a 

trial court should consider: “(a) its fixed assets including cash, furniture, equipment, 

and other supplies; (b) its other assets including accounts receivable and the value of 

work in progress; (c) its goodwill, if any; and (d) its liabilities.” Poore, 75 N.C. App. at 

419, 331 S.E.2d at 270 (citations omitted); Goodwill, Black’s Law Dictionary (11th ed. 

2019) (“A business’s reputation, patronage, and other intangible assets that are 

considered when appraising the business, . . . the ability to earn income in excess of 

the income that would be expected from the business viewed as a mere collection of 

assets.”).

However, this Court in Poore cautioned trial courts “to value goodwill with 

great care, for the individual practitioner will be forced to pay the ex-spouse tangible 

dollars for an intangible asset at a value concededly arrived at on the basis of some 
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Opinion of the Court

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uncertain elements.” Poore, 75 N.C. App. at 421, 331 S.E.2d at 271 (citation and 

quotation marks omitted).

As noted above, when valuing goodwill of a closely-held business, several 

factors should be examined: “the age, health, and professional reputation of the 

practitioner, the nature of the practice, the length of time the practice has been in 

existence, its past profits, its comparative professional success, and the value of its 

other assets.” Id. (citations omitted). 

Here, the trial court found accounts of cash assets verified by Quickbooks 

software and a note receivable. The trial court further found the intangible goodwill 

asset and computed a liability balance of the loan taken by Madison. The trial court’s 

designation was based upon Shriner’s findings, where he had the 2017 tax returns,

most of the bank statements, and a summary book but not a balance sheet. 

The evidence before and findings and conclusions by the trial court did not 

utilize the factors from Poore or the IRS for valuing a business. The trial court’s order

made no mention of the nature of the business and the history of the enterprise from 

its inception, the economic outlook in general and the condition and outlook of the 

specific industry in particular, the financial condition of the business, the company’s 

earning capacity, the market price of corporations engaged in the same or a similar 

line of business, or factors that led to the finding of intangible goodwill. 
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The trial court did not address the framework in Poore in finding and valuing

goodwill. It simply addressed the amount of goodwill by concluding Madison “had 

certain goodwill.” Outside of this conclusory statement, the trial court began 

consideration of the appropriate multiplier to apply to the goodwill, even though the 

multiplier was derived from a non-analogous source applying un-adjusted factors. 

The trial court failed to address “the age, health, and professional reputation 

of the practitioner, the nature of the practice, the length of time the practice has been 

in existence, its past profits, its comparative professional success, and the value of its 

other assets.” Poore, 75 N.C. App. at 421, 331 S.E.2d at 271. 

The trial court merely evaluated one years’ past performance in the form of a 

balance sheet and a tax return. While there may ultimately be goodwill or other 

intangible assets to include, the trial court did not conduct any further analysis to 

support the conclusion of value of goodwill. Id. at 422, 331 S.E.2d at 272.

3. Apportionment of Revenue 

During direct examination, Defendant testified: 

[Defense Counsel]: So in 2016 the corporation earned 

commissions of $217,534? 

[Defendant]: Yes. 

[Defense Counsel]: What was the – where did the cash 

assets bank accounts come from? 

[Defendant]: They came from that revenue.
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[Defense Counsel]: So you have [$]217,000 and then 

[$]24,790 that’s actually the same funds? 

[Defendant]: Correct.

. . . 

[Defense Counsel]: And the monies that were paid to Andy 

Stowe of the loans the corporation made to Andy Stowe, 

what were the source of funds for those amounts? 

[Defendant]: That revenue. 

[Defense Counsel]: The [$]217,534? 

[Defendant]: That’s correct. 

Shriner counted the cash asset and note receivable twice in the asset section: 

as both revenue in the annual revenue and as an account. Neither Shriner’s 

testimony, Shriner’s letter, nor the trial court’s order provides a remodeling or reason 

for this double count of these amounts. 

Defendant argues our Supreme Court’s reasoning in Seifert is controlling. 

Seifert v. Seifert, 319 N.C. 367, 354 S.E.2d 506 (1987). In Seifert, the Supreme Court 

of North Carolina examined a double reduction of the value in an equitable 

distribution calculation of a military service member’s pension. The Court held: “The 

effect is an unfair or inequitable reduction in the value of the award between the date 

of separation and the date of the employee-spouse’s retirement.” Id. at 371, 354 

S.E.2d at 509-10. The Court in Seifert prohibited a double discount. 
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What occurred here is a double credit. While not controlling, it is instructive 

to the facts before us. Allowing the double credit of the same funds created an “unfair” 

and “inequitable” increase in the value of the company. Id. 

The trial court erred in calculating the value of Madison by utilizing 

incompetent evidence, conducting an improper valuation of Madison incorporating 

methodology that did not approximate the value of the practice and goodwill, and by 

double counting revenue in the calculation. We reverse these portions of the order 

and remand to the trial court for additional findings and calculations of the value of 

Madison to support its conclusions. See id.

V. Refusal to Qualify Franks as an Expert

A. Preservation 

Defendant argues the trial court erred by not accepting Franks as an expert 

witness in the field of business valuation. Plaintiff asserts the issue is not properly 

preserved for appellate review by this Court. 

N.C. R. App. P. 10(a)(1) requires: “In order to preserve an issue for appellate 

review, a party must have presented to the trial court a timely request, objection, or 

motion, stating the specific grounds for the ruling the party desired the court to make 

if the specific grounds were not apparent from the context.” During the trial, Franks 

was qualified as an expert witness in the field of certified public accounting. When 
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defense counsel sought to ask Franks a question about the methodology of business 

valuation Plaintiff objected and asserted a Daubert challenge: 

[Plaintiff’s Counsel]: Your Honor, he was not qualified as a 

business valuation expert. He was qualified as a CPA. He’s 

not establishing appropriate methodology. And based on 

[N.C. Gen. Stat. §] 8C-702, I don’t think the expert evidence 

that he’s presenting passes a Daubert challenge. 

[Court]: There’s been a Daubert challenge made. [Defense 

Counsel] would you like to respond to that? 

[Defense Counsel]: Your Honor, I don’t think there’s any 

question that this expert has specialized knowledge. I don’t 

think there’s any question that his testimony can assist the 

Court to understand some of the issues in this case. The 

weight you give it is totally up to the Court. It’s not an 

admissibility issue, it’s a weight issue. The basis of his 

opinion is based upon facts known to him and reasonably 

relied upon by experts. You have testimony before this 

Court from Mr. Shriner that the rule of thumb is the 

appropriate methodology. That’s the methodology he used. 

You have testimony from Mr. Franks that that is also the 

methodology that he used. It appears the only difference is 

the multiple factor used, and I think he is surely competent 

in his experience to tell what that should be. 

. . . 

[Plaintiff’s Counsel]: The difference between Mr. Shriner 

and Mr. Franks is that Mr. Shriner was admitted as a 

business valuation expert. Mr. Franks has not been 

admitted as a business valuation expert. And under North 

Carolina Law, as a CPA he cannot render an opinion. This 

is no more than a personal opinion and it is not something

- - under same rule with Mr. Stowe providing that same 

impression or belief of what the value was. When we go 

through this - - and again, Your Honor hasn’t, I don’t 

believe, reviewed the evaluation. But nothing on this 
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evaluation that he has presented lays out his multiplier. 

Nothing in his evaluation does anything other than say I 

think this. [That] is not an appropriate standard under 

Daubert. Because he has not been admitted as an expert in 

business valuation all he can testify to - - I guess he can 

opine as to the cash flow, the taxes and everything else, but 

it is not a business valuation that’s subject to being 

admitted by this Court, because again it does not provide 

assistance to this Court. It does not rely upon principles. I 

don’t believe that he - - again, there’s a reason why Your 

Honor did not admit him as a business valuation expert. 

He doesn’t have the basis, the credentialing and the skill 

set to provide assistance to Your Honor. So again, under 

702 and under the case law of Daubert moving for, most 

recently, as State versus McCreevy (ph), I don’t believe he’s 

competent to testify as to this business value. 

. . . 

[Defense Counsel]: Your Honor, I think the admissibility 

test is, is he qualified by knowledge, skill, experience, 

training and education, and I think that he is. The weight 

that you give is up to you, but it’s not admissibility. It is 

relevant. It is. We’re before this Court on this. And is it 

reliable, and I think it is reliable. And I think particularly 

when you look at it in light of he’s used the same 

methodology as Foster Shriner. And he has also had the 

benefit of having owned an insurance company and been 

actively involved in the running of the company and knows 

how it works when Mr. Foster Shriner has not. So I think 

we do have admissibility. And I think having heard his 

testimony I would reoffer him as an expert in the area of 

business evaluations based upon his history and his 

involvement in the insurance business. 

[Court]: Counsel, thank you. The Court will sustain the 

objection. The Court will not qualify Mr. Franks as an 

expert in the area of business valuation. You may ask 

another question, counselor. 
STOWE V. STOWE

Opinion of the Court

- 22 -

Defendant asserts Plaintiff’s objection that was sustained by the trial court is 

error. When an objection is sustained, our precedents and appellate rules do not 

require the other party to register their own objection on top of having the objection 

sustained against them. See N.C. R. App. P. 10(a)(1). N.C. R. App. P. 10(a)(1) applies 

when a party failed to object to an action in the trial court and then claims error on 

appeal. Plaintiff improperly seeks to assert an inverse of N.C. R. App. P. 10(a)(1),

where a party does not object and thus has not preserved the issue for appellate

review, to bar this Court’s review of the issue. Plaintiff’s argument is dismissed.

Plaintiff further asserts Defendant did not properly notice Franks’ expert 

testimony prior to trial. N.C. Gen. Stat. § 1A-1, Rule 26(b)(4)(a)(1) (2019). Rule 

26(b)(4)(a)(1) mandates the disclosure of any experts prior to trial. This Court 

recently interpreted this rule in Myers v. Myers, holding: “The Rule does require 

advance disclosure of expert witnesses who will testify at trial, even without a 

discovery request, discovery plan, or court order.” Myers v. Myers, __ N.C. App. __, __,

837 S.E.2d 443, 456-57 (2020). 

Plaintiff’s argument relies on the premise that the only remedy for a discovery 

violation is exclusion. The goal of N.C. Gen. Stat. §1A-1, Rule 26(b)(4)(a)(1) is “to 

provide openness and avoid unfair tactical advantage in the presentation of a case at 

trial[.]” N.C. Gen. Stat. § 1A-1, Rule 26(b)(4)(a)(1). The court in Myers leaves the 

determination of the proper remedy to the discretion of the trial court. Myers, __ N.C. 
STOWE V. STOWE

Opinion of the Court

- 23 -

App. at __, 837 S.E.2d at 457. In light of a discovery violation, Myers requires a trial 

court to determine “whether [Defendant’s] failure to disclose the expert sufficiently 

in advance of the trial gave h[im] an ‘unfair tactical advantage’ at trial or defeated 

the purpose of ‘providing openness’ as contemplated by Rule 26(b).” Myers, __ N.C. 

App. at __, 837 S.E.2d at 456. Plaintiff misstates the remedy for this alleged discovery

violation. Id. (“Here, the trial court’s interpretation of Rule 26(b)(4)(a)(1) as requiring 

exclusion of [the expert’s] testimony was in error.” (emphasis original)). In light of 

our holding on this issue, additional findings by the trial court on sanctions are not 

required on remand. 

B. Standards of Review 

“A trial court may be reversed for abuse of discretion only upon a showing that 

its actions are manifestly unsupported by reason . . . that it could not have been the 

result of a reasoned decision.” White v. White, 312 N.C. 770, 777, 324 S.E.2d 829, 833 

(1985) (citation omitted). 

“Where the plaintiff contends the trial court’s decision is based on an incorrect 

reading and interpretation of the rule governing admissibility of expert testimony, 

the standard of review on appeal is de novo.” Cornett v. Watauga Surgical Grp., 194 

N.C. App. 490, 493, 669 S.E.2d 805, 807 (2008). 

C. Analysis 
STOWE V. STOWE

Opinion of the Court

- 24 -

 This Court reviews this issue for abuse of discretion. Id. Defendant does not 

challenge the trial court’s interpretation of N.C. Gen. Stat. § 8C-1, Rule 702 (2019).

Defendant proffered Franks as an expert in “business valuation in forensic 

accounting and certified public accounting.” Plaintiff requested a voir dire to question 

Franks’ qualifications: 

[Plaintiff’s Counsel]: How many CPE courses do you take 

on a yearly basis in business valuation?

[Franks]: Usually one. 

. . . 

[Plaintiff’s Counsel]: And are you specialized or do you 

have any specialization under AICPA - -

[Franks]: I do not

[Plaintiff’s Counsel]: - - - business valuation? 

[Franks]: No, 

[Plaintiff’s Counsel]: So you are not a CVA - - strike that, 

and ABV under the AICPA? 

[Franks]: No. 

[Plaintiff’s Counsel]: Do you have any specialized 

accreditation under NACVA? 

[Franks]: I do not.
STOWE V. STOWE

Opinion of the Court

- 25 -

Franks is a North Carolina licensed certified public accountant and owner of 

an accounting firm whose practice consists of business valuations, taxes, accounting, 

and tax planning. The trial court held: 

The Husband tendered an expert witness, Mr. Tom Franks, 

for the purposes of placing value on the business entity. 

The witness was tendered as an expert in business 

valuation, certified public accounting and forensic 

accounting; upon examination by counsel for the Wife, the 

Court found that the witness was a certified public 

accountant, however, had minimal business valuation 

experience, maintained minimal continuing education in 

business valuation methodologies, has not prepared 

business valuations for insurance agencies more than twice 

in the preceding 30 years and that these were for the 

purposes of assisting a client in the purchase of an agency. 

The Court accepted Mr. Franks as an expert witness in 

certified public accounting, however, did not find him to be 

an expert in business valuation or forensic accounting. 

Accordingly, the Court did not consider the witness’s 

testimony regarding a business value for Madison 

Insurance Group, Inc.

N.C. Gen. Stat. § 8C-1, Rule 702(a) provides: 

If scientific, technical or other specialized knowledge will 

assist the trier of fact to understand the evidence or to 

determine a fact in issue, a witness qualified as an expert 

by knowledge, skill, experience, training, or education, may 

testify thereto in the form of an opinion, or otherwise, if all 

of the following apply:

(1) The testimony is based upon sufficient facts or data.

(2) The testimony is the product of reliable principles 

and methods.
STOWE V. STOWE

Opinion of the Court

- 26 -

(3) The witness has applied the principles and methods 

reliably to the facts of the case.

N.C. Gen. Stat. § 8C-1, Rule 702(a). 

The Supreme Court of North Carolina has recently interpreted Rule 702(a) 

and examined leading cases interpreting Rule 702(a) by the Supreme Court of the 

United States: Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 125 L. 

Ed. 2d 469 (1993); General Electric Co. v. Joiner, 522 U.S. 136, 139 L. Ed. 2d 508 

(1997); and Kumho Tire Co. v. Carmichael, 526 U.S. 137, 143 L. Ed. 2d 238 (1999). 

Our Supreme Court held:

the witness must be qualified as an expert by knowledge, 

skill, experience, training, or education. This portion of the 

rule focuses on the witness’s competence to testify as an 

expert in the field of his or her proposed testimony. 

Expertise can come from practical experience as much as 

from academic training. Whatever the source of the 

witness’s knowledge, the question remains the same: Does 

the witness have enough expertise to be in a better position 

than the trier of fact to have an opinion on the subject? The 

rule does not mandate that the witness always have a 

particular degree or certification, or practice a particular 

profession. But this does not mean that the trial court 

cannot screen the evidence based on the expert’s 

qualifications. In some cases, degrees or certifications may 

play a role in determining the witness’s qualifications, 

depending on the content of the witness’s testimony and 

the field of the witness’s purported expertise. As is true 

with respect to other aspects of Rule 702(a), the trial court 

has the discretion to determine whether the witness is 

sufficiently qualified to testify in that field.
STOWE V. STOWE

Opinion of the Court

- 27 -

State v. McGrady, 368 N.C. 880, 889-90, 787 S.E.2d 1, 9 (2016) (citations and 

quotation marks omitted). 

Contrary to Defendant’s arguments before the trial court and this Court, 

Franks’ qualifications are pertinent to admissibility, not just weight or credibility of 

the testimony. See id. (“Rule 702(a) has three main parts, and expert testimony must 

satisfy each to be admissible.”).

Defendant has failed to show the trial court abused or did not act within its 

discretion when the court concluded not to admit Franks as an expert in the field of 

business valuations. Id. Defendant’s argument is overruled. 

VI. Tax Implications 

Defendant contends the trial court erred by calculating imbedded taxes for 

retirement accounts but not for Madison when the same testimony was presented for 

both assets. 

A. Standard of Review 

When reviewing an equitable distribution order, our standard of review “is 

limited to a determination of whether there was a clear abuse of discretion.” White, 

312 N.C. at 777, 324 S.E.2d at 833. “A trial court may be reversed for abuse of 

discretion only upon a showing that its actions are manifestly unsupported by 

reason.” Id. 

B. Analysis 
STOWE V. STOWE

Opinion of the Court

- 28 -

“[E]quitable distribution is a three-step process requiring the trial court to (1) 

determine what is marital and divisible property; (2) find the net value of the 

property; and (3) make an equitable distribution of that property.” Petty v. Petty, 199 

N.C. App. 192, 197, 680 S.E.2d 894, 898 (2009) (citation, quotation marks, and 

brackets omitted). 

N.C. Gen. Stat. § 50-20(c)(11) provides that the trial court shall consider the 

following distributive factor when equitably dividing the marital and divisible 

property: 

The tax consequences to each party, including those federal 

and State tax consequences that would have been incurred 

if the marital and divisible property had been sold or 

liquidated on the date of valuation. The trial court may, 

however, in its discretion, consider whether or when such 

tax consequences are reasonably likely to occur in 

determining the equitable value deemed appropriate for 

this factor.

N.C. Gen. Stat. § 50-20(c)(11) (2019). 

The trial court made the following finding of fact: 

That with regards to the American Traditional IRA, the 

Lumina Wealth IRA and the Principal 401(k) as set forth 

in the preceding paragraph, the parties presented evidence 

regarding embedded tax consequences and the value of 

these accounts . . . . That these are pretax retirement plans 

from which no taxes have been withheld. These accounts 

are fully subject to taxation at such time as the funds are 

withdrawn; at the present time, should these funds be 

withdrawn, there would also be a 10% penalty. The Court 

finds that there is no evidence that these accounts will be 

immediately liquidated, however, the Court further finds, 
STOWE V. STOWE

Opinion of the Court

- 29 -

based upon the credible testimony of Mr. Shriner, that these 

accounts will have taxable consequences at such time as 

they are liquidated. Mr. Shriner further testified, and the 

Court finds credible, that a 25% reduction in value is 

appropriate for purposes of valuing these assets when 

dividing these assets in exchange for post-tax or net of tax 

assets. (emphasis supplied)

The equitable distribution order distributed the IRA and 401(k) accounts. The 

trial court found if the funds are withdrawn at the present time, a ten percent penalty 

would be assessed. Additionally, the trial court also found “there is no evidence that 

these accounts will be immediately liquidated.” The trial court further found when 

the funds are withdrawn, it will be a taxable event. The trial court thus reduced the 

value of each account by twenty-five percent to account for the tax consequences, 

reducing the American Traditional IRA from $138,847.65 to $104,135.74, the Lumina 

Wealth IRA from $20,601 to $15,450.75, and the Principal 401(k) from $28,362 to 

$21,271.50. 

The trial court based its tax treatment on the potential future liquidation of 

the accounts. “Valuation of marital property may include tax consequences from the 

sale of an asset only when the sale is imminent and inevitable, rather than 

hypothetical or speculative.” Peltzer, 222 N.C. App. at 797, 732 S.E.2d at 366

(citations omitted) (emphasis supplied). “It is error for a trial court to consider 

hypothetical tax consequences as a distributive factor.” Plummer v. Plummer, 198 

N.C. App. 538, 548 680 S.E.2d 746, 753 (2009) (internal quotation marks omitted). 
STOWE V. STOWE

Opinion of the Court

- 30 -

The trial court erred by reducing the accounts as a result of a hypothetical tax 

consequence when the sale or liquidation of the retirement accounts was not 

“imminent and inevitable,” or that the equitable distribution would be a taxable 

event. Peltzer, 222 N.C. App. at 797, 732 S.E.2d at 366. We reverse these portions of 

the order and remand for additional findings and calculations of the tax consequences 

and valuations of the retirement accounts. 

VII. Improper Joinder 

Defendant argues the note payable was owed to Madison and it was error for 

the trial court to distribute payments on a note payable of the company to Plaintiff 

without joining Madison in the action. 

The parties and their respective counsels entered a memorandum of judgment 

on 13 August 2018 addressing the loan underlying the note payable. By agreement 

the note payable was classified as a loan owed to the marriage in the amount of 

$97,206.90. Defendant had accepted the first fifty percent of the loan repayment 

individually and used the funds for his and Madison’s benefit. The parties agreed the 

remaining balance was owed to Plaintiff as an interim distribution. Defendant is 

bound to the memorandum of judgment. See Smith v. Smith, 247 N.C. App. 135, 786 

S.E.2d 12 (2016). Defendant’s argument is dismissed. 

VIII. Conclusion 
STOWE V. STOWE

Opinion of the Court

- 31 -

We affirm the trial court’s treatment of the payments from the note payable 

and the trial court’s denial of admitting Franks as an expert witness in business 

valuation. We reverse the trial court’s finding and conclusion valuing Madison and 

assessing a hypothetical tax consequence without a finding and conclusion the sale 

or liquidation of the retirement accounts was “imminent and inevitable” to trigger 

the penalty. Peltzer, 222 N.C. App. at 797, 732 S.E.2d at 366. 

These portions of the trial court’s order are reversed and remanded for further 

proceedings not inconsistent herewith. It is so ordered.

AFFIRMED IN PART; REVERSED IN PART; AND REMANDED.

Judges BERGER and COLLINS concur.