Opinion ID: 2276677
Heading Depth: 2
Heading Rank: 3

Heading: Trial Court's Valuation of AutoBody

Text: An equitable distribution requires the court to consider the current values of the marital property, such that upon distribution, each party's needs are adequately addressed. McDiarmid v. McDiarmid, 649 A.2d 810, 813 (D.C.1994). Here the trial court considered evidence of the value of AutoBody from three sources: Barnes' testimony that AutoBody was worth $1.75 to $2 million, Sherman's testimony that AutoBody had a negative value, and the transfer of a one-half interest in AutoBody to Sherman's mother for $40,000. Unable to credit either of the widely disparate valuations of AutoBody offered by Barnes and Sherman, the trial court instead awarded Barnes $40,000, based on what Sherman's mother paid for a fifty-percent interest in the company, delivered to her two days prior to commencement of the divorce trial. See TURNER, supra, § 7.04, at 510 (In some cases, however, the court may have difficulty believing that either party's position is correct. Thus, the law permits the trial judge to make his or her own valuation.). Barnes argues that the transaction between Sherman and his mother was a sham and should not be used as the basis for an equitable award of AutoBody. Sherman also argues that the trial court's valuation is flawed. Although both sides argue that the trial court's decision was arbitrary, we are not thus bound to reverse or remand. The scope of this court's review is circumscribed in cases tried by a trial court without a jury: [w]hen the case was tried without a jury, the court may review both as to the facts and the law, but the judgment may not be set aside except for errors of law unless it appears that the judgment is plainly wrong or without evidence to support it. D.C.Code § 17-305(a) (1997). We noted in McDiarmid that there are a variety of acceptable methods of valuing the goodwill of a professional practice, and no single method is to be preferred as a matter of law. 649 A.2d at 815. Rather, [t]he selection of a valuation method is within the discretion of the trial judge. Id. Similarly, a number of different methods are available for determining the fair market value of a close corporation, see TURNER, supra, § 7.04, at 509, though some valuation methods may be more appropriate than others for a particular form of enterprise, or in valuing particular elements of the enterprise, Arnold H. Rutkin, Valuation of a Closely Held Corporation, Small Business or Professional Practice, in 2 VALUATION AND DISTRIBUTION OF MARITAL PROPERTY, § 22.08, at 22-103 (Matthew Bender 1996). Nevertheless, we will permit the trial court[] to accept any reasonable method which is supported by the evidence. TURNER, supra, 7.04, at 509; see also De Liedekerke v. De Liedekerke, 635 A.2d 339, 341 (D.C.1993) (In a divorce proceeding the trial court has discretion over the method by which the division of property will be effectuated.). Although we recognize that in a matter such as this exactitude is not possible, Rogers v. Rogers, 296 N.W.2d 849, 853 (Minn.1980) (en banc), and notwithstanding the trial court's considerable discretion in choosing a valuation method, the method it chooses must allow the trial court to arrive at a distribution of marital property that, based on the evidence, is equitable, just and reasonable. D.C.Code § 16-910(b). The trial court must engage in a conscientious weighing of all relevant factors, statutory or otherwise, before reaching a conclusion about the proper distribution of the property, Burwell v. Burwell, 700 A.2d 219, 225 (D.C.1997) (per curiam), but not limited to those [factors] enumerated in that section. Bernard v. Bernard, 730 A.2d 663, 665 (1999) (internal quotation omitted). Relevance . . . is a function of the particular evidence before the trial court and the issues arising therefrom. Id. (internal quotation and alteration omitted); see also Bowser, 515 A.2d at 1130 (the relevant factors will vary in each case). In this case the trial court did not consider all relevant factors in coming to its valuation of AutoBody. The trial court's method of determining Barnes' equitable portion of the business was to award Barnes one-half of $80,000, Sherman having admitted, contrary to his testimony that AutoBody had negative value, that one-half the business was worth $40,000 by giving his mother a fifty-percent interest in AutoBody for that amount. Where the owning spouse himself or herself has valued the business in an arm's-length transaction with a third party, that valuation will be highly persuasive. TURNER, supra, § 7.08, at 541 (emphasis added); cf. Square 345 Associates Ltd. Partnership v. District of Columbia, 721 A.2d 963, 973 (D.C.1998) (the authorities uniformly agree that [a]s a matter of simple common sense, a recent arm's length sale. . . is extremely probative evidence of fair market value) (quotation omitted). Although the trial court's determination was based on record facts, the trial court made no finding that the $80,000 valuation reasonably reflected an accurate market value of AutoBody as can be assumed when the value is set in an arm's-length transaction. [11] Given the timing of the transmittal of the fifty-percent interest two days before trial, and that the transaction on which the trial court's valuation was based was consummated between a mother and son, where considerations other than objective valuation may prevail, absent a trial court finding to the contrary, the record does not support that $80,000 represents a fair valuation. [12] Because the trial court fail[ed] to consider all the relevant factors, we cannot determine whether the court properly exercised its discretion and achieved an equitable result. Burwell, 700 A.2d at 223. [13] We reverse the trial court's order insofar as it concerns the amount of the equitable award resulting from Barnes' marital interest in AutoBody and remand for further proceedings consistent with this opinion. So ordered.