Court Opinion

ID: 2935888
Source: CourtListenerOpinion
Date Created: 2015-09-15 13:09:21.519987+00
Date Added: 2024-06-11T09:32:52.456318
License: Public Domain

An unpublished opinion of the North Carolina Court of Appeals does not constitute
controlling legal authority. Citation is disfavored, but may be permitted in accordance with
the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.

               IN THE COURT OF APPEALS OF NORTH CAROLINA

                                      No. COA15-7

                                Filed: 15 September 2015

Mecklenburg County, No. 11 CVD 11022

KELLY-ANNE GIEN, Plaintiff,

              v.

ANDRE GIEN, Defendant.

       Appeal by Defendant from Order and Judgment entered 28 May 2014 by Judge

Gary Henderson in Mecklenburg County District Court.              Heard in the Court of

Appeals 19 May 2015.

       James, McElroy & Diehl, P.A., by Preston O. Odom, III, and Jonathan D. Feit,
       for Plaintiff.

       Mark Hayes for Defendant.

       STEPHENS, Judge.

       Defendant Andre Gien appeals from the Mecklenburg County District Court’s

Order and Judgment in an action filed by Plaintiff Kelly-Anne Gien for, inter alia,

equitable distribution. Andre argues that the district court erred in its valuation of

his company, Lightening In A Jar, and in its valuation of shares of stock held as

marital property in an Australian company called InMatrix. Andre also contends that

the district court erred in distributing those assets solely to him and in ordering him
                                    GIEN V. GIEN

                                  Opinion of the Court

to pay a distributive award by liquidating certain assets. After careful review, we

affirm in part, vacate in part, and remand the district court’s Order and Judgment

for further findings and proceedings consistent with this opinion.

                         I. Factual and Procedural History

      Kelly-Anne and Andre are citizens of Australia and were married there on 26

November 2000. In 2001, they moved to the United States and eventually settled in

Mecklenburg County after living for a time in Florida. The parties planned to pursue

an investment strategy by which they hoped to accumulate sufficient savings to

finance their retirement and return to Australia. Andre has a background in business

and accounting, and at the time the parties first arrived in this country, he was

working for an Australian company called InMatrix, which he helped to co-found in

the early 1990s by creating a proprietary software application. At some point in the

mid-2000s, Andre left InMatrix and went to work for a company called CBIZ, where

he worked for three to four years and, with the help of his colleague Ken Fleishman,

developed a financial diagnostic software application called Global Financial Bridge

(“GFB”). Andre then left CBIZ and began working for a company called Lightening

In A Jar (“LIJ”), which is a Florida corporation that he and Kelly-Anne formed in

June 2005. Since 2005, Andre has provided business consulting services for LIJ,

which owns and markets the GFB software. Kelly-Anne assisted Andre during the

marriage by keeping records for his various business interests.

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                                   Opinion of the Court

      The parties separated on 1 September 2009 and were divorced on 25 August

2011. There were two children born of the marriage, and, on 22 February 2011, the

parties executed a Support Agreement for Payment of Alimony & Child Support and

Interim Agreement for the Distribution of Marital & Divisible Property (“Separation

Agreement”). The Separation Agreement provided, inter alia, that Andre “shall pay

child support to [Kelly-Anne] for the benefit of the parties’ minor children in the sum

of $2,000 per month” in 25 installments beginning 1 April 2011. Kelly-Anne and the

children returned to Australia shortly thereafter while Andre continued to reside in

Mecklenburg County.

      On 3 June 2011, Kelly-Anne filed a complaint in Mecklenburg County District

Court alleging that Andre had “failed and refused to pay any amount toward[] his

monthly $2,000 alimony obligation” and seeking money damages for Andre’s breach

of the Separation Agreement, specific performance of the Separation Agreement,

equitable distribution, and attorney’s fees. On 12 July 2011, Kelly-Anne served Andre

with her first request for production of documents and her first set of interrogatories.

Although Andre filed an answer denying any breach of the Separation Agreement

and counterclaimed for equitable distribution on 22 August 2011, he failed to provide

a timely response to Kelly-Anne’s initial requests for discovery. On 15 September

2011, Kelly-Anne filed a Motion to Compel. On 7 November 2011, the parties

consented to the trial court’s entry of an Order to Compel Andre to respond to Kelly-

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                                  Opinion of the Court

Anne’s initial requests for discovery within 14 days and also pay her attorney’s fees.

Kelly-Anne filed her Equitable Distribution affidavit on 14 November 2011. On 22

November 2011, Andre provided Kelly-Anne with his responses to her initial

discovery requests and then submitted an Equitable Distribution affidavit on 14

February 2012 which did not list a single asset, debt, or value and instead answered

“TBD” for all categories. After repeatedly informing Andre in the following months

that many of his responses to her discovery requests were significantly insufficient

and that numerous documents were missing, Kelly-Anne’s attorney filed a Motion for

Contempt against Andre on 28 November 2012, and an amended Motion for

Contempt on 16 January 2013. After entering an Order to Show Cause on 17 April

2013, the trial court granted Kelly-Anne’s motion on 30 July 2013 and entered an

Order for Contempt finding Andre in civil contempt of court for violating its 7

November 2011 Order to Compel. Andre then filed an amended Equitable

Distribution affidavit on 9 August 2013. Both parties sought an unequal distribution

of marital and divisible property in their own favor.

      On 15 October 2013, the trial court entered a Consent Order to Withdraw

permitting Andre’s counsel of record to withdraw from representing him. Throughout

the course of the litigation, Andre had been represented by three separate law firms,

and this marked the second time the court had entered an order allowing his counsel

to withdraw for good cause. When Andre stated that he intended to represent himself

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                                  Opinion of the Court

at trial, the court warned him that the trial would involve complex and complicated

legal issues that would be difficult for a layperson to understand. Andre affirmed that

he understood this, but stated that although he had over $30,000 in the bank, he did

not believe he could afford another attorney.

      After a Final Equitable Distribution Pretrial Order (“FPTO”) was entered on 3

December 2013, a three-day trial on the parties’ claims began in Mecklenburg County

District Court on 16 December 2013. During the marriage, the parties possessed two

homes in North Carolina, one home in Florida, and a significant number of bank

accounts, investment accounts, and equity interests in businesses. At trial, the

parties disagreed strenuously over the value of two assets that are relevant to this

appeal: the value of the parties’ shares of stock in InMatrix and the value of LIJ.

      With regard to the InMatrix shares, Andre stipulated in the FPTO that the

shares were marital property, but also claimed in his amended Equitable Distribution

affidavit that their date of separation value was “zero” because InMatrix “was sold in

2001-2002, and there were [sic] no distribution from the sale as venture capitalist

which funded it received all funds.” However, Kelly-Anne testified that on 1 July

2009, she received an email from the company’s Director of Finance, David Byrne,

which stated that the “total holding value that [the parties] have is 95,524 shares

equating to a total share capital of $330,178.” Although this email was admitted into

evidence without objection, Andre argued that the stock had no value and attempted

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                                   Opinion of the Court

to introduce documents that purported to show the company had been losing money

and was sold shortly after the parties’ date of separation in a “debt free, cash free”

transaction that did not result in any significant distribution to its shareholders. The

trial court, however, ultimately excluded this evidence because Andre never produced

it in response to Kelly-Anne’s requests for discovery and was unable to lay a proper

foundation for the admission of the documents given his lack of familiarity with our

State’s rules of evidence and civil procedure. Kelly-Anne testified that, in light of

Andre’s longstanding relationship with the company and its principals, she would not

feel comfortable being a shareholder and therefore requested that all the shares be

distributed to Andre.

      As for the parties’ respective interests in LIJ, Kelly-Anne testified that she

filed the articles of incorporation for the company, served as its registered agent and

incorporator, was also listed along with Andre as one of its two directors, and was

therefore surprised when Andre produced a document during discovery that was

dated 9 June 2009, signed only by Andre, and purported to make him the company’s

sole director by “unanimous consent of [the] shareholders.” In his trial testimony and

during a pretrial deposition, Andre acknowledged several times that Kelly-Anne is a

50% owner of the business, but also claimed that LIJ essentially functions as a one-

man operation that only earns money as a result of his personal efforts, explaining

“outside my capabilities, [LIJ] has no value.” Andre testified further that since the

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                                 Opinion of the Court

date of separation, he has frequently charged his personal expenses to the business’s

account for meals, coffee, cigars, a home mortgage, legal fees, and purchases from

Victoria’s Secret.

      According to certified public accountant Christopher Mitchell of Dixon Hughes,

who testified as an expert on Kelly-Anne’s behalf, this intermingling of business and

personal expenses made it impossible to utilize the income approach to provide a

valuation for the business. However, Mitchell testified further that he was able to

arrive at a valuation of $350,000 for LIJ by applying the asset approach for business

valuations and calculating the cost it would take to recreate the company’s GFB

software. Mitchell explained that he based his valuation on information contained in

two documents Andre eventually produced during discovery. The first document

Mitchell relied on was an ownership agreement (“the Holly/Lloyd agreement”) dated

2 August 2013 that purported to convey two-thirds of Andre’s interest in LIJ to two

of his business associates, Mick Holly and Joshua Lloyd. Although this agreement

was never fully executed, it included a heading noting that “Investment in GFB”

consisted of “an amount of $350,000 incurred by Andre Gien in the development of

the GFB product up to the date of this arrangement.” The second document Mitchell

relied on was an agreement dated 30 July 2013 (“the Fleishman agreement”) that

purported to grant Ken Fleishman a 50% interest in the GFB software and entitled

him to claim up to $350,000 in proceeds on the occurrence of GFB’s sale to a third

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                                  Opinion of the Court

party as a result of Fleishman’s significant financial contributions to the software’s

development. During his deposition, Andre testified that he had reached this

agreement with Fleishman “five or six years ago” and that Fleishman had had

“[p]retty much very little” to do with the software or the business since that time.

      Given her lack of financial background, lack of confidence in the limited

number of financial records Andre provided during discovery, and lack of involvement

in the business since 2009, Kelly-Anne requested that LIJ be distributed solely to

Andre, who in the FPTO had classified the company as marital, separate, and

divisible property, and requested an equal distribution.

      The trial on the parties’ equitable distribution claims concluded on 18

December 2013. On 28 May 2014, the trial court entered an Order and Judgment

awarding alimony and attorney’s fees to Kelly-Anne and finding that an equal

division of the parties’ $2,190,509 distributable estate would be equitable. In its

findings of fact, the court determined that the shares of InMatrix stock had a value

of $330,178 and that the value of LIJ was $350,000 based on Mitchell’s application of

the asset approach. The court ordered that both these assets be distributed to Andre,

based on its finding that an in-kind distribution would not be appropriate because

                    a. The majority of the parties’ marital assets
                    distributed to [Andre] herein have been under the
                    exclusive control of [Andre] since the date of the
                    parties’ separation, approximately four and a half
                    years ago.

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                                  Opinion of the Court

                   b. The business interests distributed to [Andre]
                   herein were controlled and managed by [Andre]
                   throughout the marriage and since the date of
                   separation. [Andre] is the party with knowledge of
                   the business interests, and with relationships with
                   other owners and partners in the businesses.

                   c. [Kelly-Anne] lives in Australia and is the full-time
                   custodian of the parties’ minor children. It is not
                   practical to distribute assets permanently located in
                   the United States to her.

Based on these findings, the court concluded that in order to effectuate an equitable

distribution, it would be necessary for Andre to pay a distributive award of $105,887

to Kelly-Anne, which the court found Andre had the ability to pay “through the

liquidation of real estate, accounts, stock, or business interests distributed to him

herein,” and thus ordered him to do so within six months of the entry of the Order

and Judgment. Through counsel, Andre gave written notice of appeal to this Court

on 23 June 2014.

                                     II. Analysis

                          A. Valuation of InMatrix shares

      Andre argues first that the trial court erred in its $330,178 valuation of the

parties’ shares of stock in InMatrix because this valuation was not supported by

competent evidence. We agree.

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                                   Opinion of the Court

      As this Court’s prior decisions make clear, section 50-20(c) of our General

Statutes requires that, in determining the value of marital property in an action for

equitable distribution,

             the trial court is to determine the net fair market value of
             the parties’ property based on the evidence offered by the
             parties. While there is no required method to follow in
             assessing the value of the parties’ marital property, the
             approach utilized must be sound. In other words, the trial
             court must determine whether the methodology underlying
             the testimony offered in support of the value of a marital
             asset is sufficiently valid and whether that methodology
             can be properly applied to the facts in issue. In valuing a
             marital interest in a business, the task of the trial court is
             to arrive at a date of separation value which reasonably
             approximates the net value of the business interest.

Robertson v. Robertson, 174 N.C. App. 784, 785-86, 625 S.E.2d 117, 119 (2005)

(citations, internal quotation marks, and brackets omitted); see also Robinson v.

Robinson, 210 N.C. App. 319, 323, 707 S.E.2d 785, 789 (2011) (explaining that section

50-20 of our General Statutes requires the trial court to determine the net value of

marital property by “consider[ing] the property’s market value, if any, less the

amount of any encumbrance serving to offset or reduce the market value”) (citation

omitted).

      Furthermore, it is well established that, in an action for equitable distribution,

the party claiming that property is marital property has “[t]he burden of proof . . . to

show by a preponderance of the evidence that the property: (1) was acquired by either

spouse or both spouses; (2) during the marriage; (3) before the date of the separation

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                                      Opinion of the Court

of the parties; and (4) is presently owned.” Young v. Gum, 185 N.C. App. 642, 647,

649 S.E.2d 469, 474 (2007) (citation omitted), disc. review denied, 362 N.C. 374, 662
S.E.2d 552 (2008). Marital property must be valued “as of the date of separation.” Id.

at 649, 649 S.E.2d at 475; see also N.C. Gen. Stat. § 50-21(b) (2013).

       Our standard of review on appeal from a judgment entered after a non-jury

trial for equitable distribution 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.

Clark v. Dyer, __ N.C. App. __, __, 762 S.E.2d 838, 839 (2014) (citation omitted).

       In the present case, the trial court’s Order and Judgment lists the value of the

InMatrix shares at $330,178 but provides no additional factual findings to explain

how it arrived at this determination. Our review of the record indicates that the court

based this valuation on the email that Kelly-Anne testified she received from

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                                         Opinion of the Court

InMatrix’s Director of Finance David Byrne on 1 July 2009. While Andre concedes

that, by failing to object to this email at trial when it was introduced into evidence,

he has waived any right on appeal to challenge its admissibility on hearsay grounds,

Andre nevertheless contends that the Byrne email is not competent evidence of the

InMatrix stock’s net value as of the date of separation.

       The Byrne email states in pertinent part that

                I will not be able to provide you with a value of the shares,
                this should be done at your end.

                The total holding value that we have is 95,524 shares
                equating to a total share capital of $330,178[.]1

On direct examination, Kelly-Anne offered the following testimony about the Byrne

email and its effect on her opinion of the value of the parties’ InMatrix shares:

                Q       Okay. Now, I want you to leave that and go to the
                        other notebook and go to Exhibit 80. Are you there?

                A       Yes.

                Q       Who is David [Byrne]?

                A       He was the CEO of the company.

                Q       Of what company?

1 The Byrne email appears in the record as part of a longer chain that began when Kelly-Anne inquired
about the “current share value” of the parties’ InMatrix stock in a 25 June 2009 email to the company’s
chief executive officer Gary Challinor. In her email, Kelly-Anne stated that the parties were planning
to move some of their shares into one of the parties’ trust instruments. That same day, Challinor
replied to Kelly-Anne by providing the company’s audited 2008 accounts and balance sheet and
referring her to Byrne for more information about transferring the shares, but also cautioned that “[a]s
for valuing the shares, I think it is more appropriate that your accountant do this for you. As you will
see from the [2008 accounts and balance sheet] the business is up for sale and we are working with a
number of interested strategic parties.”

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                   Opinion of the Court

A   InMatrix.

Q   And what’s the date of this email from David [Byrne]
    to you and Mr. Gien?

A   First of July of 2009.

Q   Okay. So, in 2009 you got an email and Mr. Gien got
    an email from Mr. [Byrne] saying that value, the
    holding value for InMatrix was 95,524 shares
    equating to a total share capital of $330,178; you see
    that?

A   Yes.

Q   Okay. Is that 2009 email consistent with Mr. Gien’s
    statement, sworn statement, in his Amended ED
    Affidavit that the stock was sold in 2001 for zero?

A   No.

Q   So, at a minimum, do you believe that the 95,524
    shares that Mr. Gien apparently has is worth
    $330,178?

A   Can you ask the question again?

Q   At a minimum --

A   Yes.

Q   -- is the InMatrix stock that as of 2009 Mr. [Byrne]
    says Mr. Gien had, some eight years after Mr. Gien
    said it was gone --

A   Yes.

Q   -- is it worth, at minimum, $330,178?

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                                    Opinion of the Court

             A      Yes.

However, when asked on cross-examination about the email and its impact on her

opinion of the value of the parties’ shares, Kelly-Anne testified as follows:

             Q      So, Ms. Gien, are you saying that the value of
                    InMatrix is $331,000.

             A      I'm saying --

             Q      Or 330 -- Sorry, pardon me, 330,000?

             A      Well, David [Byrne] is -- David [Byrne], the director
                    of finance is.

             Q      So is that what you’re claiming?

             A      Can you explain what you mean?

             Q      Is that -- Is that -- Is that your claim to the
                    value of InMatrix?

             A      It’s not the value that I believe in the ED.

             Q      So what value do you put in for InMatrix in your
                    opinion?

             A      I think it’s 200 in the ED. . . .

From our review of the record, Kelly-Anne’s testimony of “200” as the value of the

InMatrix shares appears to be in reference to the fact that the shares were listed at

a value of $205,000 for the years 2008, 2009, 2010, 2011, and 2012 on the balance

sheet of a trust instrument the parties owned.

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                                   Opinion of the Court

      In addition to the Byrne email, the court admitted into evidence InMatrix’s

annual financial report for the financial year ending 30 June 2009 and an email Kelly-

Anne said Andre had forwarded to her on 20 August 2009 from InMatrix’s Chairman,

David Smorgon, to the company’s shareholders advising them that InMatrix had

received a letter of intent from SunGard Data Systems, Inc., to acquire all the issued

share capital of InMatrix. Kelly-Anne’s counsel relied on these exhibits primarily to

demonstrate that Andre’s assertion that the parties’ InMatrix shares had no value

because the company was sold in 2001-02 was false. However, InMatrix’s 2009

financial report also includes an independent audit prepared by Deloitte stating that

the company had lost over six million Australian dollars (AUD) in 2008 and seven

million AUD in 2009; that the company had over 25 million AUD in liabilities and

only five million AUD in assets at the close of the 2009 financial year; and that total

equity attributable to equity holders amounted to a sum of negative 20,615,188 AUD.

In addition, under a heading titled “Issued capital,” the report noted that InMatrix

had a total of 844,564 “fully paid ordinary shares” in both 2008 and 2009 and that

the balance for these shares at the beginning and end of both financial years was

8,699,675 AUD. Finally, under a heading titled “Subsequent Events,” the report

stated that InMatrix had entered into a letter of intent to sell the company and its

subsidiaries in a transaction that “is anticipated to be on a debt free, cash free basis.”

Under cross-examination by Andre, Kelly-Anne acknowledged that InMatrix had

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                                   Opinion of the Court

been sold shortly after the parties’ date of separation. When Andre asked how much

they had received as shareholders from the proceeds of the sale, Kelly-Anne

answered, “Not much.”

      Based on this record, we cannot conclude that the Byrne email constitutes

competent evidence of the net value of the parties’ InMatrix shares as of the date of

separation. We note first that the Byrne email explicitly refrains from offering any

opinion as to value, and instead provides information about “share capital.” Moreover,

no additional testimony or evidence was offered by either party as to how share

capital relates to the statutorily required net fair market value of the shares, or how

the share capital value quoted in the Byrne email relates to the “issued capital”

reported in the 2009 report, and the trial court provided no additional findings in its

Order and Judgment to clarify either of these points.

      In his appellate brief, Andre contends—consistent with definitions of the term

provided by Investopedia.com and the Australian Securities & Investments

Commission—that share capital is simply a measure of the money used to purchase

shares of stock directly from a company and does not vary with market demand

because market forces have no impact on the historical fact that an owner paid a set

sum for a certain stock. Kelly-Anne contends in her brief that this does not necessarily

render the Byrne email incompetent as evidence of the net fair market value of the

InMatrix shares in light of this Court’s prior decisions in McManus v. McManus, 76

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                                  Opinion of the Court

N.C. App. 588, 334 S.E.2d 270 (1985) and Barton v. Barton, 215 N.C. App. 235, 715
S.E.2d 529, appeal dismissed, 365 N.C. 364, 719 S.E.2d 20 (2011), wherein we upheld

valuations of marital property that were based in part on the amounts originally paid

to purchase that property. However, this argument ignores the fact that in both

McManus and Barton, the property valuations at issue were also supplemented by

more recent, post-purchase data. See McManus, 76 N.C. App. at 592-93, 334 S.E.2d

at 273 (upholding the trial court’s valuation of a stock based in part on its original

purchase price, as well as the price the husband subsequently paid for more of the

same stock and the dividends earned therefrom); Barton, 215 N.C. App. at 245-46,

715 S.E.2d at 534-35 (upholding arbitrator’s valuation of real property based in part

on the original purchase price, as well as the cost of subsequent investments in the

property).

      Here, even assuming arguendo that the Byrne email accurately states how

much the parties spent to acquire their shares in InMatrix at some point in time, it

makes no reference to when or how those shares were acquired or whether and to

what extent their value subsequently increased or decreased, which we find

particularly significant in light of the company’s 2009 financial report. We therefore

conclude that although the Byrne email might provide some evidence of how much

the parties paid to acquire their shares in InMatrix, it does not constitute competent

evidence of their net fair market value as of the date of separation. Furthermore,

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although it is well established that “[t]he owners of property have generally been held

to have both a knowledge and basis for the testimony as to the value of their

property,” Finney v. Finney, 225 N.C. App. 13, 16, 736 S.E.2d 639, 642 (2013)

(citations omitted), in this instance, we conclude that Kelly-Anne’s testimony is not

competent evidence to support the court’s valuation of the InMatrix shares, given

that her direct testimony appears to be based entirely on the Byrne email, which is

not competent evidence for the reasons already stated, and is contradicted by her

subsequent testimony on cross-examination that she believed the value of the shares

was actually “200.”

      Finally, in reaching this conclusion, we also reject Kelly-Anne’s argument that

even if the Byrne email were deemed inadmissible hearsay, it would nonetheless

constitute competent evidence to support the trial court’s valuation of the InMatrix

shares given Andre’s failure to object when it was introduced at trial. In support of

this argument, Kelly-Anne cites our Supreme Court’s prior decision in Lambros v.

Zrakas, 234 N.C. 287, 66 S.E.2d 895 (1951), as well as this Court’s more recent

holding in In re F.G.J., 200 N.C. App. 681, 684 S.E.2d 745 (2009), both of which Kelly-

Anne contends demonstrate that when hearsay testimony is received into evidence

without objection, it carries full evidentiary value and must be considered competent

evidence. But this argument fails insofar as it conflates the concept of evidentiary

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                                   Opinion of the Court

admissibility with the concept of evidentiary competence and ignores critical

distinctions between the present facts and those at issue in Lambros and F.G.J.

      In Lambros, for example, the plaintiff was a surgeon who brought suit against

his former patient and her husband, alleging that they had agreed to pay $3,000 for

his services but then refused to pay that amount in full. 234 N.C. at 289, 66 S.E.2d

at 896. At trial, the plaintiff testified without objection about several discussions he

had with the defendant-patient and her family before performing the surgery,

including a conversation in which her son agreed to certain terms after stating he

was acting on his mother’s behalf. Id. When the jury returned a verdict in the

plaintiff’s favor, the defendants appealed, arguing that the testimony that their son

had served as their agent was hearsay and should have been excluded. Id. However,

even though our Supreme Court agreed that the challenged testimony was hearsay,

it refused to disturb the jury’s verdict, in part because by failing to object the

defendants had waived their right to challenge the admissibility of the hearsay

testimony, and also because “when considered with the rest of the evidence in the

case, [the hearsay testimony] was sufficient to warrant the jury in finding the issue

of agency against” the defendant. Id. at 289, 66 S.E.2d at 897.

      In F.G.J., this Court reviewed an appeal from an order terminating the

respondent-parents’ parental rights to their two minor children on the grounds of

willful abandonment and leaving the children in an outside placement for more than

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one year without making reasonable progress to correct the conditions that led to

their removal from the home. 200 N.C. App. at 686, 684 S.E.2d at 749. The children

had been removed from the respondents’ home in 2005 due to repeated reports of

domestic violence and alcohol abuse, and although the termination order included

findings of fact that both respondents participated in classes addressing the issues

that led to removal of the children throughout 2007-08, the district court based its

conclusion that both respondents had failed to make reasonable progress on factual

findings that focused on additional reports of domestic violence and alcohol abuse

involving both respondents in early 2006. Id. at 692, 684 S.E.2d at 753. We therefore

agreed with the respondent-parents that the district court failed to support its

conclusion that grounds existed for termination with sufficient factual findings. Id.

However, we declined to reverse the termination order outright in light of testimony

offered during the termination hearing by the children’s maternal uncle and

guardian, who testified without objection that the respondent-mother had told him

about several additional instances of domestic violence and alcohol abuse involving

both respondent-parents in 2007 and 2008. Id. at 692-93, 684 S.E.2d at 753. Although

the respondent-father argued this testimony constituted inadmissible hearsay, we

observed that because “no objection on hearsay grounds was made by either parent

at trial. . . . any objection has been waived, and the testimony must be considered

competent evidence.” Id. at 693, 684 S.E.2d at 753-54 (citation omitted).

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                                       GIEN V. GIEN

                                    Opinion of the Court

Nevertheless, we also rejected the petitioner’s argument that this evidence standing

alone should be considered sufficient to uphold the order, which we vacated and

remanded for additional findings of fact. Id. at 693, 684 S.E.2d at 754.

       It is clear from our review of these cases that if a party fails to object when

hearsay testimony is introduced at trial, she waives her right to challenge its

admissibility on appeal. When such hearsay testimony is competent to settle an issue

in dispute—such as whether the defendants’ son acted as their agent and agreed to

certain terms, as in Lambros, or whether the respondent-parents continued to engage

in domestic violence and alcohol abuse, as in F.G.J.—it carries “full evidentiary

value.” 234 N.C. at 289, 66 S.E.2d at 896. However, it does not logically follow that

such hearsay testimony is automatically rendered competent evidence of anything it

might be offered to prove, or that a party’s failure to object to its admissibility at trial

somehow immunizes an otherwise defective order based upon such evidence from

appellate review. In the present case, this means that although Andre waived his

right to challenge the Byrne email’s admissibility on appeal by failing to object when

Kelly-Anne offered it into evidence at trial, this Court remains obliged to review

whether the Byrne email constitutes competent evidence for settling the disputed

issue of the InMatrix shares’ value. For the reasons already discussed supra, we

conclude that the Byrne email does not settle the issue in dispute, and thus we cannot

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                                     GIEN V. GIEN

                                   Opinion of the Court

consider it competent evidence of the value of the InMatrix shares as of the date of

separation.

      Accordingly, we hold that the trial court erred in its valuation of the parties’

InMatrix shares, and we consequently vacate its finding and remand this issue for

further findings of fact and, if necessary, the taking of additional evidence. We fully

recognize that actions for equitable distribution are often among the most complex

and cumbersome cases our State’s district courts must handle, and we note that apart

from its error in valuing the parties’ InMatrix shares, the trial court dealt thoroughly

and admirably with the particular challenges posed by this case, challenges which

were undoubtedly exacerbated by Andre’s pro se representation and repeated failures

to comply with discovery requests. We also note that despite Andre’s protestations

that the InMatrix shares had no value, there appears to be competent evidence in the

record upon which the trial court could properly base its valuation on remand. This

evidence includes the company’s 2009 financial report, which could provide the basis

for expert testimony, as well as the balance sheets from the parties’ trust instrument

listing the shares at a value of $205,000 for the years 2008, 2009, 2010, 2011, and

2012, which appears to be consistent with Kelly-Anne’s trial testimony that, in her

opinion, the shares were worth “200.” To be clear, we do not intend to opine and are

not opining as to the weight of this evidence, nor are we suggesting that these are the

only valid bases on which the trial court may rely for its valuation on remand.

                                          - 22 -
                                     GIEN V. GIEN

                                   Opinion of the Court

Whatever conclusion it reaches on this issue, we urge the trial court to adequately

support its determination with specific factual findings to explain the basis of its

reasoning.

       Our decision to remand the case based on this issue also necessarily vacates

the Order and Judgment’s ultimate distribution of the parties’ marital property,

including its order for Andre to pay a distributive award by liquidating assets, and

therefore obviates any need for this Court to address Andre’s additional arguments

on that issue as well as his claims that the trial court erred because it failed to

distribute the diminished value of the InMatrix shares as a divisible asset, and

because its findings of fact did not support its decision to forego an in-kind

distribution.

                                  B. Valuation of LIJ

       Andre also argues that the trial court erred in its valuation of LIJ at $350,000

based on Mitchell’s application of the asset approach. Specifically, Andre contends

that Mitchell’s valuation was not supported by competent evidence of LIJ’s value as

of the date of separation. We disagree.

       At trial, Mitchell offered the following testimony in support of his valuation of

LIJ:

                Q   And is there anything in [the Holly/Lloyd
                    agreement] that allows you to have some
                    information with respect to -- or how to utilize the
                    asset approach in valuing Lightening in a Jar Global

                                          - 23 -
                    GIEN V. GIEN

                  Opinion of the Court

    Financial?

A   There is, there’s a very important piece of
    information in that document.

Q   Okay. And, tell the Court what the important piece
    of information is.

A   Investment in Global Financial Bridge an amount of
    350,000 incurred by Andre Gien in the development
    of the Global Financial Bridge product up to the date
    of this agreement.

Q   Okay. And, why is $350,000 important -- why does
    that number help you?

A   In trying to figure out the value of this product that
    Mr. Gien has created one of [the] techniques within
    the asset approach would be the cost to recreate it.
    So, if -- Chris Mitchell were to say, "Hey, I want to
    develop some type of software that has the same
    functionality of what Mr. Gien has created, how
    much would it cost me to go and hire people or to do
    it myself and to recreate that -- that -- that
    software?" And so, this evidence says that it would
    take about $350,000 for someone to embark on that
    -- on that exercise and that is [an] indication of the
    value of that software.

Q   And then, if we also look, Mr. Mitchell, at [the
    Fleishman agreement]. What does [the Fleishman
    agreement] tell us with respect to the $350,000 and
    what portion of the value of the asset $350,000
    represents?

A   Well it tells us that Mr. Fleishman will restrict his
    portion of ownership to $350,000 which -- which is
    the same number that we saw in -- in [the
    Holly/Lloyd agreement].

                         - 24 -
                      GIEN V. GIEN

                    Opinion of the Court

Q   So, one could infer from that that the value of that
    asset is $700,000 with Mr. Gien’s agreement to Mr.
    Fleishman to get $350,000?

A   I’m not sure.

Q   Okay. Well, it’s possible that it’s more than
    $350,000, correct, based on [the Fleishman
    agreement]?

A   That’s correct. If, if, if you sold that product for, you
    know, $1,000,000, Mr. Fleishman would be
    restricted to some amount, but -- So it could be sold
    for more.

Q   The $350,000 asset approach number would be,
    again, the, the floor value, correct?

A   For that particular asset.

Q   Right. And, when looking at the business as a whole,
    there might be other assets or if there would be other
    assets that one would consider in doing the asset
    approach, correct?

A   That’s correct.

Q   What other assets in addition to the $350,000
    represented in [the Holly/Lloyd agreement] would
    you look at to value the business?

A   Any cash in the bank account, accounts receivable,
    any good will; those type of things.

Q   Okay. So, is it accurate to say that based on -- let me
    ask you this, do you – you’ve been provided
    information, documentation, from my office, correct?

A   That’s correct.

                           - 25 -
                                    GIEN V. GIEN

                                  Opinion of the Court

             Q     And is there documentation that you’ve been
                   provided that you’ve not been able to rely on that’s
                   been produced by Mr. Gien in order to use a
                   particular approach?

             A     Well, you know, looking at the profit information
                   from the financial statements, I don’t know if it has
                   a whole lot of meaning because there’s personal type
                   items in the expenses.

             Q     Okay. Is, is [the Holly/Lloyd agreement] the best
                   piece of evidence that you’ve been given to allow you
                   to come up with a portion of the asset approach
                   valuation?

             A     Yes, sir.

             Q     Okay. And, that number’s $350,000?

             A     Yes, sir.

In its Order and Judgment, the trial court found that LIJ had a date of separation

value of $350,000, explaining in a footnote that “[t]he [c]ourt, after considering the

testimony of Christopher Mitchell of Dixon Hughes, applied the asset approach in

determining the value of this asset.”

      On appeal, Andre argues that the court’s LIJ valuation is not supported by

competent evidence of the company’s value as of the date of separation. In support of

this argument, Andre emphasizes Mitchell’s reliance on the Holly/Lloyd agreement,

which stated that Andre had incurred “an amount of $350,000” in the development of

the GFB software “up to the date of this agreement” and was dated 2 August 2013.

Andre therefore contends that we must vacate the court’s valuation of LIJ because

                                         - 26 -
                                    GIEN V. GIEN

                                  Opinion of the Court

Kelly-Anne failed to introduce any other evidence as to the timing of his investment

in the GFB software or its value before the date of separation. However, in light of

Mitchell’s testimony that he also relied on the Fleishman agreement in reaching his

determination of LIJ’s value, this argument fails.

      The Fleishman agreement provides, in pertinent part:

             It is agreed that the ownership of the [GFB] software is
             equally owned by Ken Fleishman and Andre Gien.

             Ken Fleishman will restrict his portion of the ownership to
             $350,000 which is payable on the occurrence of

             1. The outright sales of the GFB software to a third party[.]

             2. Any other payment made to any other person that
             relates to the value of GFB.

             3. If the amount of the sales price per item 1 is less than
             $700,000 Ken Fleishman shall receive 50% of the agreed
             sales proceeds.

             4. If any consideration is provided to any other person in
             relation to the GFB product Ken Fleishman shall be paid
             first, before any payment is made to any other person.

Furthermore, as Andre testified during his pretrial deposition on 28 October 2013:

             Q.    How about Ken?

             A.    Well, now I’ve still got an obligation to Ken. So I
                   eventually -- What we did was over the years I said:
                   Look, Ken, I’ve got the code. It’s starting to sell a
                   little bit but I can’t pay you your money, you know.
                   There is no loan agreement or no -- I can’t pay you
                   your money. However, what I can do is what if we
                   come to some kind of agreement? What if it’s -- if we

                                         - 27 -
                      GIEN V. GIEN

                    Opinion of the Court

     sell this code, all the -- the -- you know, whatever --
     whatever we can do with this piece of software at
     some point and I give you a sum of money.

Q.   When was this?

A.    Oh, this was a long time ago. This must have been
     -- whew -- oh, five, six years ago. Somewhere around
     there.

Q.   Okay. So --

A.   So I’ll give you a sum of money if we can sell the code
     because -- and so he said, look, you know, at the end
     of the day, okay, I -- you know, the money is written
     off, a lot of things have happened, you know, but we
     came to a figure that we sort of agreed upon which
     was if we sell it for I think it was more than $350,000
     he will get the first $350,000. If it was sold for less
     than $350,000 we would just split it half --

Q.   And did you sign something?

A.   Eventually I -- I there is a document somewhere that
     I sent to him that because of this whole thing that I
     said, okay, this -- you know, this is basically what
     our verbal agreement --

Q.   Has the document been signed?

A.   I don’t know. I’m not sure. I can -- I can get it signed.

Q.   Yeah. I’m not asking you whether you can get it
     signed. I’m asking whether there’s a signed
     document by Mr. Fleischman[].

A.   I don’t believe today there’s a signed document, no.

Q.   And, in fact, the document you sent is from July of
     2013, correct?

                           - 28 -
                                    GIEN V. GIEN

                                 Opinion of the Court

            A.     Correct. Yeah. No. It’s something recently that I
                   even would put this into writing.

            Q.     Right. But this is based on a conversation and an
                   agreement that you say you had reached five or six
                   years ago?

            A.     Correct. Yeah.

            Q.     And has Mr. Fleishman[] had anything to do with
                   the business, the software, the code, in the last five
                   or six years?

            A.     Pretty much very little.

Andre insists that the $350,000 referenced in the Fleishman agreement merely

recognizes an informal secured interest that has no relation to the $350,000 he

incurred in GFB’s development up through 2013 as referenced in the Holly/Lloyd

agreement. Nevertheless, Andre’s deposition testimony clearly indicates that

although he did not enter into any formal written agreement with Fleishman until

2013, the two men had reached an agreement “five or six years ago” regarding

Fleishman’s compensation for his financial support in the development of the GFB

software. Given the date of Andre’s deposition, and his testimony that Fleishman had

“[p]retty much very little” involvement after the two men reached their agreement,

we can infer that the events that gave rise to the Fleishman agreement occurred in

2007 or 2008. From this, we can further infer, based on the asset approach Mitchell

described in his testimony, that as of the date the parties separated on 1 September

                                        - 29 -
                                     GIEN V. GIEN

                                   Opinion of the Court

2009, it would have cost at least $350,000 to recreate the GFB software.

Consequently, we have no trouble in concluding that the trial court’s finding as to the

value of LIJ is sufficiently supported by “such relevant evidence as a reasonable mind

might accept as adequate to support a conclusion.” Clark, __ N.C. App. at __, 762

S.E.2d at 839. Accordingly, we hold that the trial court did not err in its valuation of

this asset.

       AFFIRMED in part, VACATED in part, and REMANDED in part.

       Judges BRYANT and DIETZ concur.

       Report per Rule 30(e).

                                          - 30 -