Court Opinion

ID: 9795477
Source: CourtListenerOpinion
Date Created: 2023-08-31 03:29:46.837707+00
Date Added: 2024-06-11T08:30:08.375338
License: Public Domain

Davis, J.,
concurring: I concur in the majority’s decision to reverse the Court of Appeals’ decision which affirmed the district court’s determination of MRI value and reversed in part and remanded the case to the district court for determination of the valuation of the 96% Hjersted Family Limited Partnership (HFLP) interest as of March 1,2000. The majority decision correctly points out the legal error of the Court of Appeals in its rejection of Korschot’s additional discounts and the effect such a rejection had of “effectively eliminat[ing] the only evidence in the record on the value of the transferred 96% limited partnership interest in HFLP on March 1, 2000.” Majority slip op. at 16 (citing In re Estate of Hjersted, 35 Kan. App. 2d 778, 786, 135 P.3d 202 [2006]). Addi*591tionally, the majority sets forth some of the legal concerns regarding the valuation. Both in its factual discussion and in its initial discussion of why it is reversing the valuation question, the majority generally discusses the statutory and case law to guide the district court upon remand. In doing so, the majority recognizes the district court’s broad discretion when resolving factual questions and the majority, as did the Court of Appeals, recognizes that valuation is a question of fact.
This general discussion, with legal authorities cited, provides sufficient guidance for a district court to exercise its sound judgment and discretion on remand. I take no issue with this general discussion.
In the pages following the general discussion, however, the majority effectively circumscribes the discretion of the district court upon remand by providing the district court with what, in my opinion, is overly detailed guidance. Although this guidance is well intended, the road map that is provided implies favored rationales and, arguably, results. I write separately to express my view that in its well-meaning attempt to provide guidance, the majority has gone too far and has encroached on the discretion of the factfinder.
Our judicial system places great faith and trust in the district courts of this state and recognizes that in an adversarial system counsel for the parties help narrow both legal and factual issues for decision before the district court. On questions of fact, such as the question of valuation, our system recognizes that a district court is uniquely suited to resolving the issue. As the majority opinion recognized, if such a determination of fact is supported by substantial competent evidence, appellate courts affirm such findings.
The majority in this case, instead of trusting the district court to make a sound decision as to valuation on remand, provides detailed guidance that narrows, if not eliminates, discretion upon remand. It does so under the following headings: “Estate and Gift Tax Contexts”; “Kansas dissenting shareholder case law”; “Kansas Spousal Elective Share”; and “Kansas Divorce.” I will briefly comment on each of the topics addressed by the majority opinion to illustrate my point.
*592Estate and Gift Tax Contexts
The majority opinion finds that
“the district court may possibly determine from these prior rulings that—contraiy to the Court of Appeals’ belief that ‘[a]t some time before his death, Norman apparently visited his attorneys and expressed a desire to disinherit his wife’ (35 Kan. App. 2d at 781)—Norman’s HFLP transfers instead were manifestations of his estate planning and business objective to pass the family business to Lawrence.” 285 Kan. at 573-74.
I believe a reading of the entire section of the majority opinion indicates that such a determination by the district court upon remand is favored.
The majority opinion then states:
“Should the district court determine that Norman’s transfers indeed represented legitimate estate and business planning, or at least did not represent a desire to disinherit Maryam, it may also consider that, without more, discounts for lack of control and lack of marketability can appropriately be applied to interests in family limited partnerships. [Citations omitted.]” 285 Kan. at 574.
Again, the thrust of this section is to guide the district court to the position favored upon remand.
This section of the opinion concludes with tacit approval of what the district court might do upon remand:
“In short, the district court may possibly find: that the HFLP interest transfers were manifestations of Norman’s legitimate business and estate planning; that they would be entitled, at least for transfer tax purposes, to discounts for marketability and control; and that a similar rationale would allow such discounts for valuing those assets in the augmented estate for the spousal elective share purposes.” 285 Kan. at 577.
Kansas Dissenting Shareholder Case Law
While the majority opinion recognizes that the question of valuation is to be made by the district court on remand, it states that the court may consider whether Maiyam is comparable to a minority shareholder entitled to an undiscounted value of HFLP interest. I ask the question, if the district court does not consider whether Maryam is comparable to a minority shareholder, would the district court be following the directions of this court upon remand? Further, if the district court considered the question of *593whether Maryam is comparable to a minority shareholder but determined she was not, would the district court be exercising its discretion consistent with our opinion?
The majority opinion states that as part of the district court’s calculus it should also acknowledge that it had previously accepted the 10% marketability discount of Meinhart in his evaluation of the MRI stock. The majority opinion notes that “this acceptance is obviously contrary to the outright rejection of the stock discounts in Arnaud [v. Stockgrowers State Bank, 268 Kan. 163, 992 P.2d 216 (1999)].” 285 Kan. at 578. Even though the case is remanded for a decision on valuation, are we telling the district court that its previous decision to accept the 10% marketability discount must be a part of its new decision on remand?
Kansas Spousal Elective Share
As the majority opinion advises, “the district court may possibly determine that the HFLP interest transfers represented legitimate steps toward a legitimate estate planning and business objective.” 285 Kan. at 580. As I read the direction in this section, I would be reluctant, as a district court judge, to conclude that the “HFLP interest transfers” did not represent “legitimate steps toward a legitimate estate planning and business objective.” 285 Kan. at 580. In other words, I believe the majority opinion suggests to the district court that it should decide this case upon remand in a certain way. In that same paragraph, the opinion states “[disallowance of those discounts by the district court could arguably be considered inconsistent with Norman’s legitimate intent to benefit his son Lawrence (through substantially reduced taxes) via the HFLP interest transfers.” 285 Kan. at 581. In my opinion this is a suggestion to the district court upon remand.
While the section concludes with a counter consideration the district court may consider in its calculus for decision, in my opinion the majority suggests that this court favors the granting of discounts.
*594Kansas Divorce
This section begins with the following language: “On remand, the district court may find parallels with a divorce proceedings’ property division.” 285 Kan. at 581. The opinion then considers numerous cases both in Kansas and in other jurisdictions throughout the country relating to property division cases in divorce actions. This section concludes with a statement that “the district court in the instant case applied Meinhart’s 10% discount to the MRI stock. Thus, as in HMO-W Inc., discounts could possibly be approved in the divorce-like context, e.g., spousal elective share, despite not being approved in the Amaud dissenting shareholder context.” 285 Kan. at 583-84. Again, it appears to me that we are directing and guiding a decision by the district court instead of allowing the district court within its discretion to make the decision which we have, by our majority opinion, remanded to the district court.
I would conclude by saying that we need to exhibit more trust and less guidance, recognizing that the district court will exercise its sound judicial discretion and will be assisted in its decision by the evidence presented and by advocates supporting their respective factual and legal positions both in writing and orally.
In all other respects I concur in the majority opinion.
McFarland, C.J., and Luckert, J., join in the foregoing concurring opinion.