Court Opinion

ID: 9522332
Source: CourtListenerOpinion
Date Created: 2023-08-07 02:22:58.312098+00
Date Added: 2024-06-11T13:02:34.188267
License: Public Domain

RATLIFF, Presiding Judge,
dissenting.
In my opinion, it was error for the trial court to apply a minority discount in valuing the shares of stock in the husband's business corporation. For this reason I must dissent although I concur in the majority's resolution of the other issues.
The majority's statement that "[the trial court determined that Gary would retain the stock and Candace would receive a money judgment equal to the value of one-half the jointly owned stock," Slip Opinion at 6, is inaccurate. The final decree awarded all the stock to Gary. The decree also awarded a money judgment of $850,000 to Candace, but nowhere does the decree say this award is for one-half of the stock. In fact, one-half of the value of the stock, which the court valued at $785,895 after applying both a minority discount and a "one man business" discount, is $392, 697.50, not $350,000. However, it is fair to assume the court considered the value of the stock in determining the amount of Candace's money judgment.
The trial court, in its Finding No. 70, determined the value of the corporation to be $1,808,992 as of the date of the filing of the petition for dissolution. It then applied a 25% discount for "the minority interest aspect of Wife's share, and 20% for the 'one man business' aspect ..." thereby finding the discounted value of the business to be $785,895. Finding No. 71 of the decree, p. 15 of Appendix to Appellant's brief. In applying the minority discount, I believe the court erred, and that such error constituted an abuse of discretion thereby prejudicing Candace's interests.
This is not a case involving the sale or valuation of a minority interest in a closely held corporation where application of a minority discount might be appropriate under some cireumstances. Here, the issue before the court was the valuation of all the stock owned by the marital unit which was 90.2% of the total, hardly a minority interest. All of this stock was awarded to Gary. Therefore, no minority interest question is involved. The issue was the value of all the stock which was a near total ownership of the corporation. Redue-ing the value of the stock by arbitrarily applying a minority discount was unreagonable and adversely affected the valuation of the total marital estate. For the court to use such an unreasonable valuation in determining Candace's share of the property distribution was an abuse of discretion.
Therefore, I would reverse and remand for correction of the valuations and property distribution.