Court Opinion

ID: 9905379
Source: CourtListenerOpinion
Date Created: 2023-11-29 15:03:56.008606+00
Date Added: 2024-06-11T09:23:13.914510
License: Public Domain

Cite as 2023 Ark. App. 543
                      ARKANSAS COURT OF APPEALS
                                         DIVISION IV
                                         No. CV-22-576

  FRANK FOWLER                                   Opinion Delivered November 29, 2023
                                APPELLANT
                                                 APPEAL FROM THE IZARD
  V.                                             COUNTY CIRCUIT COURT [NO.
                                                 33DR-20-99]

  ELLECIA FOWLER                                 HONORABLE DON
                                                 MCSPADDEN, JUDGE
                                   APPELLEE
                                                 AFFIRMED

                            N. MARK KLAPPENBACH, Judge

       Appellant, Frank Fowler, and appellee, Ellecia Fowler, were married in 2002 and were

divorced by a May 2022 decree. Frank appeals the decree’s division of property, contending

that the circuit court clearly erred in its valuation of the pharmacy corporation owned by the

parties. We affirm.

       Domestic-relations cases are reviewed de novo on appeal, but the appellate court does

not reverse a circuit court’s findings unless they are clearly erroneous. Wilcox v. Wilcox, 2022

Ark. App. 18, 640 S.W.3d 408. A finding is clearly erroneous when, although there is evidence

to support it, the reviewing court on the entire evidence is left with a definite and firm

conviction that a mistake has been made. Id. Furthermore, a circuit court has broad powers

to distribute property in a divorce to achieve equitable distribution; mathematical precision

is not required. Id. In reviewing a circuit court’s findings, we defer to the court’s superior
position to determine the credibility of witnesses and the weight to be accorded to their

testimony. Id.

       In this appeal, the sole issue is the value placed on the parties’ pharmacy business,

Horseshoe Health & Medicine. The parties owned two corporations, each party holding 50

percent of the corporate stock in each corporation. The farm corporation (E & F Farms, Inc.)

was valued at $875,711 and awarded solely to Ellecia (a nurse). The farm’s value is not at

issue on appeal. The pharmacy corporation (E & F Fowler, Inc.) ran an operating pharmacy

that was valued at $1.178 million and awarded solely to Frank (a pharmacist). Frank was

ordered to pay Ellecia $151,145 to equalize the distribution of marital assets that each party

was awarded.

       Frank argues on appeal that the pharmacy corporation was not as valuable as the

amount placed on it by the valuation expert, Paul Osborn. Mr. Osborn, a certified valuation

analyst for fifteen years and a CPA for nine years, regularly values businesses for litigation

purposes. The pharmacy corporation owned the pharmacy business and its inventory but not

the building or real estate, which was owned by Frank and Ellecia. Mr. Osborn reviewed the

2017 through 2020 tax returns, its 2017 through 2021 financial statements, and Frank’s past

and current involvement in the pharmacy business in determining the pharmacy’s value.

Frank had been the primary full-time pharmacist for the pharmacy, but he quit working there

full-time toward the end of 2016 or beginning of 2017. A different pharmacist was hired to

be the primary pharmacist until November 2021, after which full-time pharmacist, Molly

McCurley, took over that position. Frank did continue to work there some, and he made his

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cell phone available to customers by having it listed in various places in the building.

       Mr. Osborn defined the assets of the corporation as the cash, inventory, and goodwill,

and he testified that his valuation was of a pharmacy in Horseshoe Bend, Arkansas, being run

by a competent pharmacist, not necessarily Frank. Mr. Osborne explained that his valuation

was of “a going concern,” meaning that the pharmacy would continue in business in

Horseshoe Bend. He used three methods: capitalization of income; value based solely on

revenue; and book value based on the financial statements. Mr. Osborn explained that using

these three methods ensured that he would get an accurate value, and each of the methods

resulted in a similar valuation. Mr. Osborn stated that he worked to determine the fair market

value, and he testified that the corporate goodwill belonged to the company and is embedded

in the value of the company, meaning that he took into consideration the employees,

customer lists, trademarks, reputation, and name of the company. Mr. Osborn did not believe

that Frank held personal goodwill because Frank allowed the pharmacy to run on its own

with other full-time pharmacists and did not work on a day-to-day basis at the pharmacy. Mr.

Osborn agreed that he performed a calculation valuation of the business, which is a

streamlined and simplified approach for valuing a business.

       At trial, Frank did not offer any value of the pharmacy but rather urged the circuit

court to order it liquidated by auction. Ellecia’s attorney responded that when dividing

corporate stock, a forced liquidation was not permissible. Ellecia’s attorney argued that the

expert opinion on the pharmacy’s fair market value was the basis on which to value Ellecia’s

half. Ellecia did not want the pharmacy because she feared Frank would try to compete with

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her and actively try to bankrupt her.

       The circuit court found Mr. Osborn to be a knowledgeable, qualified, credible witness.

The circuit court awarded Frank 100 percent of the stock in the pharmacy corporation and

accepted the expert witness’ valuation at $1.178 million. The parties owned the real estate

and pharmacy building, which was ordered to be sold within a year. This appeal followed.

       Frank argues that because the pharmacy building and land was ordered sold within a

year, Mr. Osborn’s valuation of the pharmacy corporation as a going concern was not valid.

Further, Frank contends that Mr. Osborn was wrong not to consider Frank as having personal

goodwill in the business, and Mr. Osborn admittedly had limitations in his valuation report.

       Arkansas law requires the use of the “fair market value” standard for valuing businesses

in a marital-property context. Drummond v. Drummond, 2022 Ark. App. 184; Cole v. Cole, 82

Ark. App. 47, 54, 110 S.W.3d 310, 314 (2003). The circuit court was required, as the trier

of fact, to determine the credibility of witnesses and to resolve conflicting testimony. Thakar

v. Thakar, 2022 Ark. App. 284, 646 S.W.3d 666. On appeal, we will not disturb a circuit

court’s resolution of disputed facts or determinations of credibility as these are within the

province of the finder of fact. Id. This court will reverse the trial court’s valuation of a

business only if it is clearly erroneous. Atherton v. Atherton, 2018 Ark. App. 245, 547 S.W.3d

759.

       Frank has not demonstrated that the circuit court clearly erred in this case. He failed

to offer his own expert or personal opinion on what the pharmacy corporation was worth.

Ellecia presented expert testimony, which was deemed credible by the circuit court. The

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expert testimony considered financial documents from 2017 forward. It was undisputed that

Frank did not act as the primary pharmacist from 2017 forward. Frank also fails to

acknowledge that when the pharmacy building and land (owned by the parties) are sold, Frank

will have the opportunity to buy those assets. In short, Frank’s arguments on appeal attempt

to parse out various components of the expert’s opinion, but this was a matter for the circuit

court to consider and resolve. Our de novo review of the evidence convinces us that the

circuit court did not clearly err in its valuation of the pharmacy corporation.

Affirmed.

       HARRISON, C.J., and BARRETT, J., agree.

       Baxter Law Firm, PLLC, by: James R. Baxter, for appellant.

       Grayson & Grayson P.A., by: Melanie L. Grayson and Keith L. Grayson; and Murphy,

Thompson, Arnold, Skinner & Castleberry, by: Tom Thompson, for appellee.

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