Court Opinion

ID: 9664508
Source: CourtListenerOpinion
Date Created: 2023-08-24 00:20:04.447924+00
Date Added: 2024-06-11T18:15:06.768049
License: Public Domain

DUNN, Justice,
concurring and dissenting.
I concur with the majority on points of error four, five, and six. On points of error one and two, I respectfully dissent.
In his first point of error, appellant contends the trial court erred in finding that the value of the community’s business was $100,000 because the finding was an abuse of discretion, was supported by no evidence, and was against the great weight and preponderance of the evidence. In his second point of error, appellant asserts the trial court erred in admitting the testimony of the wife’s expert regarding the value of the community’s business.
In points of error one and two, regarding the valuation of the parties’ business, appellant asserts that the wife’s expert, a certified public accountant, did not use an acceptable method of valuing the parties’ business because the method he used was based on the earnings of the husband.
The facts indicate that the wife called a certified public accountant and qualified him as a business appraiser without objection. I note that certified public accountants have been held qualified to testify about the value of businesses. Taormina v. Culicchia, 355 S.W.2d 569, 574-75 (Tex.Civ.App.—El Paso 1962, writ ref’d n.r.e.).
The expert determined the income from the businesses, Respiratory Care Services and Home Care Services, for the four previous years by using the income reported on Schedule “C,” which was attached to the parties’ joint income tax returns for the years 1986, 1987, and 1988. He then averaged the income for the four years, with the fourth year, i.e., 1989, being based on the average of the past three years. The record indicates there was testimony that for the fourth year the businesses earned $116,000, which was higher than the three previous years. The expert stated that he also took into consideration the financial records of the businesses for the years 1988 and 1989. These records were properly introduced into evidence and are before this Court. The expert testified that he determined the value of the businesses based on the projected earning capacity of the enterprises and “on a 20 year worked span.” He testified that he used a conservative return rate of 8%, and “based on the standard value of the dollar today and based on the average earnings for the four year period I had available to me, I projected an estimate of value.” In further explanation, he stated that he used an annuity value of the annual income of the businesses. When asked, “What type of method is this called?” He stated that, “It is based on the fair value, the present value, on an annuity basis of average annual earnings.” At no time was there a reference to the earnings of the individual parties, only the earnings of the businesses. The focus on the time span of 20 years was based on the husband’s possible work years, i.e., from 40 to 60. He stated that he chose this method because he felt that these were service-oriented businesses, and ones in which the “assets were not of any consequence,” and that he based his entire opinion on the earning capacity of the businesses. The expert agreed that this was not the only way to determine the value of a business, but that his method was an accepted method of valuing businesses. He stated, “This particular business is not assets intensive. The primary value of the business is the earnings that the business can generate.” He testified that he took into consideration the contracts between the business and the hospitals and the clientele of the businesses.
Texas courts have held that “once an expert is qualified, his opinion should be admitted no matter how ridiculous it may *695appear to the trial court.” United States Fire Ins. Co. v. Stricklin, 556 S.W.2d 575, 580 (Tex.Civ.App.—Dallas 1977, writ ref'd n.r.e.). Any variances or discrepancies in the testimony itself do not relate to its admissibility, but are matters relevant to the weight to be given the testimony for evaluation by the trier of the facts. Simpson v. Glenn, 537 S.W.2d 114, 118 (Tex.Civ.App.—Amarillo 1976, writ ref’d n.r.e.).
Whether the entity is a sole proprietorship, partnership, or corporation makes little difference in terms of methodology in valuing a business. The appropriate technique varies between a service-oriented business, in which an investor looks primarily to the earnings of the business, and an asset-oriented business, in which an investor looks at assets as well as earnings.1 There was evidence in this case, as demonstrated by Schedule “C” of the tax returns of the business, of the income that the businesses received for the years 1986, 1987, and 1988, and there was testimony that the income for the year 1989 exceeded each of these past years. The expert testified that he used this information as well as the discounted future earnings of the businesses on which to base his opinion of their value. He stated that the discounted future earnings method is the forecast of the future earnings of the business that would be available to a hypothetical purchaser (in this case the husband), then an appropriate discount rate will be applied to arrive at a business’ present value. Even though the projections used by the expert are easily challenged, due to their inherent subjectivity, this goes to the weight of the evidence and must be left to the trier of fact. Simpson, 537 S.W.2d at 118.
Based on the foregoing, I would find appellee’s objection to the methodology for determining the value of the business, which was chosen by the wife’s expert in expressing his opinion, goes to the weight of the evidence, and the court did not err in overruling the husband’s objection.
I would overrule appellant’s second point of error.
Notwithstanding the above, the trial court had sufficient evidence of the value of the tangible assets of the business to support the $100,000 total value he placed on the business. There was testimony that Respiratory Care Services had tangible assets valued at approximately $56,000. This value included: 1) the agreed value of the Ford pick-up at $7,500 (being depreciated as a business asset); 2) the value of the airplane at $13,000; 3) the value of the hangar at $4,500 (this value is based on testimony of the husband that it was owned by the business, and that if he died he directed that the hangar be sold to “Bobby” for $4,500); 4) a certificate of deposit in the amount of $4,000; 5) equipment worth $9,800.00; 6) accounts receivable in the amount of $11,454.00; 7) a bank account worth $2,088. The respiratory therapy agreement, dated May 1, 1986, admitted in evidence between “Respiratory Care Services, a sole proprietorship,” and the Columbus Community Hospital was signed by the husband on behalf of the business. This contract was introduced as an asset of the business; however, there was no actual value placed on the contract. The contract provided for a monthly fee to be paid to Respiratory Care Services for service rendered the hospital at the approximate rate of between $5,000 and $6,000 a month for a period of three years, beginning May 1990 and ending May 1992. The contracts also provided that the fee schedule effective May 1, 1988, would remain in effect until the new fee schedule became effective.
Concerning the Home Care business, the evidence showed that there was equipment worth $7,400, accounts receivable in the amount of $1,100, a bank account worth $1,756, and a Camaro worth $1,600 (depreciated as a business asset). The total value of the business was approximately $12,000. In addition, there was testimony that there were retail agreements with customers in *696the home care business, on which no specific value was placed.
In addition to the above, the husband admitted, on cross-examination, that he had bought additional equipment in 1988 and 1989 that totaled approximately $17,600, and there was no evidence that these purchases were included in the list of equipment contained in his inventory.
Considering all the evidence contained in this record, the assets of the two businesses totaled approximately $85,000, excluding the contracts and rental agreements. Because one of the contracts, on its face, would produce more than $180,000 worth of income until 1992, I would find that there was sufficient evidence to support the $100,000 value the trial court placed on the business, without the trial court having to consider the value placed on the business by the wife’s expert. I further note that the trial court made a specific finding that he did not include good will in determining the value. As a trier of fact, the trial court had the liberty to blend all the evidence and fix a value within the range of testimony. McGee v. McGee, 537 S.W.2d 94, 97 (Tex.Civ.App.—Amarillo 1976, no writ); see Mata v. Mata, 710 S.W.2d 756, 758 (Tex.App.—Corpus Christi 1986, no writ) (value should be within the range of values in evidence); Morgan v. Morgan, 657 S.W.2d 484, 490 (Tex.App.—Houston [1st Dist.] 1983, writ dism’d).
I would hold that the court did not abuse its discretion in fixing a value of $100,-000.00 for the two businesses inasmuch as there was sufficient evidence to support the $100,000 valuation placed on the business by the trial court.
I would overrule appellant’s first point of error.
I would affirm the judgment of the trial court.

. Katherine A. Kinser & Diana Siegel Friedman, Determination and Proof of Valuation and Proof of Valuation In a Family Law Case, in State Bar of Texas Professional Development Program, How To Determine and Prove the Value of A Business H-4 (1991).