The Valuation Bugaboo — Again
October 13, 2014 § 2 Comments
It’s a never-ceasing source of wonderment to me how some lawyers devote so little attention at trial to valuation of assets when that proof is crucial to the outcome of the equitable distribution.
The latest object lesson on point is in the COA’s decision in Ilsley v. Ilsley, decided October 7, 2014. In that case, Susan and Timothy were in the throes of a divorce. Mediation had failed, and the two unhappy spouses appeared at trial as the only two witnesses.
The main equitable distribution battle ground was over an ING account with 21,225 vested (and some additional unvested) shares that Timothy had as part of his employment compensation with the Isle of Capri Casino. The COA opinion says that the “primary testimony and evidence presented at trial regarding the value per share” was Timothy’s testimony that it was worth $7.06 per share. A few months later, in his proposed findings of fact and conclusions of law, Timothy stated the share value as $5.30.
Before we go any further, take a minute to absorb what I just laid out: the evidence that the court had to rely on came from one of the parties. No expert, no agreed statement from a stock brokerage or the plan administrator, nothing other than the testimony of one of the parties.
Now, I am not taking the lawyers in the trial to task. It may be that the figures thrown out were what was developed in discovery and no further effort was needed. The end result though, is that the two figures injected into the record were the ones upon which the judge relied.
The chancellor concluded from the proof that the value of the vested shares in the ING account was $143,089, and awarded Susan $75,000, to be paid by Timothy as lump-sum alimony. The judge did not explain the value of the shares he applied to arrive at those figures, or the total number of shares he found. Susan appealed.
Judge Roberts, for the majority of the COA, said this:
¶10. Susan first argues that the chancery court erred in valuing and classifying stocks Timothy received as part of his compensation package from Isle of Capri. As part of his compensation package, Timothy was granted shares of stock each year that vest randomly over a three-year period and, once vested, are invested in an ING account. At trial, the parties stipulated that the number of vested shares in the ING account was 21,225 shares. In addition, there were 9,511 shares that granted after the date of the temporary order, but these shares had not yet vested. The chancery court found that these shares were marital, but awarded them to Timothy, as the shares had not yet vested. Timothy testified at trial that the value per share was approximately $7.06. This was the primary testimony and evidence presented at trial regarding the value per share. In his proposed findings of fact and conclusions of law, Timothy offered the value per share of $5.30. In its corrected final judgment of divorce, the chancery court found the total value of the ING account to be $193,497, and the value of the vested shares to be $143,089. The chancery court did not include in its judgment what the total number of shares or the price per share was in determing [sic] the total values.
¶11. As explained above, the two pieces of evidence presented to the chancery court as to the price per share were $7.06 as testified to at trial, and $5.30 as contained in Timothy’s proposed findings of fact and conclusions of law submitted several months after trial. “Where parties provide inadequate proof of an asset’s value, a chancellor’s valuation with ‘some evidentiary support’ will be upheld.” Dunn v. Dunn, 911 So. 2d 591, 597 (¶17) (Miss. Ct. App. 2005) (quoting Dunaway v. Dunaway, 749 So. 2d 1112, 1121 (¶28) (Miss. Ct. App. 1999)). In Dunaway, we held:
To the extent that the evidence on which the chancellor based his opinion was less informative than it could have been, we lay that at the feet of the litigants and not the chancellor. The chancellor appears to have fully explored the available proof and arrived at the best conclusions that he could, and we can discover no abuse of discretion in those efforts that would require us to reverse his valuation determinations.
Dunaway, 749 So. 2d at 1121 (¶28). Without having additional evidence provided by the parties, the chancery court was in the position to select a value for the shares and determined the total values for distribution. Additionally, the chancery court found that each party “will be entitled each to one-half of those [vested] shares.” Thus, the actual value per share fluctuates based upon the market, so the total value of the shares would vary based upon the market price.
¶12. We find that the chancery court did not abuse its discretion.
In other words, if you want a shot at overcoming a bad trial result, you’d better make it your business to make an adequate record at trial. Susan in this case in essence left the judge no choice but to rely on the figures offered by Timothy, and she ineffectively argued that it cost her, because she offered no proof to the contrary.