Auction Business Valued $125,000 in Tennesse Business Valuation Divorce
Tennessee law case summary on business valuation and alimony following 36 year marriage in divorce law from the Court of Appeals.
Scott Elmer McCarter v. Debra Lynn Walker McCarter – Tennessee divorce business valuation of auction business & alimony after 36 years married
The husband and wife in this Tennessee divorce case were married in 1975. They had two daughters, both of whom were adults. In 1983, they founded a business, McCarter Auction and Real Estate, and the business thrived, and two related companies, Great Day Investments, LLC, and Fair Garden Farms, Inc., were spun off. At the time of their divorce, both spouses were 61 years old.
The husband had a GED and a professional auctioneer’s license. During the marriage, he completed a three-year auctioneer program and also became a licensed real estate agent. The wife had a high school diploma and had taken a few college classes.
Both parties made allegations of violence and abuse. In 2007, the husband was diagnosed with cancer and had surgery. Two years later, he suffered a heart attack and had a stint implanted. In 2010, the husband filed for divorce, and the trial took place in late 2011 and early 2012. After various delays, judgment was finally entered, and the wife filed an appeal with the Tennessee Court of Appeals. The appeal focused largely on the valuation of the auction business, which the trial court had set at $125,000. The wife argued that the lower court had improperly accepted the husband’s valuation without properly crediting her evidence.
The husband’s expert witness at trial was a CPA named Fleming. The trial court had adopted Mr. Fleming’s valuation of the business.
The wife’s expert witness was CPA Renee Harwell, who believed that Mr. Fleming had improperly valued the professional goodwill of the business. Under Tennessee law, professional goodwill of a real estate agent or auctioneer is not a marital asset that can be divided.
Using both the asset and income method, Mr. Fleming had determined the value of the business to be $210,000, with $34,000 of that attributable to professional goodwill, leaving a value for divorce purposes of $176,000.
Ms. Harwell, the wife’s expert, agreed that there was goodwill, but was of the opinion that much of it was attributable to the business itself, rather than the professional services rendered by the husband. For example, she pointed out that much of the goodwill would continue if the business employed a different auctioneer.
The appeals court weighed all of these arguments, and held that the evidence did not preponderate against the trial court’s findings. For that reason, it let stand the lower court’s valuation of the business.
The appeals court also made rulings on other property issues before turning to the issue of alimony. The lower court had awarded $500 per week until the wife remarried, died, or cohabitated. The wife argued that this amount was insufficient given the facts of the case. She had requested over $14,000 per month. The court carefully examined the parties’ relative needs and abilities to pay, and concluded that the lower court had acted within its discretion in setting the amount as it did. Therefore, it also affirmed this portion of the judgment.
After examining other issues raised, the Court of Appeals determined that no other errors had been committed. Therefore, it affirmed the lower court’s judgment and remanded the case for collection of costs.
No. E2013-00890-COA-R3-CV (Tenn. Ct. App. Dec. 1, 2014).
See original opinion for exact language. Legal citations omitted.
To learn more, see Business Valuation in Tennessee Divorce Law.
