McDonald’s Owner Ordered to Pay $2+ Million Alimony

At December 06, 2022
By Miles Mason
In Alimony: 25+ Years Married, Business Valuation, Divorce
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Tennessee case summary on business valuation, alimony after 37 years married, and electronic evidence destruction in divorce.

NOTE: See link below to Rob Vance’s blog discussing this case in more detail.

James Franklin Byrd v. Valerie Finley Byrd v. Byrd Brothers, LLC, et al.

Shelby County Courthouse

The husband and wife in this Shelby County, Tennessee, case married in 1982. The husband owned and operated a number of Memphis-area McDonald’s franchises, and the wife was a stay-at-home mother. In 2016, the husband filed for divorce on the grounds of irreconcilable differences. The wife and her attorneys encountered problems obtaining information regarding the husband’s business. In 2014, the couple’s tax return showed income of over $3.5 million, but the husband asked her to sign a 2015 return showing only $18,000. The wife claimed that the husband had entered into a business venture with someone in Dubai, with a bank account in Switzerland. The trial court granted a motion to compel, and the husband was required to sign a release allowing his accountant to provide information directly.

In 2017, a hearing was held regarding temporary support. The husband produced a statement showing his income and expenses, and those amounts were equal, to the penny. The wife, on the other hand, showed a shortfall of almost $9000. She also sought expenses for forensic CPA Robert Vance.

The wife was awarded temporary alimony of $3000 per month, and was also ordered to pay attorney fees and litigation costs. After another hearing, the court granted the wife’s motion to retain CPA Vance.

The wife then amended her complaint and added about 19 entities in which the husband had an alleged interest.

The husband was subsequently found in civil contempt for discovery violations. At one point, when the husband learned that the wife would request his cell phone, he “took off” to the parking garage and was allegedly deleting files.

Trial was ultimately held in 2019 for four days. The husband stipulated to being “100% at fault” for the divorce.

The wife’s expert witnesses included certified valuation specialist Mike Pascal of Forensic Valuation Services, PLC, the same firm as CPA Robert Vance. He relied upon a financial statement that had been obtained from a bank pursuant to s subpoena, showing the value of the McDonald’s restaurants to have a value of about $5 million. He testified that he believed that the husband had a total net worth in excess of this amount.

The wife also introduced the expert testimony of certified computer examiner Ted Scott, who examined a laptop last used in 2018. He found that 175,000 files had been erased after the court had ordered files preserved.

The husband denied intentionally deleting anything, and instead suggested that it was the person who did routine maintenance on the computer.

After hearing the evidence, the trial court adopted the wife’s valuation of the marital estate, of just over $5 million.

The husband was awarded most marital assets, but the wife was awarded about $2.3 million alimony in solido, to be paid within one year. She was also awarded alimony in futuro.

As to the removal of files from the laptop, the court found that the destruction was intentional. After post-trial motions and what the trial judge described as probably the lengthiest divorce decree he had entered in his career, the husband appealed to the Tennessee Court of Appeals.

The husband first argued that the trial court erred in specifying that the husband had been guilty of inappropriate marital conduct. But since the husband had stipulated that he was 100% at fault, the appeals court held that any error was without prejudice.

The husband also argued that expert witness Vance should not have testified in the place of witness Pascal. But since the witness was not a court-appointed witness, the appeals court held that this was proper.

The husband next argued that the trial court had erred in its valuation and division of the marital property. He argued that the trial court had used “outdated information” in making its decision, but the appeals court held that the valuation was made as close as practicable to the date of the divorce.

The husband also argued that the trial court erred in adopting a marketing approach to value the husband’s business. But the appeals court noted that valuation is not an exact science, and that the trial court is entitled to great deference in the method employed. It also pointed out that the husband was the one who failed to provide the information which would have been useful in other approaches to valuation. It also noted that the husband was not a credible witness. For these reasons, the Court of Appeals affirmed the valuation holding.

The husband also argued that the trial court failed to consider the tax ramifications of its division of the estate. In particular, he argued that he would face tax liabilities if he sold the restaurants in order to meet the obligation to pay alimony. But the Court of Appeals noted that he failed to offer any evidence of those tax consequences.

After addressing some other issues, the Court of Appeals turned to the issue of the husband being found in criminal contempt regarding the laptop. After reviewing the evidence, the appeals court affirmed.

For these reasons, the Court of Appeals affirmed the lower court’s decision, with some slight modifications, and remanded the case.

No. W2021-00926-COA-R3-CV (Tenn. Ct. App. Oct. 31, 2022).

See original opinion for exact language. Legal citations omitted.