Cardiologist’s Wife Entitled to Share Practice Value Appreciation
Tennessee business valuation law case summary – Cardiologist’s practice. Tennessee divorce and family law from the Tennessee Court of Appeals.
Cunningham v. Cunningham II – 2004 – Tennessee Divorce – Valuation and Division of Medical Practice
This is the second appeal of Dr. and Mrs. Cunningham’s divorce stemming from the valuation of the doctor’s medical practice. On remand after the first appeal, the trial court reduced the valuation of Dr. Cunningham’s medical practice from its first proceedings of the case.
Dr. Louis Cunningham (“Dr. Cunningham”) and Cheryl Cheatham Cunningham (“Ms. Cunningham”) were married on October 20, 1990, and separated on July 15, 1995. Ms. Cunningham was awarded the divorce on the grounds of inappropriate marital conduct. The trial court in Madison County valued Dr. Cunningham’s medical practice, the Mid-South Heart Center (MSHC”), at $1,300,000. On appeal, the court of appeals found that the evidence did not support the trial court’s finding that the value of the MSHC to be $1,300,000, and that the professional goodwill of Dr. Cunningham’s practice was not a marital asset that should be considered in making an equitable distribution of the marital estate. The court of appeals reversed that valuation and sent the issue back to the trial court to place of value on MSHC between $ 546,710 and $624,864, which was the range supported by the evidence. The trial court subsequently re-valued MSHC at $585,787.
In this appeal, Dr. Cunningham again claimed that the trial court’s division of marital property was in error in light of the reduction in value of his medical practice from $1,300,000 to $585,787. The Cunninghams agreed that taking the revaluation into account, the trial court awarded Dr. Cunningham between 62% and 64% of the marital assets, and awarded Ms. Cunningham between 36% and 38%. Dr. Cunningham asserted that MSHC would have no value without him personally. Additionally, he maintained that because the marriage was short, Ms. Cunningham should be placed in the same financial position which she would have been in had the marriage never taken place. Dr. Cunningham’s argument was without merit, the court of appeals said, because it was impossible to determine the financial status of the parties as if their marriage had not taken place. The trial court found Ms. Cunningham was extremely successful in providing business acumen get MSHC off the ground. That investment later earned Dr. Cunningham’s salary which was higher than the national average for cardiologists.
The duration of the marriage was but one of several factors that is taken into consideration, the court of appeals explained, in making the distribution of a martial estate; and a such, the trial court did not abused its discretion or error in the division of marital property in this case.
Cunningham v. Cunningham, No. W2002-02296-COA-R3-CV (Tenn. Ct. App., 2004).
See original opinion for exact language. Legal citations omitted.
To learn more about the division and valuation of professional practices in divorce, see When Professionals Divorce in Tennessee: Valuing Professional Practices.
Miles Mason, Sr. JD, CPA handles complex divorce matters including business valuations and forensic accounting issues. View his professional biography listing books and articles published on business valuation and forensic accounting and seminars presented to lawyers, judges, business valuation experts, and forensic accountants. Miles Mason, Sr. authored The Forensic Accounting Deskbook: A Practical Guide to Financial Investigation and Analysis for Family Lawyers, published by the American Bar Association. The Miles Mason Family Law Group, PLC’s offices are located in Memphis, Tennessee and serves West Tennessee and Nashville.
