Optometrist Practice Becomes Marital Property w/ Wife’s Contributions
Tennessee business valuation law case summary – Optometrist. Tennessee divorce and family law from the Tennessee Court of Appeals.
Bacigalupo v. Bacigalupo, No. W2003-01578-COA-R3-CV (Tenn. App. October 4, 2004).
An optometrist, Mr. Bacigalupo (“Mr. B.”), filed for a divorce from Mrs. Bacigalupo (“Mrs. B”), citing inappropriate marital conduct and irreconcilable differences. Mrs. B. counterclaimed, stating she was entitled to a divorce on the basis of inappropriate marital conduct and adultery. The trial court, the Dyer County Circuit Court, granted Mrs. B. the divorce.
The Bacigalupos were married on October 22, 1994, and in January 2000, Mr. B. began an affair with one of his employees, Tracy Miller. When first questioned by Mrs. B., he denied the affair. She found out about Mr. B.’s affair in February 2000. The Bacigalupos went to counseling from their minister; also Mr. B. sought counseling from a psychologist, and Mrs. B. from another licensed psychologist. Mrs. B. visited the Caron Foundation for additional psychotherapy to address other personal issues.
On June 29, 2000, Mr. B. filed for a divorce. After a hearing on in January 2003, the trial court issued a final decree of divorce, and awarded Mr. B. the Vision Center (“VC,” a sole proprietorship and later an S Corporation) building with a value of $575,000 and an equity of $334,071 and the net increase in value of $105,000 in VC and Vision Options, LLC (“VO”). On appeal, Mr. B. claimed that the trial court incorrectly classified the increase in value of VO and VC as marital property. The increase in value, according to Mr. B., came after he filed the divorce complaint. He also argued that Mrs. B. did not substantially contribute to the increase in value of VO and VC, and was not entitled to the increase in value of those businesses. Finally, Mr. B. claimed that due to the short duration of the marriage, the trial court erred when it divided the marital assets equally.
The court of appeals was not persuaded by Mr. B’s argument that the trial court incorrectly classified the increase in value of two businesses. VO was an operating practice that began during the marriage in April 1997. As such, any interest Mr. B. owned in VO fell under the statutory definition of marital property, as did any increase in value of VO.
In examining the increase in value of VC, the court of appeals noted that Mr. B. did own the business prior to the marriage, meaning it was separate property. However, the trial court determined that Mrs. B. made a substantial contribution to the preservation and appreciation of Mr. B.’s separate asset. The entire increase in value during the marriage was to be considered marital property. On appeal, there was ample evidence that Mrs. B. substantially contributed to the preservation and appreciation of VC, such as the fact that Mrs. B. contributed approximately $88,000 of her wages toward the second mortgage on the VC property. Further, Mrs. B. contributed indirectly by acting as a homemaker, wage earner, parent to the couple’s daughter, and family financial manager for the marriage—all of which fall under the examples of what “substantial contribution” includes in the state statute. Mrs. B. was also at times an employee at VC and VO and organized staff meetings and prepared the payroll.
Mr. B.’s last argument was that the division of assets should not have been equal because the marriage was only six years long. He felt that he should have received a larger portion of the marital estate. However, Tennessee statutes list more that only the duration of the marriage for determining the division of marital assets. Here it included Mrs. B.’s substantial contribution to the preservation and appreciation of Mr. B.’s interest in VC and her monetary contribution towards the second mortgage and her employment at VC and VO, as well as the indirect contributions in the home.
The court of appeals denied all of Mr. B’s claims on appeal and affirmed the trial court’s valuation and property division as far as VO and VC.
Bacigalupo v. Bacigalupo, No. W2003-01578-COA-R3-CV (Tenn. App. October 4, 2004).
See original opinion for exact language. Legal citations omitted.
To learn more about Tennessee business valuation law, see Business Valuation in Tennessee Divorce Law. 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, 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.
