Pulmonology Practice Valued at $586K not $8.5K in Divorce
Tennessee alimony divorce case summary after 16 years married and valuation of medical practice.
Matthew Wheeler Mabie, M.D. v. Carla Jennings Mabie
The parties in this Shelby County, Tennessee, divorce case were married in 1997 and had two children who attended private schools in Memphis. At the time of their 2013 divorce trial, both the husband and wife were 41 years old. The husband was a successful medical doctor, and the wife, who was a stay-at-home mother during the marriage, had a degree in communications. Prior to the birth of the children, she had worked as a real estate agent earning about $40,000 per year.
The husband had graduated from medical school on the same day he and the wife were married. He initially worked as an employee, but then became a partner in a medical practice in 2007. His income in 2012 was $950,000 per year.
In 2011, the husband moved out of the marital residence and filed for divorce. After an attempt at reconciliation, the wife filed a counter complaint also seeking divorce. The case was resumed, and ultimately heard by Judge Gina C. Higgins. A three day trial followed, and after almost a year, the court issued its final ruling. After dividing the marital property, the court ordered the husband to pay alimony. For the first three years, the wife was to receive $6,000 per month in rehabilitative alimony. She was also to receive $5,000 per month of alimony in futuro, which would continue until her death or remarriage. During the first three years, both types of alimony were to be paid.
The husband appealed to the Tennessee Court of Appeals and raised two issues. First, he argued that the award of alimony was improper. He also argued that the trial court had erred in making the valuation of his medical practice.
The appeals court first addressed the question of spousal support. The husband argued that the award was improper because the trial judge had not properly supported the ruling with factual findings. The appeals court stated that the findings were not “the gold standard.” But because the lower court’s reasoning was evident from its oral and written rulings, the Court of Appeals held that the paucity of the findings did not warrant reversal.
The trial court had found that the wife was the economically disadvantaged spouse, and the appeals court agreed. The trial court had remedied this with both rehabilitative alimony and alimony in futuro, and the appeals court examined the rationale for both.
In this case, the lower court had found that rehabilitative alimony was appropriate, since the wife intended to attend law school. Therefore, it had awarded the rehabilitative alimony for three years. But the lower court also recognized that her earning capacity would probably still be less than the husband’s. Therefore, it also awarded alimony in futuro, which would support her in the long term.
Under the facts of the case, the appeals court concluded that the award of both types of alimony was appropriate. The rehabilitative alimony would allow her to re-enter the workforce after a decade, and the appeals court agreed that this was a proper application.
The appeals court also agreed that ongoing alimony was appropriate, since it agreed with the lower court that the wife’s income would never match the husband’s high income. For these reasons, the Court of Appeals affirmed the award of alimony.
The court then turned to the issue of business valuation. The husband’s monthly income from his business interest averaged approximately $72,000 per month over several years. The wife’s business valuation expert had testified that this income stream represented a value of $586,000.
The husband, on the other hand, took the position that his interest in the business was worth only $8,500. But in his argument to the appeals court, he essentially argued only that his expert was right and the wife’s expert was wrong. Without more, the appeals court concluded that he had not demonstrated reversible error. The appeals court noted that the valuation of a business is a question of fact, and that the lower court’s ruling enjoys a presumption of correctness.
The appeals court did dig into the testimony of the husband’s expert, who had opined that the interest in the business was not marketable. Therefore, he relied most heavily on the stock control agreement, under which the husband would have received $8,500 for his interest. But another expert testified that it “defied logic” that an income stream of over $800,000 per year would only be worth $8,500. The appeals court apparently agreed, and noted that the trial judge “is not required to check his or her common sense at the door when considering evidence.”
The husband did raise some issues of federal law on appeal, and argued that a sale of his share on the open market might be illegal. But since this had not been raised at trial, the appeals court did not consider it. Since the trial court’s valuation was supported by the evidence, the Court of Appeals affirmed.
After addressing some other issues, the Court of Appeals affirmed the order of the trial court, but denied the wife’s request for attorney fees on appeal.
No. M2016-00595-COA-R3-CV (Tenn. Ct. App. Jan. 10, 2017).
See original opinion for exact language. Legal citations omitted.
To learn more, see Alimony Law in Tennessee.
