Building Valuation by Independent Expert Witness Carries Day

Tennessee business valuation law case summary – Valuation of Building. Tennessee divorce and family law from the Tennessee Court of Appeals.

Castillion v. Castillion – Tennessee Divorce Business Valuation Case – Building

Carlos and Sarah Catillion were divorced in 2000, and the property issues were decided in 2001.  The trial court adopted a special master’s report finding that during their marriage, Mrs. Castillion had earned approximately two thirds of the money brought into the marriage, and Mr. Castillion had earned one third.

The Court of Appeals first found that the trial court had not erred in determining that the joint federal income tax liability should be divided evenly, despite the fact that the wife had earned more than the husband.  The Court of Appeals held that the trial court had acted within its discretion.  Even though Mrs. Castillion had earned more during the marriage, the court held that such an allocation was equitable, particularly when viewed in the context of the court’s allocation of the entire marital estate.

One of the assets was a property identified by the Court of Appeals only as the “Calhoun Avenue property.”  Mr. Castillion’s business leased this building from the parties. The appellate decision did not specify the nature of this business, and the value of the business (as opposed to the value of the property) was apparently not an issue.

The special master had concluded, and the trial court approved, that this property had a value of $107,000.  In making this ruling, the special master and the trial court had relied upon the testimony of an appraiser, one Mr. Costello.    Mr. Costello was the expert witness retained by the wife, and this appraisal was prepared for use at trial.

A second appraisal was also offered at trial (presumably by the husband).  This appraisal had been prepared for the purposes of refinancing, and set the value at $87,500.  The husband argued that the $107,000 appraisal should not have been accepted because it was made a year after the date of the divorce.  However, the appraiser Mr. Costello testified at trial that this fact did not affect his opinion, since the comparable sales data he used was from prior to the divorce.  Both the special master and the trial court accepted the $107,000 appraisal because of the method used, and because it had not been prepared solely for refinancing.

The court also noted that the husband’s valuation of the building was done by a personal friend of his, that it had been done without the wife’s knowledge or consent, and that it was significantly lower than Mr. Costello’s expert testimony.

The Court of Appeals affirmed, and held that the trial court had not abused its discretion in adopting the special master’s report.

The trial court had also required the husband to pay half the cost of appraiser Costello’s appraisal.  The Court of Appeals affirmed this ruling as well, as being within the trial court’s discretion.

The Court of Appeals also held that the husband’s appeal was frivolous, and that he should be ordered to pay wife’s attorney’s fees.  In making this determination, the Court of Appeals noted that Mr. Castillion’s brief did not cite even a single case, and that the appeal had “no reasonable chance of success.”

Castillion v. Castillion, 2003 WL 1092988 (Tenn. Ct. App. 2003).

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 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. Contact Us today at (901) 683-1850.