Wife appealed FC’s Findings of Fact, Conclusions of Law, and Judgment regarding valuation and distribution of her oral surgery practice in dissolution proceedings, on remand from appellate court.
FACTUAL AND PROCEDURAL BACKGROUND:
Wife established oral maxillofacial surgery practice during marriage, which was parties’ largest asset at time of divorce. At trial, Wife’s expert presented two separate reports regarding practice’s value, both comparing assets and liabilities. The first report reflected that the practice had a value of $237,000 as of 12/31/03. Wife’s expert also applied a 10% discount for lack of marketability, though he initially had discounted the value by 23%. He testified that this discount represented the ability to quickly convert property to cash at a minimal cost. His second report valued the business as of December 2004 at $114,000, which he testified reflected a significant drop in cash from the prior report. Husband’s expert valued the business using data from Wife’s expert, but averaging the values resulting from four different valuation calculations, and determined the business’ value at $669,075. FC agreed with this value and Husband correspondingly received a large sum of cash. Wife appealed and, ultimately, SC determined that FC erred by failing to recognize the presence of both business and personal goodwill and by using an arbitrary average of numbers to determine the business’ value. On remand and the basis for this appeal, FC determined that the business’ value subject to division was $237,000. On appeal, Wife argues that FC should have adopted valuation performed closest to date of decree; that FC failed to apply a 23% discount rate to 2004 value; and that FC should have awarded her post-judgment interest on the money she overpaid Husband pursuant to FC’s first judgment.
CA noted that there is no presumption that assets should be valued within close proximity to the date of decree and that Kentucky has not adopted one particular method of valuation. CA noted that Wife’s expert testified that 2004 was an unusual year for the practice due to the significant drop in cash; that Wife had dissipated $199,000 by transferring the funds to her mother and FC had considered this as a credibility factor in the valuation; that Wife had made frequent fund transfers from the business without a proper accounting; and that Wife had sole control of the business during 2004. Given these facts, CA found FC had ample evidence to support its decision to base the valuation on the 2003 report. CA also found Wife’s argument that FC should have applied 23% discount for lack of marketability given the lack of cash in 2004 to be moot given the appropriate use of the 2003 valuation. Lastly, CA held that Wife was not entitled to post-judgment interest on amounts over-paid to Husband; given that the original judgment was vacated, there was no judgment from which interest would accrue; and awards of pre-judgment interest on unliquidated claims are within the trial court’s discretion, and FC did not abuse its discretion in refusing to make such an award.
CA’s order affirmed.