COX v. COX
| Docket Number: | 2009-CA-01233-COA Linked Case(s): 2009-CA-01233-COA |
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| Court of Appeals: |
Opinion Link Opinion Date: 01-25-2011 Opinion Author: Judge Carlton Holding: Affirmed. |
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| Additional Case Information: |
Topic: Divorce: Irreconcilable differences - Equitable distribution - Valuation of business - Value of patents - Airplane - Ferguson factors - Alimony |
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Synopsis provided by:  If you are interested in subscribing to the weekly synopses of all Mississippi Supreme Court and Court of Appeals hand downs please contact Tammy Upton in the MLI Press office. |
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| Topic: | Divorce: Irreconcilable differences - Equitable distribution - Valuation of business - Value of patents - Airplane - Ferguson factors - Alimony |
| Summary of the Facts: | Suzanne Cox appeals and Lawrence Cox, Jr. were granted a divorce on the ground of irreconcilable differences. Suzanne appeals. |
| Summary of Opinion Analysis: | Issue 1: Valuation of business Suzanne argues that the value assigned by the chancellor to Steel Service Corporation, a business owned by Larry, constituted error, and she asserts that the incorrect valuation figures caused error in the chancellor assignment of value. Larry argues that he owned SSC before the couple’s marriage, and that Suzanne never acquired any interest in the companies. The findings of the chancellor reflect that he acknowledged that the parties agreed to use December 31, 2005, as a valuation date of the businesses, including SSC. The parties agreed to allow James Thomas Grantham, a certified public accountant, to evaluate the businesses and provide expert opinion as to the fair market value of the assets. The fair market value of a business is the price at which property would change hands between a willing buyer and a willing seller when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, both parties having reasonable knowledge of the relevant facts. The business valuation report provided to the court and the parties explains that the opinion of market value is based upon the value of an on-going concern. The report looked at industry conditions as well as the history of the company and the underlying assets. As noted by the chancellor in his findings, the business valuation expert, Grantham, recommended that the chancery court apply a fifty-percent discount for lack of marketability to the 2005 value of SSC due to a variety of changed circumstances. The valuation report also explains that SSC was engaged in four significant lawsuits, and three of the suits involved substantial claims where work had already been performed by SSC. The valuation report concludes that since SSC lacked an active market, by definition, SSC was illiquid. The report explained that after applying the fifty-percent lack of marketability discount to the value of SSC, that the market value of SSC constituted $2,470,000. The chancellor found that Grantham’s valuation omitted the value of a lawsuit in which SSC stood as the plaintiff. To account for the omitted value of the lawsuit in the market value calculation, the chancellor added $1,119,221 to Grantham’s estimated value. The chancellor then assigned SSC a final market value of $3,589,221 on December 31, 2005. The report contained specific data and explanations of how Grantham valued SSC, which adequately support the chancellor’s valuation of SSC. Issue 2: Value of patents Grantham, the C.P.A., also appraised 3-Design, Larry’s software company related to structural steel businesses. Grantham assigned 3-Design a negative value of $12,994. 3-Design, which earns revenue of $100,000 per year, holds intellectual property patents. Grantham elected not to include the patents in his valuation of 3-Design because, in his view, the patents are intangible assets and are included in the supreme court’s definition of goodwill, which cannot be used in the valuation of fair market value of a business. Suzanne asks for clarification of whether intellectual property such as patents and copyrights may be part of a marital estate. If intellectual property may be considered part of a marital estate, Suzanne requests the Court to reverse and remand for a valuation of the patents owned by 3-Design. While the valuation expert excluded the values of the patents from the valuation of 3-Design, the chancellor provided clearly in his opinion that he received no evidence as to the value, if any, of the patents for his consideration. Because no other evidence was presented to show the value of the patents, the chancellor, in his discretion, accepted the value of 3-Design provided by the valuation expert. The record provides substantial support for the chancellor’s valuation of 3-Design. Issue 3: Airplane Larry purchased a 1978 Grumman airplane in 1992 that was placed in a holding company, Cougar. He purchased this airplane with his separate funds. The chancellor found that the airplane constituted a depreciating asset, and therefore he found that the airplane’s value had not appreciated in value during the course of the marriage. The record shows that the parties stipulated to the underlying value of Cougar, representing the value of the airplane. Any appreciation in value of that asset, had any existed, would have been considered marital property. Thus, there was no error by the chancellor. Issue 4: Ferguson factors Suzanne argues that the chancellor erred in awarding her only twenty-five percent of the marital estate, and that chancellor incorrectly applied the Ferguson factors. The chancellor noted that the assets in the marital estate came predominantly through Larry’s efforts. Larry enjoyed great financial success through his business ventures prior to his marriage to Suzanne. The chancellor noted under this factor that Suzanne and Larry had help with housekeeping and lawn maintenance during the marriage. Further, in the later years of the marriage, Suzanne earned a sizable income, which she used entirely for herself, in addition to the monthly allowance Larry provided for her personal expenses and household needs. The chancellor considered Suzanne’s direct and indirect contributions to the acquisition of marital assets lessened even further by her significant contributions to the breakdown of the marriage. The evidence and testimony presented at trial substantially supports the chancellor’s findings that Suzanne made minimal direct or indirect contributions to the accumulation of marital assets. Suzanne argues that Larry spent approximately $200,000 per year of marital income on his personal assets which retained no value at the time of the separation. However, the chancellor’s opinion, when read as a whole, shows that the only funds credited against Suzanne’s share of the marital assets was the $200,000 Larry entrusted to her for safekeeping, and which she admittedly spent for her own personal use. The trial testimony shows that Larry took care of the couple’s finances, including maintenance on the home, insurance, taxes, etc. Thus, Larry contributed his income to the benefit of the marriage, while Suzanne retained her income entirely for her own personal use. Suzanne argues that the chancellor erred by considering that Larry remained personally liable for the debt associated with the businesses, because the chancellor took that debt into consideration and used it to reduce the current value of the businesses. However, the chancellor merely stated that he saw fit to give Suzanne a “somewhat smaller” award based on Larry’s continued personal liability for the debt. Issue 5: Alimony Suzanne argues that the chancellor’s judgment not to award alimony constitutes reversible error, because the chancellor overlooked that at the time of the judgment, Suzanne was unemployed, experienced health problems, had exhausted the $296,000 in her accounts, and had placed her real estate license on inactive status because of her inability to pay for professional insurance. Substantial evidence exists in the record to support the chancellor’s findings relative to alimony. In reaching his conclusion, the chancellor, despite Suzanne’s assertions to the contrary, examined both Suzanne’s and Larry’s circumstances under the applicable Armstrong factors. The chancellor noted that Suzanne created a successful business for herself, earning a high income. Based on both Suzanne’s and Larry’s ability to manage money and live within their means, the chancellor found that Suzanne could more than adequately support herself in the future without alimony payments from Larry. Further, the chancellor considered both Larry’s and Suzanne’s health conditions. Larry suffered from serious heart problems, undergoing bypass surgery the year before the separation. He was sixty-five years old at the time of the divorce. Suzanne was only fifty-four, and according to the chancellor, appeared to be in good health. Suzanne’s argument that the chancellor erred in not awarding her alimony is without merit. |
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