ROBYN M. TATE Plaintiff-Appellee
BRUCE E. TATE Defendant-Appellant
from the Court of Common Pleas, Domestic Relations Division,
Case No. 15DR019
Plaintiff-Appellee LON R. VINION, R.J. Helmuth
Defendant-Appellant JAMES M. RICHARD, ALETHA M. CARVER
Patricia A. Delaney, P.J. Hon. W. Scott Gwin, J. Hon. Earle
E. Wise, Jr., J.
1} Defendant-Appellant, Bruce E. Tate, appeals the March 30,
2017 decree of divorce of the Court of Common Pleas of Holmes
County, Ohio, Domestic Relations Division. Plaintiff-Appellee
is Robyn M. Tate.
AND PROCEDURAL HISTORY
2} On February 14, 1998, appellant and appellee were married.
No children were born as issue of the marriage.
3} In 1997, prior to the parties' marriage, appellant,
together with his brother, Russell Tate, and his parents,
Harold (Hal) and Nancee Tate, formed Tate Farms Company, Ltd.
Appellant received a 4 percent ownership interest in the
company. By 2007, appellant had a total ownership interest of
24.5 percent. Each time appellant's ownership interest
increased, he signed a demand note in an amount equal to the
agreed upon value of his interest. The demand notes accrued
interest at 4 percent.
4} In 2004, the same parties entered into a written
partnership agreement. Appellant received a 25 percent
ownership interest and was required to sign a demand note
equal to 25 percent of the agreed upon value of the
partnership assets or $257, 000.
5} No payments were ever made on the demand notes.
6} The partnership is the operating company for Tate Farms.
It owns all of the farm equipment and assets. The company is
the holding company, holding title to all of the real estate.
In order to purchase additional real estate, the partnership
maintained a line of credit and transferred monies to the
company to make the purchases and/or pay loan obligations.
7} The agreements between appellant and his family members
regarding the farms included buy-sell provisions in the event
a partner wanted out. The buyout value for the partnership
interest excluded the grain inventory (corn, soybeans, hay,
straw) because the grain inventory was used to cover the
operating expenses for the coming year. The buyout value for
the company interest was based on historical land values.
8} Appellant owned a farm he had acquired prior to the
marriage, referred to as the SR 39 farm.
9} During the course of the marriage, appellant worked on the
family farm and appellee worked outside the home/farm.
10} On March 10, 2015, appellee filed a complaint for divorce
against appellant, and also named defendants, Tate Farms
Company, Ltd. and Tate Farms, a Partnership, the two entities
appellant was involved in.
11} Hearings were held on September 19, 21, 22, 23, 29, and
October 10, 2016. At the conclusion of the September 29, 2016
case, the Tate Farms defendants moved for a directed verdict.
By judgment entry filed October 11, 2016, the trial court
granted the motion and dismissed them from the case.
12} On February 13, 2017, the trial court issued a statement
of the case, findings of fact, and conclusions of law. The
trial court referred to attached Exhibits A, B, and C which
were not attached. On March 30, 2017, the trial court issued
a decree of divorce, attaching Exhibits A and B, but not
The trial court ordered appellant to pay appellee $1, 479,
542.57 to effectuate an equitable distribution, and ordered
appellant to pay appellee spousal support in the amount of
$1, 000 per month for seventy-two months.
13} Appellant filed a notice of appeal on April 4, 2017.
14} On April 25, 2017, appellant filed with the trial court a
motion for a nunc pro tunc order to address the missing
Exhibit C. The trial court did not rule on this motion.
15} On May 15, 2017, appellant filed with this court a motion
to correct the record under App.R. 9(E), seeking a limited
remand to address the missing exhibit. By judgment entry
filed June 8, 2017, this court granted the motion and
remanded the matter to the trial court to address the missing
exhibit. On June 26, 2017, the trial court filed a nunc pro
tunc statement of the case, findings of fact, conclusions of
law, and decision, attaching the missing Exhibit C. The trial
court made substantive changes to its previous decision which
is the subject of separate appeals (App. Nos. 17CA13 and
16} This matter is now before this court for consideration of
the trial court's decree filed March 30, 2017, based on
the findings of fact and conclusions of law filed February
13, 2017, with the added Exhibit C. The pertinent parts of
the decision and any additional relevant facts will be
addressed under each of the corresponding assignments of
error. Assignments of error are as follows:
17} "THE TRIAL COURT ERRED AS A MATTER OF LAW WHEN IT
UTILIZED THE 'FAIR VALUE' STANDARD OF VALUE TO
DETERMINE THE VALUE OF APPELLANT'S INTEREST IN TATE
FARMS, WHICH RESULTED IN AN UNEQUAL AND INEQUITABLE DIVISION
OF PROPERTY IN VIOLATION OF R.C. 3105.171(C)."
18} "THE TRIAL COURT ABUSED ITS DISCRETION WHEN IT
REFUSED TO ENFORCE THE CURRENT UNCONTROVERTED BUY-SELL
AGREEMENTS THAT APPELLANT ENTERED INTO WITH TATE FARMS."
19} "THE TRIAL COURT ABUSED ITS DISCRETION WHEN IT
FAILED TO CONSIDER THE TAX CONSEQUENCES OF FORCING APPELLANT
TO PAY THE AWARD OF $1, 479, 542.57 AND IMPOSING A HOLD
20} "THE TRIAL COURT'S DECISION FINDING THAT
APPELLANT COMMITTED FINANCIAL MISCONDUCT IS AGAINST THE
MANIFEST WEIGHT OF THE EVIDENCE."
21} "THE TRIAL COURT ABUSED ITS DISCRETION BY AWARDING
ROBYN SPOUSAL SUPPORT AT A RATE OF $1, 000.00 PER MONTH FOR
FIVE (SIC) YEARS."
22} "THE TRIAL COURT ERRED AS A MATTER OF LAW WHEN IT
IMPOSED AN INTEREST RATE OF 7% PER ANNUM."
23} In his first assignment of error, appellant claims the
trial court erred in utilizing the "fair value"
standard to determine the value of his interests in the Tate
Farms entities, resulting in an unequal and inequitable
division of property in violation of R.C. 3105.171(C). In his
second assignment of error, appellant claims the trial court
abused its discretion in refusing to enforce the buy-sell
agreements that he had entered into with the Tate Farms
entities to determine his interest in the farms. We disagree
with both assertions.
24} Appellant is not contesting the trial court's
designation of marital property. In order to make an equal or
equitable division of marital property pursuant to R.C.
3105.171(C)(1), a trial court must first determine the value
of the property. A determination on valuation rests in a
trial court's broad discretion. Berish v.
Berish, 69 Ohio St.2d 318, 432 N.E.2d 183 (1982). In
order to find an abuse of discretion, we must determine the
trial court's decision was unreasonable, arbitrary or
unconscionable and not merely an error of law or judgment.
Blakemore v. Blakemore, 5 Ohio St.3d 217, 450 N.E.2d
25} In order to establish value, appellant presented the
expert testimony of Cathy Roche, and appellee presented the
expert testimony of John Cook, both certified professional
accountants. Ms. Roche utilized three different
methodologies: 1) net asset value method (asset approach); 2)
capitalized excess earnings method (income approach); and 3)
guideline company method (market approach). Defendant's
Exhibit 13. Mr. Cook utilized two different methodologies: 1)
fair value; and 2) fair market value. Plaintiff's Exhibit
KK. The trial court also had a collective report prepared by
Jon Mast, a real estate broker and auctioneer, and Steve
Andrews and Andrew White, relators and auctioneers,
(hereinafter known as the "Mast"
report). Plaintiff's Exhibit LL. Lastly, the
trial court had the financial statements from the Tate Farms
entities. Plaintiff's Exhibits DD and FF; Defendant's
Exhibits 21 and 22. Via a motion in limine, appellant sought
to exclude Mr. Cook's valuation under the "fair
value" standard, arguing the standard is only used in
the state of New Jersey and is not applicable in Ohio. The
trial court took the matter under advisement and ultimately
denied the motion by judgment entry filed October 11, 2017.
26} Appellant now argues this court must review the trial
court's use of the "fair value" standard under
a de novo standard of review because the trial court's
evidentiary ruling on the motion in limine was "based on
an erroneous standard or a misconstruction of the law."
Appellant's Brief at 10, citing Wray v. Wessell,
4th Dist. Scioto Nos. 15CA3724 and 15A3725, 2016-Ohio-8584,
¶ 13. We disagree. As explained by this court in
Brown v. Brown, 5th Dist. Licking No. 2008 CA 0111,
2009-Ohio-4913, ¶ 32:
R.C. 3105.171, which governs property distribution, sets
forth no specific manner for the trial court to determine
valuation of property. Crim v. Crim, Tuscarawas App.
No. 2007AP060032, 2008-Ohio-5367, ¶ 36, citing Focke
v. Focke (1992), 83 Ohio App.3d 552, 555, 615 N.E.2d
An appellate court's duty is not to require the adoption
of any particular method of valuation, but to determine
whether, based upon all the relevant facts and circumstances,
the court abused its discretion in arriving at a value.
Id., citing James v. James (1995), 101 Ohio
App.3d 668, 680, 656 N.E.2d 399. A trial court must have a
rational, evidentiary basis for assigning value to marital
property. Id., citing McCoy v. McCoy
(1993), 91 Ohio App.3d 570, 576-578, 632 N.E.2d 1358.
27} We will review the trial court's valuation of
appellant's interests in the Tate Farms entities under an
abuse of discretion standard, and determine if the trial
court had "a rational, evidentiary basis for assigning
value" to the subject marital property.
28} Appellant further argues Mr. Cook's opinion was
inadmissible under Evid.R. 703 and 705 which state the
The facts or data in the particular case upon which an expert
bases an opinion or inference may be those perceived by the
expert or admitted in evidence at the hearing.
The expert may testify in terms of opinion or inference and
give the expert's reasons therefor after disclosure of
the underlying facts or data. The disclosure may be in
response to a hypothetical question or otherwise.
29} Appellant argues "expert opinions may not be based
upon other opinions and may not be based upon hearsay
evidence, which has not been admitted." Appellant's
Brief at 14. However, appellant does not elaborate on this
statement. If appellant is referring to Mr. Cook's
reliance on the Mast report, the report was admitted into
evidence (Plaintiff's Exhibit LL), and Mr. Mast, Mr.
Andrews, and Mr. White all testified and were subjected to
30} Appellant also argues "there is no evidence in the
record that Cook offered any opinions to a reasonable degree
of legal or accounting certainty." Appellant's Brief
at 14. The trial court recognized Mr. Cook as an expert
witness, and appellant did not object to his status as an
expert. T. at 262. Mr. Cook agreed he arrived at his opinion
based upon his education, training, experience, and knowledge
"in this area." T. at 267, 291. We find the absence
of the magic words, "reasonable degree of certainty,
" does not render Mr. Cook's testimony inadmissible.
Coe v. Young, 145 Ohio App.3d 499, 504, 763 N.E.2d
652 (11th Dist.2001).
31} We do not find any violation of Evid.R. 703 and 705 as
argued by appellant.
32} Appellant further argues Mr. Cook's testimony
"as a legal expert does not apply the correct contract
law." Appellant's Brief at 14. Appellant argues Mr.
Cook erroneously interpreted language in the company and
partnership agreements regarding a "put" -
"giving one partner or owner the right to demand an
immediate payment of a calculated share without a majority
vote or a unanimous vote." Appellant's Brief at 15.
During the trial, the trial court specifically stated,
"I'm not qualifying him [Mr. Cook] in anyway as a
legal expert." T. at 272. The trial court is presumed to
be able to read, as described by appellant in his brief at
15, the "clear and unambiguous" language of the
buy-sell provisions in the agreements.
33} Settling on the capitalized excess earnings method
(income approach), appellant's expert, Ms. Roche, valued
appellant's interest in the company as of December 31,
2015, to be $635, 000, and in the partnership, $95, 200, for
a combined valuation of $730, 200 (discounts applied).
Defendant's Exhibit 13. According to appellee's
expert, Mr. Cook, appellant's combined interests in the
Tate Farms entities as of December 31, 2015, was $4, 589, 000
using the fair value method (no discounts applied).
Plaintiff's Exhibit KK. Between the two experts, the
trial court was presented with the valuations of
$730, 200 versus $4, 589,
000. In its March 30, 2017 decree of divorce at
Exhibit C, the trial court valued appellant's interests
in the Tate Farms entities at $4, 589, 000.
TATE FARMS FINANCIALS The Partnership
34} As found by the trial court, the partners determined the
stated value of the partnership. Finding of Fact No. 79; T.
at 1102. Each partner owned 25 percent of the partnership.
Finding of Fact No. 69; T. at 38, 127, 1101; Plaintiff's
Exhibit EE; Defendant's Exhibit 17.
35} The December 30, 2014 partnership minutes indicate it was
worth $5, 018, 817. Finding of Fact No. 72; Plaintiff's
Exhibits X and FF; Defendant's Exhibit 17.
36} The December 30, 2015 minutes indicate the partnership
was worth $3, 571, 500. Finding of Fact No. 78;
Plaintiff's Exhibits Y and FF; Defendant's Exhibit
37} The trial court noted in December 2015, all partners knew
appellant was involved in a contested divorce proceeding.
Finding of Fact No. 79.
38} As explained by the trial court in Finding of Fact No.
The underlying operating agreements for Tate Farms Company,
Ltd., and Tate Farms, a partnership, specify that a
partner's interest in each entity, pursuant to a buyout,
shall be determined by using a process whereby the value of
the asset is established and the particular partner
exercising the buyout receives his fractional interest,
without reduction of the total value, and including a
consideration for his capital account.
39} Pursuant to the above cited exhibits, in 2014, a
partner's buyout was worth $732, 200, and in 2015, a
partner's buyout was worth $368, 755. The figures were
reduced from a strict 25 percent because a partner's
buyout excluded the amount attributed to the grain inventory,
$2, 090, 000 in 2014 and $2, 096, 500 in 2015. As explained
by Mr. Hal Tate, starting in 2007, the grain inventory was
excluded each year because it was used for operating expenses
for "growing of next year's crops." T. at
1124-1125. Appellant understood he was not entitled to a
percentage of the grain inventory if he walked away from the
partnership. T. at 128-129. The trial court found excluding
the grain inventory from the valuation of the partnership to
be in error because the value existed at the time. Finding of
Fact Nos. 76, 80, 81, 82. Including the grain inventory to
the buyout valuations would increase the 2014 valuation to
$1, 254, 700 and the 2015 valuation to $892, 875.
40} Appellant owns 24.5 percent of the company. Finding of
Fact No. 88; T. at 36, 1115.
41} As found by the trial court, the December 30, 2014
company minutes indicate it was worth $9, 053, 300, using
"historic costs" for the land, not "actual
costs." Finding of Fact No. 91; T. at 1153-1154;
Plaintiff's Exhibits Z and DD; Defendant's Exhibit
18. Outstanding loans left a net equity of $7, 013, 300.
Finding of Fact No. 92. Appellant's buyout was worth $1,
718, 258. Finding of Fact No. 93.
42} The December 30, 2015 minutes indicates the company was
still worth $9, 053, 300; however, outstanding loans had been
lowered leaving a net equity of $7, 735, 800. Finding of Fact
No. 95; T. at 1154-1155; Plaintiff's Exhibit AA and DD;
Defendant's Exhibit 18. Appellant's buyout was worth
$1, 895, 271. Finding of Fact No. 96.
43} The financial statement attached to the December 30, 2015
minutes indicates a true value of the land equaled $17, 110,
000, with a net equity of $15, 792, 500. Finding of Fact No.
99; T. at 1155, 1157; Plaintiff's Exhibit AA and DD;
Defendant's Exhibit 22. Mr. Hal Tate explained they
computed the land values because they were "very much
aware of what real estate is selling for in the area and this
is so important in farm real estate * * * and so we'd
watch all the sales that were in vicinity so we have some
reference point." T. at 1102. They honestly believed the
value they assigned to the real estate was the real value of
the property. T. at 1150. Appellant acknowledged as of
December 30, 2015, he owned 24.5 percent of $15, 792, 500
worth of land or $3, 869, 162, but in his opinion he was
"not entitled to that" because demand notes needed
to be deducted from the gross amount. T. at 140-141.
44} The buy-sell agreement provided for consideration of each
member's capital account. The trial court found
appellant's capital account as of December 31, 2015, was
over $1, 600, 000. Finding of Fact No. 98; T. at 89-90;
Plaintiff's Exhibit B17. Appellant did not contribute to
this capital account. T. at 78, 83, 88, 92. Accountants for
the Tate Farms entities testified adjustments were made to
the capital accounts in order to balance the balance sheet.
T. at 782-783, 789, 802; Raese depo. at 28, 41-42.
45} The agreement did not provide for any discounts, and
applied a strict percentage of ownership to the total value
ratio in determining each partner's share for a buyout.
Finding of Fact No. 94; T. at 1163-1164. Using historic
costs, appellant's company buyout in December 2015 would
have been $1, 895, 271. Finding of Fact No. 96. Using true
value, appellant's company buyout in December 2015 would
have been $3, 869, 162. Finding of Fact No. 101. Mr. Hal Tate
testified that "we established long ago that the
[buyout] figure would be established at cost." T. at
1153. Appellant understood the same. T. at 139.
46} Using the 2015 partnership valuation of $3, 571, 500 and
the 2015 true value/net equity of the company of $15, 792,
500, the total value of the Tate Farms entities would equal
$19, 364, 000. Doing ...