Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Tate v. Tate

Court of Appeals of Ohio, Fifth District, Holmes

March 30, 2018

ROBYN M. TATE Plaintiff-Appellee
v.
BRUCE E. TATE Defendant-Appellant

          Appeal from the Court of Common Pleas, Domestic Relations Division, Case No. 15DR019

          For Plaintiff-Appellee LON R. VINION, R.J. Helmuth

          For Defendant-Appellant JAMES M. RICHARD, ALETHA M. CARVER

          Hon. Patricia A. Delaney, P.J. Hon. W. Scott Gwin, J. Hon. Earle E. Wise, Jr., J.

          OPINION

          WISE, EARLE, 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.

         FACTS 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 C.[1] 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 17CA14).

         {¶ 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:

         I

         {¶ 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)."

         II

         {¶ 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."

         III

         {¶ 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 HARMLESS PROVISION."

         IV

         {¶ 20} "THE TRIAL COURT'S DECISION FINDING THAT APPELLANT COMMITTED FINANCIAL MISCONDUCT IS AGAINST THE MANIFEST WEIGHT OF THE EVIDENCE."

         V

         {¶ 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."

         VI

         {¶ 22} "THE TRIAL COURT ERRED AS A MATTER OF LAW WHEN IT IMPOSED AN INTEREST RATE OF 7% PER ANNUM."

         I, II

         {¶ 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 1140 (1983).

         {¶ 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).[2] 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 327.
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 following, respectively:

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 vigorous cross-examination.

         {¶ 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 17.

         {¶ 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. 97:

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.

         The Company

         {¶ 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 ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.