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Alford v. Alford

Court of Appeals of Mississippi

July 23, 2019

CINCINNATUS E. ALFORD, III APPELLANT
v.
LINDA B. ALFORD APPELLEE

          DATE OF JUDGMENT: 06/27/2017

          SHARKEY COUNTY CHANCERY COURT HON. VICKI R. BARNES TRIAL JUDGE:

          ATTORNEY FOR APPELLANT: STEVEN TODD JEFFREYS

          ATTORNEYS FOR APPELLEE: J. MACK VARNER CLIFFORD C. WHITNEY III

          BEFORE J. WILSON, P.J., GREENLEE AND McCARTY, JJ.

          J. WILSON, P.J.

         ¶1. After thirty-nine years of marriage, Linda Alford filed for divorce from her husband, Cincinnatus ("Nat") Alford. The Alfords later consented to an irreconcilable differences divorce. The chancellor divided the marital estate and ordered Nat to pay Linda $5, 000 per month in periodic alimony, $5, 000 for attorney's fees, and $6, 000 for expert witness fees. On appeal, Nat argues that the chancellor erred by (1) accepting Linda's valuation of his twenty-five percent interest in a closely held corporation that operates a farm in Sharkey County, (2) awarding Linda $5, 000 per month in periodic alimony, and (3) awarding Linda attorney's fees and expert witness fees. We find no error in the chancellor's valuation of Nat's interest in the corporation or equitable division of the marital estate. However, we reverse and remand the alimony award for further proceedings consistent with this opinion, and we reverse and render the award of expert witness and attorney's fees.

         FACTS AND PROCEDURAL HISTORY

         ¶2. Nat and Linda married in 1977. They had two children who were in their thirties by the time of trial. During the early years of their marriage, the Alfords moved frequently for Nat's work before settling down in Rolling Fork. Nat has worked in road maintenance equipment sales for many years and was still employed at the time of trial as a regional sales manager for Cimline. Linda worked as a bookkeeper at Sharkey-Issaquena Academy during the marriage and was still employed there at the time of trial.

         ¶3. Nat and Linda separated in November 2014. Nat told Linda that he was no longer happy and moved out of the marital home. Nat testified that this decision came shortly after he learned that Linda had incurred $55, 000 in credit card debt without his knowledge. Linda told Nat that she would take care of the debt herself. However, Nat did not want $55, 000 of credit card debt on his credit report, so he used $35, 000 of marital funds to pay down the debt, and he and Linda obtained a bank loan at a lower interest rate to pay the rest. Nat stated that he and Linda had been growing apart for years and that this incident caused him to lose trust in her. Nat decided that he needed some space, and he left the marital home to stay with friends before moving to Cleveland. Nat rented an apartment in Cleveland and later bought a condominium there. He used marital funds for the down payment.

         ¶4. In February 2016, Linda filed for divorce on the ground of desertion. In April 2016, the court entered an agreed temporary order that required Nat to pay Linda $4, 000 per month in temporary support and continue paying for her medical insurance. Nat was granted use and possession of the condo in Cleveland, and Linda was granted use and possession of the marital home in Rolling Fork. In January 2017, Nat and Linda consented to an irreconcilable differences divorce and stipulated that the chancellor would decide issues related to the equitable distribution of the marital estate, alimony, and attorney's fees. The case then proceeded to trial. Linda and Nat were both sixty-three years old at the time of trial.

         ¶5. John Paris testified, without objection, as an expert witness regarding the value of Nat's twenty-five percent interest in Cannonwall Plantation Inc., a closely held corporation that operates a farm in Sharkey County.[1] Cannonwall Plantation is owned by Nat and two other individuals. Paris testified that Cannonwall Plantation had assets and liabilities with a net fair value of $553, 272. Paris further testified that the net fair value of Nat's twenty-five percent interest was $138, 318. Paris explained that the company's fair value was equal to the net value of its assets and liabilities on the day of the valuation and that the fair value of Nat's interest was equal to twenty-five percent of the company's value. In valuing the company's assets, Paris relied primarily on appraised values provided by Nat in discovery.

         ¶6. Consistent with her Rule 8.05 financial statement, [2] Linda testified that she had a net monthly income of $1, 516.36 and monthly expenses of $6, 376.43. She asked the court to award her permanent periodic alimony of $5, 000 per month. She also asked the court for an award of attorney's fees and expert witness fees. She testified that she had made partial payments to her attorney and expert in monthly installments, but she said she had "been struggling to" do so.

         ¶7. Nat's Rule 8.05 statement showed gross monthly income of $10, 000, net monthly income of $8, 070, and expenses (exclusive of temporary alimony) of $3, 109.54. However, Paris testified that Nat's gross monthly income was approximately $15, 391 and that his net monthly income was approximately $10, 952. Paris relied on a 2016 earnings statement from Cimline and Nat's 2015 tax return, which showed income from Cannonwall, dividends, and interest. Nat testified that Paris's analysis overstated his income because he had record-setting sales in 2015, which resulted in higher-than-normal commissions. Nat also stated that Linda's request for $5, 000 per month in periodic alimony was excessive given that they were both approaching retirement. Nat testified that he planned to retire around age sixty-seven.

         ¶8. The chancellor subsequently entered an opinion and final judgment. The judgment classified and valued the Alfords' property. The parties agreed that certain assets were separate, non-marital property: Linda's 2015 Honda CR-V, which was a gift from her father, and inherited stock and a portion of a Merrill Lynch account owned by Nat, which had a total combined value of $124, 824. All other assets, including Nat's interest in Cannonwall Plantation, were deemed marital property. The chancellor divided the marital estate and awarded Linda assets and liabilities with a total net value of $713, 123.49. Linda received the marital home, which no longer had a mortgage. The chancellor adopted Paris's valuation of Nat's interest in Cannonwall Plantation and awarded it to Nat. The chancellor awarded Nat marital assets and liabilities with a total net value of $742, 730.88. The chancellor also awarded Linda $5, 000 in permanent periodic alimony, $5, 000 in attorney's fees, and $6, 000 in expert witness fees.

         ¶9. Nat filed a motion to alter or amend the judgment, which the chancellor denied, and a notice of appeal. On appeal, Nat challenges the chancellor's valuation of Cannonwall Plantation, the alimony award, and the award of attorney's fees and expert witness fees.

         ANALYSIS

         ¶10. "When reviewing a decision of a chancellor, this Court applies a limited abuse of discretion standard of review." Mabus v. Mabus, 890 So.2d 806, 810 (¶14) (Miss. 2003). "This Court will not disturb the chancellor's opinion when supported by substantial evidence unless the chancellor abused his discretion, was manifestly wrong, clearly erroneous, or an erroneous legal standard was applied." Id. at 819 (¶53). However, on issues of law, our standard of review is de novo. Lowrey v. Lowrey, 25 So.3d 274, 285 (¶26) (Miss. 2009).

         ¶11. "When this Court reviews a chancellor's judgment of property division we are to review the judgment to ensure that the chancellor followed the appropriate standards and did not abuse his discretion." McKnight v. McKnight, 951 So.2d 594, 596 (¶6) (Miss. Ct. App. 2007) (quotation marks omitted). We also review awards of alimony and attorney's fees for abuse of discretion. Creekmore v. Creekmore, 651 So.2d 513, 520 (Miss. 1995); Armstrong v. Armstrong, 618 So.2d 1278, 1280 (Miss. 1993). However, "[i]f we find the chancellor's decision manifestly wrong, or that the court applied an erroneous legal standard, we will not hesitate to reverse." Armstrong, 618 So.2d at 1280.

         I. Cannonwall Plantation

         ¶12. As stated above, Paris testified that the net fair value of Cannonwall Plantation's assets and liabilities was $553, 272 and that the fair value of Nat's twenty-five percent was $138, 318. Paris presented a "fair value balance sheet" for the business, which showed its assets-including cash, accounts receivable, loans to shareholders, and buildings and equipment-and liabilities-including mortgages, loans, and accounts payable. Paris testified that he valued the buildings and equipment based on appraisals provided by Nat during discovery. Paris testified that he did not estimate the "fair market value" of the farm as a going concern because such a value necessarily would have included goodwill as a component of the farm's value. Paris testified that under Mississippi law goodwill should not be included in a business valuation prepared for purposes of the equitable division of marital assets in a divorce case. Thus, Paris used an asset-based approach to valuation, which measures only the fair value of the company's assets and liabilities excluding goodwill. Paris testified that his valuation of Cannonwall Plantation was consistent with standard accounting and valuation principles. Nat did not present any testimony or other evidence to contradict Paris's opinion.

         ¶13. Paris's understanding of Mississippi law on the subject of goodwill is correct. The Mississippi Supreme Court has held that "'goodwill,' whether 'personal goodwill' or 'business enterprise goodwill' shall not be included in the valuation of [a business for purposes of equitable distribution in a divorce]. Goodwill is simply not property; thus it cannot be deemed a divisible marital asset in a divorce action." Yelverton v. Yelverton, 961 So.2d 19, 30 (¶21) (Miss. 2007) (citation, footnote, quotation marks, and brackets omitted); accord Lacoste v. Lacoste, 197 So.3d 897, 908 (¶34) (Miss. Ct. App. 2016). Therefore, Paris properly valued Cannonwall Plantation without including any value attributable to goodwill.

         ¶14. Nonetheless, Nat finds two flaws in Paris's valuation. First, he argues that Paris improperly estimated the business's "fair value" rather than its "fair market value." We note that the distinction between these two concepts is not entirely clear from Paris's testimony, and Nat presented no expert testimony of his own. Nonetheless, Paris's valuation method is essentially the same as the method that we approved in Dunaway v. Dunaway, 749 So.2d 1112, 1117-18 (¶13) (Miss. Ct. App. 1999). In that case, the chancellor "valued the various physical assets making up the farming operation, assigning a market value to each component." Id. Essentially, the chancellor valued the farm based on "the break-up value of the various assets used in the operation." Id. We held that the chancellor did not err by using the liquidation value of the company as a floor for its value rather than attempting to value the farm as a going concern. Id. Paris did essentially the same thing in this case. Although he referred to the "fair value" of the assets, he primarily relied on appraisals that Nat provided to determine the values of the farm's physical assets. Nat does ...


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