Childers v. Childers

• Decision Date: 20 September 2016
• Docket Number: No. 112,497,112,497
• Citation: 2016 OK 95,382 P.3d 1020
• Parties: Tracy Way Childers, Petitioner/Appellee, v. Kelly Joe Childers, Respondent/Appellant.
• Court: Oklahoma Supreme Court

382 P.3d 1020

2016 OK 95

Tracy Way Childers, Petitioner/Appellee,

v.Kelly Joe Childers, Respondent/Appellant.

No. 112,497

Supreme Court of Oklahoma.

FILED SEPTEMBER 20, 2016

Paul E. Blevins and Emily B. McLean, Pryor, Oklahoma, for Appellee.

Christopher B. Lyons, Pryor, Oklahoma, for Appellant.

KAUGER, J.:

¶ 1 The three dispositive questions presented are whether: 1) the trial court's valuation of the parties' marital estate was against the clear weight of evidence; 2) the trial court's distribution of the parties' marital estate was just and reasonable; and 3) the trial court's order that each party pay its own attorney fees was an abuse of discretion. We hold that the trial court's valuation of the parties' marital estate was not against the clear weight of evidence, that its distribution of the parties' marital estate was just and reasonable, and that its order that each party pay its own attorney fees was not an abuse of discretion.

FACTS

¶ 2 The Petitioner/Appellee, Tracey Childers (wife) and the Respondent/Appellant, Kelly Childers (husband) were married in Tulsa, Oklahoma, on May 13, 1996. They have two daughters, born in 1998, and 2001, respectively. The wife received her medical degree in 1994, and then completed a residency in ear, nose, and throat. Throughout their marriage, the couple started a number of businesses, most of which were related to the wife's medical practice or provided other medical services.¹ The husband oversaw these businesses from their home. Beginning in 2001, the husband's management of the businesses was his sole source of employment.

¶ 3 The wife filed for divorce on December 16, 2011, in the District Court of Cherokee County, Oklahoma. At a temporary order hearing on January 10, 2012, the husband made an oral motion for the appointment of a receiver to oversee the parties' eleven different business entities, and the wife agreed to pay temporary spousal support to the husband in the amount of $7,000 a month. The receiver, Tim Watts (receiver), took over the management and handling of the couples' businesses. The receiver was a retired public accountant, and had known the parties for several years. He had prepared their personal taxes and had discussed the establishment of some of the businesses with the husband.

¶ 4 Prior to trial, the husband began working for Water is Life , a humanitarian organization that helps provide fresh water to impoverished communities. Beginning September 1, 2012, the husband would be gone roughly every other month to assist the organization. Much of his work was to take place in Africa. Because he received no compensation from Water is Life and had no other form of employment, the wife was his sole financial support. On August 21, 2012, the wife filed a motion to modify the temporary spousal support, requesting that it be reduced to $2,500.00 a month. She practiced full time as a physician, and asked that the spousal support be reduced so that she could hire the additional help needed to care for their children while the husband was out of the country. The husband admitted that he would be out of the country doing missionary work, but insisted that it would not have any impact on what the wife was already financially contributing.

¶ 5 A trial on the divorce merits was held on December 6–7, 2012. The receiver, husband, and wife provided the entirety of the testimony. The vast majority of testimony related to valuation of the businesses came from the receiver. As part of his receivership, he conducted an extensive investigation into all of the businesses. He determined the outstanding accounts payable and receivable, as well as the debt encumbered. He prepared profit and loss statements for the major entities, and determined their total assets, liabilities, and equity.

¶ 6 The profit and loss statements, as well as the assets and liabilities sheets, were created using the “accrual basis” method of accounting. Accrual basis is a method that registers debits and credits when they arise, rather than when the income is actually received or the expense is actually paid. The receiver also had the couple's real property and airplanes appraised.² Both parties called the receiver to testify, and the husband did not object to the evidence presented by the receiver as to the values of the businesses. During the husband's testimony, he presented no evidence, other than his own statements, as to what he believed the values of the businesses to be.

¶ 7 The trial court entered a Decree of Dissolution of Marriage on November 7, 2013. It awarded the wife assets with equity in the amount of $519,020³ and the husband assets with equity in the amount of $177,942.⁴ It also awarded the husband alimony in lieu of property in the amount of $150,000. The parties assumed the debt associated with the property awarded to them. The decree also ordered the parties to pay their own attorney fees.

¶ 8 The husband appealed on January 21, 2014, after his Motion to Reconsider was denied. He asserted four points of error. He argued that the trial court erred in determining the value of the businesses and property, in not awarding him any support alimony, and in denying his request for attorney fees. He also argued that its distribution of the marital estate was inequitable.

¶ 9 The Court of Civil Appeals affirmed in part, reversed in part, and remanded. It concluded that the trial court's valuation of the marital estate was against the clear weight of evidence and remanded for the trial court to receive evidence of the “fair market values” of the marital businesses. It affirmed the trial court's denial of support alimony to the husband, and ordered the trial court to rule on the husband's request for attorney fees on remand. We granted certiorari on January 19, 2016.

I.

THE TRIAL COURT'S VALUATION OF THE MARITAL ESTATE WAS NOT AGAINST THE CLEAR WEIGHT OF EVIDENCE.

¶ 10 The husband argues that the trial court erred because it used an “accrual basis” method of accounting to determine the value of the marital assets. This is the method used by the receiver. It resulted in the profit and loss statements, as well as the assets and liabilities sheets, which were used by the trial court to value the parties' businesses. According to the husband, this method does not reflect the businesses' fair market values.

¶ 11 The wife argues that the trial court did not err in relying on the receiver's testimony. It is her position that the receiver's background and experience lent credibility to his testimony and that the use of profit and loss statements is standard in the profession. She also notes that the husband has failed to identify any alternative accounting method.

¶ 12 A trial court's valuation of a marital estate will not be disturbed unless it is against the clear weight of evidence,⁵ and our cases demonstrate considerable deference to a trial court's valuation of marital assets in a divorce.

¶ 13 In Johnson v. Johnson, 1983 OK 117, ¶ 1, 674 P.2d 539, a wife appealed a divorce decree, alleging that the trial court erred in its valuation of corporate stock. The stock was awarded to the husband, and she contended that it was undervalued. According to the wife, the trial court erred by not using the “net asset,” “market,” or “investment earning” methods for stock valuation. This Court affirmed the trial court, holding that “[t]he trial judge could have selected any one of several methods of computing the value of the stock.”⁶ The value was based on a financial report presented at trial. Although the methods suggested by the wife may have resulted in a different valuation, the trial court's decision was not against the clear weight of evidence and consequently affirmed.

¶ 14 Similarly, in Carpenter v. Carpenter, 1983 OK 2, ¶ 32, 657 P.2d 646, a wife appealed a divorce decree, asserting that the trial court erred by using the “book value” of stock rather than the “earnings value.” Again, we affirmed the trial court. In Ford v. Ford, 1988 OK 103, ¶ 6, 766 P.2d 950, we affirmed a trial court's valuation of a law practice even though acknowledging that it was based to some extent on “speculation” that occurred during testimony at trial.

¶ 15 In the present case, the “accrual basis” method used by the receiver and accepted by the trial court was appropriate. In Oklahoma, “the net worth of marital property may be determined by subtracting the liabilities from the assets.”⁷ The receiver testified that his profession is based on profit and loss statements. In fact, the husband testified that he uses profit and loss statements as well. The following exchange took place when the husband was being questioned by his own counsel:

Q: So what kind of protocol or procedure do you go through in terms of being able to get a sense about an ongoing business as far as its value is concerned for purposes of either buying or selling?

A: What is coming in the door as far as cash. What is coming in and what is actually having to go out. A profit and loss is what I use extensively, in addition to other factors.

¶ 16 Additionally, the husband did not object to the evidence presented by the receiver. He had the opportunity to cross-examine the receiver when the receiver was called by the wife. The husband then called the receiver in his case in chief. There, the receiver was questioned by the husband and then redirected twice. If the husband had an alternative method to valuing the businesses, he could and should have presented it. He had a full and fair opportunity to present evidence as to the fair market value of the businesses. However, he did not provide any evidence, other than his own statements, as to their value.

¶ 17 In Honeywell v. Honeywell, 1959 OK 163, ¶ 1, 344 P.2d 589, a wife appealed a divorce decree, alleging that the trial court erred in determining the value of a farm and livestock that the husband had acquired prior to marriage. The only evidence of the value of the property in question was provided by the husband...