Nelson v. Nelson

• Decision Date: 29 June 2001
• Docket Number: No. 5D99-826.,5D99-826.
• Citation: 795 So.2d 977
• Parties: Jesse J. NELSON, Appellant/Cross-Appellee, v. Betty J. NELSON, Appellee/Cross-Appellant.
• Court: Florida District Court of Appeals

795 So.2d 977

Jesse J. NELSON, Appellant/Cross-Appellee, v. Betty J. NELSON, Appellee/Cross-Appellant.

No. 5D99-826.

District Court of Appeal of Florida, Fifth District.

June 29, 2001.

As Corrected on Grant of Rehearing October 1, 2001.

Michael R. Riemenschneider of O'Brien, Riemenschneider & Kancilia, P.A., Melbourne, for Appellant/Cross-Appellee.

Scott Krasny of Krasny and Dettmer, Melbourne, for Appellee/Cross-Appellant.

SHARP, W., J.

The former husband Jesse Nelson (Jesse) appeals from a final judgment of dissolution rendered February 8, 1999, and the former wife Betty Nelson (Betty) cross appeals. Jesse raises several points on appeal, which we summarize: (1) the trial court's valuations of certain marital assets are not supported by substantial competent evidence, and it resulted in an inequitable distribution of assets to him, (2) the trial court abused its discretion in requiring him to pay Betty monthly sums in excess of his ability to pay, and (3) the trial court abused its discretion in requiring him to maintain life insurance to secure his alimony obligations to Betty. We agree Jesse is entitled to some relief as discussed below.

Betty argues on her cross appeal that the trial court erred in not granting her a perfected security interest in the stock of Nelson Engineering and that she should have been awarded all of her attorney's fees, based on the disparity of the parties' incomes. We affirm the trial court on the cross appeal.

The Nelsons had a long-term marriage; thirty-eight and one-half years. They were blessed with five children, all adults at the time of the dissolution. Jesse graduated from high school, but Betty did not complete high school. He was 65 years old at the time of the dissolution and Betty was 61. Betty had suffered various health problems, but at the time of the dissolution was doing well. Jesse was in good health with no plans for retirement.

The parties married when both were very young and had few assets. The considerable wealth and assets they accumulated over the time of their marriage were properly classified by the trial court as marital. During the latter part of their marriage, they enjoyed a high standard of living, which encompassed a summer home in Tennessee, vacations overseas, yachts, and new cars. The source for the parties' good fortune and income was and is Nelson Engineering Company, which the parties jointly owned.

The parties separated in March of 1995 and Betty filed a petition for dissolution in November of 1996. The trial court selected December 31, 1996 as the date upon which to value Nelson Engineering, as well as the parties' certificates of deposit. It also selected March 14, 1996 as the date chosen to value other corporations and assets owned by one or both of the parties. The court explained this was because they were controlled and managed by Jesse, and the court had in evidence a financial statement dated March 14, 1996, sworn to as accurate by Jesse. No other proof of value was presented at trial, of values for those assets close to the date of the parties' separation. It chose to accept the values shown on the financial statement. The parties were able to stipulate and agree to the valuation of the real estate properties owned by them.

The court distributed the parties' assets as follows:

Jesse: Betty Nelson Engineering 1,520,000 All certificates of deposit 215,000 Government Bonds 58,000 Retirement Plan 123,000 A.G. Edwards Account 113,000 IRA w/A.G. Edwards 14,000 Ginnie Mae bonds 125,000 Funds removed from 6,000 Blue Water 330,000 Grandkids account Excel Tel Services 300,000 Bass Boat 2,500 Pexin Farms 211,000 1989 Jaguar 11,300 Retirement Plan 244,000 Personal Property— 20,000 IRA w/A.G. Edwards 14,000 Melbourne Property Funds Grandkids account 10,000 Timeshare 6,000 Pontoon boat 2,500 ¼ acre, Bay County, FL 7,425 31 foot Scarab boat 17,000 Lots 455, 456 InletBch. Heights 20,000 1985 Jaguar 8,500 Lot 106, Riviera Beach 4,350 1992 Corvette 24,000 Marital Residence—2781 181,000 Property; 253 Terrance Ave., 67,500 Pineapple Ave., Melbourne Melbourne ($80,000 less (300,000 less mortg. 118,000) mortg. 12,500) Part of Lots 3 & 4, Block F, 189,000 Funds received— 113,000 Almar Subdivision New England Life (250,000 less mortg. 61,000) Insurance policies 42 acres, sections 34, 35, 21,500 Levy County, FL TOTAL: $3,157,500 Sections 34, 35 3,000 Levy County, FL (22,000 less mortg. 19,000) Lots 12 & 14, Buttons Subdiv. 100 Seminole County, FL Tract 8, Chas. Hedrick Property Sevier County, TN 14,700 Residence; Sevier County, TN 103,600 Lot & Furnishings, as above 10,000 10.5 acres, Sevier County, TN 35,000 Harrisburg Bridge property Sevier County, TN 12,000 Tracts 1 & 2, Jones Cove Rd Property; Sevier County, TN 102,400 ½ interest in Tracts 4-9 Cocke County, TN 34,500 TOTAL: $1,135,37

However, these totals do not reflect the court's additional awards to Betty to equalize the distribution of marital assets. It required Jesse to pay Betty $11,500.00 in cash on January 1, 1999, and to execute a promissory note in the principal amount of $1,000,000.00 with interest at 7.75%. Based on the court's valuations of the marital assets, Jesse received $2,158,500.00 and Betty received $2,144,375.00.

I. VALUATION OF MARITAL ASSETS.

A. Nelson Engineering Company.

At the time of the parties' dissolution, the parties' most valuable asset and the primary source of their income was Nelson Engineering Company. Each owned 50% of the stock in the company. Jesse began the company in 1981. Betty was at first reluctant to have him leave his salaried job. However, she also worked for the company doing clerical and administrative jobs, until she retired in 1993. After she retired, the company continued to pay her a salary of $110,000.00 through 1998. Three of the parties' sons and a daughter also worked for the company. Jesse was the company's CEO, through the time of the parties' dissolution. He worked long hours and traveled extensively to solicit business and maintain client contacts.

The company provides engineering and design services for telecommunications systems and installs and constructs systems for voice and data transmission networks. It employs a large number of employees and managers. Its maximum work force was 140 in 1993-94, and at the time of the dissolution it employed 70, exclusive of family members. The biweekly payroll for the company was $75,000.00. Gross receipts for the company in 1993 were $3,081,124.00; in 1994 they were $3,297,500.00; in 1995 they were $3,218,383.00, and in 1996 they were $3,699.996.00.

The trial judge valued the company at $1,520,000.00, using the excess earnings method testified to by the two expert witnesses at trial as the most appropriate method to value this company.¹ But he increased the value beyond that established by the witnesses, because of various personal expenses the company had been paying for the parties, which were not taken into account by the witnesses in their calculations. The issue for this appellate court is whether or not there was sufficient competent evidence to support the trial court's finding on valuation.²

Jesse's primary argument on appeal is that both expert witnesses' testimonies should have been rejected by the trial court because the excess income approach to valuation of the company included a significant component for "goodwill" or "going concern value"³ and neither expert established that this intangible existed separate and apart from Jesse's reputation and continuing work and contribution. He urges that pursuant to Thompson v. Thompson, 576 So.2d 267 (Fla.1991) and Young v. Young, 600 So.2d 1140 (Fla. 5th DCA 1992) that the existence of an intangible known as "goodwill" or "going concern value" must first be established as an entity which stands alone absent Jesse' continuing presence. Only after that is accomplished can it be included as a marital asset in the context of a dissolution case.

The difficulty for Jesse in taking this position on appeal is that in this case his trial counsel failed to raise this issue at trial, or on motion for rehearing. In fact, Jesse's own expert witness, Flavin, included in his valuation a sum for goodwill or "going concern value" close to the amount calculated by Betty's expert witness, Arnold. It appears this issue has been waived. See Williams v. Williams, 683 So.2d 1119 (Fla. 3d DCA 1996)

.

B. Valuations of Business Assets Distributed to Former Husband; Blue Water, Excel Tel Services, Pexin Farms.

The trial court opted to use March 14, 1996, to value the parties' assets, which was after the parties had separated but before the petition for dissolution was filed. Blue Water⁴ and Excel Tel Services⁵ were valued on the Financial Statement at $330,000 and $300,000, respectively, as of March 14, 1996. The reason the trial court gave for selecting that date was two-fold. First, neither party presented substantial competent evidence as to values close to that period of time, other than a financial statement executed by Jesse on that date. Neither party offered a better solution to the date of valuation of marital assets. In view of these facts, we cannot say the trial court abused its discretion in doing so.⁶

In addition, the trial court was faced with a situation where, between 1996 and 1997, the values of these businesses had greatly diminished and no one accounted for where the capital assets and/or cash had gone. The trial judge explained

I kind of get the feeling that a lot of money that exists in certain corporations in March of 1996 found a way into different entities in October of 1997 and it appears that numbers were a couple of hundred thousand less in 1997 where the business went bad or moneys were hidden or whatever, there's a lesser amount. I guess my feeling is, and I will give you (the parties) a chance to argue in closings or follow up, is maybe what will be easiest for the Court to figure out the

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