Reese v. Reese, 75A03-9502-CV-47
| Decision Date | 15 October 1996 |
| Docket Number | No. 75A03-9502-CV-47,75A03-9502-CV-47 |
| Citation | 671 N.E.2d 187 |
| Parties | Theodore J. REESE, Appellant-Respondent, v. Bonnie M. REESE, Appellee-Petitioner. |
| Court | Indiana Appellate Court |
Theodore J. Reese ("Theodore") appeals the trial court's judgment dissolving his marriage to Bonnie M. Reese ("Bonnie"). He presents four issues for our review which we consolidate and restate as follows:
I. Whether the trial court abused its discretion in utilizing an early valuation date for a business whose value declined during the pendency of the dissolution proceedings.
II. Whether the trial court erred by including proceeds from the noncompetition agreement in the marital estate.
III. Whether the trial court erred in ordering Theodore to pay a substantial portion of Bonnie's attorney fees.
We affirm in part, reverse in part, and remand. 1
Bonnie and Theodore were married in 1964 and had two children, an emancipated son and a daughter attending college. In 1975, Theodore founded a corporation, Cadence Environmental Energy, Inc. ("Cadence"), which engaged in hazardous waste disposal. Stock in the corporation was owned entirely by Theodore and Bonnie, each owning 90% and 10% respectively.
Cadence processes hazardous waste derived fuels. Specifically, Cadence takes hazardous waste and processes it into fuel burned by cement companies. These cement companies are Cadence's primary customers. Until the late 1980's, Cadence only had the ability to process liquid hazardous wastes. Thereafter, Cadence developed, patented, and implemented new technology which involved solid hazardous wastes. This innovation caused tremendous sales and growth, increasing Cadence's net income to over $3.7 million in 1991.
Cadence comprises the bulk of the marital estate and its valuation was a contested issue at trial. Bonnie and Theodore both presented expert testimony regarding the value of Cadence. Using a June 30, 1992 valuation date, Theodore's accounting firm, Peat Marwick, valued Cadence at $7.8 million. Using the same valuation date, but a different accounting approach, Bonnie's accounting firm, Ernst and Young, valued the business at $14 million.
Following this valuation, and as a result of certain federal environmental regulations, 2 Cadence's business declined. Prior to trial, Peat Marwick, prepared a new valuation of the business using a valuation date of June 30, 1993, which valued Cadence at $6 million. The trial court rejected the valuations offered by Theodore's experts and adopted the value as of June 30, 1992. It assigned Cadence a value of $14 million.
In addition to Cadence, Theodore, along with Norman Foster ("Foster") founded another company in the early 1980's, Petro-Chem Processing, Inc. ("Petro-Chem"). Petro-Chem, located in Detroit, Michigan, processed hazardous wastes for Cadence. After Bonnie filed her petition for dissolution, Theodore sold Foster his stock in Petro-Chem. 3 As a result, Theodore received $7,850,000 for his stock and $3.6 million for a covenant not to compete. The proceeds for both the stock and the covenant not to compete were included in the marital estate and subjected to equal distribution.
Following an eleven day dissolution hearing, the bulk of which consisted of evidence regarding Cadence, the trial court entered findings of fact and conclusions of law. The court found, inter alia, that the net worth of the marital estate was $27,085,010. The valuation included Cadence and the proceeds from the Petro-Chem sale less taxes. The proceeds received for the covenant not to compete were included in the marital estate. The trial court awarded Theodore $16,769,451 and Bonnie $10,315,559, plus a cash payment of $3,336,946, which resulted in each party receiving $13,542,505. 4 In addition, the trial court deferred judgment on the issue of Bonnie's request for attorney fees and litigation expenses.
Theodore filed a motion to correct error wherein he petitioned the court: (1) to redetermine the value of Cadence using a June 30, 1993 valuation date, assign Cadence a value of $6 million, and then divide the marital estate equally; or alternatively, (2) open the judgment pursuant to Ind. Trial Rule 52(B), take additional testimony on the value of Cadence or grant a new trial pursuant to Ind. Trial Rule 59(J) in order for the court to consider Cadence's recent financial performance, assign a value, and divide the marital estate equally; or alternatively, (3) order Cadence sold and divided equally in the marital estate pursuant to IND.CODE § 31-1-11.5-11(b)(3) (1993). 5 The trial court denied Theodore's motion.
After the record had been filed commencing this appeal, this court suspended its jurisdiction to allow the trial court to decide the issue of attorney fees. The trial court granted in part and denied in part Bonnie's request for attorney fees and expenses. The court ordered Theodore to pay $339,761.21 of Bonnie's fees and expenses, and Bonnie to pay the balance of $106,424.96. This court then resumed jurisdiction and the appeal continued.
First, Theodore alleges that the trial court abused its discretion when it failed to use the June 30, 1993 valuation date for the purpose of determining Cadence's value as a part of the marital estate. Theodore notes that, pursuant to IND.CODE § 31-1-11.5-11(c) (1993), the trial court "shall presume that an equal division of the marital property between the parties is just and reasonable." The trial court's over-valuation of Cadence, he argues, results in an unequal division of the marital estate.
We note at the outset that both Bonnie and Theodore requested the trial court to enter findings of fact and conclusions of law. When a party has requested specific findings of fact and conclusions thereon pursuant to Ind. Trial Rule 52(A), the reviewing court cannot affirm the judgment on any legal basis; rather, this Court must determine whether the trial court's findings are sufficient to support the judgment. Vanderburgh County Bd. of Comm'rs v. Rittenhouse, 575 N.E.2d 663, 665 (Ind.Ct.App.1991), trans. denied. In reviewing the judgment, we must first determine whether the evidence supports the findings and second, whether the findings support the judgment. Id. The judgment will be reversed only when clearly erroneous, i.e., when the judgment is unsupported by the findings of fact and conclusions entered on the findings. DeHaan v. DeHaan, 572 N.E.2d 1315, 1320 (Ind.Ct.App.1991), trans. denied. Findings of fact are clearly erroneous when the record lacks any evidence or reasonable inferences from the evidence to support them. Id. To determine whether the findings or judgment are clearly erroneous, we consider only the evidence favorable to the judgment and all reasonable inferences flowing therefrom, and we will not reweigh the evidence or assess witness credibility. Id.
In a dissolution action, the trial court has broad discretion in determining the value of property, and its valuation will only be disturbed for an abuse of discretion. Quillen v. Quillen, 671 N.E.2d 98, 102 (Ind.1996). If there is sufficient evidence to support the trial court's decision, no abuse of discretion occurred. Id.
The trial court also has discretion in choosing the date on which to value the property. Id. at 102-103. It can choose any date between the date of the filing of the petition for dissolution and the date of the hearing. Id. at 103. Although the date selected for the valuation has the effect of allocating the risk of a change in value between the parties, this allocation of risk is entrusted to the discretion of the trial court. Id. The choice of an early valuation date for an asset which decreases in value is not necessarily an abuse of discretion. Id. We will reverse the trial court's decision as to a valuation date only if it is clearly against the logic and effect of the facts and circumstances before the trial court. Id. at 102.
Here, the June 30, 1992 valuations performed by both parties relied upon a business forecast prepared by Cadence executives. This business forecast took into account the new environmental regulations and their expected impact upon Cadence's business. Theodore presented evidence of the new regulations at trial and also presented evidence that the impact of the new regulations was greater than anticipated, causing Cadence's value to drop drastically by June 30, 1993. In setting the valuation date for Cadence, the trial court acknowledged the new regulations and their impact on the value of Cadence. However, it determined that Theodore should bear the risk of the change in value because he had complete control of the company both before and after the petition for dissolution was filed. He alone had the power to decide whether to retain the company or sell it before the value dropped too low. 6 Theodore's control of Cadence is amply supported by the record evidence.
The trial court determined in its discretion that the risk of a decline in Cadence's value should be borne by Theodore, because he controlled the company; thus, it chose an early valuation date. Because there is evidence in the record to support Theodore's control of the company, we cannot say that the trial court's choice of an early valuation date is clearly against the logic and effect of the circumstances before it. Quillen, supra, at 102. Accordingly, we conclude that the trial court's choice of an early valuation date was not an abuse of discretion. 7
Theodore next contends that the trial court's determination that the proceeds he received from the covenant not to compete were marital property...
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