Wife’s Expert Witness Valuation of Subways Accepted
Tennessee case summary on dissipation and business valuation in divorce.
Staci L. Robinson v. Eric S. Robinson
The husband and wife in this Hawkins County, Tennessee, case were married in 1990 and had two children. At the time of their divorce, the husband, who had a master’s degree, was 51, and the wife, who had been trained to be a medical assistant, was 48. The husband was initially employed by the U.S. Department of Veteran’s Affairs, with a salary of $52,000 per year, and the wife worked for a hospital insurance department earning $15-20,000 per year. For the past twenty years, both worked in the Subway restaurants owned by the wife.
They had opened their first franchise in 1999. They sold that for a profit and acquired a new one in Kingsport. They later acquired two more, in Kingsport and Bristol.
The wife was listed as the owner of all three franchises. The husband claimed that this was because the franchise fee would double with two owners. The wife, on the other hand, testified that this was done to keep the properties safe from the husband’s other child support obligations.
The wife filed for divorce in 2019, after which the husband made several withdrawals, before the wife removed him from the accounts. The wife claimed that the husband had committed dissipation in the amount of $90,000. The husband, on the other hand, claimed that the money was used to pay bills and legal fees, as well as “minimal living expenses.”
The husband claimed that he had been an active participant in running the Subways, but the wife testified that his involvement was practically non-existent. Testimony of employees tended to back up the wife’s version.
The wife retained business valuation expert Travis McMurray of Trinity Valuation Consulting Group, PLC. Based on income, he valued the three franchises at $343,100.
The husband, on the other hand, saw things differently, and valued the three franchises at $1.25 million. He did not retain an expert, but instead stated that his valuation was based on discussions with Subway’s corporate office.
After a trial which included additional issues, the trial court concluded that the husband had committed dissipation in the amount of $65,000. It awarded the husband half this amount, but offset it by amounts of temporary spousal maintenance owed by the wife. It also relied upon the wife’s expert when it came to valuing the business. The husband then appealed to the Tennessee Court of Appeals. After addressing issues surrounding the purchase of the franchises, it turned to their valuation. The husband argued that the expert’s testimony was speculative.
The trial court reviewed the witness’s qualifications and concluded that he was competent to testify. The trial court ultimately valued the franchises at more than the witness testified, but considerably less than the husband’s value, $450,000.
The appeals court noted that both parties are required to provide competent evidence as to value, and the court makes the decision if the values are conflicting. In this case, the court did exactly that, and the Court of Appeals saw no reason to reverse the lower court’s determination.
The appeals court then turned to the question of dissipation. The appeals court noted that the lower court had not made detailed findings of fact before holding that there had been dissipation. In this case, there was evidence that the husband had taken trips to Florida, and had purchased a smoothie shop.
The husband did have some success in his arguments. After reviewing the various expenditures by the husband, the Court of Appeals concluded that he had committed dissipation, but in the amount of $39,000 rather than $65,000. Therefore, it modified the lower court’s ruling.
After addressing other aspects of the lower court’s ruling, the Court of Appeals affirmed the lower court’s decision in part, modified it in part, and remanded the case.
No. E2020–01535-COA-R3-CV (Tenn. Ct. App. June 29, 2022).
See original opinion for exact language. Legal citations omitted.
To learn more, see Property Division in Tennessee Divorce and view our video Is Tennessee a 50 50 divorce state?
To learn more, see Business Valuation in Tennessee Divorce.
