JEAN ALISA ELDER v. THOMAS DAMIEN ELDER, JR.
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RENDERED:
OCTOBER 7, 2005; 2:00 P.M.
NOT TO BE PUBLISHED
Commonwealth Of Kentucky
Court of Appeals
NO. 2004-CA-001833-MR
JEAN ALISA ELDER
APPELLANT
APPEAL FROM UNION FAMILY COURT
HONORABLE WILLIAM E. MITCHELL, JUDGE
ACTION NO. 00-CI-00089
v.
THOMAS DAMIEN ELDER, JR.
APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE:
DYCHE AND SCHRODER, JUDGES; ROSENBLUM, SENIOR JUDGE. 1
ROSENBLUM, SENIOR JUDGE:
This appeal arises out of an
interlocutory decree of dissolution of marriage between Jean
Alisa Elder (Jean) and Thomas Damien Elder, Jr. (Tommy), entered
July 14, 2003.
Jean brings this appeal from a judgment 2 of the
Union Family Court, entered September 1, 2004, dividing marital
1
Senior Judge Paul W. Rosenblum sitting as Special Judge by assignment of the
Chief Justice pursuant to Section 110(5)(b) of the Kentucky Constitution and
Kentucky Revised Statutes 21.580.
2
The appeal is taken from a "corrected judgment." The original judgment was
entered May 21, 2004. Thomas and Jean filed separate motions to alter,
amend, or vacate, which were overruled by order entered August 4, 2004.
Thomas filed a motion to reconsider and Jean filed a motion to alter, amend,
or vacate, both of which were overruled by order entered September 1, 2004.
A corrected judgment, which is the basis for this appeal, was entered
September 1, 2004.
and non-marital property; assigning marital and non-marital
debt; and awarding maintenance.
We affirm.
The parties were married on August 8, 1980.
At the
time of the marriage, Tommy was almost twenty-three and Jean was
nineteen.
A daughter was born in 1987 and a son in 1990.
Tommy, a self-employed farmer, is a member of a family farming
operation.
Tommy is the owner of a one-third interest in Elder
Brothers, LLC, (Elder Brothers), a partnership that owns farms
in Livingston, Crittenden, and Webster Counties; and a shop and
grain bin complex in Union County.
He is also the owner of a
one-fourth interest in Damien Elder & Sons, (DE&S), a
partnership that owns farm equipment and vehicles.
Just short of twenty years of marriage, the parties
separated on March 15, 2000, and Jean filed a petition for
dissolution of marriage on April 6, 2000.
Three years later, an
interlocutory decree of dissolution was entered on July 14,
2003, reserving for future rulings all issues relative to the
division of property, assumption of debt, establishment of child
support and the request for an award of maintenance. 3
On July
18, 2003, an agreed order was entered granting sole custody of
the minor children to Jean and which set forth specific
visitation periods for Thomas.
Following hearings in August and
3
Jean's appeal of the interlocutory decree was dismissed by this Court by
opinion and order rendered January 28, 2005. Elder v. Elder, 2003-CA-001904MR.
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September, 2003, the circuit court entered its judgment on May
21, 2004, which culminated in the corrected judgment entered
September 1, 2004.
This appeal followed.
Before us, Jean argues that the family court erred
with regard to 1) the value of "goodwill" and Tommy's income; 2)
the value assigned to assets and debts; and 3) twenty other
specific rulings.
We review questions of fact under the clearly
erroneous standard of Kentucky Rules of Civil Procedure (CR)
52.01, and applications of law de novo.
See generally Combs v.
Combs, 622 S.W.2d 679 (Ky.App. 1981); Perrine v. Christine, 833
S.W.2d 825 (Ky. 1992); Bob Hook Chevrolet Isuzu, Inc. v.
Transportation Cabinet, 983 S.W.2d 488, 490 (Ky. 1998).
As we
conclude that the findings of the family court are supported by
substantial evidence and are not an abuse of discretion, and
that the family court correctly applied the law, we affirm.
Jean first argues that the family court's finding that
there was no "goodwill" was erroneous.
As to this issue, the
family court stated:
[Jean] argues that [Tommy] failed to
show any value for the partnership and the
LLC. She cites Clark v. Clark, Ky.App., 782
S.W.2d 56 (1990), in support of her
argument. In that case, the Court states
"Goodwill of a business or professional
organization is a factor to be considered in
arriving at the value of the practice for
purposes of dividing marital assets, and a
Court's adoption of a capitalization of
excess earnings method for evaluating the
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goodwill of a medical professional
corporation, based in part on the amount
. . . is correct . . ." She also refers to
Rupley v. Rupley, Ky.App., 776 S.W.2d 849
(1989), where the Court stated "in a divorce
action, the Court's evaluation of the
husband's corporation at the net asset value
as shown on the corporate books is error
where . . . the book value is further
deceptive in reflecting no value for
goodwill . . ." In support of her argument,
[Jean] presented the testimony of Robert
Wayne Stratton. Mr. Stratton was asked to
value a one-fourth interest in Damien Elder
& Sons partnership and a one-third interest
in Elder Brothers, LLC. Mr. Stratton
testified that he was provided tax returns
of both the partnership and the LLC and a
compact disc of all transactions during the
period of time that supported the tax
returns. Mr. Stratton valued both business
entities based upon what he refers to as the
capitalization method. Based upon his
analysis, Mr. Stratton values the interest
of [Tommy] in Damien Elder & Sons
partnership at $196,800.00 and [Tommy's]
interest in Elder Brothers, LLC at
$47,500.00. On cross-examination, Mr.
Stratton states that he values the operating
entity and not the value of any of the
assets. He stated that he did not take into
consideration the mortgage indebtedness
against the real estate except only to the
extent there were interest deductions that
may have shown up on the tax return but not
to the extent that there were mortgages
outside of there. He stated that he does
not know the entities' ability to repay the
loans that are mortgage indebtednesses
against the property and does not know
anything about the value of the land owned
by the LLC. He testified that he does not
know what the partnership owns or the age of
the equipment and has not had any experience
with anyone buying a minority interest in a
row crop farm partnership located in western
Kentucky. In response to the testimony of
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Mr. Stratton, [Tommy] presented the
testimony of Ben Campbell. Ben Campbell is
a local Certified Public Accountant and
testified that he has a substantial number
of farm clients in the immediate area and is
very familiar with Damien Elder & Sons
partnership and Elder Brothers, LLC as he
has completed their taxes for ten plus
years. He testified that Mr. Stratton was
attempting to put a going concern/goodwill
valuation to an operation that does not have
any goodwill and would not be properly
valued by this method. Mr. Campbell noted,
that in this particular operation, the
partnership does not own any real estate,
instead it rents and the contracts are nonassignable, and since they are nonassignable you could not use the going
concern approach because an outsider could
not buy the operation and have the contracts
go with the business.
[Tommy] also presented evidence from
his real estate appraiser, Tom Duncan, to
the effect that due to the fact that [Tommy]
owned a minority interest, i.e., one-third
interest, in the real estate that the value
of [Tommy's] interest should be discounted
by 15%. It is his position that the sale of
a minority interest in this real estate
would not bring its full value and therefore
should be reduced.
The Court rejects both of these
testimonies as a basis for determining the
value of the assets and adopts the value of
the assets, set forth above, and the
outstanding liabilities as the true value of
[Tommy's] interest in both the partnership
and the LLC.
* * *
It is Ordered, Adjudged and Decreed as
follows:
* * *
19. [Tommy] shall be awarded all real
estate titled in the name of Elder Brothers,
LLC at a value of $472,833.33. He shall
also assume the obligations owed to Integra
Bank, Fifth Third Bank and Commodity Credit
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Corporation associated with this real estate
at a value of $641,532.30.
20. [Tommy] shall be awarded all farm
equipment and vehicles, except otherwise
specifically allotted, at a value of
$120,015.65. He shall assume the
indebtedness owed the Deere & Company in the
amount of $20,805.88.
Jean also argues that the court erred in the valuation
of Tommy's income, underestimating his monthly income by
$17,912.33.
With regard to this issue, the court found as
follows:
[Tommy] has a monthly cash draw of
$1,600.00. His 2002 income tax return shows
a total taxable income of $10,808.00. This
income is based upon accelerated
depreciation on the Schedule F return.
[Tommy] recomputed his Schedule F return
claiming only straight-line depreciation and
increased the income on Schedule F from
$4,511.00 to $19,360.00. [Tommy's] income
for 2002, when adjusted for straight-line
depreciation, is $25,657.00. The
partnership furnishes health insurance for
[Tommy] and the parties' two minor children
at a cost of $457.48 per month. The cost of
the insurance of $457.48 when added to the
monthly average income of $2,138.08 creates
a total average income of $2,595.56 per
month. [Jean] argues that a number of other
expenses are paid for [Tommy] by the
partnership and should be added to his
income. KRS 403.212(2)(b) would include any
benefits furnished him by the partnership in
his income. [Jean], however, failed to
prove the value of any of these additional
benefits except for the value of the
insurance, which is furnished [Tommy] and
the parties' children. [Tommy] did not
introduce evidence as to the cost of the
insurance for the children alone.
* * *
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It is Ordered, Adjudged and Decreed as
follows:
* * *
25. The Court has found that [Tommy's]
interest in the growing crops and government
payments when the 2002 crop received in 2003
is $246,142.52. In addition, there in an
interest in a growing wheat crop which was
found to be $1,873.40 for a total interest
in crops and government payments of
$248,015.92. This has found to be marital
property. The Court is to make an equitable
division of this marital asset.
[Tommy] has been paying and continues
to pay child support based upon a gross
monthly income of $1,766.67. The income
from the crops is the source of the funds
available to [Tommy] to pay this child
support. The Court is deducting $21,200.04
(yearly income based upon $1,766.67 per
month) from the value of the crops of
$248,015.92 leaving a net value of
$226,815.88. [Jean] did not provide any
labor in the production of the crops nor did
she assume any financial risk associated
with the crop. The Court finds that an
allocation of 40% of this figure is an
equitable distribution of these assets or
the sum of $90,726.35.
* * *
29. [Jean's] income has been determined to
be $1,257.00 per month. To this sum the
amount of $200.00 for maintenance is to be
added for a monthly gross income of
$1,457.00. [Tommy's] income has been
determined to be $2,596.00. The sum of
$200.00 being paid by him to [Jean] for
maintenance is deducted from this sum for an
adjusted monthly of $2396.00. Based upon
these adjusted monthly income amounts,
[Tommy] shall pay child support to [Jean] in
the amount of $514.00 per month.
As indicated above, we review Jean's arguments as to
the court's factual findings under the clearly erroneous
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standard.
Findings of fact of the circuit court shall not be
set aside unless clearly erroneous, and due regard shall be
given to the opportunity of the court to judge the credibility
of the witnesses.
CR 52.01.
Findings of fact are not clearly
erroneous if supported by substantial evidence, the test of
which is, whether when taken alone, or in the light of all the
evidence, the findings have sufficient probative value to induce
conviction in the minds of reasonable men.
Kentucky State
Racing Commission v. Fuller, 481 S.W.2d 298, 308 (Ky. 1972).
With regard to Jean's contentions that the family
court’s findings are erroneous, we are, however, bound to assume
that the family court’s factual findings are supported by
substantial evidence because the record on appeal does not
contain the testimony or evidence which formed the basis for the
court's alleged erroneous findings.
Briefs for both parties
cite us to hearing tapes from August 21, 2003, and August 22,
2003, but we do not find them in the appellate record.
A review
of the record indicates that the tapes were not in the record on
appeal.
CR 98; 75.01.
When the complete record is not before
the appellate court, we are bound to assume that the omitted
record supports the decision of the trial court.
Commonwealth
v. Thompson, 697 S.W.2d 143, 145 (Ky. 1985); Burberry v.
Bridges, 427 S.W.2d 583, 585 (Ky. 1968).
As noted by the court
in Burberry, supra, "[i]t is also reasonable to place upon
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appellant the duty to designate and file a record sufficient to
enable the court to pass on the alleged errors."
We must
conclude, therefore, that the findings of the family court are
supported by substantial evidence contained in the record and
are clearly not erroneous, and that the family court correctly
applied the law.
Jean also alleges 1) twenty specific errors by the
family court which amount to allegations of differences between
the findings of the court and the actual testimony or evidence;
and 2) numerous errors in the valuation of assets and debt.
Again, because the record on appeal does not contain the
testimony or evidence, we must assume that the omitted record
supports the findings of the family court.
We therefore
conclude that the court's findings are not erroneous and that
the family court correctly applied the law.
Burberry, supra.
For the foregoing reasons, the judgment of the Union
Family Court is affirmed.
ALL CONCUR.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
Amealia R. Zachary
Dixon, Kentucky
Sidney H. Hulette
Morganfield, Kentucky
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