Robert Stephens, petitioner, Respondent, vs. Shelly Tanning, Appellant.
This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2002).
STATE OF MINNESOTA
IN COURT OF APPEALS
Robert Stephens, petitioner,
Filed September 21, 2004
Hennepin County District Court
File No. DC 270115
Michael Ormond, Ormond & Zewiske, 303 Butler North Building, 510 First Avenue North, Minneapolis, MN 55403 (for respondent)
John M. Mulligan, Heather A. Lang, Mulligan & Bjornnes PLLP, 401 Groveland Avenue, Minneapolis, MN 55403-3292 (for appellant)
Considered and decided by Hudson, Presiding Judge; Lansing, Judge; and Willis, Judge.
U N P U B L I S H E D O P I N I O N
Shelly Tanning appeals the district court's denial of her alternative motion for a new trial or amended findings, alleging a factually unjustified and legally erroneous division of marital assets in the dissolution of her marriage to Robert Stephens. Because we conclude that the district court did not err in relying on the undisputed facts of record in valuing the marital interest in a business that was subject to property division and did not misapply the burden of proof in its valuation of the marital estate, we affirm.F A C T S
Shelly Tanning and Robert Stephens were married in October 1998, separated permanently in September 2001, and dissolved their marriage on April 17, 2003. The dissolution judgment reserved the resolution of contested issues, including all financial issues incident to the marital dissolution. Following a contested hearing, the district court, in May 2003, amended the dissolution judgment to incorporate Tanning and Stephens's agreement on the disputed issues which they were able to resolve and to make a determination on the issues that they were unable to resolve.
Tanning and Stephens were unable to agree to the amount that Stephens's business had increased in value during the marriage. The district court found that Stephens's eighty-percent interest increased in value by $128,000 during the marriage and allocated half of the increase ($64,000) to Tanning and half ($64,000) to Stephens. It is this valuation that is at issue in this appeal.
Stephens founded the business, The Geek Squad, Inc., in 1994, featuring distinctive vehicles emblazoned with its logo to provide technical-assistance house calls for personal-computer users. Incident to the property division in the dissolution proceedings, Stephens and Tanning selected a neutral business evaluator to determine the value of Stephens's interest in the business at the time of the marriage and at the time of separation. Based on the revenue generated by The Geek Squad, the evaluator concluded that Stephens's interest had increased in value by $128,000, from $264,000 in 1998 to $392,000 in 2001.
In October 2002, before the contested hearing, Best Buy, Inc. purchased Stephens's interest in The Geek Squad for $2,400,000 and hired him as a vice president with a yearly salary of $175,000. Under the terms of the purchase agreement, Best Buy agreed to the presale spin-off of the business-to-business commercial operations of The Geek Squad, which were reincorporated as Network TaskForce, Inc.; Stephens then invested $252,000 of his sale proceeds in this new venture.
In its amended judgment, the district court determined that "The Geek Squad concept was established prior to the marriage and is not part of the marital estate." The court found "no evidence that the value of [T]he Geek Squad trademark or the value of [Stephens's] future services increased during the course of the short-term marriage," and it was these two aspects of The Geek Squad that accounted for the Best Buy purchase price. The court further concluded that Stephens would have been able to sell The Geek Squad for substantially more in 1997 or 1998 in the more favorable technology environment existing before Tanning and Stephens's October 1998 marriage.
Following entry of the amended judgment, Tanning moved for a new trial or for amended findings on two aspects of the business valuation: whether or not the trademark and other essential elements of The Geek Squad were marital property and whether they had increased in value during the marriage. The district court denied both motions, and Tanning appeals the district court's order denying her alternative motions.D E C I S I O N
An appellate court will not reverse a district court's valuation of a marital asset unless it is "clearly erroneous on the record as a whole." Hertz v. Hertz, 304 Minn. 144, 145, 229 N.W.2d 42, 44 (1975). A district court need not be exact in its valuation of assets; "it is only necessary that the value arrived at lies within a reasonable range of figures." Johnson v. Johnson, 277 N.W.2d 208, 211 (Minn. 1979) (citing Hertz, 304 Minn. at 145, 229 N.W.2d at 44). Because the district court has the opportunity to assess the credibility of a witness, appellate courts defer to that assessment. Sefkow v. Sefkow, 427 N.W.2d 203, 210 (Minn. 1988). Broad deference is appropriate in valuations that are necessarily approximations. Maurer v. Maurer, 623 N.W.2d 604, 606 (Minn. 2001).
In denying Tanning's alternative motions for a new trial or amended judgment, the district court summarized its earlier findings that "[t]here is no dispute that the trademarks and other essential elements of The Geek Squad were created years prior to the parties' relationship and subsequent marriage [or] that the purchase by Best Buy was for the purpose of obtaining the trademark and other essential elements of the company (as well as future services of [Stephens])." It went on to note that "[t]here is no evidence that the value of the trademark and other essential elements of the company grew during the short marriage of the parties." Therefore, it reasoned, only the $128,000 increase in the value of the business itself was divisible as marital property.
In arriving at this decision, the court heard testimony by the neutral evaluator that the business operations were only marginally profitable and that the Best Buy purchase price was determined by Stephens's contractual commitment of future services and The Geek Squad concept, logo, and trademark, the value of which had been established prior to the marriage. The evaluator further explained that the business's market value did not reflect the intangible and independent value of the trademark. See, e.g., Ed Peters Jewelry Co. v. C. & J. Jewelry Co., 51 F. Supp. 2d 81, 92 (D.R.I. 1999) (accepting evaluator's division of business valuation into four types of assets, including operating assets, tangible personal property, real estate, and intangible personal property such as trademarks). The factual findings that underlie the district court's determination rely on this testimony as well as Stephens's own testimony of the premarital value of the business, particularly the trademark and related elements. These facts are uncontradicted in the record.
"[T]he increase in the value of nonmarital property attributable to the efforts of one or both spouses during their marriage" is divisible marital property. Nardini v. Nardini, 414 N.W.2d 184, 192 (Minn. 1987). Applying this definition, the district court found that only the increase in the value of the business itself was marital property subject to division. Although the court's findings appear to have separated integral elements of value in a business, the court essentially stated that the value of the trademark, concept, and logo was static or that it decreased slightly during the marriage. Thus, the only empirically assessable factor that changed is the operating revenues generated by the business between October 1998 and September 2001.
Tanning does not dispute that Stephens founded The Geek Squad before the marriage or that the value of the trademark and related elements had an established value before the marriage. The court examined the value of the business in the context of both the neutral evaluator's empirically based opinion and Best Buy's purchase price for The Geek Squad. The district court's method of valuation is supported by quantifiable facts. In the absence of a contrary theory, the court, in its valuation, relied on the only available expert evidence, the testimony of the neutral evaluator. The only other evidence of value came from Stephens's testimony, which did not contradict the opinion of the neutral evaluator.
Finally, Tanning appeals the district court's conclusion that the evidence rebutted a presumption that Tanning made a substantial contribution to the acquisition of income and property during the marriage. Tanning cites Minn. Stat. § 518.58, subd. 1 (2002), for the proposition that this presumption cannot be rebutted, but instead is "conclusively presumed." We agree. But this misstatement did not prejudicially affect the marital-property division. The district court allocated one-half of the marital value of The Geek Squad to Tanning. The equal division of the increase in the value of the marital portion of The Geek Squad reflects Tanning's equal contribution. On these facts, the district court's valuation is reasonable and not clearly erroneous on the record as a whole.