Gill v. GillAnnotate this Case
In this divorce proceeding, the Supreme Court affirmed the decision of the court of appeals concluding that the certain contingent earn-out payments set forth in a purchase agreement selling a company in which Husband had an ownership interest were marital property.
While married to Wife, Husband purchased an ownership interest in a company. During dissolution proceedings but before the dissolution, Husband and the other owners of the company sold the company and their ownership interests in the company. The purchase agreement gave the company and its owners the right to receive and up-front payment and two potential future earn-out payments. The district court concluded that the earn-out payments were nonmarital property under Minn. Stat. 518.003, subd. 3b because they were property acquired by a spouse after the district court’s valuation date for marital property. The court of appeals reversed. The Supreme Court affirmed after noting that the consideration for the sale of the company occurred before the dissolution and included an amount paid at the time of the sale and a contractual right to receive future payments. The Court held that because the parties’ interest in the company was marital property acquired before the valuation date, the consideration for the sale was also marital property.