Bair v. Bair
214 So. 3d 750
| Fla. Dist. Ct. App. | 2017Background
- Daniel (Husband) and Laura Bair (Wife) divorced after ~14 years; dispute centered on valuation and division of Husband's nonmarital business, Quality Boats, and on alimony/child support.
- Husband owns 47.5% of Quality Boats; brother 47.5%; sister 5%. Husband worked full-time and contributed marital labor that increased company value during marriage.
- Parties agreed on custody, home disposition, and furnishings; trial focused on business valuation, marital appreciation, certain liabilities, and support.
- Trial court adopted Wife's expert valuation (about $1M higher than Husband's expert) but excluded Quality Boats' real property from company valuation and treated retained earnings as distributable cash.
- Trial court treated Husband's K-1 pass-through income as his available income for support despite limited actual distributions; Husband appealed.
Issues
| Issue | Husband's Argument | Wife's Argument | Held |
|---|---|---|---|
| Exclusion of Quality Boats' real property from company valuation | Trial court erred; real property is part of company value and must be included | Exclusion justified because property appreciation was passive market-driven | Reversed: excluding company real property was legal error; remand to include all assets/liabilities in valuation |
| Treatment of retained earnings (double-counting) | Court improperly included retained earnings in valuation then ordered their distribution (double-dip) | Court could value company including retained earnings and also order distribution | Reversed: retained earnings are corporate bookkeeping, not automatic cash available; court erred and must revalue without double-counting |
| Inclusion of marital assets dissipated during litigation | Court wrongly charged Husband with assets/liabilities spent to cover living expenses and fees without finding intentional dissipation | Wife relied on court's distribution decision | Reversed: where court found no intentional dissipation, assets used for marital expenses during litigation should not be resurrected for distribution |
| Use of undistributed S-corp pass-through income (K-1) for alimony/child support (Zold) | K-1 pass-through amounts retained for corporate purposes are not available income; court misapplied Zold by attributing retained income to Husband | Wife argued retained earnings were "excess" and effectively available because Husband and brother run company | Reversed: under Zold, undistributed pass-through income retained for corporate purposes is not income for chapter 61; trial court must recalculate support based on actual wages/distributions |
Key Cases Cited
- Randolph v. Randolph, 626 So. 2d 342 (Fla. 5th DCA 1993) (corporate valuation must include all assets and liabilities)
- Diffenderfer v. Diffenderfer, 491 So. 2d 265 (Fla. 1986) (prohibits considering same asset twice in distribution/support)
- Anson v. Anson, 772 So. 2d 52 (Fla. 5th DCA 2000) (retained earnings are bookkeeping entries, not cash available for dividends)
- Zold v. Zold, 911 So. 2d 1222 (Fla. 2005) (undistributed S-corp pass-through income retained for corporate purposes is not chapter 61 "income")
- Roth v. Roth, 973 So. 2d 580 (Fla. 2d DCA 2008) (assets dissipated during litigation not included in distribution absent intentional misconduct)
- Chapman v. Chapman, 866 So. 2d 118 (Fla. 4th DCA 2004) (asset appreciation can be marital where marital labor contributed, even if market forces played a role)