911 N.W.2d 750
S.D.2018Background
- Mindy filed for divorce from David after ~16 years of marriage; property division and valuations were contested at trial.
- David owned three business interests: 50% of Dakota Valley Trucking, 50% of Dakota Valley Logistics, and a sole proprietorship trucking operation; significant 1099 transfers flowed from the corporations to David.
- Competing expert opinions: Snyder (valuation engagement) produced substantially higher values; Eide Bailly/Teigen (calculation engagement) produced lower, more limited "calculated" values.
- Circuit court found Eide Bailly’s calculation engagement and assumptions problematic, credited Snyder’s approach for some items, and resolved valuation by considering interrelatedness and the 1099 transfers.
- The court valued Dakota Valley Trucking at $850,000, Dakota Valley Logistics at $102,000, and the sole proprietorship at $178,000; it refused a marketability discount for the corporations.
- Court also (1) included $15,000 (of an estimated $30,000) in improvements David made to his father’s rental property in the marital estate, and (2) valued a Great Western bank account at $26,497.40 based on the last complete (Nov. 2015) statement, due to lack of complete later statements.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Valuation date for bank account | Value at last complete statement (Nov. 2015) because later statements were redacted | Court should use most recent statements (Aug. 2016) | Court did not abuse discretion; used last unredacted complete statement ($26,497.40) |
| Recapture of improvements to father’s rental property | Improvements reflected David’s expenditures and should be included in marital estate | Improvements were paid/owned by Norm; Mindy speculated David paid | Court found David participated and lacked candor; recaptured $15,000 into marital estate |
| Valuation method and values of three business interests | Snyder: enterprise approach, account for 1099 transfers; higher values | Eide Bailly: limited calculation engagement; lower values; asset-based for sole prop | Court rejected wholesale Eide Bailly approach, credited Snyder on key points, accounted for 1099s within Dakota Valley Trucking; valuations affirmed as within evidentiary range |
| Marketability discount for corporations | (Mindy) No discount warranted given lack of intent to sell and attractiveness | (David) Discount required due to bylaws/restrictions | Court properly declined marketability discount for corporations based on evidence of no sale intent and attractiveness to buyers |
Key Cases Cited
- Pieper v. Pieper, 841 N.W.2d 781 (S.D. 2013) (standard/date and scope for valuation in divorce/property division)
- Geraets v. Geraets, 554 N.W.2d 198 (S.D. 1996) (trial court as finder of value; date-of-divorce valuation rule absent special circumstances)
- DeVries v. DeVries, 519 N.W.2d 73 (S.D. 1994) (valuation need only lie within a reasonable range)
- Grode v. Grode, 543 N.W.2d 795 (S.D. 1996) (trial court must consider equity and circumstances; not bound to mathematical formula)
- Fausch v. Fausch, 697 N.W.2d 748 (S.D. 2005) (factors for applying marketability discount in divorce valuation)