Edwin Kiest Norton III v. Mary Michelle Cheney

Opinion

ACCEPTED

03-14-00087-CV

3761677

THIRD COURT OF APPEALS

AUSTIN, TEXAS

1/14/2015 10:28:19 AM

JEFFREY D. KYLE

CLERK

NO. 03-14-00087-CV

FILED IN

In the Third Court of Appeals 3rd COURT OF APPEALS AUSTIN, TEXAS

Austin, Texas 1/14/2015 10:28:19 AM JEFFREY D. KYLE

Clerk

_______________________________________

Edwin Kiest Norton III,

Appellant,

v.

Mary Michelle Cheney,

Appellee.

_______________________________________

ORAL ARGUMENT DEMONSTRATIVES

_______________________________________

David F. Minton Lisa Bowlin Hobbs State Bar No. 14192300 State Bar No. 24026905 Zooey Wharton Kurt Kuhn State Bar No. 24008264 State Bar No. 24002433 Minton, Burton, Bassett & Collins, KUHN HOBBS PLLC P.C. 3307 Northland Drive, Suite 310 1100 Guadalupe Austin, Texas 78731 Austin, Texas 78701 (512) 476-6003 (512) 476-4873 (512) 476-6002 (fax) (512) 479-8315 (fax) Lisa@KuhnHobbs.com Kurt@KuhnHobbs.com

COUNSEL FOR APPELLEE

ORAL ARGUMENT DEMONSTRATIVES Appendix 1. ................................................................................................................. Timeline

Appendix 2 ..............................................................County Line Enterprises Stock Ledger

Appendix 3 .............Demonstrative of Norton’s County Line Enterprises Stock Shares

Appendix 4 ............................ Trial Court’s Valuation of County Line Enterprises Stock

3

Dated: January 14, 2015 Respectfully submitted,

/s/Lisa Bowlin Hobbs

David F. Minton Lisa Bowlin Hobbs State Bar No. 14192300 State Bar No. 24026905 Zooey Wharton Kurt Kuhn State Bar No. 24008264 State Bar No. 24002433 Minton, Burton, Bassett & Collins, P.C. KUHN HOBBS PLLC 1100 Guadalupe 3307 Northland Drive, Suite 310 Austin, Texas 78701 Austin, Texas 78731 (512) 476-4873 (512) 476-6003 (512) 479-8315 (fax) (512) 476-6002 (fax)

Lisa@KuhnHobbs.com Kurt@KuhnHobbs.com

COUNSEL FOR APPELLEE

CERTIFICATE OF SERVICE

I hereby certify that on January 14, 2015, I served a copy of this Brief of Appellee on counsel of record electronically, in accordance with the Court’s rules on electronic filing, as listed below:

Nathan Kennedy via e-Service 1607 Nueces Street Austin, Texas 78701 nkennedy@nathankennedylaw.com

John T. Beliveau via e-Service Law Office of John T. Beliveau 100 Rocky River Road Blanco, Texas 78606 jtbeliveaulaw@gmail.com

/s/ Lisa Bowlin Hobbs Lisa Bowlin Hobbs

APPENDIX 1

TIMELINE OF KEY TRANSACTIONS

Walcutt dies.

Ricky Goss His shares are shares are purchased by purchased by Concepts and CLE and redistributed as retired as a partnership CLE formed. treasury stock. distribution.

1988 1992 2006

1990 1995 2010 Norton & May: Rocky Goss Randy Goss Cheney marry. shares are dies. As with purchased by CLE Walcutt and retired as transaction, treasury stock. his shares are purchased by Concepts and

December: redistriubted Concepts formed. as partnership It is undisputed distribution. that Concepts is a community interest

partnership.

 Norton and Cheney were married in 1990.

 Concepts, a community interest partnership, was formed in 1995.

 Concepts distributed 90,152 shares of CLE stock to Norton in 2006.

 Concepts distributed 12,251 shares of CLE stock to Norton in 2010.

 Norton acquired a total of 102,403 shares of CLE stock during his marriage to Cheney from these two distributions.

 There is no evidence in the record that Norton acquired these shares before his marriage to Cheney.

APPENDIX 2 ,\"'

The County Line Enterprises, Inc.

Stock Ledger

• .Cert.

No.

1

2

Date Issued

01/02/89 01/02/89 01/02/89

Person:or Entity

Bruce D. Walcutt Richard L. Goss

#of Shar.es· Shares

Issued

105,918 105,918 105,916

..

O/S

0

0

0

Date ·Cancelled

10/16/06 05/18/92 03/14/89

·Replace-··

ment Share#

34

25

21,22

Ref. Comments.

1, 13 1,5

1

3 Edwin K. Norton Ill 4 01/02/89 Rocky L. Goss 40,816 0 05/18/95 31 1,9 5 01/02/89 Don A. Miller 20,708 20,708 1 6 01/02/89 Benjamin A. Collins 20,479 0 11/29/94 NIA 1,8 7 01/02/89 Randy J. Goss 8,145 0 10/01/10 38 1,14 8 01/02/89 Adrienne Milloy 4,100 0 06/28/95 32 1, 10 9 01/02/89 Bruce D. Walcutt 26,270 0 03/04/89 ·17,20 1,2 10 01/02/89 Richard L. Goss 26,270 0 03/04/89 18,20 1,2 ·. ·11 01/02/89 Edwin K. Norton !II 26, 180 0 03/04/89 19,20 1,2 12 01/02/89 Rocky L. Goss 10,090 0 05/18/95 31 1,9 13 01/02/89 Don A. Miller 5,050 5,050 1 :14. 01/02/89 Benjamin A. Collins 5,120 0 11/29/94 N/A 1,8 15 01/02/89 Randy J. Goss 2,020 0 10/01/10 38 1, 14 16 01/02/89 Adrienne Milloy 1,000 0 06/28/95 32 1, 10 '17 03/04/89 Bruce D. Walcutt 17,724 ·o 10/16/06 34 2, 13 ·18 · . 03/04/89 Richard L. Goss 17,724 0 05/18/92 25 2,5 ..19 03/04/89 Edwin K. Norton Iii 17,634 0 03/31/89 23,24 2,4 20 03/04/89 John Blazier-Agnt 25,638 0 01/14/93 26,27,28 2,6 .. 21 03/14/89 Edwin K. Norton Ill 86,458 0 03/31/89 23,24 3 22 03/14/89 Edwin K. Norton Ill 19,458 0 03/31/89 23,24 3

• . 27

23

"24

25

26

.28 03/31/89 03/31/89 05/18/92 01/14/93 01/14/93 01/14/93

Edwin K. Norton Ill Edwin K. Norton Ill

CLE, Inc.

Bruce D. Walcutt Edwin K. Norton If I

CLE, Inc.

24,710 98,840 123,642

8,546 8,546 8,546

24,110 98,840

0

0

8,546

0

03/01/94 10/16/06

29, 30

34

4

4

5,7

6

6

6

::·29 03/01/94 Don A. Miller 18,500 18,500 7 ·. 30 03/01/94 CLE, Inc. 105,142 0 7 . 31 06/15/95 CLE, Inc. 50,906 0 9 ..32 06/28/95 Adrienne Milloy 5,100 0 06/28/95 N/A 10, 11 ·33. 07/01/95 Don A. Miller 7,138 0 10/15/10 41 12, 15 34 10/16/06 CLC 132,188 0 11/09/06 35,36,37 13 .35 11/09/06 Edwin K, Norton Ill 90,1?2 90, 152 13 36 11/09/06 Don A. Miller 35,162 35,162 13 37 11/09/06 Randy J. Goss 6,874 0 10/01/10 38 13 38 10/01/10 CLC 17,039 0 10/01/10 39,40 14 39 10/01/10 Edwin K. Norton Ill 12,251 12,251 14 40 10/01/10 Don A. Miller 4,788 4,788 14 41 10/15/10 Don A. Miller 7,138 7, 138 01/01/00 15 -

Edwin K. Norton Ill 234,499 - ,.

----Goo-A~ -94:.:" ·-

.~ ·~

Total 325,845

• G:ICLIENTSICL 0317\CLE\Stock Ledger 2010

. ··--·---- --------

THE COUNTY LINE ENTERPRISES, INC~ STOCK LEDGER REFERENCE COMMENTS

• 1. Initial Stock Distribution by The County Line Enterprises, Inc. ("CLE")

2. Bruce Walcutt, Richard Goss and Edwin Norton surrendered 8,546 Shares each (Certificate Nos. 9, 10, and 11 were cancelled and Certificate Nos. 17, 18, and 19 were issued) for a total of 25,638 Shares which were issued to John C. Blazier, Escrow Agent as Share Certificate No. 20 for Don IVJ.iller to acquire (Certificate No. 29 I 18,500 Shares and Certificate No. 33 I 7,138 Shares).

3. Ed-win Norton - Equal exchange of Shares. Certificate No. 3 I 105,916 Shares was cancelled. Certificate No. 21 I 86,458 Shares and Certificate No. 22 I 19,458 Shares (Total of 105,916 Shares) were issued.

4. Edwin Norton - Reissue of Shares to allow a division of the existing Shares into two Certificates for pledging of 98,840 Shares to Alliance Bank to secure existing

• debt. Certificate No. 19 I 17,634 Shares, Certificate No. 21 I 86,458 Shares, and Certificate 22 I 19,458 Shares (Total of 123,550 Shares) were .cancelled. Certificate No. 23 I 24,710 Shares· and Certificate No. 24 I 98,840 Shares (Total of 123,550 Shares) were issued.

5. CLE purchased Richard Goss' 123,642 Shares (Certificate No. 2 I 105,918 Shares and Certificate No. 18 I 17, 724 Shares were cancelled) as Treasury Stock. Certificate No. 25 (123,642 Shares) was issued to CLE on 5/18/92. Outstanding Shares were reduced from 514,000 Shares to 390,358 Shares (514,000 - 123,642 = 390,358).

6. John C. Blazier, Escrow Agent transaction (see Comment No. 2 above) was terminated. Certificate No. 20 I 25,638 Shares was cancelled. Certificate No. 26 I 8,546 Shares was issued to Bruce Walcutt. Certificate No. 27 I 8,546 Shares was issued to Ed~ Norton. Certificate No. 28 I 8,546 Shares was issued to CLE as Treasury Stock. Outstanding Shares were reduced from 390,358 to 381,812 Shares (390,358 - 8,546 = 381,812).

7. Don Miller acquired 18,500 Shares (Certificate N9. 29 I 18,500 Shares) from

• CLE Treasury Stock. Certificate No. 25 I 123,642 Shares was cancelled.

THE COUNTY LINE ENTERPRISES, INC. STOCK LEDGER REFERENCE COMMENTS

• Certificate No. 30 I 105,142 Shares was issued to CLE. Outstanding Shares were increased from 381,812 to 400,312 Shares (381,812 + 18,500 = 400,312).

8. CLE purchased Benjamin Collins' 25,599 Shares (Certificate No. 6 I 20,479 Shares and Certificate No. 14 I 5,120 Shares were cancelled) as Treasury Stock. No new Share Certificates were issued tq CLE. Outstanding Shares were reduced /

from 400,312 Shares to 374, 713 Shares ( 400,312 - 25,599 = 374, 713).

9. CLE purchased Rocky Goss' 50,906 Shares (Certificate No. 4 I 40,816 Shares and Certificate No. 12 I 10,090 Shares were cancelled) as Treasury Stock. Certificate No. 31 I 50,906 Shares "was issued to CLE on 6/15/95. Outstanding Shares were reduced from 374,713 Shares to 323,807 Shares (374,713 - 50,906 = 323,807).

10. Adrienne Millay's Original Share Ce1iificate No. 8 I 4,100 Shares and No. 16 I

• 1,000 Shares (Total of 5,100 Shares) were deemed to be lost. Therefore, Certificate Nos. 8 and 16 were cancelled and replaced by Share Certificate No. 32 I 5, 100 -Shares.

11. CLE purchased Adrienne Millay's 5,100 Shares (Ce1iificate No. 32 I 5,100 Shares was. cancelled) as Treasury Stock. No new Share Certificates were issued to CLE. Outstanding Shares were reduced from 323,807 to 318,707 Shares (323,807 - 5,100 = 318,707).

12. Don Miller acquired 7,138 Shares (Ce1iificate No. 33 I 7,138 Shares) from CLE Treasury Stock. Outstanding Shares were increased from 318, 707 Shares to 325,845 Shares. (318,707 + 7,138 = 325,845).

,, . 1:J. The County Line Concepts, Ltd. ("CLC") I CLE purchased Bruce Walcutt's 132,188 Shares (Certificate No. 1 I 105,918 Shares and Certificate l'qo. 17 I 17, 724 Shares and Certificate No. 26 I 8,546 Shares were cancelled) and redistributed said Shares prQraJ._a_t.o_the_remaining Sbar.ehol.de~~ 34 I 132,188 Shares-was issued to CLC and then cancelled. Certificate No. 35 I 90,152 Shares was issued to Edwin Norton. Certificate No. 36 I 35,162 Shares

• - - - - - - - - · - - - - - · --· --·

'.

THE COUNTY LINE ENTERPRISES, INC. STOCK LEDGER REFERENCE COMMENTS

• was issued to Don Miller. Certificate No. 37 I 6,874 Shares was issued to Randy Goss. Outstanding Shares remained constant at 325,845 Shares.

14. CLC I CLE purchased Randy Goss' 17,039 Shares (Certificate No. 7 I 8,145 Shares, Certificate No. 15 I 2,020 Shares and Certificate No. 37 I 6,874 Shares) and redistributed said Shares prorata to the remaining Shareholders. Certificate No. 38 I 17,039 Shares was issued to CLC and then cancelled... Certificate No. 39 I 12,251 Shares was issued to Edwin Norton. Certificate No. 40 I 4,788 Shares was issued to Don Miller. Outstanding Shares remained constant to 325,845 Shares.

15. Don Miller's Original Share Certificate No. 33/ 7,138 Shares was deemed to be lost. Therefore, Certificate No. 33 was cancelled and replaced by Share Certificate No. 41/ 7,138 Shares .

• g:lclicntslcl 0317\clclstock.lodgcr.lO IO.doc

•

APPENDIX 3

514,000 25.7%

3. 3/4/89 11 c - 26,180 - - - 4. I 3/4/89 19 I 17,634 - 123,550 514,000 24.0%

5. 3/14/89 3 c - 105,91~1 I Equal exchange of Shares (105,916 Shares 6. 3/14/89 21 I 86,458 - for 105,916 Shares). 7. 3/14/89 22 I 19,458 -I 123.550 I 514 .000 I 24.0% 8. 3/31/89 19 c - 17,634 9. 3/31/89 21 c - 86,458 - - - Reissue EN Shares to allow a division of the existing Shares into iwo Certificates for 10. 3/31/89 22 c - 19,458 - - - pledging of 98,840 Shares to Alliance Bank to 11. 3/31/89 23 I 24,710 - - - - secure existing debt.

::>'

12. 3/31/89 I 24 I 98,840 - 123,550 514,000 24.0%

I 5/18/92 j· - - 123.550 I 31.7% 13. - -1 390,358

14. 8,546 132,096 381,812 34.6% 1/14/93 27

15. 3/1/94 - - - ., 132,0961 400,3121 33.0%

16. 111/29/94 - -

-I 132,0961 374,7131 35.3%

17. I 5/23/95 I - - -T T 132,0961 323,8071 40.8%

18. 6/28/95 I - -I -I 132,0961 318,7071 41.5%

19. 7/1/95 - -I -I 132,096 325,845 I 40.5%

20 . I 11/9/06 · I 35 I 90,152 I -I 222,248 325,8451 68.2% I redistributed said Shares pn Shareholders. CLC I CLE purchased Randy

21. I 10/1/10 I 39 I I 12,251 I -I 234,499 I 325,845 I 72.0% I Sl1ares (Certificate Nos. 7, 15 & 37) and redistributed said Shares prorata to remaining

APPENDIX 4

Price per share in CLE corporate documents = $45.82 No contractual provision for discounting price Cheney’s Expert Norton’s Expert Trial Court Overall Price Per Share $45.82 $40.97 $40.97 Marketability Discount 15% 45% 25% Lack of Control Discount 0% 35% N/A Total Price Per Share $38.67 $14.65 $30.73