John William Ernest Ward v. Erica Jill Ward

755 S.E.2d 494, 233 W. Va. 108, 2014 WL 641983, 2014 W. Va. LEXIS 128
CourtWest Virginia Supreme Court
DecidedFebruary 14, 2014
Docket12-1261
StatusPublished
Cited by3 cases

This text of 755 S.E.2d 494 (John William Ernest Ward v. Erica Jill Ward) is published on Counsel Stack Legal Research, covering West Virginia Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
John William Ernest Ward v. Erica Jill Ward, 755 S.E.2d 494, 233 W. Va. 108, 2014 WL 641983, 2014 W. Va. LEXIS 128 (W. Va. 2014).

Opinion

PER CURIAM:

This case is before the Court upon the appeal of John William Earnest Ward (“the Husband”) from the final order entered on September 5, 2012, by the Circuit Coux-t of Mercer County, West Virginia, in a divorce case. The circuit court affirmed, in part, and reversed, in part, the family coui’t’s order. 1 The Husband argues on appeal that the circuit couit erred: 1) by reversing the decision of the family court regarding rehabilitative spousal support and substituting the circuit court’s judgment to award rehabilitative spousal support at a significantly greater monthly rate and for a significantly greater duration of time; 2) by failing to value the Husband’s marital interest in Advantage *111 Timberland, Inc. (“Advantage”), as it existed on the date of separation and by failing to recognize during the valuation process that the actual compensation paid to the owners was reasonable and normal; and 3) by reversing the family court regarding the calculation of child support because the circuit court: a) failed to include the spousal support in the Wife’s income; b) disregarded the statutory guidelines to calculate child support; and c) considered matters not contained within the record. Erica Jill Ward (“the Wife”) also asserts two cross-assignments of error including the circuit court and family court: 1) erred in attributing one-third of the value of Advantage to the Husband’s personal goodwill; and 2) abused their discretion by not awarding to the Wife her attorney’s fees, expert witness fees and costs. 2 Based upon a review of the parties’ briefs and arguments, the appendix record and all other matters submitted before the Court, we reverse the lower courts’ decisions regarding the valuation of Advantage, as well as the circuit court’s calculation of child support; we affirm the circuit court’s decision on all other issues before this Court. 3

I.Facts

The parties were married on October 14, 2000, and separated on December 27, 2009. The Wife was thirty-four years old and the Husband was thirty-seven years old at the time of separation. The parties have two children who were eight years old and five years old at the time the final divorce order was entered. The parties determined that it was in the best interests of their children that the Husband have more shared parenting time with the children, so the parties agreed to essentially a 50/50 shared parenting agreement. 4 The basis for the separation was irreconcilable differences.

By agreement of the parties, the Wife was a stay-at-home mom, working only briefly at a part-time job in a bar. She ceased working shortly after the parties’ first child was born. The Husband owns a 25% interest in three businesses: Advantage, East River Timber, LLC, and Lonesome Pine Real Estate and Development, LLC. The parties agreed to the value of the Husband’s interest in East River Timber, LLC, and Lonesome Pine Real Estate and Development, LLC, 5 but disputed the value of the Husband’s interest in Advantage. The Husband’s total income in 2011 from Advantage was $156,092. His average income for 2009, 2010, and 2011 was $146,660 or $12,221 per month.

II.Standard of Review

West Virginia Code § 51-2A-14(e)(2008) provides that “[t]he circuit court shall review the findings of fact made by the family court judge under the clearly erroneous standard and shall review the application of law to the facts under an abuse of discretion standard.” Likewise,

[i]n reviewing a final order entered by a circuit court judge upon a review of, or upon a refusal to review, a final order of a family court judge, we review the findings of fact made by the family court judge under the clearly erroneous standard, and the application of law to the facts under an abuse of discretion standard. We review questions of law de novo.

Syllabus, Carr v. Hancock, 216 W.Va. 474, 607 S.E.2d 803 (2004); see also Syl. Pt. 1, Paugh v. Linger, 228 W.Va. 194, 718 S.E.2d 793 (2011). Keeping this standard of review in mind, we now examine the issues before us.

III.Discussion

A. Valuation of Advantage Timberland, Inc.

The first assignment of error concerns the valuation of Advantage. The Husband claims *112 that both the family court and the circuit court failed to value Advantage as it existed on the date of separation as required by West Virginia Code § 48-7-104(1) (2009) 6 . Rather, the Husband argues that both courts agreed with the Wife, whose expert valued Advantage not as it existed on the date of separation — as a company operated by four individuals each of whom received income from the business — but, instead, “chose to change Advantage ... effective the date of separation by creating a fiction that the four owners could be replaced with one executive forester for a total compensation of $120,-000.” 7 The Wife maintains that the Husband “confuses the date to determine the value of an asset with the method to value.” According to the Wife, it was proper for the family court to adjust officer compensation to determine the fair market value of Advantage.

In valuing Advantage, the family court examined the testimony of both the expert for the Wife, Ross Dionne, and the Husband’s expert, Dan Selby, each of whom valued the Husband’s interest in Advantage. 8 The record showed that Advantage managed a tract of timber for a single client, The Forest Land Group. The tract of timber contained 625,-000 acres of land. The Husband and three other partners each have a 25% interest in Advantage, making the Husband a minority interest holder in the company. The four also act as owners and managers of Advantage.

The experts for both parties agreed that the proper method to determine the fair market value was to use the capitalization of earnings method. 9 Further, the family court found that “[b]oth also agree that a component of this method is to adjust, or ‘normalize,’ officer compensation.” 10 The issue in this case focuses upon the fact that while Mr. Dionne normalized officer compensation, Mr. Selby found that the compensation paid to the officers was not excessive and, therefore, there was no need to normalize the compensation.

Specifically, Mr. Dionne determined that Advantage paid the four owners total compensation of $388,432 in 2008 and $393,617 in 2009. According to Mr. Dionne, the national average for officers and directors of corporations in the timber industry was between 1% and 5.2% of net sales or between $20,000 and $115,000 per year. Additionally, in West Virginia the average compensation for an officer or manager in the timber industry was $69,655 per year.

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Bluebook (online)
755 S.E.2d 494, 233 W. Va. 108, 2014 WL 641983, 2014 W. Va. LEXIS 128, Counsel Stack Legal Research, https://law.counselstack.com/opinion/john-william-ernest-ward-v-erica-jill-ward-wva-2014.