Oakes v. Oakes & Leadwise, Inc.

2024 Ohio 6051

• Court: Ohio Court of Appeals
• Decided: December 27, 2024
• Docket: 30023
• Status: Published

Opinion

[Cite as Oakes v. Oakes & Leadwise, Inc., 2024-Ohio-6051.]

IN THE COURT OF APPEALS OF OHIO SECOND APPELLATE DISTRICT MONTGOMERY COUNTY

SHERY B. OAKES : : Appellant/Cross-Appellee : C.A. No. 30023 : v. : Trial Court Case No. 2020 DR 00761 : DAVID C. OAKES : (Appeal from Common Pleas Court- AND LEADWISE, INC. : Domestic Relations) : Appellees/Cross-Appellant :

...........

OPINION

Rendered on December 27, 2024

JOHN D. SMITH & ELIZABETH R. MURRAY, Attorneys for Appellant/Cross-Appellee

TERRY S. POSEY, JR. & L. BRADFIELD HUGHES, Attorneys for Appellees/Cross- Appellant

.............

TUCKER, J.

{¶ 1} Shery B. Oakes appeals from the trial court’s final judgment and decree of

divorce terminating her marriage to appellee David C. Oakes and dividing their assets

and liabilities. Shery contends the trial court erred in failing to provide security for David’s -2-

nearly $29 million financial obligation to her and in valuing several businesses and the

marital residence.

{¶ 2} In a cross appeal, David claims the trial court erred in valuing Leadwise, Inc.,

which was the largest of the businesses, at $115.7 million and in valuing his ownership

interest in the business at more than $80 million. He also contends the trial court erred in

treating the parties’ residence as marital property even though it had been gifted to an

irrevocable trust and in treating investments in wine, watches, jewelry, and art as personal

property subject to division by coin flips. Finally, David asserts that the trial court erred in

ordering him to pay Shery nearly $29 million to equalize division of their assets and

liabilities.

{¶ 3} With regard to Shery’s appeal, we conclude that the trial court erred in not

ordering some security for David’s financial obligation, which is payable to her over seven

years. The trial court did not err, however, in failing to value David’s “founder’s option,”

which gave him a right to repurchase all outstanding Leadwise shares. The trial court also

erred in valuing the marital residence at $5 million absent evidentiary support for that

valuation. We see no error, however, in the trial court’s valuation of the Villages of Winding

Creek Homeowners Association and Design Homes and Development Company, two

other businesses that were marital property. Finally, we agree with Shery that the trial

court erred in valuing Brantwood Development, LLC, which also was a marital-property

business.

{¶ 4} As for David’s cross appeal, we find a remand necessary for the trial court to

make additional findings regarding the value of Leadwise. We also conclude that the trial -3-

court erred in awarding Shery real estate owned by an irrevocable trust, a separate entity

that was not a party to the divorce case, and in directing David personally to facilitate

transfer of the property to her. We see no error, however, in the trial court’s coin-flip

disposition of the wine, watch, jewelry, and art collections.

{¶ 5} For the reasons set forth more fully below, the trial court’s judgment will be

affirmed in part, vacated in part, and reversed in part. The case will be remanded for the

trial court to make additional findings and to correct the errors identified herein.

I. Background

{¶ 6} The parties married in 1980 and have three adult children. During the

marriage, David and Shery started a number of successful ventures and acquired

substantial assets. Shery filed a complaint for divorce in October 2020 on the grounds of

incompatibility. The trial court held a divorce hearing that included many days of testimony

and produced a voluminous record. One of the primary issues concerned the value of

David’s majority interest in Leadwise, an integrated national real-estate construction

company with numerous subsidiaries operating under its umbrella. In addition to

Leadwise, the parties disputed the value of several other marital businesses, the value of

the marital residence, and whether the residence constituted a marital asset subject to

equitable division given that Shery had conveyed it to an irrevocable trust during the

marriage. The parties additionally disputed the proper disposition of wine, watch, jewelry,

and art collections.

{¶ 7} Based on the evidence presented, the trial court resolved each of the

foregoing issues. To equalize the division of marital assets and liabilities, the trial court -4-

ordered David to pay Shery $28,952,397.50 over a seven-year period. The trial court

ordered annual payments with interest, but it did not require any security for David’s

financial obligation. Shery timely appealed, advancing six assignments of error, and David

cross appealed, advancing four assignments of error.

II. Shery’s Appeal

{¶ 8} Shery’s first assignment of error states:

THE TRIAL COURT ERRED IN FAILING TO PROVIDE SUFFICIENT

SECURITY FOR THE FUNDS NEEDED TO EQUALIZE THE DIVISION OF

MARITAL PROPERTY.

{¶ 9} Shery contends the trial court abused its discretion in failing to require any

security for David’s nearly $29 million financial obligation to her. For his part, David argues

that security is not required in every divorce case and that the trial court did not err in

failing to require it here.

{¶ 10} When dividing the parties’ assets and liabilities, the trial court allowed David

to retain his interest in Leadwise, Inc., which was by far the most valuable asset. To

equalize the division of all marital assets and liabilities, the trial court ordered David to

pay Shery $28,952,397.50 over seven years. Despite Shery’s request, the trial court

declined to require him to provide any security for this obligation.

{¶ 11} On appeal, the parties agree that a trial court has discretion whether to order

security for a payment obligation arising from a marital-property division. Palazzo v.

Palazzo, 2016-Ohio-3041, ¶ 16 (9th Dist.); Berger v. Berger, 2015-Ohio-5519, ¶ 99 (11th

Dist.). As a result, we apply abuse-of-discretion review. An abuse of discretion implies the -5-

existence of an unreasonable, arbitrary, or unconscionable attitude. Blakemore v.

Blakemore, 5 Ohio St.3d 217, 219 (1983). A decision is unreasonable if no sound

reasoning process supports it. AAAA Ents., Inc. v. River Place Community Urban

Redevelopment Corp., 50 Ohio St.3d 157, 161 (1990).

{¶ 12} Upon review, we see no sound reasoning process to support the trial court’s

failure to require any security for David’s nearly $29 million financial obligation payable

over seven years. Near the end of its written decision, the trial court acknowledged

Shery’s request for some sort of security, including potentially a promissory note, security

agreement, liens, guarantees, stock-transfer restrictions, or a requirement for immediate

payment if David sells stock in Leadwise. The trial court denied Shery’s request, stating:

“[T]he court will not order that David individually or as Trustee be restricted from

transferring any shares of Leadwise. It has not been demonstrated that David would do

anything to prevent Shery from receiving her full share of the marital assets nor does the

court believe that David would do anything to diminish the value of Leadwise, Inc.”

{¶ 13} Even if we assume that David would not intentionally fail to pay Shery nearly

$29 million, she persuasively argues on appeal that he controls Leadwise and has

discretion to transfer the company’s shares in ways that could undermine his repayment

obligation. She notes too that future events—including among other things the possibility

of David’s death, a remarriage, business problems, claims by creditors, and the fact that

his Leadwise shares are held in trust—could complicate her ability to collect on his

financial obligation to her.

{¶ 14} In our view, the trial court acted unreasonably, and thereby abused its -6-

discretion, in failing to require any security for David’s $28,952,397.50 debt to Shery. This

obligation is exponentially larger than the award in any of the cases cited by either party.

Particularly given the size of this award, the seven-year duration of David’s payment

obligation, and the nature of his control over Leadwise, the trial court was obligated to

order some form of security for the debt. While its failure to do so constituted an abuse of

discretion, we will leave it to the trial court and the parties to address the nature of that

security on remand. Shery’s first assignment of error is sustained.

{¶ 15} The second assignment of error states:

THE TRIAL COURT ERRED IN VALUING LEADWISE, INC.

{¶ 16} Shery challenges the trial court’s decision to assign no value to a Leadwise

stock option owned by David. The option, which was known as the “founder’s option,”

granted David the right to repurchase shares that had been awarded to other

shareholders. Exercising the option required him to pay 1.25 times book value to

repurchase outstanding shares.

{¶ 17} Although David could exercise the founder’s option at any time for any

reason, he testified that its purpose was to empower him to remove an employee-

shareholder who was not a good fit. Shery argues that the founder’s option was marital

property because David acquired it during the marriage and it necessarily had value.

Shery’s expert, Alan Duvall, valued the option at $22 million. Duvall arrived at this figure

by subtracting 1.25 times book value from his estimate of fair-market value for all

Leadwise shares that David did not own.

{¶ 18} In its written opinion, the trial court largely adopted Duvall’s opinion -7-

regarding Leadwise’s valuation. However, the trial court declined to assign any value to

the founder’s option. It noted that David never had exercised the option. The trial court

also found it “highly unlikely that the option would ever be exercised.” For that reason, the

trial court declined “to include in Mr. Duvall’s valuation his estimated value of the

Founder’s Option.”

{¶ 19} On appeal, Shery insists that the founder’s option was a marital asset and

that it had some value even if David was unlikely to exercise it. She contends David’s

own rebuttal expert, Rebekah Smith, suggested that the founder’s option had a value of

more than $5 million. Under these circumstances, she insists that the trial court abused

its discretion in failing to assign any value to the option.

{¶ 20} Upon review, we find Shery’s argument to be unpersuasive. Although David

was entitled to exercise the option for any reason, he characterized it as a “damage

control” tool. According to David, its purpose was to enable him to rid the company of

someone who did not meet expectations and who was “negatively affecting the financial

well-being of the company.” David opined that exercising the option for any other reason

would harm Leadwise because it would damage the existing culture of trust and the family

atmosphere within the company. David testified that he never had considered exercising

the option, which he obtained in 2013, and that he had no intention of doing so.

{¶ 21} The trial court was entitled to credit David’s testimony that he only would

exercise the founder’s option to rid the company of a bad employee. The trial court

reasonably concluded from David’s testimony that he was “highly unlikely” ever to

exercise the option. David’s rebuttal expert, Rebekah Smith, testified that accepted -8-

option-valuation methodology considers the likelihood of an option ever being exercised.

Given the trial court’s determination that David was “highly unlikely” ever to exercise the

founder’s option, we believe the trial court acted within its discretion in declining to assign

any value to the option. In the abstract, the value of the option might have been the

difference between 1.25 times book value and the higher fair-market value of the

Leadwise shares David did not own. But if David never exercised the option, he never

would realize that value. The trial court was not obligated to ignore this reality.

{¶ 22} Contrary to the suggestion in Shery’s brief, we note too that David’s rebuttal

expert did not value the founder’s option at more than $5 million. Rather, applying Duvall’s

methodology for the sake of argument, Smith corrected what she perceived as errors in

his calculations and arrived at a value of $5,355,000. Smith later made clear, however,

that she did not agree with Duvall’s methodology because he failed to include “a likelihood

analysis” of the option never being exercised.

{¶ 23} Given the non-traditional nature of the founder’s option, David’s testimony

about its narrow purpose, and his lack of intent to exercise it, we see no abuse of

discretion in the trial court’s failure to assign any value to the option. Accordingly, the

second assignment of error is overruled.

{¶ 24} The third assignment of error states:

THE TRIAL COURT ERRED IN VALUING THE MARITAL HOME.

{¶ 25} Shery contends the trial court erred in using cost basis to value the parties’

residence rather than relying on evidence of fair market value. Shery, a licensed realtor,

contends that she opined during the divorce hearing that the marital home was worth -9-

between $3.8 million and $4 million. According to Shery, she based this opinion on two

appraisals that were not admitted into evidence. For his part, David did not present

evidence of the home’s current value. He did introduce evidence, however, establishing

that the home’s cost basis was approximately $5 million when it was built. Shery claims

the trial court erred in adopting cost basis rather than her market-value opinion. We review

the trial court’s valuation determination for an abuse of discretion. Gregory v. Gregory,

2007-Ohio-4098, ¶ 39 (2d Dist.).

{¶ 26} During the divorce hearing, Shery described the marital residence as being

“dysfunctional,” “odd in the marketplace,” and “a unicorn in the city.” At one point, she

opined that “you can’t appraise it.” She nevertheless hired two appraisers to determine

its value. When pressed for her own valuation opinion, she admitted that she was “not

quite sure what it would sell for.” She explained that there might not be “many buyers out

there” and that “[i]t could be worth far less than we expected.” She mentioned, however,

that the appraisers had valued the home at $3.8 million and $4.0 million respectively.

Later in her testimony, she referred to the residence as a “money pit.” When asked

whether it was worth less than the parties had invested, she characterized the answer to

that question as “a market decision.” However, she then expressed certainty that “the

value is less than what we paid at the time.”

{¶ 27} In the divorce decree, the trial court valued the marital home at $5 million.

In its supporting written decision, the trial court reasoned:

David presented evidence the value of the marital home is

$5,000,000.00. Shery presented evidence that the value of the marital home -10-

is $3,900,000.00. The court finds the value of the marital home is

$5,000,000.00 for purposes of offset. Shery will retain title to the Lot free

and clear of any claim of David. David shall undertake all steps necessary

to facilitate the title transfer to Shery.

{¶ 28} On appeal, Shery contends the trial court abused its discretion in adopting

the home’s cost basis as the fair market value. She notes that she provided evidence of

the home’s current fair market value and that the trial court provided no explanation for

adopting the cost basis.

{¶ 29} Upon review, we find Shery’s argument to be persuasive. David did not

testify that the fair market value of the home was $5 million at the time of the divorce. He

merely introduced evidence that the home had cost roughly $5 million to build years

earlier. In fact, David concedes that, during the divorce hearing, he “introduced no

affirmative evidence as to the property’s value.” See David’s May 15, 2024 Opposition

Brief at p. 41, n. 6. Given David’s failure to introduce any evidence of the home’s fair

market value, the trial court had only Shery’s opinion and her testimony about the two

appraisals.

{¶ 30} Although Shery expressed uncertainty about the home’s value, she opined

that it was worth less than she and David had paid. Her opinion was consistent with her

unchallenged testimony about the results of two appraisals, which had assigned a fair

market value of $3.8 million and $4.0 million respectively. On the record before us, we

see no evidentiary support for the trial court’s determination that the fair market value of

the marital residence was $5 million at the time of the divorce. The trial court abused its -11-

discretion in assigning that value to the home. Accordingly, Shery’s third assignment of

error is sustained.

{¶ 31} The fourth assignment of error states:

THE TRIAL COURT ERRED WHEN IT FAILED TO ALLOCATE THE

VILLAGES OF WINDING CREEK’S HOMEOWNERS ASSOCIATION’S

ACCOUNT RECEIVABLE.

{¶ 32} Shery contends the trial court erred in not fully valuing the Villages of

Winding Creek Homeowners Association (VWC), a business that was marital property. In

particular, she claims the trial court failed to allocate any value to a particular account

receivable. Shery argues that the trial court had notice of the account receivable and its

status as marital property. Under these circumstances, she reasons that the trial court

was obligated to value and distribute it as part of the marital estate.

{¶ 33} We find Shery’s argument to be unpersuasive. During the proceedings

below, the parties agreed to accept an appraiser’s valuation of VWC as the final value.

They stipulated that “no further evidence or testimony shall be submitted to the Court on

the value of VWC Holdings, LLC.” The trial court later adopted the appraiser’s valuation.

Although Shery now complains that the appraiser’s valuation omitted an account

receivable, this argument is precluded by her stipulation that the trial court would consider

“no further evidence or testimony” beyond the appraiser’s opinion. The fourth assignment

of error is overruled.

{¶ 34} The fifth assignment of error states:

THE TRIAL COURT ERRED IN VALUING DESIGN HOMES & -12-

DEVELOPMENT CO.

{¶ 35} Shery contends the trial court erred in overvaluing Design Homes &

Development Company, a marital-property business that the parties started in 1987.

Specifically, she claims the trial court erred in not imputing a higher salary to her than she

actually received.

{¶ 36} The record reflects that Shery received annual compensation of $86,000 as

the principal owner and manager of the business, which was in the custom-home-building

industry. The company had approximately 20 employees and generated gross income of

$16 million to $22 million per year.

{¶ 37} Shery’s expert, Allan Duvall, valued the business at a little over $5 million.

In so doing, he determined that Shery’s salary was inappropriately low and imputed a

higher one. He examined the salaries earned by top executives at subsidiaries of David’s

company, Leadwise, Inc. Those subsidiaries had gross incomes roughly in line with

Designs Homes’ gross income, and the executives at Leadwise’s subsidiaries earned an

average of roughly $504,000. Duval opined that Shery’s salary should be in a similar

range, and he assigned her a salary of $460,000. His adoption of that higher figure

negatively affected his valuation of Design Homes.

{¶ 38} David’s expert, Greg Toman, valued Design Homes at $6.7 million. He used

the same general methodology as Duvall but declined to adjust Shery’s salary. Although

Toman believed she was underpaying herself, he opined that she also was overpaying

other key employees. As a result, he concluded that the total compensation paid to Design

Homes’ top employees was appropriate. He saw no need to adjust Shery’s salary to -13-

create a more accurate picture of the company’s earnings.

{¶ 39} In its written decision, the trial court adopted Toman’s valuation of $6.7

million for Design Homes. It found this to be “the more reliable and credible number.” The

trial court referenced Toman’s opinion that Shery may have underpaid herself while

significantly overpaying other key employees. The trial court also expressed some

concern about whether salaries paid in the custom-homebuilding industry were fairly

comparable to the salaries received by key executives of Leadwise’s subsidiaries.

{¶ 40} On appeal, Shery acknowledges that abuse-of-discretion review applies to

the trial court’s adoption of Toman’s valuation figure. “An abuse of discretion occurs when

the decision demonstrates the trial court’s attitude is unreasonable, arbitrary, or

unconscionable.” Pollock v. Mullins, 2024-Ohio-3423, ¶ 20 (2d Dist.). We see no abuse

of discretion here. The trial court considered two competing valuation figures and

provided a reasonable explanation for choosing Toman’s. We see no grounds for

reversal. Accordingly, the fifth assignment of error is overruled.

{¶ 41} The sixth assignment of error states:

THE TRIAL COURT ERRED IN VALUING BRANTWOOD

DEVELOPMENT, LLC.

{¶ 42} Shery challenges the trial court’s valuation of Brantwood Development,

LLC, another of the parties’ marital-property businesses. Brantwood Development’s

primary asset was a $2.8 million tax-incremental-financing loan to the city of Riverside

repayable over 30 years at five-percent annual interest. The loan’s purpose was to fund

public-infrastructure improvements. -14-

{¶ 43} The parties stipulated that David held a 22.35 percent ownership interest in

Brantwood. They disagreed about the value of his interest. Shery’s expert, Alan Duvall,

valued David’s interest in Brantwood Development at $780,000. David’s expert, Greg

Toman, valued his interest at $472,000. The differing valuations stemmed from a dispute

over whether the city’s semi-annual payments to Brantwood Development would rise over

time if property values increased.

{¶ 44} The trial court found no evidence that the amount of the city’s periodic

payments to Brantwood Development would rise if property values rose. In its written

decision, it adopted David’s proposed $472,000 valuation, reasoning:

The court finds that Mr. Duvall failed to provide any evidence that

increases in [tax incremental financing] occur as a result of increases in

property values. Furthermore, the court reviewed what it believes to be the

contract between the City of Riverside and Brantwood Development, LLC

and it was specifically stated that the contract would be repaid at a 5%

interest rate. Therefore, the court finds that Mr. Toman’s figure is more

credible, reliable, and accurate, and as a result, finds that David’s 22.35

[percent] interest in Brantwood Development, LLC is $472,000.00.

{¶ 45} On appeal, Shery contends the terms of the agreement between the city

and Brantwood Development established that payments to Brantwood would increase if

property values increased. She also cites evidence suggesting that Brantwood would fail

to recoup its full investment if the city’s payments did not increase over time. She reasons

too that David received a larger distribution from Brantwood in 2021 than he would have -15-

received if payments from the city did not rise with property-value increases. In response,

David asserts that the agreement at issue did not provide for rising payments based on

increased property values. With regard to the 2021 distribution, he claims it included cash

Brantwood had retained in prior years.

{¶ 46} Upon review, we find dispositive the language of the written agreement

between the city of Riverside and Brantwood Development. That agreement, which is part

of the record, is titled “BRANTWOOD II SUBDIVISION TAX INCREMENT FINANCING

AND INFRASTRUCTURE DEVELOPMENT AGREEMENT.” It contemplated the

construction of a housing subdivision, including necessary public-infrastructure

improvements, on certain real estate. It provided for owners of any portion of the affected

property to make semi-annual “service payments” to the Montgomery County Treasurer,

in lieu of paying property taxes, for up to 30 years. Under Section 1 of the agreement,

these service payments were to be “in the same amount as the real property taxes that

would have been charged and payable[.]”

{¶ 47} Section 10 of the agreement governed repayment of the city of Riverside’s

$2.8 million loan from Brantwood Development. It provided for the city to pay Brantwood

Development “an amount not to exceed the total actual amount of funds deposited to [an]

Escrow Account by [Brantwood] to construct the Public Infrastructure Improvements plus

an amount equal to 5% interest annually on the outstanding balance until such amount

has been repaid or the expiration of the TIF exemption and the final collection of Service

Payments.” The agreement further provided that the city’s obligation to repay Brantwood

Development “is limited to revenues received by the City from the Services Payments -16-

from the Brantwood TIF.” The agreement also outlined how Brantwood was to be repaid.

It stated:

Commencing with the first collection and distribution of Service

Payments to the City, the City shall first pay, solely from such Service

Payments, any compensation due and owing the Mad River School District,

which has not been paid by the Montgomery County Treasurer; second, the

City shall pay, solely from such Service Payments, any outstanding

amounts owed for the construction of any Public Infrastructure

Improvements; and third, the City shall pay any remaining amounts of such

Service Payments to the Owner [i.e., Brantwood Development] until the

Owner has been paid a maximum amount equal to the Owner’s deposits to

the Escrow Account, plus any interest due, as set forth above. Payments to

the Owner pursuant to this Section shall be made twice a year each year

not later than 30 days from receipt of each half final settlement of real estate

taxes from the County [Treasurer/Auditor].

(Emphasis added.)

{¶ 48} Finally, if the 30-year TIF property-tax exemption expired before Brantwood

Development recouped its full loan balance plus interest from service payments, the

agreement relieved the city of any obligation on the unpaid balance.

{¶ 49} In essence, the TIF agreement between the city of Riverside and Brantwood

Development granted affected property owners a property-tax exemption for up to 30

years. In lieu of taxes, the property owners were to make “service payments” to the -17-

county. Because those service payments were “in the same amount as the real property

taxes that would have been charged and payable,” the service payments from property

owners presumably would rise over time. When service-payment revenue was collected,

the agreement provided for the city to distribute it first to the local school district and

second to pay any public-infrastructure-improvement debt. After satisfying these

obligations, the agreement obligated the city to pay Brantwood Development “any

remaining amounts” until Brantwood Development is repaid in full with interest or until the

30-year TIF tax exemption expires.

{¶ 50} Given that revenue generated from the property owners’ service payments

likely would rise over time, the pool of money available for the city to repay Brantwood

Development also likely would increase. As Brantwood Development was entitled to all

“remaining amounts” from service-payment revenue, it follows that the city’s semi-annual

payments to Brantwood Development may increase over time as property values

increase. The trial court abused its discretion in finding otherwise and basing its valuation

of David’s interest in Brantwood Development on a finding that the city’s payments to

Brantwood Development could not increase over time as property values increase.

Shery’s sixth assignment of error is sustained.

III. David’s Cross Appeal

{¶ 51} David’s first assignment of error on cross appeal states:

THE TRIAL COURT ERRED WHEN IT FOUND IN ITS DECISION AND

DECREE OF DIVORCE THAT LEADWISE, INC.’S VALUE AS OF

DECEMBER 31, 2020, WAS $115,700,000.00, AND THAT DAVID -18-

OAKES’ SHARE OF LEADWISE, INC. AT THAT TIME HAD A VALUE OF

$80,180,100.00.

{¶ 52} David challenges the trial court’s valuation of Leadwise. He argues that the

trial court erred in its “wholesale adoption” of the value proposed by Allan Duvall, who

was Shery’s valuation expert. David contends the trial court failed to explain its adoption

of Duvall’s valuation in sufficient detail for us to determine whether its decision was

equitable. He also claims the trial court erred in adopting Duvall’s valuation despite stating

that it was “not totally satisfied with any of the three expert reports in this matter.” Relying

on Miller v. Miller, 2021-Ohio-4573 (10th Dist.), David asserts that the trial court was

obligated to conduct a “block-by-block evaluation of the evidence” rather than conducting

a “global” evaluation of which expert’s valuation was most credible as a whole. Finally,

David contends Duvall’s valuation was flawed because it (1) included non-recurring

income, (2) assumed that all Leadwise income could be distributed to the company’s

owners and applied a 10-percent growth rate without accounting for increases in working

capital and capital expenditures, (3) failed to apply a discount for various risk factors, (4)

assumed a 26 percent tax rate rather than a 39 percent rate, and (5) failed to apply any

marketability discount.

{¶ 53} When parties present substantially different valuations of an asset, a trial

court is free to believe all, part, or none of any witnesses’ testimony. Landis v. Landis,

2020-Ohio-6768, ¶ 9 (2d Dist.). “The court, in the end, must make its own determination

as to valuation based on the evidence presented.” Id., citing James v. James, 101 Ohio

App.3d 668, 681 (2d Dist. 1995). “A reviewing court must affirm a trial court’s -19-

determination if it is supported by competent, credible evidence and is not otherwise an

abuse of discretion.” Id. at ¶ 10. A trial court abuses its discretion when its attitude is

unreasonable, arbitrary, or unconscionable. Blakemore v. Blakemore, 5 Ohio St.3d 217,

219 (1983). “[M]ost instances of abuse of discretion will result in decisions that are simply

unreasonable, rather than decisions that are unconscionable or arbitrary.” AAAA Ents.,

Inc. v. River Place Community Urban Redevelopment Corp., 50 Ohio St.3d 157, 161

(1990). “A decision is unreasonable if there is no sound reasoning process that would

support that decision.” Id.

{¶ 54} In the present case, the trial court heard valuation testimony from three

experts: Alan Duvall, Greg Toman, and Rebekah Smith. Shery’s expert, Duvall, and

David’s expert, Toman, presented competing valuation reports. Duvall valued David’s

interest in Leadwise at $108,800,000, whereas Toman valued his interest at $27,480,000.

For her part, Smith testified as a rebuttal witness for David. After correcting perceived

errors in Duvall’s valuation, Smith opined that David’s interest in Leadwise was

$30,686,000.

{¶ 55} The trial court filed its 48-page written decision on September 29, 2023,

resolving the valuation dispute and other issues. With regard to David’s interest in

Leadwise, the trial court recognized that all three experts had “extensive knowledge in

the field of valuation.” Before addressing differences in the parties’ proposed valuations,

the trial court noted that it was “not totally satisfied with any of the three experts’ reports

in this matter.” The trial court nevertheless stated that it could not arbitrarily select a figure

“between the numbers suggested by the experts.” The trial court recognized that it was -20-

permitted to arrive at its own valuation based on the evidence presented. It found itself

incapable of doing so, however, reasoning:

. . . Given the numerous factors that are involved in evaluating the

fair market value of a Sub-Chapter S Corporation as complex as Leadwise,

Inc., it is obvious to the court that if it changes one factor, the court would

be unaware of what significance that would have on other factors that were

used in any one of the evaluations. Therefore, in essence, the court must

pick one of the evaluations as determined by the three experts. Therefore,

the court will review the below significant factors the court considered in

ascertaining which of the two reports [was] the most credible, reliable, and

accurate.

{¶ 56} The trial court found that “[a]lthough Mr. Duvall and Mr. Toman used the

same methodology in arriving at their fair market values for Leadwise, Inc., the vast

difference in their valuations is a result of five significant differences they used in their

application of different factors.” The trial court engaged in nearly 10 pages of analysis

addressing those factors and other valuation issues. It identified the five key factors as:

(1) using Leadwise’s financials from 2016 through 2020 (Duvall’s approach) or using only

2020 financials (Toman’s approach); (2) applying a company-specific risk adjustment of

.19 percent (Duvall) or 3.7 percent (Toman); (3) adopting a 26 percent to 29 percent tax

rate (Duvall) or a 36 percent tax rate (Toman); (4) assuming 10 percent annual growth for

five years with 3 percent growth thereafter (Duvall) or assuming only 3 percent growth

going forward (Toman); and (5) including as income a portion of Leadwise’s COVID-era -21-

“Paycheck Protection Program” (PPP) funds (Duvall) or excluding PPP funding as non-

recurring revenue (Toman).

{¶ 57} On each of the foregoing issues, the trial court found Duvall’s approach to

be the most credible and reliable. In addition to its analysis of those factors, the trial court

cited other evidence supporting Duvall’s valuation. It found that David and another key

principal of Leadwise together earned between $8 million and $12 million annually in

salary and distributions. The trial court reasoned:

. . . It seems to stretch the limits of credibility to suggest that a

Subchapter S Corporation that would generate anywhere near this annual

income for just two of its principal owners would have a fair market value of

$39,660,000.00. This does not take into account that Leadwise, Inc. has

built substantial owner equity over the history of its existence at the same

time as paying out substantial sums to its principal owners. Furthermore, as

noted by Mr. Duvall, Leadwise, Inc., for most of its history, has been able to

purchase equipment, with financing, etc., all being done internally, and the

company has virtually no need to go outside to financial institutions to

finance their projects. When all of these factors are looked at together, the

court finds that the fair market value as determined by Mr. Duvall is the more

reliable and accurate number.

Additionally, the court finds that plaintiff’s Exh. 150 was a valuable

piece of evidence. Exhibit 150 was an internal projection of David’s income

assuming that he continued to reduce his ownership interest in Leadwise, -22-

Inc. Leadwise, Inc.’s internal projections indicated that as of 2023, David’s

share of the net income from Leadwise, Inc. would be $12,542.40 [sic].

Therefore, the entire net income of Leadwise, Inc. projected for 2023 would

be $19,841,000.00. It seems to stretch the bounds of credibility to suggest

that a company that would generate almost $40,000,000.00 in net income

in 2 years would have a fair market value of approximately $39,660,000.00.

{¶ 58} Although the trial court adopted much of Duvall’s valuation, it explicitly

disagreed with him on two issues. Unlike Duvall, the trial court declined to assign any

value to David’s “founder’s option,” which entitled him to repurchase all outstanding

Leadwise shares. The trial court also rejected Duvall’s calculation of David’s ownership

interest in the company. The trial court adopted Toman’s conclusion that David owned

69.3 percent of Leadwise. As a result of these two adjustments, the trial court rejected

Duvall’s opinion that David’s ownership interest in the company was worth $108,800,000.

By declining to assign any value to the founder’s option, adopting Toman’s finding that

David owned 69.3 percent of the company, and otherwise adopting Duvall’s findings, the

trial court valued David’s interest in Leadwise at $80,180,100.

{¶ 59} Upon review, we reject David’s argument that the trial court erred in its

“wholesale adoption” of Duvall’s opinion. Duvall valued David’s interest in the company

at over $108 million. The trial court valued that interest at just over $80 million, which is

far from a complete adoption of Duvall’s position. The trial court engaged in a detailed

discussion of the competing expert opinions. It also identified key issues on which the

experts disagreed, and it found Duvall’s analysis of those to be the most credible and -23-

reliable.

{¶ 60} Although David complains that the trial court failed to explain why it found

Duvall’s valuation to be the most accurate, the trial court’s written decision and the

experts’ testimony as a whole are sufficiently clear. With regard to reviewing Leadwise’s

financials, Duvall believed looking at records from 2016 through 2020 provided a more

accurate perspective than relying on 2020 financials alone. The trial court agreed. With

regard to the company-specific risk adjustment, the trial court simply was persuaded that

Duvall’s .19 percent adjustment was more accurate than Toman’s 3.7 percent adjustment.

With regard to the proper tax rate, the trial court largely relied on Duvall’s application of

current tax rates rather than Toman’s use of a projected future tax rate. As for the

company’s growth rate, the trial court adopted Duvall’s 10 percent rate for five years

followed by a three percent rate thereafter. The trial court found this growth rate more

accurate than Toman’s projected straight three percent rate. Given the length of time it

took to litigate the case, the trial court noted that even Duvall’s 10 percent projected

growth rate for 2021 proved to be too conservative, as Leadwise actually grew by nearly

30 percent that year. Finally, the trial court agreed with Duvall’s argument that including

some PPP revenue in Leadwise’s gross revenue was appropriate, because it

compensated the company for COVID-related losses and failing to do so would artificially

undervalue the company. On each of the foregoing issues, the question is whether the

trial court abused its discretion in reaching its conclusion. Having reviewed the trial court’s

decision and the extensive testimony presented by Duvall, Toman, and Smith, we believe

the record is sufficient to enable us to perform appellate review. -24-

{¶ 61} As noted above, David also contends the trial court erred in adopting

Duvall’s valuation despite stating that it was “not totally satisfied with any of the three

expert reports in this matter.” David cites the Tenth District’s opinion in Miller, 2021-Ohio-

4573, for the proposition that the trial court was not permitted to choose the least flawed

expert opinion and to adopt it wholesale. In Miller, a divorce case, the parties presented

widely-divergent expert opinions about the value of the husband’s optometry practice.

Despite finding both parties’ valuations “flawed in certain respects,” the trial court in Miller

adopted the wife’s expert’s valuation without any revisions. The Tenth District found an

abuse of discretion by the trial court, reasoning:

. . . Simply noting that the expert’s analysis was “flawed” (albeit less

flawed than the competing expert’s) did not excuse the trial court, in our

view, from the need then to evaluate whether those unspecified flaws

counseled reexamination or revision of any of the expert’s bottom line

numbers.

...

. . . Again, we do not know what aspects of [wife’s expert’s] analysis

the trial court found to be flawed. But a trial court practice designed to adopt

without modification and as an all or nothing proposition the results of a

concededly flawed expert analysis simply because countervailing analysis

was more flawed seems to us—as applied in this particular context involving

the testimony we have referenced—an abuse of discretion as unreasonable

and arbitrary. -25-

Id. at ¶ 14, 16.

{¶ 62} Relying on Miller, David asserts that the trial court should have conducted

a “block-by-block evaluation of the evidence” rather than engaging in a “global” evaluation

of which expert’s valuation to adopt. Id. at ¶ 12. He contends its failure to do so constituted

an abuse of discretion.

{¶ 63} Upon review, we find David’s argument to be unpersuasive. Unlike Miller

the trial court did not wholly adopt the value proposed by Duvall or Toman. Most notably,

it explicitly rejected Duvall’s assignment of a $22 million value to David’s founder’s option.

Contrary to Duvall’s opinion, the trial court gave no value to the option. Additionally, Duvall

opined that David owned 75 percent of Leadwise, whereas the trial court determined that

David owned 69.3 percent, which was consistent with Toman’s analysis. These

adjustments by the trial court presumably addressed some of its dissatisfaction with

Duvall’s valuation.

{¶ 64} Although the trial court may have been “not totally satisfied” with any of the

expert valuations for additional reasons, it correctly noted that it could not arbitrarily

choose a valuation somewhere in the middle. “While the trial court is not bound to use

one valuation method over another, it is nonetheless restricted to the valuations in

evidence.” Berger v. Berger, 2015-Ohio-5519, ¶ 21 (11th Dist.); see also McCoy v.

McCoy, 91 Ohio App.3d 570, 578 (8th Dist. 1993) (“[I]f the trial court summarily arrives at

a valuation of an asset or property, even though between the two extremes of the

opposing parties’ witnesses, without a proper evidential predicate, such would be error.”).

Without an evidentiary predicate, “[a] trial court cannot devise its own value that falls

between the parties’ respective expert’s testimony.” Berger at ¶ 21. “Although a trial court -26-

is free to choose between the values presented by the parties according to the weight of

the evidence, it is not free to deviate from the evidence before it. Id.

{¶ 65} Here the trial court acknowledged its discretion to arrive at its own valuation

based on the evidence. It declined to do so, however, finding itself unqualified

independently to analyze “the numerous factors that are involved in evaluating the fair

market value of a Sub-Chapter S Corporation as complex as Leadwise, Inc.” Therefore,

as a practical matter, the trial court felt constrained to “pick one of the evaluations as

determined by the three experts.”

{¶ 66} Having reviewed volumes of testimony and boxes of exhibits addressing the

value of Leadwise, we are sympathetic to the trial court’s concerns. David’s own rebuttal

expert, Rebekah Smith, illustrated the dilemma. She acknowledged that changing one

valuation factor very well may “impact the amount of another change.” In other words,

Smith recognized that the valuation factors and adjustments to them were

interdependent. At one point, Smith explained: “Valuation isn’t, isn’t done in a vacuum,

you can’t just change one single number and have a yes or no.” She added: “It is complex,

so, I can’t sometimes just isolate [one] particular element, ok.” Smith’s testimony

supported the trial court’s reasonable concern “that if it changes one factor, the court

would be unaware of what significance that would have on other factors that were used

in any one of the evaluations.”

{¶ 67} In short, the parties based their competing valuations on the opinions of

seasoned experts who the trial court found had “extensive knowledge in the field of

valuation.” The trial court understandably lacked this extensive experience and -27-

knowledge, which, of course, was why expert opinions were needed. Even Smith

acknowledged on cross-examination that business-valuation issues, including calculating

a company-specific risk factor, require “professional judgment” in assessing and weighing

interrelated considerations. It follows that making such determinations is within the realm

of financial experts.

{¶ 68} We do not suggest that courts have no obligation to attempt to resolve

difficult valuation questions. Here, however, the trial court did the best it could and found

itself unable to conduct its own valuation analysis based on the evidentiary record before

it. The trial court may have possessed a general sense that one expert’s figure was too

high while the other expert’s was too low. Lacking the expertise of a certified public

accountant or other financial professional, however, the trial court was unable to render

its own valuation opinion. Given that it also could not arbitrarily pick a mid-range valuation

without an evidentiary predicate, one remaining option was to adopt, albeit with

modifications that it was comfortable making, the expert opinion that it found most credible

and reliable.1 On the record before us, we see no abuse of discretion in the trial court’s

adoption of this general approach.

{¶ 69} The remainder of David’s assignment of error addresses the following

factors that led to the experts’ divergent valuations.

A. Consideration of non-recurring revenue

{¶ 70} David first challenges the trial courts’ inclusion of some COVID-relief PPP

funding and a COVID-related payment from the Bureau of Workers’ Compensation

1 The trial court conceivably could have appointed a special master to assist it. But neither

party appears to have raised that issue in the trial court, and it is not an issue on appeal. -28-

(BWC) in Leadwise’s income. David asserts that the trial court erred in adopting Duvall’s

valuation insofar as it included this non-recurring revenue. He reasons that treating one-

time income as on-going revenue erroneously skewed Duvall’s growth projections for

Leadwise. David criticizes the trial court for adopting Duvall’s position on the foregoing

issue without explaining why.

{¶ 71} Upon review, we see no abuse of discretion in the trial court’s adoption of

Duvall’s inclusion of some non-recurring COVID-related revenue and a BWC payment in

Leadwise’s income. Duvall explained why he believed it was proper to include in the

company’s income a special BWC dividend and a portion of $5.5 million in PPP funding

from the federal government. At several points, he opined that some of Leadwise’s

construction-related segments were hurt financially by COVID. For example, a subsidiary

known as Threecore increased sales from 2019 to 2020 but swung from a $2.9 million

profit in 2019 to a $600,000 loss in 2020. Duvall recalled that another Leadwise subsidiary

known as Matrix also had “some issues.” After analyzing the situation, he attributed the

losses to project delays and increased expenses caused by COVID. In his expert opinion,

there was “zero question” that Leadwise had been harmed financially by COVID. We note

that David’s rebuttal expert, Rebekah Smith, also testified that she “understood [it] to be

true” that Leadwise as a whole had sustained COVID-related losses. In light of that fact,

Duvall included in one year of Leadwise’s income just $1.8 million of $5.5 million in PPP

funding as well as a BWC payment to the company.

{¶ 72} Duvall reasoned that it was appropriate to offset non-recurring losses

attributable to COVID with a portion of the non-recurring COVID-related funding. In his -29-

opinion, failing to do so would have painted a distorted financial picture and would have

resulted in the effect of non-recurring losses and expenses being projected into the future.

By offsetting the non-recurring losses with non-recurring income, Duvall brought

“everything back to even” and negated the one-time impact of COVID on Leadwise’s

future performance. Although David disagrees with Duvall’s treatment of the issue, we

cannot say the trial court acted unreasonably in accepting Duvall’s analysis.

B. Projected growth rate, working capital, and capital expenditures

{¶ 73} David next contends the trial court erred in applying a 10 percent growth

rate for five years and in assuming that all Leadwise income could be distributed to the

company’s owners without accounting for increases in working capital needed to cover

rising capital expenditures.

{¶ 74} Upon review, we see no abuse of discretion in the trial court’s adoption of a

projected10 percent growth rate for five years with three percent growth thereafter. These

figures were based on Duvall’s projections. Given the length of time it took to resolve the

case, even a 10 percent projected growth rate for 2021 proved to be too low. Leadwise

actually grew by nearly 30 percent that year, which was the first year of Duvall’s

projections. That being so, we certainly cannot say the trial court erred in rejecting

Toman’s analysis, which projected mere three percent growth every year.

{¶ 75} With regard to a need for increased working capital to cover rising capital

expenditures, David relied largely on testimony from rebuttal expert Rebekah Smith. She

stated that Duvall’s growth projections and corresponding net-income projections failed

to take into account that rapid growth comes at a cost. According to Smith, Leadwise -30-

would need to retain more of its earnings to cover additional capital expenditures

necessary to create the growth. Smith testified that Duvall did not make any adjustments

to working capital to account for increased capital expenses.

{¶ 76} While reviewing Duvall’s valuation report, she testified as follows:

. . . [Y]ou can see then in the next box is that there is no adjustment

for working capital when Mr. Duvall does his analysis. Because he doesn’t

set aside any of that net income as money that the Company needs to sort

of hold back. And what you see, is that as a percentage of revenues as he

grows the Company from being 135 million dollar Company up to and

almost 200 million dollar Company, the percentage of working capital keeps

falling, and falling, and falling, until eventually, he’s sort of at the end of his

projection period, it’s only 8 and a half percent which is way below what

Compan[ies] in this industry operate with at 15 percent.

December 9, 2022 Transcript Vol. 7 at p. 1159.

{¶ 77} Later in her testimony, Smith noted that Duvall’s “working capital number

doesn’t move in the same way that it historically has moved when there was growth.” She

opined that Duvall’s “working capital just stays flat, so, as the Company is growing, he is

basically distributing every dollar and not keeping any in the Company.” Id. at 1161. Smith

stated that “[t]he Company is not going to be able to grow at 10 percent if you don’t leave

any money behind.” Id. Smith made adjustments that she deemed necessary and opined

that they reduced Duvall’s valuation of Leadwise as a whole by $10.3 million.

{¶ 78} In its written decision, the trial court did not address the foregoing issue. It -31-

merely recognized that “for most of its history, [Leadwise] has been able to purchase

equipment, with financing, etc., all being done internally, and the company has virtually

no need to go outside to financial institutions to finance their projects.” While this may be

true, it does not address Smith’s point that rapid growth, if funded internally, requires

increased capital expenditures that in turn require increased working capital. According

to Smith, this means that more of the company’s earnings must be retained to pay for the

grown, which negatively impact’s the company’s value.

{¶ 79} On appeal, Shery too points out that Leadwise historically “has grown

exponentially without resorting to any outside funding or borrowing.” She also notes that

working capital traditionally has increased with the company’s growth. But these

observations seemingly support Smith’s point. Leadwise indeed can fund its own growth

if it increases retained earnings and working capital to account for necessary capital

expenditures accompanying the growth. According to Smith, the problem is that in her

opinion Duvall’s valuation, which the trial court largely adopted, failed to take into account

the need for increased working capital to cover increased capital expenses.

{¶ 80} Given that the trial court did not address the foregoing issue, which also

does not appear to have been specifically addressed in Duvall’s valuation report, we

express no opinion as to the correctness of Smith’s proposed $10.3 million reduction in

Leadwise’s value. We will remand the case for the trial court to make a finding as to

whether Duvall’s growth and net-income projections erroneously failed to take into

consideration the cost of that growth.

C. Company-specific risk factors and lack-of-marketability discount -32-

{¶ 81} David next challenges the trial court’s adoption of Duvall’s analysis of

certain company-specific risk factors as well as Duvall’s failure to apply a marketability

discount when valuing Leadwise.

{¶ 82} With regard to Duvall’s risk-factor analysis, which the trial court adopted,

David contends it did not adequately account for factors such as the company’s service

concentration, lack of customer diversity, dependence on David as the majority owner,

competitive risk, and interest-rate risk. Although Duvall applied a .19 percent risk-factor

adjustment, David’s expert, Toman, found a 3.7 percent discount to be appropriate. For

her part, Smith believed a four percent discount was the most accurate.

{¶ 83} In its written decision, the trial court summarized the competing expert

testimony regarding the appropriate company-specific risk adjustment. See September

29, 2023 Decision at p. 9-11. In so doing, it specifically addressed most of the risk factors

cited by David on appeal. After noting Duvall’s and Toman’s agreement that this aspect

of valuation was “the most subjective,” the trial court found Duvall’s .19 percent

adjustment to be “the more credible and accurate number.” In adopting Duvall’s analysis,

the trial court stated:

Mr. Duvall disputes that Leadwise, Inc. has a lack of diversity.

Although Leadwise, Inc. does not provide multiple product lines and

services, the companies under Leadwise, Inc.'s umbrella provides [sic]

every service that is needed in a construction related type job. Therefore,

Mr. Duvall stated that Leadwise, Inc. was unique in this instance, and that

when it would contract to do a construction job, it did not have to outsource -33-

any of these services. As a result, they were able to provide every client

with every service that was needed to accomplish the project. Furthermore,

Mr. Duvall indicated that Leadwise, Inc. is diverse in the sense that it is a

national corporation that provides work throughout the United States, and

in fact, has offices and has conducted work in numerous states.

Even though David is the majority owner of Leadwise, Inc., he has

been reducing his ownership role over the last several years and there

seems to have been no adverse impact on the company’s revenue and

growth as a result of the same. Furthermore, David has indicated he

believes that he has a very capable management team in place that is able

to maintain customer relationships and continue to do the work needed to

build the company.

Mr. Duvall acknowledges that Leadwise, Inc. does a significant

amount of work for a couple of customers, those being primarily Amazon

and Walmart. However, Mr. Duvall testified that in recent time, the

percentage of work provided by large customers to Leadwise, Inc. has

decreased from approximately 50% to 37%. Furthermore, these customers

have been long term customers for Leadwise, Inc. and there is no indication

that they are unhappy with Leadwise, Inc. services or have any intention of

taking their business elsewhere. Additionally, both Mr. Toman and Ms.

Smith seem not to take into account at all the unique nature of Leadwise,

Inc. Not only is Leadwise, Inc. a significantly large player in the construction -34-

industry, and provides virtually all of the construction services needed for a

customer under one umbrella, Leadwise, Inc. has significantly outperformed

the industry year after year after year. Therefore, it would suggest to this

court that a lower specific company cap risk is appropriate, and as a result,

[the court] find[s] that Mr. Duvall’s determination as to the company specific

risk factor is the more credible and accurate number.

Id. at p. 10-11.

{¶ 84} In short, the parties’ experts agreed that an adjustment to Leadwise’s

valuation was necessary to account for company-specific risk factors. The trial court

weighed the competing evidence as to the proper discount and, based on the reasoning

quoted above, credited Duvall’s testimony on the issue. We cannot say the trial court

acted unreasonably in doing so.

{¶ 85} Finally, with regard to a marketability discount, Toman and Smith testified

that Leadwise’s value needed to be discounted due to a relative lack of liquidity. In her

expert report, Smith explained that “[a]ll else being equal, an investment in which the

owner is able to achieve liquidity quickly is worth more than an investment in which the

owner is not able to liquidate the investment quickly.” According to Smith, “[t]his lack of

marketability forces an investor to seek a price concession to compensate for being

locked into an illiquid and long-term investment.” Because Leadwise was not a publicly-

traded company and because there were restrictions on shareholders selling or

transferring shares, Smith and Toman agreed that a 10 percent discount should be

applied. Smith testified that Duvall’s valuation report lacked any marketability discount.

{¶ 86} For his part, Duvall agreed that a marketability discount was necessary. He -35-

explained that “because [Leadwise] is a private company . . . the ability to convert stock

into cash is hindered and[,] therefore, deserves a discount.” Contrary to David’s argument

on appeal and Smith’s testimony below, Duvall insisted that he effectively had applied

such a discount when determining the company’s capitalization rate or “cap rate,” which

was a key component of the valuation analysis. He stated that Leadwise’s cap rate was

“built up” by making adjustments for projected growth and various risk factors. According

to Duvall, one risk factor he considered was the relatively small size of Leadwise. He

opined that a marketability discount was included in the small-company discount he

applied when determining the company’s cap rate. Therefore, Duvall saw no need for a

redundant “second level of discounting” for lack of marketability.

{¶ 87} In her rebuttal testimony, Smith denied that any component of Duvall’s cap-

rate “build up” accounted for a lack of marketability. After noting that Leadwise was a

private company with restrictions on selling shares, Smith explained that cap rates are

constructed using “public company data.” She asserted that Duvall’s small-company

discount was predicated on data from small publicly-traded companies with “liquidity

options” that Leadwise lacked. Smith opined that Duvall’s small-company discount was

not in any sense a “marketability discount” because there was no marketability

component to it.

{¶ 88} In its written decision, the trial court adopted Duvall’s .19 percent company-

specific risk discount without specifically addressing the marketability issue. The trial court

did not determine whether Duvall had neglected to adjust Leadwise’s cap rate to account

for a lack of marketability, as Smith claimed, or whether a marketability discount was -36-

embedded in the small-company discount Duvall used when computing the company’s

cap rate.

{¶ 89} Based on our review of the record, we find Duvall’s own testimony on the

issue to be unclear. He explained that developing a company’s cap rate required

assigning risk to various factors. One factor involved company size with “the smaller the

company, the higher the risk.” On direct examination, Duvall cited data examining risk

premiums for small public companies in Leadwise’s “size range.” Later on direct

examination, Duvall was questioned about his application of a marketability discount. He

responded:

I applied it through the cap rate. I mean, the cap rate builds up the

risks on an incremental basis you know, so, now, by the time you get

through the cap rate, you’ve got the value of the company, you know, of this

size. It’s already in the size premium. I don’t see any need to do another,

two answers, number one, I don’t see a need to do a second level of

discounting, as you used the term double dipping.

The second is, basically, Mr. Oakes has a control over one hundred

percent of the company. You could easily argue that he’s—the control

premium could be applied[.]”

June 7, 2022 Transcript Vol. II at p. 303-304.

{¶ 90} On cross-examination, Duvall addressed the subject again. When asked

whether his cap-rate calculations had treated Leadwise as a small publicly-traded

company, he responded: -37-

Well, the cap rate starts a build-up [w]ith a small—um—based on

large public companies. But then it has metrics in it like a size premium that

brings the cap rate down to the size that Leadwise is. So, the rate is geared

to be, to apply to the size of company Leadwise actually is.

December 5, 2022 Transcript Vol. III at p. 395.

{¶ 91} Duvall then engaged in the following exchange with David’s counsel:

Q. And you claim that you accounted when you testified before that you

accounted for a discount for the lack of marketability—um—by the

percentage that you used for the size premium when you were

building up your cap rate, right?

A. That’s the risk factor, yes.

Q. And then that size premium percentage you used when you were

building up your cap rate that was based on publicly-traded

companies, right?

A. We’ve been through that. No, the cap rate is based on a company

that’s Leadwise’s size. It starts with public but it ends up with a

company of Leadwise’s size.

Id. at p. 405.

{¶ 92} Finally, on redirect examination, Duvall elaborated on the concept of a

“control premium” in the context of a marketability discount. He stated:

Well, first you have to understand how the discount from

marketability typically is generated. It’s generated from statistics relating to

control premiums. You know, how much people pay to get control. Then -38-

you take the inverse and that’s your lack of marketability. Well, you know,

in this case, you know, [David] directly owns, you know, because they’re

invested what I’m saying 73 and a half to 75 percent of the stock, but

through the [Founder’s] option, he basically, owns over 100. I mean, he

owns 100. He’s got a super control. So you could argue that there should

be a control premium not a [marketability] discount.

Id. at 424.

{¶ 93} Although not entirely clear, Duvall’s testimony suggests to us that he may

have conflated the concepts of company size and marketability. A company may be

relatively large or small. As Duvall noted, a smaller company receives a valuation discount

in recognition of its higher investment risk. Whether large or small, a company also may

be private or public. As both parties’ experts recognized, a privately-held company

receives a marketability discount due to the comparative difficulty in converting its stock

to cash. In his testimony, however, Duvall repeatedly seemed to say that no discount was

needed to account for Leadwise’s lack of marketability because he already had made a

cap-rate adjustment to account for investment risk associated with the company’s small

size. It appears to us, however, that this reasoning involves a non sequitur. We fail to see

how a discount recognizing the risk of investing in a small company, whether public or

private, necessarily addresses the separate concern an investor might have about the

lack of marketability inherent in a private company.

{¶ 94} A small-company discount and a marketability discount appear to address

different issues. This view is consistent with the trial court’s decision in Bohme v. Bohme,

2015-Ohio-339 (2d Dist.), a case cited by David on appeal. One issue in Bohme involved -39-

valuing the husband’s dental practice. The trial court heard valuation testimony from

competing experts. One of those experts was Duvall, who opined that no marketability

discount was necessary for two reasons. First, the dental practice was fully marketable

because the husband was the sole owner. Second, “Duvall indicated that the lack of

marketability [was] built into the capitalization rate, and as a result, he did not feel applying

a marketability discount was appropriate[.]” Id. at ¶ 5. Without elaboration, the trial court

rejected Duvall’s position, found a marketability discount necessary, and valued the

dental practice significantly lower than Duvall had proposed. Id. On appeal, we affirmed

in part and reversed in part. Id. at ¶ 64. We did so without addressing the applicability of

a marketability discount, as that issue had not been raised on appeal. Bohme

consequently holds less precedential value in the present case than it otherwise might.

The trial court’s decision in Bohme nevertheless does support David’s position about the

discount for a lack of marketability.

{¶ 95} As for Duvall’s additional testimony suggesting that a marketability discount

may be unwarranted given David’s total control over Leadwise, we disagree. In light of

the founder’s option, Shery stresses that David has the power to acquire 100 percent of

Leadwise’s shares and to dispose of them at will. Therefore, she reasons that no discount

for lack of marketability was warranted.

{¶ 96} Upon review, we find Shery’s argument to be unpersuasive. In our analysis

of her appeal above, we upheld the trial court’s refusal to assign any value to the founder’s

option because David was “highly unlikely” ever to exercise the option. It would be

incongruous to assign no value to the founder’s option yet to rely on David’s ability to -40-

exercise the option to circumvent a marketability discount. We note too that unlike

someone who owns shares in a public company, David cannot sell his shares on the open

market and wait a few days for the transaction to settle. As noted above, David’s own

expert, Rebekah Smith, acknowledged that an owner of a private company cannot

“achieve liquidity quickly” and that this “lack of marketability forces an investor to seek a

price concession to compensate for being locked into an illiquid and long-term

investment.” For the foregoing reasons, we conclude that the existence of the founder’s

option did not obviate the need for some marketability discount.

{¶ 97} As noted above, the trial court did not address whether Duvall had failed to

discount Leadwise’s cap rate to account for a lack of marketability or whether a

marketability discount had been embeded in Duvall’s small-company discount. The

parties’ experts appeared to agree that some marketability discount was necessary, and

we reach the same conclusion. We will leave it to the trial court, as the trier of fact, to

determine in the first instance on remand whether Duvall’s analysis in fact contained an

adjustment to account for Leadwise’s relative lack of marketability.

D. Tax rate

{¶ 98} Finally, David claims the trial court erred in applying a 26 percent tax rate

when calculating Leadwise’s after-tax earnings. This rate was consistent with Duvall’s

valuation analysis. David asserts that the trial court should have adopted a 36.1 percent

rate used by Toman.

{¶ 99} The main difference in the two tax rates was that Duvall applied current tax

rates and took into consideration a qualified-business-income deduction (QBID). -41-

Conversely, Toman examined corporate tax rates dating back to the 1920s. He found that

current rates were historically low. He also noted that the rate Duvall used and the QBID

deduction itself were set to expire at the end of 2025. Therefore, Toman applied “an

average rate over a great number of years” and did not apply the QBID deduction. After

noting differences in the two experts’ approaches, the trial court simply found Duvall’s tax

rate “more credible and reliable.”

{¶ 100} When adjusting Leadwise’s cap rate to account for the impact of taxes, the

parties’ experts recognized that the company was an S-corporation and, therefore, that it

did not pay income tax directly. Instead, its shareholders paid taxes on distributions from

the company. That being so, Shery’s counsel cross-examined Toman about whether

taxes should be considered at all when valuing the earnings of an S-corporation. Toman

acknowledged literature stating that a zero-percent tax rate should be applied. He

maintained that such a rule only applied in gift-tax cases. Without elaboration, he opined

that the zero-tax-rate approach did not apply to general business valuations.

{¶ 101} Ultimately, Duvall and Toman both found it appropriate to take taxes into

consideration when valuing Leadwise despite its status as an S-corporation. As noted

above, both experts also considered corporate tax rates when doing so. Duvall focused

on current rates, and Toman used a blended average of historical rates. Duvall also

considered the impact of the QBID deduction on distributions from Leadwise to David.

{¶ 102} On appeal, David cites Toman’s testimony that since 1926 corporate tax

rates historically have been over 30 percent. He also cites Smith’s testimony that

corporate tax rates have averaged 37 percent over the last 47 years. Smith explained -42-

that valuing a business involves projecting income, the effect of taxes, and other factors

into the future. As a result, she opined that the tax rate at a particular moment in time,

while informative, should not be controlling. Like Toman, she found it more appropriate to

apply historical averages when valuing Leadwise.

{¶ 103} Although the approach employed by Toman and Smith makes sense, we

cannot say the trial court abused its discretion in adopting Duvall’s reasonable alternative

analysis. David contends the tax rates and QBID deduction on which Duvall relied will

sunset at the end of 2025 and may not be renewed. According to Toman, higher rates will

take effect if new legislation is not enacted. But none of the experts could say with any

certainty what will happen in 2026. Their valuations for Leadwise began with the year

2020—six years before any potential tax-law changes. In essence, Toman and Smith

discounted six years of existing tax law to account for what might happen in the future

and what had happened in the past. On the other hand, Duvall discounted potential tax-

law changes and focused on six years of existing law. Choosing between these

alternatives was within the trial court’s discretion.

{¶ 104} Based on the reasoning set forth above, we sustain David’s first

assignment of error in part and overrule it in part. The assignment of error is sustained

insofar as the trial court erred in ordering him to pay Shery nearly $29 million without

making a finding as to whether Duvall’s growth and net-income projections for Leadwise

erroneously had failed to consider the cost of growth and the company’s relative lack of -43-

marketability. The case will be remanded for the trial court to address those issues.2 In

all other respects, David’s first assignment of error is overruled.

{¶ 105} David’s second assignment of error states:

DECREE OF DIVORCE THAT THE SOCIAL ROW RESIDENCE

PREVIOUSLY GIFTED TO THE OAKES RESIDENCE TRUST IS

{¶ 106} David challenges the trial court’s determination that the parties’ residence

and a separate lot constituted marital property. He contends the trial court lacked

jurisdiction to make any disposition regarding the residence or the lot because they were

held in an irrevocable trust that was not a party to the divorce case. Even if the trial court

possessed jurisdiction, he claims the home and the lot were not marital property subject

to division.

{¶ 107} The parties built the home in 2007 and placed it in Shery’s name. In 2009,

they created an irrevocable trust known as “The Oakes Residence Trust.” The trust

identified Shery as the grantor and David as the executor. Under the heading “Intent of

2 In remanding the case, we remain cognizant of the trial court’s reluctance to change

any one valuation factor based on the effect the change might have on other factors. With regard to Duvall’s alleged failure to consider the cost of growth and Leadwise’s relative lack of marketability, however, Rebekah Smith quantified the effect of those alleged omissions. According to Smith, Duvall’s alleged failure to consider the cost of Leadwise’s projected growth overvalued the company as a whole by $10.3 million. She also opined that Duvall’s alleged failure to apply a marketability discount overvalued the company by 10 percent. If the trial court concludes on remand that Duvall failed to account for the cost of growth and Leadwise’s relative lack of marketability, it remains free to give Smith’s testimony whatever weight it deems appropriate. -44-

Trust,” the document provided: “It is the Grantor’s intent to make a completed gift of the

Trust Estate to the Beneficiaries under the terms set forth in this Trust.” Acting as grantor,

Shery conveyed the marital residence to the trust in 2009. At some point, a parcel of land

known as the Greenbriar lot was conveyed to the trust as well.

{¶ 108} In the proceedings below, Shery argued that the marital residence and the

Greenbriar lot were marital property subject to equitable division because they had been

purchased during the marriage with marital funds. Although the home and the lot had

been conveyed to an irrevocable trust, Shery testified that the intent of those conveyances

was to shelter the assets “from outside invaders” who might sue her or David. Shery

denied having any intent to “gift” the home to David. For his part, David agreed that the

conveyances had been made “for asset protection.” Regardless of the purpose, he

nevertheless asserted that the home and the lot in fact had been gifted to the irrevocable

trust, an independent third-party entity, meaning that they could not be marital property.

David also maintained that the trial court lacked jurisdiction over the trust’s assets

because the trust had not been made a party to the divorce proceeding.

{¶ 109} In its written decision, the trial court noted that no gift tax had been filed in

conjunction with the transfer of the residence or lot into the trust. The trial court also found

that the parties continued to treat the residence as their own property and to pay all

expenses with marital funds. Finally, the trial court noted that the parties once had used

the residence as collateral. The trial court then determined that “the Residence Trust is

marital in nature and will be divided as such.” In support of this determination, the trial

court reasoned: -45-

The court finds that Shery did not make an inter vivos gift to David.

It was never Shery’s intention to convey her ownership interest away in the

marital estate, and furthermore, neither of the parties ever executed any of

the terms of the trust, which would indicate there was an intent to transfer

Shery’s marital interest. Ohio case law has demonstrated that determining

the nature of a trust is done on a case by case approach based upon the

intent and conduct of the relevant parties. In this instance, at no time did

either party treat the trust as if it were separate or non-marital property.

David alleges that the real estate residence trust is not properly

before the court. David contends that it should have been ordered to be a

third party defendant in order for it to be properly before the court. However,

the court finds that David had at least constructive notice that the issue of

whether the real estate residence trust constituted marital or separate

property [sic], and David is the trustee of said trust and could of at any time

interpled the real estate trust in as a third party. Additionally, the trust could

have requested to have been added as [a] third party defendant at any time

and chose not to do so.

{¶ 110} The trial court’s divorce decree directly awarded Shery the marital home

and the Greenbriar lot while ordering David to “take all necessary steps” to facilitate these

transfers to her.

{¶ 111} Upon review, we find it unclear whether the trial court believed that Shery’s

conveyances of the residence and lot into the trust were invalid and void or whether it -46-

simply treated the trust assets as marital property despite the fact that they were held in

a valid irrevocable trust. After carefully reviewing the trial court’s written decision, we

believe it adopted the latter approach. The trial court characterized the trust as being

“marital in nature” based on how the parties had treated the real estate it held. The trial

court does not appear to have found Shery’s conveyances into the trust invalid, and we

see no basis for such a conclusion.

{¶ 112} Nothing in the record suggests that Shery lacked the capacity to place the

marital residence and the lot into an irrevocable trust, and we see nothing fraudulent about

the conveyance. The transfer was not done without Sherry’s knowledge. Indeed, she was

the grantor. After consulting a trust attorney, the parties mutually decided to convey the

residence and the lot to an irrevocable trust as a means of asset protection. Even if the

parties acted casually regarding the trust and treated the residence as their own marital

property, the fact remains that Shery purposefully did convey it to an irrevocable trust.

{¶ 113} “An irrevocable trust is an independent third-party entity, and, generally,

neither the trust nor the assets held by such a trust are subject to equitable division in a

divorce.” Kim v. Kim, 2020-Ohio-22, ¶ 11 (9th Dist.). Under some circumstances,

however, “[p]roperty paid for with marital funds, but . . . held by a third party, including a

trust, may be treated as marital property[.]” Id. This is consistent with R.C. 3105.171(A)(3),

which defines “martial property” to include not just property owned by a spouse but also

“[a]ll interest that either or both of the spouses currently has in any real or personal

property . . . that was acquired by either or both of the spouses during the marriage.”

Thus, under appropriate circumstances, if a spouse maintains an interest in real or -47-

personal property held by an irrevocable trust, a trial court may treat that interest as

marital property. See, e.g., Guagenti v. Guagenti, 2017-Ohio-2706, ¶ 71 (3d Dist.)

(“However, to be clear, in this instance Mark does have certain property interests flowing

from the 2007 SJG Trust which are subject to R.C. 3105.171(A)(3). While the 2007 SJG

Trust itself may not be subject to division, the distributed income received by Mark from

the SJG 2007 Trust is a property interest held by Mark.”).

{¶ 114} “[W]hen reviewing a trial court’s determination regarding the nature of an

irrevocable trust in the context of a divorce proceeding, a ‘case-by-case approach based

upon the intent and conduct of the relevant parties with regard to the formation and the

operation of the trust’ [is the] most appropriate approach and consistent with the manifest

weight standard of appellate review.” Kim at ¶ 11, quoting Guagenti at ¶ 69.

{¶ 115} In Kim, a case cited by Shery on appeal, the husband created an

irrevocable trust without his wife’s knowledge. Under the trust’s terms, the husband was

the grantor and his brother was the trustee. The husband purchased life-insurance

policies with marital funds and placed the policies in the trust. When the parties divorced,

the trial court declared the cash value of the policies to be marital property subject to

division. The Ninth District affirmed, noting that if it “were to hold otherwise, it would allow

a spouse to unilaterally, and without the consent or knowledge of the other spouse, move

marital money out of the reach of the other spouse by merely placing it in an irrevocable

trust.” Id. at ¶ 69. The Ninth District rejected the husband’s argument that the trial court

could not direct the trustee to take any action because neither the trustee nor the trust

had been made a party to the divorce case. The appellate court observed that the trial -48-

court had not ordered the trustee or the trust to do anything. “Rather, the trial court

credited the cash value of all the life insurance policies within the trust to Husband when

the court sought to equalize the distribution of marital property.” Id. at ¶ 16. The Ninth

District found no error because this action was within the trial court’s equitable power and

because the trial court did not direct the non-party trust or trustee “to take any action in

this case.” Id.

{¶ 116} We see little similarity between Kim and the present case. Unlike in Kim,

Shery and David mutually agreed to convey the marital residence and the lot to an

irrevocable trust. Although Shery insisted that she did not intend to “gift” those properties

to David, she undeniably did intend to gift them to a third-party irrevocable trust and to

have David serve as the trustee. The evidence for this conclusion is found in the language

of the trust agreement. Shery’s asset-protection rationale did not negate her donative

intent. Rather, it explained why she had donative intent and purposefully gifted the marital

residence and the lot to the trust. Indeed, the parties’ desired asset protection “from

outside invaders” existed precisely because Shery deliberately had divested herself of

the marital residence and the Greenbriar lot by placing those assets in an irrevocable

trust.

{¶ 117} In any event, given that the parties had acquired the marital residence and

the lot during the marriage using marital funds, we recognize that the trial court potentially

could have treated the value of those assets as marital property subject to division, as in

Kim, even though the real estate itself was held by a third-party irrevocable trust. We need

not resolve that issue definitively, however, because that is not what occurred. Unlike -49-

Kim, the trial court directly awarded Shery the marital residence and the Greenbriar lot,

while ordering David to take all necessary steps to convey those properties to her.

{¶ 118} We conclude that the trial court erred as a matter of law in its disposition

of the marital residence and the lot. In Guagenti, the Third District recognized that an

irrevocable trust “is an independent third-party entity and that assets held by such a trust

are not property owned by either spouse, but rather property owned by a third party.”

(Citations omitted.) Guagenti, 2017-Ohio-2706, at ¶ 70. That being so, there are no

steps David personally can take to convey the marital residence and the Greenbrier lot to

Shery. Those properties are owned by another entity, namely The Oakes Residence

Trust, which was not a party to the divorce case.

{¶ 119} This court considered a similar scenario in Maloney v. Maloney, 2005-

Ohio-1368 (2d Dist.), which involved a husband’s claim to part of the increased value of

a trust corpus of which his wife was a beneficiary. We reasoned:

R.C. 3105.171(A)(3)(a) defines marital property in the broadest

terms to include any property that either spouse currently owns or “has.”

However, even if the court had found that Linda “has” an interest in the

corpus of the trust of which she is a beneficiary, the court could not order

her to pay any part of the increase in the value of the trust to Joseph

because she lacks that power and authority. The power and authority to do

that are reserved to the trustee, Jim Cook, who is not a party to this action.

He might have been joined for that purpose pursuant to Civ.R. 75(B)(1) as

a “person . . . having possession of . . . or claiming an interest in property . -50-

. . out of which a party seeks a division of martial property,” but he was not

so joined.

Id. at ¶ 56.

{¶ 120} As in Maloney, a transfer of the marital residence and the Greenbrier lot

from the irrevocable trust to Shery would need to be performed by the trustee. We note,

however, that neither The Oakes Residence Trust nor David, in his capacity as trustee,

was made a party to the divorce proceeding. “Courts will find that a defendant is sued in

his capacity as trustee if a complaint identifies the defendant as a trustee either in the

caption or in a factual allegation.” Spencer v. Spencer, 2018-Ohio-4277, ¶ 48 (11th Dist.).

Shery’s divorce complaint did not name David as trustee in the caption or in factual

allegations. Therefore, the irrevocable trust and its trustee were not parties to the action.

Compare UAP-Columbus JV326132 v. Young, 2012-Ohio-2471, ¶ 19 (“Because neither

Wells Fargo nor UAP sued Young in his capacity as trustee, the owner of the Woodridge

property is not a party in this litigation.”).

{¶ 121} The trial court recognized the foregoing defect but faulted David. It

reasoned that David, as trustee, could have sought intervention as a third-party defendant

and could have interpleaded The Oakes Residence Trust. See Civ.R. 75(B). In his

personal capacity, however, David argued that the marital residence and lot were neither

marital property nor separate property owned by one spouse. He maintained that they

were owned by another legal entity, the irrevocable trust. David was not the party seeking

to have the residence and the lot equitably divided as marital property despite Shery’s

previously having gifted them to an irrevocable trust for asset-protection purposes. -51-

Therefore, David had no reason or obligation to assist Sherry by moving to be made a

party-defendant in his capacity as trustee and interpleading The Oakes Residence Trust.

See MacAlpin v. Van Voorhis, 1981 WL 3787, *2 (11th Dist. Sept. 28, 1981) (“Clearly, if

any duty or responsibility is imposed, it is on Nancy V. Taylor, Trustee, who, as was stated

earlier, was neither named nor served as a party defendant. . . . In her personal capacity,

Nancy V. Taylor had nothing to defend. There was no reason for her to assist the plaintiff

by moving to be made a party defendant, as trustee.”). David’s duties as trustee did “not

include voluntarily subjecting [himself] to suit in that capacity when [he] was sued merely

as an individual[.]” Id. at *4.

{¶ 122} For the foregoing reasons, we hold that the trial court erred in awarding

Shery real property owned by The Oakes Residence Trust, a separate entity that was not

a party to the divorce case, and in directing David personally to facilitate transfer of the

marital residence and the Greenbriar lot to her. Based on the authority set forth above,

the trial court may possess discretion to treat the value of the home and the lot as a marital

asset without actually ordering David in his personal capacity to facilitate its conveyance.

But, again, that is not what occurred. Therefore, we will leave it to the trial court and the

parties on remand to determine the proper disposition of the real estate in light of our

analysis herein. David’s second assignment of error is sustained.

{¶ 123} David’s third assignment of error states:

DECREE OF DIVORCE THAT SHERY OAKES’ INVESTMENTS IN WINE

COLLECTIONS (BOTH IN OHIO AND FRANCE), JEWELRY, -52-

EXPENSIVE WATCHES, AND EXTENSIVE ART COLLECTIONS ARE

PERSONAL PROPERTY SUBJECT TO DIVISION PURSUANT TO

MONTGOMERY COUNTY DOMESTIC RELATIONS LOCAL RULE

4.40(C)(1).

{¶ 124} David contends the trial court erred in finding that marital investments in

wine, jewelry, watches, and art were personal property subject to division under a coin-

flip provision in Mont. D.R. Rule 4.40(C)(1). David characterizes these items as

“alternative investments.” He maintains that they fell outside of the local rule, which he

argues applies to “run-of-the-mill household goods and furnishings.”

{¶ 125} By its terms, Rule 4.40 covers the division of “[m]arital household goods,

furniture, furnishings, appliances, tools, and other tangible personal property.” If the

parties cannot agree to the disposition of such property, Rule 4.40(C)(1) provides: “The

parties shall flip a coin with the winner having first choice of one item, the loser having

second choice, and the parties alternating selections until all items in dispute are divided.”

With the exception of two specific gifts that were not marital property, the trial court

ordered the parties to divide their personal property—including a collection of wine,

jewelry, watches, and art—using the coin-flip method. It reasoned that such a disposition

was the only “equitable and efficient” manner of distribution “[g]iven the magnitude of the

inventory of marital assets.”

{¶ 126} Applying the cannon of statutory construction ejusdem generis, David

argues that Local Rule 4.40 applies to “other tangible personal property” of the same kind,

type, or class as the specified items, which included marital household goods, furniture, -53-

furnishings, appliances, and tools. He reasons that the parties’ extensive collections of

wine, jewelry, watches, and art are “alternative investments” and are not in any way

analogous to traditional marital household goods that may be divided by coin-flip

disposition under Local Rule 4.40.

{¶ 127} Even if we accept David’s construction of the rule, we see no prejudice

resulting from the trial court’s dispositional order. In the proceedings below, David hired

an experienced personal-property appraiser, Amelia Jeffers, who assigned a fair-market

value to each item in the collections. Under Local Rule 4.40, the parties will take turns

selecting those items. Although David suggests that Shery may have a better

understanding of “the market,” Jeffers assigned a value to each item and the coin-flip

process will award him roughly half of the value. When questioned on that issue by the

trial court, Jeffers proffered testimony and agreed that the parties could “do the math and

come up with a relatively equitable distribution of the property” as of December 2020, the

date used to value the marital estate. Under these circumstances, we see no abuse of

discretion in the trial court’s dispositional order. David’s third assignment of error is

overruled.

{¶ 128} David’s fourth assignment of error states:

BASED UPON ANY ONE OR MORE OF THE FOREGOING ASSIGNED

ERRORS, THE TRIAL COURT ERRED, FURTHER, WHEN IT

CONCLUDED IN ITS DECISION AND DECREE OF DIVORCE,

PURSUANT TO THE COURT’S EQUALIZATION OF ASSETS, THAT

DAVID OAKES OWES SHERY OAKES $28,952,397.50 TO EQUALIZE -54-

THE PARTIES’ TOTAL ASSETS, DEBTS, AND LIABILITIES.

{¶ 129} In his final assignment of error, David contends our sustaining of any of

his first three assignments of error would render the trial court’s ordered $28,952,397.50

equalization payment to Shery mathematically incorrect and, therefore, an abuse of

discretion.

{¶ 130} In our analysis of Shery’s appeal above, we determined that she was

entitled to security for the judgment against David. With regard to the amount of that

judgment, we found that the trial court had abused its discretion in valuing the marital

residence and in basing its valuation of David’s interest in Brantwood Development on a

finding that the city’s payments to the company could not increase over time.

{¶ 131} In our analysis of David’s first three assignments of error, we found that

the trial court had erred in awarding Shery real property owned by The Oakes Residence

Trust and in directing David personally to facilitate transfer of the marital residence and

the Greenbriar lot to her. We also held that the trial court had failed to address whether

Alan Duvall’s growth and net-income projections erroneously failed to take into

consideration the cost of that growth and a relative lack of marketability.

{¶ 132} On remand, the trial court’s resolution of the foregoing issues likely will

impact the amount of David’s equalization payment to Shery. Consequently, the trial

court’s order in the divorce decree obligating him to pay her $28,952,397.50 will be

vacated pending resolution of the issues identified above. Because the trial court’s order

for a $28,952,397.50 equalization payment must be vacated, we overrule David’s fourth

assignment of error, as moot, as it challenges the amount of the vacated equalization- -55-

payment order.

IV. Conclusion

{¶ 133} The trial court’s judgment is affirmed in part and reversed in part. The

judgment is reversed insofar as the trial court failed to order any security for David’s nearly

$29 million financial obligation to Shery. Although we are vacating that ordered

equalization payment, Shery remains entitled to some form of security for whatever

payment the trial court ultimately orders David to make.

{¶ 134} The trial court’s judgment also is reversed insofar as it (1) valued the

marital residence at $5 million absent evidentiary support, (2) valued Brantwood

Development, LLC, based on a finding that periodic payments to the company could not

increase over time, and (3) awarded Shery real estate owned by an irrevocable trust and

directed David personally to facilitate transfer of the real estate to her. Finally, the trial

court’s order for David to pay Shery $28,952,397.50 over a seven-year period is vacated.

On remand, the trial court shall consider and determine whether Alan Duvall’s growth and

net-income projections failed to take into consideration the cost of that growth and

whether Duvall’s analysis contained a discount for Leadwise’s relative lack of

marketability. In resolving each of the foregoing issues, the trial court remains free to hear

additional testimony, take additional evidence, or adopt any procedure it deems

appropriate. In all other respects, the trial court’s judgment is affirmed.

WELBAUM, J. and HUFFMAN, J., concur. -56-