Georgia Case Turns on Memorandum of Agreement Establishing Valuation Methodology Reviewed by Momizat on . More: A Case in Texas Turns on a Husband and Wife with Differing Appraisals of a Business That’s Declined in Value Peter Agrapides gathers recent federal cases More: A Case in Texas Turns on a Husband and Wife with Differing Appraisals of a Business That’s Declined in Value Peter Agrapides gathers recent federal cases Rating:
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Georgia Case Turns on Memorandum of Agreement Establishing Valuation Methodology

More: A Case in Texas Turns on a Husband and Wife with Differing Appraisals of a Business That’s Declined in Value

Peter Agrapides gathers recent federal cases bearing on valuation and family law. In Georgia, a county issues bonds to finance a regional warehouse built by the corporation; the parties agree to use a certain valuation methodology, and since agreement is mentioned in the lease, the Georgia Court of Appeals finds full compliance with that methodology is in fact part of the lease.

Sherman v. Dev. Auth
2012 Ga. App. LEXIS 524
July 5, 2012
Court of Appeals of Georgia
Judge Mitchell

Summary:
The state initiated a bond validation proceedings against appellees, a county development authority and a corporation, seeking a judgment confirming and validating the authority’s issuance of proposed taxable revenue bonds and related security as required by the Development Authorities Law, O.C.G.A. § 36-62-1 et seq. Appellant resident challenged a judgment of the Fulton County Superior Court (Georgia), which validated and confirmed the bonds.  The bonds were intended to finance the acquisition, renovation, and equipping of a warehouse distribution center that the corporation would develop.

The validation order ruled that the parties had the authority to enter into a memorandum of agreement establishing the valuation methodology to be use in assessing ad valorem taxes on the leasehold estate and that the memorandum was valid and enforceable. The court of appeals held that because the memorandum was referenced by the lease and dictated the methodology to be used to value the corporation’s leasehold estate for ad valorem tax purposes, it constituted an integral part of the lease and was properly before the trial court.

Although the validation order stated that the valuation methodology set forth in the memorandum complied with the supreme court’s prior rulings, it did not explain the facts or analysis it used to reach that conclusion pursuant to O.C.G.A. § 9-11-52(a). Without such evidence, the court of appeals was unable to determine that the valuation method used was not arbitrary and unreasonable.

The resident requested specific findings of fact and conclusions of law regarding the application of the required factors.  The court of appeals affirmed the judgment in part, vacated it in part, and remanded the case so that the superior court could enter a judgment setting forth requisite findings of fact and conclusions of law that would allow meaningful appellate review of the trial court’s rejection of the resident’s arguments.


Walsh v. Walsh

2012 Tex. App. LEXIS 5926
July 24, 2012
Court of Appeals of Texas
Judge Seymor

Summary:
Appellant former wife challenged a decision from the 247th District Court, Harris County, Texas, which divided the marital property in a divorce case involving appellee former husband.  The parties disputed the valuation of a resort that was owned by a corporation. The parties were the only shareholders and officers.

“The court of appeals held that because the memorandum was referenced by the lease and dictated the methodology to be used to value the corporation’s leasehold estate for ad valorem tax purposes, it constituted an integral part of the lease and was properly before the trial court.”

The trial court accepted the husband’s valuation of the resort, and this appeal followed. In affirming, the appellate court determined that a division of the property was done in a manner that was just and right having due regard to the parties and any children of the marriage, pursuant to Tex. Fam. Code Ann. § 7.001 (2006).

The value of community assets was determined as of the date of the divorce or as close to that date as possible. Here, the trial court did not abuse its discretion in valuing the property at a lower amount. The appraisal offered by the wife was three years old, while the one offered by the husband was more recent.

During a deposition, the wife acknowledged that the value of the resort had gone down. The wife’s emphasis on her familiarity with the property was actually a factor negating using the higher figure because the trial court could have considered her previous opinion that it was no longer worth that amount. 

The ruling of the trial court was affirmed.

Peter H. Agrapides, MBA, AVA, is a Principal at Western Valuation Advisors, which has offices in Salt Lake City, Utah, and Las Vegas, Nevada. Mr. Agrapides’ practice focuses primarily on valuations for gift and estate tax reporting. He has experience valuing companies in a diverse array of industries. These engagements have ranged from small family owned businesses to companies over $1 Billion. Reach him as panayotiagra@yahoo.com.


The National Association of Certified Valuators and Analysts (NACVA) supports the users of business and intangible asset valuation services and financial forensic services, including damages determinations of all kinds and fraud detection and prevention, by training and certifying financial professionals in these disciplines.

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