Case Law: States Opt for Accredited Appraisers, Limit Expert Testimony, Consider Contracts

In Nebraska, Judge Considers: Should Damages be Limited to the Length of a Non-Compete Clause?

The Supreme Court of North Dakota prefers the testimony of an accredited appraiser, a Tennessee court asks an expert witness to stick to the topic rather than allowing him to recommend an alternative legal remedy, and a Nebraska court considers whether damages should be limited to those incurred during the period of a non-compete agreement. Find out the details.

Nuveen v. Nuveen
795 N.W. 2d 308
March 22, 2011
Judge Kaspner
Supreme Court of North Dakota

Summary:
The primary issue before the Supreme Court of North Dakota was the value of the husband’s orthopedic practice as well as spousal support issues.  The court preferred the testimony of an accredited appraiser over the testimony of a business broker.  The court was also complementary of the accredited appraiser’s use of a prior transaction in the subject. 

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Level 3 Communications v. Floyd

2011 U.S. Dist. LEXIS 30427
March 22, 2011
United States District Court for the Middle District of Tennessee
Judge Trauger

Summary:
The court precluded the defendant’s expert from opining on the appropriate legal remedy in the case at hand, namely: (1) the loss of use damages v. (2) lost profits.  The court did admit his testimony and criticized the plaintiff expert’s loss of use damage calculation and proposed an alternative damage amount. 

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Gary’s Implement, Inc. v. Bridgeport Tractor Parts

2011 Neb. LEXIS 26
April 1, 2011
Judge McCormack
Supreme Court of Nebraska

Summary:
Appellant, the seller of a business, sought review of a decision of the District Court for Morrill County (Nebraska), which awarded a judgment in favor of appellee, the buyer of a business. The buyer had set forth the action by alleging breach of contract and cross-appealed the denial of its motion for restitution. 

The seller asserted that the district court erred in failing to impose a time limit on damages awarded to compensate the buyer for breach of an agreement not to compete. The seller contended that the jury was entitled to award damages only for the five-year period contemplated in the agreement. The court upheld the decision.

The noncompetition agreement at issue provided that the seller would not compete with the buyer, either directly or indirectly, for a period of five years from the closing date. The date of closing was July 15, 1998. Thus, the agreement expired on July 15, 2003. The seller argued that the jury should have been instructed on that fact and that without such instruction, the instruction was misleading.

The court held that there was no legal basis for an instruction limiting the award of damages to the time period specified in an agreement not to compete so long as the evidence provided established damages with reasonable certainty.

As the evidence supported the instruction and because the jury instructions taken as a whole were not misleading and adequately covered the issues supported by the pleadings and evidence, there was no reversible error.  The decision of the lower court was affirmed. 

One interesting aspect of the case is that the Nebraska Supreme Court affirmed the admission of lost profit calculations that utilized comparable companies owned by the defendant.

by Peter Agrapides, MBA, AVA

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 $1billion. Reach him as panayotiagra@yahoo.com.