Colclasure v. Colclasure

WATT, J.,

with whom WINCHESTER, J. and COMBS, J. join, dissenting:

11 The petitioner/appellant, Lori Colelas-ure (wife), sold a forty-nine percent interest in her flooring business to the respondent/ap-pellee, Kent Colelasure (husband), before the marriage. The majority remands the instant cause for the trial court to re-evaluate the worth of the business, including any loss in its value due to the husband having opened a competing business and to the draws he took from the business after divoree proceedings were instituted. It also directs the trial court to value the business as of the date of the husband's purchase along with any money he received as an owner of the business. In so doing, the majority invades the province of the trial court while re-writing the parties' contract for what appears to be the single purpose of increasing the wife's settlement award. This I will not do. Therefore, I dissent.

T2 a) No abuse of discretion occurred in the property division.

T3 The majority pays lip service to the well-established rule that the trial court has considerable discretion in making decisions regarding the division of property upon divoree. The opinion provides in pertinent part at 1 15:

... The trial court has wide latitude in determining what part of jointly acquired property shall be awarded to each party.... An appellate court will not disturb the trial court's property division absent a finding of abuse of discretion or a finding that the decision is clearly contrary to the weight of the evidence.... [Footnotes omitted.]

Nevertheless, it goes on to find abuse where none exists. In order to do so, the majority abandons the rule it claims for guidance and the standard for upholding a decision made by the one person in the judicial chain with the opportunity to hear the evidence, observe the parties and the witnesses, and form an independent conclusion guided by application of legal standards to the facts presented.

T4 An abuse of discretion occurs when a court bases its decision on an erroneous conclusion of law,1 when there is no rational basis in evidence for the ruling,2 or if it acts arbitrarily.3 None of these conditions exist in this cause.

T5 There are valid reasons upon which the trial court may have determined the husband's valuation of the business interest to have been more accurate than that of the wife's. First, the wife's expert recognized that there was an error of approximately $144,000.00 in his calculations.4 Second, the *1133appraiser acknowledged that there was a method in the parties' agreement for the determination of a date to utilize in determining the valuation of the business, which he did not utilize.5 Third, the report itself had conflicting dates upon which different capitalization rates 6 were utilized, which may have indicated that the wife's appraiser was "cherry picking" information from reports of different dates and utilizing the information most favorable to his client. This is demonstrated by the expert's own testimony where he admits completing an initial report in which he utilized a capitalization rate of 36.96% and then applied a rate of 47.05% in the report submitted at trial.7 It is also apparent in the selection of a number for the corporation's gross profits.8 Third, the same witness admitted to using the highest tax rate available to a corporation in his valuation estimates rather than the tax rate applicable to the flooring business.9 Fourth, the wife's expert agreed that his original valuation of the company was some $300,000.00 lower than the final draft and that if he had not included estimated values for diversion of income and had not utilized the inflated capitalization rate, his estimate would have been comparable to the estimate made by the husband's appraiser.10 Finally, the wife's ex*1134pert admitted that his valuation was not computed in accordance with generally accepted accounting principals although it was done pursuant to National Association of Certified Valuation Analyst Professional Standards.11

T6 The majority recognizes that the trial court had before it evidence that would support the trial court's property division. It acknowledges that the valuation was made by an individual who is a member of the Oklahoma Bar Association and a Certified Valuation Analyst. It is of no import that there was also evidence from another source which would support a different division of the property interests. There being no evidence sufficient to show the trial court abused its discretion as to the property division, its ruling should be affirmed.

T7 b) To reach the result recommended by the majority, it must rewrite an unambiguous contract. An action prohibited by Oklahoma jurisprudence.

T8 The Operating Agreement (agreement) was signed by both the husband and the wife as "members." - It provides in pertinent part that each member may engage in business, without limitation, in business interests and activities that are in direct competition with the Company. The agreement goes on to state, in mandatory language,12 that no provision of the contract shall be deemed to prohibit a member from having a competing business or engaging in competitive activities.13

T9 Upon divorce, the agreement provides that the company shall dissolve and its affairs be wound up with the right to purchase being given to any remaining member. The same contract has a formula for determining a purchase price which utilizes an appraised value where no agreed value can be reached. Again, mandatory language provides that the "appraised value" shall mean the value determined as of the last day of the month immediately prior to the month in which the event of dissolution occurs, here the appraisal date is undoubtedly the last day of the month prior to the month in which the petition for divorce was filed. In this case, the "event of dissolution" was the wife's filing for divorcee on December 28, 2009. Clearly, the agreement, which both parties signed, intended the date of valuation to be November 30, 2009, not some date thereafter which might take into effect changes in condition of the operation of the flooring business.14

10 Intent at execution controls the meaning of written contractual terms 15 and the extent of the obligation is defined by the promise given. Contract language is accorded its plain and ordinary meaning absent a term intended to carry a specific technical maening.16 Where terms are defined the *1135parties are bound by those definitions.17 Extrinsic evidence need not be introduced when the language is clear and explicit.18 If the contract is complete in itself and, viewed in its entirety unambiguous, its language is the only legitimate evidence of intent.19 The courts decide, as a matter of law, whether a contract provision is ambiguous.20 Absent illegality, the parties are free to bargain as they see fit, and this Court will neither make a new contract nor rewrite existing terms.21

T 11 There is nothing ambiguous about the agreement entered by the parties. It clearly and unambiguously allows direct competition and provides the formula by which the value of the company is to be determined. The wife made a bad business decision when she sold her then fiancée forty-nine percent (49%) of her flooring company for $5,000.00. The husband did not "double dip" by continuing to receive his share of the benefits arising from the interest he held in the wife's flooring business and nothing prohibited his entering into competition with the original flooring enterprise. Rather, such competition was expressly considered in the agreement itself.

112 There was no abuse of discretion in acknowledging the terms of the contract or in holding the parties to those strictures. The abuse occurs when the majority steps in to make a property division that "looks fair" but which is not what the parties clearly intended nor is it that for which they negotiated.

CONCLUSION

{13 A review of the property division for an abuse of discretion does not allow this Court to substitute its judgment for that of the trial court. Because no such abuse occurred, the property division award should be upheld. I would do so. Therefore, I dissent.

. Wells Fargo Bank, N.A. v. Heath, 2012 OK 54, ¶ 8, 280 P.3d 328.

. United States Bank Nat'l Ass'n v. Baber, 2012 OK 55, 14, 280 P.3d 956; Fent v. Oklahoma Natural Gas Co., 2001 OK 35, ¶ 12, 27 P.3d 477.

. Head v. McCracken, 2004 OK 84, 12, 102 P.3d 670; Mooney v. Mooney, 2003 OK 51, 150, 70 P.3d 872.

. Transcript of proceedings, September 27, 2010, Kenneth W. Klingenberg testifying in pertinent part at p. 64:

*1133"... Q All right. Looking at this page, do you see where you have the-the number $357,386, correct?
A - Absolutely, yes, sir.
Q Okay. I'm going to hand you [sic] calculator. Will you, please, do the math where you have deducted out those other expenses and tell me if your report give [sic] us the correct number?
A Well, I'm embarrassed to tell you, it does not come up with the number.
THE COURT: Okay, I'll bite. What number does it come out to?
MR. KLINGENBERG: 207,588..."

. Transcript of proceedings, September 27, 2010, Kenneth W. Klingenberg testifying in pertinent part at pp. 65-66:

"... Q Okay. But you saw in the operating agreement, in Section 12, where the parties agreed on how the company would be valued, as far as how the appraisal date would be determined for using for an evaluation, if there was a need to evaluate the company; is that correct?
A As of the appraisal date, yes....
Q So the parties had agreed previously, before we got any experts involved, on what date the company's financials and documents would be looked at to do an evaluation; is that correct?

A Under the operating agreement there is a method, yes...."

. "Capitalization rate" is that percentage which will provide for recapture or amortization of value of investment in the improvements, plus a reasonable and proper rate of return to the investor, whether income to be capitalized is calculated before or after deduction of debt service. Sill Corp. v. United States, 343 F.2d 411 (10th Cir. 1965), cert. denied, 382 U.S. 840, 86 S.Ct. 88, 15 L.Ed.2d 81 (1965).

. Transcript of proceedings, September 27, 2010, Kenneth W. Klingenberg testifying in pertinent part at:

pp. 66-67: "Q Looking at this page that we've been referring to or your report, it's got-why does it say, 31-Dec-08 at the top of those numbers?
A Well, because I had originally prepared an evaluation prior, and when we changed it that should have changed to December 31, '09...."
p. 74; "... Q It is quite common when you prepare evaluations of companies to see capitalization rates computed at 47.05 percent, in your experience?
A ... But this is a relatively high cap rate, I'm not denying that it is. ..."
p. 78: "... Q - And tell the Judge what your pretax, current year capitalization rate was when you prepared your first valuation of the company?
A 36.96 percent...."

. Transcript of proceedings, September 27, 2010, Kenneth W. Klingenberg testifying in pertinent part at p. 78:

"... Q And you used the valuation date of December 31st, 2008, in this report, correct? A That is correct.
Q Now, Arrow Hardwood Floors {sic} gross profit for 2009 was actually a bit higher than 2008, wasn't it?
A I think you're right...."

. Transcript of proceedings, September 27, 2010, Kenneth W. Klingenberg testifying in pertinent part at p. 74:

"... Q Okay. Now, speaking of the taxes, isn't it true, sir, that you used the highest tax rate of 35 percent, which is the same rate used for C corporations?
A That's correct.
Q - And that is an S corporation, correct?
A That's correct...."

. Transcript of proceedings, September 27, 2010, Kenneth W. Klingenberg testifying in pertinent part at pp. 84-85:

"... Q Okay. What on the 2009 tax return changed your valuation of this company by, approximately, $300,000, sir?
*1134. A I don't know that it was specifically anything on the '09 tax return that changed the value....
Q Okay. Would you agree with me, sir, that if we take out this stuff about a deduction for diversion of income and used this cap rate that you originally determined for the valuation of the company, you and Mr. Blodget's final valuation numbers are very close?
A You know I haven't run those numbers but I would-certainly, that would narrow the gap....

. Transcript of proceedings, September 27, 2010, Kenneth W. Klingenberg testifying in pertinent part at p. 86:

"... Q Can you tell this Court this your final valuation is computed in accordance with generally accepted accounting principals?
A -It never was intended to be, and it was not, and it will not be...."

. The term "may" is ordinarily construed as permissive while "shall" is commonly considered to be mandatory. MLC Mort. Corp. v. Sun America Mort. Co., 2009 OK 37, fn. 17, 212 P.3d 1199; Osprey LLC v. Kelly-Moore Paint Co., Inc., 1999 OK 50, ¶ 14, 984 P.2d 194; Shea v. Shea, 1975 OK 90, 1 10, 537 P.2d 417.

. Operating Agreement of Arrow Hardwood Floors, clause 6.08.

. Operating Agreement of Arrow Hardwood Floors, clause 12.01.

. Title 15 O.S.2011 § 152; Oxley v. General Atlantic Resources, Inc., 1997 OK 46, ¶ 14, 936 P.2d 943.

. Title 15 O.S.2011 § 154; JPMorgan Chase Bank v. Specialty Restaurants, Inc., 2010 OK 65, 243 P.3d 8; BP America, Inc. v. State Auto Property & Cas. Ins. Co., 2005 OK 65, ¶ 6, 148 P.3d 832.

. See, Maule v. Independent School Dist. No. 9 of Tulsa County, 1985 OK 110, ¶ 7, 714 P.2d 198

. Lum v. Lee Way Motor Freight, Inc., 1987 OK. 112, ¶ 16, 757 P.2d 810; Rucker v. Republic Supply Co., 1966 OK 118, ¶ 9, 415 P.2d 951.

. Founders Bank & Trust v. Upsher, 1992 OK 35, ¶ 19, 830 P.2d 1355; Mercury Inv. Co. v. F.W. Woolworth Co., 1985 OK 38, 19, 706 P.2d 523.

. Oklahoma Oncology & Hematology v. United States Oncology, Inc., 2007 OK 12, ¶ 27, 160 P.3d 936; Whitehorse v. Johnson, 2007 OK 11, ¶ 14, 156 P.3d 41; Pitco Prod. Co. v. Chaparral Energy, Inc., 2003 OK 5, ¶ 12, 63 P.3d 541.

. JPMorgan Chase Bank v. Specialty Restaurants, Inc., see note 17, supra; Oxley v. General Atlantic Resources, Inc., see note 16, supra; Bonner v. Oklahoma Rock Corp., 1993 OK 131, ¶ 5, 863 P.2d 1176.