New case digests added to BVLaw in the last weeks


The following is a sampling of court decisions in which determination of the value of a business was essential to the result.   Many of the leading financial experts and business appraisers were involved as consultants or expert witnesses in these matters.  BVLaw digests all cases where valuation methodologies or competing approaches are adjudicated.

Holber v. M&T Bank (In re Scheffler), 2012 Bankr. LEXIS 2568 (June 5, 2012)

In fraudulent conveyance suit, federal bankruptcy court rejects cost approach and “hypothetical capitalization of income approach” to value a unique technology that nevertheless never made any profit in the history of the debtor’s business.

Experts: David Weinberg (trustee); Damon Neagle (defendant)

Judge:  Fehling

State/Jurisdiction: federal

Court: U.S. Bankruptcy Court

Type of case:  bankruptcy

SIC code: 2752 Commercial Printing, Lithographic

Enneking v. Schmidt Builders Supply Inc., 2012 U.S. Dist. LEXIS 84343 (June 19, 2012)

Court finds all ERISA claims against the company, ESOP plan fiduciaries, and appraisal firm for fraud and breach of fiduciary duty are barred by the statute of limitations, but permits state law negligence/malpractice claims to proceed against the appraisers.                                   

Experts:  SS&C Solutions, Inc.

Judge:  Robinson

State/Jurisdiction:   federal/Kansas

Court: U.S. District Court

Type of case:  ESOP

SIC code: 1521 General Contractors-Single-Family Houses

B-K Cypress Log Homes v. Auto-Owners Insurance Co., 2012 U.S. Dist. LEXIS 73773 (May 25, 2012)

Court admits the “before and after” as well as the “yardstick” model developed by the plaintiff’s lost profits expert, leaving questions regarding the underlying assumptions and data for cross-examination at trial, but excludes the defendant’s rebuttal witness as redundant to these same questions.                                  

Experts: Stanley Stephenson (plaintiff) and Jeffrey Harrison (defendant)

Judge:  Jones

State/Jurisdiction:   federal/ Florida

Court: U.S. District Cour

Type of case:  contract

SIC code: 1521 General Contractors-Single-Family Houses

Duke v. Duke, 2012 Tenn. App. LEXIS 367 (June 1, 2012)

Appellate court affirms $5.4 million value for business that supports emergency services department in hospitals, finding that it appropriately accounted for the risks of losing customer contracts as well as the absence of a non-compete agreement with the husband/CEO.                                   

Experts: Gerald LeCroy (husband); Kurt Myers (wife)

Judge:  Dinkins

State/Jurisdiction: Tennessee

Court: Court of Appeals

Type of case:  marital dissolution 

SIC code:  8093 Specialty Outpatient Facilities, Not Elsewhere Classified

Nordetek Environmental, Inc. v. RDP Technologies, Inc., 2012 U.S. Dist. LEXIS 68220 (May 16, 2012)

Federal court dismisses expert’s damages calculation of under Daubert for incorrectly applying the diminution of value approach to a recovered business, and for assuming a disputed IP license had no value.                                   

Experts:  J. Mark Penny and Edward Wilusz (defendant)

Judge:  Dalzell

State/Jurisdiction: federal/Pennsylvania

Court: U.S. District Court

Type of case: contract

SIC code and industry: 1629 Heavy Construction NEC (irrigation systems, sewage treatment plants, and water treatment plants) 

In the Matter of the Marriage of Gay, 2012 Ore. App. LEXIS 622 (May 16, 2012)

Appellate court affirms trial court’s determination that—despite expert evidence from both parties—the valuation of the wife’s minority shares in a closely held was too speculative, particularly when no actual buyer was likely to buy the shares; a strong dissent says the majority failed to apply legal (FMV standard) as well as equitable principles.                                  

Experts: William Mason II (wife)

Judge:  Schuman

State/Jurisdiction: Oregon

Court: Court of Appeals

Type of case:  marital dissolution

SIC code and industry: 1761 Roofing, Siding, and Sheet Metal Work

Apple, Inc. v. Motorola Mobility, Inc., 2012 U.S. Dist. LEXIS 105387 (May 22, 2012)

Federal court dismisses all the damages expert in the case, for both parties, for failure to calculate damages based on reliable consumer surveys and the “real world” cost of infringement alternatives.                                 

Experts: Brian Napper (plaintiff); Michael Wagner and Carla Mulhern (defendant)

Judge:  Posner

State/Jurisdiction:  federal/Illinois

Court: U.S. District Court

Type of case:  IP

 SIC code and industry: 4813 Telephone Communications, Except Radiotelephone (except resellers)

Apple, Inc. v. Motorola Mobility, Inc., 2012 U.S. Dist. LEXIS 89960 (June 22, 2012)

After excluding the parties’ damages experts under Daubert, the court finds no credible evidence remains to support their claims for patent infringement, damages, or equitable relief (either permanent injunctions or prospective royalties).                                    

Experts: Brian Napper and Nathaniel Polish (plaintiff); Charles Donahue (defendant)

Judge:  Posner

State/Jurisdiction:  federal/Illinois

Court: U.S. District Court

Type of case:  IP 

SIC code and industry: 4813 Telephone Communications, Except Radiotelephone (except resellers)

Bernier v. Bernier, 2012 Mass. App. LEXIS 211 (June 29, 2012)

Massachusetts Court of Appeals remands the case—for the second time—to the trial court for an appropriate valuation of the parties’ S corporations, including a tax affecting according to the “Kessler metric” (adopted from the Delaware Chancery Court).                                   

Experts: Howard Gordon (wife); David Merfield (husband)

Judge:  Sullivan

State/Jurisdiction:   Massachusetts

Court: Court of Appeals

Type of case:  marital dissolution

SIC code and industry: 5411 Grocery Stores (except convenience stores, freezer plans, and grocery stores with substantial general merchandise)

In the Matter of Cottrell, 2012 N.H. LEXIS 83 (June 29, 2012)

Appellate court affirms trial court valuation of dental practice that included “substantial” goodwill value but did not apportion it between personal and business goodwill, noting that the appealing party bears the burden at trial to establish this amount.                                   

Experts: Stanley Pollock (husband); Anthony Albright (wife)

Judge:  Lynn

State/Jurisdiction:   N.H.

Court: Court of Appeals

Type of case:  marital dissolution

SIC code and industry: 8021 Offices and Clinics of Dentists


Categories