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Who Pays for a Business Valuation?

Maiwald v. Maiwald, 2022-NCCOA-321 (unpublished) (2022)


In North Carolina, Equitable Distribution (ED) cases will classify, value, and distribute marital assets in a fair way. One major component is classification, as separate property (typically property not acquired during the marriage) is not distributed. If a party owns a business, however, even if the business was started before the marriage, it may have a significant marital component. If the business is marital, how do you value it? Value matters a lot. In distribution, the court will presume a 50/50 split and will also try not to split a business. (The record of ex-spouses working well together is not good.) So a bad valuation could result in a lopsided division. Courts will sometimes require the use of a certified business appraiser or business valuation expert.


Facts: Plaintiff and Defendant were in an ED case. Plaintiff had a business, Maiwald Underground LLC, which was alleged marital property. Defendant moved for the appointment of a business appraiser expert witness to find the value of the business for ED. The trial court granted Defendant’s motion and ordered that Plaintiff bear the cost of the expert’s fees. Plaintiff asked the court to reconsider and argued that some circumstances had changed that made his ability to pay the fees difficult. The motion to reconsider was heard and the court did not find that Plaintiff couldn’t pay. In the order appointing the expert, a provision was included that, while Plaintiff was to pay the initial fees, those fees may be assessed to the other party later in the ED trial. Plaintiff appealed before the ED was decided, making this an interlocutory appeal.


Issue: Did this interlocutory appeal affect a substantial right?


Holding: No


Reason: As a brief reminder, an interlocutory appeal is one that is made while the underlying case is still pending, from an order that may settle some, but not all, of the issues. Sometimes a trial court will certify an interlocutory order for appeal, but otherwise the order must affect a substantial right. To meet that burden, the appellant must pass a two-part test: 1) that there is a substantial right, and 2) that deprivation of that right must injure the appellant if it not corrected before the final judgment in the case. In this case, there was no substantial right because, while the order stated that Plaintiff would bear the upfront cost, the trial court expressly held open the issue of how the fees would be assessed at a later date, in conjunction with the ED trial. This temporary nature of fee apportionment did not amount to a substantial right in effect. I imagine that if Plaintiff made a strong showing in the motion to reconsider, and the court actually made findings that he would encounter hardship in paying those fees yet ordered that he should, he would have a better case on appeal. After all, the punishment for disobeying that order could be contempt with jail time.