MARTIN LEE BASS,
Plaintiff,
v
.
Robeson County
No. 97 CVD 2404
VICKIE LYNN BASS,
Defendant.
Sullivan & Grace, P.A., by Nancy L. Grace and Katherine G.
Hardersen, for plaintiff appellant.
Brown & Neier, L.L.P., by Bryce D. Neier, for defendant
appellee.
ELMORE, Judge.
Martin Lee Bass (“plaintiff”) and Vickie Lynn Bass
(“defendant”) were married on 16 June 1990, separated on or about
22 October 1997, and divorced on 14 December 1998. The parties'
cross-claims for equitable distribution were heard on 7 September
2001, and on 16 January 2002, the trial court entered a Judgment of
Distribution of Marital Property (the “equitable distribution
order”) in which the trial court identified, and assigned a
monetary value to, each item of marital property pursuant to N.C.
Gen. Stat. § 50-20 (2001). One item determined by the trial courtto be marital property was Bass Bonding Company, Inc. (“Bass
Bonding”), a bail-bonding business established together by the
parties during their marriage. With respect to the valuation of
Bass Bonding, the trial court made extensive findings of fact as
follows:
. . .
11. The parties chose Mr. Willie Blake, a certified
Public Accountant from Fayetteville, NC to value Bass
Bail Bonding, Inc. This business is jointly owned by the
parties, and Mr. Blake placed a total value on the
business of $419,689.00. The component of a professional
practice which is the most controversial and difficult to
value, is it's [sic] good will [sic]. Mr. Willie Blake,
used the excess earnings method of valuation to value
this business. He values the adjusted net tangible
assets of the business at $231,939.00. He values the
intangible good will [sic] at $187,750.00. The
Defendant's expert witness, Mr. Walter Lee Cline,
testified that the primary product of a bail bonding
business is the generation of liability, namely, the bail
bonds themselves. The inventory of a bail bond business
is the bonds that the business might have to pay if
forfeited. According to [Cline], it is very doubtful
that he, or anyone else, would buy another bonding
company that had outstanding liabilities. For the many
years that [Cline] has been a bondsman, [Cline] only
knows of one bonding company that was sold as a going
concern.
12. Mr. Blake's well-reasoned valuation of the goodwill
of this bonding business is wildly speculative in light
of the absence of any real market value for bail bonding
businesses. The usual definition of fair market value as
applied by Mr. Blake is not valid in the face of evidence
that there is in fact no true market for such unique
businesses. Accordingly, the Court sets the value of the
bail bonding business at $231,939.00 and rejects Mr.
Blake's contention that the goodwill of the business has
a value of $187,750.00.
. . .
In dividing the marital property pursuant to N.C. Gen. Stat.
§ 50-20 et seq., the trial court determined that defendant wasentitled to Bass Bonding. The equitable distribution order further
provided as follows:
. . .
18. Based upon the foregoing, the Court determines and
finds as a fact, that an equal division would be
equitable. It is, however, impossible to make a division
in kind, and, therefore, in order to accomplish an equal
division of marital property, it will be necessary for
the Defendant to make a distributive award to the
Plaintiff in the sum of $119,098.50. This distributive
award facilitates the distribution and is necessary to
achieve equity between the parties.
. . .
The equitable distribution order further provided that the
distributive award “shall be paid in three (3) equal installments
of $39,700.00. . . . The first instalment [sic] shall be due, with
interest, on December 1, 2002. The remaining installments, with
interest, shall be due on December 1, 2003, and December 1, 2004.”
On 14 February 2002, plaintiff filed his notice of appeal from
the equitable distribution order. Plaintiff does not contest the
trial court's determination that Bass Bonding is marital property.
Plaintiff appeals only from those portions of the equitable
distribution order which (1) valued Bass Bonding at $231,939.00, a
figure representing the value of the business' adjusted net
tangible assets, and (2) awarded plaintiff a distributive award of
$119,098.50. Plaintiff contends the trial court should have
assigned a higher monetary value to Bass Bonding, which would have
consequently resulted in a larger distributive award to him.
In his brief, plaintiff asserts the trial court erred by (1)
determining the value of Bass Bonding without placing any value onthe company's intangible business goodwill, based solely on the
finding that there is a limited market for bail bonding businesses;
(2) relying on the testimony of bail bondsman Walter Cline
(“Cline”) in rejecting the existence of goodwill in Bass Bonding;
and (3) calculating the amount of plaintiff's distributive award
based on an erroneous determination of Bass Bonding's value. For
the reasons discussed herein, we find each of plaintiff's
assignments of error to be without merit.
Our appellate courts have established the standard of review
for equitable distribution awards as follows:
Historically our trial courts have been granted wide
discretionary powers concerning domestic law cases. . .
. It is well established that where matters are left to
the discretion of the trial court, appellate review is
limited to a determination of whether there was a clear
abuse of discretion. . . . A trial court may be reversed
for abuse of discretion only upon a showing that its
actions are manifestly unsupported by reason. . . . A
ruling committed to a trial court's discretion is to be
accorded great deference and will be upset only upon a
showing that it was so arbitrary that it could not have
been the result of a reasoned decision.
Munn v. Munn, 112 N.C. App. 151, 155-56, 435 S.E.2d 74, 77 (1993)
(quoting White v. White, 312 N.C. 770, 777, 324 S.E.2d 829, 833
(1985)) (internal citations omitted). In the case sub judice, we
apply the abuse of discretion standard in reviewing the trial
court's equitable distribution order.
By his first assignment of error, plaintiff contends the trial
court erred by rejecting certified public accountant Willie Blake's
(“Blake”) conclusion that the value of Bass Bonding's intangible
business goodwill, which he determined was worth $187,750.00,
should have been added to the $231,939.00 value of Bass Bonding'sadjusted net tangible assets to produce a total value of
$419,689.00 for the business as of the date the parties separated.
Plaintiff further contends the trial court rejected Blake's
valuation “based solely on the finding that there is a limited
market for bail bonding businesses.”
In the context of determining the value, for equitable
distribution purposes, of a professional practice determined to be
marital property, this Court has stated that a trial court “should
consider the following components of the practice: (a) its fixed
assets including cash, furniture, equipment, and other supplies;
(b) its other assets including accounts receivable and the value of
work in progress; (c) its goodwill, if any; and (d) its
liabilities.” Poore v. Poore, 75 N.C. App. 414, 419, 331 S.E.2d
266, 270, disc. review denied, 314 N.C. 543, 335 S.E.2d 316-17
(1985) (emphasis added). This Court has stated that goodwill “is
commonly defined as the expectation of continued public patronage.”
Id. at 420, 331 S.E.2d at 271.
“There is no set rule for determining the value of the
goodwill of a professional practice; rather, each case must be
determined in light of its own particular facts. . . . The
determination of the existence and value of goodwill is a question
of fact and not of law . . . and should be made with the aid of
expert testimony.” Id. at 421, 331 S.E.2d at 271 (internal
citations omitted). “On appeal, if it appears that the trial court
reasonably approximated the net value of the practice and its
goodwill, if any, based on competent evidence and on a soundvaluation method or methods, the valuation will not be disturbed.”
Id. at 422, 331 S.E.2d at 272. The reasoning employed by this
Court in Poore “is also applicable to the valuation of closely held
corporations.” Locklear v. Locklear, 92 N.C. App. 299, 301, 374
S.E.2d 406, 407 (1988).
After a careful review of the record, we conclude that the
trial court here did not abuse its discretion in setting Bass
Bonding's value at $231,939.00 and rejecting Blake's valuation of
Bass Bonding's goodwill at $187,750.00. We also conclude that this
portion of the trial court's ruling was not “based solely on the
finding that there is a limited market for bail bonding
businesses.”
The trial court's finding that Blake's valuation of Bass
Bonding's goodwill was “wildly speculative in light of the absence
of any real market for bail bonding businesses” was supported by
the expert testimony of bail bondsman Cline, who testified that in
twenty-seven years as a licensed bail bondsman he knew of only one
occasion in which an individual had purchased a bail bonding
company as a going concern from another bondsman. Cline further
testified it was “really doubtful” that he would purchase a bail
bonding company from another bondsman and that the sale of a bail
bonding company as a going concern was unlikely because the
purchaser would be “buying a liability . . . not buying an asset.”
The trial court made additional findings of fact that, unlike other
types of businesses, “the primary product of a bail bonding
business is the generation of a liability, namely, the bail bondsthemselves” and that Bass Bonding's inventory consisted solely of
“the bonds that the business might have to pay if forfeited,” which
were also supported by Cline's testimony.
It is well-settled that in a bench trial, the trial judge “has
the duty to pass upon the credibility of the witnesses who testify.
He decides what weight shall be given to the testimony and the
reasonable inferences to be drawn therefrom.” General Specialties
Co. v. Teer Co., 41 N.C. App. 273, 275, 254 S.E.2d 658, 660 (1979).
Moreover, where, as here, the trial judge sits as the trier of
fact, his findings are “conclusive on appeal when supported by
competent evidence.” Id.
Examining the four Poore components for determining a
business' value for equitable distribution purposes in light of the
trial court's findings, we conclude that the trial court did not
abuse its discretion in setting Bass Bonding's value at
$231,939.00, which represented Blake's valuation of the business'
adjusted net tangible assets. Cline's testimony gave rise to a
reasonable inference that unlike other types of businesses, bail
bonding companies have no accounts receivable or inventory apart
from their outstanding bonds, which are properly characterized as
liabilities rather than assets because the bonds are subject to
forfeit while they remain outstanding. With respect to the
goodwill component, which is “comprised of such things as location,
referrals, associations, reputation, trade name and office
organization,” Sonek v. Sonek, 105 N.C. App. 247, 249, 412 S.E.2d
917, 919 (1992), we conclude that the trial court did not abuse itsdiscretion in declining to recognize the existence of goodwill in
Bass Bonding. Cline's testimony concerning both Bass Bonding's
severely limited marketability and the high rate of turnover among
bail bonding companies in nearby Cumberland County, combined with
Bass Bonding's mere four-year existence prior to the parties'
separation and the unique nature of how the services provided by a
bail bonding company produce income, support the trial court's
findings of fact, which in turn support its conclusions of law. We
thus hold that the trial court did not abuse its discretion in
assigning no value to Bass Bonding's “expectation of continued
public patronage” and therefore declining to adopt Blake's
valuation of the business' goodwill. This assignment of error is
overruled.
By his next assignment of error, plaintiff contends the trial
court erred in relying on Cline's testimony regarding the limited
market for bail bonding businesses. We disagree.
The trial court allowed Cline, over plaintiff's objection, to
testify “as an expert witness - - as a bail bondsman.” With regard
to expert witness testimony, our Supreme Court has stated as
follows:
The admissibility of expert testimony is governed by Rule
702 of the North Carolina Rules of Evidence, which
provides, “If scientific, technical or other specialized
knowledge will assist the trier of fact to understand the
evidence or to determine a fact in issue, a witness
qualified as an expert by knowledge, skill, experience,
training, or education, may testify thereto in the form
of an opinion.” N.C.G.S. § 8C-1, Rule 702(a) (1999).
Expert testimony is properly admissible when the witness,
because of his expertise, is in a better position to have
an opinion on the matter than is the trier of fact. Thetrial court is given great latitude in determining the
admissibility of expert testimony.
State v. Gainey, 355 N.C. 73, 88, 558 S.E.2d 463, 473-74, cert.
denied, 154 L. Ed. 2d 165, 123 S. Ct. 182 (2002) (internal
citations omitted).
In the case sub judice, we conclude that Cline, by virtue of
his twenty-seven years as a bail bondsman in Robeson, Cumberland,
and surrounding counties as well as his ten-year tenure on the
North Carolina Bail Bonding Association's board of directors, was
in a better position than the trial court to have an opinion
regarding the marketability of bail bonding businesses. Moreover,
plaintiff did not object to Cline's testimony, in response to the
trial court's inquiry, that he knew of only one sale of a bail
bonding business as a going concern in the past twenty-seven years.
This assignment of error is without merit.
In light of our holding that the trial court did not abuse its
discretion in setting Bass Bonding's value at $231,939.00, we need
not address plaintiff's third assignment of error.
Affirmed.
Judges MCCULLOUGH and HUDSON concur.
Report per Rule 30(e).
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