This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2004).
STATE OF MINNESOTA
IN COURT OF APPEALS
Alan I. Mugge,
Filed January 2, 2007
Toussaint, Chief Judge
Larry M. Nord, Orman Nord Spott & Hurd Law Office, 1301 Miller Trunk Highway, Suite 400, Duluth, MN 55811 (for appellant)
U N P U B L I S H E D O P I N I O N
TOUSSAINT, Chief Judge
Appellant-husband Alan I. Mugge challenges the district court’s amended findings and order valuing and distributing his business. Because the district court did not consider the value of appellant’s personal services to the business or include a key-person discount, we affirm in part, reverse in part, and remand.
A district court’s
valuation of an item of property is a finding of fact and it will not be set
aside unless it is clearly erroneous on the record as a whole. Maurer v. Maurer, 623 N.W.2d 604, 606 (
valuation determined by the trier of fact should be sustained if it falls
within the limits of credible estimates made by competent witnesses . . .
v. Balogh, 356 N.W.2d 307, 310 (Minn. App. 1984) (quoting Lammi v. Lammi, 348 N.W.2d 372, 374
(Minn. App. 1984)). When valuing a
business by capitalizing its income, the district court should ordinarily
exclude the value of personal services rendered by the owner. Roberson
v. Roberson, 296
that the district court erred by not considering the value of his personal
services to his business, Tomahawk Ford, a garbage-collecting operation doing
business as East Mesabi Sanitation. We
agree. The district court valued
Tomahawk by capitalizing its income, but did not account for the value of
appellant’s services to the business.
The record contains sufficient evidence to attach a value to appellant’s
personal services at Tomahawk, and, following Roberson, it should be excluded from the valuation. Roberson,
argues, and we agree, that the district court erred by not including a key-person
discount in valuing Tomahawk. The
Minnesota Supreme Court addressed the key-person discount in Rogers v. Rogers, 296 N.W.2d 849 (
Here, the record
shows that appellant is Tomahawk’s sole director and only full-time
employee. He does substantial every-day
work for the business and personally negotiates all of Tomahawk’s contracts. Appellant’s expert testified that appellant
“is Tomahawk Ford, and without him, the company would suffer financially.” Therefore, like the business in
Next, appellant contends that the district court erred by assigning Tomahawk’s value based on a capitalization-of-benefits method. Appellant argues that because Tomahawk is a personal business that depends solely on him for its success, capitalizing the earnings from the business is the same as capitalizing his income, which is impermissible. See Robinson, 355 N.W.2d at 740. While we agree that capitalizing appellant’s income is impermissible, any such error will be addressed on remand by considering the value of appellant’s personal services to the business as well as by applying a key-person discount to Tomahawk’s valuation.
argues that the district court abused its discretion by not including a value for
Tomahawk’s nonmarital going-concern.
Appellant contends that the record supports such a finding because the
business existed at the time the parties married. “A party seeking to establish the nonmartial
character of an asset must do so by a preponderance of the evidence.” Wopata
v. Wopata, 498 N.W.2d 478, 484 (
Affirmed in part, reversed in part, and remanded.