Cotton v. Roedelbronn (App Div., 1st Dep’t)

Plaintiff (hereafter “the husband”) and the defendant (hereafter “the wife”) entered into a judgement of divorce dated October 25, 2017 which awarded the wife 10% of the husband’s business interest valued at $19,942,898 and 40% of the plaintiff’s other two business entities valued at $3,280,150 and $655,943, respectively.

The Special Referee accepted the values as determined by the husband’s valuation expert as the findings were grounded by the credibility of the expert witness’ testimony and the valuation techniques utilized. The wife did retain her own expert, however did not call her expert as a witness at trial. As the businesses were actively management by the husband, a valuation date close to the date of commencement was utilized.

The wife claimed she was entitled to 50% of the marital value of the business, however the court found this claim unsupported. With regard to the business valued at $19,942,898, the court found that the value was primarily derived from efforts made by the husband and his business partners prior to the marriage and that the wife made little contribution to the businesses growth. Further, it was determined at trial that the wife acted as a hindrance to the husband’s business and accordingly, the court did not divide this asset equally (i.e. 50%/50%). Based on the foregoing, the court awarded the wife 10% of the $19,942,898 value.

With regard to the businesses valued at $3,280,150 and $655,943, these businesses were formed during the marriage and primarily from marital funds. The court determined that although the wife did not make a direct contribution to these entities, she shared in a restrained lifestyle that allowed these particular businesses to grow. Accordingly, the court awarded the wife 40% of the appraised values.