Divorce Court docket Lacks Jurisdiction to Divide LLC Not a Social gathering

Tennessee case abstract on property division and enterprise valuation in divorce.

Thomas John Pitera v. Samantha Pitera

The husband and spouse on this Blount County, Tennessee, have been married in 1998 when the husband was within the Marine Corps and the spouse was employed on base.  Beginning in 2005, the husband was employed as a contractor with the U.S. Military in Iraq, and in 2007, he fashioned an LLC which engaged in trucking in Iraq, till the contract was terminated in 2015.  The events separated in 2015, and the husband filed for divorce later that yr.  A trial was held in 2016, and the ultimate judgment was entered in 2018.  The spouse was granted alimony in solido of over $7 million, to be paid over a interval of 10 years.  To safe cost, the spouse was granted a lien on actual property, together with property owned by LLC’s owned by the husband.

Due to the termination of the LLC’s contract with the federal government, the LLC had a contingent declare towards the federal government, probably price $32 million.  The court docket ordered that the primary $6.6 million recovered below that declare could be awarded to the spouse.  The husband introduced an attraction to the Tennessee Court docket of Appeals.

The husband first argued that the decrease court docket had erred in designating one of many LLC’s as marital property.  Nonetheless, the appeals court docket appeared deeper and concluded that the true subject was whether or not the trial court docket had jurisdiction to adjudicate possession of property owned by the LLC, although the LLC was not a celebration to the case.  The appeals court docket agreed and held that the trial court docket had no jurisdiction to adjudicate possession of property owned by the LLC.  Accordingly, it vacated that portion of the decrease court docket’s order.

The appeals court docket subsequent turned to the contingent declare towards the federal government.  As soon as once more, the Court docket of Appeals held that the decrease court docket had acted improperly.  For the reason that LLC was not a celebration to the case, the trial court docket erred in adjudicating possession of this declare, because it was property of the LLC.

The husband additionally argued that the decrease court docket had erred in setting the valuation of the corporate.  The husband argued {that a} monetary assertion relied upon by the court docket was outdated and never licensed by a CPA.

Nonetheless, the appeals court docket discovered that the monetary assertion had been correctly admitted, and that the decrease court docket had thought-about info that had taken place after the date of the assertion.  The appeals court docket primarily appeared on the husband’s arguments as going to the load of the proof, and held that such selections are correctly made by the trial court docket.

The appeals court docket did, nevertheless, discover it essential to remand the case.  For the reason that contingent declare had been handled individually, it was by no means taken into consideration in figuring out the worth of the corporate.  Due to this fact, on remand, the decrease court docket would wish to reevaluate the worth of the enterprise.

After addressing another points within the case, the Court docket of Appeals remanded the case for additional proceedings.  The spouse requested lawyer charges on attraction, however this request was denied.

No. E2019-01136-COA-R3-CV (Tenn. Ct. App. Nov. 10,  2020).

See authentic opinion for precise language.  Authorized citations omitted.

To study extra, see Property Division in Tennessee Divorce.

To study extra, see Business Valuation in Tennessee Divorce.

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