Appeals court hears dispute over valuation of Dobbs Data Services and overlap with spousal support

Kelly Cotting, attorney for Ben Dobbs, told the appeals court that the trial court improperly treated Dobbs'owned business, Dobbs Data Services, as a valued marital asset without stating how it arrived at a dollar figure or using established valuation methods. "The court chose for some reason to value DDS, but they didn't assign a value and they didn't engage in any of the valuations that have been accepted by any of the appellate courts as proper for valuing a business," Cotting said.

Cotting said neither party requested a formal business valuation and that Mr. Dobbs, who was pro se at trial, failed to present contemporaneous business records. Counsel argued the trial court appeared to base its findings on "potential future earnings," which she said the court cannot treat as a divisible asset for equitable distribution and later also use to calculate spousal or child support. She urged the court to either require explicit findings explaining the valuation method or to recognize an adverse inference based on the missing evidence.

Kevin Hohelter, attorney for Shelby Dobbs, urged the court to affirm the trial court's rulings, saying the record did not include admissible evidence sufficient to support a formal numeric valuation. He outlined the two-step goodwill analysis he said trial courts use: (1) determine whether goodwill exists; and (2) if so, assign a dollar value. "The trial court said it did not place a value on it because it didn't have the evidence," Hohelter said, adding the court used the reliable items in the record — chiefly the tax return — to assess revenue and admissible expenses.

Hohelter pointed to the tax return entries the court relied on, including about $58,000 listed as contract labor, and said the court excluded expenses that were not proved with documentation. He also asserted Mr. Dobbs had credibility problems when testifying about expenses and that a remand would not help where the evidence had not been presented at trial. "He doesn't get a remand for a second chance to present the evidence that he failed to present the first time around," Hohelter said.

A questioner on the panel noted that the parties' positions at trial ranged from counsel's assertion that the business was worth $0 to the opposing party's suggestion it was worth about $10,000 in cash on hand, and asked how an appellate court can review equitable distribution without a specific valuation. Cotting replied that if the trial court intends to value the business it must explain the methodology such that the appellate court can determine whether the result was within the range of credible evidence under precedent (she cited Soriano and Sedlock).

Counsel also debated whether the trial court had improperly used a figure Mr. Dobbs had listed on child support worksheets (reported gross revenue of about $27,000 per month) without deducting legitimate business expenses, and whether the court had properly made and recorded findings when it checked forms indicating imputation of income. Cotting argued that the trial court's findings were not detailed enough to allow meaningful appellate review; Hohelter countered that the court used actual income evidence and reliably proven expenses.

The appeals court heard argument on the scope of permissible valuation approaches, the proper use of an adverse inference when a party fails to produce business records, and the distinction between valuing an asset and imputing personal income for support calculations. Counsel cited precedent (including Mansoor, Berg, Ravenet, Soriano, and Sedlock) and disputed whether the record contained the factual findings required for review. The justices moved on after counsel finished; no ruling was recorded during argument.

Next procedural step: the panel will confer and issue a decision in accordance with its internal procedures.