Posted on June 2, 2009 by Sandra C. Fava

COURT'S CAN'T "SPLIT THE BABY" WHEN IN COMES TO DUELING APPRAISALS

If you have never been through the process of a divorce yourself you may not know how, at the end of the day, things are actually decided. For example, how do attorneys or the court calculate how much of a spouse's pension or 401(k) gets divided?  How do attorneys or the court calculate the value of real property? Experts are obtained to appraise assets in order to obtain values.  Often parties each get their own experts and their are dueling appraisals.  If the parties cannot agree on a value, a court will have to hear testimony from both experts and make the call.

That was an issue that was recently addressed in the published Appellate Division decision of Pansini Custom Design Associates, LLC and Roger Parkin Joint Venture v. City of Ocean City and Patrick Newton and Saving Our Station Coalition, A-2003-07T1, decided May 14, 2009.

Many people who go through the process of divorce own real property.  If parties are unable to reach an agreement as to the value of real property owned so as to determine how much each may be entitled to, how does the issue get resolved?  Typically, the parties may either retain a joint real estate appraiser or each obtain their own real estate appraiser who will create an appraisal.  In the latter scenario, the result may be competing real estate appraisals and values.  If no resolution is reached among the parties and the issue is left to a court to decide in a trial, the importance and validity of these real estate appraisals will be tested.

There are experts available on nearly every topic if you look hard enough.  In family law, real estate experts abound.  Many attorneys have their "go to" experts or others who may solicit them for business.  No matter what, whatever expert is involved in your matter should be selected with thought and consideration to the specific facts of your case and the ultimate goals of the clients they work for.

Once an expert is selected and the real estate appraisal performed, how does the court determine which expert to rely upon when called upon to make a determination as to the value of real property? Are not all real estate appraisals the same? The answer is simply no. Courts have a body of case law that guides them on what considerations and factors they must focus on when called upon to make this determination.

A court's need for an expert to testify arises "where the fact [-] finder is not expected to have sufficient knowledge or experience and would have to speculate without the aid of expert testimony." Torres v. Schripps, Inc., 342 N.J. Super. 419, 430 (App. Div. 2001). While expert testimony is generally necessary to determine the fair market value of real property, Jacobitti v. Jacobitti, 263 N.J. Super. 608, 613 (App. Div. 1993), the court is not required to accept the testimony of an expert witness and may accept some testimony and reject other parts, Torres supra 342 N.J. Super. at 431. Where there's a question or rejection of the expert's testimony, the judge may appoint an independent expert. Id. at 436.

What it comes down to is the judge is left to weigh and evaluate the expert's opinion and credibility in order to reach a reasoned, just and factually supported conclusion. Pansini supra at p.9. The trial judge in Pansini decided to take the values and discounts given by three different experts and average them in order to reach a final number for fair market value. The Appellate Division tells us that "averaging...is not an appropriate methodology for assessing divergent values. The reasoned weight of authority provides sound policy reasons for such a conclusion. Properties are not fungible. Even with adjustments during the appraisal process, there are sufficient differences that must be weighed and considered by the fact-finder in addressing the ultimate issue in dispute." Id. at p. 13.

The Court goes on to state that averaging "will intentionally distort and skew the values to insure a high or low number without concern that the fact finder must resolve the issue with a careful analysis of data that may result in adoption of one appraisal figure over another." Id. at p. 14.

Pansini tells us that while it may seem like an easy and fair on its face solution, simply averaging competing expert's appraisal values is not sound methodology and should not be done by trial judges faced to decide such an issue as the fair market value of real property.

On another note, when using a real estate expert, don't be afraid to ask questions about comparable values used, discounts applied, etc. If the report and/or expert is going to be tested during a trial, you want to be sure that your expert can defend his/her report and will do well under the stress and pressure of a trial. Always talk to your attorney who should as well know and understand the expert's report and be able to present and defend it during a trial.


 
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Posted on March 7, 2009 by Eric S. Solotoff

TRIAL IS AN EXPENSIVE WAY TO GET YOUR POUND OF FLESH

I just completed a 10 or so day trial (really a binding arbitration).  Why did it take so long?  Were there complicated valuation issues? No.  Complicated alimony issues? No.  Custody issues?  No - custody and parenting time were already settled. 

The answer in large part was one party's bad faith and need to extract a pound of flesh.  He did not get his pound of flesh and while we await the decision, I doubt he will receive satisfaction there either?

Some examples of the nonsense.  The case started in 2006 when real estate was at its height and the marital home was appraised by a joint appraiser in early 2007.  The case lingered and trial did not start until the fall 2009.  Despite the fact that the law is clear that homes are valued at the date of distribution, the husband opposed a new appraisal.  Why - as every knows, real estate values were going down.  Since he knew that the wife wanted to keep the house, he was trying to use this to his advantage.  Due to the delays, the wife had to get an updated appraisal in January 2008 when the was originally supposed to occur.  She had to get another one in August 2008 before the trial started.  The husband held out and opposed using the joint appraiser, costing the parties more money for experts and then wasting a day trying the issue of the value of the home.

 

The husband got an employability expert to determine the wife's earning capacity.  This is not unusual.  What caused a waste of time is that he lied to his expert about what his wife did when he had a small consulting business in the late 90s, trying to portray her as not being out of the workforce, despite the fact that she probably worked only a few hours per month.

Plaintiff's direct examination was 3 to 4 hours.  The cross examination was several days.  Why?  Despite the fact that he had no evidence of it nor would it be relevant, the husband had his lawyer try to pursue an adultery claim.   He had his lawyer try to pursue issues of parenting alienation despite the fact that custody was settled and the joint expert blamed his relationship with the children in larger measure on his conduct.

In addition, he had his lawyer nitpick on minutiae that was not relevant to anything.  Even if my client got the answer wrong, it would not prove that she was not credible. 

In fact, both this cross examination and the trial in general was torturous because of the costly and needless waste of time by the husband delving into irrelevant issues, which then had to be rebutted.  This brings up another point.  Just because you are having a trial does not mean you have to address every issue and every fact as to every issue that has every come up in a case.  Courts and arbitrators don't care about such nonsense.  It only causes more in counsel fees.  While it would be easy to cast aspersions at opposing counsel's trial capabilities, clearly much of it was following the marching orders of her client - at great and outrageously needed expense of both parties.

One can only hope that when all is said and done, counsel fees will be assessed such that the husband will pay for the folly he created.
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Posted on January 23, 2009 by Eric S. Solotoff

EXPERTS. EXPERTS, EXPERTS

Early on in a case, the lawyer and client will have to determine what experts will be necesary to resolve a case either for settlement or trial.  In fact, at the first Case Management Conference, the uniform Case Management Order requires that you identify the types of experts you need and how they are going to be paid for. 

What is an expert and why do we need them?  Per the Rules of Evidence, "If scientific, technical or other specialized knowledge will assist the trier of fact to understand the evidence or 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 or otherwise."  Simply put, an expert is a tool to help determine a fact.  Experts provide information that the parties cannot generally provide themselves.

What kind of experts are used in these cases?  The following are some examples:

  • Forensic accountants to value busineses, determine actual income, trace income and assets (including tracing premarital assets), to provide lifestyle analysis, to provide cash flow reports based upon proposed alimony and child support scenarios and a variety of other financial related issues,
  • Business valuation experts (sometimes they are not accountants)
  • Experts to value stock options or other exployee benefits - often but not always accountants
  • custody evaluators - usually forensic psychologists, but occasionally forsensic psychiatrists and social workers, who will give an opinion of custody and parenting time
  • educational experts - to determine which school or school district is better, what program is better, public vs. private school issues, educations issues regarding children with special needs
  • employability experts  - to determine what someone can and/or should be earning.
  • pension appraisers - usually actuaries, to determine the value of a pension, parse out premarital shares of 401ks, and draft Qualified Domestic Relations Orders
  • Real estate appraisers
  • personal property appraisers
  • jewelry appraisers
  • art, coin, antique appraisers
  • medical doctors - to assess disabilities or sometimes personal injuries
  • handwriting experts
  • computer forensics
  • Interpreting services (for documents in foreign languages)
  • experts to value intellectual property

There are probably many other types of experts.  This list does not even include other professionals that may help the parties, but probably not testify, like financial planners, stock brokers, insurance agents, parent coordinators, reunification therapists or for that matter any treating therapists.

Over the years, we have worked with most or all of these types of experts as the need has arisen.  Should an issue requiring an expert come up in one of our client's cases, we are well equipped to handle it.

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