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Klamer v. Klamer

Jul 17, 2020
321 So. 3d 1249 (Ala. Civ. App. 2020)


2180768 2180814


Lisa G. KLAMER v. George Jerry KLAMER George Jerry Klamer v. Lisa G. Klamer

Charles H. Dunn and Joseph P. Callaway of Boyd, Fernambucq & Dunn, P.C., Birmingham, for appellant/cross-appellee Lisa G. Klamer. Bruce L. Gordon and Jason E. Gilmore of Gordon, Dana & Gilmore, LLC, Birmingham; and Terry M. Cromer, Moody, for appellee/cross-appellant George Jerry Klamer.

Charles H. Dunn and Joseph P. Callaway of Boyd, Fernambucq & Dunn, P.C., Birmingham, for appellant/cross-appellee Lisa G. Klamer.

Bruce L. Gordon and Jason E. Gilmore of Gordon, Dana & Gilmore, LLC, Birmingham; and Terry M. Cromer, Moody, for appellee/cross-appellant George Jerry Klamer.


Lisa G. Klamer ("the wife") appeals from a judgment entered by the Shelby Circuit Court ("the trial court") divorcing her from George Jerry Klamer ("the husband"), challenging the trial court's rehabilitative-alimony award, the trial court's decision to discount the testimony of the wife's valuation expert, and the trial court's order directing the husband to pay only a portion of the amount of attorney's fees the wife requested. The husband cross-appeals to the extent that the judgment ordered him to pay certain litigation expenses. With regard to the wife's appeal, we reverse those portions of the trial court's judgment addressing property division, periodic alimony, and attorney's fees. With regard to the husband's appeal, we reverse that portion of the judgment ordering him to pay certain litigation expenses.

Procedural History

On August 8, 2016, the wife filed a complaint seeking a divorce from the husband. On September 19, 2016, the husband answered and counterclaimed for a divorce. After a trial, the trial court entered a judgment on January 14, 2019, divorcing the parties. The wife filed a postjudgment motion on February 8, 2019. She filed an amendment to that motion on March 5, 2019. On May 9, 2019, the trial court entered an amended judgment of divorce. The trial court's judgment, as amended, provides, in pertinent part:

"The parties were married on May 30, 1998.

"[The] Husband is 62 years of age. [The] Wife is 52 years of age. Both are in good health. There is no evidence that [the] Wife is unable to work outside the marriage.

"[The] Wife is highly educated with a master's degree in education and ... taught ... school for 11 years .... She quit teaching in 2000. During the marriage, [the] Wife owned and ran her own women's boutique for a year after she quit teaching in 2000. [The] Wife also worked for a website developer and in food sales business for a short time later in the marriage.

"[The] Wife did office work for the [husband's] business for two years from 2005-2007 and was paid for her work.

"There is unrefuted evidence before the Court from the Husband's vocational expert of the expected earning capacity of the Wife in various areas together with the availability of work. He estimates jobs that she is qualified for are readily available.

"The Court now turns its attention to the valuation of [the] Husband's business, Medicare Advantage Specialists (‘MAS’). In Rohling v. Rohling, (Ala. Civ. App. 2018), the Court of Civil Appeals specifically addressed the issue of calculation engagements in regards to their admissibility and the weight the court gives ... calculation engagement evidence given by expert testimony. In Rohling, the court admitted the calculation engagement estimate into evidence, subject to cross examination and rebuttal, in determining the weight, if any, to give to the findings of the expert's estimate. Id. ...

"In comparison to the decision in Rohling, the Wife's expert in this case, Michelle Parks, ... offered into evidence her calculation of value, subject to cross examination and rebuttal. The Court considered the weight, if any, of Parks'[s] calculation to be given to the valuation of MAS. Consistent with the findings in Rohling, this Court heard the evidence, allowed the calculation of value into evidence subject to cross examination and rebuttal, and then chose to give the evidence little weight due to the flaws described here and below.

"This Court distinguishes the present case from Rohling. The court in Rohling found the calculation engagement employed recognized accounting methods accepted by the accounting industry and there was no evidence contradicting the evidence within the calculation engagement. Id. ... However, in our case, after hearing the evidence and finding contradictions to Parks'[s] calculation, the Court notes, in addition, many flaws to Parks'[s] calculation engagement, and therefore gives little weight to Parks'[s]

estimate as to the valuation of the business.

"The Husband's primary business is [MAS, and] he owns 70% thereof, which is valued by [the] Husband at $1.6 Million. [The] Wife's expert, Michelle Parks (‘Parks’), did not ‘value’ the business[;] instead[,] she provided a calculation of value referred to as an ‘an estimate’ per the Statement on Standards for Valuation Services (‘SSVA’) a Professional Guide Line promulgated by the American Institute of Certified Public Accountants (‘AICPA’) of $9,528,000 and thus 70% of that 100% value equated to $6,528,000.

"This Court takes judicial knowledge that the SSVA, as well as ... Parks'[s] engagement letter is replete with admonitions that what she was engaged to do is to perform a ‘calculation’ of value which is not an opinion of value but only a calculation which is an ‘estimate’ and is not to be used as an ‘opinion.’ Thus while Parks was qualified as an expert and then allowed to testify under Section 702 of the Alabama Rules of Evidence as such, her testimony is not admitted and considered as ‘expert’ testimony but will be considered by this court as to the weight of what the estimates are.

"She testified that her ‘estimate’ did not rise to an ‘opinion’ and that based upon her engagement she could not and was not giving an opinion. Counsel for the Husband clearly and unequivocally adduced testimony from Parks for this Court on the difference between an ‘opinion of value’ and that of a ‘Calculation of Value,’ the latter being an ‘estimate’ and not an ‘opinion.’ It is recognized that Parks testified that she met with the Wife and her attorneys before the engagement and discussed what she was to do, the methodology she was to use, and the fact it was to be an estimate and not an opinion. This predetermined method and caucus is disconcerting to this Court and causing this Court some apoplexy in that the report was predetermined. This Court muses whether there were other factors which could and should have been considered to make the estimate more reliable like talking to management, determining the same business model for comparisons, and using the multiple determined by the calculation of value report, etc.

"Having admitted ... Parks'[s] Calculation of Value into evidence as qualified above, this Court does note and takes knowledge of the following deficiencies, namely: a) The fact that the Estimate used 42 businesses selected by Parks from Pratt Stats, a valuation resource report used by valuation experts to compare sales of alleged related businesses for the comparison companies to MAS. These comparisons were overwhelmingly in the ‘insurance agency business’ and [were] not in any way connected to and/or associated or related to the Administrative and Services business in which MAS is engaged. This Court acknowledges that MAS is not in the insurance agency business; b) The fact that Parks used the NAICS code of 524210 (a national recognized code of companies for tax reporting purposes and financial reporting) was a gross miscalculation as to credibility when had she just talked to management and asked questions, the type of business and the comparative companies could have been narrowed and, thus, be more meaningful and reliable; c) The comparable companies were so divergent as to sales, type of business, location, size, sale of assets vs. sale of stock or the ownership interest, tax consequences and adjustments to sales price to account for taxation issues, whether company

sold was a partnership, LLC or corporation and whether the corporation was a ‘C’ corporation or a ‘subchapter S’ corporation, whether liabilities were assumed or not, the amount of cash and receivables owned and whether they were transferred or not, the debts to lenders and whether any debt is guaranteed and the credit worthiness of the sellers reported by Pratt; d) ... Parks['s] [r]eport arbitrarily used a multiple of 3.0 on Exhibit 9 entitled ‘Guideline Transaction Method-Value Indication’ (notice this refers the reader to Ex 4 and Ex 8) when her own report shows the ‘mean’ multiple to be 1.72 and the median multiple to be 1.82. Further a review of all of the companies shown on the [r]eport demonstrate that use of a 3.0 multiple was arbitrary at best, and the Court is placed in a quandary as to the integrity of the report when Parks arbitrarily chose 3.0 as the multiple and her explanation in response to the question ‘why’ at trial was inadequate; e) The Court notes further flaws in ... Parks['s] report such as the repeated use of the term ‘fair market value’ wherein the value to be determined by this Court is fair value; and f) Exhibit 9 entitled ‘Guideline Transaction Method-Value Indication,’ which was changed at the 11th hour correcting a $534,875 addition/subtraction error in the original report which was made and contained in the report since September 2017. The change was an alleged accounting change but without consultation with management and without consultation with the accountants for MAS. A close examination of the Exhibit 8 two page report shows comparisons which are not anywhere near the realities of this MAS examination and the Court wonders if a Calculation of Value (‘opinion’) would have rectified this carelessness.

"This Court finds, as matter of fact, that MAS was an Administrative and Services Company as well as a recruiter of agents for insurance carriers and not an ‘Insurance Agency.’ Further this Court finds that the multiple used by Parks on Exhibit 3 along with this report being just an ‘estimate’ cast as a ‘Calculation of Value’ and not an ‘Opinion of Value’ is flawed.

"To summarize, while this Court admitted the Calculation of Value report, it takes notice of the following, but not to be limited by a) there was no conversation or attempted conversation with management; b) there was no conversation with MAS's CPA; c) the preengagement conference to arrive at the predetermined mythology [sic] and scope of ... Parks'[s] engagement; d) the differences between the Opinion of Value and a Calculation of Value are clear; e) no site visit; f) no examination of the facilities, equipment, fixtures and the like; g) no discussion regarding the actual size of the industry and just a review of Pratt Stats related to the insurance agency business and the insurance agency industry from journals; h) no comparison of the type sale (entity or assets); i) no actual material related to her adjustment to delete the management fees of $500,000.00 on Exhibit 3 to support this decision [(]which appears ... arbitrary and capricious) (recall Parks testified that the subtraction of the management fees for 2015 and 2016 reduced expenses, thus increased revenue and caused the valuation to be higher); j) no justification for the arbitrary use of a 3.0 multipl[e] on Exhibit 9 rather than stay with the ‘means’ reflected on [that] Exhibit; k) no explanation why after the exhaustive research and preparation of the [r]eport there is a $534,875.00 adjustment to Exhibit 9 made right before the trial (note on Exhibit 9 of the original

Parks [r]eport dated September 2017, the $534,875 is shown within parenthesis as a subtraction but, in fact, is added to the computation creating an error in excess of 1 million dollars; l ) no effort to research same and similar companies in the general geographic areas and no effort to seek information from sources like the Alabama Business Council, other state agencies or local economist and other businesses in the same or similar business; and m) why ‘fair market value’ was used several times in a report regarding the estimate when the criteria is ‘fair value.’ "

(Emphasis omitted.)

The trial court further found that the parties own "three parcels of real estate," specifically, the marital home, which was valued at $850,000, with an associated indebtedness of $444,000; a lake house valued at $500,000, with an associated indebtedness of approximately $270,000; and farmland valued at $750,000, with an associated indebtedness of approximately $380,000. The trial court also found that the husband has collectible vehicles valued at approximately $203,000 and other vehicles valued at approximately $127,829 and that the wife has a vehicle valued at $46,954. The trial court further found that the wife has "personal jewelry and designer purses valued at $109,880" and that the husband has "personal jewelry valued at $35,500." The trial court found that, in addition to the debt associated with the real estate, the husband owed $300,000 in income taxes for the calendar year 2017.

The trial court awarded the husband all the real estate and ordered him to pay the indebtednesses associated therewith. The trial court also awarded the husband his interest in Medicare Advantage Specialists ("MAS"). The wife was awarded a property settlement in the amount of $2,000,000, with the husband being ordered to pay $500,000 of that amount within "sixty (60) days from the date of this Final Judgment of Divorce or the order on any Rule 59 Motions filed pursuant to the Alabama Rules of Civil Procedure unless stayed by appropriate Motion and order" and the remaining balance in monthly installments of at least $10,000. The trial court stated that the property settlement would not be reportable as income to the wife. The wife was awarded her vehicle and her jewelry and purses, and the husband was awarded the remaining vehicles and his jewelry. The husband was ordered to pay the wife rehabilitative alimony in the amount of $5,000 per month for 60 months, $30,000 in attorney fees, and $10,900 "as necessary litigation expenses incurred by her during the pendency of this case."

The wife filed her notice of appeal on June 19, 2019. The husband cross-appealed on July 2, 2019.


I. The Wife's Appeal

On appeal, the wife argues that the trial court erred by awarding her rehabilitative alimony in the amount of $5,000 per month for 60 months instead of awarding her periodic alimony and that it also erred in valuing MAS.

"A property division and ... periodic alimony are interrelated, and the entire judgment must be considered in determining whether the trial court abused its discretion as to either of those issues." Montgomery v. Montgomery, 519 So. 2d 525, 526 (Ala. Civ. App. 1987). In this case, the judgment, in addition to awarding the wife her valuable personal property and rehabilitative alimony, awards the wife a $2,000,000 property settlement, payable in a lump sum of $500,000 followed by monthly installments of at least $10,000, primarily to compensate her for her equitable interest in MAS. In regard to the property division, the wife argues that the trial court erred in excluding the calculation of value made by her expert witness, Michelle Parks, when determining the value of MAS; however, the record shows that the trial court actually admitted Parks's calculation of value but, as explained in the judgment, assigned little weight to that evidence, which was its prerogative under Rohling v. Rohling, 266 So. 3d 51 (Ala. Civ. App. 2018). The wife contends that no evidence supports some of the trial court's findings of fact regarding its reasons for giving the calculation of value little weight, but our review of the record indicates otherwise. Moreover, the wife has not challenged other findings of fact that support the trial court's judgment. We therefore find no basis for reversing the judgment based on the trial court's treatment of the calculation of value and its ultimate determination of the value of MAS. See, e.g., Rohling, 266 So. 3d at 68 (quoting Ex parte R.E.C., 899 So. 2d 272, 279 (Ala. 2004), quoting in turn Ex parte Foley, 864 So. 2d 1094, 1099 (Ala. 2003) ) (" ‘ "[A]n appellate court may not substitute its judgment for that of the trial court. To do so would be to reweigh the evidence, which Alabama law does not allow." ’ ").

On the other hand, we hold that the judgment should be reversed for the trial court to reconsider its property division and alimony award. As the wife persuasively argues, the award of five years of rehabilitative alimony, even when coupled with her large property settlement and her earning capacity, inequitably deprives her of means to maintain the marital standard of living.

The wife presented evidence indicating that the parties had enjoyed a rather luxurious standard of living during their marriage. They owned three homes -- the marital home, a lake house, and a farm -- that had combined equity of over a million dollars; they spent $3,900 per month for lawn care, $1,100 per month for a maid, and approximately $4,000 per month for automobile care; and they had acquired $377,783 worth of automobiles and $145,380 in personal jewelry and purses. The wife testified that, during the marriage, the parties traveled to expensive resorts, including Cabo San Lucas, Mexico; Banff, Alberta, Canada; and Colorado. The wife testified that the husband had paid the household and medical bills and that she had used a debit card and a credit card for discretionary expenses. According to the wife, she had routinely shopped for items for the marital home and for clothing and groceries for herself and the husband, and, she said, she had made purchases without even looking at the price tags. Both parties regularly enjoyed expensive salon treatments and Botox injections. The wife introduced an exhibit showing that she had averaged approximately $7,500 per month in discretionary spending on her debit and credit cards for the first five months of 2016, contradicting the husband's testimony that the wife was spending approximately $3,500 per month for her "basic" expenses. The wife estimated that, to maintain the marital standard of living and to cover both her discretionary spending and her regular household bills, she would need $22,000 per month in net income, as demonstrated on another exhibit she introduced that outlined her monthly budget. The wife requested that the trial court award her $30,000 per month in periodic alimony, which, she said, would provide her sufficient income after taxes.

The trial court did not award the former wife periodic alimony; instead, it awarded the wife rehabilitative alimony in the amount of $5,000 per month for 60 months. We find no evidence in the record to support such a limited award. The trial court has broad judicial discretion in awarding periodic alimony. Bush v. Bush, 784 So. 2d 299, 300 (Ala. Civ. App. 2000). In exercising that discretion, the trial court is guided primarily by the needs of the petitioning spouse and the ability of the responding spouse to pay. Shewbart v. Shewbart, 64 So. 3d 1080, 1087–89 (Ala. Civ. App. 2010). A petitioning spouse shows a need for periodic alimony through evidence demonstrating that, without such financial support, he or she will be unable to maintain the marital standard of living. Id.

In this case, the husband challenged the wife's monthly budget, contending that it included "unnecessary" expenses. However, the purpose of periodic alimony is not simply to supply support for the basic necessities of life, but also to maintain the lifestyle the parties enjoyed during the marriage. See Spuhl v. Spuhl, 144 So. 3d 397 (Ala. Civ. App. 2014). The husband's objections to the wife's monthly budget did not effectively contradict the wife's evidence indicating that she would need approximately $22,000 in net income to maintain the marital standard of living.

Once the petitioning spouse has established the expenses associated with maintaining the marital standard of living,

"[t]he petitioning spouse should then establish his or her inability to achieve that same standard of living through the use of his or her own individual assets, including his or her own separate estate, the marital property received as part of any settlement or property division, and his or her own wage-earning capacity, ... with the last factor taking into account the age, health, education, and work experience of the petitioning spouse as well as prevailing economic conditions, ... and any rehabilitative alimony or other benefits that will assist the petitioning spouse in obtaining and maintaining gainful employment."

Shewbart, 64 So. 3d at 1088.

The record contains no evidence indicating that the wife owns a separate estate. The trial court awarded the wife a property settlement of $2,000,000, which the trial court structured so that the wife is entitled to $500,000, approximately the cost to purchase a home comparable to the marital home, plus at least $10,000 per month until paid in full. In addition, the trial court determined that the wife could return to work, citing the testimony of a vocational expert retained by the husband who testified that the wife could expect to earn gross wages of between $34,000 and $66,800 annually. Based on that testimony, the trial court could have determined that the wife was capable of earning as much as $5,567 in gross wages per month, which would be subject to state and federal income taxes.

The trial court awarded the wife $5,000 per month in rehabilitative alimony for 60 months, which is also taxable as income to the wife. See Meek v. Meek, 83 So. 3d 541, 559 (Ala. Civ. App. 2011). Assuming the trial court discounted some of the expenses claimed by the wife, it appears that the award of $5,000 per month, when coupled with the liquid assets the wife was awarded in the property settlement and with the wife's earning capacity, would enable the wife to at least approximate the marital standard of living. However, the trial court awarded the wife only 60 months of rehabilitative alimony. No evidence in the record indicates that, at the end of that 60-month period, the wife, who was 51 years old at the time of the trial, can be expected to earn sufficient wages to maintain the marital standard of living, even assuming she reaches the highest potential for earning as established by the testimony of the husband's vocational expert. See Dollar v. Dollar, 203 So. 3d 108 (Ala. Civ. App. 2016) (reversing judgment awarding limited rehabilitative alimony in absence of evidence indicating that wife would be able to meet the marital standard of living through rehabilitation). Moreover, the monthly property-settlement installments will expire in 150 months or sooner, leaving the wife to depend solely on her earning capacity for income, which is wholly insufficient to enable her to maintain the marital standard of living.

The record indicates that the husband has the ability to pay the wife periodic alimony, even considering the debts assigned to him in the divorce judgment. The husband's annual gross income, as reported on his latest income-tax return that was introduced into evidence, exceeded $1,500,000, and the evidence indicated that he could be expected to maintain that level of income. The husband must pay the wife $500,000 plus at least $10,000 per month thereafter until the property settlement is paid in full, and he remains responsible for the mortgages on the real properties he was awarded and past-due taxes; however, after paying those debts and the regular costs of maintaining those real properties and his own lifestyle, the husband should have sufficient disposable income to cover the payment of monthly periodic alimony to the wife without undue hardship. Shewbart, 64 So. 3d at 1088 ("A responding spouse obviously has the ability to pay if the responding spouse can satisfy the entirety of the petitioning spouse's needs without any undue economic hardship.").

Finally, we conclude that the equities of this case favor an award of periodic alimony to the wife. See Shewbart, 64 So. 3d at 1088 ("After being satisfied that the petitioning spouse has a need for periodic alimony and that the responding spouse has some ability to meet that need, the trial court should consider the equities of the case."). The parties were married for 18 years before they separated. In the early part of the marriage, the parties struggled financially. In 2005, the husband founded MAS with Rick Beebe. The wife worked long hours for the company, at times without compensation, and the husband acknowledged that, "if the three of us had not worked together, it would not have happened." After MAS became a successful venture, the husband asked the wife to stop working "because it was not necessary for her to work [at MAS] any longer because we had adequate employees, and the stress was wearing on her." Thereafter, the wife did not work outside the home; instead, she dutifully cared for the husband as a homemaker and oversaw the construction of the marital home, which, according to the testimony, had been fraught with difficulties. The husband never objected to the wife's spending. After the wife discovered evidence indicating that the husband was involved with other women, the marriage ended, along with the way of life to which the wife had become accustomed.

In deciding the issue of periodic alimony, "a trial court essentially determines whether the petitioning spouse has demonstrated a need for continuing monetary support to sustain the former, marital standard of living that the responding spouse can and, under the circumstances, should meet." Shewbart, 64 So. 3d at 1087. As explained above, the record indicates that the wife has demonstrated a need for periodic alimony that the husband can and should meet. Accordingly, we reverse the property-division and alimony awards in the judgment and remand the cause for the trial court to reconsider those awards. See Montgomery v. Montgomery, 519 So. 2d 525, 526 (Ala. Civ. App. 1987).

Finally, the wife argues that, because of the disparity in the parties’ incomes, the trial court exceeded its discretion in not awarding her the total amount of attorney's fees she requested. In Frazier v. Curry, 104 So. 3d 220, 228 (Ala. Civ. App. 2012), this court reasoned:

"[T]he financial circumstances of the parties as well as the results of the litigation are undetermined because we have reversed the trial court's property division and alimony award in their entirety and remanded the case for further consideration. Accordingly, we reverse the attorney-fee award and direct the trial court to further consider the issue on remand."

In accordance with Frazier, we reverse the judgment insofar as it ordered the husband to pay only part of the wife's attorney's fees. We instruct the trial court to reconsider the allocation of attorney's fees upon a final determination of the property-division and alimony awards. See Whaley v. Whaley, 218 So. 3d 360, 367 (Ala. Civ. App. 2016).

II. The Husband's Cross-Appeal

On cross-appeal, the husband argues that the trial court erred in ordering him to pay to the wife $10,900 "as necessary litigation expenses incurred by her during the pendency of this case." He argues that that award was impermissible because it is the expenses incurred by the wife for an expert-witness fee. "[N]either our legislature nor our supreme court has seen fit to permit expert-witness fees to be recovered in domestic-relations matters." Vardaman v. Vardaman, 167 So. 3d 342, 351 (Ala. Civ. App. 2014).

Before the entry of the divorce judgment, the wife's attorney represented that, in addition to attorney's fees, the wife had incurred the following costs: court costs in the amount of $291.20, process-server fees in the amount of $55.80, deposition expenses in the amount of $944.45, copying expenses in the amount of $902.61, and expenses for the valuation of MAS in the amount of $10,990. In its judgment, the trial court ordered the costs to be taxed as paid but ordered the husband to pay the wife $10,900 in "necessary litigation expenses." Because the costs, excluding the expert-witness fee, do not total $10,900, it is clear that the trial court's award of "necessary litigation expenses" includes, at least to some extent, the expert-witness fee. See, e.g., Vardaman, 167 So. 3d at 350 (holding that, "[b]ecause the trial court granted the wife the entire requested amount of $13,326 for legal expenses, we must assume that the expert-witness fees were included in that amount"). We therefore reverse the trial court's judgment to the extent that it ordered the husband to pay $10,900 in "necessary litigation expenses," and we remand this cause for the trial court to reconsider that award in light of the fact that expert-witness fees may not be awarded in this case.


With regard to the wife's appeal, the trial court's judgment is reversed and the cause is remanded for the trial court to reconsider the property-division, alimony, and attorney-fee awards. With regard to the husband's cross-appeal, the trial court's judgment is reversed to the extent that it ordered the husband to pay $10,900 in "necessary litigation expenses," and the cause is remanded for the trial court to reconsider that portion of the judgment in light of this opinion.



Moore, Donaldson, Edwards, and Hanson, JJ., concur.

Thompson, P.J., concurs in the result, without writing.

Summaries of

Klamer v. Klamer

Jul 17, 2020
321 So. 3d 1249 (Ala. Civ. App. 2020)
Case details for

Klamer v. Klamer

Case Details

Full title:Lisa G. Klamer v. George Jerry Klamer George Jerry Klamer v. Lisa G. Klamer


Date published: Jul 17, 2020


321 So. 3d 1249 (Ala. Civ. App. 2020)