A divorce case in Florida has produced an important discovery ruling about a spouse’s right to information from a non-party business that might indicate the value of a marital asset. The ruling could be welcome news for other divorce litigants seeking equitable distributions.
Husband seeks access
In Hall, the wife held a fractional ownership interest in a large medical practice. Her husband subpoenaed the practice for 16 categories of documents that might shed light on the value of the wife’s ownership interest.
The medical practice moved for a protective order. It argued that, under the practice’s operating agreement, the value of the wife’s interest was predetermined by the practice’s “book value,” as determined by its accountant. The trial court denied the husband access to those records, and he appealed.
Appeals court grants limited discovery
The Florida Court of Appeals came down on the side of the husband — at least partially. It noted that the operating agreement defined the value of an interest in the practice only under limited circumstances, such as on the death or termination of an owner.
The husband argued that those none of these circumstances would occur as a result of the divorce. He claimed he was entitled to reasonable discovery from the practice to determine the value of the wife’s interest under fair market value or any other relevant standard of value.
The appellate court agreed. If the wife’s interest was a marital asset, its value must be determined and considered by the court when conducting its equitable distribution analysis. Information related to the practice’s value was discoverable because it may be admissible or lead to the discovery of admissible evidence.
The court also pointed out that “book value,” as defined in the operating agreement, didn’t include the value of the practice’s accounts receivable or goodwill. The practice’s expert admitted that book value wasn’t the same as the practice’s fair market value.
But the court didn’t grant the husband access to all the subpoenaed documents. It limited discovery to information about stock options, stock purchases since 2012, stock appraisals and offers to purchase the practice in the previous five years. The appellate court also instructed the trial court to limit the use of the documents to this particular case and prohibit disclosure to others.
Because the husband in Hall didn’t settle for accepting the practice’s book value, it’s likely that he’ll receive a larger distribution from the marital estate. The lesson? Comprehensive discovery, which looks beyond the operating agreement and other internal documents for evidence of business value, can help ensure a fair and equitable distribution of marital assets. •
Hall v. Hall, No. 5D18-1608 (Fla. App. June 14, 2019)