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Divorce Mediation Blog

Biblically Speaking, the Judge Got It Wrong: Lasher v. Lasher

Wednesday, April 26, 2017

At least in Massachusetts, we now know two things:

  1. You shouldn’t send a bible to a judge before whom you are a litigant; and
  2. If you do, you should not expect him to rule in your favor before recusing himself.

In the Appeals Court’s recent Lasher v. Lasher, a three –judge panel reversed a trial court judge who offered to entertain a motion to remove him from the case after he determined that a bible inscribed with his name sent to his lobby had been sent by the other party to the case. The non-gifting party took the judge up on his offer and sought recusal. The judge complied.

But, before doing it, he denied the only other motion that was before him, in which the party requesting recusal had sought substantive relief from an underlying judgment. In other words, he ruled that it was reasonable for the moving party to view him as tainted by the obvious impropriety of the gift; but he would rule on the dispositive sunstantive motion anyway, to the detriment of the offended party, and then withdraw from the now terminated case.

The appellate courts are not always kind to their trial court brothers and sisters, but in this case the Appeals Court made mercifully fast work of the matter by vacating the ruling on the substantive matter and remanding to another judge for re-hearing.

 

Applying Marketability Discount for the Wrong Reason: Wasniewski v. Walsh

Wednesday, April 12, 2017

Over the last year, BV Wire, an excellent publication of Business Valuation Resources, LLC, has been chronicling the New Jersey trial of Wasniewski v. Walsh, in which three Superior Court judges addressed a shareholder withdrawal case, with serial appeals and remands.

The issue presented is if the trial judge acted properly in applying a 15% discount for lack of marketability (“DLOM”) in setting the buyout of the withdrawing 50% shareholder, not because the interest difficult to sell, but rather to redress the plaintiff’s oppression of the shareholder-defendant.

(New Jersey law apparently permits the application of a DLOM in fair value determination in “extraordinary” circumstances).

Since BV Wire first reported the case, various experts have weighed in with critical thinking, including one who observed that:

    If trial courts determine marketability discounts as bad behavior discounts, there is really no way that business appraisers can provide meaningful information to the court. If the court’s concern is one “of the equities” in a matter rather than in determining the fair value…, then there is little that appraisers can do to help.

    (BVWire Issue #161-2, February 10, 2016, quoting a blog post by Chris Mercer at http://chrismercer.net/bad-behavior-marketability-discount-new-jersey/; italics ours.)

BVWire recently reported a New Jersey lawyer’s support of the Mercer view, noting that:

    …the use of the DLOM as a legal penalty voids a long-thought-out valuation measure of its meaning and separates it from its economic basis. The DLOM application should not become contingent on the character of the parties but be based instead on the actual value factors of marketability.

    (BVWire Issue #174-2, March 8, 2017, summarizing Michelle Patterson; italics ours).

While we prefer the conclusion that this trial court’s use of a DLOM was driven by “bad behavior” rather than “character”, there is no question that it was a sanction, and as such it is troubling.

As former trial lawyers, a retired trial judge and a frequent family law arbitrator and special master addressing business issues, we are always alert to the need to recognize (and avoid) implicit bias in fact-finding. Instead, this case seems to validate explicit bias.

Business valuation is meant to be an objective economic exercise. Bad behavior is a fact. Redressing inequity, when relevant, should find its voice in remedy, rather than fact-finding.

It seems to us that Wasniewski v. Walsh encourages a toxic mix.

 



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