CONSIDERED ON BRIEFS ON MARCH 19, 2018
FROM THE CIRCUIT COURT OF THE THIRD JUDICIAL CIRCUIT GRANT
COUNTY, SOUTH DAKOTA THE HONORABLE VINCENT A. FOLEY Retired
R. STRAIT of Austin, Hinderaker, Hopper, Strait & Benson,
LLP Watertown, South Dakota Attorneys for plaintiff and
GREGORY T. BREWERS of Strange, Farrell, Johnson &
Brewers, P.C. Sioux Falls, South Dakota Attorneys for
defendant and appellant.
In this divorce action, the husband challenges the circuit
court's valuation of his three business interests, the
valuation of a bank account on a date other than the date of
divorce, and the decision to recapture into the marital
estate the value of home improvements made to a third
party's rental property. We affirm.
Mindy Giesen brought suit for divorce against David Giesen in
April 2015. Two children were born during the marriage. At
the time of the October 2016trial, Mindy and David had been
married approximately sixteen years. When the trial
concluded, the circuit court stated certain rulings on the
record and reserved ruling on others. In particular, the
court reserved ruling on fault, the property division, and
Mindy's request for alimony. This appeal concerns the
circuit court's valuation and division of property.
In November 2015, the circuit court issued a detailed
memorandum decision valuing and allocating the parties'
assets and debts. The court's February 2017memorandum
decision set forth the terms of David's cash equalization
payment to Mindy to be made as part of the property division.
On May 23, 2017, the circuit court entered findings of fact
and conclusions of law which specifically incorporated the
previous memoranda decisions. On the same day, the court
entered a judgment and decree of divorce.
Because this appeal concerns the valuation of David's
business interests, the valuation of a bank account, and the
court's decision to include $15, 000 of improvements made
to the property rented by David, we detail only the facts and
evidence relevant to those issues.
In 1998, David and his father Norm Giesen entered the
trucking business. At the time, David had been working as a
diesel mechanic in Norm's shop. After they entered the
trucking business, Norm drove truck while David managed his
father's shop. Within the first two years, they added a
second truck and hired an owner/operator. In 2002, David and
Norm incorporated their business as Dakota Valley Trucking,
Inc. They each owned 50% of the trucking operation. In 2007,
David and Norm started a second trucking operation: Dakota
Valley Logistics, Inc. Like Dakota Valley Trucking, David and
Norm each owned 50% of Dakota Valley Logistics. David
testified that he and Norm began Dakota Valley Logistics
because Dakota Valley Trucking had more loads than it could
handle. To handle the additional loads, Dakota Valley
Logistics operated as a bonded brokerage firm that brokered
out loads to other companies.
In 2008, David individually purchased a truck and started a
sole proprietorship. David testified that he started his sole
proprietorship because he wanted to "have a truck of
[his] own." He explained that he occasionally drove
truck but that he hired drivers for his sole proprietorship.
David, through his sole proprietorship, contracted with
Dakota Valley Trucking as an independent contractor. He
testified that his contracts with Dakota Valley Trucking were
the same as the other independent contractors. David offered
the following example of how a driver is paid for a load.
[I]f we haul for one company, we bid a load. Roughly say
going to Los Angeles, we bid the load for $5, 000. The driver
would get 26 percent of that $5, 000. Dakota Valley would get
10 percent. If say it's [David's] truck and [his]
trailer, [he] gets the rest [(64%)].
cross-examination, David agreed that he started his sole
proprietorship to build assets and equity and to allow
himself to generate more revenue personally.
David testified that as part of his employment with Dakota
Valley Trucking, he received a wage (approximately $35, 000),
and Dakota Valley Trucking issued him a W-2 for those wages.
Dakota Valley Trucking also transferred David money in the
form of a 1099 (1099 transfers). David claimed that the money
was for services rendered as an independent contractor.
Regardless, David reported his share of Dakota Valley
Trucking's revenue on his personal tax return Schedule C,
which number was usually around $300, 000 per year. On
cross-examination, David admitted that Dakota Valley Trucking
had the choice to retain its revenue and buy its own trucks
instead of distributing it to David. David explained,
"If we wanted to purchase a truck through Dakota Valley
Trucking, yes, but I want to purchase a truck through
David and Mindy presented separate expert testimony on the
value of David's three business interests: 50% ownership
in Dakota Valley Trucking, 50% ownership in Dakota Valley
Logistics, and 100% ownership of the sole proprietorship.
David had hired Eide Bailly to calculate the value of his
business interests. Kevin Teigen, a business valuation
manager from Eide Bailly, testified at trial. He did not
participate in or create Eide Bailly's reports on
David's business interests. Mindy had hired Michael
Snyder, an accountant and lawyer, to offer an opinion on the
value of David's business interests. Snyder testified at
The following chart represents the respective valuations
offered by the experts, rounding to the nearest thousand.
Dakota Valley Trucking
$1, 375, 000.00
Dakota Valley Logistics
parties do not dispute that their respective experts used
different methods. Eide Bailly performed a calculation
engagement and Snyder performed a valuation engagement.
The difference between the two types of engagements was
explained in Eide Bailly's report and was recognized by
the circuit court. "A calculation engagement is limited
in scope to the extent that the valuation analyst and the
client agree on the valuation approaches and methods to be
performed; the results of these procedures are expressed as a
calculated value." In contrast, under a valuation
engagement, "[t]he valuation analyst is free to apply
the valuation approaches and methods he or she determines