Calculation Accepted in Arizona—Again
In late 2021, we reported on an Arizona case (Larchick v. Pollock, 2021 Ariz. App. Unpub. LEXIS 895; 2021 WL 3929954) that the appellate court remanded to determine whether a calculation of value should be allowed as evidence. In that case, the trial court excluded a valuation report because it was a calculation of value. However, the Appellate Court remanded the case to the trial court for a determination on whether the report met the requirements of AZ Rule 702 as allowable evidence, noting that the fact that it was a calculation of value did not per se make it impermissible. We are not aware of the disposition of the remand by the trial court.
However, in Mikalacki v. Rubezic, 2022 Ariz. App. Unpub. LEXIS 836; 2022 WL 10219850, an Arizona divorce case, the appellate court affirmed the decision of the trial court to accept a calculation of value in determining the value of the husband’s business. The appellate court noted that, in determining fair market value, the trial court may rely on a testifying expert’s opinion and challenges to the expert go to the weight of the evidence, not to the admissibility. Because the trial court was in the best position to assess and resolve conflicting evidence, “we accept its factual findings absent clear error.”
The appellate court also noted that, although a calculation of value was not the “gold standard,” it was not unacceptable. (Larchick v. Pollack) In other words, the fact-finder need not discount an expert’s opinion just because he or she did not consider every process and procedure that would be included had he or she conducted a fuller valuation.
I have reported on court acceptances of calculations before. As noted, courts will do what courts will do. They are not bound by the standards of any professional organization nor by its ethics. In a trial some years ago, we pointed out to the judge that the other side’s expert should not be allowed to testify because, by doing so, he was violating the AICPA’s ethical code. The judge told us to take it up with the AICPA Ethics Board because “I want to hear what he has to say.” Although calculations are deficient, in my opinion, for use in litigation, some courts disagree.