Sample new cases added to BVLaw in the last few weeks

Here’s a partial listing of digests and court documents added to the exclusive BVLaw database in the past few weeks. BVLaw reviews the hundreds of cases each month—in damages, family law, Tax Court, the Delaware Chancery and other commercial courts, and elsewhere—to analyze those decisions which depended on business valuation or financial analysis in their conclusions.

Davis v. Commissioner, T.C. Memo 201---286; 2011 Tax Ct. Memo LEXIS 278 (Dec. 12, 2011)

Tax Court finds $36 million exercise of executive stock option was taxable income to the shareholder, but permitted company to take the same amount as deduction for reasonable compensation for the executive’s services.

Experts: Alex Howard (taxpayer)

Judge: Kroupa

State/Jurisdiction: Federal

Court: U.S. Tax Court

Type of case: federal tax

SIC code: 6141 Personal Credit Institutions

JGR, Inc. v. Thomasville Furniture Inds., 2011 U.S. Dist. LEXIS 144545 (Dec. 15, 2011)

On plaintiff’s third attempt to prove damages due to defendant’s breach of contract, Sixth Circuit permits expert to present lost business value based primarily on discounted cash flow analysis.

Experts: Robert M. Greenwald

Judge: Lioi

State/Jurisdiction: Federal/Ohio

Court: U.S. District Court

Type of case:  breach of contract

SIC code: 5712 Furniture Stores (custom made upholstered household furniture)

Silicon Knights, Inc. v. Epic Games, Inc., 2011 U.S. Dist. LEXIS 147633 (Dec. 22, 2011)

Court excludes damages expert under Daubert for subjective selection of comparables (video games) without reference to any “structured” or “principled” criteria, but that simply served to boost his lost profits calculations

Experts: Terry Lloyd (plaintiff); Phillip Beutel (defendant)

Judge: Dever

State/Jurisdiction: Federal/ North Carolina

Court: U.S. District Court

Type of case: IP

SIC code: 7372 Prepackaged Software

Nantahala Capital Partners, LP v. Washington Mutual, Inc. (In re Washington Mutual, Inc.), 2012 Bankr. LEXIS 1 (Jan. 3, 2012)

Bankruptcy court finds that “litigation tracking warrants” held by investors are equity as opposed to debt claims, based primarily on testimony by the creators of the warrants rather than the parties’ financial experts.

Experts: Charlotte Chamberlain (debtors); Barry Levine (investors)

Judge: Walrath

State/Jurisdiction: Federal/Delaware

Court: U.S. Bankruptcy Court

Type of case:

SIC code: 6011 Federal Reserve Banks

Pryor v. Tiffen (In re TC Liquidations LLC), 2011 Bankr. LEXIS 4950 (Dec. 6, 2011)

Bankruptcy court discredits intangible asset appraisal of debtor’s patents, unpatented know-how, customer relationships, and trademarks, finding these have no value apart from an ongoing business concern.

Experts: Michael Goodman (trustee); David Berliner and G. William Kennedy (debtor)

Judge: Eisenberg

State/Jurisdiction: Federal/New York

Court: U.S. Bankruptcy Court

Type of case: Bankruptcy

SIC code: 3861 Photographic Equipment and Supplies

Bricklayers and Trowel Trades International Pension Fund v. Credit Suisse First Boston, 2012 U.S. Dist. LEXIS 4566 (Jan. 13, 2012)

District court strike’s expert event study, purporting to support a “fraud on the market theory,” for “flouting” accepted methodology, including “cherry-picking” the event dates and failing to account for confounding factors.

Experts: Scott Hakala (plaintiffs)

Judge: Gorton

State/Jurisdiction: Federal/Mass.

Court: U.S. district court

Type of case: securities

SIC code: 7383 News Syndicates

Collelo v. Geographic Services, Inc., 2012 Va. LEXIS 12 (Jan. 13, 2012)

Va. Supreme Court reverses and remands trade secrets case for new trial on damages under the state’s Trade Practices Act, but finds evidence from two experts on statutory damages insufficient to support plaintiff’s breach of contract and tort claims.

Experts: Michele Riley and Kace Clawson (plaintiff)

Judge: Lemons

State/Jurisdiction: Virginia

Court: Supreme Court

Type of case: IP

SIC code: 3812 Search, Detection, Navigation, Guidance, Aeronautical, and Nautical Systems and Instruments

Swaney v. Swaney, 2011 N.C. App. LEXIS 2648 (Dec. 20, 2011)

North Carolina Court of Appeals affirms $30,000 goodwill value for closely held IT firm based on a multiple of earnings approach and assumption of a non-compete in a willing buyer/willing seller transaction.

Experts: George Batten (husband)

Judge: Ervin

State/Jurisdiction: North Carolina

Court: Court of Appeals

Type of case: marital dissolution

SIC code: 7371 Computer Programming Services

In re Marriage of Baker, 2011 Iowa App. LEXIS 1460 (Dec. 21, 2011)

Court of Appeals affirms finding that buy-sell agreement limits spouse’s interest in medical clinic to $1,000.

Experts: unnamed

Judge: Sackett

State/Jurisdiction: Iowa

Court: Court of Appeals

Type of case: marital dissolution

SIC code: 8011 Offices and Clinics of Doctors of Medicine

In re Marriage of Restaino, 2012 Cal. App. Unpub. LEXIS 273 (Jan. 13, 2012)

Court of Appeals reverses the trial court’s finding that pay-outs under a law firm dissolution agreement represented income to the husband rather than his equity share in a community asset, to which the wife could claim a portion.

Experts: none

Judge: Rylaarsdam

State/Jurisdiction: California

Court: Court of Appeals

Type of case: marital dissolution

SIC code: 8111 Legal Services

In re Marriage of Kingery, 2011 Okla. Civ. App. LEXIS 110 (Dec. 29, 2011)

In valuing the husband’s 25% interest in a law firm, the trial court erroneously accepted a valuation that included a “purchase acquisition cost” or “goodwill cost” derived from a buy-out of a former partner.

Experts: Kenneth Klingenberg (husband); Michael O’Brien (wife)

Judge:  Hetherington, Jr.

State/Jurisdiction: Oklahoma

Court: Court of Appeals

Type of case: marital dissolution

SIC code: 8111 Legal Services