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Court decides battle of NAV versus income approach

In a Nevada case dealing with the value of collateral for a loan default, a company had to be valued because its shares were used as part of the collateral.

Business Valuation Case Law Yearbook, 2025 Edition

February 2025 PDF (192 pages)

BVR (editor)

Business Valuation Resources, LLC

The legal coverage and in-depth analysis from the BVR legal team includes an Introduction by Jim Alerding, BVR Legal Editor, and delivers lessons learned to help appraisers reach better and more defensible valuation conclusions. The Business Valuation Case Law Yearbook 2025 illustrates how financial experts helped their side win (and lose) in the courtroom and includes over 70 new cases that were added to BVLaw in 2024.   Learn more >>

Business Valuation Update Yearbook, 2025 Edition

February 2025 PDF (418 pages)

BVR (editor)

Business Valuation Resources, LLC

Another year has come and gone and it's time again for one of BVR's “greatest hits” publications! The Business Valuation Update Yearbook 2025 covers the previous year’s most groundbreaking and thought-provoking advancements in valuation. Learn more >>

BVR offers free resources in wake of disasters

For business valuation experts grappling with business interruption (BI) and damages matters in the wake of this year’s natural disasters, BVR is offering some free resources.

Appellate court rejects valuation date in damages case

In a 2023 Florida case, a jury awarded rapper Flo Rida more than $82 million in a breach of contract case.

Bush v. Crystal

This contract case dealing with the value of collateral for a defaulted loan took issue with the use of a business plan that did not have any foundation and was nothing more than based on “conjecture, assumption and generalization” to value a minority stock interest in an operating entity under the income approach. Forecasts or projections used in valuing an entity must be reasonable and reliable. The court affirmed the use of the net asset value approach. The opinion also affirmed that it was appropriate to have art used as collateral for a loan be valued by testimony from an art expert.

Nevada Supreme Court Affirms Exclusion of Testimony Based on a Speculative Business Plan

This contract case dealing with the value of collateral for a defaulted loan took issue with the use of a business plan that did not have any foundation and was nothing more than based on “conjecture, assumption and generalization” to value a minority stock interest in an operating entity under the income approach. Forecasts or projections used in valuing an entity must be reasonable and reliable. The court affirmed the use of the net asset value approach. The opinion also affirmed that it was appropriate to have art used as collateral for a loan be valued by testimony from an art expert.

Free Resources to Help Valuers With Business Interruption Claims

For business valuation experts grappling with business interruption (BI) and damages matters in the wake of this year’s natural disasters and tech outages, BVR is offering some free resources. You can download two full chapters from The Comprehensive Guide to Economic Damages, 7th edition, that deal with BI, lost profits, and damages claims. Plus, we provide some tips on uncovering misrepresentations in claims.

Endless River Techs., LLC v. TransUnion, LLC (II)

The U.S district court denied the defendant’s motion to exclude the testimony of Dr. Malec, who had used an unreliable valuation, during the trial. The jury awarded the plaintiff $18.3 million in damages. Post-trial, the defendants filed a motion for judgment as a matter of law, challenging Endless River’s recovery on multiple grounds. The district court granted the motion and vacated the award. In so doing, it pointed out that the report and testimony of Dr. Malec was speculative and based on projections of management that Malec had not vetted and were unreliable. The appellate court affirmed the vacatur of the jury award. Once again, this pointed out that projections from management cannot be taken at face without some vetting as to reliability. The trial court also determined, among other things, that Dr. Malec’s testimony was not relevant to the damages nor was it reliable and his testimony was therefore stricken under Rule 702.

U.S. Appellate Court Affirms Vacatur of Jury Award—Witness Should Not Have Been Allowed to Testify

The U.S district court denied the defendant’s motion to exclude the testimony of Dr. Malec, who had used an unreliable valuation, during the trial. The jury awarded the plaintiff $18.3 million in damages. Post-trial, the defendants filed a motion for judgment as a matter of law, challenging Endless River’s recovery on multiple grounds. The district court granted the motion and vacated the award. In so doing, it pointed out that the report and testimony of Dr. Malec was speculative and based on projections of management that Malec had not vetted and were unreliable. The appellate court affirmed the vacatur of the jury award. Once again, this pointed out that projections from management cannot be taken at face without some vetting as to reliability. The trial court also determined, among other things, that Dr. Malec’s testimony was not relevant to the damages nor was it reliable and his testimony was therefore stricken under Rule 702.

Celsius Holdings, Inc. v. Strong Arm Productions USA, Inc.

In determining the amount of damages in this contract dispute, the Florida Appellate Court dealt with the appropriate date of value of stock of the defendant in determining the appropriate amount of damages. The date of value was an issue that arose in a number of cases. The court rejected the use of the date of trial but remanded for the court to determine whether to use the date of the breach of contract or the date at which restrictions on the sale of stock lapsed. While the court touched on the restriction issue, no evidence that a value at the date of breach, which included the impact of the restrictions on value, was presented.

Florida Appellate Court Remands for Determination of the Proper Date of Value in a Damages Case

In determining the amount of damages in this contract dispute, the Florida Appellate Court dealt with the appropriate date of value of stock of the defendant in determining the appropriate amount of damages. The date of value was an issue that arose in a number of cases. The court rejected the use of the date of trial but remanded for the court to determine whether to use the date of the breach of contract or the date at which restrictions on the sale of stock lapsed. While the court touched on the restriction issue, no evidence that a value at the date of breach, which included the impact of the restrictions on value, was presented.

Crypto theft not a ‘direct physical loss,’ court affirms

The 4th Circuit Court of Appeals has affirmed a district court’s ruling that a homeowner’s insurance policy does not cover the theft of cryptocurrency because it is not a “direct physical loss” as required by the policy.

Headwater Rsch. LLC v. Samsung Elecs. Co.

Multiple factors in this decision on motions to exclude expert witnesses have importance in determining infringement damages. First, the court allowed the use and reliance of other experts in the case to be appropriate. Second, the court noted that documents one of the experts used are ones experts normally rely on. Additionally, the court did deny the use by a witness of a trailing royalties based on post-trial sales.

U.S. District Court (Texas) Allows Damages Based on Acceptable Data Relied on but Denies Expert Testimony on Running Royalty Analysis on Post-Trial Sales

Multiple factors in this decision on motions to exclude expert witnesses have importance in determining infringement damages. First, the court allowed the use and reliance of other experts in the case to be appropriate. Second, the court noted that documents one of the experts used are ones experts normally rely on. Additionally, the court did deny the use by a witness of a trailing royalties based on post-trial sales.

BVR lends a helping hand in wake of disasters

For business valuation experts grappling with business interruption (BI) and damages matters in the wake of this year’s natural disasters and tech outages, BVR is offering some free resources.

Sedaghatpour v. Lemonade Ins. Co. (II)

Similar to what happened with many of the pandemic cases, the court here determined that cryptocurrencies did not have a physical presence or at least not one that was part of the cause of the theft that the plaintiff suffered. Definitions of cryptocurrencies supported the decision of the court. The Court of Appeals affirmed this case. In valuing cryptocurrencies, the lack of insurance coverage could be an additional risk to be considered. Subsequent to the date of this claim, most insurance companies had specifically excluded loss of cryptocurrency from coverage.

Optimistic projections not necessarily unreliable under Daubert

In a federal district court in Washington, a liquor distributor sued the supplier of Four Roses bourbon for damages for improperly terminating its distribution agreement.

Expert accused of cherry-picking comps

In a New York case, a shareholder accused his partner of freezing him out, and he sued for damages.

TAKTL, LLC v. IWR, N. Am., LLC

This case, a breach of construction contract case, again provided a tutorial on the application of FRE 702 and the Daubert rules as to whether a witness qualified to testify. This case was post-Dec. 1, 2023, so the rule application was subject to the clarification of FRE 702 that became effective on that date. The court went in depth into the “fit” requirement, which was: Did the expert adequately apply testimony and a report that “fit” the case at hand, a requirement clarified by the Dec. 1, 2023, changes?

Court Decides on Motions to Exclude Under Post-Dec. 1, 2023, FRE 702

This case, a breach of construction contract case, again provided a tutorial on the application of FRE 702 and the Daubert rules as to whether a witness qualified to testify. This case was post-Dec. 1, 2023, so the rule application was subject to the clarification of FRE 702 that became effective on that date. The court went in depth into the “fit” requirement, which was: Did the expert adequately apply testimony and a report that “fit” the case at hand, a requirement clarified by the Dec. 1, 2023, changes?

American Society of Appraisers (ASA) 2024 International Conference

I had the pleasure of attending the 2024 ASA International Conference in Portland, Ore., September 15 to 19. This was my first time to visit Portland, Ore., and I found it to be a very pleasant and attractive place to be. The conference was held at the Downtown Hilton in Portland.

Hetrick v. iink

The FRE 702 rules were modified in December 2023 to strengthen the qualifications for admittance of expert testimony. In this case, the Virginia U.S. District Court allowed the expert to testify and denied the Daubert motion to exclude the testimony. Among other things, the court found that the testimony was relevant to the case at hand.

U.S. District Court (Virginia) Denies Daubert Motion to Exclude Under New (2023) FRE 702

The FRE 702 rules were modified in December 2023 to strengthen the qualifications for admittance of expert testimony. In this case, the Virginia U.S. District Court allowed the expert to testify and denied the Daubert motion to exclude the testimony. Among other things, the court found that the testimony was relevant to the case at hand.

Yador v. Mowatt

The plaintiff’s damages expert was challenged in a Daubert motion in this case asserting that his use of historical data from two comparable companies as the basis for his revenue growth estimates amounted to “cherry picking” rather than using a survey or other independent method. The court allowed the testimony, noting that “‘any selection of comparable companies is inherently the product of expert judgment,’ and the record does not indicate that [the expert’s] judgment was biased or otherwise flawed.”

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