         IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
                              FIFTH DISTRICT

                                                NOT FINAL UNTIL TIME EXPIRES TO
                                                FILE MOTION FOR REHEARING AND
                                                DISPOSITION THEREOF IF FILED


LALLY ORANGE BUICK PONTIAC
GMC, INC., ET AL.,

             Appellants,

 v.                                                    Case No. 5D15-3582

SIMI SANDHU,

             Appellee.

________________________________/

Opinion filed December 22, 2016

Appeal from the Circuit Court
for Orange County,
Alice Blackwell, Judge.

Jennifer S. Eden and Christina Y. Taylor, of
Latham, Shuker, Eden & Beaudine, LLP,
Orlando, for Appellants.

Jennifer R. Dixon, Richard Dellinger and
Melody B. Lynch, of Lowndes, Drosdick,
Doster, Kantor & Reed, P.A., Orlando, for
Appellee.

PER CURIAM.

      Lally Orange Buick Pontiac GMC, Inc., et al. (“Appellants”) appeal a final judgment

containing a judicial appraisal that valued Simi Sandhu’s shareholder interest in the

corporation at $1.9 million. Because the trial court’s valuation is not supported by

competent, substantial evidence, we reverse.
       Lally Orange Buick was an automobile dealership organized as a closely held

corporation. The corporation was initially owned by Resham Lally, and his son, Rajinder

Lally. In 2010, Rajinder and his wife, Simi Sandhu, divorced. 1 Pursuant to the final

judgment of dissolution, Sandhu and Rajinder were each equitably distributed one-half of

Rajinder’s 50% share of Lally Orange Buick. Immediately after the dissolution, the Lallys

formulated a plan to remove Sandhu as a shareholder through formation of a new

corporation. Before Rajinder transferred one-half of his interest to Sandhu, Lally Orange

Buick amended its articles of incorporation, through which it authorized an additional

20,500 shares of common stock.

       In November 2013, Lally Orange Buick issued an “Appraisal Notice and Form

Notice of Action by Written Consent,” which informed shareholders about a planned

merger of Lally Orange Buick into a new corporation, Orange Buick GMC, Inc. The Lallys

sent shareholder notice of the merger to Sandhu. The notice indicated that the

corporation’s estimate of the fair value of her shares was $420 per share, which was the

amount it would pay Sandhu pursuant to the dissolution of Lally Orange Buick. 2 Sandhu

objected to this valuation and returned a counter-proposal that indicated she valued her

interest at $5,066.67 per share, resulting in a total value of her 25% interest at $1.9 million.

To reach this valuation, Sandhu relied on an undisclosed accountant’s expert valuation.

       The parties did not reach an agreement as to the value of Sandhu’s shares, and

Sandhu filed suit against the Appellants. Sandhu sought (1) a declaratory judgment to




       1   Coincidentally, the same judge presided over the dissolution of marriage action.
       2 This value was considerably less than the value the Lallys’ own expert testified
to at the subsequent trial.


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establish that the merger was “ineffective and illegal”; (2) damages for Appellants’ alleged

breach of fiduciary duty; and/or (3) a judicial appraisal pursuant to section 607.1330,

Florida Statutes (2013). Appellants also counterclaimed for a judicial appraisal.

       During a non-jury trial, both parties presented expert testimony on the valuation of

Sandhu’s corporate shares. Sandhu’s expert, Robert Morrison, is an accredited senior

appraiser in business valuation, but this was the first case in which he performed as an

expert witness for valuation of an automobile dealership. He utilized a single period

capitalization method under an income approach to valuation for assessing Sandhu’s

interest. Morrison’s methodology resulted in two valuations based on assumptions about

certain shareholder loans that were in dispute before the trial court. Assuming the loans

were debt capital, Morrison opined that the statutory fair value of Sandhu’s 25% interest

was $889,000 as of the date of the merger. Assuming the loans were equity capital,

Morrison testified that the statutory fair value of Sandhu’s interest was $1,031,000.

       Appellants’ expert, Ken Rosenfield, is a Certified Public Accountant who has

extensive experience valuing automobile dealerships and testifying as an expert. 3

Rosenfield disagreed with Morrison’s methods, and testified that Morrison’s approach did

not encompass an automobile-specific approach to valuation. He opined that a “multiple

of earnings” approach was the industry standard for valuing automobile dealerships.

Based on this approach, Rosenfield valued the entire corporation at $630,000.

Rosenfield’s valuation was revised in 2015 to correct the valuation period, and

Rosenfield’s ultimate valuation of the corporation increased by $383,000. However,



       3Rosenfield was also the expert who testified about the valuation of Lally Orange
Buick during the dissolution proceedings between Sandhu and Rajinder Lally.



                                             3
according to Rosenfield, the only essential differences between the two experts’

valuations were the number of years evaluated and the capitalization rate utilized. 4

       The trial court ultimately denied Sandhu’s claim for declaratory judgment in Count

I and her claim for damages for breach of fiduciary duty in Count II. However, the court

found that Sandhu was entitled to judicial appraisal of her interest pursuant to Count III of

the complaint and Appellants’ counterclaim.

       The court rejected Appellants’ initial statutory valuation, as well as Rosenfield’s

expert testimony regarding valuation, and found that Rosenfield was unreliable. The court

credited Morrison’s testimony and found that Morrison provided the “appropriate business

valuation methodology in accordance with industry standards.” However, the court then

adopted $1.9 million as the valuation of Sandhu’s interest in Lally Orange Buick. This

appeal follows.

       Statutory appraisal rights are set forth in sections 607.1301 through 607.1333 of

the Florida Statutes. Section 607.1301, Florida Statues (2013), defines the fair value of

corporate shares:

              (4) “Fair value” means the value of the corporation’s shares
              determined:

              (a) Immediately before the effectuation of the corporate action
              to which the shareholder objects.

              (b) Using customary and current valuation concepts and
              techniques generally employed for similar businesses in the
              context of the transaction requiring appraisal, excluding any
              appreciation or depreciation in anticipation of the corporate



       4 Morrison assessed a 3-year look-back period, and utilized a capitalization rate,
also known as a multiple, of 3.56. Rosenfield used a 5-year look-back period and applied
a multiple of 1.



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              action unless exclusion would be inequitable to the
              corporation and its remaining shareholders.

              (c) For a corporation with 10 or fewer shareholders, without
              discounting for lack of marketability or minority status.

If a corporation engages in a merger process that requires the payout of the fair value of

corporate shares, the corporation must provide notice and an estimate of the fair value of

the shares, along with an offer of that fair value, to the shareholders. § 607.1322(1),

(2)(a)–(c), Fla. Stat. (2013). If a shareholder is dissatisfied with the corporate appraisal,

the shareholder may object in writing, provide his/her assessment of fair value of the

shares, and demand payment. § 607.1326(1), Fla. Stat. (2013). If a shareholder’s

demand for payment remains unresolved, and a party seeks judicial appraisal of the

corporate shares, the shareholder is entitled to judgment of fair value of the shares “as

found by the court.” § 607.1330(5), Fla. Stat. (2013). To facilitate this process, the trial

court “may appoint one or more persons as appraisers to receive evidence and

recommend a decision on the question of fair value.” § 607.1330(4), Fla. Stat. (2013).

       A trial court’s determination of the appropriate method to determine statutory fair

value is reviewed for abuse of discretion. Nunez v. Nunez, 29 So. 3d 1191, 1192 (Fla. 5th

DCA 2010). However, the court’s conclusion as to fair value must be “supported by

competent, substantial evidence and properly conformed to the requirements for

determining fair value.” Dolan v. Springlite Bottled Water Corp., 656 So. 2d 211, 212 (Fla.

3d DCA 1995) (citing § 607.1301, Fla. Stat.). If the trial court is acting as the factfinder, it

is “free to accept or reject the testimony of the business valuation expert[s].” Nunez, 29

So. 3d at 1192. However, absent competent, substantial evidence, a trial court’s valuation

constitutes an abuse of discretion. Id.




                                               5
       Appellants argue that the only evidence regarding a $1.9 million valuation figure

was Sandhu’s appraisal rights form containing her counter-proposal and Sandhu’s

testimony that she valued her shares at that amount. They contend that this does not

constitute competent, substantial evidence to support the trial court’s valuation and note

that the trial court adopted neither experts’ valuation figure in the final judgment. Sandhu

argues that her appraisal rights form supported the valuation because it was based on an

independent accountant’s valuation, and the trial court acted within its discretion in

adopting the $1.9 million valuation figure. 5

       The only record evidence supporting the $1.9 million valuation figure was Sandhu’s

testimony that she valued her shares at that amount, and the appraisal rights form Sandhu

returned to the corporation that reflected that figure. 6 Moreover, Sandhu’s testimony

regarding the $1.9 million valuation did not detail any valuation methods or point to

documentation that would support a valuation of $1.9 million. The final judgment likewise

does not provide findings or an explanation of how the trial court arrived at the $1.9 million

valuation figure. Thus, the trial court’s valuation figure is not supported by competent,



       5 Sandhu also argues that Appellants invited any error in the trial court’s valuation.
See Gupton v. Vill. Key & Saw Shop, 656 So. 2d 475, 478 (Fla. 1995) (explaining “a party
cannot successfully complain about an error for which he or she is responsible or of
rulings that he or she invited the trial court to make”). She claims that because Appellants
argued to the trial court that it had discretion to reject the expert opinions at trial and adopt
its own valuation, they invited any error in the court’s valuation. Appellants indeed argued
below that the trial court had discretion to calculate the valuation figure, and it was free to
accept or reject the expert testimony. However, Appellants did not argue that the trial
court could choose a valuation that was not based on the evidence, and Appellants also
argued that to adopt the $1.9 million figure would be a punitive and therefore improper.
Thus, Sandhu’s reliance on the invited error doctrine is inapposite.
       6 While Sandhu claims that this figure was based on an independent accountant’s
valuation, this accountant did not testify at the trial nor were any documents submitted
into evidence that supported this assertion.


                                                6
substantial evidence, and the court abused its discretion in adopting that figure. Cf.

Blossman v. Blossman, 92 So. 3d 878, 878 (Fla. 1st DCA 2012) (holding there was no

competent, substantial evidence to support trial court’s valuation of corporate stock, while

each expert relied on different valuation methods and provided different valuation figures,

it appeared trial court simply “split the difference between the two valuations”); Nunez, 29

So. 3d at 1192 (Fla. 5th DCA 2010) (reversing valuation of corporation, although trial court

could reject expert testimony regarding valuation, trial court could not base valuation

solely on letter of intent to purchase from a defunct purchaser that was no longer seeking

acquisition of the corporation); Sheffield v. Sheffield, 522 So. 2d 986, 986 (Fla. 1st DCA

1988) (reversing valuation of corporations in dissolution proceeding because trial court

based valuation solely on tax returns, which did not reveal the actual fair value of the

corporations and no other record evidence supported such valuation).

       The trial court may appoint independent appraisers to recommend a decision on

the question of fair value. § 607.1330(4), Fla. Stat. (2013). The court may also credit one

expert witness’s method of computation over another. G & G Fashion Design, Inc. v.

Garcia, 870 So. 2d 870, 872 (Fla. 3d DCA 2004) (citing CDC Capital Inc. v. Gershon, 723

N.Y.S.2d 166, 168 (N.Y. Sup. Ct. 2001)). Moreover, the court may utilize an expert’s

valuation technique to formulate an independent valuation based on the evidence

presented. 7 See, e.g., Cox Enters., Inc. v. News-Journal Corp., 510 F.3d 1350, 1358 (11th



       7   Likewise, a trial court’s independent valuation is not limited to one expert’s
testimony; the court may formulate its valuation by using different portions of the experts’
testimony that it credits or rejects. Cf. Erp v. Erp, 976 So. 2d 1234, 1236 (Fla. 2d DCA
2008) (finding no abuse of discretion in trial court’s approach of accepting some portions
of each expert’s analysis; reversing on other grounds). However, as in this case, where
the trial court wholly rejects one expert’s testimony over the other, this limits the scope of
the evidence on which the court may rely to formulate such an independent valuation.


                                              7
Cir. 2007). If the valuation is within the range of the testimony presented at trial, it will not

result in reversible error when it rests primarily on witness credibility and valuation

techniques. Garcia, 870 So. 2d at 872 (quoting Davis v. Alpha Packaging, Indus. Inc.,

700 N.Y.S.2d 220, 221 (N.Y. Sup. Ct. 1999)). Here, however, the trial court rejected

Rosenfield’s expert testimony, credited Morrison’s testimony, but, without explanation,

adopted neither of these experts’ valuations. The trial court also did not make findings in

the final judgment that would explain how it independently arrived at the $1.9 million

valuation figure. On remand, the trial court must adopt a valuation that is supported by

competent, substantial evidence, or appoint an independent appraiser to provide a

recommendation on the fair value of Sandhu’s shares pursuant to section 607.1330(4),

Florida Statutes (2013).


       REVERSED and REMANDED.


ORFINGER, COHEN JJ. and SEMENTO, L.J., Associate Judge, concur.




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