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In re Marriage of Salgado

Court of Appeals of Oregon

September 18, 2013

In the Matter of the Marriage of VICTORIA MARCEL SALGADO, Petitioner-Respondent, and AVEL RINCON SALGADO, Respondent-Appellant.

Argued and submitted on January 22, 2013.

Lane County Circuit Court 151009612 Cynthia D. Carlson, Judge.

George W. Kelly argued the cause and filed the briefs for appellant.

Katina R. Saint Marie argued the cause and filed the brief for respondent.

Before Schuman, Presiding Judge, and Wollheim, Judge, and Duncan, Judge.

SCHUMAN, P. J.

Husband appeals a dissolution judgment, requesting that we modify the trial court's property division and reduce his spousal support and child support obligations. With respect to the property division, husband argues that the trial court erred in valuing the family business at $600, 000, awarding it to him, and awarding wife an equalizing judgment for half that amount. The court compounded the mistake, he argues, by failing to take that equalizing judgment into account when calculating his support obligations. More specifically, he argues that, after the equalizing judgment, his income is not sufficient to pay the amount awarded in spousal and child support, and that the equalizing judgment (and interest on that judgment) should be treated as wife's income for calculating child support. For the reasons that follow, we agree that the trial court erred in valuing the business, and that the judgment must be reversed and remanded for that reason. Because the support obligations are intertwined with the property valuation (and any equalizing judgment), we do not reach husband's assignments of error concerning support issues, but instead remand those issues for the trial court to consider in the first instance.[1]

We begin with a brief summary of the background of this case, as well as a description of the record that developed concerning the valuation of the business, which is the dispositive issue before us. Husband and wife married in 1990 and have two children together, one of whom was a minor at the time of dissolution. In 1998, husband and wife bought a reforestation business, Oregon Forest Management Services, Inc. (OFMS). Husband had previously been an employee of OFMS, and husband and wife bought the business from husband's employer for $30, 000, using their marital residence as security for the purchase. At the time they bought OFMS, the company owned two trucks and had six employees.

During the marriage, OFMS grew significantly. At the time of dissolution, OFMS owned five trucks and a van, and had approximately 15 employees. Much of the company's success depends on the bidding process, which husband handles himself. OFMS's larger clients, such as Weyerhaeuser, might have as many as eight contactors bidding for its reforestation work, and husband must bid successfully and profitably--i.e., obtain contracts at profitable margins--for OFMS to stay in business. In recent years, OFMS has grossed as much as $1 million annually; over the course of the marriage, it generated an average annual income of $240, 000 for husband and wife. The business was the primary source of the parties' income during the marriage; wife assisted 5 to 10 hours per week with OFMS's "payroll, filing, miscellaneous office tasks, answering phones, reconciling checkbooks, delivering paperwork to the accountant, just numerous small office tasks like that, " but otherwise was a homemaker during the marriage.

At the dissolution hearing, husband and wife offered divergent estimates of the value of OFMS. Neither husband nor wife offered expert testimony to substantiate their respective valuations; rather, each testified as an "owner" of the business. Husband took the position that the business is worth "whatever assets it's got"--"[t]he trucks, the equipment, and that's about it." He explained:

"I believe that because, you know, I basically run the business inside and out. You know, without me, the business is worth whatever assets we got. I do the bidding. I do the payroll. I do work outside, inside * * *."
When asked to put a value on the assets, husband responded, "Probably--I would say around 70 or [$]80, 000."
Wife, meanwhile, testified as follows:
"[WIFE'S COUNSEL:] You're familiar with the amount of vehicles, the condition of the vehicles, and you've recently seen [husband's] tax returns and bank records ...

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