Opinion
20-P-100
12-01-2020
CATHERINE J. McMACKIN v. DANIEL D. McMACKIN.
NOTICE: Summary decisions issued by the Appeals Court pursuant to M.A.C. Rule 23.0, as appearing in 97 Mass. App. Ct. 1017 (2020) (formerly known as rule 1:28, as amended by 73 Mass. App. Ct. 1001 [2009]), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 23.0 or rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260 n.4 (2008).
MEMORANDUM AND ORDER PURSUANT TO RULE 23.0
The former wife (wife) appeals from an amended judgment of divorce entered by the Probate and Family Court. She primarily challenges the denial of her requests to compel the production of certain financial records, which she says were necessary to value the former husband's (husband) interest in a family-owned business, McMackin Technical Services Co., Inc. (MTS). She also argues that the trial judge erred in admitting and crediting the opinion of the husband's expert regarding the value of the husband's interest in MTS. We affirm.
Background. The following facts are undisputed. At all pertinent times, the husband owned a twenty-five percent interest in MTS, with the remainder owned by the husband's father, aunt, and uncle in equal shares. MTS was one of several family-owned companies. The others included The McMackin Corporation, National Process Systems, Inc., and Portland Street Nominee Trust (together, the companies). The companies were owned in varying percentages by the husband's father, aunt, and uncle.
MTS paid a management fee to The McMackin Corporation on an annual basis. The management fee covered payroll and some portion of other expenses, including rent, travel, advertising, benefit programs, utilities, maintenance, and accounting and legal fees. The management fee appeared as a single line item on the financial records produced by MTS, with no details about the breakdown of expenses.
The wife filed for divorce in February 2016. In May 2017 the wife moved to compel the companies to provide numerous categories of financial documents responsive to subpoenas she served earlier that year. The husband opposed, arguing that the wife was not entitled to view the confidential financial records of companies in which the husband had no ownership interest. In June 2017 a judge (first judge) denied the wife's motion without written findings.
Because of a malfunction with the recording system, the wife was unable to obtain a hearing transcript and moved to reconstruct the record. In response the first judge issued a "statement of proceedings," indicating that he denied the wife's motion after the parties "argued from their respective filings."
A pretrial conference was held in March 2018, and trial was scheduled for mid-September 2018, with a discovery deadline of June 29, 2018. The parties later stipulated to extend the discovery deadline to August 17, 2018. A few days after the extended deadline expired, the wife moved for leave to depose the husband's aunt, Virginia McGirr, and to issue a documents-only subpoena to The McMackin Corporation, stating that the wife was seeking the information for the "limited purpose" of valuing the husband's share in MTS. The husband opposed on the ground that the wife's requests were untimely. On August 30, 2018, a second judge, who was also the trial judge (trial judge), denied the wife's motion.
A few days later, despite the trial judge's ruling, the wife served subpoenas on McGirr and The McMackin Corporation, demanding the production of various financial records. The husband filed a motion to quash the subpoenas, which the trial judge allowed. The trial judge explained that he had already denied the wife's motion to depose McGirr and to serve a subpoena on The McMackin Corporation on the ground of untimeliness. Specifically, the trial judge noted that, when the wife filed her motion, "[d]iscovery had closed," and the "case [had] been pending for two-and-a-half years."
After a two-day trial, the trial judge issued a detailed written decision in which he found, as pertinent here, that the fair market value of the husband's share in MTS was $291,000 as of December 31, 2017. In his rationale the trial judge stated that, while he "would have preferred to have more evidence on the management fee being paid by MTS to [The McMackin Corporation]," he accepted the valuation opinion of the husband's expert, Marc Bello, as it was based on "established and recognized methodologies." The trial judge then awarded the wife fifty percent of the husband's share, finding an essentially equal division of assets to be appropriate under G. L. c. 208, § 34.
Discussion. 1. Discovery motions. The wife argues that the first judge and the trial judge both erred in denying her requests to compel production of the companies' financial records. We review discovery rulings only for an abuse of discretion. See Billings v. GTFM, LLC, 449 Mass. 281, 296 (2007). An abuse of discretion occurs where "the judge made a clear error of judgment in weighing the factors relevant to the decision, such that the decision falls outside the range of reasonable alternatives." Vasquez v. Commonwealth, 481 Mass. 747, 751 (2019), quoting L.L. v. Commonwealth, 470 Mass. 169, 185 n.27 (2014).
The first judge acted within his discretion in denying the wife's May 2017 motion to compel the companies to produce documents responsive to her subpoenas. Although the wife asserts on appeal that those documents were relevant to determining whether the management fee was overstated and, consequently, to valuing the husband's share in MTS, the wife's May 2017 motion was not limited to documents related to the management fee. Rather, it indiscriminately sought production of numerous categories of confidential documents, including the companies' financial statements, payroll records, and tax returns from the prior three years. "[T]he weighing of privacy interests as against relevance of the items sought in discovery is a matter 'committed to the sound discretion of the trial judge.'" Matter of the Enforcement of a Subpoena, 436 Mass. 784, 794 (2002), quoting Adoption of Paula, 420 Mass. 716, 734 (1995). Here, given the scope of the wife's requests, and her failure to explain with specificity why the documents she sought were relevant, the first judge could permissibly have determined that the companies' privacy interests outweighed the potential relevance of the discovery, warranting denial of the motion. See Matter of the Enforcement of a Subpoena, supra at 795, quoting Ward v. Peabody, 380 Mass. 805, 813-814, 819, 820 (1980) ("privacy interests [may] defeat a request for discovery when the relevance of the information sought is 'marginal,' 'attenuated,' 'remote,' or 'slight'").
It was also permissible for the trial judge to deny the wife's August 2018 motion for leave to depose McGirr and to issue a subpoena to The McMackin Corporation. While this motion only sought information relating to the management fee, the wife filed the motion after the discovery deadline and shortly before the start of trial. The trial judge was within his discretion to deny the motion on this basis. See Bishop v. Klein, 380 Mass. 285, 288 (1980) ("it was within the discretion of the judges to conclude that the . . . discovery motions were untimely").
For the same reason, the trial judge did not abuse his discretion by allowing the husband's motion to quash.
2. Expert opinion. The wife next contends that the trial judge erred by admitting Bello's expert testimony and report. The admission of expert testimony is within the discretion of the judge. See Commonwealth v. Camblin, 478 Mass. 469, 475 (2017). The judge, acting as gatekeeper, must conduct a "preliminary assessment of whether the reasoning or methodology underlying the testimony is scientifically valid and of whether that reasoning or methodology properly can be applied to the facts in issue." Commonwealth v. Lanigan, 419 Mass. 15, 26 (1994), quoting Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 592-593 (1993). The judge must focus this inquiry "solely on principles and methodology," rather than conclusions. Daubert, supra at 595.
Contrary to the husband's contention, the wife preserved this issue by filing a motion in limine to exclude Bello's testimony and by objecting to the admission of his report.
We discern no abuse of discretion in the trial judge's ruling. As the trial judge found, Bello and the wife's expert agreed that "the income approach [was] the appropriate method to value [the] [h]usband's ownership interest in MTS" and that "the standard for a partial interest valuation such as [the] [h]usband's in MTS [was] 'fair value.'" The trial judge also found that Bello's opinion was "based upon known and recognized methodologies." These findings, which are uncontested, support the trial judge's decision to admit Bello's testimony and report in evidence. Although the wife argues that Bello had insufficient information about the management fee to value the husband's interest under an income approach, that argument goes to the weight of the evidence, not its admissibility. See Commonwealth v. Roberio, 428 Mass. 278, 281 (1998). Indeed, the trial judge explained that the wife could explore the issue of the management fee on cross-examination of Bello, and she availed herself of that opportunity.
Relatedly, the wife contends that the trial judge erred in crediting Bello's opinion over that of her expert, who testified that it was impossible to value the husband's interest in MTS without additional information regarding the management fee. But "[f]aced with a battle of experts," the trial judge could "accept one reasonable opinion and reject the other." Fechtor v. Fechtor, 26 Mass. App. Ct. 859, 863 (1989). Bello testified that he had enough information to determine that the management fee was reasonable and to provide a reliable opinion of the value of the husband's interest in MTS. In light of this testimony, the trial judge did not clearly err in adopting Bello's valuation. See Demoulas v. Demoulas Super Mkts., Inc., 424 Mass. 501, 541 n.47 (1997) (valuation "is a question of fact," which "is subject to review under the 'clearly erroneous' standard").
The wife further contends that the trial judge should have rejected Bello's valuation because it improperly incorporated a minority discount. Bello testified, however, that he did not apply a minority discount, and the trial judge was entitled to credit his testimony. See Fechtor, 26 Mass. App. Ct. at 863. We disagree with the wife's assertion that the trial judge was required to find that Bello "implicitly" applied a minority discount based on his inability to say -- in response to a hypothetical question posed by the wife's attorney -- whether the value of MTS would change if the husband's ownership interest increased. Bello explained that he could not answer that hypothetical question because it depended on other "facts and circumstances that could change the value of the business." Bello also testified that the value of MTS could increase or decrease under the hypothetical, which contravenes the wife's claim that he necessarily incorporated a minority discount in his valuation. In short, we discern no abuse of discretion or clear error in the trial judge's treatment of the expert evidence.,
To the extent we have not specifically addressed any of the wife's arguments, we have considered them and found them to be without merit.
We deny the husband's request for appellate attorney's fees.
Amended judgment affirmed.
By the Court (Green, C.J., Shin & Hand, JJ.),
The panelists are listed in order of seniority.
/s/
Clerk Entered: December 1, 2020.