Wisniewski v. Walsh

Full title: PATRICIA WISNIEWSKI, Plaintiff-Appellant/Cross-Respondent, v. FRANCIS J…

Court: SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION

Date published: Apr 2, 2013

DOCKET NO. A-0825-10T4 (App. Div. Apr. 2, 2013)

Opinion

DOCKET NO. A-0825-10T4 DOCKET NO.A-0826-10T4

04-02-2013

PATRICIA WISNIEWSKI, Plaintiff-Appellant/Cross-Respondent, v. FRANCIS J. WALSH, JR., Defendant-Respondent, and NORBERT J. WALSH, Defendant-Respondent/Cross-Appellant. NORBERT J. WALSH, Plaintiff-Respondent/Cross-Appellant, v. DONNA WALSH, Executrix of the Estate of Francis J. Walsh, Jr., and NATIONAL RETAIL TRANSPORTATION INC., a Pennsylvania Corporation, Defendants-Appellants/Cross-Respondents, and PATRICIA WISNIEWSKI, Defendant-Respondent, and COHEN EXPRESS CORPORATION, a New Jersey Corporation, Defendant.

Michael S. Meisel argued the cause for appellant/cross-respondent Patricia Wisniewski (Cole, Schotz, Meisel, Forman & Leonard, attorneys; Mr. Meisel and Warren A. Usatine, of counsel and on the brief; Lauren T. Rainone, on the brief). Eric D. McCullough argued the cause for appellants/cross-respondents Frank's Estate Walsh, as Executrix of the Estate of Francis J. Walsh, Jr. and National Retail Transportation, Inc. (Waters, McPherson, McNeill, attorneys; James P. Dugan and Mr. McCullough, of counsel; Mr. McCullough, on the brief). Eric I. Abraham and Jeffrey J. Greenbaum argued the cause for respondent/cross-appellant Norbert J. Walsh (Hill Wallack and Sills, Cummis & Gross, attorneys; Mr. Abraham and Mr. Greenbaum, of counsel and on the brief; Christina L. Saveriano, on the brief).

PER CURIAM

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

Before Judges Fisher, Alvarez and Waugh.

On appeal from the Superior Court of New Jersey, Chancery Division, Hudson County, Docket Nos. C-171-95 and C-13-96.

Michael S. Meisel argued the cause for appellant/cross-respondent Patricia Wisniewski (Cole, Schotz, Meisel, Forman & Leonard, attorneys; Mr. Meisel and Warren A. Usatine, of counsel and on the brief; Lauren T. Rainone, on the brief).

Eric D. McCullough argued the cause for appellants/cross-respondents Frank's Estate Walsh, as Executrix of the Estate of Francis J. Walsh, Jr. and National Retail Transportation, Inc. (Waters, McPherson, McNeill, attorneys; James P. Dugan and Mr. McCullough, of counsel; Mr. McCullough, on the brief).

Eric I. Abraham and Jeffrey J. Greenbaum argued the cause for respondent/cross-appellant Norbert J. Walsh (Hill Wallack and Sills, Cummis & Gross, attorneys; Mr. Abraham and Mr. Greenbaum, of counsel and on the brief; Christina L. Saveriano, on the brief). PER CURIAM

In this appeal, we consider a variety of issues in this long-standing oppressed shareholder suit. Concluding that the trial judge erred in not applying a marketability discount and that he may have double-counted by adhering to an error made by one of the experts, but finding no other error or abuse of discretion, we affirm in part and remand in part.

This suit, involving various disputes among shareholders in National Retail Transportation, Inc., a close corporation once equally owned by three siblings, was commenced in the Chancery Division on September 21, 1995, nearly eighteen years ago. The action was commenced by plaintiff Patricia Wisniewski against her brothers, Norbert and Frank Walsh, regarding the company's acquisition of certain property. On January 31, 1996, Norbert filed a complaint against Patricia and Frank, alleging their attempts to oust him from the company made him an oppressed shareholder entitled to the remedies outlined in N.J.S.A. 14A:12-7; Patricia filed a counterclaim, seeking similar relief. These actions were consolidated and, to preserve the status quo during the litigation, the Chancery judge at the time appointed an attorney as special agent and later as provisional director, to monitor the company and mediate any disputes among the parties that might arise during the ordinary course of business.

In 2000, following a lengthy trial, the Chancery judge rendered a decision (the Phase I decision), finding that Norbert was the oppressing shareholder and that his actions harmed the other shareholders but not the company. On March 21, 2000, the judge ordered Norbert to sell his one-third interest back to the company, or to Frank and Patricia, at fair value to be determined after receipt of expert reports. The judge set the valuation date at January 31, 1996, to coincide with the date Norbert filed his complaint.

The parties later submitted their expert reports regarding valuation. Without conducting a hearing, the judge issued an opinion on November 7, 2001 (the Phase II decision), by which he fixed the fair value of Norbert's interest in the company at $12,400,000. Final judgment was entered on January 3, 2002, followed by a series of amended judgments, the last of which was entered on April 25, 2002. Pursuant to these orders, the parties had a closing on the purchase of Norbert's interest, which called for a down payment and a four-year note for the balance secured by mortgages on company-owned real property; the closing occurred without prejudice to the parties' right to appeal the final judgment.

An appeal was filed, and on March 23, 2004, we reversed the Phase II decision and remanded for reconsideration of the valuation date and the fair value of Norbert's interest at an evidentiary hearing. Wisniewski v. Walsh, No. A-3477-01 (App. Div. Mar. 23, 2004).

Pursuant to our mandate and with the retirement of the first judge, a different Chancery judge conducted an eleven-day evidentiary hearing on sporadic days between February 24, 2005 and June 9, 2005. On November 15, 2005, the judge fixed a valuation date of November 29, 2000, the day Norbert departed the company.

The judge then conducted a twelve-day hearing on the question of valuation that ended on February 28, 2007; he issued decisions on October 11, 2007 and July 22, 2008, which explained why he determined that the fair value of Norbert's one-third interest was approximately $32,200,000. He later heard testimony regarding the company's financial circumstances and the propriety of proposed payment terms over the course of a number of days between November 2009 and March 2010. An order was entered on June 30, 2010, which fixed the payment terms, and a final judgment entered on October 16, 2010.

Patricia and Frank's Estate¹ appeal, and Norbert cross-appeals. In her appeal, Patricia argues:

1 Frank died on February 24, 2009.

I. THE TRIAL COURT ERRED IN FAILING TO APPLY A MARKETABILITY DISCOUNT TO DETERMNINE THE FAIR VALUE OF THE COMPANY.
II. THE TRIAL COURT ERRED IN ACCEPTING NORBERT WALSH'S EXPERT'S DEFINITION OF FAIR
VALUE AS BEING SYNONYMOUS WITH "INTRINSIC VALUE."
III. THE TRIAL COURT ERRED IN ACCEPTING NORBERT WALSH'S EXPERT'S UNRELIABLE INCOME (DISCOUNTED CASH FLOW) APPROACH, INCLUDING SPECULATIVE REVENUE PROJECTIONS AND THE ERRONEOUSLY CALCULATED DISCOUNT RATE.

A. The Trial Court Should Have Rejected Trugman's Speculative Revenue Projections.
B. The Trial Court Should Have Rejected Trugman's Erroneously Calculated Discount Rate.

IV. THE TRIAL COURT ERRED IN REJECTING THE MARKET APPROACH AS A METHODOLOGY INCONSISTENT WITH FAIR VALUE.
V. THE TRIAL COURT ERRONEOUSLY ACCEPTED NORBERT WALSH'S EXPERT'S ANALYSIS OF EXCESS COMPENSATION PAID TO THE SHAREHOLDERS /OFFICERS OF THE COMPANY.
VI. THE TRIAL COURT ERRED IN REFUSING TO CORRECT UNDISPUTED ERRORS IN NORBERT'S EXPERT REPORT, WHICH OVERSTATED THE VALUE OF HIS INTEREST BY $1,321,000.
VII. THE TRIAL COURT IMPOSED INEQUITABLE PAYMENT TERMS, INCLUDING TERMS RELATING TO INTEREST, COLLATERAL, AND PAYMENT FLEXIBILITY.

A. Norbert Has "Adequate" Collateral Without Junior Mortgages On Properties That Will Create A Covenant Default By The Company Under Its Existing Senior Mortgages.
B. The Trial Court Abused Its Discretion By Imposing Fixed Rather Than Flexible Payments.

Frank's Estate argues in its appeal:

I. THE TRIAL COURT ERRED IN DEPARTING FROM THE STATUTORY PRESUMPTIVE VALUATION DATE AND SELECTING NOVEMBER 29, 2000 AS THE VALUATION DATE.

A. The Basis For Moving The Valuation Date Proposed By Norbert And Adopted By The Trial Court Is Legally Flawed, And Warrants Reversal.

1. Shareholder Status and the status quo orders do not warrant a new valuation
date.
2. Frank and Patricia did not act inequitably after
2000.
3. Norbert's alleged participation has been compensated by other means.

B. Critical Findings Of The Trial Court Relevant To The Valuation Date Are Barred By The Law Of The Case Doctrine And Not Supported By The Record.
C. Using The Complaint Date Is Fair And Equitable.

II. THE TRIAL COURT ERRED IN REJECTING THE DEFENDANTS' REQUEST FOR A CREDIT TOWARD THE PURCHASE PRICE TO ACCOUNT FOR $2,530,264 IN "NON-SHARHEOLDER COMPENSATION" PAID TO NORBERT PURSUANT TO THE REVERSED 2002 JUDGMENT.

A. The Defendants Have Not Waived Their Right To Seek A Credit For

Non-Shareholder Compensation Paid To Norbert.
B. The Non-Shareholder Compensation Is Unnecessary With The New Valuation Date.
C. Norbert Performed No Services For The Company In 2000 And 2001 To Justify A Court-Awarded $1,265,312 A Year Salary Enhancement.

III. THE TRIAL COURT ERRED IN REJECTING THE DEFENDANTS' REQUEST TO ADJUST THE PURCHASE PRICE TO ACCOUNT FOR NORBERT'S SHAREHOLDER LOAN BALANCE.
IV. THE TRIAL COURT ERRONEOUSLY AWARDED NORBERT INTEREST, OR, ALTERNATIVELY, ABUSED ITS DISCRETION IN SETTING THE INTEREST RATE.

A. Norbert, An Oppressing Shareholder Who Was Ordered To Sell His Interest In The Company For Being A "Most Disruptive Factor," Is Not Entitled To Interests.
B. Alternatively, The Trial Court Abused Its Discretion In Setting The Interest Rate.

And, in his cross-appeal, Norbert argues:

I. THE TRIAL COURT ERRED IN FAILING TO ADD TO THE FAIR VALUE OF THE COMPANY APPROXIMATELY $20 MILLION IN IMPROVEMENTS MADE TO OGDEN II TO CONSTRUCT A STATE OF THE ART DISTRIBUTION CENTER, A PROJECT THAT WAS UNDER CONSTRUCTION AS OF THE VALUATION DATE, BUT NOT YET COMPLETED AND FINANCED OUT OF CASH THAT OTHERWISE WOULD HAVE BEEN DISTRIBUTED TO SHAREHOLDERS.
II. THE TRIAL COURT ERRED IN APPLYING A SEPARATE 15% "KEY MAN" DISCOUNT TO REDUCE
THE VALUE OF THE COMPANY TO ACCOUNT FOR FRANK'S IMPORTANCE WHEN THE COMPANY'S DEPENDENCE ON KEY MANAGEMENT WAS ALREADY TAKEN INTO ACCOUNT IN THE DISCOUNTED CASH FLOW VALUATION, THEREBY DEPARTING FROM THE "FAIR VALUE" STANDARD BY VALUATING NORBERT'S SPECIFIC SHARES INSTEAD OF HIS PRO RATE INTEREST IN THE WHOLE COMPANY AND DOUBLE PENALIZING NORBERT FOR FRANK'S IMPORTANCE.

A. The Discount Rate Selected By The Trial Court In Adopting Trug-man's Discounted Cash Flow Valuation Already Adjusted Fair Value To Reflect The Value Of Frank's Historical Contribution; Any Additional Discount For The Same Factor Is An Impermissible Double Counting.
B. The Law Does Not Support The Use Of A Key Man Discount In An Oppressed Shareholder Case.
C. In Any Event, Frank's Death Proves The Inappropriateness Of The Use Of A Key Man Discount.

III. THE TRIAL COURT ERRED IN FAILING TO APPLY A 20% "CONTROL PREMIUM" TO THE VALUE OF THE COMPANY, THEREBY FINDING THE VALUE OF A MINORITY INTEREST AND NOT THE "FAIR VALUE" OF NORBERT'S PROPORTIONATE INTEREST IN THE ENTIRE COMPANY.
IV. THE TRIAL COURT ERRED IN NOT GRANTING POST-JUDGMENT INTEREST ON THE ENTIRE JUDGMENT AMOUNT, AWARDING IT ONLY ON THE PRINCIPAL PORTION OF THE JUDGMENT AMOUNT AND NOT ON THE PRE-JUDGMENT INTEREST WHICH BECAME PART OF THE FINAL JUDGMENT.

A. Post-Judgment Interest Is Awarded Under R. 4:42-11 Essentially As Of Right.

B. Pre-Judgment Interest Is An Integral Element Of The Final Judgment.
C. New Jersey Case Law Requires Post-Judgment Interest Be Paid On The Pre-Judgment Interest Component Of The Final Judgment.
D. The Oppression Shareholder's Act Implicitly Requires That Post-Judgment Be Paid On The Entire Portion Of The Unpaid Purchase Price.

V. ONCE THE TRIAL COURT DETERMINED THE AMOUNT DUE NORBERT IN SEPTEMBER 2008, BUT HAD NOT YET SET THE TERMS AND CONDITIONS OF PAYMENT, THE COURT ERRED IN AWARDING INTERIM INTEREST ON ONLY THE PRINCIPAL AMOUNT DETERMINED OUTSTANDING AS OF NOVEMBER 2000 AND NOT ON THE $12 MILLION OF INTEREST THAT THE COURT FOUND HAD ACCRUED FROM 2000 TO THE COURT'S DETERMINATION OF VALUE IN 2008.
VI. THE TRIAL COURT ERRED IN SETTING THE POST-JUDGMENT INTEREST RATE AT THE CASH MANAGEMENT FUND RATE PROVIDED BY RULE 4:42-11(a) PLUS TWO PERCENT, INSTEAD OF USING THE COMPANY'S BORROWING RATE OF PRIME RATE PLUS ONE PERCENT.

The parties' arguments require our consideration of whether the trial judge abused his discretion: (1) in departing from the presumptive valuation date; (2) in rejecting a market value approach; (3) in accepting Norbert's expert's income approach; (4) in declining to apply a marketability discount; (5) in declining to apply a control premium; (6) in applying a key-person discount; (7) in failing to account for improvements to property with funds that would otherwise have been distributed to shareholders; (8) in failing to adjust the purchase price for certain non-shareholder compensation paid to Norbert pursuant to a judgment later set aside; (9) in the manner in which he imposed payment terms; and (10) in awarding interest.

Before examining these issues, we first outline the factual circumstances and the nature of the hearings conducted in the trial court.

The record reveals that each sibling owned one-third of the company their father, Francis J. Walsh, Sr., founded in 1952 as a one-truck operation. The business has since expanded to include such services as freight consolidation, line-haul, and even dedicated fleets for retail stores throughout the country. Frank, the oldest of the three siblings, joined the company in 1964 at age seventeen, and assumed leadership by 1973, the same year the younger Norbert joined the company as a truck driver. Frank continued to lead the company following his father's death in 1978, although, by the time of this litigation, Norbert served as an officer as well, along with Raymond Wisniewski, Patricia's husband. Patricia never worked for the company.

The company enjoyed considerable success over the years, affording its shareholders generous distributions and loans, though that success has not been consistent. The company sought bankruptcy protection in the 1980s, and took several years to reorganize. The company took yet another financial downturn when Frank left in 1992 to serve a prison sentence for commercial bribery and bank fraud, among other things. He left Norbert in control during his absence, though Norbert testified that he believed himself to have already been in control of the company.

In any event, during that period, Norbert discontinued payment of Patricia and Raymond's bills that the company had routinely paid on their behalf, requiring them to take out a second mortgage on their home and sell assets to meet their obligations. Norbert further ordered an accounting transfer of billings from a company in which all parties had a nominal interest to a subsidiary in which Patricia then had no interest. He did this without consulting or compensating Patricia. Norbert further attempted to exclude Patricia from a company real estate deal until Frank objected, and then excluded both by purchasing the property through an entity owned by his immediate family. Those acts would later constitute the basis of the trial judge's finding that Norbert was an oppressing shareholder and that this oppression continued until Frank returned and reacquired control of the company with Patricia and Raymond's support.

The parties substantially disagree about the extent of Norbert's participation in the family business thereafter. Norbert testified that his involvement in the company was generally active until his departure in 2000. According to Norbert, he maintained a separate office from Frank and continued all of his duties during the litigation. He maintained contact with customers, participated in contract negotiations, including new contracts with K-Mart and Best Buy and renewals with Marshall's and Federated Stores, and signed all contracts as president. Moreover, he made tens of millions of dollars in personal guarantees to obtain financing for the company.

Frank and Raymond, on the other hand, disagree. Raymond in particular testified that Norbert's involvement in the company was minimal once Frank returned and only nominal once the litigation began, asserting that all of the company's success arose from Frank's development of relationships with its major customers, that Frank was responsible for negotiating all major contracts, and that the company suffered financially during his absence. Even Norbert acknowledged that Frank had secured many of the company's major customers.

Moreover, according to Raymond, once the litigation began, Norbert's only role at the company was as an obstructionist. For example, in one instance, Norbert refused to cooperate with the company's efforts to redevelop a parcel of property known as Ogden II near its North Bergen terminal. Eventually, the company was able to make scheduled improvements in accordance with the state-approved redevelopment plan using funds ordinarily distributed to the company's shareholders. It did so only over Norbert's objection, but with approval of the provisional director and the trial judge.

No party has contested the Phase I conclusions that Norbert's conduct in withholding distributions from Patricia and shifting the company's assets to her detriment constituted oppressive behavior or that Norbert should be bought out as a result. As noted earlier, however, we reversed the trial court's Phase II decisions regarding valuation and the valuation date. Wisniewski, supra, slip op. at 12. With respect to valuation, we concluded that the trial judge should not have resolved the issue, dependent on conflicting expert testimony, without the benefit of a hearing to evaluate the relative credibility of the experts. Id. at 8-11. As for the valuation date, though, we concluded that, as a matter of equity, Norbert, whose oppressive behavior occasioned this litigation but had not, according to the trial court, harmed the company's success, should not have been deprived of the benefit of the growth of the company between the filing of his action and the end of his involvement with the company, though we declined to identify that date as an exercise of original jurisdiction. Id. at 7-8. On remand, the trial judge, based largely on Norbert's testimony, concluded that Norbert, while perhaps not as key to the company's success as Frank, had participated sufficiently in the company to warrant extending the valuation date in the interest of equity until November 29, 2000.

At the valuation trial, Norbert elicited testimony from Gary R. Trugman, president of Trugman Valuation Associates. Trugman used a discounted-cash-flow approach, which estimates the value of a company as the present value of its expected future cash flow. To arrive at his calculation, Trugman estimated the company's projected revenues based on data of the growth of its key clients, adjusted or "normalized" its expenses to eliminate items such as excess officer compensation, and applied a discount rate to the result to yield the present value of that income stream.

Defendants relied on Roger J. Grabowski, a partner and managing director of Duff & Phelps, LLC, in Chicago. Grabowski undertook a market approach to valuation, estimating the value of the company as extrapolated from data pertaining to sales of comparable entities.

Although not particularly trustful of either expert, concluding that each had designed his valuation to exaggerate the company's value in his client's favor, the judge found Trugman's approach to valuation relatively more reliable and more consistent with the applicable legal standard, concluding that it was more conducive, under the circumstances, to yielding the value of a closely-held company for which there was no ready market. Nonetheless, the judge also credited Grabowski's testimony in certain respects, including his analysis of the key-person discount that Norbert disputes on appeal. All told, the judge fixed the value of Norbert's interest in excess of $32,000,000.

I

Frank's Estate argues that the trial judge should not have changed the valuation date from the date Norbert filed his complaint, both as a matter of equity and because the judge's choice of a later date conflicted with the findings in the first proceeding that Norbert never challenged on appeal.

N.J.S.A. 14A:12-7(8) authorizes a court, within its sound discretion, to order a sale of any shareholder's stock to the extent fair and equitable under the circumstances. It specifies that "[t]he purchase price of any shares so sold shall be their fair value as of the date of the commencement of the action or such earlier or later date deemed equitable by the court, plus or minus any adjustments deemed equitable by the court." N.J.S.A. 14A:12-7(8)(a). That is, the suit's commencement date is the presumptive valuation date, though a court may select another date as demanded by fairness and equity. Musto v. Vidas, 333 N.J. Super. 52, 60 (App. Div.), certif. denied, 165 N.J. 607 (2000). Such a determination should not be disturbed absent an abuse of discretion. See id. at 64.

The first Chancery judge concluded that the statutory presumptive date -- the date that Norbert filed his complaint -- was the most appropriate date for valuation because neither party presented any compelling reason for changing it. We disagreed, noting that Norbert remained actively involved in the company until he left in 2000, and concluded it would be inequitable to deny him his proportionate share of that growth:

Since the trial court found that Norbert's oppression had not had any adverse effects on the company, and since he remained active until May 31, 2000, the equities suggest that that date should have been the earliest one chosen. Although we are satisfied that the trial court abused its discretion in selecting January 31, 1996, as the valuation date, rather than choose the date ourselves as an exercise of original jurisdiction, we remand this issue for redetermination.
[Wisnewski, supra, slip op. at 8]

In complying with our mandate, the second Chancery judge credited Norbert's testimony and found he had actively participated in the company's affairs until November 29, 2000, when he formally relinquished his job responsibilities pursuant to a settlement. The judge noted that while Norbert's role was "perhaps not as big as Frank's," he had nonetheless "contributed to the growth of the company."

Notwithstanding our prior holding, Frank's Estate argues that the trial judge should not have changed the valuation date from the presumptive date absent exceptional circumstances, relying in part on a number of out-of-state cases to that effect. Our statute, however, explicitly permits such a change in the interest of equity. N.J.S.A. 14A:12-7(8)(a). Indeed, in Torres v. Schripps, Inc, 342 N.J. Super. 419, 437-38 (App. Div. 2001), we approved the fixing of a valuation date to a point prior to the filing of the complaint so the innocent party would not be penalized for the company's decline following his departure.

Frank's Estate argues that we have not previously authorized the selection of a valuation date later than the presumptive date, reasoning that such an unprecedented approach to account for future growth of the company would double count any growth already captured in the valuation, relying on Musto, supra, 333 N.J. Super. at 63-64. Frank's Estate misinterprets Musto. There, we warned against double counting the company's growth by making equitable adjustments to the valuation as of a given valuation date, not in moving the date itself. Ibid. Since the income capitalization approach used there already captured that growth in the fair value reached, it would have been double counting to adjust that value for the same growth. Ibid. The trial judge here made no adjustment of the fair value at the presumptive valuation date to account for growth, but instead concluded that equity demanded a change in the date. It suffices here, as it did in Musto, that the judge reached that conclusion on a thorough consideration of the equities. Id. at 63.

We also reject Frank's Estate's argument because it was considered and rejected in the earlier appeal. Wisniewski, supra, slip op. at 7-8. We decline the Estate's invitation to revisit that determination. See Lombardi v. Masso, 207 N.J. 517, 539-40 (2011).

II

Patricia contends that the trial judge abused his discretion in setting the value of Norbert's share of the company by applying an incorrect legal standard in valuating the company. Specifically, she asserts that the judge mistakenly favored Trugman's discounted-cash-flow analysis, which Patricia interprets as conflating "fair value" with the notion of "intrinsic value," while rejecting Grabowski's reasonable market approach as inconsistent with that standard. Although the judge found neither expert particularly credible, he found Trugman's method relatively more reliable and consistent with the applicable fair-value standard under the circumstances. That credibility determination is entitled to our deference. In addition, a review of the judge's decision confirms that his consequent conclusions did not depart from the applicable valuation standard.

Valuation, particularly of a closely-held corporation, is a fact-sensitive undertaking for which there is no single correct approach. Steneken v. Steneken, 183 N.J. 290, 296-97 (2005). A judge may consider any evidence of fair value "'generally acceptable in the financial community and otherwise admissible in court,'" Lawson Mardon Wheaton, Inc. v. Smith, 160 N.J. 383, 397 (1999) (quoting 1 John R. MacKay II, New Jersey Business Corporations ¶s 9-10(c)(1) (2d ed. 1996)), and may calculate an appropriate value using any acceptable method, Torres, supra, 342 N.J. Super. at 434. The reasonableness of any particular method depends "upon the judgment and experience of the appraiser and the completeness of the information upon which his conclusions are based." Bowen v. Bowen, 96 N.J. 36, 44 (1984). The goal is the fair value of the asset subject to valuation, which may obtain whether or not any ready market for the asset exists. Brown v. Brown, 348 N.J. Super. 466, 487 (App. Div.) (quoting Lavene v. Lavene, 162 N.J. Super. 187, 193 (Ch. Div. 1978)), certif. denied, 174 N.J. 193 (2002).

A court's determination of fair value is entitled to great deference on appeal and should not be disturbed absent an abuse of discretion. Balsamides v. Protameen Chems., 160 N.J. 352, 368 (1999). Any of the findings of fact that underlie that determination are likewise entitled to deference on appeal so long as they are supported by sufficient credible evidence in the record. Lawson Mardon Wheaton, supra, 160 N.J. at 403; see also Rova Farms Resort v. Investors Ins. Co., 65 N.J. 474, 483-84 (1974). That is particularly so where the findings depend on the judge's credibility determinations made after a full opportunity to observe the witnesses testify. Balsamides, supra, 160 N.J. at 367-68. A judge may accept or reject any expert testimony in whole or in part in evaluating its relative credibility. Maudsley v. State, 357 N.J. Super. 560, 586 (App. Div. 2003).

The trial judge found Trugman's discounted-cash-flow approach relatively more reliable because he viewed that approach as more conducive than Grabowski's to ascertaining the company's "intrinsic value," a term that Trugman had used, albeit not as one synonymous with fair value. Patricia seizes on the judge's choice of words, claiming that choice demonstrates the judge departed from the fair-value standard applicable in this action.

In such matters, "intrinsic value" is a term of art referring to "an analytical judgment of value based on the perceived characteristics inherent in [an] investment, not tempered by characteristics peculiar to any one investor, but rather tempered by how these perceived characteristics are interpreted by one analyst versus another." Shannon P. Pratt et al., Valuing a Business: The Analysis and Appraisal of Closely Held Companies 31 (4th ed. 2000). Particularly with respect to an equity security, it is "'the amount that an investor considers, on the basis of an evaluation of available facts, to be the "true" or "real" worth . . . that will become the market value when other investors reach the same conclusions.'" Ibid. (quoting W.W. Cooper and Yuri Ijiri, eds., Kohler's Dictionary for Accountants 285 (6th ed. 1983)). The resultant value may or may not be consistent with the asset's fair value.

The phrase "intrinsic value" has a colloquial meaning as well and does not alone evoke a standard independent of the statute's fair-value standard. Courts have often used the term to describe the statutory standard. See, e.g., Tri-Continental Corp. v. Battye, 74 A.2d 71, 72 (Del. 1950); see also Pratt, supra, at 32 (observing that references to the phrase in case law "almost universally . . . do not define the term other than by reference to the language in the context in which it appears," including "in cases where the statutory standard of value is specified as fair value or even fair market value" (emphasis deleted)). In Tri-Continental, the Delaware Supreme Court explained that

[t]he basic concept of value under [Delaware's] appraisal statute is that the stockholder is entitled to be paid for that which has been taken from him, viz., his proportionate interest in a going concern. By value of the stockholder's proportionate interest in the corporate enterprise is meant the true or intrinsic value of his stock which has been taken by the merger. In determining what figure represents this true or intrinsic value, the appraiser and the courts must take into consideration all factors and elements which reasonably might enter into the fixing of value.
[74 A.2d at 72]

Delaware courts continue to follow this approach in ascertaining fair value, Weinberger v. UOP, Inc., 457 A.2d 701, 713 (Del. 1983), and our standard is consistent, see Lawson Mardon Wheaton, Inc. v. Smith, 315 N.J. Super. 32, 47 (App. Div. 1998) (noting that the purpose of an appraisal is the determination of the intrinsic worth or fair value of a shareholder's interest), rev'd on other grounds, 160 N.J. 383 (1999). Indeed, the trial judge cited Tri-Continental in explaining that Trugman's discounted-cash-flow approach, insofar as intended to yield the intrinsic worth of an asset that may well have no ready market, was generally more reliable. Despite Patricia's forceful suggestion to the contrary, we do not interpret the judge's opinion as using the phrase "intrinsic value" as defining a standard distinct from the applicable statutory standard of fair value. The judge did not apply an incorrect standard in arriving at its determination of value.

Nor did the trial judge, as Patricia asserts, reject the market valuation methodology as inherently inconsistent with the applicable fair-value standard. Although the judge stated his view that the discounted-cash-flow approach should generally be preferred over the market approach "in this type of litigation," he never rejected the market valuation methodology out of hand, but only found Grabowski's approach less appropriate than Trugman's under the circumstances. Moreover, the judge found that Grabowski's decision not to perform a discounted-cash-flow valuation to corroborate his market valuation demonstrated that he "took somewhat of an . . . ostrich approach," avoiding that methodology "for fear that the numbers [would] not be suitable for what he was retained to do."

The judge's credibility determinations on these questions, at which he arrived following a full opportunity to observe experts from both sides testify, must be accorded deference on appeal. Maudsley, supra, 357 N.J. Super. at 586. So, too, should the judge's correctly identified and explained conclusion that Trugman's approach to valuation was conducive to yielding a value more consistent with the applicable legal standard.

III

Trugman's discounted-cash-flow approach required that he project the company's anticipated cash flows, normalize its expenses, and calculate the present value of the resulting income stream by applying a discount rate appropriate to the company. In first calculating the company's anticipated future cash flows, Trugman extrapolated his projections from data pertaining to growth of the company's key clients, consistently with guidelines set by the American Society of Appraisers. The judge faulted him for failing to meet with the company's management to confirm the accuracy of those projections, but noted the company had not made any internal projections available to him for that purpose and that Trugman had reviewed Frank's depositions and the company's historical financial data. Based on that financial data, Trugman concluded that the company was mature, that its operations were consistent, and that its growth was steady over the five-year period preceding the valuation date. According to Trugman, that data demonstrated the company had grown approximately 12.4% in 1996, 8.5% in 1997, 4.1% in 1998, 10% in 1999, and 8.5% in 2000. Consequently, he estimated the company's long-term growth rate at approximately five percent, a figure the judge found reasonable.

The trial judge, however, generally rejected Trugman's approach to estimating the company's expenses. Trugman had testified that expenses during the valuation year had been higher than prior years, in part due to rising fuel costs, and rejected the company's actual expenses that year in favor of calculating an average of normalized expenses over the prior three years; on the other hand, Grabowski testified that the company's valuation-year expenses would be representative of the company's current operations and should serve as the benchmark. The judge found Grabowski's testimony on this point more credible and adopted his approach to estimating expenses.

Trugman arrived at his discount rate using the "build-up" method, which yields a rate from the sum of a number of components each measuring the risk associated with some aspect of the entity being evaluated. He began with the long-term treasury bond yield as of the valuation date and added a seven-percent equity risk premium to account for the added risk of holding a share of a company. He then added a size or small-company premium of approximately 3.5% to account for the added risk inherent in investing in a company of this size, and a specific-company risk premium of four percent to account for the added risk entailed in holding an interest in this particular company, including that attributable to its reliance on Frank for its success. Reducing that, then, for the cost of the company's cost of debt and estimated taxes, he arrived at a final discount rate of twelve percent, which the judge found reasonable as consistent with industry-wide data on which even Grabowski had relied.

Patricia takes issue with Trugman's projections of the company's future revenue, relying largely on unpublished authority declining to credit expert projections under the particular circumstances of each case. But valuation is not an exact science, and the reliability of any particular valuation approach rests on the quality of the evidence supporting it, subject, of course, to the court's relative credibility determinations. Bowen, supra, 96 N.J. at 44. Here, although Trugman had no access to any company-prepared projections of future revenue for use in his analysis, he calculated his own projections, extrapolating them from available data relevant to the growth of the company's primary customers. Given his explanation of the foundation of that aspect of his analysis in available evidence on which he could reasonably rely, his testimony was certainly not so speculative as to be inadmissible. See Polzo v. County of Essex, 196 N.J. 569, 583-84 (2008).

Patricia does not argue that Trugman's testimony was so deficient as to be inadmissible; she asserts the judge should not have found it reliable. Indeed, the judge did not find Trugman's analysis particularly credible, but he generally found Trugman's methodology more reliable than Grabowski's, and largely adopted it on that basis, revenue projections and all.

A court must ultimately arrive at a fair value based on the evidence that the parties present. However "speculative" Patricia may view Trugman's analysis in this respect, the judge was entitled to find it relatively more reliable than the expert testimony defendants presented. The judge's determination is entitled to deference on appeal. Balsamides, supra, 160 N.J. at 367-68.

Patricia also argues Trugman calculated his discount rate using an incorrect equity-debt ratio for the company. Specifically, Trugman calculated a 40% equity to 60% debt ratio justifying a discount rate of 12%, and Grabowski testified that the very sources that Trugman used to perform his calculations actually supported a 70% equity to 30% debt ratio, warranting a much higher discount rate of 16.5%. Patricia argues that Grabowski's calculation was more reliable.

The judge did not address the intricacies of those calculations, but he found that Trugman's estimate was well within the range calculated for a sampling of trucking companies in a source on which Grabowski had relied in his analysis. We must defer to the judge's finding that Trugman's estimate was more reliable.

We also defer to the judge's finding that Trugman's analysis of the excess compensation paid to officers of the company was relatively more credible than Grabowski's, a conclusion Patricia also contests. Trugman concluded, based on salary data from comparable publicly-traded companies, that the company could replace Frank, Norbert, and Raymond for a combined salary of $1,047,000. Grabowski, on the other hand, following an analysis undertaken in Exacto Spring Corp. v. Commissioner of Internal Revenue, 196 F.3d 833, 838-39 (7th Cir. 1999), concluded that the salaries were not excessive in relation to the rate of return realized by the company under their management. Again, the judge found Trugman's conclusion relatively more credible, and there was adequate support for his finding.

Lastly, Patricia challenges the trial judge's failure to correct certain miscalculations in Trugman's valuation. Grabowski testified that, in consolidating the company's financial statements, Trugman double-counted NRT's income and included Ogden II's income without including its operating expenses, decreasing the expense ratio and increasing the resulting value of the company on both counts. The judge rejected Grabowski's criticism but believed his concerns would be eliminated by adopting his general approach to calculating the expense ratio, using data from the valuation year rather than an average of the prior three. The judge agreed, and Norbert does not challenge, that Grabowski's approach was the more appropriate one.

However, the judge later seemed to acknowledge that Trugman had made the double-counting errors in his calculations, although it is not entirely clear whether the judge had actually earlier found the calculations inaccurate or was merely acknowledging defendants' assertions that he had. The judge ultimately maintained that his adoption of Grabowski's general approach eliminated his concerns, but using only the last year's worth of inaccurate calculations, rather than an average of the prior three, does not resolve the inaccuracy.

We remand for the judge's reconsideration of the argument and for clear findings on this point. The judge's determination that Trugman's testimony was relatively more credible than Grabowski's is generally entitled to deference on appeal; however, the conclusion that certain claimed inaccuracies in Trugman's calculation of the company's expected expense ratio were eliminated by adopting Grabowski's general approach to calculating that ratio may be incorrect, and the judge should further explore that issue on remand.

IV

Patricia contends that a marketability discount should have been applied to the valuation of Norbert's interest in the company. We agree.

A marketability discount adjusts the value of an interest in a closely-held corporation on the understanding that demand for such a relatively illiquid interest is limited and its value consequently diminished. Lawson Mardon Wheaton, supra, 160 N.J. at 398-99. In forced buy-out circumstances, such a discount is not applicable except under extraordinary circumstances. Brown, supra, 348 N.J. Super. at 483. As we explained, "[t]he unfairness of using [marketability] discounts lies in the potential for depriving minority shareholders of the full proportionate value of their shares and enriching majority shareholders by allowing a buy-out of minority interests at bargain prices." Id. at 484. The determination of whether circumstances exist to warrant application of the discount in a particular matter must be guided by considerations of fairness and equity. Balsamides, supra, 160 N.J. at 377. Whether the discount applies is a matter of law subject to de novo review on appeal. Lawson Mardon Wheaton, supra, 160 N.J. at 398.

In Balsamides, as here, an oppressed shareholder was ordered to acquire the oppressing shareholder's interest; there, the competing shareholders were equal owners. 160 N.J. at 355 n.2, 382. The Court observed that "where the oppressing shareholder instigates the problems, . . . fairness dictates that the oppressing shareholder should not benefit at the expense of the oppressed." Id. at 382. Further, any less solution would permit the statute to become an instrument for oppression. Id. at 382-83.

In that light, the Court noted that, were the oppressed shareholder ordered to buy out the oppressor at a value without any discount for marketability, the innocent party would inequitably be forced to shoulder the entire burden of the asset's illiquidity. Id. at 378-79. The oppressing shareholder, whose unlawful behavior occasioned the forced sale in the first place would have received the undiscounted proportional value of his share of the company, while the oppressed shareholder would be forced to accept a discounted price in any future sale to a third party. Ibid. The Court concluded that equity demanded application of a marketability discount to the purchase price to ensure that the oppressing shareholder would not be rewarded at the innocent shareholder's expense. Id. at 382-83.

Balsamides is directly applicable. Although the equities may not be as suggestive of the discount here as in Balsamides -- for example, Norbert's actions, while oppressive, did not actually harm the company, and, unlike the two veto-wielding equal partners in Balsamides, Norbert was a minority shareholder -- the fact remains that Norbert should not be rewarded when his conduct not only harmed the other shareholders but necessitated this forced buyout. 160 N.J. at 383.

The judge's failure to apply an appropriate marketability discount was erroneous. We remand for the application of a marketability discount, although we do not foreclose the possibility, which the judge should analyze on remand, that such a discount might not already be embedded in the discount rate used in the discounted-cash-flow valuation the court adopted. In other words, absent a clear understanding of whether a marketability discount was implicitly applied through adoption of the discounted-cash-flow valuation approach, the judge should reconsider the award through application of an appropriate marketability discount.

V

Norbert contends that a control premium should have been added to the value of the company. The judge rejected this, concluding that the discounted-cash-flow approach that Norbert's own expert used and that the judge largely credited already yielded a fair value of a controlling interest in the company without the need for an additional premium.

A control premium is the "added amount an investor is willing to pay for the privilege of directly influencing the corporation's affairs." Lawson Mardon Wheaton, supra, 315 N.J. Super. at 67. The objective of a valuation is the fair value of the shareholder's proportional interest in the entire entity as a going concern. Casey v. Brennan, 344 N.J. Super. 83, 113 (App. Div. 2001), aff'd, 173 N.J. 177 (2002); see also Rapid-American Corporation v. Harris, 603 A.2d 796, 802 (Del. 1992). Application of a minority discount, which adjusts the value of a minority interest for its lack of control, would be counterproductive to that end absent extraordinary circumstances insofar as either discount might "depriv[e] minority shareholders of the full proportionate value of their shares and enrich[] majority shareholders by allowing a buy-out of minority interests at bargain prices." Brown, supra, 348 N.J. Super. at 483-84. On the contrary, application of a control premium -- in some sense the opposite side of the same coin as the minority discount, Lawson Mardon Wheaton, supra, 315 N.J. Super. at 67 -- insofar as necessary to reflect market realities may be considered to ensure that minority shareholders duly and proportionately share in the fair value of the entire company. Casey, supra, 344 N.J. Super. at 112-13. Whether the premium is applicable under particular circumstances is a matter of law subject to de novo review on appeal. Lawson Mardon Wheaton, supra, 160 N.J. at 398.

While our courts have not dealt extensively with application of the control premium, we have found Delaware's jurisprudence instructive. See Casey, supra, 344 N.J. Super. at 106, 112-13. As particularly pertinent here, Delaware courts have usually rejected application of the premium in a discounted-cash-flow analysis. Montgomery Cellular Holding Co. v. Dobler, 880 A.2d 206, 217 n.19 (Del. 2005). So long as such an analysis is designed to assess a company's full value, no minority discount inheres in it that would necessitate adjustment by a control premium. In re Toys "R" Us, Inc. S'holder Litig., 877 A.2d 975, 1013 (Del. Ch. 2005). Shareholders, after all, are entitled to no more than their proportional share of the company's value. Ibid.

The trial judge noted at the outset, relying on Toys "R" Us, that a discounted-cash-flow method typically yields the value of a controlling interest in an entity, eliminating the need for a premium. The judge then considered, but rejected, Trugman's testimony that his particular valuation approach did not yield such an interest. Specifically, while Trugman had acknowledged that his discounted-cash-flow valuation included some control level adjustments to account -- for example, for excessive officer compensation -- he had maintained, with little elaboration, that application of an independent control premium would nonetheless be justified on the premise that a third-party buyer could plausibly run the company with greater efficiency even beyond the adjustments he had made. The judge found his assertions that a new owner could cure those unspecified deficiencies in the company's management incredible, particularly in light of Norbert's own testimony that Frank had been managing the company efficiently. The judge concluded that Trugman's approach had already reached a control value and that no premium was therefore appropriate. This conclusion was consistent with applicable legal principles and adequately grounded in the record.

VI

Norbert argues that a key-person discount should not have applied. The judge determined that the company's singular reliance on Frank for its success justified application of such a discount here.

A key-person discount adjusts for the risk of holding an interest in a company with an "unusually concentrated dependence on one executive or on a small group of executives." Pratt, supra, at 431. We have not previously addressed the applicability of this discount in a fair valuation proceeding, but, as with other discounts or premiums, whether a key-person discount applies under particular circumstances is a matter of law subject to de novo review on appeal. Cf. Balsamides, supra, 160 N.J. at 373.

The judge felt "quite strongly" that the discount should apply here. He recognized the prior finding in the Phase I opinion that Frank was uniquely responsible for the company's success, as well as abundant testimony regarding Frank's extensive relationships with customers, the company's relatively poor economic performance during his absence, and its growth since his return. The judge credited Grabowski's testimony that any buyer would demand a key-person discount under those circumstances, and adopted the fifteen-percent discount Grabowski suggested would be appropriate.

Courts in other jurisdictions have often rejected application of the discount. Such was the case in Hendley v. Lee, 676 F. Supp. 1317, 1330-31 (D.S.C. 1987), where the court doubted the discount's general applicability to the value of an asset subject to a forced sale, but concluded it would be particularly inapplicable there, where the key person remained employed with the company, and his departure would likely not affect the efficient management of the company. The Georgia Supreme Court reached a similar conclusion in Miller v. Miller, 705 S.E.2d 839, 844-45 (Ga. 2010), adding that, where an income approach to valuation is undertaken, application of the discount could double-count the impact of the key person's loss insofar as that impact is already accounted for in the calculation of the capitalization rate. See also Hough v. Hough, 793 So.2d 57, 58-59 (Fla. Dist. Ct. App. 2001) (rejecting expert's evaluation as artificially low where it both reduced expected annual income and increased capitalization rate to account for key person's good will). The Massachusetts Supreme Judicial Court found the discount particularly inappropriate in Bernier v. Bernier, 873 N.E.2d 216, 231-32 (Mass. 2007), where evidence revealed that the individual was neither crucial to the company's success nor, as here, likely to leave the company in the near future. On the other hand, in Nelson v. Nelson, 411 N.W.2d 868, 874-75 (Minn. Ct. App. 1987), a key-person discount was applied in effecting an equitable distribution of the parties' marital property.

Regardless of the view of some courts that the discount should not be applied, ultimately its application or rejection turns on what equity demands in a given situation. Here, Norbert does not challenge the court's conclusion that Frank qualified as a key person of the company, except to assert that Frank's death nonetheless did not impact the company's success, as even Raymond acknowledged, but that circumstance was not knowable as of the valuation date and would be inappropriate for consideration now. Moreover, Norbert acknowledges that it was appropriate for Trugman to account for the company's dependence on Frank by increasing the discount rate in his analysis. He argues only that the trial judge should not have applied a separate, independent key-person discount to the valuation.

We find no merit in Norbert's argument and defer to the judge's factual determination that the discount was appropriate.

VII

Norbert argues that the trial judge erred by failing to add in excess of $20,000,000 to the company's valuation to account for improvements made to Ogden II during the litigation with funds that might otherwise have been distributed to shareholders. He asserts that, because the property had not yet been fully redeveloped by the valuation date, its worth could not be captured by Trugman's discounted-cash-flow valuation and needed to be valued separately as if a non-operating asset of the company.

A non-operating asset is one that is "not necessary to ongoing operations of the business enterprise." Pratt, supra, at 914. Insofar as such an asset "could be liquidated without impairing operations," it may be valued independently from the rest of the business. Id. at 249-50.

The trial judge thoroughly recounted the company's history of ownership of Ogden II, including its long use as a staging area, as well as its redevelopment. The judge noted in particular Norbert's own acknowledgement that the property was "integral to the operations and growth of the company" and concluded the property could not be classified as a non-operating asset whose value could be separately calculated and added to that of the company.

Norbert does not challenge the judge's finding that Ogden II did not qualify as a non-operating asset. He argues only that, due to the timing and circumstances of its redevelopment, the revenue that the redeveloped property could expect to generate could not have been ascertainable as of the valuation date so as to be included in Trugman's discounted-cash-flow analysis. He relies on Trugman's testimony to the effect that treating the property merely as if it were a non-operating asset would ensure that its worth would be adequately captured in the valuation.

The judge did not explicitly address that colorable contention, but generally found Trugman's testimony on the issue incredible and "just not consistent whatsoever with the evidence." Moreover, the judge's thorough findings with respect to Ogden II's history and operation amply demonstrate the property's integrality to the company's business both prior to its redevelopment, during years for which the company's revenues were known and considered in both experts' analyses, and would continue to be integral to the company's expansion, which Trugman's valuation presumed. The trial judge's conclusion that the value of Ogden II was already adequately accounted for in that valuation was sound.

Insofar as Norbert's arguments may be taken to imply instead that, as a matter of equity, he should be entitled to the value of the withheld distributions, the company's decision to withhold those distributions was timely challenged by Norbert, approved by the provisional director, and upheld by the trial judge. Even if appropriate to now collaterally revisit that long-resolved issue, it remains that the withheld distributions funded an expansion of the company enhancing its value, for which Norbert is already otherwise compensated. Indeed, had the company instead made the distributions, the loans it would have had to acquire to timely complete redevelopment of the property would have affected the value.

VIII

Frank's Estate contends that defendants were entitled to credits against the purchase price of Norbert's shares for certain non-shareholder compensation that the company paid him pursuant to the reversed 2002 judgment and for Norbert's outstanding shareholder loan balance. The trial judge rejected those arguments, concluding that defendants had waived the first issue by failing to raise it in the prior appeal and that no evidence in the record supported the second. The judge was correct in both respects.

In the first respect, the trial judge ordered the company in the since-reversed judgment to pay Norbert $1,265,372 per year for 2000 and 2001 with interest for non-shareholder compensation as a salary enhancement. While addressing valuation issues, the judge allowed defendants a credit toward the purchase price for shareholder distributions that the company had made to Norbert since January 31, 1996, which was then the valuation date applied, pursuant to Musto, supra, 333 N.J. Super. at 59. In so doing, the judge credited Trugman's analysis of the excess distribution that Norbert had received, and to which defendants were therefore entitled reimbursement, by accounting for the difference between Norbert's actual officer salary and that he would expect as consistent with industry standards -- two percent of the company's gross sales. The judge used that figure not only in calculating defendants' credit pursuant to Musto, but in concluding Norbert was owed the difference between what he should have expected his salary to be and the $500,000 actually paid in each of 2000 and 2001. That difference is the sum Frank's Estate now disputes.

Frank's Estate admits that, although defendants raised the issue in their notices of cross-appeal, they never actually briefed it. On remand, the trial judge found defendants' failure to brief the issue to constitute a waiver and that it should not consider the issue on remand. In so doing, the trial judge perceived no direction to the contrary in our prior opinion by which we remanded the matter for a redetermination of the valuation date and fair value of the company and, more broadly, of "such other matters as may be required for full determination of the rights and liabilities of the parties." Wisniewski, supra, slip op. at 12.

Frank's Estate, however, seizes on that language and argues that we thereby intended to permit consideration of any issue required for a full determination of the parties' rights. The Estate contends that this issue was particularly appropriate for consideration, because the valuation date changed on remand, obviating any need for the credit that occasioned Norbert's salary enhancement, and because Norbert never provided any services to justify even the salary that he was paid in the first place. Although Frank's Estate does not concede defendants waived this issue, asserting that Frank "reserved" it for remand without actually briefing it, the Estate argues that the judge should have nonetheless considered the issue to avoid an inequitable result.

Our rules require that an appellant identify and fully brief any issue raised on appeal. R. 2:6-2(a). Consequently, a failure to brief an issue will be deemed a waiver. 539 Absecon Blvd., LLC v. Shan Enters. Ltd. P'ship, 406 N.J. Super. 242, 272 n.10 (App. Div.), certif. denied, 199 N.J. 541 (2009). An appellant may escape that waiver only in the interests of justice. Otto v. Prudential Prop. & Cas. Ins. Co., 278 N.J. Super. 176, 181 (App. Div. 1994).

Defendants' conceded failure to brief the issue constituted a waiver. And, although our prior mandate was broad, we did not suggest that the trial judge was required to consider this issue, which was initially asserted on appeal but then waived. Norbert's award of an officer salary consistent with industry standards was neither clearly inequitable nor so inextricably entwined in the prior valuation decision as to require reconsideration along with the valuation itself on remand.

With respect to Norbert's shareholder-loan balance, the trial judge had initially adjusted the purchase price to account for that balance, but Norbert appealed that determination. On remand, the trial judge noted the first judge's findings that the company had made advances to Norbert during the bankruptcy proceeding to facilitate reorganizing the company. Specifically, two new entities were created to acquire certain of the company's intangible property, and Norbert, the sole shareholder of those entities -- PDR, Inc., and Global Transportation, Inc. -- borrowed money from the company and lent it to them for that acquisition. The judge found that he had never personally used that money, but put it back into the company and wound up with a disproportionate loan balance. The judge also found no credible evidence of Norbert's actual indebtedness for that balance, including any interest paid or payment schedule set for his or other shareholder loan and concluded that Norbert should not be held responsible for the balance.

Frank's Estate acknowledges that a portion of Norbert's balance is attributable to the loans the company made him during its reorganization, but argues that most of it, $6,422,046.28, is not, as demonstrated by the company's records. The Estate emphasizes that the judge had ordered the company to loan Norbert $615,000 as a condition of permitting the company to lease a new facility during this litigation. The Estate contends the judge rejected any credit for the loan balance in reliance exclusively on arguments in Norbert's brief about the loans' origins in the bankruptcy proceedings, which were not competent evidence. Frank's Estate asserts that, to the extent the judge considered the matter disputed, it should have instead held a hearing.

Of course, courts should not resolve disputed issues of material fact without a hearing. Williams Scotsman, Inc. v. Garfield Bd. of Educ, 379 N.J. Super. 51, 62 (App. Div. 2005), certif. denied, 186 N.J. 241 (2006). Indeed, the first trial judge's earlier valuation decision was reversed for precisely that reason. Wisniewski, supra, slip op. at 10-11. But, several hearings were held in this matter and the parties had ample opportunity to present evidence bearing on this issue, and Frank's Estate points to no instance when the court denied it that opportunity. The judge found, based on the evidence that the parties did present, that there was never any intention to hold Norbert accountable for his loan balance and concluded that he should therefore not be responsible for it now. We find no error or abuse of discretion in the judge's conclusion.

IX

Patricia argues that the court abused its discretion by imposing inequitable terms for satisfaction of the judgment that unduly rewarded Norbert, the oppressing shareholder, at defendants' expense.

When a buy-out is ordered, N.J.S.A. 14A:12-7(8)(e) authorizes a court to order payment "by the delivery of cash, notes, or other property, or any combination thereof" and entrusts the selection of the appropriate method of payment under the circumstances to the court's sound discretion. Specifically, the statute permits the court, where an immediate cash payment is not feasible, to "determine the amount of the cash payment, the kind and amount of any property, whether any note shall be secured, and other appropriate terms." Ibid. The resultant order severs the selling shareholder's interest in the company except the right to payment for the fair value of the shares and any other amounts due, "provided the corporation or the moving shareholders post a bond in adequate amount with sufficient sureties or otherwise satisfy the court that the full purchase price of the shares, plus whatever additional costs, expenses, and fees as may be awarded, will be paid when due and payable." N.J.S.A. 14A:12-7(8)(f) (emphasis added).

Once valuation was determined, the judge heard again from Trugman and from Bernard Katz, defendant's expert, as to the economic circumstances of the company and the consequent feasibility of the parties' proposed payment terms. In light of that testimony, which the judge found credible, the judge observed that the company's revenues were relatively healthy, increasing considerably from 2001 to 2007 and dropping only slightly in the following two years. The company had distributed over $116,000,000 to its shareholders from 2002 to 2009, including more than $14,000,000 in 2008 alone and another $3,700,000 in the beginning of 2009. It had increased its holdings of fixed assets during the same period from $146,000,000 to $264,000,000, acquiring in the prior three years a $16,800,000 property in Savannah, Georgia, and the "F-Yard," an undeveloped $36,400,000 property adjacent to the North Bergen terminal purchased with a loan secured by mortgages on other company properties, so as to leave it unencumbered. Moreover, the company saw substantial revenue growth from its top five customers in 2009 from $168,000,000 to $187,000,000, and its total revenues from that year exceeded internal projections by about $4,000,000. That growth continued despite the recession and despite Frank's death, which, as confirmed by Raymond's testimony, had no apparent impact on the company's relationship with its customers. According to Katz, prospects for both the company and the industry in general were set to improve in the near future, as well.

Nonetheless, the judge developed an understanding during the hearing "that there was a certain arrogance of the company when it came to this judgment." Despite the company's economic success and its knowledge by 2008 of an approximate $32,000,000 obligation to Norbert, it failed to set aside any money to satisfy the judgment. In so doing, it even defied Katz's recommendations to slow non-tax distributions to shareholders for both the financial health of the company and compensating Norbert.

The judge had long advised the parties that it would order a down payment, and so, notwithstanding the company's "incomprehensible" failure to set aside any funds for that purpose, he ordered defendants to remit Norbert a down payment of fifteen percent and execute a ten-year note for the balance of the judgment. The judge rejected defendants' proposal to satisfy the note with flexible, periodic payments of one-third the company's actual cash flows, which Katz testified could be reliably extrapolated from the net income reported on the company's year-end financial statement with a widely-accepted formula for calculating debt capacity. The judge instead favored fixed payments over the ten-year duration of the note that would eliminate the need for its continued involvement in this litigation to set payment terms for an obligor that had shown little willingness to pay. The judge further observed that defendants had already pledged company stock and four mortgages on company-owned real property as collateral pursuant to a consent order following the earlier judgment, and ordered that they additionally pledge mortgages on all company-owned property, including the F-Yard, for that purpose, as well as other equitable relief not challenged on appeal. The judge subsequently denied defendants' motion to amend the final judgment.

Patricia takes issue with the trial judge's requirement that mortgages on all company-owned real estate be pledged as collateral, asserting this condition was excessive and in none of the parties' interests. She argues that defendants' offer to abide by the existing agreement and additionally pledge as collateral a mortgage on the F-Yard, a property whose value alone exceeded the judgment, would suffice to secure the judgment. In her view, requiring anything more would contravene the statute, which she interprets to require only a pledge of "adequate" collateral, N.J.S.A. 14A:12-7(8)(f), and would constitute an abuse of discretion. Moreover, she contends, mortgages on the additional properties, particularly the company's main terminal complex and Cinnaminson terminal would provide Norbert with superfluous collateral at the expense of endangering the financial well-being of the company, whose existing bank mortgages on those properties prohibit the acquisition of junior liens.

A court of equity generally exercises considerable discretion in fashioning remedies, Sears Mortgage Corp. v. Rose, 134 N.J. 326, 354 (1993), and the statute explicitly invests courts with discretion in this context, N.J.S.A. 14A:12-7(8)(e). Pursuant to that statute, a court may require the obligor to pledge collateral sufficient to "satisfy [it] that the full purchase price of the shares, plus whatever additional costs, expenses, and fees as may be awarded, will be paid when due and payable." N.J.S.A. 14A:12-7(8)(f). In so doing, it may, but need not, accept any pledge barely adequate to meet that obligation, as Patricia insists it must. The judge thoroughly explained that the company's refusal to set aside any funds to satisfy the judgment, including its disregard of its own expert's advice in that respect, justified setting less favorable payment terms than defendants would have preferred. The judge's decision with respect to the collateral required by those terms was adequately grounded in the evidence and within his discretion.

Patricia further argues that the judge erred in imposing fixed, rather than flexible, payment terms. She asserts that, while the company had diligently satisfied its obligation thus far, an unfavorable shift in the economy could impact its ability to continue making fixed payments over the course of the ten-year payout and force the company to return to court to seek a modification to avoid a default. Defendants' proposal to pay one-third the company's actual cash flows, as calculated by the formula that Katz explained, would leave little room for the abuse that a flexible payment schedule might otherwise present and be more equitable than the terms the judge imposed.

Whatever the merits of that formula in calculating flexible payment terms under other circumstances, the judge determined, within his discretion, that the most appropriate manner of ensuring a reliable, equitable payment schedule under these circumstances would be to order fixed payment terms. Patricia acknowledges that the company has diligently observed the existing payment schedule thus far, presumably without great detriment to its financial health, and remains free to apply for a modification of that schedule in the interests of equity should the company's financial circumstances drastically change for the worse. But, the judge's decision with respect to the terms for payment of the judgment was within its discretion and we have been presented with no principled reason for intervening.

X

Frank's Estate and Norbert both challenge the interest rates applied to the judgment. The trial judge awarded interest primarily to provide an incentive for defendants to satisfy an obligation that the judge perceived they were reluctant to pay. Frank's Estate argues that interest should not have been awarded at all as a matter of equity, while Norbert contends that the rates were set too low. The judge's decision was within his discretion.

N.J.S.A. 14A:12-7(8)(d) permitted the judge, in the exercise of his discretion, to set interest "at the rate and from the date determined by the court to be equitable." A judge's determination in that regard should not be disturbed absent an abuse of that discretion. Musto, supra, 333 N.J. Super. at 74; Benevenga v. Digregorio, 325 N.J. Super. 27, 35 (App. Div. 1999), certif. denied, 163 N.J. 79 (2000).

After the judge determined the fair value of Norbert's share of the company, but before he could set payment terms, he ordered defendants to remit monthly interest payments to Norbert on the outstanding principal balance due. The judge reasoned that the company had long had use of the money that would otherwise have been due to Norbert, obviating the need to borrow that money from a commercial lender. Moreover, while Norbert's conduct was oppressive, it had no adverse impact on the company's success and so should not preclude an award of interest otherwise warranted as a matter of equity. The judge set the interest rate at the prime rate plus one percent, the rate at which Trugman had observed the company could expect to borrow money.

Later, when the judge fixed the final payment terms, he also imposed a post-judgment interest rate. The judge reasoned that he had not "one iota of proof that the company had been interested in paying this judgment or setting aside monies to pay" it, and concluded that an award of interest would be necessary to encourage defendants to satisfy their obligation. The judge set the interest rate at the State of New Jersey Cash Management Fund rate plus a two percent enhancement pursuant to Rule 4:42-11, rejecting defendants' argument that the unenhanced rate would be a sufficient incentive to pay the judgment. The judge specified, however, that interest would be applicable only to the outstanding principal balance, reasoning that awarding interest on the already accumulated interest would be unnecessary and inequitable.

Frank's Estate argues that, as a matter of equity, no interest should have been awarded at all or at least should have been set at lower rates, so that the judge might not unduly reward the oppressing shareholder at the oppressed shareholders' expense, but punish defendants with a superfluous incentive to satisfy an obligation they already intended to pay. For his part, Norbert argues, also as a matter of equity, that post-judgment interest should have been set at a higher rate, and that defendants should pay interest not only on the outstanding principal balance due, but on accumulated interest, as well.

The trial judge adequately explained the award of prejudgment interest as warranted by Norbert's creditor status and the award of post-judgment interest as required to encourage defendants to satisfy an obligation that the judge perceived, based on its review of the record and its own firsthand observations of witness testimony, defendants had not been taking seriously. The particular prejudgment interest rate was grounded in evidence of the company's expected borrowing rate, directly echoing the reasoning for awarding that interest. The post-judgment interest rate was presumptively appropriate because it is specified in the rules, albeit for tort claims. R. 4:42-11. Both parties' reliance on authority setting or rejecting particular rates under other circumstances do not constrict the judge's discretion to set equitable interest rates under these particular circumstances. The judge did not abuse his discretion in awarding interest.

Any arguments we have not already discussed have insufficient merit to warrant further discussion in this opinion. R. 2:11-3(e)(1)(E).

We remand for the fixing and application of a marketability discount to the extent not already subsumed in the judge's findings, as explained in Section IV, for reconsideration of the judge's adoption of alleged inaccuracies in Trugman's estimates, as explained in Section III, and a modification of the judgment to reflect any changes required by the results of the remand proceedings.

Affirmed in part; remanded in part. We do not retain jurisdiction.

I hereby certify that the foregoing is a true copy of the original on file in my office.

CLERK OF THE APPELLATE DIVISION