Marriage of Micalizio

Robert (plaintiff) and Gerry (defendant) Micalizio were married in June 1971. Prior to marriage, Robert was employed with J.R. Norton (Norton), a closely held corporation. In 1963, Robert purchased stock in Norton. Robert financed the purchase using two promissory notes. Robert’s stocks were subject to buy-sell agreements that required minority shareholders to offer to sell the stock to Norton before the stocks could be sold or transferred. During the marriage, Gerry wrote checks from the community bank account to make payments on the promissory notes. In 1981, Robert filed a petition for dissolution of marriage. The evidence at trial indicated the value of the stock under the buy-sell agreements was approximately $13 per share. Roger Stevenson, a secretary-treasurer for Norton, testified that if Norton liquidated assets, the shares would be worth $25 a piece. In June 1984, the buy-sell agreement was amended to state that Norton must consent to all stock transfers and provide more favorable terms if the shareholder sold the stocks back to Norton. Neither Gerry, nor the trial court knew about the amendment. On November 30, 1984, the court valued each share at $13.667 but divided the community shares in kind between the parties. After learning of the June 1984 amendment, Gerry filed a motion for new trial. Gerry claimed that the amendment rendered her stock unsellable and requested that Robert pay Gerry the fair market value of the stocks. Robert filed a declaration stating that Norton would issue shares to Gerry without the restrictions of the 1984 amendment. The court ruled that the June 1984 amendment made Gerry’s stocks worthless and valued the stock at $25 per share. The trial court entered a judgment ordering Robert to execute a promissory note to Gerry for $421,875, with interest. Robert appealed.