What happens to a divorce settlement when a business fails?

In the case of Mistretta v. Mistretta, 31 So.3d 206 (Fla. 1st DCA 2010), the trial court used October 31, 2007 as the date of valuation for the final judgment which was entered on August 25, 2008. The trial court awarded of the parties' principle asset, Jerry's Cajun Café and Market, Inc., to the husband, determining the value on that date to be $845,000, and ordered the husband to make a cash equalizing payment to the wife. The husband sought rehearing, conceding that the former wife established the value of the corporate entity by competent, substantial evidence and did not request an opportunity to present additional evidence or seek a different valuation date. Before the rehearing motion was heard, the husband filed an amended rehearing motion (in March, 2009) in which he claimed that "newly discovered evidence" showed that the 2007 economic recession had caused his business to sustain a net loss, warranting a new trial. On April 6, 2009 the trial court entered an order granting husband's motion for rehearing. The District Court reversed:

1. "Rehearing or new trial based on newly discovered evidence 'is warranted only where (1) it appears that the evidence is such that it will probably change the result if a new trial is granted, (2) the evidence has been discovered since the trial, (3) the evidence could not have been discovered before the trial by the exercise of due diligence, (4) the evidence is material to the issue, and (5) the evidence is not merely cumulative or impeaching….' Importantly, the allegedly 'newly discovered evidence' cannot simply show some change in circumstances since the trial."

2. "In the present case, the alleged 'newly discovered evidence' - evidence of an economic recession that began in December of 2007, months or weeks after the valuation date, and operating results for the year 2008 - tends to prove a change in circumstances occurring after the October 31, 2007, date of valuation, and relates, at least in part, to events that transpired after the trial."

3.  Economic recessions, like other vagaries in the business cycle, are contingencies appraisers must take into account in valuing a business."

4. "The witnesses who appraised the business by assigning it a value as of October 31, 2007, made assumptions about the business's prospects then, doubtless informed by the actual experience between October 31, 2007, and mid-March of 2008, when they testified on the question. On August 25, 2008, when final judgment was entered, economic conditions had presumably changed again, and it is certainly true that the parties' experts might not have predicted the precise economic conditions on April 6, 2009, the day the order under review was entered, or, for that matter, the reported improvements in economic conditions since. But a cloudy crystal ball is no basis for a new trial."