Goodwill
INDIANA: DeSalle v. Gentry, 818 N.E.2d 40 (Ind. Ct. App. 2004).
Where both spouses participated in operating toy shows, the toy show venues were part of the enterprise goodwill of the business, and not part of the personal goodwill of the parties. Their division was nevertheless error because it amounted to an injunction against the husband's future earnings. In affirming an equal division of the marital estate and awarding the wife her entire pension, the court gave particular weight to the fact that the husband had removed personal property from the marital home without sufficiently accounting for it.
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ILLINOIS: In re Marriage of Schneider, 343 Ill. App. 3d 28, 798 N.E.2d 1242 (2003).
The husband's personal goodwill was marital property, despite appellate case law holding generally to the contrary, where the wife waived spousal support, so that any division of personal goodwill would not consider the husband's future earnings as a factor in both property division and support. The trial court erred in failing to include various tangible assets in determining the value of the husband's dental practice, including most notably accounts receivable.
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NEW YORK: Murphy v. Murphy, 6 A.D.3d 678, 775 N.Y.S.2d 370 (2004).
The trial court erred in basing an award of maintenance upon income which was also used for the purpose of valuing the husband's business. It was not error, however, to base an award of child support upon the same income.
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OREGON: In re Marriage of Triperinas, 185 Or. App. 283, 59 P.3d 586 (2002).
The trial court erred by failing to assign value to the goodwill of the wife's automobile dealership. The court did not err by reducing the value of the dealership by a 25% minority discount. The court properly failed to award the husband stock in the dealership, as this would unduly entangle the parties' postdivorce finances. But the errors were harmless, as an unequal division was equitable. The wife had custody of the parties' three children, one of whom was disabled, she received considerable debts and few liquid assets, and the husband was in a better position to support himself.
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CALIFORNIA: In re Marriage of Rosen, 105 Cal. App. 4th 808, 130 Cal. Rptr. 2d 1 (2003).
In valuing the goodwill of a law practice under the excess earnings method, the trial court must use a reliable long-term average figure for the husband's income. It is error to base the valuation upon the income from a single year when that income was uncommonly high and is not representative of the practice's actual earning capacity. The trial court must also use a reasonable average earnings figure for a similar practice. When the practice's caseload is almost exclusively publicly funded criminal appeals in southern California, it is error to use a nationwide average income figure for all types of law firms.
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