RENDERED : FEBRUARY 19, 2009 TO BE PUBLISHED
,*uyrrmr (~vurf of ~irufu 2007-SC-000190-DGE 2007-SC-000207-DGE
JULIE ANNE GASKILL APPELLANT/ APPELLEE
ON REVIEW FROM COURT OF APPEALS V. CASE NO . 2005-CA-002088-MR WARREN CIRCUIT COURT NO . 03-CI-01652
JON KEVIN ROBBINS APPELLEE/APPELLANT
OPINION OF THE COURT BY JUSTICE NOBLE
AFFIRMING
The questions presented in this appeal are whether the goodwill of a
closely held or sole proprietorship business can have both personal and
enterprise values, and whether the trial court improperly assumed that it must
make a 50-50 division of the marital assets . Recognizing that this Opinion is a
departure from previous law, this Court affirms the Court of Appeals as to its
ruling on goodwill, but on other grounds; the trial court is affirmed on its
ruling regarding division of the marital estate, as it did not abuse its discretion .
I. Background
Appellant/ Appellee, Julie Anne Gaskill, is the petitioner in a divorce and
custody proceeding filed in Warren Family Court on October 14, 2003. The
respondent, John Kevin Robbins, Appellee/Appellant, filed a Verified Response
on October 24, 2003, denying all the nonfactual allegations of the petition, including a denial that the marriage was irretrievably broken, and asked the
trial court to order a reconciliation conference. A protracted, contested process
ensued . Having heard several preliminary motions, by the time the trial court
heard the case in an eight day trial in late 2004, it was very familiar with the
parties and their circumstances.
There were two dominant areas of dispute at trial : custody of the parties'
minor son, and valuation of Gaskill's practice as an oral and maxillofacial
surgeon. The trial court awarded sole custody to the father, with standard
visitation to the mother, and ordered child support . As to the division of
marital property, the trial court determined that it should be divided
approximately 50-50 between the parties. Gaskill had a very successful
practice, and Robbins worked as a salaried employee with several businesses
throughout the marriage, so that at the time of trial, the parties had amassed a
marital estate of over four million dollars, including a value of $669,075 for the
practice. A large portion of this was in various cash accounts, but the single
biggest asset in contention was the oral surgery practice.
There was no dispute that Gaskill was highly skilled and earned roughly
90% of the income received during the marriage . The testimony also indicated
that she was extremely hard working, and managed her practice with frugality.
The practice consisted of her as the sole oral surgeon, with office staff. She
was also primarily responsible for management of the office, though Robbins
did take care of some paper work such as paying bills, and he often brought
supplies to the office . Gaskill alone was responsible for patient acquisition.
Robbins testified that he helped her set up the office initially, and was generally 2 supportive . Since the practice in Bowling Green was established after the
marriage, there is no question as to its marital character . )
At trial, each party presented experts on valuation of the practice .
Gaskill's accountant, Steve Wheeler, who collected data from the business
records and actually talked with personnel at the practice location, did a
detailed report laying out all of the financial information, a discussion of
various accounting methods, and definitions of frequently used accounting
terms . After testifying about why various valuation methods were not
applicable due to the unique nature of this sole proprietorship, he settled on an
asset-based analysis . He chose this approach because the business was not
actually to be liquidated, no similar sales of a reasonably similar business were
available, and there was no previous transaction in this business with which to
compare. He testified at trial that the practice had a value of $221,610, which
he later adjusted downward to make the value more current . Wheeler assigned
a value of zero to goodwill because Gaskill's role in the business amounted to a
"non-marketable controlling interest ." To illustrate, he asked, "Why would a
purchaser pay more than fair market value of the tangibles if Dr. Gaskill can
take her patients, go down the hall, and set up a practice?"
Robbins's expert, Richard Callahan, did not independently collect data
and did not visit the practice to interview staff or view the physical aspects and
working procedures of the office, but instead used Wheeler's detailed data. He
used four different methodologies to evaluate the business : capitalized
1 Gaskill had previously maintained an office in nearby Russell County, and later moved the practice to Bowling Green. 3 earnings, excess earnings, adjusted balance sheet, and the market approach .
He calculated a value for the business under each method, then averaged the
four numbers to arrive at a value of $669,075, which included an assumed
non-compete agreement and goodwill. He specifically objected to one of
Wheeler's calculations doubling the wages of the employees to allow for the cost
of acquiring similarly trained personnel, arguing that a willing buyer could
utilize the same employees that Gaskill currently had . He testified that using
Wheeler's calculations on this item would reduce the practice's value by
$315,890 .
The trial court accepted Callahan's view "to be more credible,"
particularly referencing the employee salary calculations, and fixed the value of
the practice at $669,075 . However, the trial court primarily relied on the
premise that there is no legal authority for a distinction between personal and
enterprise goodwill in Kentucky law.
The total value of the marital property was determined, and the trial
court analyzed the requirements of KRS 403.190,2 and found that the parties
KRS 403 .190, the disposition of property statute, provides: (1) In a proceeding for dissolution of the marriage or for legal separation, or in a proceeding for disposition of property following dissolution of the marriage by a court which lacked personal jurisdiction over the absent spouse or lacked jurisdiction to dispose of the property, the court shall assign each spouse's property to him. It also shall divide the marital property without regard to marital misconduct in just proportions considering all relevant factors including: (a) Contribution of each spouse to acquisition of the marital property, including contribution of a spouse as homemaker; (b) Value of the property set apart to each spouse ; (c) Duration of the marriage; and 4 contributed equally in obtaining the marital estate, to duties at home, and to
the raising of their son . The trial court also considered that at the time of the
(d) Economic circumstances of each spouse when the division of property is to become effective, including the desirability of awarding the family home or the right to live therein for reasonable periods to the spouse having custody of any children . (2) For the purpose of this chapter, "marital property" means all property acquired by either spouse subsequent to the marriage except : (a) Property acquired by gift, bequest, devise, or descent during the marriage and the income derived therefrom unless there are significant activities of either spouse which contributed to the increase in value of said property and the income earned therefrom; (b) Property acquired in exchange for property acquired before the marriage or in exchange for property acquired by gift, bequest, devise, or descent ; (c) Property acquired by a spouse after a decree of legal separation ; (d) Property excluded by valid agreement of the parties; and (e) The increase in value of property acquired before the marriage to the extent that such increase did not result from the efforts of the parties during marriage . (3) All property acquired by either spouse after the marriage and before a decree of legal separation is presumed to be marital property, regardless of whether title is held individually or by the spouses in some form of co-ownership such as joint tenancy, tenancy in common, tenancy by the entirety, and community property . The presumption of marital property is overcome by a showing that the property was acquired by a method listed in subsection (2) of this section . (4) If the retirement benefits of one spouse are excepted from classification as marital property, or not considered as an economic circumstance during the division of marital property, then the retirement benefits of the other spouse shall also be excepted, or not considered, as the case may be . However, the level of exception provided to the spouse with the greater retirement benefit shall not exceed the level of exception provided to the other spouse . Retirement benefits, for the purposes of this subsection shall include retirement or disability allowances, accumulated contributions, or any other benefit of a retirement system or plan regulated by the Employees Retirement Income Security Act of 1974, or of a public retirement system administered by an agency of a state or local government, including deferred compensation plans created pursuant to KRS 18A.230 to 18A.275 or defined contribution or money purchase plans qualified under Section 401 (a) of the Internal Revenue Code of 1954, as amended . dissolution, Gaskill remained able to earn approximately 7 .5 times the amount
Robbins could, giving her a far greater ability to rebuild her estate. The trial
court then found that "just proportions" required that the marital estate be
divided equally, and ordered a 50-50 division of the marital property. The
practice was assigned to Gaskill, as were a number of other non-liquid assets,
and most of the cash was assigned to Robbins in order to equalize the
distribution .
Gaskill appealed . The Court of Appeals reversed on the custody ruling
because of hearsay evidence and failure to allow a proper witness, and
remanded for a new trial on that issue. That issue has not been appealed to
this Court.
The Court of Appeals also reversed on the goodwill evaluation because it
believed the trial court was under the incorrect impression that goodwill in a
business must be assigned a value greater than zero, and it recognized that not
all businesses have goodwill, citing Clark v. Clark , 782 S.W. 2d 56 (Ky. App.
1990) and Heller v. Heller, 672 S. W. 2d 945 (Ky. App . 1984) .
This Court granted discretionary review to consider the proper valuation
of goodwill in the oral surgery practice, and the appropriateness of the
proportional division of the marital estate.
II. Analysis
A. Valuation of Goodwill
The valuation of a business is complicated, often speculative or
assumptive, and at best subjective . This is particularly true in a divorce case
where the business is a professional practice with only one practitioner, clients 6 or patients come to the business to receive that particular person's direct
services, the business is not actually being sold, and the success of the
business depends upon the personal skill, work ethic, reputation, and habits of
the practitioner .
Nonetheless, when a business is established during a marriage and is
thus marital property, the trial court is required to fix a value and divide it
between the spouses . To do this, a trial court must hear factual evidence,
which generally will include expert testimony . If a court is to arrive at a fair
market value of a business, often stated as what a willing buyer will pay a
willing seller, the court must have the means to answer at least the following
questions a willing buyer would ask:
1 . What can be earned from the business over a reasonable period of
time? This value must then be reduced to present value, and
includes the concept of transferable goodwill.
2 . What is the value of the hard assets? This includes real estate,
equipment, client lists, cash accounts or anything else the business
may own or control .
3 . What is the value of the accounts receivable? This has a potential
discount because all the accounts may not be collectible.
4 . What is the value of the training of the personnel who will remain with
the practice, or what is the cost to train new personnel?
5 . What are the liabilities that will remain after the purchase? This
includes personnel salaries, taxes, debt service, and other costs of
doing business. While some of these questions are comparatively easy to answer, some of them
are complex and require application of accounting and business valuation
methods. The concept of goodwill and how it may affect continuing profitability
is one of the complex questions.
The question of how to value goodwill of a business has been a source of
contention for many years, with trial courts left to decipher competing and
frequently inconsistent theories and accounting practices into something
meaningful. It is generally accepted in existing Kentucky law that goodwill is a
factor to be considered in arriving at the value of a business, Heller, 672 S . W.
2d at 947-48, but whether goodwill can be divided between the business and
the individual is a question of first impression for this Court.
Heller is the first in a line of Court of Appeals cases recognizing that at
times a business can be sold for more than just the value of its assets. The
idea is premised on the notion that the reputation of the business will draw
customers, get them to return, and thus contribute to future profitability.
Obviously, future business is of primary importance to a potential buyer.
Heller's concept of goodwill has been applied in a line of cases that includes
Clark v. Clark, 782 S .W .2d 56 (Ky. App. 1990), Drake v. Drake , 809 S .W.2d
710 (Ky . App . 1991), and Gomez v. Gomez, 168 S .W. 3d 51 (Ky. App. 2005) .
This line of cases focuses on professional practices, and assumes that there is
a buyer for the practice (in Heller, an accounting practice ; in Clark, a share in
a medical professional corporation; in Drake , an interest in a medical practice
under a buy-sell agreement; and in Gomez, a hospital-based radiology
practice) . In order to evaluate the fair market value of the practice, everything 8 of value, including transferable goodwill, must be counted . None of these
published cases recognize a distinction between personal and enterprise
goodwill; however, they do not prohibit such an analysis . They merely
establish that goodwill is a factor to be considered in valuation . This Court
agrees with that conclusion .
In this case, Gaskill is the sole proprietor, or only practitioner, in the oral
and maxillofacial surgery practice. Every patient of the practice is treated by
her. Only she exercises the professional judgment and skill required to
perform surgery on her patients . The evidence indicates that she has been a
prudent and frugal office manager as well, a fact that Wheeler claimed was
responsible for the large cash account of the business . Gaskill alone has
performed the treatment in this practice for over thirteen years. Clearly, the
practice is, in general, marital property, and therefore subject to division, but
how are we to divide a person's reputation, skill and relationships? To what
extent can a buyer of a business assume that his performance will equal that
of the present owner? To what extent can he take on the seller's reputation in
the community?
This Court has held that an advanced professional degree is not to be
treated as marital property because it is personal to the holder and cannot be
transferred to another. Lovett v. Lovett, 688 S .W.2d 329 (Ky. 1985) . This is
because the degree
"does not have an exchange value or any objective transferable value on an open market. It is personal to the holder . It terminates on the death of the holder and is not inheritable. It cannot be assigned, sold, transferred, conveyed or pledged . An advanced degree is a cumulative product of many years of previous 9 education, combined with diligence and hard work. It may not be acquired by the mere expenditure of money . It is simply an intellectual achievement that may potentially assist in the future acquisition of property . . . [.]"
Id . at 331 (quoting Mahoney v. Mahoney, 442 A.2d 1062, 1066 (N .J . Super .
1982)) .
In Heller, the Court of Appeals held that there was at least "limited
marketability" of goodwill where practices "can be sold for more than the value
of their fixtures and accounts receivable . . . ." 672 S.W .2d at 948 (quoting In re
Marriage of Nichols, 606 P.2d 1314, 1315 (Colo . Ct. App . 1979)) (emphasis
added) . Based on this, that court held that it could distinguish professional
degrees and professional goodwill . This is correct to the extent that, unlike for
a professional degree, some businesses may be able to establish value beyond
fixtures and accounts receivable . Examples of this include when a practitioner
is part of a group practice, or is selling the name of a practice such as "Smith
Pharmacy," or any other reputational thing a buyer could reasonably be
expected to pay for. The analysis falls short in that it fails to consider that part
of goodwill that is personal and nontransferable, much like the professional
degree . It is obvious that in some cases, depending on the facts, goodwill can
belong primarily or only to the person, precisely as a professional degree
belongs only to the person . If value is to be decided on a fair and reasonable
basis, and property divided equitably, this must be considered .
Since the mid-eighties, when Heller was decided, trial courts have had
increasing opportunities to look at this issue, not only in Kentucky but
throughout the nation . This led to development of the concepts of "personal"
10 and "enterprise" goodwill, recognizing that there could be some goodwill
associated with a business, and some that was solely due to the personal
qualities of the practitioner. In states adopting this view, valuations take into
consideration, based on the factual proof, whether any goodwill could
reasonably be marketable as continuing with the business absent the presence
of a particular person. An excellent review of how this distinction is being
applied, at the time of its rendering, was done in May v . May, 589 S.E .2d 536
(W .Va . 2003) .
In May , the Supreme Court of West Virginia found from its survey that
13 courts made no distinction between personal and enterprise goodwill, 5
courts held that goodwill is not a part of marital property, and 24 states
differentiated between personal and enterprise goodwill. Even though there
was no Kentucky Supreme Court opinion on the subject, the West Virginia
Supreme Court included Kentucky among the thirteen that made no
distinction, citing the Court of Appeals' opinion in Heller. The May court joined
the 24 jurisdictions that distinguish between enterprise and personal goodwill .
In reaching its decision, the court relied substantially on an opinion of the
Supreme Court of Indiana, which explained in detail the rationale behind
distinguishing between personal and enterprise goodwill as follows:
Goodwill has been described as the value of a business or practice that exceeds the combined value of the net assets used in the business . Goodwill in a professional practice may be attributable to the business enterprise itself by virtue of its existing arrangements with suppliers, customers or others, and its anticipated future customer base due to factors attributable to the business . It may also be attributable to the individual owner's personal skill, training or reputation . This distinction is sometimes reflected in the use of the term "enterprise goodwill," as opposed to "personal goodwill." Enterprise goodwill is based on the intangible, but generally marketable, existence in a business of established relations with employees, customers and suppliers . Factors affecting this goodwill may include a business's location, its name recognition, its business reputation, or a variety of other factors depending on the business . Ultimately these factors must, in one way or another, contribute to the anticipated future profitability of the business. Enterprise goodwill is an asset of the business and accordingly is property that is divisible in a dissolution to the extent that it inheres in the business, independent of any single individual's personal efforts and will outlast any person's involvement in the business. It is not necessarily marketable in the sense that there is a ready and easily priced market for it, but it is in general transferrable to others and has a value to others .
In contrast, the goodwill that depends on the continued presence of a particular individual is a personal asset, and any value that attaches to a business as a result of this "personal goodwill" represents nothing more than the future earning capacity of the individual and is not divisible . Professional goodwill as a divisible marital asset has received a variety of treatments in different jurisdictions, some distinguishing divisible enterprise goodwill from nondivisible personal goodwill and some not. . . . [W]e join the states that exclude goodwill based on the personal attributes of the individual from the marital estate . . . . [B]efore including the goodwill of a self-employed business or professional practice in a marital estate, a court must determine that the goodwill is attributable to the business as opposed to the owner as an individual. If attributable to the individual, it is not a divisible asset and is properly considered only as future earning capacity that may affect the relative property division. In this respect, the future earning capacity of a self- employed person (or an owner of a business primarily dependent on the owner's services) is to be treated the same as the future earning capability and reputation of am employee . Some ownership interests in a professional practice are properly viewed as divisible property even if goodwill is a component of their value. Otherwise stated, even a professional practice can have an enterprise goodwill component to its value .
In sum, to the extent a business or profession has goodwill (or has a value in excess of its net assets) it is a factual issue to 12 what extent, if any, that goodwill is personal to the owner or employee and to what extent it is enterprise goodwill and therefore divisible property .
Yoon v. Yoon, 711 N . E.2d 1265, 1268-70 (Ind. 1999) (citations and quotation
marks omitted) .
In this first look at the subject, this Court finds the reasoning of Yoon
and May to be compelling . The distinction between enterprise and personal
goodwill has a rational basis that accepts the reality of specific business
situations . In a case such as this one, there can be little argument that the
skill, personality, work ethic, reputation, and relationships developed by
Gaskill are hers alone and cannot be sold to a subsequent practitioner . In this
manner, these attributes constitute nonmarital property that will continue with
her regardless of the presence of any spouse . To consider this highly personal
value as marital would effectively attach her future earnings, to which Robbins
has no claim. Further, if he or someone similarly situated were then awarded
maintenance, this would amount to "double dipping," and cause a dual
inequity to Gaskill . On the other hand, if she were willing to leave her name on
the practice, such as "Gaskill's Oral and Maxillofacial Surgery," even though
she herself did not continue to practice, there arguably could be some
reputational reliance that she would stand behind the quality of the practice
which could have some pecuniary value . Such scenarios do occur, but this is
not the case here .
Additionally, this type of distinction is as susceptible to expert valuation
as goodwill on the whole is . If the value of goodwill can be reasonably determined at all, the amount of enterprise goodwill, which is all that can be
considered as marital property, can be determined .
Therefore the trial court erred in failing to consider personal and
enterprise goodwill . In so stating, this Court is not unmindful that there was
no definitive Kentucky law for the trial court to apply at the time of its ruling,
and its opinion is otherwise thoughtful and well-written .
B. Valuation Methods
We have accepted that goodwill can have pecuniary value if the trial
court finds that there is reasonable evidence to support its value . In reaching a
value, the trial court must have a rational basis for applying given accounting
principles . Its decision must be supported by adequate evidence, and should
avoid speculation and assumptions as much as possible.
In this case, both experts testified to multiple accounting methods of
measuring value. Wheeler chose a specific method, gave his reasons for
choosing that method, and explained where his data came from. Callahan, in
contrast, did not directly obtain data, and calculated the value of the practice
using four different methods, with a different value derived from each. He
found all the methods to be reliable, and unable to choose, averaged the
numbers to get a value .
While the trial court is free to determine the credibility of any witness, it
cannot make a determination that is clearly erroneous or an abuse of
discretion . Using an average to obtain a value, without some basis other than
an inability to choose between conflicting and competing valuation methods, is
nothing more than making up a number, for there is no evidentiary basis to 14 support that specific number . Employing all four methods, then averaging
them, is tantamount to no method at all. If an expert believes four methods
are valid, yet each produces a different number, this provides little or no help
to the trial court . The trial court must fix a value, and there should be an
evidence-based articulation for why that is the value used. While an average
may present the easiest route, it lacks the proper indicia of reliability. Thus,
the trial court abused its discretion in relying on Callahan's estimate of
$669,075 as the value of the practice . Also, since this means there was no
reliable evidence to support a finding of a $669,075 value, the trial court's
factual finding of such a value was clearly erroneous .
Further complicating the matter, the practice is not actually being sold
and was assigned in its entirety to Gaskill. Part of the value the trial court
relied on that could impact a goodwill valuation was the assumption by
Callahan that a non-compete agreement should be a part of the valuation.
While fair market value of Gaskill's practice anticipates what a willing buyer
would give a willing seller, the fictional sale must be viewed as a "fire sale,"
meaning that it must be valued in its existing state . This precludes factoring in
a non-existent non-compete clause, as there is no requirement that she enter
into one other than as a possible negotiated term of a real sale. It was
improper to include such a speculative item to enhance the value of the
practice .
C. Equitable Division of Marital Property
KRS 403.190 requires a trial court to divide marital property in "just
proportions," considering "all relevant factors," and specifically includes four 15 factors that must be considered : contribution of each spouse to the acquisition
of marital property, value of nonmarital property to each, duration of the
marriage, and the economic circumstances of each spouse when the division of
property is to become effective .
In its opinion, the trial court specifically listed each category. The trial
court acknowledged that Gaskill's earned income that was contributed to the
marital estate was much greater than her husband's, but gave weight to the
testimony that he had assisted her in carrying out her oral surgery practice,
was employed full time outside the home, and contributed all of his earnings to
the marital estate. The court also found that he shared equally in home and
parenting duties . Given the nature of Family Court and the length of this
action, the trial court no doubt had an understanding of the testimony in ways
a stranger to the case may not have . It had discretion to determine the
credibility of all witnesses and the weight to give to each . The trial court was
well aware of the length of the marriage and found that Gaskill's ability to earn
in the future, and thereby rebuild her estate, "far exceeds that of [Robbins] ." It
also found that the nonmarital property of each party did not impact the
division of marital property. After considering all this, the trial court divided
the marital estate 50-50 between the parties .
Gaskill argues that the most significant factor in division of the marital
property is the great disparity between the respective financial contributions of
the two parties, and that the weight of the evidence does not support a 50-50
division. She and the Court of Appeals inferred that the trial court acted under
a mistaken belief that it must presume a 50-50 division, or that there is at 16 least a "disturbing trend" for trial courts to do so. The law is clear that there is
no presumption of a 50-50 division without regard to the evidence . Herron v.
Herron, 573 S .W.2d 342 (Ky. 1978) . The trial court recognized this law in its
opinion . Moreover, because a court must divide the marital estate "in just
proportions," starting the parties off in an even position in order to determine
how to apportion is not unreasonable, provided that the trial court considers
"all relevant factors ." In fact, given that each party is an equal owner in the
marital estate until the trial court divides it, the parties are in exactly the same
position when the court begins dividing marital property. How the trial court
ends up splitting the property must be based on record evidence, with an eye
toward equity .
The property division statute looks at each spouse's contribution to
acquiring the marital estate, and there is no question that on that factor the
weight of the evidence lies in favor of Gaskill if numbers alone are considered .
However, while the amount of the marital estate may be easily allocated
between earners, the ability to work with the support of a spouse and co-parent
is an intangible that goes beyond dollars . All of the work done by either spouse
during the marriage is done for the marital purpose: having someone, within
the bounds of law, with whom one shares a union that allows for joint
homemaking, co-parenting if children are born, and experiencing life in general
with another. Within the marital arrangement, abilities are often unequal, the
use of one's time varies according to present need, and each spouse does
things to accommodate the other. How the parties earn money and build
wealth is affected by these variables, but is done for common purpose . The 17 term "contribution." thus has tangible and intangible components that must be
weighed by the trial court .
Another important statutory factor is what the economic circumstances
of the parties will be at the time the property division becomes effective . To
determine this, the trial court can look at the nonmarital property each has
been awarded, if any, and the future earning capacity of each spouse . Just as
the actual earnings disproportionately come from Gaskill, her ability to earn
after the divorce is disproportionate . This is a factor the trial court can
consider in Robbins's favor in making the decision as to just proportions of the
marital property, and the trial court did specifically note it here. Because of
the disposition the trial court made of the marital property, it did not award
maintenance to Robbins even though the great disparity in income earning
ability would otherwise have supported it .
This Court will not infer that the trial court believed it must divide the
marital estate 50-50 in light of the express statement in its opinion that "`just
proportions' does not require equal division," and that "a presumption of equal
division absent evidence to the contrary is improper ." There was evidence to
support the trial court's determination that the marital estate should be
divided 50-50, which is clearly reflected on the video record of the testimony of
both parties about the participation each had during the marriage . While other
reasonable courts may have weighed the evidence differently, this Court cannot
find that the trial court abused its discretion in dividing the marital estate as it
did . The Court of Appeals declined to rule on the trial court's distribution of
the marital property as a whole, and Gaskill appealed on this issue.
Construing that failure to rule as a ruling adverse to Gaskill, this Court finds
that the trial court did not abuse its discretion in dividing the marital estate,
and affirms its division .
III. Conclusion
The decision of the Court of Appeals as to goodwill and the trial court's
valuation and division of Gaskill's medial practice is affirmed, though on
grounds other than those stated in its opinion, and the judgment of the trial
court as to the proportions of marital property division is affirmed . This case is
remanded to the Warren Family Court to determine the value of Gaskill's oral
surgery practice consistent with the discussion herein and to divide the marital
estate accordingly.
Cunningham, Schroder and Scott, JJ ., concur. Venters, J ., concurs with
Justice Noble's well-reasoned opinion, but strongly disagrees with its criticism
of all expert valuations based on an average of various valuation methods .
Abramson, J ., concurs in part and dissents in part by separate opinion .
Minton, C .J., not sitting. COUNSEL FOR APPELLANT/ APPELLEE:
Glen S. Bagby J . Robert Lyons, Jr. Woodward, Hobson 8v Fulton, LLP 200 West Vine Street, Suite 500 PO Box 1720 Lexington, Kentucky 40588-1720
James E. Keller Gess, Mattingly 8s Atchison, PSC 201 West Short Street Lexington, Kentucky 40507-1269
Betty Reece Herbert Brian Keith Pack Herbert, Herbert 8, Pack 135 North Public Square PO Box 1000 Glasgow, Kentucky 42142-1000
COUNSEL FOR APPELLEE/APPELLANT :
David A. Lanphear Lanphear 8s Walton, PLLC 1131 Fairway Street PO Box 128 Bowling Green, Kentucky 42101-0128 RENDERED : FEBRUARY 19, 2009 TO BE PUBLISHED
';VUyrnut (~Vurf of ~irufurhv 2007-SC-000190-DGE 2007-SC-000207-DGE
ON REVIEW FROM COURT OF APPEALS V. CASE NO. 2005-CA-002088-MR WARREN CIRCUIT COURT NO . 03-CI-01652
OPINION BY JUSTICE ABRAMSON
CONCURRING IN PART AND DISSENTING IN PART
I concur with all parts of the majority opinion except the prohibition on
consideration of a covenant not to compete . If expert testimony establishes
that such covenants are an integral part of a sale of a professional practice (as
they typically are, in my opinion) the expert should be able to take into account
the covenant not to compete in valuing the practice .