Case Name: Robert Michael WATSON v. Patricia Harris WATSON
Court: Mississippi Supreme Court
Jurisdiction: Mississippi
Decision Date: 2004-06-24
Citations: 882 So. 2d 95
Docket Number: No. 2001-CA-01178-SCT
Parties: Robert Michael WATSON v. Patricia Harris WATSON.
Judges: SMITH, C.J., WALLER AND COBB, P.JJ., AND CARLSON, J., CONCUR. RANDOLPH, J., DISSENTS WITH SEPARATE WRITTEN OPINION. EASLEY, J., CONCURS IN PART AND DISSENTS IN PART WITH SEPARATE WRITTEN OPINION. DIAZ AND GRAVES, JJ., NOT PARTICIPATING.
Reporter: Southern Reporter, Second Series
Volume: 882
Pages: 95–129

Head Matter:
Robert Michael WATSON v. Patricia Harris WATSON.
No. 2001-CA-01178-SCT.
Supreme Court of Mississippi.
June 24, 2004.
Rehearing Denied Sept. 23, 2004.
John R. McNeal, Jr., attorney for appellant.
Richard C. Roberts, III, Jackson, attorney for appellee.

Opinion:
DICKINSON, Justice,
for the Court.
¶ 1. This is a divorce case in which we are asked by both parties to review the award of alimony and division of marital assets. As is sometimes the case when we are presented sharp, persuasive disagreement by knowledgeable counsel for both parties, we find several areas of the law which need clarification.
¶ 2. Divorce seldom produces winners. On their wedding day, a man and woman join together as one. Should they separate soon after marriage, their separate estates and obligations to the other may be discerned rather easily. However, should they (as here) stay together for two decades, much changes.
¶ 3. For instance, they develop a formula known only to themselves which divides between them their respective responsibilities and contributions to the marriage. This allows them to maximize the accumulation of assets which, invariably and to various degrees of complication, are commingled.
¶ 4. Additionally, they separately develop skills which, when combined, work together to address the full array of life's needs; but when divided, scarcely meet the needs of either.
¶ 5. Difficult though it may be, the termination of such a marriage requires an accounting and a fair division of those marital assets. It is soon learned that some marital assets cannot be easily divided. Some, not at all. When, as here, the parties cannot agree, it falls upon the courts to make the division.
¶ 6. This matter proceeded to trial, and a final judgment of divorce was entered. Although neither party contests the granting of divorce, both parties have appealed various aspects of the award of alimony and division of marital assets.
FACTS
¶ 7. Dr. Robert Michael Watson had just completed his first year of veterinary school at Auburn University, and Patricia Harris Watson was working as a hairstylist in Jackson, Mississippi, when the two were married on June 9,1979.
¶ 8. Patricia and her two daughters joined Mike in Auburn, where Patricia established a hair salon business. While attending school and holding down a part-time job, Mike assisted with the management and bookkeeping of the salon.
¶ 9. After graduation in 1982, the Wat-sons moved to the Gulf Coast, where Mike accepted employment as a veterinarian, and Patricia worked as a hairstylist. The following year, they moved to Jackson, where Mike went to work for Dr. Jack Ross, and Patricia went to work at Earle and Joseph Salon.
¶ 10. In 1987, Mike opened his own practice in Jackson, the Magnolia Animal Clinic, which he still owned and operated at the time of trial.
¶ 11. Patricia was diagnosed in 1991 with two ruptured disks and degenerative disk disease which required a spinal fusion. She was unable to work for 89 days. After the surgery, and up until trial, she continued limited work at Earle and Joseph Salon.
¶ 12. At some point, Mike began a sexual relationship with one of his employees. On May 12, 1999, he left Patricia and moved in with his paramour and her two children whereupon he began paying the mortgage and utilities for his new residence.
¶ 13. Patricia filed for divorce in April, 2000. The chancellor granted Patricia a divorce on the ground of adultery, which has not been appealed by either party, and will not be disturbed. We find we must, however, review the chancellor's award of alimony and division of marital assets, including Dr. Watson's professional practice.
DISCUSSION
¶ 14. This Court employs a limited standard of review when reviewing a chancellor's decision. Miss. Dep't Human Servs. v. Shelby, 802 So.2d 89, 92 (Miss.2001). We will not disturb a chancellor's award of alimony and division of marital assets unless the court was manifestly wrong, abused its discretion or applied an erroneous legal standard. Sandlin v. Sandlin, 699 So.2d 1198, 1203 (Miss.1997).
ALIMONY
¶ 15. This Court has long recognized the concept that alimony and equitable distribution should be considered together so as to prevent inequity. "Alimony and equitable distribution are distinct concepts, but together they command the entire field of financial settlement of divorce. Therefore, where one expands, the other must recede." Ferguson v. Ferguson, 639 So.2d 921, 929 (Miss.1994) (citing LaRue v. LaRue, 172 W.Va. 158, 304 S.E.2d 312, 334 (1983) (Neely, J., concurring)). "In the final analysis, all awards should be considered together to determine that they are equitable and fair." Id.
¶ 16. In this case, the chancellor awarded Patricia a net estate valued at almost a half million dollars. Additionally, the chancellor recognized that Patricia has separate income of approximately $2,400 per month. Also, from the assets awarded to her, Patricia will realize income between $250,000 and $400,000. Considered together, under the chancellor's award, Patricia would have a separate, net estate, of approximately $700,000, to $1,000,000.
¶ 17. When considering the Armstrong factors in his original findings, the- chancellor stated that Patricia's income was the only source to meet her needs, and that, "for the most part," the assets he awarded Patricia "are not income-producing assets from which [Patricia] could secure additional income without the imposition of alimony." Then, upon reconsideration, the chancellor stated that the assets awarded to Patricia would produce income between $250,000 and $400,000. However, this income which the chancellor did not consider in the original award of alimony did not serve to convince him to lower alimony. Instead, he raised it by $750.00 per month. The precise reason alimony was raised, post-trial, is unclear. A portion of the discussion seems to indicate that the debt payments assumed by Patricia may have been a factor. If so, that would be inappropriate, unless the debt was removed as a factor in calculating the division of assets (which it was not in this case). Otherwise, the same debt serves to advantage Patricia twice; first, to increase her award of assets, and second, to increase her award of alimony.
¶ 18. We reverse and remand for a new determination of alimony, based upon findings of fact and conclusions of law which take these matters into account.
DIVISION OF MARITAL ASSETS
¶ 19. Few appreciate the difficulty visited upon a chancellor charged with dividing marital assets in a case such as this. I believe the chancellor's conduct of the proceedings was admirable. His forty-four page Findings of Fact and Conclusions of Law was obviously crafted after a great deal of study of the record and consideration of the numerous issues and law applicable thereto. Additionally, both parties filed motions for reconsideration, challenging the findings in numerous respects. The chancellor did not hesitate to reexamine his findings. The motions were carefully considered, and the chancellor agreed with, and made, several requested changes.
¶ 20. To complicate matters, almost a year following the trial in this case, this Court handed down Singley v. Singley, 846 So.2d 1004 (Miss.2002), which, as a matter of first impression in Mississippi, addressed "goodwill" of a professional practice in the context of division of marital assets. When this case proceeded to trial, the chancellor did not have the benefit of the holding in Singley. Therefore, we turn first to the chancellor's valuation of Mike's veterinary clinic.
1. The Veterinary Practice.
¶ 21. The valuation of a business is nothing more than an appraisal which, depending upon the purpose for which it will be used, can be performed using one of several valid, acceptable methods. Lenders, for instance, view a business as collat eral, and their opinion of worth will generally not agree with an owner or investor. Each person or entity seeking an appraisal or valuation must factor in those matters which are, to them, important. They must also exclude those matters which would cause the appraisal to produce a false or misleading value for their purposes.
¶ 22. So it is with the courts in division of marital property. Where, as here, a chancellor must determine the value of a professional practice, the value must be calculated for that specific purpose, recognizing constrictions which may not be apparent in other contexts.
¶ 23. This Court carefully considered the issue of valuing a professional practice in Singley. It seems to us at first blush that one should have difficulty misunderstanding the following language:
We join the jurisdictions that adhere to the principle that goodwill should not be used in determining the fair market value of a business, subject to equitable division in divorce cases.
The term goodwill as used in determining valuation of a business for equitable distribution in a domestic matter is a rather nebulous term clearly illustrating the difficulty confronting experts in arriving at a fair, proper valuation. Good-mil within a business depends on the continued presence of the particular professional individual as a personal asset and any value that may attach to that business as a result of that person's presence. Thus, it is a value that exceeds the value of the physical building housing the business and the fixtures within the business.
Singley, 846 So.2d at 1010-11 (emphasis added). However, what seemed clear under the facts in Singley, are not so clear under the facts of this ease. We shall use this opportunity to clarify our holding in Singley.
¶ 24. In reaching its conclusion in Singley, this Court carefully reviewed the approach taken in other jurisdictions, and "join[ed] the jurisdictions that adhere to the principle that goodwill should not be used in determining the fair market value of a business subject to equitable division in divorce cases." Singley, 846 So.2d at 1010. The Court then cited numerous cases, and assigned to them, respectively, the following parenthetieals:
(holding failure to assign goodwill value to business was not erroneous where any goodwill rested solely on husband's well known reputation and abilities and his continued existence and involvement in the business);
(goodwill in professional practice is not marital property, but is an aspect of income potential to be considered in maintenance and support);
(noting that professional goodwill is an aspect of income potential and should be reflected in maintenance awards otherwise additional consideration of goodwill is duplicative and improper);
(stating that Indiana law adheres to the rule that goodwill based on the personal attributes of the individual is not properly part of the marital estate);
(goodwill in medical practice is not an asset subject to division in dissolution);
(goodwill in a doctor's practice is not a divisible asset because it does not possess value or constitute an asset separate and apart from the doctor's person or ability to practice the profession);
(marital estate does not include goodwill of husband's partnership interest in law firm).
Singley, 846 So.2d at 1010-11 (citations omitted) (emphasis added).
¶ 25. As stated in Singley, goodwill is a nebulous term. It "depends on the continued presence of the particular professional individual as a personal asset and my value that may attach to that business as a result of that person's presence." Id. at 1011 (emphasis added). In a furniture or appliance business with several owners, it would be difficult to assess the value to the business attributable to one of the owners. Customers go to the business looking for furniture or appliances. However, in the context of a single-owner professional practice, it becomes less difficult. Patients (including pet owners) go there looking for their doctor.
¶ 26. The inequity which led to the decision in Singley, and the inequity which is so glaringly present in this case, occurs where the marital assets to be divided in a divorce include the goodwill of a professional practice. This is particularly true where, as here, the professional practice has one owner/professional. Unless the valuation of the professional practice carefully avoids any element attributable to the presence and work of the professional, the result will be a double award to the spouse. The professional's income will be used, first to calculate alimony, and then again to calculate the, value of the "business." That is exactly what happened in this case.
The First Award — Alimony.
¶ 27. Permanent, periodic alimony was awarded to Patricia based primarily on Mike's income. Specifically, the chancellor found Mike's and Patricia's net monthly income to be $7,794.42, and $2,393.34, respectively. These two net income amounts, when added together, total $10,187.76, per month. Patricia was awarded monthly periodic,' permanent alimony in the amount of $3,250.00 which, when added to her monthly income of $2,393.00, increases her monthly income to $5,643.34. Mike, on the other hand, will have monthly income, after alimony payments, of $4,544.42.
¶ 28. Thus, as a result of the chancellor's award of alimony, Patricia's income will exceed Mike's. Stated differently,' Patricia will have approximately 55% of the parties' combined income. Based upon the approach taken by the chancellor, it cannot be denied that Mike's income has been "divided up" in the award of alimony.
The Second Award — Value of the. Practice.
¶ 29. Mike is the sole owner of Magnolia Animal Clinic (the "Clinic"). It is from this Clinic that he derives his income. The tax returns relied upon by the chancellor reveal that the Clinic income was virtually all of Mike's income. The valuation of the Clinic used by the chancellor to calculate the award to Patricia was based upon projected future income of the Clinic. That is to say, the award was based upon Mike's predicted future earnings-the same earnings which already were divided, in the award of alimony.
Koerber's Valuation of the Clinic.
¶ 30. Patricia called James A. Koerber, CPA, to provide an expert opinion as to the valuation of the Clinic. Koerber testified that he could have appraised the Clinic by ¡(1) looking at its assets ("asset-based" approach), (2) surveying the market for similar sales ("market-based" approach), or (3) placing a value on the earn ing potential ("income-based" approach). In this case, Koerber used the income-based approach. When asked if he used the asset-based approach, he testified:
We considered it. You always consider all three approaches. But because Mike's practice is a service business, you know, assets are really not the major generator of income. The major generator of income is services. So we considered it, but didn't feel like it applied in this situation.... But in businesses such as this where you have a professional entity, you really don't look at the asset approach."
He further testified:
A. Basically, you're looking at what the cash — what the cash will be available to the owner or owners of a business without jeopardizing the business itself. It's whatever can be returned to the owner.
Q. Okay. What is capitalized cash flow method?
A. It's basically the same thing. But instead of looking at a longer period of time, which the discounted cash flow uses, you look at a single period of time to come up with the value.
Q. All right. Okay. How did you come up with your final value of $325,000?
A. The final value for $325,000 we really went back and looked at what— under the income approach, we basically looked at that — if you looked at the discounted net cash flow and the capitalized cash flow, we felt like, you know, that was a pretty good range. So we basically took an average of those two figures to come up with $325,000.
¶ 31. Because Koerber's testimony is crucial to the question of whether the requirements of Singley were followed, it is necessary to go into it in some additional detail.
¶ 32. To develop an earnings pattern for the Clinic, Koerber examined its historic "net cash flow." He then used that past experience to predict what would happen in the future. That is to say, he projected future earnings based on past earnings, and from these future earnings, he estimated the value of the Clinic. The calculations and approach used by Koer-ber, and accepted by the Chancellor, were improper for two reasons.
¶ 33. First, Koerber valued the Clinic based upon the earnings and personal contribution of Mike. These earnings are de- pendant upon Mike's personal, professional practice. This approach is forbidden by Singley, which cites with approval, In re Marriage of Claydon, 306 Ill.App.3d 895, 240 Ill.Dec. 144, 715 N.E.2d 1201 (1999) ("professional goodwill is an aspect of income potential and should he reflected in maintenance awards, otherwise additional consideration of goodwill is duplicative and improper"). Singley, 846 So.2d at 1010 (emphasis added).
¶ 34. Second, Koerber did not take into account that Mike would be ordered to pay alimony based upon an annual income of $158,000. Koerber projected the income of the Clinic into future years, arriving at a total amount of earnings he expected for the Clinic. He then deducted from those predicted earnings approximately $93,000 per year, an amount he assumed necessary to provide a replacement for Mike. Koer-ber's theory was that, since Mike could be replaced with a $93,000 per year employee, all earnings of the clinic above the $93,000 were profits which had nothing to do with Mike.
¶ 35. Thus, according to Koerber, all earnings above $93,000 were included in his value of the Clinic, and are fair game to be divided with Patricia. But, as already stated, the chancellor did not use $93,000 to calculate alimony. He used Mike's true annual income of $158,000. Therefore, the portion of income which exceeds $93,000 was used to calculate both alimony for Patricia, and the value of the Clinic to be awarded to Patricia.
¶ 36. Theoretically, Koerber was justified in using the $93,000 deduction, if his mission was to demonstrate the earning potential of the Clinic with an assumed replacement for Mike. But that mission would require two unrealistic assumptions: First, that Mike's' expertise, skill and customer loyalty could be replaced with a $93,000 per year employee; and second, the Clinic would suffer no loss in business or income as a result. Furthermore, Koerber had no way to know the chancellor was going to award alimony to Patricia, so he could not have accounted for it in valuing the Clinic.
¶ 37. Thus, even if Singley had been decided differently, Koerber's method would still have been incorrect, since the $68,000 difference between the two income amounts would have been used twice to calculate an award for Patricia; once for alimony, and again for valuation of the Clinic.
Goodwill.
¶ 38. During his direct testimony at trial, Koerber never mentioned goodwill. His report which was admitted at trial does not address goodwill. The calculations in his report, and his direct testimony, clearly indicate that he made no reduction whatsoever in the value for goodwill.
¶ 39. On cross-examination, however, Koerber was asked several times whether his valuation assumed that Mike would remain at the Clinic. He could not an swer. When challenged concerning whether Mike had any "professional goodwill," that would go with him, should he leave the practice, Koerber provided the following response:
We took that — we took into consideration what a comparable person would earn, you know, as far as the business goes — as far as the practice goes — I'm sorry — and came up with the value of approximately $94,000. Basically, that's removing any personal goodwill. All we're looking at is the value of the practice.
¶ 40. This testimony demonstrates that Koerber's definition of goodwill is (to put it charitably) different from what one would expect, and certainly different from this Court's discussion of goodwill in Singley. Under Koerber's courtroom definition, "goodwill" seems to be nothing more than the amount of money an average veterinarian would make. Stated another way, Mike's goodwill had nothing to do with Mike. Stated still another way, since $93,000 would hire a veterinarian to run the Clinic, then that, somehow, sets the amount of Mike's goodwill. How? If Koer-ber's opinion and approach had any merit, then the goodwill of every single-owner veterinarian clinic in the country is approximately $93,000. There may be some abstruse accounting theory which employs this application and definition of goodwill, but it certainly does not fit within the context of Singley, or any of the other cases reviewed.
¶ 41. It could have been the extra caution of good "lawyering," or possibly that Patricia (or her counsel) sensed an imminent decision from this Court with respect to whether "goodwill" of a professional practice should be included in marital assets. For whatever reason, Patricia submitted a post-trial affidavit from Koerber, which attempted to persuade the chancellor that "personal goodwill" had been considered, and was properly reflected in his opinion and testimony. However, repackaging and relabeling the evidence and opinions after trial cannot convert to market value that which is obviously personal goodwill. Instead of shedding light on his view of goodwill and its application in this case, Koerber's affidavit further establishes that he did not, in fact, consider goodwill in the context of Singley.
¶ 42. The chancellor, stating that "Mike was basically a 'one-man business whose reputation as an individual had a large impact on the value of his business," reduced Koerber's opinion of valuation by $75,000. There is absolutely no evidence supporting this reduction of the original valuation. There is literally no testimony or other evidence regarding the extent to which Mike's "goodwill" increased the value of the business. While it appears the chancellor obviously found Koerber's appraisal to be flawed, he does not explain the flaw, nor does he explain how the $75,000 reduction serves to cure it.
¶ 43. As stated above, "goodwill" is a "rather nebulous term." Some of our sister States have recognized that this nebulous term is actually comprised of two separate but related concepts. The Indiana Supreme Court has described goodwill as "the value of a business or practice that exceeds the combined value of the net assets used in the business." Yoon v. Yoon, 711 N.E.2d 1265, 1268 (Ind.1999). The Indiana court determined that, in a professional practice, goodwill could be "attributable to the business enterprise it self by virtue of its existing arrangements with suppliers, customers or others, and its anticipated future customer base due to factors attributable to the business." Id. However, goodwill might be associated with the "individual owner's personal skill, training or reputation." Id.
¶ 44. Enterprise goodwill "is based on the intangible, but generally marketable, existence in a business of established relations with employees, customers and suppliers." Id. (quoting Allen Parkman, The Treatment of Professional Goodwill in Divorce Proceedings, 18 FAM. L.Q. 213, 215 (1984)). Further, the court in Yoon stated:
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 transferable to others and has a value to others.
711 N.E.2d at 1268-69 (internal citations omitted). In contrast, the court in Yoon concluded that personal goodwill is a personal asset and as such, is not divisible at divorce. Id. at 1269. This is true because "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." Id.
¶ 45. A close reading of our opinion in Singley reveals that we have not explicitly addressed any distinction between "personal goodwill" and "business enterprise goodwill," although we did note that other jurisdictions recognize both. Singley, 846 So.2d at 1010 n. 2.
¶ 46. We now hold that, although there is á distinction between "personal goodwill" and "business enterprise goodwill," neither should be included in the valuation of a solo professional practice for purposes of a division of marital assets. In such cases, the two are simply too interwoven and not divisible.
¶ 47. In his calculations, Koerber applied a specific company risk factor "of five percent (5%) to the discount rate to reflect that Mike's practice was a sole proprietorship and therefore has a greater risk than a professional practice." Koerber made no effort to relate the five percent reduction to goodwill.
¶ 48. Koerber testified that there was no real customer base associated with the clinic, but his report includes name recognition of the practice as a factor. Any name recognition of the clinic is due to Mike's personal efforts, and his practice. Stated differently, "Magnolia Animal Hospital" is synonymous with "Dr. Robert Michael Watson."
¶ 49. Furthermore, Koerber's report considers the reputation of the clinic. In a solo practice like Magnolia Animal Hospital, the reputation of the clinic is synonymous with the professional's reputation; that is to say, Mike's professional reputation is imputed to the clinic. Because Mike managed the practice as its sole owner, he established business relationships with suppliers and the company employees. Thus, under such circumstances, personal goodwill and enterprise goodwill are actually the same.
¶ 50. Here, as in Singley, neither party raises the issue of whether "goodwill" includes "personal goodwill," "business en terprise goodwill," or both. Since this is a matter of first impression for this Court, we clarify this Court's holding in Singley, and hold that, for purposes of division of marital assets, both "personal goodwill," and "business enterprise goodwill" must be excluded from the valuation of a solo professional practice. Upon remand, the parties may address this issue by providing evidence of the valuation of the clinic, absent goodwill. In the event an asset-based approach is used, the valuation should not exceed the fair market value of the tangible assets, assuming they were sold in their current configuration. Although we do not foreclose the use of other valuation methods, we are mindful that, in using the income approach, extracting goodwill would seem difficult, and must be carefully accomplished and explained.
2. The Commercial Building.
¶ 51. Patricia argues that the trial court erred in assessing the value of the commercial building at $120,000. She contends that the building should have been valued at $150,000. She points out that the parties consistently valued the building at $150,000 on a number of financial statements. Additionally, the chancellor noted that, prior to the divorce action, Mike had listed the value at $150,000 on financial statements and loan applications.
¶ 52. However, at trial, Mike testified that, in his opinion, the value of the building was presently worth $120,000, basing the decrease in value on foundation problems. No tax receipt of the tax assessment value of the property was provided to the trial court.
¶ 53. As neither party offered expert testimony or other evidence as to the value of the building, we do not find that the trial court erred in accepting Mike's testimony as to the value. As the evidence does not indicate that the trial court abused its discretion, this issue is without merit.
3. The Marital Home.
¶ 54. We now address several issues raised concerning the marital home.
Tax Roll Assessment
¶ 55. Mike contends that the trial court erred in assessing the value of the marital home to be $302,772. The trial court determined that, based on its experience, the value assessed by the county tax assessor was approximately 85% of the appraised true value. Therefore, the trial court increased the tax roll assessment of $263,280 by 15% or $39,492 to $302,772.
¶ 56. Neither party offered any expert opinion as to the value of the marital home before the trial court made its decision. Patricia testified she believed that the value of the marital home was approximately $350,000. Mike testified that he believed the value was approximately $425,000, but he offered nothing to support that amount. The cost of construction on the home in 1992 was approximately $220,000.
¶ 57. Because both parties provided opinions to the chancellor which were higher than the chancellor's calculation, and because the chancellor applied his "experience" without any evidence in the record which would cause such experience to apply to the facts of this case, we must reverse the chancellor's valuation, and remand for a determination of the value, as of the date of trial, of the marital residence. Both parties will have an opportunity, on remand, to provide opinions and expert testimony as to the value.
Trustmark Home Mortgage
¶ 58. Mike briefly states that the trial court erred in failing to reduce the outstanding mortgage balance of the marital domicile by the amount of payments he made during the time period between the filing of the complaint for divorce and the judgment of divorce. These payments, he contends, resulted in Patricia receiving at least a $8,000 increase in the equity of the marital home. In setting the outstanding mortgage in its original findings of fact and conclusions of law, the chancellor stated:
There was some small differences in the parties' evidence regarding the outstanding balance of the Trustmark house mortgage. Mike [Mike] listed the liability at $110,000.00. Patricia listed the outstanding at $114,624.00. Patricia's testimony was that this figure was the exact figure she' received from the bank the week prior to trial. The Court finds that the outstanding balance of this mortgage indebtedness to be $114,624.00.
¶ 59. Attached to his motion for reconsideration, Mike produced a letter dated February 7, 2001, from Ginger Sprinkle, payoffiassumption supervisor, at Trust-mark Bank, which listed the present principal balance as of April 1, 2001, at $106,372:61. The trial court did not specifically address the issue of the outstanding mortgage in its amended findings of fact and conclusions of law dated May 31, 2001. Trial in this matter was held on November 8, 9-10, 2000.
¶ 60. This matter may be revisited upon remand, as the parties will have the opportunity to provide accurate, current data.
Reduction of $77,777 in Value.
¶ 61. Mike contends that the chancellor erred in reducing the value of the marital domicile by $77,777, due to the portion of the house built by Patricia's parents. In its original findings of fact and conclusions of law, the trial court stated:
The Court finds that it would be inappropriate to use a value of $77,777.00 and decrease the appraised value by such amount because if the Court awards this house to the wife, the benefit of $77,777.00 would ultimately be realized by Patricia. This Court sees no deed wherein the addition completed by the parents was ever shovjn to have been deeded to Patricia's parents and therefore the total property of record as of the date .of the hearing was jointly owned by Patricia and Mike [Mike]. This Court finds that the value of the former marital residence to.be $302,772.00.
¶ 62. On reconsideration, the trial court cited no authority for the change in the treatment of the $77,777 so claimed by Patricia to be attributed to her mother, nor does Patricia provide any such authority on appeal.
¶ 63. In fact, Patricia does not even attempt to distinguish the case sub judice from our holding in Henderson v. Henderson, 757 So.2d 285 (Miss.2000). The facts in Henderson are similar to the facts here, except the money contributed by the wife's mother was greater than the amount attributed to Patricia's mother. In Henderson, based on the parties' testimony, the wife's mother contributed approximately $116,000 to $235,000 in construction costs in exchange for the assurance that she could live there and be taken care of for the remainder of her life. Id. at 286, 288. The trial court determined that 1/3 of the net equity of the marital home was non-marital property, and awarded the wife's mother 1/3 net equity ($66,633.33) in the marital home. Id. at 289-90.
¶ 64. On appeal, this Court reversed, noting that the wife's mother "was not named in the deed, nor was any written document presented evidencing any ownership in the house in her." Id. at 291. The Court went on to state:
The record shows that the chancellor considered Mrs. Lawson's $116,000 contribution in determining what share of the marital domicile was due to both parties under the first Ferguson factor. Ferguson v. Ferguson, 639 So.2d 921, 928 (Miss.1994). He determined that the $116,000 was Mary's contribution alone. This was also error. Mrs. Lawson's $116,000 contribution was not a gift to her daughter. It was the consideration in an agreement between Mrs. Lawson and the Hendersons. It was procured by both Mary and Howard. We have stated that all assets "acquired or accumulated during the marriage" are marital assets subject to equitable distribution. Hemsley v. Hemsley, 639 So.2d 909, 915 (Miss.1994). Therefore, Mary alone did not directly or indirectly contribute $116,000 to the acquisition of the marital home. Gifts may be made to either party to a marriage or to the marital union itself. Under facts such as those before us, we can only conclude that the contribution of Mary's father, on the one hand, and the contributions bargained for from Mrs. Lawson on the other, were both made to the marital union of the parties, rather than to an individual partner of the marriage. Therefore, such assets, absent clear proof otherwise, are assets of the marital estate.
¶ 65. Based on this Court's holding in Henderson, we find that the trial court erred in modifying its judgment on reconsideration by reducing the value of the marital home by $77,777 to reflect the contribution of Patricia's parents and, upon rehearing, the value of the marital home should not be reduced for that purpose.
¶ 66. We now turn to several issues the chancellor should take into account upon remand and recalculation of the value and division of marital assets.
4. Consideration of Fault.
¶ 67. A recitation of all the facts surrounding Mike's affair and conduct is not necessary. It is sufficient to say that Mike's adultery was not a "slip-up," peccadillo, or occasional indiscretion. He moved out of the marital home he had shared with his wife for twenty years, and began an open, continuous, adulterous affair. He began to invest his time, society, companionship and assets into the nurturing and development of another home, leaving Patricia to her own emotional survival. This is the stuff of "marital fault" which led the Singley court to reverse the chancellor for dividing the marital property equally, a division which obviously placed "minimal weight" upon fault.
¶ 68. The central question is whether the adulterous conduct "impacted and burdened the stability and harmony of the marriage." Singley, 846 So.2d at 1009. See also Ferguson, 639 So.2d at 928. Be cause the trial court obviously ignored conduct and equally divided the assets, Singley was remanded for a recalculation of the percentages. The same is required here.
5. Calculations in Valuing the Marital Property.
¶ 69. Before applying the Ferguson factors to make an equitable distribution of the marital property, the trial court devoted 11 pages of his original findings of fact and conclusions of law to first identify "marital property" as opposed to "separate/nonmarital property" according to Hemsley v. Hemsley, 639 So.2d 909, 915 (Miss.1994). In Ferguson, this Court established the factors that should be considered in reaching a decision on the equitable distribution of marital property. Ferguson, 639 So.2d at 928. The chancellor devoted 15 pages of his original findings of fact and conclusions of law to applying the Ferguson factors to the marital assets and liabilities in order to provide an equitable decision. In doing so, the chancellor stated:
The Court has attempted to apply each and every one of the Ferguson factors to each marital asset and liability, both collectively and individually. From the application of the factors the Court finds, based upon the evidence presented, that this marriage was an equal partnership in every sense of the word until Mike [Mike] began a sexual relationship with his employee, Laurie Foil. The Court finds that Patricia should receive approximately fifty percent (50%) of the net assets acquired and accumulated during this marital partnership based upon her direct and indirect economic contributions, her contribution to the stability and harmony of the marriage, and the other factors set forth in the Ferguson decision.
¶ 70. In his original findings of fact and conclusions of law, the chancellor divided $1,216,662.52 in marital assets, with Mike receiving $566,113.48 and Patricia receiving $650,121.07. Patricia was assigned the marital liabilities totaling $162,955.99 which, when deducted from her assets, left her with net assets of $487,165.08, and a deficit of $78,948.40.
¶ 71. In order to render a 50% division of the marital assets and liabilities and correct the deficit, the chancellor awarded Patricia $39,474.20 Qk the deficit) to be paid in three equal yearly installment payments of $13,158.07.'
¶ 72. Both parties filed motions for reconsideration. As a result, the chancellor amended his findings of fact and conclusions of law. Thereafter, the chancellor entered a Judgement, which included a list of asset values. The amended findings of fact and conclusions of law, and the asset values listed in the Judgment, reflect the following significant changes:
• The value of the marital home was reduced by $77,777.
• $26,881.32 was added to Mike's assets for his certificate of deposit which was discussed by the trial court in its original findings of fact and conclusions of law but omitted in the division of assets.
• Patricia's marital personal property (furniture, jewelry, etc) was reduced by $15,000. The trial court's charts reflect a $15,000 reduction in the value assigned to Patricia's marital personal property (furniture, jewelry, etc.) from the original decision to the decision rendered on reconsideration. The original chart in the original decision designates Patricia's marital personal property (furniture, jewelry, etc.) at $35,000 ($20,000 for furniture, furnishings and appliances plus $15,000 for the marital property, a Rolex watch). The chart contained in the reconsideration decision designates Patricia's personal property (furniture, jewelry, etc.) at $20,000, resulting in a $15,000 reduction by the trial court. The only explanation provided by the trial court in reaching the reduction was that a Rolex watch, awarded to Patricia, should be reduced from $15,000 to $5,000 on reconsideration. This should have resulted in a $10,000 reduction, rather than a $15,000 reduction. It appears there was an error in transferring the amounts. On reconsideration, the written decision states that the value of Patricia's marital personal property is $25,000, including the Rolex watch. However, the numerical chart lists the amount of Patricia's marital personal property as $20,000. Therefore, based on a lack of explanation by the trial court as to the $5,000 discrepancy between the written decision and the numerical chart used to divide the marital estate, there exists a mathematical error of $5,000.
¶ 73. The trial court's judgment contains other mathematical errors not briefed by either party. Mike's assets were understated in the judgment by $85,380. Mike was actually awarded $592,994.80 of the marital assets by the trial court, when adjusting for mathematical errors. Patricia's award was listed in the Judgment as $557,344.07. According to paragraph 6 of the judgment, it should have been increased by $77,777, to $635,121.07. Patricia's marital personal property was incorrectly stated as $20,000, rather than $25,000, which would require an addition of $5,000 to Patricia's total marital personal property. Therefore, applying corrected calculations to the chancellor's amended findings, Patricia's total marital assets would be $640,121.07.
¶ 74. Patricia was assigned all the marital debt of $162,955.99. Therefore, Patricia was actually awarded $477,165.08. Under the amended findings, as corrected, Patricia would have been left with a deficit of $115,829.72. Adjusting the award of marital assets and liabilities to account for Patricia's deficit in order to maintain the trial court's equal division of the marital estate, Patricia would have been awarded $57,914.86, rather than $56,613.36 awarded by the chancellor.
¶ 75. We have set forth these errors and recalculated the asset award solely for the purpose of assisting the chancellor on remand. We do not mean to suggest any particular division of assets, as that must be done by the chancellor after consideration of all matters discussed herein.
Expert Costs and Interest Rate.
¶ 76. The chancellor ordered Mike to pay Patricia's expert fees and expenses. This was improper. This Court has held in numerous cases that attorney fees should not be awarded unless the requesting party is unable to pay. See, e.g., Creekmore v. Creekmore, 651 So.2d 513, 520 (Miss.1995). The expert fees of Patricia should not be considered differently. Here, the value of Patricia's separate estate will far exceed the threshold for consideration of an award of attorney fees and costs.
¶ 77. Additionally, the chancellor ordered Mike to pay interest at 8%, per annum, on past-due installments. Upon remand, the chancellor should reexamine this rate in light of today's prevailing interest rates. See Miss.Code Ann. § 75-17-7.
CONCLUSION
¶ 78. It is surprising to hear it argued by the dissent that this Court's decision is "devastating" for Patricia. In response, and in conclusion, we shall do no more than mention two points.
¶ 79. First, and least important, the dissenter is presumptuous in assuming that remand will not be favorable to Patricia. We are reversing because of several errors which cannot be overlooked, and which contributed to an award of alimony and division of marital property which were inconsistent with controlling law. For instance, when dividing marital assets, the chancellor failed to give weight to the uneontested fact that Mike's adulterous relationship caused him to vacate the marital home and emotionally abandon Patricia. This conduct certainly "impacted and burdened the stability and harmony of the marriage". See Singley, 846 So.2d at 1009. See also, Ferguson, 639 So.2d at 928. Remand might very well result in a division of property more favorable to Patricia. If so, the term "devastating" would hardly seem appropriate.
¶ 80. Second, and most important, we are bound by oath to follow the law. The law requires, for the reasons stated, that this case be reversed and remanded. Therefore, we reverse and remand.
¶ 81. REVERSED AND REMANDED.
SMITH, C.J., WALLER AND COBB, P.JJ., AND CARLSON, J., CONCUR. RANDOLPH, J., DISSENTS WITH SEPARATE WRITTEN OPINION. EASLEY, J., CONCURS IN PART AND DISSENTS IN PART WITH SEPARATE WRITTEN OPINION. DIAZ AND GRAVES, JJ., NOT PARTICIPATING.
. Armstrong v. Armstrong, 618 So.2d 1278 (Miss.1993).
. We are aware of the temptation to simply adopt the proposals submitted by the prevailing party on each issue. This Court is most grateful to Judge Zebert for his detailed analysis of each issue, which provides for a more meaningful review.
. The fiction which, as here, leads to the inequity is the assumption that a single owner professional can sell and leave his or her practice which was built up over many years, and the practice will continue as before. That the value of the practice would be sharply diminished by loss of the professional, even when replaced by another professional, would seem obvious.
. Koerber testified that he neither inspected nor valued the assets of the Clinic.
. This is, indeed, curious testimony from a CPA who, when serving in Singley as a court-appointed expert, did in fact use the asset-based approach to value a dental practice. It is also interesting and instructive that, in that case, he arrived at a value of $145,000 — less than half the value he places on Mike's veterinary practice. Singley, 846 So.2d at 1009-10.
. Mike was the sole owner of the Clinic, and the "cash flow" of the Clinic is nothing more than Mike's earnings.
. When asked how he arrived at the valuation for the Clinic, Koerber testified that it was "a projection based on historical information ." When asked to explain "net cash flow," he testified:
As far as net cash flow, you look at, basically, the income and expenses from the business. You deduct from there the — any debt service and also any capital expenditures to buy new equipment and so forth for the practice to come up with what is available to an owner of a business. So basically, you're really seeing what is left in the bank, you know, for the person after they— they've removed all the necessary operating expenses.
. Koerber arrived at this "comparable compensation" by opining that the mean, average wage for a veterinarian in Jackson, Mississippi, is $49,960, and he added to that, $44,300, which is the mean income of a labor relations manager.
. This assumption requires one to believe that the "replacement" doctor would have the same value to the Clinic as Mike, and to further assume that the Clinic would lose no business as a result of Mike leaving. This would require us to accept that people are loyal to buildings, not doctors. We decline to accept this theory.
. Koerber did state in his report that "[i]f the practice were to lose its owner, Robert Michael Watson, the Practice may experience a decline in business." Nowhere in his calculations, however, does he take this into account.
. If $93,000 is enough to replace Mike in Jackson, then it is enough to replace any veterinarian anywhere in the country, allowing for small cost of living differences here and there.
. The value of the assets when sold together, already installed and in working order, may exceed the value of the same assets sold separately. There can certainly be additional value assigned to a new owner's ability to walk in and go to work. Such additional value, if any, may be included in the division of marital assets, since it is unrelated to the past performance, income or patient/customer base of the practice.
. Patricia contends that her mother, Hariris, contributed approximately $46,000 to the construction of an attached 1100 sq. ft. apartment. Harris did not testify. Based on Patricia's testimony, the trial court accessed a value on the 1,000 sq. ft. apartment of $77.77 per sq. ft., or $77,777 in its original findings of fact and conclusions of law dated February 2, 2001.
. The trial court prepared charts in its original Findings of Fact and Conclusions of Law, its Amendment to Prior Findings of Fact and Conclusions of Law, and its Judgment. The chart of assets included in the Judgment contains the mathematical errors.
. 507,614.80 + 85,380 = $592,994.80
. $557,344.07 + 77,777 + 5,000 = $640,121.07
. $557,344.07 + 77,777 + 5,000-162,-955.99 = $477,165.08
. Mike's total marital estate $592,994.80-Patricia's total marital estate $477,165.08 = $115,829.72 deficit to Patricia.
. $115,829.72 deficit/ 2 = $57,914.86 cash payment.