Court Opinion

ID: 9749740
Source: CourtListenerOpinion
Date Created: 2023-08-27 17:01:51.073896+00
Date Added: 2024-06-11T07:25:57.138543
License: Public Domain

COOPER, P. J., Concurring and Dissenting.
I concur in the lead opinion and in the judgment with respect to all issues but one. I respectfully dissent from my colleagues’ conclusion that husband has no divisible goodwill. The facts found by the trial court establish that husband possesses valuable goodwill, as traditionally recognized by California case law. In holding otherwise as a matter of law, the majority apply restrictive concepts that disregard established family law precedent. Moreover, even under this legal revision, substantial evidence still supports the trial court’s findings that husband possessed goodwill in his professional business, in which wife was entitled to share.
Business and Professions Code section 14102 declares the goodwill of a business to be property, albeit intangible. Section 14100 of the same code compactly defines goodwill as “the expectation of continued public patronage.” The United States Supreme Court has similarly stated, “Although the definition of goodwill has taken different forms over the years, the shorthand description of goodwill as ‘the expectancy of continued patronage’ [citation] provides a useful label with which to identify the total of all the imponderable qualities that attract customers to the business.” (Newark Morning Ledger Co. v. United States (1993) 507 U.S. 546, 555-556 [123 L.Ed.2d 288, 113 S.Ct. 1670].)
*1116In California, spousal goodwill is uniformly recognized as subject to assessment and award in proceedings for division of community property. (See 11 Witkin, Summary of Cal. Law (9th ed. 1990) Community Property, § 69, pp. 461-462.) “Although community goodwill is usually associated with a professional practice, it may exist in any business which is founded upon personal skill or reputation.” (Id. at p. 461.) Both the existence and the value of goodwill in a particular case are questions of fact, and their determination is reviewed on appeal under the substantial evidence test. (E.g., Smith v. Bull (1958) 50 Cal.2d 294, 306 [325 P.2d 463]; Mueller v. Mueller (1956) 144 Cal.App.2d 245, 252 [301 P.2d 90] (Mueller); In re Marriage of Slivka (1986) 183 Cal.App.3d 159, 162 [228 Cal.Rptr. 76].)
Previous decisions have attributed goodwill to a variety of professional individuals and situations, including an attorney who worked at home on appointed criminal appeals (In re Marriage of Rosen (2002) 105 Cal.App.4th 808 [130 Cal.Rptr.2d 1]), a computer consultant who worked at home or at his clients’ facilities, with “no plant, no commercial location, no employees, and [no] office” (In re Marriage of King (1983) 150 Cal.App.3d 304, 310 [197 Cal.Rptr. 716]), and a law firm partner who was found to possess professional goodwill as an individual (In re Marriage of Iredale & Cates (2004) 121 Cal.App.4th 321 [16 Cal.Rptr.3d 505]; accord, In re Marriage of Fenton (1982) 134 Cal.App.3d 451, 463 [184 Cal.Rptr. 597]; see In re Marriage of Nichols (1994) 27 Cal.App.4th 661, 673, fn. 4 [33 Cal.Rptr.2d 13]).
In the present case, husband’s business and profession were that of a motion picture director. The trial court found, after assessing extensive evidence, that husband possessed professional goodwill of a value of $1.5 million. Because all of this value had developed during the parties’ marriage, wife was entitled to a compensatory payment of $750,000.
The majority now set aside these findings by superimposing on the concept of marital goodwill a novel set of elements. In brief, the majority opine that a professional individual such as husband may not possess goodwill without having a “business” (which husband supposedly did not have), and that there can be no goodwill unless it, or the accompanying business, can be sold (which husband’s allegedly cannot). These artificial restrictions are legally unfounded and factually inaccurate; moreover, even were they correct, they would provide no cause for reversing the award of goodwill in this case as a matter of law.
The lead opinion’s effort to limit goodwill to a “business” as opposed to an individual is semantic. Any professional who independently practices his or her profession, for profit—be it lawyer, doctor, computer consultant, or film *1117director—thereby conducts a business, within the lead opinion’s own unattributed definition, as well as more traditional ones.1 It is therefore neither factually nor legally correct to say that only a business, and not a natural person, may generate or possess goodwill. When the consultant in In re Marriage of King, supra, 150 Cal.App.3d 304, and the lawyers in In re Marriage of Rosen, supra, 105 Cal.App.4th 808, and In re Marriage of Iredale & Cates, supra, 121 Cal.App.4th 321, generated goodwill while practicing their professions, they did so as individuals.2
But whichever view one takes of this issue, it cannot properly oust husband and wife of the palpable, valuable goodwill that the trial court found husband had developed. By any realistic understanding, husband earned his professional compensation, and developed an expectation of continued patronage, while practicing a business, of directing motion pictures. This business comprised not just husband’s talent, but a series of corporations, one of which owned an airplane, which husband used to travel to and scout film locations. Husband had as much a “business” as the professionals in the cases last cited.
The second disqualifying element, in the majority’s view, is the notion that husband’s goodwill was not transferable. This too is not a valid ground for reversing the present findings and award for goodwill.
The lead opinion’s treatment of this subject rests substantially on the incorrect perception that husband’s goodwill, as found below, consisted of the “elite professional standing” the trial court found he enjoyed. But the finding of “elite standing” was only prefatory to the ultimate finding that husband possessed goodwill, in the court’s words, “an expectation of continued patronage at his prior level of compensation.” (Cf. Bus. & Prof. Code, § 14100.)
As for whether this goodwill is transferable and therefore qualifies as property, the short answer is that the law has determined both questions. Business and Professions Code section 14102 establishes, as a matter of law, that “The good will of a business is property and is transferable." That includes the goodwill of husband’s business as a director. Whether or not a *1118third party is willing to buy it is not material. (Accord, In re Marriage of Watts (1985) 171 Cal.App.3d 366, 372 [217 Cal.Rptr. 301].)
There is a reason why the existence of goodwill in a marital context does not depend upon the practical transferability of the professional spouse’s practice. Insofar as it is assessed and disposed of in a judicial proceeding upon dissolution of the marriage, goodwill is not a commodity in the marketplace, but rather “a portion ... of the professional practice as a going concern on the date of the dissolution of the marriage.” (In re Marriage of Foster (1974) 42 Cal.App.3d 577, 584 [117 Cal.Rptr. 49] (Foster).)
Foster further explained, “As observed in Golden [v. Golden (1969) 270 Cal.App.2d 401, 405 [75 Cal.Rptr. 735]], ‘. . . in a matrimonial matter, the practice of the sole practitioner husband will continue, with the same intangible value as it had during the marriage. Under the principles of community property law, the wife, by virtue of her position of wife, made to that value the same contribution as does a wife to any of the husband’s earnings and accumulations during marriage. She is as much entitled to be recompensed for that contribution as if it were represented by the increased value of stock in a family business.’ ” (Foster, supra, 42 Cal.App.3d at p. 584.) Accordingly, In re Marriage of Watts, supra, 171 Cal.App.3d 366, disposed of the notion that transferability as a practical matter is a prerequisite of a business with goodwill: “In the dissolution of marriage context, the mere fact that a professional practice cannot be sold, standing alone, will not justify a finding that the practice has no goodwill nor that the community goodwill has no value.” (Id. at p. 372.)
Acknowledging that goodwill is transferable by law, the concurring opinion yet pursues the question of transferability, by asserting that husband cannot sell or transfer his professional business, because “nothing exists to sell.” (Conc. opn. of Boland, J., ante, at p. 1112.) As just explained, this would not be dispositive, even if correct. But the concurrence’s assertion that husband’s business is not amenable to sale or transfer is a supposition, grounded not in the record of this case but in speculation, about a business and craft that we appellate jurists know very little about.3 This is not a proper basis for reversal.
*1119In this case the trial court properly determined the existence and extent of husband’s goodwill, in accord with substantial evidence and with California law, as consistently expounded for half a century. Even under the majority’s refashioning of that law, those determinations remain sustainable. I respectfully dissent.
The petition of appellant Donna Dubrow for review by the Supreme Court was denied January 25, 2006, SI39403.

 Thus, Webster’s Third New International Dictionary (1993), page 301, defines “business” as “a commercial or industrial enterprise,” and then immediately offers as an example, “he’s in [business] for himself . . . .” The denotation does not include the lead opinion’s element of “with assets.”

 The notion that compensating for an individual’s goodwill would create liabilities that might not be recoverable is also unrealistic. Assessments and valuations of goodwill, as in this case, take into account the individual or other business’s apparent prospects, negative as well as positive. Any such assessment, whether for a doctor or a delicatessen, is a “predictio[n] about earning capacity” (lead opn., ante, at p. 1099), based on prior experience.

 Thus, although irrelevant, it is by no means certain that husband could not procure someone else to direct one of his films. For example, John Frankenheimer replaced Arthur Penn as director of The Train (United Artists 1964), Otto Preminger replaced Rouben Mamoulian as director of Laura (20th Century Fox 1944), and Victor Fleming succeeded George Cukor as director of Gone With the Wind (Metro-Goldwyn-Mayer 1939). (See, respectively, <http.7/imdb.com/title/tt0059825/fullcredits#directors> [as of Oct. 28, 2005], <http://imdb.eom/title/tt0037008/fullcredits#directors> [as of Oct. 28, 2005], and <http://imdb.eom/title/tt0031381/fullcredits#directors> [as of Oct. 28, 2005].)