Court Opinion

ID: 9737164
Source: CourtListenerOpinion
Date Created: 2023-08-26 19:17:52.315276+00
Date Added: 2024-06-11T18:24:55.511435
License: Public Domain

RODOWSKY, Judge,
dissenting.
I respectfully dissent. By mixing the Marital Property Act, Family Law Article §§ 8-201 through 8-205, with the Rules of Professional Conduct, principally Rule 5.6(a), without giving effect to the purpose of either ingredient, the Court has produced an inequitable result. Although the spouse of a person engaged as a sole proprietor in a trade or business may receive an equitable award in the value of the goodwill of that proprietorship, and although the spouse of a person engaged as a sole practitioner in a profession, other than law, may receive an equitable award in the value of the goodwill of that professional practice, the Court holds that the spouse of a person engaged as a sole practitioner in the legal profession cannot even be considered for an equitable award in the value of the goodwill of that law practice because, solely in the latter instance, goodwill is not marital property.
Archer v. Archer, 303 Md. 347, 493 A.2d 1074 (1985), held that there is no marital property in a license to practice medicine. But there this Court said:
“Our cases have generally construed the word ‘property’ broadly, defining it as a term of wide and comprehensive signification embracing ‘ “everything which has exchangeable value or goes to make up a man’s wealth — ev*243ery interest or estate which the law regards of sufficient value for judicial recognition.” ’ Deering v. Deering, 292 Md. 115, 125, 437 A.2d 883 (1981); Diffendall v. Diffendall, 239 Md. 32, 36, 209 A.2d 914 (1965). In Bouse v. Hutzler, 180 Md. 682, 686, 26 A.2d 767 (1942), we said that the word ‘property,’ when used without express or implied qualifications, ‘may reasonably be construed to involve obligations, rights and other intangibles as well as physical things.’ ‘Goodwill,’ for example, has been characterized as a legally protected valuable property right. Schill v. Remington Putnam Co., 179 Md. 83, 88-89, 17 A.2d 175 (1941).”
303 Md. at 356, 493 A.2d at 1079.
Indeed, the majority opinion acknowledges that “[t]he view most often followed treats goodwill as marital property in all cases.” Opinion at 234 (footnote omitted). Thus, if a brain surgeon or a house painter were to divorce, most courts would permit the spouse to show both goodwill in the solo practice or sole proprietorship and the value thereof. This is consistent with the policy of Maryland’s Marital Property Act
“that nonmonetary contributions within a marriage should be recognized in the event that a marriage is dissolved; that a spouse whose activities do not include the production of income may nevertheless have contributed toward the acquisition of property by either or both spouses during the marriage; that when a marriage is dissolved, the property interests of the spouses should be adjusted fairly and equitably, with careful consideration given to both monetary and nonmonetary contributions made by the respective spouses; and that the accomplishment of these objectives necessitates that there be a departure from the inequity inherent in Maryland’s old ‘title’ system of dealing with the marital property of divorcing spouses.”
Archer v. Archer, 303 Md. at 351-52, 493 A.2d at 1076-77.
The Court nevertheless holds that the majority rule in this country does not apply here because “the goodwill of a *244solo law practice is personal to the individual practitioner. ... In order for goodwill to be marital property, it must be an asset having a separate value from the reputation of the practitioner.” Opinion at 239. “Because the instant case involves the practice of law, special considerations arise which might not be present in other professional practices.” Opinion at 240.
Although today’s holding is clearly limited to solo legal practitioners, the holding seems to rest, at least in part, on equating goodwill with professional reputation and then denying marital property in a professional reputation. In my view that does not distinguish attorneys and brain surgeons from house painters for marital property purposes. Where services are involved a reputation for competently rendering the particular service is a component of goodwill whether we deal with a trade, a business or a profession. The nonmonetary support rendered by the spouse while the service provider was expending the time and effort required for quality performance, and thereby was building the reputation, is precisely the type of contribution within a marriage which the General Assembly intended be recognized under the Marital Property Act.
If, on the other hand, both the rationale and the holding of the majority opinion are limited to solo legal practitioners, then it seems to be principally because, under the majority’s reasoning, “an attorney, as distinguished from other professionals, may not covenant to abstain from the practice of law, and therefore, may not sell his or her goodwill.” Opinion at 240. Rule 5.6, entitled “Restrictions on Right to Practice,” subsection (a), prohibits a lawyer from participating in offering or making “[a] partnership or employment agreement that restricts the rights of a lawyer to practice after termination of the relationship, except an agreement concerning benefits upon retirement[.]” The rationale underlying the prohibition “is that such covenants impinge upon the right of future clients to free choice of counsel.” G. Hazard, Jr. & W. Hodes, The Law of Lawyering: A Handbook on the Model Rules of Professional *245Conduct 486 (1985). The freedom of choice of future clients is in no way diminished by recognizing a spouse’s marital property interest in the goodwill of a solo law practice.
The only effect of the Rules of Professional Conduct on the problem before us is to complicate valuation. Because a solo law practice, unlike a medical practice or accounting practice, cannot be sold directly, valuation of a law practice might require comparisons to be drawn to other professions, particularly if a multiplier of some part of the net earnings of the law practice must be used. See Dugan v. Dugan, 92 N.J. 423, 439-40, 457 A.2d 1, 9-10 (1983) (multiplier to be applied to excess of average annual net income from practice over annual salary available in same general locale to attorney of comparable experience, expertise, education and age).
Finally, it is at least interesting to note that experienced counsel for the respondent did not even urge the majority holding. Recognizing the inequity of denying marital property in the goodwill of a professional practice while allowing marital property in the goodwill of sole proprietorships, trades and businesses, counsel urged that goodwill which ultimately rested on personal reputation not be included in marital property in the case of any trade, business or profession.
Chief Judge Murphy and Judge Eldridge authorize me to state that they join in the views expressed in this dissenting opinion.