Court Opinion

ID: 9624099
Source: CourtListenerOpinion
Date Created: 2023-08-22 06:50:57.533367+00
Date Added: 2024-06-11T10:05:09.851371
License: Public Domain

*254Judge GREENE
concurring in the result.
I agree with the majority that under current North Carolina law, goodwill exists only in the presence of an ownership interest in a business. See Maola Ice Cream Co. v. Maola Milk & Ice Cream Co., 238 N.C. 317, 321, 77 S.E.2d 910, 914 (1953); McLean v. McLean, 323 N.C. 543, 558, 374 S.E.2d 376, 385 (1988) (professional association engaged in law practice); Locklear v. Locklear, 92 N.C. App. 299, 301-02, 374 S.E.2d 406, 407 (1988), disc. rev. allowed, 324 N.C. 336, 378 S.E.2d 794 (1989) (closely held corporation engaged in trucking); Draughon v. Draughon, 82 N.C. App. 738, 741, 347 S.E.2d 871, 873 (1986), disc. rev. denied, 319 N.C. 103, 353 S.E.2d 107 (1987) (sole proprietorship engaged in landscaping); Poore v. Poore, 75 N.C. App. 414, 420, 331 S.E.2d 266, 271, disc. rev. denied, 314 N.C. 543, 335 S.E.2d 316 (1985) (solely-owned professional association engaged in dental practice); Weaver v. Weaver, 72 N.C. App. 409, 414, 324 S.E.2d 915, 919 (1985) (partnership engaged in accounting). Accordingly, because the defendant-employee did not have an ownership interest in his place of employment, I agree that the defendant has no goodwill. As the following facts reveal, however, our holding will lead to an inequitable result if we fail to recognize as marital property the increase in value, if any, to the defendant-employee’s medical license due to marital contributions, if any. I disagree with the majority that this issue has not been raised by either of the parties to this appeal. Defendant specifically argues in his brief that “the value [of his medical license] that accrued during his employment . . . should ... be recognized as his separate property.” In any event, to the extent that Rule 10 has been violated, in order to “prevent manifest injustice” and to “expedite decision in the public interest,” I would suspend the rule, pursuant to Appellate Rule 2, and answer the question raised. See State v. Petty, 100 N.C. App. 465, 397 S.E.2d 337 (1990) (Court of Appeals “in its discretion” decided appeal filed in violation of Appellate Rule 10).
The following facts as found by the trial court are undisputed: At the time of the trial court’s order, the plaintiff was 35 years old and the defendant was 38 years old. The plaintiff was just over 17 years of age and still in high school when she married the defendant. After their marriage, they moved to Ottawa, Canada where the plaintiff finished high school. The plaintiff continued her studies at the University of Ottawa and received a bachelor’s degree and a master’s degree in psychology. The defendant also graduated from the University of Ottawa where he received a *255bachelor’s degree, a medical doctorate degree, and later received his medical license. Throughout their marriage, the plaintiff was the primary, if not the sole, caretaker of the parties’ home and children. Her efforts enabled the defendant “to complete his education and advance his professional career with minimal interference from family obligations.” Furthermore, the plaintiff was always willing “to sacrifice to whatever extent was necessary in order to assure that the defendant would complete his education and have a successful medical career.”
In 1974, the plaintiff developed rheumatoid arthritis. Realizing that her disease might prohibit the plaintiff from working, the parties “concentrated on developing the defendant’s career in order that they might derive a comfortable standard of living from his medical practice.” At the time of the trial court’s order, the plaintiff suffered from “severe chronic active rheumatoid arthritis.” The disease has totally and permanently disabled the plaintiff. She cannot work. At the time of the trial court’s order, the plaintiff had custody of the parties’ children despite her condition.
Because professional and business licenses are personal to their holders, are difficult to value, cannot be sold, and represent enhanced earning capacity, the vast majority of courts which have addressed the issue have held that such licenses are not property for purposes of equitable distribution. L. Golden, Equitable Distribution of Property § 6.19 (1983). Despite these concerns, however, our courts have recognized that professional and business licenses are property rights. North Carolina State Bar v. DuMont, 52 N.C. App. 1, 15, 277 S.E.2d 827, 836 (1981), modified and aff’d, 304 N.C. 627, 286 S.E.2d 89 (1982) (law license); Parker v. Stewart, 29 N.C. App. 747, 748, 225 S.E.2d 632, 633 (1976) (license to engage in occupation is property right). As the New York Court of Appeals has explained, “[a] professional license is a valuable property right, reflected in the money, effort and lost opportunity for employment expended in its acquisition, and also in the enhanced earning capacity it affords its holder . . . .” O’Brien v. O’Brien, 489 N.E.2d 712, 717 (N.Y. 1985) (medical license). Likewise, our General Assembly has recognized that such licenses are in fact property for purposes of the equitable distribution statute. N.C.G.S. § 50-20(b)(2) (1987 & Supp. 1991).
In North Carolina, “[a]ll professional licenses and business licenses which would terminate on transfer shall be considered *256separate property.” Id. However, the increases in value to separate property which are attributable to contributions of the marital estate are marital property. Ciobanu v. Ciobanu, 104 N.C. App. 461, 465, 409 S.E.2d 749, 751 (1991). Accordingly, the value of the defendant-employee’s medical license at the date of marriage, if acquired before marriage, or when acquired, if acquired after marriage, is his separate property, and any increase in value to his medical license as of the date of separation which is attributable to marital contributions is properly deemed to have been acquired by the marital estate and is therefore marital property.1 The trial court should make the factual determinations concerning values with the help of expert testimony. See Poore, 75 N.C. App. at 421, 331 S.E.2d at 271; see also Jones v. Jones, 543 N.Y.S.2d 1016, 1019-20 (Sup. Ct. 1989) (valuing the medical license of a salaried employee by calculating the differential between the physician-employee’s salary and that of average college graduate of employee’s age and racial group without medical license, by projecting that differential out to age 65, and then by reducing that figure to present value). This rule applies, however, only when the spouse is an employee. When the spouse possesses an ownership interest in a business in which he or she uses his or her license, our courts may not classify, value, and distribute both the increased value of the professional license and the value of the goodwill. This is so because whether the classification and valuation is of an owner’s goodwill or of a non-owner’s professional license, each essentially represents a value based on enhanced earning capacity. It would be inconsistent with principles of fairness to allow distribution of both. See B. Turner, Equitable Distribution of Property § 6.19A, at 183 (Cum. Supp. 1991).
I realize that valuing such licenses may be difficult, but that problem has not deterred our courts from recognizing that such licenses are property nor has it deterred the General Assembly from identifying and classifying such property as separate. Likewise, difficulties in valuing a medical license cannot support the failure to recognize the marital aspects, if any, of any increases in value of such property. See O'Brien, 489 N.E.2d at 718. Furthermore, *257the trial court is presently required to value and consider professional licenses in ordering the distribution of marital property. N.C.G.S. § 50-20(c)(1) (1987 & Supp. 1991); Miller v. Miller, 97 N.C. App. 77, 80, 387 S.E.2d 181, 184 (1990). Finally, the failure to recognize this potential source of marital property would elevate form over substance in that the spouse of a sole medical practitioner would be entitled to share in the enhanced earning capacity (goodwill) of his or her spouse while the spouse of an employee would not be entitled to share in the enhanced earning capacity of the employee-spouse. Such a position runs counter to the fundamental goal of equitable distribution which is to fairly distribute property acquired during marriage by seeking “to effect upon divorce those sharing principles that motivate most couples during marriage." Sharp, Equitable Distribution of Property in North Carolina: A Preliminary Analysis, 61 N.C. L. Rev. 247 (1983).
Other jurisdictions remedy the potentially unfair consequences of cases like this one through recognition of “reimbursement alimony,” In re Marriage of Francis, 442 N.W.2d 59, 64 (Iowa 1989) (alimony designed to compensate spouse for economic sacrifices directly enhancing other spouse’s future earning capacity and does not end until full compensation achieved), and quasi-contractual actions, Pyeatte v. Pyeatte, 661 P.2d 196, 207 (Ariz. Ct. App. 1982) (court allowed restitution measure of recovery limited to contributions for “living expenses and direct educational expenses”). I. Ellman, P. Kurtz & K. Bartlett, Family Law ch. 3, at 330-49 (2d ed. 1991). In North Carolina, these potential solutions are arguably impermissible. See N.C.G.S. § 50-16.2 (1987) (fault ground required for alimony); Britt v. Britt, 320 N.C. 573, 577, 359 S.E.2d 467, 469 (1987), overruled on other grounds, 323 N.C. 559, 374 S.E.2d 385 (1988) (for unjust enrichment claim the “benefit must not be gratuitous”); Suggs v. Norris, 88 N.C. App. 539, 544, 364 S.E.2d 159, 163, cert. denied, 322 N.C. 486, 370 S.E.2d 236 (1988) (services rendered between spouses presumed gratuitous). In the absence of either our recognition of the increase in value of an employee-spouse’s medical license due to marital contributions as marital property or a valid premarital or separation agreement dealing with the employee-spouse’s enhanced earning capacity, a remedy for the contributing spouse currently available in North Carolina is to treat the employee-spouse’s enhanced earning capacity as a distributional factor. N.C.G.S. § 50-20(c)(7) (1987 & Supp. 1991) (direct or indirect contribution to help educate or develop career *258potential); Geer v. Geer, 84 N.C. App. 471, 478, 353 S.E.2d 427, 431 (1987) (career enhancing contributions); Harris v. Harris, 84 N.C. App. 353, 358-59, 352 S.E.2d 869, 873 (1987) (earning potential). When the marital estate is large, the trial court’s discretion in its award based upon this distributional factor may very well lead to the equitable result intended by our equitable distribution statute. When the marital estate is small, however, treating as a distributional factor what should be distributed in the first place achieves nothing. Therefore, when the trial court determines that the increase in value of an employee-spouse’s professional license is marital property, the trial court should distribute that increase. In such cases, however, the trial court should not also consider the increased value as a distributional factor.2
Accordingly, I agree that on remand the trial court should “eliminate the value of the goodwill and assign the proper percentage due to each spouse.” However, in keeping with that general mandate, the trial court shall allow the parties to present new evidence which may be necessary for the trial court to identify, value, and distribute the increase in value, if any, of defendant-employee’s medical license due to marital contributions, if any.

. Measuring the increase in value of a professional license is very similar to the valuation required where a party acquires an interest in a business before marriage. In such cases, the value of the party’s business interest at the date of marriage is his or her separate property and any increase in value of the business interest due to marital contributions is marital property.

. Likewise, when the trial court determines that goodwill is marital property, the trial court should distribute the value of the goodwill but should not also consider the owner-spouse’s enhanced earning capacity as a distributional factor. .