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Law School Case Brief

May v. May - 214 W. Va. 394, 589 S.E.2d 536 (2003)


Goodwill is 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 an asset of the business and accordingly is property that is divisible in a dissolution of marriage 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. 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.


Hillman H. May (“Dr. May”) and Carol S. May (“Mrs. May”) were married on June 23, 1979. In 1980, the couple built a home on property adjacent to Dr. May's dental office. The parties’ marriage bore three children. On May 22, 2000, Mrs. May filed for divorce, and on September 24, 2001, the Circuit Court of Hancock County granted the divorce on the grounds of irreconcilable differences. However, the decree granting the divorce left unresolved the issue of the distribution of marital property. The issue was subsequently litigated in front of the family court judge. During the proceeding before the family court judge, the parties presented expert testimony on the valuation of Dr. May's solo dental practice. Dr. May's expert valued the dental practice at $ 55,000.00, which included a 20% discount for lack of marketability. Mrs. May's expert placed a fair market value on the dental practice at $ 120,000.00. The fair market value included a value for goodwill. By order entered on February 26, 2002, the family court judge adopted the dental practice valuation proffered by Mrs. May's expert. Mrs. May's equitable distribution payment for her interest in the dental practice was payable to her in the amount of $ 889.00 per month from June 1, 2004, to May 31, 2012. Additionally, the family court judge found that the real estate involved in the case was marital property that had a net value of $ 125,324.44. Mrs. May was awarded a one-half interest in the value of the real estate. From these rulings, Dr. May filed an appeal directly with the supreme court of appeals.


Was the valuation of the ex-husband's dental practice proffered by the expert hired by an ex-wife, including goodwill in its valuation, proper?




The supreme court of appeals held that the practice's enterprise goodwill, arising from its existing arrangements with suppliers, customers, or others, and its anticipated future customer base due to factors attributable to the business, was subject to equitable distribution, but the practice's personal goodwill, arising from the continued presence of the husband there and attributable to his personal skill, training, or reputation, was not subject to equitable distribution. As a result, the trial court erred in adopting the goodwill portion of the wife's expert's valuation of the husband's practice, when entering its equitable distribution order, because it was clear that the expert's valuation of the practice's goodwill included only personal goodwill.

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