2011-210, In the Matter of Carolyn P. Cottrell, DDS and Mostafa El-Sherif, DMD

Hamblett & Kerrigan, P.A.

No. 2011-210 Manchester Family Division

The trial court found, or the record supports, the following facts. After a

the final distribution of property. We affirm.

page is: http://www.courts.state.nh.us/supreme. a.m. on the morning of their release. The direct address of the court's home reporter@courts.state.nh.us. Opinions are available on the Internet by 9:00

adopted an appraisal valuing his business at $1,274,000 for the purposes of Marital Master (Lemire, M.). He argues that the trial court erred when it decree of the Manchester Family Division (Emery, J.), recommended by the LYNN, J. The respondent, Mostafa El-Sherif, DMD, appeals a divorce

Wise on the brief, and Ms. Wise orally), for the respondent. Sulloway & Hollis, PLLC and Ronna F.

to press. Errors may be reported by E-mail at the following address: Rauseo on the brief, and Mr. Rauseo orally), for the petitioner.

editorial errors in order that corrections may be made before the opinion goes Hampshire, One Charles Doe Drive, Concord, New Hampshire 03301, of any Readers are requested to notify the Reporter, Supreme Court of New

well as formal revision before publication in the New Hampshire Reports. NOTICE: This opinion is subject to motions for rehearing under Rule 22 as parties having reasonable knowledge of relevant facts.” In the Matter of

p. 2 compulsion to buy and the latter is not under any compulsion to sell, both between a willing buyer and a willing seller when the former is not under any value of property as “the price at which the property would change hands

name of either or both parties.” We have previously defined the fair market

belonging to either or both parties, whether title to the property is held in the

divorce as “all tangible and intangible property and assets, real or personal, RSA 458:16-a, I (2004) defines the property subject to division in a

the “substantial goodwill as a business entity.” The respondent appeals. years (tending to lower the value) and, unlike Pollock’s appraisal, accounted for

noted that Albright’s appraisal disregarded the respondent’s highest earning

and it had generated substantial income for him ever since. The court also was worth only $156,000 because the respondent paid $410,000 for it in 1996 for doing so, the court was “incredulous” of the testimony that the business

The trial court adopted the petitioner’s estimate. Among other reasons

value of the equipment and furniture used in the dental practice. estimate reflected only the business’s net tangible asset value, including the he knew that the respondent did not intend to sell the business. Thus, his

that he did not value the business based upon its transferable value because

value to be $156,000. To arrive at this figure, Pollock acknowledged at trial The respondent’s expert, Dr. Stanley L. Pollock, estimated the business’s

ability to generate future earnings – the “capitalization of earnings” approach.

court’s findings in this regard unless they are unsustainable on the record. Id. value of goodwill. Watterworth, 149 N.H. at 450. We will not disturb the trial that seeks to determine the present value of the business by estimating its trial court.”). Also a question of fact is the determination of the existence and Albright testified in support of that report, which was based upon a formula (“[D]etermining the value of any given asset is left to the sound discretion of the 450; see the fair market value was $1,274,000 as of December 31, 2009. Anthony In the Matter of Chamberlin & Chamberlin, 155 N.H. 13, 16 (2007) by the trial court based upon the particular facts and circumstances. Id. at The valuation of a professional practice is a question of fact to be determined Watterworth & Watterworth, 149 N.H. 442, 447 (2003) (quotations omitted).

Brayman, Houle, Keating, and Albright, PLLC, rendered a report opining that

the respondent’s dental practice. The company hired by the petitioner, The divorce trial required the court to determine the fair market value of

also a dentist and operates a successful dental practice in Concord. clinical associate professor of dentistry at Tufts University. The respondent is equitable division in a divorce under RSA 458:16-a, for neither expert assigned

p. 3 question of whether professional goodwill is marital property subject to

from the overall valuation of a business. Here, we need not decide the legal initiative, both determine the value of professional goodwill and discount it the proposition that in a divorce proceeding the trial court must, on its own

professional goodwill. The respondent cites no authority, however, to support

goodwill, the trial court should have adopted a middle ground discounting for his estimate attributable to professional goodwill, separate from practice respondent contends that, because Albright did not determine the portion of

goodwill” and, therefore, the matter must be remanded for an adjustment. The

court’s decision “failed to subtract the portion attributable to professional Having lost the battle of the experts, the respondent argues that the trial

Albright’s estimate and distributed the marital property accordingly.

Respondent’s extensive education and reputation.” Thus, the court adopted

that Albright believed the practice was “completely transferrable despite for the practice’s “substantial goodwill as a business entity.” The court noted issue” and disregarded the respondent’s highest earning years, but accounted

method discounted for the business’s lack of marketability given its “liquidity

how the business assets are used to generate income over time. Albright’s only the business assets, Albright employed an appraisal method based upon accurately assessed the business’s fair market value. Instead of considering

In contrast, the court found that the petitioner’s expert, Albright,

run an unusually successful dental practice ever since. the fact that the respondent paid $410,000 for the business in 1996 and had

$156,000 and his alternative estimate of $400,000 were further undermined by

made no calculation of goodwill in his appraisal. Both Pollock’s estimate of

$400,000, but did not arrive at a precise figure. Thus, it was clear that Pollock respondent to sell it, Pollock stated that he would receive no more than tangible assets only. When pressed on the value of the business were the

especially in light of his concession that he limited his analysis to its net

expert, Pollock, vastly underestimated the fair market value of the business, determination of the business’s value. The court found that the respondent’s The trial court was presented with two expert opinions to aid in its

exercised its discretion in adopting the petitioner’s valuation of the business.

On the record before us, we conclude that the trial court sustainably

and therefore transferable to a willing buyer.

goodwill that is severable from the professional reputation of the respondent

that the court was free to consider the value of the “practice goodwill” – the is attached to the respondent’s own education and reputation. He concedes dental practice that he asserts would not be transferable upon sale because it

his practice that included “professional goodwill” – the intangible value of the The respondent argues that the trial court erred by attributing a value to p. 4 ACAS Acquisitions v. Hobert

Hampshire law recognizes such contracts as long as they are reasonable.

covenants routinely accompany the sale of professional practices, and New

would pay a willing seller. Notably, both experts agreed that non-compete dental practice. As noted above, the fair market value is what a willing buyer covenant not to compete in its determination as to the fair market value of the 4

extended consideration. See misapplication of the approach he used, and we conclude that they warrant no court should have made adjustments to Albright’s appraisal based upon a

adopting Albright’s appraisal on the grounds that it included a hypothetical

Affirmed

We have reviewed the respondent’s remaining arguments that the trial

to compete. DALIANIS, C.J., and HICKS and CONBOY, JJ., concurred. unsustainable exercise of discretion.

respondent to sell his practice, the price would likely include an agreement not (quotations omitted)). The court’s decision, therefore, did not constitute an therefore entitled to rely upon both experts in considering that, were the

Without having done so, the respondent ran the risk that the court would

testimony in whole or in part, when faced with conflicting expert testimony.” 135 N.H. 498, 501 (1992) (The trial court “is free to accept or reject an expert’s

underscoring the factual nature of setting a value to a professional practice. could have accorded such evidence its due consideration – further plausible estimation of the value attributable to his reputation, the trial court practice. Cf. Chamberlin, 155 N.H. at 16. Had the respondent presented a a precise value, if any existed, to the professional goodwill of the respondent’s