Mocnik v. Mocnik
838 p.2d 500, 1992 WL 153551 (1992)
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Rule of Law:
When a shareholder's agreement in a professional corporation sets the value of a stockholder's interest upon withdrawal, and provides no method for the stockholder to realize a monetary value for professional goodwill, that goodwill is not a divisible marital asset.
Facts:
- Barbara Mocnik and Jack Mocnik married in 1971.
- During the marriage, Jack attended medical school and completed his radiology residency while Barbara was employed until the birth of their first child.
- After leaving the Navy, Jack became a stockholder in a professional corporation, Tulsa Radiology Associates (TRA).
- Jack's interest in TRA was governed by a Stock Purchase Agreement which stipulated that upon termination of his employment, he would receive the book value of his stock plus a share of discounted accounts receivable.
- The Stock Purchase Agreement did not provide for any payment for the corporation's goodwill.
- The couple separated in 1988.
Procedural Posture:
- A divorce was granted to Barbara and Jack Mocnik in a trial court on December 21, 1988.
- On January 5, 1989, the trial court issued a Decree of Divorce which addressed the division of property and other issues.
- The trial court valued the Husband's interest in his professional corporation by including a monetary value for the corporation's goodwill.
- Based on this valuation, the trial court awarded the Wife a judgment for alimony in lieu of property division, along with support alimony and child support.
- The Husband appealed the trial court's decision to the Supreme Court of Oklahoma, arguing the court erred by treating goodwill as a divisible asset.
- The Wife cross-appealed, arguing the valuation of goodwill was too low and that the support awards were insufficient.
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Issue:
Does the goodwill of a professional medical practice constitute a divisible marital asset when a stockholder's agreement defines the stockholder's realizable interest and does not include a value for goodwill?
Opinions:
Majority - Justice Summers
No, the goodwill of the professional medical practice does not constitute a divisible marital asset under these circumstances. The stockholder's agreement unambiguously defines the value a stockholder can recover upon leaving the practice, and there is no way for the Husband to realize his share of the corporation's goodwill. Methods of valuing goodwill based on capitalizing excess earnings improperly attempt to divide future earnings, which are not marital property. Because the Husband cannot sell or otherwise liquidate the goodwill value, it is inequitable to compel him to pay the Wife a share of an intangible asset that has no realizable value to him.
Concurring-in-part-and-dissenting-in-part - Justice Alma Wilson
No, the trial court erred in its valuation, but the majority's holding that goodwill is not a divisible marital asset is an incorrect legal conclusion. Goodwill can be a marital asset if it can be valued and sold. In this specific case, the evidence failed to show that the Husband could realize any benefit from the goodwill of the medical corporation other than what was provided for in the Stock Purchase Agreement. Therefore, while the agreement controls the valuation on these facts, the court should not have created a broad rule precluding the division of goodwill in all similar cases.
Concurrence - Vice Chief Justice Hodges
No, the goodwill of the corporation should not have been considered a discrete asset. The Husband's interest in the corporation was determined entirely by the stock agreement. Under that agreement, he did not acquire any goodwill separate from the value of his stock. Since the Husband could never realize the value of that goodwill other than through his salary, it was never an acquired marital asset subject to division.
Concurring-in-part-and-dissenting-in-part - Justice Kauger
Yes, the goodwill of the husband's professional practice should be considered a divisible marital asset. The majority ignores multiple Oklahoma statutes that explicitly define goodwill as transferable property subject to ownership. A restrictive buy-sell agreement, which the wife did not sign and was not intended for divorce valuations, should not be allowed to shield a valuable marital asset from equitable division. The majority's decision effectively allows professional corporations to block a non-partner spouse from receiving fair compensation for their contributions to building the practice.
Analysis:
This decision solidifies Oklahoma's position, established in Travis v. Travis regarding a sole practitioner, that professional goodwill is not a divisible marital asset if it cannot be realized through sale or other means. By extending this reasoning to a professional corporation governed by a restrictive stockholder's agreement, the court gives significant weight to such agreements in divorce valuations. The ruling creates a predictable framework for valuing professional practices but may disadvantage non-owner spouses, as it allows practitioners to contractually limit the divisible value of their business interests, thereby shielding a potentially significant intangible asset from property division.
