Brave v. Brave
432 S.W.3d 42
Ark. Ct. App.2013Background
- Peter and Marie Brave co-owned Brave, Inc. (d/b/a Brave New Restaurant, BNR), opened during the marriage; each held 50% of the closely held corporation.
- Divorce decree valued BNR and real estate, deducted debt, and awarded Marie $420,000 for her interest in the business.
- Trial court later found BNR’s goodwill was corporate (marital) and awarded Marie one-half of goodwill value.
- Peter (appellant) argued the goodwill was personal to him (non‑marital) and that the court therefore erred; he also argued the court improperly “double dipped” by dividing goodwill and awarding alimony (raised but not resolved on remand).
- Evidence included appraisals and testimony from Gus Dobbs (business consultant) who valued goodwill but said the business was largely Peter’s personality and could be difficult to replace; Dobbs would not allocate personal vs. corporate goodwill.
- The majority held the trial court clearly erred in treating all goodwill as marital, concluding evidence showed at least some personal goodwill tied to Peter; case reversed and remanded for allocation between personal and corporate goodwill and reassessment of alimony.
Issues
| Issue | Plaintiff's Argument (Peter) | Defendant's Argument (Marie) | Held |
|---|---|---|---|
| Whether BNR’s goodwill is personal (non‑marital) or corporate (marital) | Goodwill is personal to Peter because the restaurant’s success depends on his unique reputation and presence | Goodwill is a sellable business asset of the corporation and thus marital property | Majority: Trial court erred; evidence showed personal goodwill exists—remand to allocate portion as Peter’s separate property |
| Whether dividing goodwill plus awarding alimony impermissibly double counts Peter’s future earning capacity | Division of personal goodwill is improper; awarding alimony after dividing goodwill double‑dips into future earnings | Alimony and property division are distinct; court previously treated goodwill as marital so division was proper | Not decided on merits—court remanded for reallocation of assets and then reassessment of alimony |
Key Cases Cited
- Wilson v. Wilson, 294 Ark. 194, 741 S.W.2d 640 (Ark. 1987) (goodwill is marital only if marketable independently of an individual; professional‑license goodwill may be personal)
- Tortorich v. Tortorich, 50 Ark. App. 114, 902 S.W.2d 247 (Ark. Ct. App. 1995) (personal goodwill represents future earning capacity and is not divisible as marital property)
- Williams v. Williams, 82 Ark. App. 294, 108 S.W.3d 629 (Ark. Ct. App. 2003) (party seeking to exclude goodwill from marital estate must prove personal/professional goodwill)
- Cole v. Cole, 89 Ark. App. 134, 201 S.W.3d 21 (Ark. Ct. App. 2005) (appellate standard: factual findings affirmed unless clearly erroneous)
- Cummings v. Cummings, 104 Ark. App. 315, 292 S.W.3d 819 (Ark. Ct. App. 2009) (goodwill determination is fact‑intensive)
- Nicholson v. Nicholson, 11 Ark. App. 299, 669 S.W.2d 514 (Ark. Ct. App. 1984) (goodwill of an ongoing commercial business may be marital and divisible)
- Taylor v. Taylor, 222 Neb. 721, 386 N.W.2d 851 (Neb. 1986) (recognized distinction between saleable business goodwill and professional goodwill tied to an individual)