Prahinski v. Prahinski

582 A.2d 784 Margaret E. PRAHINSKI

Leo PRAHINSKI. Term, 62, Sept. 1988.

No. Appeals Maryland. Court

Dеc. 1990. (Arnold Weiner, Figinski M. Albert M. Peter B. Rosen- wald, Melnicove, Weiner, II, Kaufman, Garbis, Smouse & P.A., brief), Baltimore, on for petitioner. Arnold M. Weiner (Thomas Kalichman, brief),

Daniel F. Thomas & Daniel Thomas, Baltimore, respondent. F. ELDRIDGE, COLE, RODOWSKY,

Argued before ADKINS, McAULIFFE, BLACKWELL, JJ. and ORTH, Jr., E. of the Judge CHARLES Court of (retired) Appeals, Specially Assigned, JJ. MURPHY, C.J., ELDRIDGE, COLE,

Reargued before McAULIFFE, RODOWSKY, CHASANOW and CHARLES ORTH, Jr., (retired), of the Judge Appeals, E. Court of Assigned, JJ. Specially

COLE, Judge.

In this case must determine whether the goodwill we is a practice property solo law value includable as marital calculating for of purposes monetary upon award divorce. The are neither in complicated dispute. Marga- facts nor ret and Leo F. X. Prahinski marriеd on March were Margaret 1965. discontinued her education after her fresh- year college family man order to maintain the home. Leo continued his formal education and obtained eventually degree. practice. a law Leo started his own law Margaret secretary, practice became his and as the law responsibilities so did in the office. grew, Margaret’s Grad- ually, practice the focus of the shifted to real estate settle- into Margaret’s position ments and evolved that of office manager. Leo another became involved with woman 1983.

. thereafter, separated Margarеt filed for parties divorce 1986. The Circuit Court for Prince November divorce, George’s granted an and on County July absolute 10, 1987, determining the court filed a written order what marital marital property, providing was distribution of assets, granting and indefinite monetary both award alimony. Included in the was one-half of monetary award the law Special Appeals claiming to the Court of appealed Leo in considering trial court erred his law practice that the consisting property totally marital and divid- be ing equally parties. the value thereof between the Leo also propriety setting the amount of questioned alimony far advance of when the alimony payments at a time to commence. were Special Appeals, 540 A.2d Md.App.

The Court (1988), held that the value of the consisted Prahinski, of Leo F. X. entirely reputation Attorney- at-Law, such, and was therefore to him. As value of the and could not subject part monetary distribution award. appellate The intermediate court left open possibility in a solo could marital if that the goodwill it could be shown was severable from the practitioner. Additionally, Court it was Special Appeals improper alimony held that for to be payments begin set now when the were not to until some it imрossible predict future time because would be parties circumstances of the on the date economic when Furthermore, begin. that court held that alimony was into monetary should take consideration the award. alimony recalculated, must that court declared Since award previous alimony calculation was invalid. The interme- court, therefore, appellate diate remanded the case to the trial court for calculation of proper monetary both Margaret this for alimony. petitioned award Court granted in order to address the impor- certiorari which we tant issue involved. (1984, Maryland

We set forth several sections of the Code Cum.Supp.) Family Law Article which we believe impact upon disposition our of this case. 8-201(e) provides:

Section (e) property. (1) “Marital means the Property” Marital — titled, property, acquired by parties however or both during marriage.

(2) property” “Marital does not include property: (i) acquired marriage; before the (ii) acquired by gift inheritance or from a third party; (iii) agreement; excluded or by valid (iv) directly any traceable to of these sources. Property. Determination, 8-203 (a) Section —Marital — Time of court proceeding action. —In an annulment divоrce, or if an absolute there is a as to dispute whether certain property, the court shall deter- mine which is marital property: (1) grants when the court an annulment or an absolute

divorce[.] provides Section 8-205 in pertinent part (a) to the Subject provisions Grant of subsec- award. — (b) section, tion of this after the court determines which property is marital and the value property, of the marital property, the court transfer ownership an interest retirement, in pension, profit sharing, or deferred com- pensation plan from to either or party parties, both award, grant both, or monetary as an adjustment equities rights parties concerning marital whether or not property, alimony awarded. (b) determining pay- Factors in amount and method of or court ment terms of transfer. —The shall determine the amount payment and the method of of a monetary award, or the terms of the transfer of the interest in the retirement, pension, profit sharing, or deferred compensa- both, plan, tion after each of considering following factors: contributions, monetary nonmonetary, of each to

party wellbeing family; the of the (2) the value of all interests of each property party; (3) the economic circumstances of eаch at the time party made;

the award is to be (4) the estrange- circumstances that contributed to the parties;

ment of the (5) marriage; the duration of the of each (6) age party; the

(7) party; and mental condition of each the physical or interest in (8) specific property and when how retirement, sharing, the or deferred pension, profit plan, acquired, the effort compensation including in expended by ‍‌‌‌​‌​‌​‌​​​​‌‌‌​​‌‌‌‌​​​‌‌‌‌‌​‌‌‌​​‌​‌​‌‌‌​‌​‌​‍party accumulating each the marital retirement, or the the pension, interest property sharing, both; or or profit compensation plan, deferred (9) of alimony any provi- award and award or other any use, respect family

sion that court has made with home; family or the personal property factor court any necessary other that the considers or appropriate to consider order to arrive a fair or an equitable monetary award transfer of inter- retirement, pension, sharing, est in profit de- compensation ferred or both. plan, provisions, Under the above it seems to us that trial required courts are property first to determine which is, marital, the value of this marital and then what 8-205(b) ten apply the factors to determine what § monetary represents “adjustment equities award an of the rights parties” of the property. the marital argues

Margaret that the value of the should be subject considered marital and therefore to a property, monetary compensate award to her for her contributions thereto. She insists that the majority work handled did not an require attorney, and that she contributed the overwhelming majority the time and effort which made the practice deny successful. To her an equitable share inherent in the practice, she claims, would frustrate the purpose monetary award statute, which seeks to adjust rights parties upon during based their marriage. contributions Margaret Specifically, contends that form of which the practice acquired during marriage; hence it fits the definition of marital no property, matter urges whose name is on the business. She further this that the adopt position professional goodwill Court proprietorship a sole is valuable be included estate. the marital

Leo maintains that his always vocation has a solo been such, any intangible law As assigned value to the is a result of his personal reputation business as an attor- ney. only The could way be considered mari- argues, tal he is if the property, goodwill had a value independent presence continued practitioner. sole He only person contends that he is the Prahinski, can who under name “Leo F.X. Attorney-at-law.” He claims he could not sell his practice therefore, intangible and its assets to he anyone; concludes the goodwill to him and should not be considered marital property. of goodwill characterization and its to a relationship

business is crucial to the determination of In this issue. Dundore, 430, (1946), v. 187 Md. 50 A.2d 570 Hagan we partnership examined the sale of a interest. In so doing, we took notice of the definitions of applied by other One such definition jurisdictions. good states: “The those comprises advantages mаy will business which holding inure to the purchaser himself out to the public succeeding enterprise to an has identi which been past fied with the name and of his repute predeces sor.” 50 A.2d at 576 (quoting Id. Knoedler v. Boussod, (S.D.N.Y. 1891), (2d 47 F. 55 F. 895 aff'd, Cir.1893)) added). definition, (emphasis According to this goodwill can exist in those situations in which business owners, benefitting has successive each one from the management of the preceding business owners. exists, however, in

Goodwill businesses that are still the hands of their founders and which never be sold. took notice of such a situation in Benzinger, We Brown v. (1912), quoted 118 Md. 84 A. 79 where we Lord Eldon’s probability definition of as “the that the old cus- the old 84 A. at 81 place.” tоmers will resort to Id. (Ch. 1810)). (quoting Lye, Eng.Rep. Cruttwell in a presence for the provides a definition Such placed if has ever been monetary no even business it. the sale of Brown, the was confronted with Court surgeon chiropo- conducted by

“business vendor] [the makes clear 31, opinion A. at 79. That 118 Md. at 84 dist.” 1912, goodwill considered the ago as this Court long that as goodwill different from the profession in a to be involved Examining the decisions in a involved commercial business. in the court noted that the Brown jurisdictions, from other of a agreement of a the sale non-competition context business, practice had been goodwill professional specifi- The Court personal prаctitioner. held to be that there was a distinction cally observed of a trade or business of good the sale of the will between is important character where the location an a commercial business, the sale of an feature of the established engaged profession in a good person will of a immediate or the income therefrom is the calling where integrity, and where direct result of his labor and skill skill, personal qualities and other desirable follow ability place. and not the person 36, 81 cases cited therein. 84 A. at Id. in the goodwill the existence above

Having recognized situations, goodwill determine whether we must now noted case. circumstances of the instant particular can exist pre- the trial court found that business was Although such, a title and treated it as both dominantly company to this Court are based on the Court parties’ arguments sole holding propri- that the business was a Special Appeals’ It should be etorship, particular and in a solo law status of the party contesting that neither is noted being contested is license to law.1 What 347, Archer, (1985), 1074 “a we held in Archer v. 303 Md. 493 A.2d 1. As degree possess any professional or license does not of the basic property.” property ambit of marital Id. characteristics of within the A.2d at 493 1079. 234 established once the

existence license has been obtained. question professional goodwill Because the whether of first impression Maryland, is one we the decisions of the found it beneficial to review courts addressed the issue. This review other states which have most often followed positions. revealed three view in all The next treats as marital cases.2 to the largest group considers property.3 Finally, and therefore not marital practitioner, requires of states examination to group case-by-case small interesting should be treated.4 It is determine how Rostel, (Alaska 1981), 2. Rostel v. rеv’d on other 622 P.2d 430-32 Wisner, (Alaska 1988); grounds, Wisner v. Foster, Ariz. 749 P.2d 343 Marriage (1981); In re Cal.App.3d P.2d 115 Golden, (1974); Cal.App.2d Golden v. Cal.Rptr. 75 Cal. Mueller, 245, (1969); v. ‍‌‌‌​‌​‌​‌​​​​‌‌‌​​‌‌‌‌​​​‌‌‌‌‌​‌‌‌​​‌​‌​‌‌‌​‌​‌​‍Cal.App.2d Mueller Rptr. 144 301 P.2d 90 735 Nichols, 383, Marriage (1956); Colo.App. In re 43 606 P.2d 1314 of (Del.Fam.Ct.1983); (1979); Wright Wright, v. In re 469 A.2d 803 1010, 234, Marriage Kapusta, 141 IIl.App.3d 96 Ill.Dec. 491 N.E.2d Porter, (1986); v. Heller v. (Ind.App.1988); Porter N.E.2d 219 48 526 Rethman, Heller, v. Rethman (Ky.Ct.App.1984); 672 S.W.2d 945 429 868, (1987); Kowalesky Kowalesky, v. Mich. 413 N.W.2d 679 148 den., 112, 151, (1986); app. Roth Mich.App. N.W.2d 425 Mich. 876 384 Roth, Hanson, (Minn. Ct.App.1987); Hanson v. v. 77 738 406 N.W.2d (Mo.1987); (Mo.1987); Taylor Taylor, v. In S.W.2d 388 S.W.2d 429 736 Hull, 480, (1986); Dugan Marriage v. re Mont. 712 P.2d 1317 219 641, 423, (1983); Dugan, Hurley Hurley, v. N.J. 457 A.2d 1 94 N.M. 92 grounds by (1980), overruled on other Ellsworth v. 615 P.2d 256 Dorton, Ellsworth, 133, (1981); Dorton v. P.2d 77 97 N.M. 637 564 Jondahl, 667, (1985); Jondahl v. N.C.App. N.W.2d 336 S.E.2d 415 344 729, (1976); (N.D.1984); Goger Goger, v. Or.App. 27 557 P.2d 46 63 Sorensen, Gardner, (Utah 1989); Gardner v. Sorensen v. P.2d 820 769 324, Marriage Fleege, Wash.2d 1988); (Utah In re 748 P.2d 1076 91 (1979). 588 P.2d 1136 Powell, 456, (1982); Pearce v. v. 3. Powell 231 Kan. 648 P.2d 218 20, Pearce, (La.1986); Beasley Beasley, v. Pa.Super. So.2d 108 359 482 Wood, (1986); Wood v. (S.C.App.1989); 378 S.E.2d 59 518 A.2d 545 Austin, Smith, (Tenn.Ct.App.1985); Austin v. v. Smith 709 S.W.2d 588 Geesbreght, (Tex.Civ.App.1981); Geesbreght v. 570 619 S.W.2d 290 Nail, (Tex. (Tex.Civ.App.1978); Nail v. 486 S.W.2d 761 S.W.2d 427 Holbrook, 327, (1981). 1972); v. N.W.2d 343 Holbrоok 103 Wis.2d 309 Richmond, 1989); (Alaska Wilson v. 4. Richmond v. P.2d 1211 779 Wilson, Harvey, (1987); Antolik v. 294 Ark. 741 S.W.2d as a communi- jurisdiction classification of to note that the an state is equitable state or distribution ty goodwill. of its treatment determinative of a solo should that the view on set forth early was considered as Mueller, 144 Cal.App.2d decisions Mueller California Golden, and Golden v. 270 Cal. 301 P.2d 90 Cal.Rptr. App.2d Mueller, the sole owner of dental the husband was sought six The wife

laboratory employed people. which time divided at the the value of business have that argued The husband divorce. skill dependent upon his wholly was

business examined the business and concluded The court ability. dependent largе old and too to be that the business was too goodwill, Cal.App.2d its upon the owner for solely 95, and that the value of this business 301 P.2d at held Furthermore, parties. to be divided between the Mueller argument court examined the that cannot depending upon person- in a professional arise business person. though Even skill and ability particular al decision, argu- its the court stated this unnecessary to set by on the definition forth ment was based better, modern, Eldon, and the more view that Lord has learning acquired intangible aby skill Id. 301 P.2d at which be transferred. open possibility professional good- This left 94-95. upon could also be divided divorce. will The court Gоlden used Mueller opening left The property. was marital hold that The Golden practicing physician. husband in a sole sought practice a division the value when the wife Mueller, court, 270 looking was divorced. The couple 737, 405, holding forth the Cal.App.2d Cal.Rptr. at 75 at set case, that, good in a that “the better rule divorce will 721, Taylor Taylor, 222 (1988); v. Haw.App. 761 P.2d Neb. 305 (1986). N.W.2d 851 professional practice husband’s as a sole practitioner should taken into consideration determining award to the wife.” Id. Golden court

The distinguished a divorce from the disso- lution of a partnership, might which it difficult to determine the correct share upon distribution. matter, a matrimonial the practice practi- of the sole

[I]n continue, tioner husband will intangible with the same value as it had princi- Under the during marriage. ples community law, the wife, virtue by position her made to wife, that value the same contribution as does a wife to any husband’s and earnings during accumulations is as marriage. She recompensed much entitled to be for that contribution as represented if it were by increased value of stock in a family business.

Id. at added). at 738 Cal.Rptr. (emphasis

Although the California court used community property give law to credit wife for the increase in the goodwill during marriage, the non-monetary contribution aspect equitable ‍‌‌‌​‌​‌​‌​​​​‌‌‌​​‌‌‌‌​​​‌‌‌‌‌​‌‌‌​​‌​‌​‌‌‌​‌​‌​‍principles tends to distribution accom- plish Note, the same result. Treating Good- Professional Property will Marital in Equitable Distribution States, 58 N.Y.U.L.Rev.

The Dugan Dugan, Jersey New case of N.J. (1983) 457 A.2d 1 presents quite situation which is similar case, to the instant in that case but the court held that the of a solo law property. was marital attorney husband was an who operated his as a wholly-owned professional corporation. Jersey New Maryland place both the following prac- limitations on the (1) tice of practitioners law: sole cannot sell their law id. practices, 8, (2) A.2d restrictive covenants prohibiting competition transferor of the are allowed, not clients practic- be sold between law, es. Regarding domestic relations Maryland both Jersey states, New are equitable distribution and neither or to degree proper license as treats a A.2d 91 N.J. ty. Lynn Lynn, See began analysis looking New court its at the Jersey by goodwill used other states. Its various definitions goodwill protect- that exists and is a legally conclusion was at Next court N.J. at 457 A.2d 4. ed interest. 92 goodwill “going relationship examined the between and closely to related to concern value.” Goodwill was found Jersey definition on reputation, and the settled New goodwill “is to the excess equivalent court was that earnings on normаl expected over based earnings actual at 5. rate return on investment.” Id. A.2d Examining relationship earning between (as degree), to a medical the court that relates capacity found a difference between the two: How- earning capacity per goodwill.

Future se not has en- ever, earning when future been capacity that probable pa- to future hanced because leads clients, tronage existing potential from the resulting exist and value. When that occurs have equitable good property subject will is to distribution. Id. at 457 A.2d at 6. earning

Having distinguished goodwill capacity from distribution, equitable having goodwill subject fоund to its rationale for the decision: court went to state divorce, will After the law continue to benefit during that it had Much marriage. produced during attorney’s an economic value marriage to the of the law will inhere It inequitable would the contribution ignore non-attorney spouse development to the practitioner’s inability An economic resource. individual does not eliminate existence to sell law as an asset to be considered goodwill and its value equitable distribution equitable Obviously, distribution. any particular transfer of require conveyance does wife, spouse, in case the is entitled asset. The othеr this as any have asset considered other property acquired during marriage partnership.

Id. added). at 6 (emphasis A.2d The that professional goodwill personal view is to the practitioner and is not marital property is articulated the by Nail, v. Nail (Tex.1972). Texas court 486 S.W.2d 761 Texas, California, the Despite fact that like community is a state, Nail the court held that goodwill the built a up medical by personal was to the husband goodwill doctor. court determined that the was based skill, personal reputation. the husband’s experience, and the goodwill Because was not an asset separate apart doctor, died, from the it be if extinguished rеtired, would he or became disabled. Because of the personal nature of this asset, was by it not considered the court as an earned or divorce, vested at the the property right time of and did not qualify subject to in a proceed- division divorce Id. ing. at 764. v.

Taylor Taylor, 222 (1986), Neb. 386 N.W.2d 851 sets the ground forth middle the between two extremes. The trial court found that the professional husband’s medi- cal no corporation goodwill subject contained which to was upon distribution On the appeal, divorce. Nebraska Su- preme however, Court affirmed that In so finding. doing, the appellate proper circumstances, court noted that profеssional goodwill might exist aas salable or marketable Id. at asset. business 386 at N.W.2d 858-59. Whether such question a situation existed would a If be of fact. the goodwill marketable, was found to be the saleable or court could that goodwill divide as a marital asset. The court stated the essential factor would which determine goodwill to personal dependence upon would be its Id. presence continued of the individual. 386 also, Richmond, N.W.2d at 858. See Richmond 779 P.2d and Antolik v. (Alaska 1989) Harvey, Haw.App. P.2d therefore, Taylor, for provides case-by-case analysis determine whether particular situation should court, the Texas Unlike property. considered marital that a possibility not rule out does Taylor And unlike goodwill. contain such practice might solo those cases, for distinctions between it allows California it is and where truly personal is where situations which the It this rationale property. indeed Md.App. Appeals persuasive. found Special Court 133, 540 A.2d at 843. and the rationale reviewing these three alternatives

After cases, the opinion are of supporting of their we respective solo law such circumstances Goodwill practitioner. individual practitioner of the sole not severable made to the regardless of the contributions to be marital order spouse employees. from having sеparate must an asset a property, it reputation of the practitioner. the the of solo law We are not convinced of from the the attor- practice separated can be name, the It whether on door attorney is the whose ney. are is the We embodiment stationery, law and computer age many practices, that in this cognizant much of the research and practice particular, in Leo’s analysis, is In the final nonlawyers. “form” done by work the however, responsible alone who is attorney it is the of Professional comes out of the office. Buie work that case, 5.3(c). respоnsibility instant the Conduct Margaret Leo’s, by no amount of done will solely and work signature or attorney’s her. The responsibility shift to done approval being his seal on the work places affidavit of and accuracy for its authen- attorney and makes liable might have assurance is what ticity. This Prahinski, Attorney- clients use Leo F.X. convinced some to at-Law, company to have their going instead of to title would end should assurance completed. settlements Therefore, himself from the practice. Leo somehow remove him generated attorney 240 is not kind of asset which can be divided as marital

property.

Because the instant cаse law, involves the of special considerations arise which might present not other professional practices. In Brown v. Benzinger, 118 (1912), Md. A. quoted 84 79 we approval with from Gaston, v. Yeakley Tex.Civ.App. 50 111 S.W. 768 said, where the court sale “the by a professional carries it obligation with he will ab- stain the future in the from which territory he binds himself to withdraw.” It is clear that an attorney, as distinguished professionals, from other covenant law, therefore, abstain from the may not sell her goodwill. The ABA/BNA Lawyer’s Manual his or Conduct 91:801 states: § Professional

because ethical proscriptions, authorities have [the] generally prohibited a lawyer’s goodwill. sale his or her Moss, [Citing], 53 Cal.App.3d 125 Cal.Rptr. Geffen Detroit Bank Trust (1975); 687 Coopes, Co. v. 93 Lake County Bar Mich.App. (1979); 287 N.W.2d 266 Patterson, Association v. 64 Ohio St.2d 413 N.E.2d In re (1980); 840 Laubenheimer 680], Wis.2d [113 N.W.2d ^[624] (Wis.1983); ABA Formal Opinion (June 2, 1945); see also Sterett, The Sale a Law Practice, (1972); U.Pa.L.Rev. 306 Annot. ALR 3d professions prohibition Other do not against have the v. Benzinger, supra sale Brown goodwill. (sale of her practice “including goodwill” by “surgeon chiropodist”); Booth, (1870) (sale 33 Md. 63 of physician’s a Warfield Benenati, goodwill); Spaulding v. practice including (1982) N.Y.2d (good- N.Y.S.2d N.E.2d Hamilton, asset); will of a dentist is Dwight v. a saleable (1873) Mass. 175 (goodwill physician is a saleable asset). asset, lawyer’s goodwill

Since a is not it a saleable has no- commercial value. The methods for the valuing marketable profession a applicable of business would not a The fact that goodwill. nonmarketable attorney’s to an another lawyer sold the goodwill cannot be lawyer’s property. is not marital that it in our determination factor lawyers Maryland the fact that importance equal Of Conduct, which of Professional the Rules governed by are and non- lawyers situations in which specifically deal with together. lawyers work provides pertinent part:

Rule 5.4 nonlaw- not with a (b) lawyer partnership A shall form a consist ‍‌‌‌​‌​‌​‌​​​​‌‌‌​​‌‌‌‌​​​‌‌‌‌‌​‌‌‌​​‌​‌​‌‌‌​‌​‌​‍partnership the activities any if yer practicе of law. sje ifi Hfi £ # ^[*] a in the form of with or (d) lawyer practice A shall prac- authorized corporation or association if: for profit tice law therein, except interest

(1) nonlawyer any a owns of a lawyer of the estate fiduciary representative a for a of the lawyer the stock or interest hold administration; during time reasonable officer director or (2) corporate a is a nonlawyer thereof; or or control the to direct right a has nonlawyer lawyer.

professional judgment Margaret making clearly This Leo prohibits rule fact, up set practice was partner in his law no Prahinski, and there is Attorney-at-Law” F.X. as “Leo Mar- 5.4(d) not followed. Because indication that Rule she cannot claim a partner practice, in the garet cannot be from her her upon in the divorce partner’s practice interest lawyer husband. no has non-lawyer spouse these circumstances

Under therefore the interest the lawyer-spouse’s included as marital may not be cannot spouse non-lawyer that a We hold property. Mary- otherwise) of law partner (silent or land. noted, Special Appeals, as did the Court

We have the circuit court included the value legal practice of Leo Prahinski part F.X. as a the property. and the alimony monеtary award were both the calculated with a being factor. This was error. Therefore, spouse entitlements must be recalcu- lated.5 OF THE

JUDGMENT COURT OF SPECIAL APPEALS AFFIRMED. PETITIONER TO PAY THE COSTS.

Dissenting RODOWSKY, J., Opinion by in which MURPHY, ELDRIDGE, C.J. and join. J.

RODOWSKY, Judge, dissenting. I respectfully mixing dissent. By the Marital Property Act, Family through 8-205, Law Article 8-201 with the §§ Conduct, Rules of 5.6(a), Professional principally Rule with- giving out effect to purpose either ingredient, the produced inequitable Court has an result. Although spouse person of a engaged as a sole in proprietor a trade an may equitable or business receive in award the value of of that proprietorship, and although spouse person a sole engaged practitioner as profession, a law, other than an equitable receive award in the value of the goodwill professional practice, of that the Court holds that the spouse person engaged as sole practitioner legal profession cannot even be considered for eq- an uitable award in the value of the goodwill of that law because, solely instance, goodwill the latter not marital property. Archer, (1985),

Archer v. 303 Md. 493 A.2d 1074 held that there is no marital a license to practice medicine. But there this Court said:

“Our cases have construed the generally ‘proper- word ty’ broadly, defining it a term of comрrehen- wide and ‘ signification sive embracing “everything which has ex- changeable value or man’s goes up make wealth —ev- 5. We have not addressed the other issues certified for review and need disposition not do so because we make in case. this of sufficient regards which the law or estate interest ery ’ Deering, recognition.” Deering judicial value (1981); v. 437 A.2d 883 Md. Diffen- Diffendall In v. Bouse 32, 36, 209 A.2d Md. dall, 239 (1942), we said A.2d 767 Md. Hutzler, 180 express or used without when ‘property,’ the word that be construed ‘may reasonably qualifications, implied as intangibles well rights and other obligations, involve char- ‘Goodwill,’ has been example, for things.’ physical right. property valuable legally рrotected a acterized as 88-89, Co., 179 Md. Putnam Remington v. Schill (1941).” A.2d 175 356, 493 A.2d at 1079.

303 Md. acknowledges Indeed, opinion majority “[t]he as marital proper- treats followed most often view Thus, omitted). (footnote at 234 Opinion in cases.” all ty divorce, most were to painter or a house surgeon if a brain in the spouse to show both permit courts would thereof. and the value sole proprietorship or solo Marital policy Maryland’s This is consistent with Act Property marriage a nonmonetary contributions within

“that marriage is in event that a recognized should be do not include dissolved; whose activities spouse that a have contrib- income nevеrtheless production either both property by acquisition uted toward marriage a marriage; that when during the spouses dissolved, spouses interests of the should be property with careful consideration fairly equitably, adjusted monetary nonmonetary contributions given to both accomplish- and that the respective spouses; made a there be objectives these necessitates ment of in old Maryland’s inherent inequity from the departure dealing with the ‘title’ system divorcing spouses.” 351-52, A.2d at 1076-77. Archer, Md. at

Archer rule majority holds that the The Court nevertheless “the not here because country apply this does solo is law to the individual practitioner. In ... order for to be marital it property, must be having separate an asset the reputation of the practitioner.” Opinion at 239. “Because the instant case law, involves the special considerations arise might which present professional other practices.” Opinion at 240.

Although today’s holding clearly limited legal to solo practitioners, rest, the holding seems to part, least equating goodwill with reputation and then denying marital professional reputation. my view that does not distinguish attorneys and brain surgeons from painters house for marital property pur- poses. Where services аre involved compe- tently rendering particular the component service is a of trade, whether we deal with a a business or a profession. The nonmonetary support rendered by the while spouse provider the service was expending the time and required effort for quality performance, thereby and building reputation, the is the precisely type of contri- bution within a marriage which the General in- Assembly tended recognized under the Property Marital Act.

If, hand, on the other the both rationale and holding the of the majority opinion are legal practition- limited to solo ers, then it seems to because, be principally under the majority’s reasoning, “an attorney, as distinguished from other professionals, not covenant to abstain from the law, practice therefore, of sell may not his or her goodwill.” Opinion 5.6, at 240. Rule entitled “Restrictions Practice,” on to Right ‍‌‌‌​‌​‌​‌​​​​‌‌‌​​‌‌‌‌​​​‌‌‌‌‌​‌‌‌​​‌​‌​‌‌‌​‌​‌​‍(a), prohibits subsection a lawyer from participating in offering making or or partnership “[a] employment agreement rights that restricts the of a lawyer practice to after termination of the relationship, except an agreement concerning upon benefits The retirement[.]” underlying rationale the prohibition “is that such covenants impinge upon right of future сlients to of free choice Hazard, Hodes, counsel.” G. Jr. & W. The Law Lawyer- of ing: A on Handbook the Model Rules of Professional choice of future The freedom Conduct spouse’s a recognizing no diminished way in clients is solo law in interest property marital of Professional Conduct of the Rules effect only Because a valuation. complicate us to before problem accounting or practice unlike a medical practice, law solo practice law directly, sold valuation cannot be practice, profes- to other to be drawn comparisons might require net part of the multiplier if a of some sions, particularly Dugan See must be used. earnings of the law (multi- 423, 439-40, A.2d 9-10 N.J. Dugan, average annual net income to excess of applied to plier in general same available salary over annual edu- experience, expertise, comparable to attorney locale age). cation experienced interesting least note it

Finally, urge majority did not even respondent for the counsel marital denying prop- holding. Recognizing inequity allow- while erty proprietorships, of sole ing marital businesses, goodwill which urged counsel trades and be included rested on ultimately trade, any case of business profession. Eldridge authorize me Judge Murphy Judge

Chief dissenting in this expressed they join state that the views opinion.

Case Details

Case Name: Prahinski v. Prahinski

Court Name: Court of Appeals of Maryland

Date Published: Dec 6, 1990

Citation: 582 A.2d 784

Docket Number: 62, September Term, 1988

Court Abbreviation: Md.