Alaska High Court Affirms Zero Goodwill for Naturopathic Practice

Reedy-Huffman v. Huffman, 2015 Alas. LEXIS 56 (May 20, 2015)

No valuation evidence, no claim to business goodwill. This sums up a recent divorce ruling from the Alaska Supreme Court centering on the value of two practices the husband, a naturopathic physician, owned.

Alaska is an equitable distribution state but allows for community property agreements between spouses. It differentiates between business and personal goodwill; only the former is includable in the marital estate.

After filing for divorce, the wife complained to the trial court that the husband had “possession and control of all of the business documents.” She asked for an order that the husband pay her $10,000 so as to allow her to litigate the case and retain an expert to value the business. The court granted the request as well as a continuance to give her time to procure the appraisal. But the wife failed to hire an appraiser or to offer any valuation of the practice at trial.

For his part, the husband did not use an expert either, but in his brief he stated that his business had zero market value because a similar business in the area had failed to sell even though it had been on the market for over a year. The wife did not rebut this argument but instead claimed there was an “evidentiary void” as to the value and that the business should be valued at $500,000 “to account for its goodwill as an ongoing established business.”

The trial court dismissed the “evidentiary void” argument and found zero marketable goodwill in the practice. The appeals court affirmed.

To find out more about the court's reasoning, click here.