NJ court’s goodwill ruling comes in for harsh criticism from appellate panel

Slutsky v. Slutsky, 2017 N.J. LEXIS 120 (Aug. 8, 2017)

A New Jersey appellate court had harsh words for the trial court’s defective valuation and equitable distribution rulings in a drawn-out, nasty divorce case that centered on valuing the owner spouse’s equity partner interest in a large law firm.

A main issue for the parties’ appraisers was determining whether the owner spouse’s interest should include a portion of the goodwill value of the enterprise and what that value would be.

The two experts disagreed in that the non-owner spouse’s (wife’s) expert decided there was a separate goodwill interest worth close to $1.2 million, whereas the owner spouse’s (husband’s) expert found there was no goodwill component that had to be added to the value of the husband’s interest.

Among the trial court’s many failings was the judge's misunderstanding of the conclusion, on goodwill, the husband’s expert had reached, the appellate court said.

The appellate decision, which discusses goodwill jurisprudence, is instructive not only for valuators working on family law cases in New Jersey, but for all attorneys and appraisers who want to stay on top of case law developments.

For more on the case, click here.