Sorensen v. Sorensen
| Decision Date | 10 February 1989 |
| Docket Number | No. 870102-CA,870102-CA |
| Citation | 769 P.2d 820 |
| Parties | Elaine S. SORENSEN, Plaintiff and Respondent, v. Clifford G. SORENSEN, Defendant and Appellant. |
| Court | Utah Court of Appeals |
Kent Kasting, Salt Lake City, for appellant.
Reid E. Lewis and Jeffrey Robinson, Salt Lake City, for plaintiff and respondent.
Before GARFF, BILLINGS and JACKSON, JJ.
In this divorce action, defendant/appellant, Clifford G. Sorensen ("Dr. Sorensen") appeals the trial court's property valuation and distribution, award of attorney fees to Mrs. Sorensen, and the allocation of expert witness fees. We affirm the property distribution and allocation of expert witness fees but reverse the award of attorney fees.
The parties were married on April 10, 1975. Mrs. Sorensen was a registered nurse. Dr. Sorensen was a dentist and had practiced in Roy, Utah for approximately six years prior to the marriage. The parties have four children, ages 10, 9, 6, and 3 at the time of trial. There is no dispute as to custody, child support, or alimony.
During the marriage, Dr. Sorensen continued to practice as a dentist in Roy. Mrs. Sorensen returned to school and received her masters degree in nursing and also completed all the necessary courses for a Ph.D. in public health.
At trial, Mrs. Sorensen claimed Dr. Sorensen's dental practice, a professional corporation, was a marital asset subject to valuation and distribution by the court. Mrs. Sorensen called Dr. Richard Austin as an expert witness. Dr. Austin had been a dentist in Utah for four and one-half years. Dr. Austin also worked for a Denver company that brokered the purchase and sale of dental practices. His brokerage company had appraised and sold approximately 250 dental practices. Dr. Austin had participated in 12 appraisals and 7 sales of dentistry practices. Six of the 7 sales occurred in the Salt Lake City area.
Dr. Austin testified that the fair market value of Dr. Sorensen's dental practice was $100,060 and that dental practices in Utah generally sold for 90 to 95 percent of their appraised value. In connection with his testimony, Dr. Austin presented the trial court his written valuation of Dr. Sorensen's dental practice. Dr. Austin's valuation was based on unaudited information previously provided by Dr. Sorensen through discovery. Dr. Austin's calculation was the combined value of three components: 1) tangible assets, i.e., furniture and equipment--$15,330, 2) accounts receivable--$22,170, 1 and 3) intangible assets or "goodwill"--$62,560, for a total market value of $100,060. Dr. Austin further testified
To determine the goodwill value, Dr. Austin reviewed the income and expenses of Dr. Sorensen's practice for a three year period, 1983 through 1985. During this time, Dr. Sorensen averaged $184,000 in gross receipts. Dr. Austin testified that the "goodwill" value of dental practices he had appraised in Utah ranged from 15 to 80 percent of their gross receipts depending on a number of factors. These factors include: the length the practice had been operating, location, number of patients, profitability, currency of accounts receivable, and an evaluation of the transferability of profit to a prospective buyer. Applying the foregoing factors to Dr. Sorensen's practice, Dr. Austin concluded the goodwill value was 34 percent of the gross receipts for a total of $62,560. Specifically, Dr. Austin testified:
The age of a dental practice plays an important role in determining its value. Dr. Sorensen has been practicing in the community for a number of years and has established a good reputation for family dental care. The number of patients of record and the maintenance of healthy production figures attest to this.
Dr. Sorensen's practice location is on a very highly traveled street and is in an excellent location for visibility and public exposure. Parking is convenient. The office space is adequate and functional. However, updating equipment and leasehold improvements would increase the value of this practice.
The aging of the accounts receivable indicates that the practice has a healthy collection policy and that the receptionist is doing a good job of collecting.
The community of Roy has a healthy, growing economy. The influx of new dentists into the area quickly absorbs patients seeking new dentists.
In response to Dr. Austin's testimony, Dr. Sorensen called two expert witnesses: Mr. Gerald Deters, his accountant, and Mr. Roger Nuttal, a CPA. Mr. Deters compared the respective income, expenses, and profit of Dr. Sorensen's dental practice for the years 1974 and 1986, and concluded that since the date of the marriage, Dr. Sorensen's practice was "a little bit bigger, a little better." Mr. Deters further testified that goodwill had never been shown as an asset of Dr. Sorensen's professional corporation.
Dr. Sorensen also called Mr. Roger Nuttal, who evaluated the Sorensen's entire financial situation, both business and personal. Mr. Nuttal testified that he believed some goodwill existed, but found Dr. Austin's calculations "very questionable." He further testified that Dr. Austin failed to consider $10,129 in accounts payable. Thereafter, relying primarily on Dr. Austin's calculations less the amount for accounts payable, Mr. Nuttal testified that Dr. Sorensen's dental practice was worth approximately $87,096.
With reference to the dental practice, the trial court concluded with our emphasis:
[D]efendant has continued to practice dentistry in Roy, Utah, during the course of the marriage and has an office with an excellent location; has continued to build his clientele; has a good fee collection record and a good reputation in the community.
The Court finds the total value of the practice to be $100,000 including accounts receivable and all equipment with the exception of the computer.
That dental practices usually sell for approximately 90 percent of the appraised value....
* * *
The defendant should be awarded the dental practice including all equipment and accounts receivable the Court feeling that the large portion of the value of the practice has to do with good will and reputation built up in the practice over the years of marriage. The only reasonable way to value said practice is to proportion it based upon the years the parties have been married during the practice. Based on their eleven years of marriage over sixteen years of practice for the purpose of distribution, the Court values the practice at 69 percent of the value as found above for a total of $62,100.
The trial court then ordered essentially an equal division of the parties' property crediting $62,100 to Dr. Sorensen for his practice and an equal amount of offsetting property to Mrs. Sorensen.
The trial court also ordered Dr. Sorensen to contribute $2,000 toward Mrs. Sorensen's attorney fees. Mrs. Sorensen testified she had incurred fees, but she had no present income to pay those fees. Mrs. Sorensen's attorney proffered an exhibit reflecting the time spent and the rates charged. Dr. Sorensen's counsel stipulated that the proffer could be received but expressly refused to stipulate that the fees were reasonable.
The trial court also ordered the parties to bear the expense of their own expert witnesses, with the exception of Allan Heiskanen, a real estate appraiser, whose fees the parties were ordered to split. The Sorensens, by pretrial stipulation, agreed to have their real property appraised by Mr. Heiskanen. The stipulation provided that the expense of the appraiser was to be paid initially by Dr. Sorensen with the ultimate responsibility for payment to be determined by the trial court.
Dr. Sorensen raises three issues on appeal. First, he claims the trial court erred in its valuation of his dental practice by, 1) determining that "goodwill" was a marital asset subject to equitable distribution, 2) including Dr. Sorensen's accounts receivable in the valuation of the dental practice, and 3) failing to consider accounts payable in its evaluation of the practice. Second, Dr. Sorensen claims the trial court erred in awarding Mrs. Sorensen a portion of her attorney fees. Finally, Dr. Sorensen claims the trial court erred by ordering him to pay a portion of Mr. Heiskanen's expert witness fee.
In a divorce proceeding, "determining and assigning values to marital property is a matter for the trial court and this Court will not disturb those determinations absent a showing of clear abuse of discretion." Talley v. Talley, 739 P.2d 83, 84 (Utah Ct.App.1987). "In making such orders, the trial court is permitted broad latitude, and its judgment is not to be lightly disturbed, so long as it exercises its discretion in accordance with the standards set by this Court." Newmeyer v. Newmeyer, 745 P.2d 1276, 1277 (Utah 1987) (citations omitted). An appealing party bears the burden of establishing that the trial court violated those standards "or that the trial court's factual findings upon which the [property] division is grounded are clearly erroneous under Utah Rule of Civil Procedure 52(a)." Id. Furthermore, assessing the weight and credibility of expert witness testimony is a matter for the trier of fact. See Yelderman v. Yelderman, 669 P.2d 406, 408 (Utah 1983) ().
In its property distribution, the trial court credited Dr. Sorensen with $62,100 which represents the trial court's assessment of the total value of Dr. Sorensen's dental practice. As part of its calculations, the trial court assigned a substantial value to the goodwill of Dr. Sorensen's professional dental...
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