Mitchell v. Mitchell

In 1954, Robert Mitchell (plaintiff) and Carole Mitchell (defendant) married. Robert went on to receive his accounting degree, become licensed as a certified public accountant, and form several successful accounting practices. For the most part, Carole was not employed outside the home. The Mitchells had two children. As of 1975, Robert practiced accountancy in partnership with Earl Hardy. Beginning in 1979, Robert’s practice, Mitchell & Hardy, operated through a partnership agreement, which both Robert and Carole signed. There was a provision in the agreement that disclaimed the existence of goodwill in an eventual determination of a partner’s interest in the net assets of the partnership (no-goodwill provision). The agreement also provided that if a partner should retire or die, he was entitled to payments of money—a share in future profits—beyond the partnership’s tangible assets. Thereafter, Robert filed for divorce. In valuing the community’s interest in Mitchell & Hardy at $150,000, the trial court included the professional partnership’s goodwill as a divisible community asset. The court of appeals reversed and remanded the judgment for a valuation of the partnership interest without including goodwill. The appellate court believed it was bound by the no-goodwill provision in the partnership agreement. The Arizona Supreme Court reviewed the matter.