Statham v. Statham

Harry Statham (Butch) (defendant) owned and operated a medical insurance brokerage company, P & S Benefits Consultants, Inc. (PSBC). Butch’s wife, Marsha Jo Statham (Jody) (plaintiff), filed for divorce after 35 years of marriage. It was undisputed that PSBC was community property. At a bench trial for community-property partition, Jody presented expert testimony from Richard Guillot, a business-valuation expert, valuing PSBC at approximately $311,000. Guillot’s valuation was based on PSBC’s fair market value and did not assess the value of PSBC’s goodwill. Butch presented expert testimony from Carlton Clark, a business-valuation expert, valuing PSBC at approximately $34,000 for partition purposes. Clark’s valuation was based on the fact that most of PSBC’s value derived from goodwill, and 90 percent of PSBC’s goodwill was attributable to Butch’s personal qualities. Clark determined that 90 percent of PSBC’s goodwill was attributable to Butch’s personal goodwill based on the loyalty of Butch’s customers, the fact that most of Butch’s business came from referrals, and the quality of the customer service Butch provided. Clark determined that the goodwill attributable to PSBC itself was limited because PSBC sold medical-insurance products that were widely available through other brokers. The trial court found Clark’s valuation more credible because it included a goodwill assessment and accordingly valued PSBC at $34,000 for partition purposes. Jody appealed, arguing that Clark’s goodwill analysis failed to account for the fact that PSBC was a stable business because it sold well-known policies from major medical-insurance companies.