## Facts

- Deloris R. Slater (wife) and Ronald B. Slater (husband) married in February 1958 and separated in December 1975.
- The wife received custody of three minor children; the husband was ordered to pay $250 per month per child in child support.
- The husband was a gynecologist and a long-time partner in the Hayward Medical Group.
- The partnership agreement set a purchase formula upon withdrawal, death, or expulsion that effectively excluded goodwill from the buyout value.
- In the dissolution judgment, the trial court valued the husband’s partnership interest at $31,350 (capital account plus accounts receivable) and assigned zero value to goodwill.
- The wife offered expert testimony valuing the husband’s interest at over $80,000, including a substantial goodwill component.
- To equalize the community property division, the court awarded the wife a five-year, 10% promissory note for $24,430, secured by the husband’s partnership investment interests and related income.
- The court ordered spousal support of $750 per month, with jurisdiction retained for future modification.

## Issues

1. Whether the trial court erred by valuing goodwill in the husband’s group medical practice at zero based solely on the partnership agreement’s withdrawal/buyout provision.
2. Whether ordering a five-year secured promissory note to equalize community property constituted an abuse of discretion.
3. Whether the spousal support award of $750 per month was an abuse of discretion.

## Decision

- The judgment was reversed and remanded for redetermination of the value of the husband’s interest in the group medical practice, including goodwill.
- The equalization promissory note order was affirmed.
- The spousal support award was affirmed.

## Legal Principles

- Goodwill in a professional practice, if developed during marriage, is a community asset that must be valued in dissolution proceedings when it exists.
- A partnership agreement’s internal buyout/withdrawal formula may be considered as evidence but does not control the community property valuation of a spouse’s practice interest, and it cannot be used to eliminate goodwill from consideration.
- Goodwill valuation must be based on the economic value of the practice as an asset, not on the mere expectancy of future earnings.
- Trial courts have broad discretion in structuring equalization payments in property division, including the use of secured promissory notes, so long as the arrangement is reasonable.
- Spousal support determinations are reviewed for abuse of discretion and will be upheld when the award reasonably reflects the parties’ circumstances and remains modifiable.

## Conclusion

The court required an independent valuation of professional-practice goodwill notwithstanding a partnership buyout formula, while upholding the trial court’s discretion to use a secured promissory note for equalization and to set spousal support at a level supported by the record.


In re Marriage of Slater, 100 Cal. App. 3d 241, 160 Cal. Rptr. 686 (Ct. App. 1979)