## Facts

- Edward Lewis Von Hohn II and Susan Joan Von Hohn married in 1997, had two children, and separated when Susan filed for divorce in 2004.
- Conservatorship and child-support issues were resolved by agreement; the contested dispute concerned division of the community estate.
- Edward was an attorney and equity partner in a law firm governed by a partnership agreement that:
  - assigned “units of participation” and maintained capital and profits accounts; and
  - set formulas for valuing a partner’s interest upon death, retirement, withdrawal, or expulsion.
- The partnership agreement did not state how to value a partner’s interest upon divorce and limited what a departing partner could receive under the contract.
- Susan offered expert testimony (James C. Penn) valuing Edward’s interest using business-valuation approaches that included goodwill and a component tied to projected earnings; the trial court limited consideration of future earnings to two years but otherwise admitted the testimony.
- A jury valued Edward’s partnership interest at $4.5 million (subject to taxes), and the trial court’s decree used that valuation in the property division.
- Edward appealed, challenging admission of Penn’s testimony, the court’s treatment of the partnership agreement and goodwill, and denial of directed verdict on valuation.

## Issues

1. Whether the trial court abused its discretion under Texas Rule of Evidence 702 by admitting Susan’s expert valuation testimony as relevant and reliable.
2. Whether the community estate may be awarded value for goodwill or future earnings beyond the partner-spouse’s enforceable rights under the partnership agreement.
3. Whether Edward was entitled to a directed verdict on valuation due to asserted lack of legally sufficient evidence.

## Decision

- The court of appeals affirmed the ruling admitting Penn’s expert testimony under Rule 702.
- The court of appeals reversed the property-division valuation to the extent it awarded the community estate value exceeding Edward’s contractual rights in the partnership.
- The court remanded for further proceedings to determine a valuation and property division consistent with the limitation that the community takes no greater interest than the partner-spouse possesses under the agreement.
- The directed-verdict complaints did not warrant rendition for Edward because evidence existed to submit valuation to the jury, but the valuation had to be recalculated under the proper legal constraints.

## Legal Principles

- Expert testimony is admissible under Texas Rule of Evidence 702 when it is relevant and rests on a reliable foundation; disputes about assumptions and methodology typically affect weight, not admissibility.
- In valuing a spouse’s partnership interest for community-property division, the community estate’s rights are derivative of the partner-spouse’s legally enforceable rights; the community cannot receive more than the partner could obtain under the partnership agreement.
- Goodwill analysis distinguishes:
  - personal goodwill (linked to the professional’s personal reputation and future earning capacity), which is not divisible community property; from
  - enterprise goodwill (attributable to the business entity), which is divisible only to the extent the partner-spouse owns a transferable, enforceable interest in it under the governing contract.
- Valuation models using projected earnings may not be used to award the community estate an economic interest the partner-spouse cannot realize because of contractual restrictions.

## Conclusion

The court held that the expert valuation evidence was properly admitted, but the community-property valuation of a law-firm partnership must be limited to the partner-spouse’s enforceable contractual rights; any award based on non-realizable goodwill or earnings beyond those rights required reversal and remand for a corrected valuation and property division.


Von Hohn v. Von Hohn, 260 S.W.3d 631 (Tex. App.—Tyler 2008)