{ "id": 11203382, "name": "DONNA CASSELS CONWAY, Plaintiff v. DONALD R. CONWAY, Defendant", "name_abbreviation": "Conway v. Conway", "decision_date": "1998-12-15", "docket_number": "No. COA97-1439", "first_page": "609", "last_page": "619", "citations": [ { "type": "official", "cite": "131 N.C. App. 609" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "374 S.E.2d 376", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1988, "pin_cites": [ { "page": "385", "parenthetical": "quoting Poore, at 422, 331 S.E.2d at 272" } ], "opinion_index": 0 }, { "cite": "323 N.C. 543", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2563389 ], "year": 1988, "pin_cites": [ { "page": "558", "parenthetical": "quoting Poore, at 422, 331 S.E.2d at 272" } ], "opinion_index": 0, "case_paths": [ "/nc/323/0543-01" ] }, { "cite": "437 S.E.2d 397", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1993, "pin_cites": [ { "page": "399" } ], "opinion_index": 0 }, { "cite": "112 N.C. App. 788", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8524029 ], "year": 1993, "pin_cites": [ { "page": "791" } ], "opinion_index": 0, "case_paths": [ "/nc-app/112/0788-01" ] }, { "cite": "487 S.E.2d 545", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1997, "opinion_index": 0 }, { "cite": "346 N.C. 278", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 139653, 139565, 139506, 139450, 139515 ], "year": 1997, "opinion_index": 0, "case_paths": [ "/nc/346/0278-05", "/nc/346/0278-02", "/nc/346/0278-01", "/nc/346/0278-04", "/nc/346/0278-03" ] }, { "cite": "482 S.E.2d 752", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1997, "opinion_index": 0 }, { "cite": "125 N.C. App. 736", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 11871689 ], "year": 1997, "opinion_index": 0, "case_paths": [ "/nc-app/125/0736-01" ] }, { "cite": "346 S.E.2d 430", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1987, "opinion_index": 0 }, { "cite": "317 N.C. 437", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4772767 ], "year": 1987, "opinion_index": 0, "case_paths": [ "/nc/317/0437-01" ] }, { "cite": "327 S.E.2d 910", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1985, "opinion_index": 0 }, { "cite": "74 N.C. App. 144", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8523505 ], "year": 1985, "opinion_index": 0, "case_paths": [ "/nc-app/74/0144-01" ] }, { "cite": "409 S.E.2d 749", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1991, "opinion_index": 0 }, { "cite": "104 N.C. App. 461", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8522246 ], "year": 1991, "opinion_index": 0, "case_paths": [ "/nc-app/104/0461-01" ] }, { "cite": "429 S.E.2d 382", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1993, "opinion_index": 0 }, { "cite": "110 N.C. App. 99", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8524995 ], "year": 1993, "opinion_index": 0, "case_paths": [ "/nc-app/110/0099-01" ] }, { "cite": "421 S.E.2d 788", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1992, "pin_cites": [ { "page": "791" } ], "opinion_index": 0 }, { "cite": "107 N.C. App. 734", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8527960 ], "year": 1992, "pin_cites": [ { "page": "739" } ], "opinion_index": 0, "case_paths": [ "/nc-app/107/0734-01" ] }, { "cite": "335 S.E.2d 316", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 3, "year": 1985, "pin_cites": [ { "page": "421-22" } ], "opinion_index": 0 }, { "cite": "314 N.C. 543", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4689381, 4687407, 4695924, 4688661, 4687388 ], "weight": 2, "year": 1985, "opinion_index": 0, "case_paths": [ "/nc/314/0543-04", "/nc/314/0543-05", "/nc/314/0543-03", "/nc/314/0543-02", "/nc/314/0543-01" ] }, { "cite": "331 S.E.2d 266", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 3, "year": 1985, "pin_cites": [ { "page": "272" }, { "page": "272" } ], "opinion_index": 0 }, { "cite": "75 N.C. App. 414", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8526019 ], "weight": 2, "year": 1985, "pin_cites": [ { "page": "422" } ], "opinion_index": 0, "case_paths": [ "/nc-app/75/0414-01" ] }, { "cite": "336 S.E.2d 415", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1985, "opinion_index": 0 }, { "cite": "77 N.C. App. 667", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8525003 ], "year": 1985, "opinion_index": 0, "case_paths": [ "/nc-app/77/0667-01" ] }, { "cite": "381 S.E.2d 179", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1989, "opinion_index": 0 }, { "cite": "94 N.C. App. 670", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8527721 ], "year": 1989, "opinion_index": 0, "case_paths": [ "/nc-app/94/0670-01" ] }, { "cite": "111 N.C. 460", "category": "reporters:state", "reporter": "N.C.", "year": 1993, "opinion_index": 0 }, { "cite": "327 S.E.2d 283", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1985, "pin_cites": [ { "page": "287", "parenthetical": "emphasis added" } ], "opinion_index": 0 }, { "cite": "74 N.C. App. 12", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8522509 ], "year": 1985, "pin_cites": [ { "page": "16", "parenthetical": "emphasis added" } ], "opinion_index": 0, "case_paths": [ "/nc-app/74/0012-01" ] }, { "cite": "373 S.E.2d 104", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1988, "opinion_index": 0 }, { "cite": "323 N.C. 171", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2562113, 2566065, 2560632, 2561049, 2561822 ], "year": 1988, "opinion_index": 0, "case_paths": [ "/nc/323/0171-04", "/nc/323/0171-03", "/nc/323/0171-01", "/nc/323/0171-05", "/nc/323/0171-02" ] }, { "cite": "367 S.E.2d 347", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1988, "opinion_index": 0 }, { "cite": "90 N.C. App. 58", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8522233 ], "year": 1988, "opinion_index": 0, "case_paths": [ "/nc-app/90/0058-01" ] }, { "cite": "389 S.E.2d 113", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1990, "pin_cites": [ { "parenthetical": "trial court erred by allocating property based on its gross fair-market value without considering the outstanding credit card balance on the property" } ], "opinion_index": 0 }, { "cite": "326 N.C. 264", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 5306405, 5304933, 5306324, 5309117, 5309023 ], "year": 1990, "pin_cites": [ { "parenthetical": "trial court erred by allocating property based on its gross fair-market value without considering the outstanding credit card balance on the property" } ], "opinion_index": 0, "case_paths": [ "/nc/326/0264-02", "/nc/326/0264-04", "/nc/326/0264-01", "/nc/326/0264-03", "/nc/326/0264-05" ] }, { "cite": "386 S.E.2d 84", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1989, "opinion_index": 0 }, { "cite": "96 N.C. App. 462", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8522998 ], "year": 1989, "opinion_index": 0, "case_paths": [ "/nc-app/96/0462-01" ] }, { "cite": "494 S.E.2d 407", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1997, "opinion_index": 0 }, { "cite": "347 N.C. 396", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 551335, 551114, 551379, 551254, 551354 ], "year": 1997, "opinion_index": 0, "case_paths": [ "/nc/347/0396-05", "/nc/347/0396-02", "/nc/347/0396-01", "/nc/347/0396-04", "/nc/347/0396-03" ] }, { "cite": "487 S.E.2d 784", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1997, "opinion_index": 0 }, { "cite": "127 N.C. App. 87", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 11792309 ], "year": 1997, "opinion_index": 0, "case_paths": [ "/nc-app/127/0087-01" ] }, { "cite": "331 S.E.2d 765", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1985, "opinion_index": 0 }, { "cite": "76 N.C. App. 134", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8526769 ], "year": 1985, "opinion_index": 0, "case_paths": [ "/nc-app/76/0134-01" ] }, { "cite": "354 S.E.2d 506", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1987, "opinion_index": 0 }, { "cite": "319 N.C. 367", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4745005 ], "year": 1987, "opinion_index": 0, "case_paths": [ "/nc/319/0367-01" ] }, { "cite": "346 S.E.2d 504", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1986, "opinion_index": 0 }, { "cite": "82 N.C. App. 329", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8358898 ], "year": 1986, "opinion_index": 0, "case_paths": [ "/nc-app/82/0329-01" ] }, { "cite": "374 S.E.2d 144", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1988, "opinion_index": 0 }, { "cite": "92 N.C. App. 116", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8526499 ], "weight": 2, "year": 1988, "opinion_index": 0, "case_paths": [ "/nc-app/92/0116-01" ] }, { "cite": "444 S.E.2d 420", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 3, "year": 1994, "pin_cites": [ { "parenthetical": "distribution of marital debts is matter committed to sound discretion of trial court" } ], "opinion_index": 0 }, { "cite": "336 N.C. 575", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2536486 ], "weight": 3, "year": 1994, "pin_cites": [ { "parenthetical": "distribution of marital debts is matter committed to sound discretion of trial court" } ], "opinion_index": 0, "case_paths": [ "/nc/336/0575-01" ] }, { "cite": "433 S.E.2d 196", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 6, "year": 1993, "pin_cites": [ { "page": "205" }, { "page": "204" } ], "opinion_index": 0 }, { "cite": "111 N.C. App. 460", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8522769 ], "weight": 4, "year": 1993, "pin_cites": [ { "page": "475" } ], "opinion_index": 0, "case_paths": [ "/nc-app/111/0460-01" ] }, { "cite": "N.C. Gen. Stat. \u00a7 50-20", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "weight": 9, "pin_cites": [ { "page": "(c)(7)" }, { "page": "(c)(6)" }, { "page": "(c)(7)" }, { "page": "(c)(8)" }, { "page": "(c)(6)" }, { "page": "(c)" }, { "page": "(b)(2)" }, { "page": "(c)(8)" }, { "page": "(b)(2)" } ], "opinion_index": 0 }, { "cite": "321 S.E.2d 161", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1984, "opinion_index": 0 }, { "cite": "70 N.C. App. 665", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8524388 ], "year": 1984, "opinion_index": 0, "case_paths": [ "/nc-app/70/0665-01" ] }, { "cite": "330 S.E.2d 616", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1985, "opinion_index": 0 }, { "cite": "313 N.C. 612", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4722697, 4725936, 4721340, 4722525, 4724158 ], "weight": 2, "year": 1985, "opinion_index": 0, "case_paths": [ "/nc/313/0612-03", "/nc/313/0612-05", "/nc/313/0612-01", "/nc/313/0612-02", "/nc/313/0612-04" ] }, { "cite": "325 S.E.2d 260", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 4, "year": 1985, "pin_cites": [ { "page": "268" }, { "page": "268-69" } ], "opinion_index": 0 }, { "cite": "72 N.C. App. 372", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8526819 ], "weight": 3, "year": 1985, "pin_cites": [ { "page": "379" }, { "page": "380" } ], "opinion_index": 0, "case_paths": [ "/nc-app/72/0372-01" ] }, { "cite": "331 S.E.2d 682", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1985, "opinion_index": 0 }, { "cite": "314 N.C. 80", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4687900 ], "year": 1985, "opinion_index": 0, "case_paths": [ "/nc/314/0080-01" ] } ], "analysis": { "cardinality": 803, "char_count": 22452, "ocr_confidence": 0.758, "pagerank": { "raw": 2.9676759281074196e-07, "percentile": 0.8500505241811395 }, "sha256": "17aafe23b84bb5992214c05800f954283698cd9a2e727a838bfe2db74e9499ec", "simhash": "1:cf4346223e2f245e", "word_count": 3578 }, "last_updated": "2023-07-14T20:31:28.584435+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Judges LEWIS and WALKER concur." ], "parties": [ "DONNA CASSELS CONWAY, Plaintiff v. DONALD R. CONWAY, Defendant" ], "opinions": [ { "text": "MARTIN, John C., Judge.\nPlaintiff and defendant were married 1 September 1979, separated on 21 October 1994, and were divorced on 29 January 1996. Issues of alimony, support of the parties\u2019 two minor children, custody, and visitation have apparently been resolved and are not involved in this appeal. Both parties appeal from an equitable distribution judgment entered 8 April 1997.\nAt the time of the parties\u2019 marriage, both of them had undergraduate college degrees and defendant was enrolled in a graduate program for medical illustration. After completion of the requirements for his masters degree, plaintiff continued his education and enrolled in medical school in 1982. He completed medical school in 1986 and was in residency training until June 1994. Defendant obtained a license to practice medicine in North Carolina in the summer of 1994 and the parties moved to Asheville in August 1994, where defendant began a private medical practice as a plastic surgeon. The trial court found the net value of the parties\u2019 marital estate to be $8,336.56, consisting of gross marital assets totaling $82,453.89, and marital debt totaling $74,117.33. The trial court distributed 83% of the gross marital assets to plaintiff, all of the marital debt to defendant, and ordered defendant to pay plaintiff a distributive award of $61,676.17.\nDefendant\u2019s Appeal\nDefendant contends the trial court erred by considering improper distributional factors and by making an award to plaintiff in excess of the total net value of the marital estate. We have carefully considered his arguments and reject them.\nA.\nFirst, defendant contends the trial court improperly considered marital fault as a distributional factor. He directs us to the following distributional factor cited by the trial court in its order:\n12. That evidence was offered concerning the following distributional factors, which the Court will consider in determining the most equitable distribution of the aforesaid marital estate:\nd) That in 1994 the Defendant completed his residency training, and the family moved to Asheville for the purpose of beginning the Defendant\u2019s private practice as a plastic surgeon; however, before a home was purchased in Asheville, and before his practice was established, the defendant voluntarily and without Plaintiffs consent removed himself from the marital home and terminated the marriage relationship.\nDefendant contends the finding indicates the trial court determined that defendant had abandoned plaintiff and considered the abandonment as a distributional factor justifying an unequal distribution. We disagree.\nIt is well established that marital misconduct or fault not affecting the marital economy may not be considered by the court in dividing the marital property. Smith v. Smith, 314 N.C. 80, 331 S.E.2d 682 (1985); Wade v. Wade, 72 N.C. App. 372, 325 S.E.2d 260, disc. review denied, 313 N.C. 612, 330 S.E.2d 616 (1985); Hinton v. Hinton, 70 N.C. App. 665, 321 S.E.2d 161 (1984). However, upon careful consideration of the challenged factor in its entirety, we do not believe the trial court\u2019s finding spoke to fault or misconduct; rather the finding includes important distributional facts. The completion of defendant\u2019s residency training and the family\u2019s move to a new location is relevant to plaintiff\u2019s contributions to defendant\u2019s professional career potential and development, and to his obtaining a professional license. See N.C. Gen. Stat. \u00a7 50-20(c)(7) & (8) (1995). Moreover, the short period of time between the opening of defendant\u2019s medical practice and the termination of the marriage is relevant to the short amount of marital time in which plaintiff contributed to defendant\u2019s medical practice. See N.C. Gen. Stat. \u00a7 50-20(c)(6) (1995). The fact that defendant opened a private practice and then terminated the marriage before the practice was established is an important consideration in evaluating how to distribute the medical practice. We consider the court\u2019s description of defendant\u2019s termination of the marriage as \u201cvoluntary\u201d and \u201cwithout the plaintiff\u2019s consent\u201d as merely incidental to the distributional factor as a whole. This assignment of error is overruled.\nB.\nDefendant also contends the trial court improperly considered plaintiff\u2019s marital efforts and the relative size of the marital estate. We disagree. Plaintiff\u2019s efforts in the marriage and the relatively small size of the net marital estate were appropriate facts to consider in the context of (1) plaintiff\u2019s aid in developing defendant\u2019s career potential, see N.C. Gen. Stat. \u00a7 50-20(c)(7) (1995), (2) her contributions to defendant\u2019s medical professional license, see N.C. Gen. Stat. \u00a7 50-20(c)(8) (1995), and (3) her contributions as homemaker. See N.C. Gen. Stat. \u00a7 50-20(c)(6) (1995).\nC.\nFinally, defendant contends the trial court exceeded its authority by awarding plaintiff marital property having a value in excess of the total net value of the marital estate. He argues the court is limited to awarding either party an amount which does not exceed the value of the net marital estate. We disagree.\nIn distributing marital assets, the trial court is required by G.S. \u00a7 50-20 (1995) to (1) classify property as marital, separate, or mixed, (2) determine the net value (fair market value less encumbrances) of the property, and (3) distribute the property equally, unless equity requires an unequal distribution. Smith v. Smith, 111 N.C. App. 460, 433 S.E.2d 196 (1993), rev\u2019d on other grounds, 336 N.C. 575, 444 S.E.2d 420 (1994); McIver v. McIver, 92 N.C. App. 116, 374 S.E.2d 144 (1988); Seifert v. Seifert, 82 N.C. App. 329, 346 S.E.2d 504 (1986), affirmed and remanded, 319 N.C. 367, 354 S.E.2d 506 (1987); Cable v. Cable, 76 N.C. App. 134, 331 S.E.2d 765 (1985). In valuing an asset, the trial judge finds the fair market value and reduces it by any encumbrances on that property. Carlson v. Carlson, 127 N.C. App. 87, 487 S.E.2d 784, disc. review denied, 347 N.C. 396, 494 S.E.2d 407 (1997); Hendricks v. Hendricks, 96 N.C. App. 462, 386 S.E.2d 84 (1989), cert. denied, 326 N.C. 264, 389 S.E.2d 113 (1990) (trial court erred by allocating property based on its gross fair-market value without considering the outstanding credit card balance on the property); Beightol v. Beightol, 90 N.C. App. 58, 367 S.E.2d 347, disc. review denied, 323 N.C. 171, 373 S.E.2d 104 (1988). Defendant argues that the same valuation process used to value individual marital assets should be applied to the marital estate as a whole.\nG.S. \u00a7 50-20(c) provides:\nThere shall be an equal division by using net value of marital property unless the court determines that an equal division is not equitable. If the court determines that an equal division is not equitable, the court shall divide the marital property equitably.\nN.C. Gen. Stat. \u00a7 50-20(c) (1995). The statute does not limit the scope of the trial court\u2019s authority as argued by defendant; indeed, the net market value of each asset is determined when marital property is valued, not the marital estate as a whole. \u201cThe Act requires the trial court to first determine what constitutes marital property, to then determine the net market value of that property, and finally, to distribute it based on the equitable goals of the statute and the specific statutory factors.\u201d Little v. Little, 74 N.C. App. 12, 16, 327 S.E.2d 283, 287 (1985) (emphasis added). The trial court does not lose its ability to distribute marital assets simply because marital debts equal or exceed the value of those assets. In addition, where marital debts significantly reduce the net marital estate, the trial court still retains the discretion to distribute the individual assets and debts independently. See Smith v. Smith, 111 N.C. 460, 433 S.E.2d 196 (1993), rev\u2019d on other grounds, 336 N.C. 575, 444 S.E.2d 420 (1994) (distribution of marital debts is matter committed to sound discretion of trial court); Rawls v. Rawls, 94 N.C. App. 670, 381 S.E.2d 179 (1989). Otherwise, the trial court would lose its authority to distribute significant assets merely because there are unrelated debts diminishing the net value of the estate. Having found sufficient distributional factors in this case to justify an unequal distribution of the marital assets to plaintiff and distribution of the entire marital debt to defendant, the trial court acted within its discretion when it distributed the assets and debts independently.\nDefendant\u2019s remaining assignments of error are deemed to have been abandoned. N.C.R. App. R 28(a).\nPlaintiff\u2019s Appeal\nIn her appeal, plaintiff contends the trial court erred and abused its discretion when it (A) failed to assign a value to defendant\u2019s professional medical license; (B) failed to find that a portion of the value\nof defendant\u2019s professional medical license was a result of active appreciation and, therefore, was a marital asset to be distributed; and (C) valued defendant\u2019s good will in his medical practice at $3,000. We reject her first two contentions, but find merit in the third.\nA.\nFirst, plaintiff argues that the trial court erred in refusing to assign a value to defendant\u2019s professional medical license. We disagree. A professional license is separate property. N.C. Gen. Stat. \u00a7 50-20(b)(2) (1995). Marital contributions to separate property, such as a professional license, may be considered as a distributional factor. N.C. Gen. Stat. \u00a7 50-20(c)(8) (1995). The trial judge must consider separate property, including professional licenses, when dividing marital property. Dorton v. Dorton, 77 N.C. App. 667, 336 S.E.2d 415 (1985); Poore v. Poore, 75 N.C. App. 414, 331 S.E.2d 266, disc. review denied, 314 N.C. 543, 335 S.E.2d 316 (1985). However, there is no requirement that the trial court determine the numeric value of separate property when considering distributional factors. Smith v. Smith, 111 N.C. App. 460, 433 S.E.2d 196 (1993). \u201cThere is no language within \u00a7 50-20(c) which would indicate that the trial court is required to place a monetary value on any distributional factor and we decline to impose such an unnecessary burden upon the trial court.\u201d Gum v. Gum, 107 N.C. App. 734, 739, 421 S.E.2d 788, 791 (1992).\nThe trial court found defendant\u2019s medical license to be separate property, that it has a \u201cvery significant value,\u201d and is \u201cthe only significant asset acquired by these parties during the years of their marriage.\u201d Having classified the license as separate and considered its \u201cvery substantial value,\u201d the trial court did not err in refusing to assign it a monetary value.\nB.\nPlaintiff also contends the trial court erred by failing to classify as marital property, and value, a portion of defendant\u2019s professional license as being the result of active appreciation. Again, we disagree.\nWhen marital efforts actively increase the value of separate property, the increase in value is marital property and is subject to distribution. Godley v. Godley, 110 N.C. App. 99, 429 S.E.2d 382 (1993); Ciobanu v. Ciobanu, 104 N.C. App. 461, 409 S.E.2d 749 (1991). To demonstrate active appreciation of separate property, there must be a showing of the (1) value of asset at time of acquisition, (2) value of asset at date of separation, (3) difference between the two. McLeod v. McLeod, 74 N.C. App. 144, 327 S.E.2d 910 (1985), overruled on other grounds, Johnson v. Johnson, 317 N.C. 437, 346 S.E.2d 430 (1987). Any increase is presumptively marital property unless it is shown to be the result of passive appreciation. See Smith, 111 N.C. App. 460, 433 S.E.2d 196.\nIn light of the remedial nature of the statute and the policies on which it is based, we interpret its provision concerning the classification of the increase in value of separate property as referring only to passive appreciation of separate property, such as that due to inflation, and not to active appreciation resulting from the contributions, monetary or otherwise by one or both of the spouses.\nWade v. Wade, 72 N.C. App. 372, 379, 325 S.E.2d 260, 268, disc. review denied, 313 N.C. 612, 330 S.E.2d 616 (1985). In order for the court to value \u201cactive appreciation\u201d of separate property and distribute the increase as marital property, the party seeking distribution of the property must offer credible evidence showing the amount and nature of the increase. Grasty v. Grasty, 125 N.C. App. 736, 482 S.E.2d 752, disc. review denied, 346 N.C. 278, 487 S.E.2d 545 (1997); McIver v. McIver, 92 N.C. App. 116, 374 S.E.2d 144 (1988).\nIn this case, plaintiff did not show an increase in value of the license between its acquisition in June 1994 and the date of separation in October 1994. The evidence tended to show that marital efforts led to the acquisition of the separate property rather than to an active increase in its value. Therefore, the trial court did not err in refusing to value the active appreciation of the medical license.\nThe confusion lies in the distinction between appreciation of separate property and the acquisition of marital property:\nIf an asset is characterized as separate property that has increased in value during the marriage, the court\u2019s focus is on the appreciation occurring during the marriage and whether that appreciation was passive or active. If, on the other hand, an asset is characterized as marital property to which a contribution of separate property was made, in which case it is of a dual nature having a marital and a separate property component, then the primary focus is on acquisition, not appreciation.\nSmith v. Smith, 111 N.C. App. 460, 475, 433 S.E.2d 196, 205 (1993), rev\u2019d on other grounds, 336 N.C. 575, 444 S.E.2d 420 (1994).\nWhere there is no statute controlling whether property is marital or separate, this Court has adopted a dynamic rather than a static interpretation of the term \u201cacquired\u201d as used in G.S. \u00a7 50-20(b), stating \u201cthat acquisition must be recognized as the ongoing process of making payment for property or contributing to the marital estate rather than being fixed on the date that legal title to property is obtained.\u201d Smith at 473, 433 S.E.2d at 204 (quoting Wade v. Wade, 72 N.C. App. 372, 380, 325 S.E.2d 260, 268-69 (1985)). This flexible notion of acquisition underlies the \u201csource of funds doctrine,\u201d treating acquisition \u201cas an ongoing process\u201d and finding that \u201cproperty may have a dual nature and consist of both marital property and separate property components.\u201d Id.\nUnder the source of funds doctrine, the trial court\u2019s finding that the medical license \u201chad a very significant value\u201d and represented \u201cthe only significant asset acquired by these parties during the years of their marriage,\u201d would have led to the conclusion that the license was marital property subject to distribution because it was acquired by marital efforts. However, the statute defining the professional license as separate, controls in this case. N.C. Gen. Stat. \u00a7 50-20(b)(2) (1995). Classifying the efforts leading to the acquisition of a professional license as \u201cmarital\u201d under the \u201cactive appreciation doctrine\u201d would undermine this statutory definition of professional licenses as separate property.\nC.\nFinally, plaintiff disputes the trial court\u2019s valuation of the good will in defendant\u2019s medical practice. The trial court valued defendant\u2019s good will at $3,000 based upon expert testimony. Plaintiff argues that the expert applied no legitimate method in valuing the good will in the practice. We agree.\n\u201cWhen valuing a professional practice, a court should consider the business\u2019 fixed assets, the value of its work in progress and accounts receivable, its goodwill and its liabilities.\u201d Harvey v. Harvey, 112 N.C. App. 788, 791, 437 S.E.2d 397, 399 (1993).\nOn appeal, if it appears that the trial court reasonably approximated the net value of the practice and its goodwill, if any, based on competent evidence and on a sound valuation method or methods, the valuation will not be disturbed.\nPoore v. Poore, 75 N.C. App. 414, 422, 331 S.E.2d 266, 272, disc. review denied, 314 N.C. 543, 335 S.E.2d 316 (1985). Several methods have been approved in valuing good will. These methods focus on past results, not post-marital efforts, and include: (1) the price a willing buyer would pay, (2) capitalization of excess earnings, (3) one year\u2019s average gross income of the practice, and (4) evidence of sales of comparable practices. Id. at 421-22, 331 S.E.2d at 271-72.\nIn this case, defendant\u2019s expert valued good will in the medical practice at $3,000. This value reflected two months of $1,500 shared expenses. Defendant\u2019s expert explained that when a practice has been in existence for a short period of time, the goodwill is measured by the value of having the practice \u201cup and running as opposed to just thinking about it.\u201d This is not a legitimate method of computing the goodwill of the practice.\nIn addition, the trial court should:\nmake specific findings regarding the value of a spouse\u2019s professional practice and the existence and value of its goodwill, and should clearly indicate the evidence on which its valuations are based, preferably noting the valuation method or methods on which it relied.\nMcLean v. McLean, 323 N.C. 543, 558, 374 S.E.2d 376, 385 (1988) (quoting Poore, at 422, 331 S.E.2d at 272). While the trial court stated the value of the goodwill, it did not \u201cclearly indicate the evidence on which its valuations are based,\u201d nor did it note the method of valuation.\nWhen, as in this case, a professional practice has not been established for a sufficient period to determine goodwill based upon comparable past earnings, the capitalization of excess earnings method of valuing goodwill should be used.\nUnder this approach, the value of goodwill is based in part on the amount by which the earnings of the professional spouse exceed that which would have been earned by a person with similar education, experience, and skill as an employee in the same general locale.\nPoore, at 421-22, 331 S.E.2d at 271-72.\nFor the reasons set forth herein, we vacate that portion of the equitable distribution order which determines the value of defendant\u2019s good will in his medical practice, and remand this case to the district court for a proper determination of such value and recalculation of the amount of any distributive award to which plaintiff may be entitled as a result of such valuation. Otherwise, the judgment is affirmed.\nAffirmed in part, vacated in part, and remanded.\nJudges LEWIS and WALKER concur.", "type": "majority", "author": "MARTIN, John C., Judge." } ], "attorneys": [ "Morrow, Alexander, Task, Long & Kurtz, by G.R. \u201cSkip\u201d Long, Jr., for plaintiff-appellant.", "Gum & Hillier, P.A., by Howard L. Gum; Edward P. Hausle, P.A., by Edward P. Hausle, for defendant-appellant." ], "corrections": "", "head_matter": "DONNA CASSELS CONWAY, Plaintiff v. DONALD R. CONWAY, Defendant\nNo. COA97-1439\n(Filed 15 December 1998)\n1. Divorce\u2014 equitable distribution \u2014 distribution factors\u2014 fault\nThe trial court did not err in an equitable distribution action by finding as a distributional factor that defendant had voluntarily and without plaintiff\u2019s consent removed himself from the marital home and terminated the relationship after completing his residency and moving to Asheville, but before purchasing a home and establishing his practice. The completion of defendant\u2019s residency and the family\u2019s move to a new location are relevant to plaintiff\u2019s contributions to defendant\u2019s career and the fact that defendant opened a private practice and then terminated the marriage before the practice was established is an important consideration in evaluating the distribution of the practice. The description of defendant\u2019s termination of the marriage as \u201cvoluntary\u201d and \u201cwithout plaintiff\u2019s consent\u201d was merely incidental to the distributional factor as a whole.\n2. Divorce\u2014 equitable distribution \u2014 relative size of marital estate \u2014 marital efforts\nThe trial court did not err in an equitable distribution action resulting in an uneven distribution by considering plaintiff\u2019s marital efforts and the relative size of the marital estate. These were appropriate facts to consider in the context of plaintiffs aid in developing defendant\u2019s career potential and her contributions to defendant\u2019s medical professional license.\n3. Divorce\u2014 equitable distribution \u2014 award in excess of net value\nThe trial court did not err in an equitable distribution action by awarding plaintiff property having a value in excess of the net value of the martial estate where the court found that the gross marital assets totaled $82,453.56 and marital debt $74,117.33, distributed 83% of the gross assets to plaintiff and all of the debt to defendant, and ordered defendant to pay plaintiff $61,676.17. Having found sufficient distributional factors to justify an unequal distribution of marital assets to plaintiff and distribution of the entire marital debt to defendant, the trial court acted within its discretion when it distributed the assets and debts independently.\n4. Divorce\u2014 equitable distribution \u2014 distributional factors\u2014 medical license not valued\nThe trial court did not err in an equitable distribution action resulting in an unequal distribution by refusing to assign a value to defendant\u2019s professional medical license. The court must consider separate property, including professional licenses, when dividing marital property, but is not required to determine the numeric value of separate property when considering distributional factors.\n5. Divorce\u2014 equitable distribution \u2014 uneven distribution\u2014 appreciation of medical license\nThe trial court did not err in an equitable distribution action resulting in an unequal distribution by not classifying and valuing as marital property the appreciation of defendant\u2019s medical license. The evidence tended to show that marital efforts led to the acquisition of the separate property rather than to an active increase in its value.\n6. Divorce\u2014 equitable distribution \u2014 valuation of medical practice goodwill\nThe trial court erred in an equitable distribution action by accepting certain expert testimony regarding the value of the goodwill in defendant\u2019s medical practice. When a professional practice has not been established for a sufficient period to determine goodwill based upon comparable past earnings, the capitalization of excess earnings method of valuing goodwill should be used.\nAppeal by plaintiff and defendant from judgment entered 8 April 1997 by Judge Earl J. Fowler, Jr., in Buncombe County District Court. Heard in the Court of Appeals 26 August 1998.\nMorrow, Alexander, Task, Long & Kurtz, by G.R. \u201cSkip\u201d Long, Jr., for plaintiff-appellant.\nGum & Hillier, P.A., by Howard L. Gum; Edward P. Hausle, P.A., by Edward P. Hausle, for defendant-appellant." }, "file_name": "0609-01", "first_page_order": 643, "last_page_order": 653 }