                     NOTICE: NOT FOR OFFICIAL PUBLICATION.
 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
                 AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.




                                    IN THE
             ARIZONA COURT OF APPEALS
                                DIVISION ONE


                              In re the Matter of:

                    MARILYN DRISS, Petitioner/Appellee,

                                        v.

                     LEON DRISS, Respondent/Appellant.


                           No. 1 CA-CV 18-0243 FC
                             FILED 2-12-2019


           Appeal from the Superior Court in Maricopa County
                          No. FN2016-006079
              The Honorable Katherine M. Cooper, Judge

   AFFIRMED IN PART; REVERSED AND REMANDED IN PART


                                   COUNSEL

Hallier & Lawrence, PLC, Phoenix
By Andrea Christine Lawrence, Tabitha A. Jecmen
Co-Counsel for Petitioner/Appellee

Jones, Skelton & Hochuli PLC, Phoenix
By Eileen Dennis GilBride, Sean M. Moore (argued)
Co-Counsel for Petitioner/Appellee
Burt Feldman & Grenier, Scottsdale
By Sandra Burt
Co-Counsel for Respondent/Appellant

The Wilkins Law Firm, PLLC, Phoenix
By J. Edward Doman, Jr. (argued), Amy M. Wilkins
Co-Counsel for Respondent/Appellant



                      MEMORANDUM DECISION

Presiding Judge Paul J. McMurdie delivered the decision of the Court, in
which Judge Randall M. Howe and Judge Jennifer B. Campbell joined.


M c M U R D I E, Judge:

¶1            In this dissolution action, Leon Driss (“Husband”) appeals
from the valuation of his medical practice and award of spousal
maintenance to Marilyn Driss (“Wife”). For the reasons stated below, we
affirm the business valuation but reverse the award of spousal maintenance
and remand for reconsideration.

             FACTS AND PROCEDURAL BACKGROUND

¶2            The parties were married in 1984. Husband is 64 and a
physician with a solo medical practice in Lakeside, Arizona. He is also
employed as the medical director of a hospice group and works several
shifts a month as a hospitalist in a Pinetop-Lakeside hospital. Wife is 65 and
employed full-time as a social worker.

¶3            Wife filed for dissolution in 2016. Pending trial, Husband
lived in the parties’ Lakeside residence, and Wife lived in their Scottsdale
residence. The court ordered the Lakeside residence sold and the proceeds
equally divided. Wife was awarded the Scottsdale residence with an
equalization payment due to Husband. At trial, each party called an expert
witness to testify regarding the value of Husband’s medical practice. Wife’s
expert, Susannah Sabnekar, conducted a computation of value and
determined the practice had a value of $193,000. Husband’s expert, Glenn
Karlberg, performed a business valuation and concluded the practice had
no value.




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                           Decision of the Court

¶4            The superior court accepted Sabnekar’s calculation of value
and awarded Wife one-half of $193,000 as her share of Husband’s medical
practice. The court also found Wife was entitled to spousal maintenance
and awarded her $2200 a month for five years. Husband timely appealed,
and we have jurisdiction pursuant to Arizona Revised Statutes (“A.R.S.”)
section 12-2101(A)(1).

                               DISCUSSION

A.     The Valuation of Husband’s Medical Practice Was Within the
       Superior Court’s Discretion.

¶5             Husband contends the superior court abused its discretion by
accepting Sabnekar’s calculation of the value when deciding the value of
Husband’s medical practice. “The valuation of assets is a factual
determination that must be based on the facts and circumstances of each
case.” Kelsey v. Kelsey, 186 Ariz. 49, 51 (App. 1996). In considering
Husband’s argument that the record does not support the court’s valuation,
we view the evidence in the light most favorable to upholding the court’s
decision and will affirm the ruling if reasonable evidence supports it. See In
re Marriage of Molloy, 181 Ariz. 146, 152 (App. 1994).

¶6           The superior court found Sabnekar’s calculation of value
more “well-founded” because she considered “a value for goodwill based
on an accepted methodology” and Karlberg did not consider any value for
goodwill. Husband argues the record does not support the finding of
goodwill. The court concluded:

       Goodwill is a party [sic] of a service business like a primary
       care practice. Patients recommend their PCP to friends. They
       return where they receive good care. Husband has built his
       practice for 18 years. He is one of two primary physicians in
       his area. He states that he feels that the community depends
       on him to continue practicing.

Husband contends the court’s definition of “goodwill” is incorrect.
According to Husband, valuing goodwill is a mathematical conclusion
based on whether he earns more than his peer group. Karlberg testified that




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Husband did not earn more than his peers; therefore, there was no
goodwill. 1

¶7            Goodwill is not based on one element, but is determined after
consideration of many factors, such as “the practitioner’s age, health, past
earning power, reputation in the community for judgment, skill and
knowledge, and his or her comparative professional success.” Wisner v.
Wisner, 129 Ariz. 333, 337–38 (App. 1981). There is “[n]o rigid and
unvarying rule” for determining the value of goodwill. Id. at 338; see also
Molloy, 181 Ariz. at 153 (rejecting argument that excess earnings is “the only
proper method to value goodwill” and holding “[a] court is not required to
use any one specific method to value goodwill”); Walsh v. Walsh, 230 Ariz.
486, 493, ¶¶ 20–21 (App. 2012). The superior court did not abuse its
discretion by rejecting Karlberg’s more limited definition of goodwill and
considering additional factors in deciding the goodwill value of the medical
practice.

¶8             Husband also argues the superior court abused its discretion
by relying on Sabnekar’s calculation of value and disregarding Karlberg’s
more comprehensive business valuation. The experts presented the court
with two vastly different values. Sabnekar performed only a market
analysis, whereas Karlberg conducted income and asset analyses. Wife
alleged several flaws in Karlberg’s analyses, and Husband alleged
deficiencies in Sabnekar’s analysis. Deciding which approach to rely on was
within the superior court’s discretion. See Mitchell v. Mitchell, 152 Ariz. 317,
323 (1987) (upholding business valuation that was supported by expert
testimony that a gross fees approach was preferable to excess earnings
method proposed by a different expert); Kelsey, 186 Ariz. at 51.

¶9            Husband cites Mortensen v. Mortensen, 1 CA-CV 15-0097 FC,
2016 WL 3211196, at *3, ¶ 15 (Ariz. App. June 9, 2016) (mem. decision),
where a wife retained an expert to conduct a “calculation of value” and the
husband’s expert provided an “opinion of value,” similar to a business
valuation. Mortensen concluded that the superior court properly rejected
the calculation of value as “incomplete and unreliable” based on specific

1      Husband combines the income (approximately $186,000) from his
two part-time jobs with the gross revenues from the practice into the
practice’s bank account. From these combined funds, Husband pays
himself $255,000 annually. However, both experts testified that when the
part-time incomes are backed-out, the practice can pay Husband $145,000 a
year from its gross revenues.



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                            Decision of the Court

deficiencies in that expert’s analysis. Id. at ¶ 17. Mortensen did not conclude
that a calculation of value is per se unacceptable as evidence of value. Thus,
in our case, the court did not abuse its discretion by relying on a calculation
of value that was supported by expert testimony and based on an
acceptable valuation method. See Mitchell, 152 Ariz. at 323.

¶10           Husband contends the record does not support the superior
court’s finding that Karlberg’s opinion lacked foundation. The court found
Karlberg’s opinion lacked foundation because he did not consider accounts
receivable, did not consider expenses and retirement contributions when
normalizing the practice income, and attributed all the cash in the practice
to Husband’s part-time jobs. The experts disagreed whether accounts
receivable should be considered and if distributions or retirement
contributions should be included when normalizing the practice income.
Regarding practice expenses, Karlberg accepted Husband’s statement that
there were no discretionary expenses or expenses attributed to the
part-time jobs, but Sabnekar testified that an income analysis should
scrutinize practice expenses. Karlberg attributed the cash in the practice to
Husband’s part-time jobs because the practice did not generate a positive
cash flow. Sabnekar questioned this conclusion. However, even if Karlberg
attributed the cash to Husband’s part-time jobs, the court was not obligated
to accept Karlberg’s methodologies when presented with another analysis
that the record supported. The superior court is the ultimate factfinder
when determining the credibility and weight to give the experts’ conflicting
testimony, and we will defer to its factual determinations. See Gutierrez v.
Gutierrez, 193 Ariz. 343, 347, ¶ 13 (App. 1998).

¶11           Finally, Husband contends the superior court’s conclusion
that Karlberg’s opinion lacked foundation was based on Sabnekar’s
inadmissible testimony. The court precluded Sabnekar from testifying to
the deficiencies in Karlberg’s report because those opinions had not been
properly disclosed. However, the foundational deficiencies the court cited
were brought out during cross-examination of Karlberg. Karlberg admitted
he did not analyze practice expenses but accepted Husband’s statement
that the practice had no non-practice or discretionary expenses. Karlberg
also stated on cross-examination that he did not clarify what components
(e.g., retirement or distributions) were included in the average “total
physician compensation” figure he received from the pertinent database.
Thus, even if Sabnekar improperly testified to these facts, other admissible
evidence supported the court’s findings, and Husband was not prejudiced.
See Ariz. R. Fam. Law. P. 86 (“Unless justice requires otherwise, an error in
admitting or excluding evidence—or any other error by the court or a
party—is not grounds for granting relief . . . or for vacating, modifying, or


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                             Decision of the Court

otherwise disturbing a judgment or order.”); Dep’t of Econ. Sec. v. Valentine,
190 Ariz. 107, 110 (App. 1997) (error must be prejudicial to warrant
reversal).

B.     In Deciding Spousal Maintenance, the Superior Court Erred by
       Failing to Consider the Income-Earning Potential of the Property
       Awarded to Wife but Could Properly Consider Husband’s
       Additional Income.

¶12            The superior court found Wife was entitled to a spousal
maintenance award of $2200 per month for five years because she lacked
sufficient property to meet her reasonable needs, she was unable to be
self-sufficient through her employment, and her age precluded her from
becoming self-sufficient through other employment. See A.R.S.
§ 25-319(A)(1), (2), (4). Husband argues the court failed to consider that
property awarded to Wife would generate at least some interest income and
abused its discretion by considering the income he earns from two
part-time jobs in addition to his full-time medical practice. We review the
court’s award of spousal maintenance for an abuse of discretion. Cullum v.
Cullum, 215 Ariz. 352, 354, ¶ 9 (App. 2007). Whether to attribute income to
a spouse is a question of law we review de novo. Pullen v. Pullen, 223 Ariz.
293, 295, ¶ 9 (App. 2009). Again, error must be prejudicial to warrant
reversal. Ariz. R. Fam. Law. P. 86.

¶13            In considering a request for spousal maintenance, the
superior court first determines if the requesting spouse is eligible under
A.R.S. § 25-319(A). If the court finds the spouse is eligible for an award, it
then considers the “amount and duration of the award” based on the factors
in A.R.S. § 25-319(B). See Gutierrez, 193 Ariz. at 348, ¶ 15 (quoting Thomas v.
Thomas, 142 Ariz. 386, 390 (App. 1984)). Wife bore the burden of establishing
that she was entitled to spousal maintenance and the amount warranted
under the statute. See id. at 350, ¶ 27; Troutman v. Valley Nat’l Bank of Ariz.,
170 Ariz. 513, 517 (App. 1992) (“The party who asserts a fact has the burden
to establish that fact.”).

¶14          The superior court found Wife unable to be self-sufficient
through her employment, the marriage was of long duration, and Wife’s
age prevented her from becoming self-sufficient through her employment.
Husband does not dispute that Wife has reached her maximum earning
potential and her age precludes further career advancement. Thus, Wife is
eligible for an award of spousal maintenance pursuant to A.R.S.
§ 25-319(A)(2) and (4). See Gutierrez, 193 Ariz. at 348, ¶ 17 (a party is eligible




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                           Decision of the Court

for spousal maintenance if the court finds any one of the A.R.S. § 25-319(A)
factors is present).

¶15            Based on her monthly wages, the court concluded Wife
needed an additional $2260 a month to meet her reasonable expenses. The
court found Wife earns $77,000 annually and will receive approximately
$1.7 million in assets. These assets include: (1) her share of the community
investment, retirement, and bank accounts; (2) equalization payments for
her share of the equity in the Lakeside residence and her interest in
Husband’s medical practice; (3) cash; (4) the Scottsdale residence (with an
equalization payment due to Husband); (5) one-half share of the parties’
interest in the “Sunrise” investment; (6) a vehicle; and (7) a timeshare. When
calculating Wife’s monthly income, however, the court did not consider the
interest income potential of these assets because neither party presented a
“calculation of the monthly income that could be generated from the
investment of the assets Wife will receive.”

¶16           Husband argues the superior court was obliged to consider
the income-producing potential of these assets according to Deatherage v.
Deatherage, 140 Ariz. 317, 320 (App. 1984). Wife argues the court did not
abuse its discretion by failing to include any interest income because it
heard no evidence of such income. Both parties, however, testified that they
received $16,000 to $18,000 in annual distributions from the Sunrise
investment. Thus, the court did hear evidence of some interest income from
the investment accounts awarded to Wife.

¶17            Although Wife did not know if her retirement accounts
generated any monthly interest income and, therefore, could not provide
specific figures to the court, certainly Wife’s (and Husband’s) sizeable
investment and retirement accounts generate some interest income. Wife is
of retirement age and may be able to take without penalty any interest
earned on her retirement accounts without depleting any principal.
Pursuant to Deatherage, the court must consider “all property capable of
providing for the reasonable needs of the spouse seeking maintenance.” 140
Ariz. at 320 (emphasis added). The court abused its discretion by failing to
attribute any interest income to these substantial assets.

¶18           Wife argues that not all of the $1.7 million in assets are
income-producing and she need not use up her remaining assets to support
herself. In addition to the non-income-producing assets, i.e., the Scottsdale
residence, vehicle, and timeshare, Wife was awarded substantial assets
with income-producing potential which the court failed to consider. The
superior court can attribute a conservative rate of return on the investment


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                           Decision of the Court

and retirement accounts and the equalization payments without requiring
Wife to use any of the principal from these accounts or assets to support
herself. See Deatherage, 140 Ariz. at 320–21.

¶19           Husband also argues the superior court abused its discretion
when it considered the income he earns from his two part-time jobs. In
addition to his medical practice, Husband works as the medical director for
a hospice organization and works shifts as a hospitalist. The court found
Husband worked 45–50 hours per week at his medical practice. According
to Husband, he works 10–15 hours per month for the medical director
position and three to seven 12-hour shifts a month at the hospital. Husband
argues the court should not attribute 56–75 hours per week to a 64-year-old
spouse in determining whether he can pay Wife spousal maintenance. See
A.R.S. § 25-319(B)(4).

¶20           Husband cites the Child Support Guidelines, A.R.S. § 25-320
app. § 5(A) (“Guidelines”), which provide that the court should not
attribute additional income if it would require an extraordinary work
regimen. Assuming without deciding that the same analysis applies to
spousal maintenance cases, see Pullen, 223 Ariz. at 296–97, ¶ 14 (in spousal
maintenance case, court held it was appropriate to apply the same factors
used to attribute income for purposes of child support), the superior court
was within its discretion to include the additional earnings. In applying the
Guidelines § 5(A), then Guidelines § 4(A), McNutt v. McNutt held this
section did not “entitle a parent who continues to work the same schedule
as he or she consistently worked during the marriage to a decreased support
obligation.” 203 Ariz. 28, 31–32, ¶ 14 (App. 2002). 2 McNutt also rejected the
argument that courts were to disregard any hours worked above and
beyond a typical 40-hour work week; instead holding courts were to
consider the specific facts of the case. Id. at ¶¶ 14–15.

¶21           Husband has been working as the hospice medical director
since 2001 and has been taking hospital shifts since 2010. Husband started
working hospital shifts to cover the overhead for his medical practice when
his partners left the practice group. In 2016, he reduced the number of
hospital shifts and now only works day shifts. According to Husband, he
continues to work hospital shifts to support the medical practice. Husband

2      In Woodside v. Woodside, 2 CA-CV 2013-0144, 2014 WL 3732558, at *5,
¶ 25 (Ariz. App. July 29, 2014) (mem. decision), this court expressly
declined to apply McNutt, 203 Ariz. at 32, ¶ 17, and Guidelines § 5(A) in a
spousal maintenance case.



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                           Decision of the Court

maintains the medical practice because he enjoys it and feels an ethical
obligation to his patients and the community to keep the practice open.
Husband, like many physicians, works more than a typical 40-hour work
week. He has historically worked these hours and chooses to continue to
do so for reasons other than and in addition to providing for his family.
Therefore, we find no abuse of discretion.

¶22          Because the court failed to consider even a conservative rate
of return on potential income producing assets awarded to wife, and we
cannot determine if the error was harmless, the case must be remanded for
reconsideration.

            ATTORNEY’S FEES AND COSTS ON APPEAL

¶23           Both parties request an award of attorney’s fees and costs on
appeal pursuant to A.R.S. § 25-324. After considering the parties’ financial
resources and positions on appeal, we decline to award fees to either party
in the exercise of our discretion.

                              CONCLUSION

¶24           We affirm the superior court’s valuation of Husband’s
medical practice but vacate the award of spousal maintenance and remand
for reconsideration consistent with this decision.




                        AMY M. WOOD • Clerk of the Court
                        FILED: AA




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