On appeal from the Superior Court, Chancery Division, Family Part, Bergen County, whose decision is reported at N.J. Super. .
King, Brody and Ashbey. The opinion of the court was delivered by Ashbey, J.A.D.
This is an appeal from the provisions of a judgment of divorce between plaintiff entertainer and comedian Joseph and defendant Nancy Piscopo. The novel issue raised by the trial judge's holding is that the marital property included plaintiff's "celebrity goodwill." See Piscopo v. Piscopo, 231 N.J. Super. 576, 580-581 (Ch.Div.1988).
At trial plaintiff claimed that the goodwill attributed to his celebrity status was not an asset subject to equitable distribution. On appeal he concedes that celebrity goodwill could be a distributable marital asset. His argument is personal, that his reputation as a celebrity could not be related to probable future earnings, but only to possible future earnings. Defendant asserts that the goodwill associated with plaintiff's status as a celebrity is an intangible but quantifiable asset recognizable by analogy to well-accepted New Jersey case law, and therefore an equitably distributable marital asset.
Irwin Marks, C.P.A., was appointed by the trial judge to value plaintiff's business and pension interests and to calculate
the value, if any, of celebrity goodwill and the actual disposable income of plaintiff. Marks had experience as an accountant for famous entertainment personalities. He rendered two reports and testified at trial.
Marks found that substantially all of plaintiff's earned income flowed through Piscopo Productions, Inc., with plaintiff's compensation from the corporation determined at the end of each year.*fn1 Marks said the valuation of plaintiff's business was analogous to valuing any other professional corporation. He used three out of five years of income from which to derive an average adjusted net income of $288,150 and average adjusted gross receipts of $635,452.
Marks had never valued the business of a show business personality. He had familiarized himself with publications and with custom of the trade, which was to take a percentage of the celebrity's average gross earnings and to apply an appropriate discount. He calculated plaintiff's celebrity goodwill by taking 25% of his average gross earnings over the three year period. He applied no further discount. He said that by using the figure of 25%, he had already discounted the applicable percentage based upon his experience and training.*fn2 Marks attributed to plaintiff's celebrity goodwill a value of $158,863.
Under N.J.S.A. 2A:34-23, the court may "effectuate an equitable distribution of the property, both real and personal, which was legally and beneficially acquired by them or either of
them during the marriage."*fn3 While no New Jersey case has held that celebrity goodwill is a form of "property" to be distributed within the meaning of the statute, goodwill is a legally protected interest. J. B. Liebman & Co., Inc. v. Leibman, 135 N.J. Eq. 288, 292 (Ch.1944); In re Hall, 99 N.J.L. 1, 2 (Sup.Ct.1923), aff'd 100 N.J.L. 405 (E. & A. 1924).
In the context of equitable distribution, the leading case holding that goodwill is a distributable asset is Dugan v. Dugan, 92 N.J. 423 (1983). In Dugan the Supreme Court held that the goodwill attributed to the solely owned professional corporation of a lawyer was subject to equitable distribution, despite the fact that ethical considerations prevented plaintiff from selling his practice. The Court said that business goodwill existed although the business depended entirely upon the skill of one person and had no book value. Id. ...