Reliability Without Revealing the Algorithm: Vermont Affirms V.R.E. 702 Admission of Proprietary Practice-Valuation Methods and Discounts Professional Goodwill Absent a Noncompete

Introduction

In Xandra Velenchik v. Alan Velenchik, Case No. 25-AP-046, the Vermont Supreme Court (entry order dated September 5, 2025) affirmed the family division’s property-division and maintenance rulings in a divorce between a dentist operating a solo practice and her spouse. Although the opinion issues as a three-justice panel entry order—therefore not precedential under Vermont’s rules—it offers a clear and practical roadmap for three recurring issues in family litigation:

When and how expert testimony derived from proprietary valuation tools satisfies Vermont Rule of Evidence 702;
How to treat professional “goodwill” in valuing a professional practice, particularly where the professional intends to continue practicing and will not agree to a noncompete; and
How the maintenance statute’s threshold criteria operate when a party’s asserted needs are driven by voluntary expenses (e.g., contributions to adult children) rather than personal living needs.

The parties married in 2001 and separated in 2021. Wife is a dentist in Manchester, Vermont, who acquired and improved an existing dental practice; Husband has stable employment and some supplemental earnings. The lower court divided property—allocating the marital home and the dental practice (with debts) to Wife and a ski condominium and retirement accounts to Husband—resulting in an approximately 59%/41% split in Wife’s favor. It also denied Husband’s request for spousal maintenance. On appeal, Husband challenged the admissibility of Wife’s valuation expert, the court’s treatment of goodwill in the dental practice valuation, and the denial of maintenance.

The Supreme Court affirmed on all points, grounding its decision in established Vermont law on expert admissibility, valuation discretion, and maintenance criteria.

Summary of the Opinion

The Court upheld the family division’s evidentiary ruling admitting Wife’s expert appraisal of the dental practice under Vermont Rule of Evidence 702. The expert—a seasoned dental practice consultant with decades of industry experience who uses a proprietary spreadsheet and marketplace data—was found qualified, and her methodology reliable, even though she could not detail the internal formulas of the tool. Citing State v. Pratt, the Court emphasized that an expert need not understand a software tool’s inner programming to offer reliable testimony where the tool is widely used, validated in the field, and applied properly to sufficient data.

On valuation, the Court approved the trial court’s choice to discount the practice’s value to $45,000 in the marital estate because roughly 90% of the practice’s indicated “fair market value” depended on goodwill realizable only if Wife agreed to transitional covenants (including a noncompete) and a sale. Given Wife’s credible testimony that she would continue practicing locally and would not undertake such restrictions or a sale, the lower court reasonably limited the marital value to what could be realized without goodwill and noncompete terms.

Finally, the Court affirmed the denial of maintenance. Despite an income disparity—Wife earns about 2.5 times Husband—Wife’s reasonable expenses (including support for the minor child and taxes) nearly equaled her income. Husband’s budget included voluntary support for an adult child; excluding that voluntary expense, he ran a surplus and had capacity to earn more. Under 15 V.S.A. § 752(a) and controlling Vermont case law, Husband failed to meet the threshold criteria for maintenance.

Analysis

Precedents Cited and Their Influence

USGen New England, Inc. v. Town of Rockingham, 2004 VT 90, 177 Vt. 193: The Court relied on USGen for two propositions: (1) the standard of review—admission or exclusion of expert testimony is reviewed for abuse of discretion and will be affirmed absent a clear error; and (2) expert qualification is flexible. USGen upheld an expert with substantial practical experience but no formal appraisal training or prior expert testimony. Here, the Vermont Supreme Court analogized: Wife’s expert had 45+ years of industry experience, hundreds of appraisals, and extensive sales experience. Formal credentials were not required, and this experiential foundation sufficed for Rule 702 qualification.
State v. Pratt, 2015 VT 89: Pratt is the linchpin for the reliability ruling. It recognizes that an expert may rely on specialized software without understanding the internal programming, provided the tool is broadly used, has a track record of accuracy, and the expert uses it correctly. The Court extended that logic to civil valuation evidence: the expert’s proprietary spreadsheet—used industry-wide for decades, subject to internal review, and validated by sales occurring at appraised values approximately 75% of the time—met Rule 702’s reliability prong.
Semprebon v. Semprebon, 157 Vt. 209 (1991): Semprebon supports deference to the trial court on property valuation: if the chosen figure lies within the range of evidence, it will be upheld. The Court used this principle to affirm the $45,000 valuation for the practice absent a noncompete and goodwill transfer, as it fell within the admissible evidence presented by Wife’s expert.
Johnson v. Johnson, 155 Vt. 36 (1990): Johnson supplies the maintenance standard of review—broad discretion to the trial court—and underscores that the challenger must show no reasonable basis for the ruling. This set the bar for Husband’s maintenance appeal and informed the affirmance.
Sochin v. Sochin, 2004 VT 85 (mem.), 177 Vt. 540: Sochin confirms that if the threshold requirements of 15 V.S.A. § 752(a) are not met, maintenance must be denied. The Court cited Sochin to sustain the conclusion that Husband did not meet the statutory threshold.

Legal Reasoning

1) Expert Admissibility Under V.R.E. 702

Rule 702 requires that expert testimony be offered by a qualified witness and be based on sufficient facts, reliable methods, and reliable application of those methods to the case. Husband argued the expert was unqualified and her method unreliable because it relied on a proprietary spreadsheet whose inner workings she could not disclose or detail.

The Court disagreed. On qualification, it stressed that “expertise may arise from either training or from experience” and does not demand professional certifications. The expert’s decades-long specialization in dental practice appraisal and transition work—including approximately 400 appraisals and over 300 sales—satisfied the qualification requirement.

On reliability, the Court emphasized several factors:

Use of a recognized valuation framework (fair market value) and collection of relevant quantitative and qualitative inputs (multi-year tax returns, production metrics, payer mix, patient counts, fee schedules, overhead, and normalization adjustments);
Deployment of an industry-tested proprietary tool subject to internal review, coupled with a real-world validation rate (approximately 75% of appraised practices sold at the appraised price); and
Regular use of the methodology in the marketplace, not merely for litigation.

Invoking Pratt, the Court clarified that an expert’s inability to explain the software’s programming or formulas is not disqualifying when the tool is widely accepted and the expert can explain the inputs, process, and validation. Reliability, the Court reaffirmed, turns on sound methodology and relevance, leaving weight and credibility for the trier of fact.

2) Valuation of a Professional Practice and the Role of Goodwill

The expert estimated a “full” fair market value of $440,000 for the dental practice—but testified that roughly 90% depended on human capital and goodwill that would only be realized with a transition arrangement and a noncompete. Without those covenants, the fair market price would fall to $45,000. Wife testified credibly that she intended to remain practicing in Manchester and would not agree to a noncompete or sale.

The family division credited that testimony and used the “no noncompete/no goodwill transfer” value ($45,000) in the marital balance sheet. The Supreme Court affirmed that approach as reasonable and within the evidentiary range. In effect, the Court endorsed a practical principle for divorce valuations: where the predominant value of a professional practice lies in personal goodwill and is not realistically transferable—because the owner will continue practicing and will not (or cannot) agree to restrictions—the marital estate should not be inflated by goodwill that cannot be realized without constraining the professional’s future livelihood.

3) Property Division and the 59%/41% Allocation

The parties largely agreed on who would take which assets: Wife took the marital home and practice (with debt); Husband took a ski condo and retirement accounts. This produced a 59%/41% split in Wife’s favor. The court found that allocation equitable because:

The marital home—where the youngest child resides—needs substantial work;
Wife bears essentially all financial support for the minor child and is primary caregiver; and
The distribution reflects Wife’s contributions to acquiring and developing her dental practice.

Within Vermont’s equitable-distribution regime, equality is not required. The record supported the court’s exercise of discretion.

4) Denial of Spousal Maintenance

Maintenance under 15 V.S.A. § 752(a) requires a threshold showing that the applicant lacks sufficient income or property to meet reasonable needs and cannot maintain the marital standard of living through appropriate employment (or is a child’s custodian). The trial court found:

Wife earns about $26,673 per month, with reasonable expenses of $26,534 (including taxes of $12,686 and substantial support for the minor child)—leaving virtually no surplus;
Husband earns about $10,451 per month, with reasonable expenses of $6,619—including $1,743 for the adult child’s rent and living expenses—and $3,068 in taxes; without the voluntary support of the adult child, he would have about $2,037 surplus monthly;
Husband is well-educated, healthy, and capable of earning additional income via overtime and supplemental work; neither party lives extravagantly, and both are paying down debts largely incurred by shared choices to send their children to a costly ski academy.

Given these findings—which Husband did not meaningfully contest—the court concluded he failed to satisfy the threshold criteria for maintenance. The Supreme Court, citing Sochin and Johnson, held that substantial evidence supported that conclusion and that the lower court acted within its discretion. Notably, voluntary support for adult children does not create a cognizable “need” under § 752(a).

Impact and Practical Significance

A. Evidence Law: Proprietary Tools Under Rule 702

This decision underscores that Vermont courts will admit expert opinions generated through proprietary or “black box” tools when:

The expert is well-qualified by experience or training;
The method is standard in the relevant industry and used outside litigation;
The inputs and process can be explained; and
There is real-world validation (e.g., consistent sales at appraised values).

Practitioners should prepare experts to articulate the data inputs, the general valuation framework, quality controls, and marketplace validation, even if they cannot disclose source code or detailed formulas.

B. Family Law Valuations: Personal Goodwill and Noncompetes

The Court’s acceptance of a steep goodwill discount where the professional intends to continue practicing clarifies a vital point: personal or inextricably human-capital-based goodwill is not a readily divisible marital asset unless the preconditions for realizing it (e.g., a sale, transition plan, and restrictive covenants) are realistically in play. Overstating a practice’s distributable value by including non-transferable goodwill risks inequity and judicial reversal.

Practically, valuation experts should provide alternative values:

Full fair market value assuming a sale with transition and restrictive covenants; and
Value without goodwill/noncompete effects when the owner will continue practicing.

Notably, the Court highlighted that Husband’s expert offered a full-value estimate close to Wife’s expert ($415,000 vs. $440,000) but did not provide a “no goodwill” figure—leaving the trial court with only one credible number for that scenario. Future litigants should avoid that gap.

C. Maintenance Litigation: Threshold Criteria Are Dispositive

The decision reiterates that maintenance claims hinge first on § 752(a)’s threshold. Voluntary expenses—especially support of adult children—will not establish “need.” Parties should:

Present net budgets focused on personal reasonable needs and tax realities;
Address capacity to earn (including overtime or secondary employment); and
Document the marital standard of living and whether it is attainable through appropriate employment and the property award.

Complex Concepts Simplified

V.R.E. 702 (Expert Testimony): Allows qualified experts to testify if their opinions are based on sufficient facts, derive from reliable methods, and are reliably applied to the case. “Qualified” includes practical experience, not just formal certifications. Reliability can be shown by industry acceptance and real-world validation—experts need not explain software code to meet the standard.
Fair Market Value (FMV): The price a willing buyer would pay a willing seller in an arm’s-length transaction, with neither under compulsion and both with reasonable knowledge of relevant facts. For professional practices, FMV may assume covenants like noncompetes and transition assistance that materially affect price.
Personal vs. Enterprise Goodwill: Personal goodwill is tied to an individual’s reputation, skills, and relationships; enterprise goodwill inheres in the business entity (brand, location, systems). Personal goodwill is typically non-transferable without the professional’s active cooperation and restrictive covenants. Where goodwill is largely personal and the professional will continue practicing, its value is often not realizable in a divorce context.
Abuse of Discretion / “Range of Evidence”: Trial courts receive deference on evidentiary and valuation calls. If a valuation number falls within the supported evidentiary range, appellate courts will not substitute their judgment.
Maintenance Threshold (15 V.S.A. § 752(a)): Before a court calculates amount/duration, the applicant must show insufficiency of income/property to meet reasonable needs and inability to maintain the marital standard of living through appropriate employment (or custodial status). Failure at this threshold ends the inquiry.

Conclusion

While nonprecedential, Velenchik provides a well-reasoned, practical template for three recurrent issues in Vermont family law:

Expert admissibility under V.R.E. 702 encompasses proprietary valuation tools when the expert explains inputs and process and demonstrates marketplace reliability—echoing the logic of State v. Pratt.
Professional practice valuations must separate realizable enterprise value from personal goodwill that cannot be monetized absent a sale and noncompete; if the professional credibly intends to continue practicing without restrictive covenants, courts may adopt a significantly reduced valuation.
Maintenance claims rise or fall on § 752(a)’s threshold; voluntary outlays for adult children do not create statutory “need,” and courts will consider earning capacity and realistic budgets anchored in reasonable personal expenses.

Family practitioners should structure expert evidence to include alternative valuations with and without goodwill/noncompete assumptions, prepare experts to articulate methodology and validation, and build maintenance records that clearly address the statutory threshold. Evidence law practitioners should note the Court’s continued openness to reliable, experience-based methodologies even where the computational details are proprietary. Together, these holdings reinforce trial court discretion grounded in practical realities of the marketplace and family finances.

Note: The Court’s entry order was issued by a three-justice panel and is not precedential in Vermont. It nevertheless offers persuasive guidance on the treatment of proprietary valuation methods, professional goodwill, and maintenance thresholds.