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Dodgers Divorce Closer to Resolution: Part I

The Dodgers are one of the most storied franchises in Major League Baseball, and one of baseball’s most valuable teams. The team has been in some turmoil, mainly for off the field reasons. Most importantly, who will own the team for next season depends on the ruling in a divorce case.

Frank McCourt bought the team for approximately $355 million in 2004. This year, Forbes Magazine estimated the team’s value at $727 million including Dodger stadium and other team-owned facilities. Frank McCourt and his wife, Jamie, have been married since 1979 and were both active in owning and managing the team. However, in 2009 Frank McCourt fired Jamie McCourt as chief executive of the team. Shortly thereafter, Jamie filed for divorce from Frank.

Frank is claiming full ownership of the Dodgers based on a post-nuptial agreement they signed after purchasing the team, but before moving from Massachusetts to California. The post-nuptial agreement would give Frank complete ownership of the Dodgers, and Jamie would receive sole ownership of the McCourts’ vast real estate holdings.

Like Wisconsin, California is a community property state. In a community property system, the property of both spouses is considered to be marital property and each spouse has half-interest in all marital property. When a couple divorces, the marital property must be divided between them. Jamie McCourt is arguing that the post-nuptial agreement is invalid under community property law, and therefore she is entitled to a 50 percent share in the Dodgers.

They presently have a divorce case pending in Los Angeles County Superior Court. That case would rule on the validity of the post-nuptial agreement and determine who gets what in the McCourt divorce. While that case is pending, the McCourts are also participating in mediation, a form of dispute resolution that bypasses the courts and gives the parties an opportunity to reach a negotiated compromise. In our next post, we will go into more detail on the McCourts’ mediation and the case that is presently pending in court.

Sources: Los Angeles Times: Mediator gives McCourts settlement proposal; Bill Shaikin, 11/19/2010

Forbes.com: The Business Of Baseball, Los Angeles Dodgers (http://www.forbes.com/lists/2010/33/baseball-valuations-10_Los-Angeles-Dodgers_338671.html)

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Dodgers Divorce Closer to Resolution: Part II

In our last post, we discussed the Frank and Jamie McCourt divorce. Unless they can reach a settlement, the judge in the McCourt’s divorce case will determine the ownership of the Los Angeles Dodgers. Ownership of the Dodgers will depend on the validity of the McCourts’ post-nuptial agreement and an interpretation of California’s system of community property law- a system similar to Wisconsin law.

While their divorce case is pending, the McCourts have also participated in mediation in an attempt to reach a compromise. Last week, the judge overseeing the mediation met with each of the McCourts separately and advised them of how he believes they should divide ownership of the Dodgers.

While the mediator ordered that the parties not publicly discuss the mediation, reports indicate they have until the end of the month to accept or reject the mediator’s recommendation. Reports also indicate that the mediator’s opinion would give Jamie an interest in the Dodgers. Although the details of the mediator’s opinion are presently confidential, past settlement and mediation discussions do shed some light on what is being discussed.

The McCourts have attempted to reach a settlement many times, both with and without a mediator. In the past, discussions between the McCourts have established that Jamie would give up her interest in the Dodgers and Frank would compensate her. However, the parties have been unable to come to terms on how much should be paid. If the McCourts cannot settle this issue, it will be up to Los Angeles Superior Court Judge Scott Gordon to make a ruling on the post-nuptial agreement and the ownership of the Dodgers. Judge Gordon has until December 29 to rule in the case.

Almost any divorce has the potential to have very complex issues that can be difficult to resolve. The McCourt divorce demonstrates that when there are significant assets in dispute, property division issues can be difficult to settle by compromise alone. The McCourts have made several attempts at reaching a negotiated compromise, but if they cannot reach a compromise then this case will be in the hands of a judge.

Sources: Los Angeles Times: Mediator gives McCourts settlement proposal; Bill Shaikin, 11/19/2010

Forbes.com: The Business Of Baseball, Los Angeles Dodgers (http://www.forbes.com/lists/2010/33/baseball-valuations-10_Los-Angeles-Dodgers_338671.html)

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Jamie McCourt wins Ruling in Dodgers Divorce

Previously, we posted about the divorce between Frank and Jamie McCourt that will determine who owns the Los Angeles Dodgers. Frank and Jamie participated in mediation in an attempt to reach a property division settlement, however their mediation failed. Without a settlement in place, it was up to Judge Scott Gordon to rule on the issue of who owns the Dodgers and whether a post-nuptial agreement between the McCourts was binding.

If valid, the agreement would give Frank McCourt sole ownership of the Dodgers. Tuesday, Judge Gordon threw out the post-nuptial property division agreement, a decision that could make Jamie McCourt part owner of the team and could result in protracted property division litigation.

Judge Gordon found the post-nuptial agreement invalid based on errors occurring when the McCourts signed the agreement. During the trial, the attorneys for both sides reviewed the documents and found that the McCourts signed six copies of the agreement. Three of the copies listed the Dodgers as Frank’s sole property, but three copies did not.

Frank McCourt could decide to appeal Judge Gordon’s ruling, but he is already employing another legal strategy. Frank has informed the court that he is claiming sole ownership of the Dodgers on the theory he bought the franchise using the assets of a company he established before he married Jamie.

The parties disagree on how long it would take to resolve this new claim. Frank’s attorneys believe this new property division claim could be resolved in a one-day trial based upon evidence that has already been introduced into the record. Jamie’s attorneys believe the trial could require up to 60 days and months to collect new evidence.

As an alternative to further court proceedings, this ruling may bring the McCourts back to the negotiation table to settle their property division contest. Past negotiations focused on Jamie giving up her interest in the Dodgers and Frank compensating her, but they could never come to terms on a deal. During the past negotiations, the post-nuptial agreement was an unknown variable. Now that there has been a ruling on the issue, the McCourts may now feel they have a better understanding of their rights and be able to reach a compromise.

Source: Los Angeles Times, “Dodgers’ ownership in limbo after judge throws out McCourt property agreement,” Bill Shaikin and Carla Hall, 12/7/2010

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McCourts continue to work on Dodgers divorce settlement

Opening day has come and gone in Milwaukee, as one of the Brewer’s National League Rivals begins a new baseball season with its ownership in doubt because of a prolonged divorce. Although many couples struggle to properly divide their assets during a divorce, few need to worry about an asset as valuable as a professional baseball team during the property division settlement proceedings. However, Jamie and Frank McCourt, joint owners of the Los Angeles Dodgers, are doing exactly that as the Dodgers themselves enter a second season without settled ownership.

Requests from both Jamie and Frank’s attorneys resulted in the postponement of a hearing originally scheduled for April 11. Jamie McCourt is asking that Frank be required to provide her with all of the Dodgers’ financial documentation regarding the teams’ business operations.

The new hearing date is scheduled one month later on May 11. The change will give Frank and Jamie additional time to negotiate the complex property division agreement that could finally end their divorce proceedings, which began in late 2009.

In December, Judge Scott Gordon of the Los Angeles Superior Court threw out an agreement that would have given sole team ownership to Frank McCourt. Jamie McCourt took this decision to mean that she was a half-owner of the team.

At that point, Frank McCourt’s attorneys said that he would pursue a second trial to make the Dodgers his separate property, while Jamie McCourt’s attorneys said that she’d create an investment group to purchase Frank’s interest in the Dodgers. As of the present date, neither party has followed through with these stated intentions, and their attorneys have declined to comment on the negotiations since March 2 when the pair met to discuss the settlement.

Source: Los Angeles Times, “Frank and Jamie McCourt working quietly on a settlement,” Bill Shaikin, 3/29/2011

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Jamie McCourt would like to force sale of Dodgers

Jamie McCourt is requesting an immediate sale of the Dodgers to avoid a takeover by Major League Baseball. During a divorce with the team’s owner, Frank McCourt, the Jamie was fired, and she now claims that the team is severely mismanaged. Jamie petitioned Superior Court Judge Scott Gordon to order an immediate sale in hopes of obtaining the maximum amount of value for the franchise.

The team is the couple’s largest asset and the subject of an ongoing marital property division dispute, despite the fact that their divorce is already official. Jamie McCourt believes that the sale would be a positive change for the team and its fans, as it would bring in a new owner with differing business strategies than those of her ex-husband.

Judge Gordon has scheduled a hearing on the issue for June 22, during which he will consider arguments for and against the forced sale of the team. The hearing will also cover Jamie’s request to obtain her ex-husband’s financial records. This follows a ruling in December, when the judge set aside a controversial post-nuptial agreement. That decision has caused considerable tension for the franchise itself, as Frank had previously argued that 2004 post-nuptial agreement granted him exclusive ownership over the team.

The commissioner of Major League Baseball has launched an investigation into the failing finances of the Dodgers, suggesting that MLB might have to take over the team if the current management is unable to resolve the situation.

As the divorce between Frank and Jamie McCourt demonstrates, complex property division can be one of the most difficult issues to resolve in a divorce that involves substantial assets. While just about any divorce has the potential to become a hotly contested divorce, achieving a settlement can be quite a challenge when there are significant assets at stake. If you have questions about marital property division in Wisconsin, an experienced divorce attorney can help.

Source: Thomson Reuters News and Insight, “Jamie McCourt seeks immediate sale of the Dodgers,” Mark Lamport-Stokes, 5/19/2011

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Frank McCourt files for lower alimony payments

Any divorce has the potential to become a complex divorce. When there is a large amount of assets involved, the chances that the divorce will become complex increase. The divorce between Frank and Jamie McCourt is a good example of how this can happen.

In the latest round in the prolonged divorce contest between McCourts, Frank McCourt is disputing the amount of spousal support, or alimony, that he is required to pay. Frank McCourt argues that his wife is living extravagantly and that he cannot afford to continue funding her lifestyle while the divorce is finalized. Jamie McCourt contends that he is mismanaging his funds, and could sell his half of the Dodgers to cover costs of the divorce.

A previous court order mandated that Frank McCourt was to pay his ex-wife more than $600,000 per month, including $400,000 in payments on seven homes that are in her name. He would like these payments to be reduced.

The seven properties, which are all titled in Jamie McCourt’s name, are currently a major part of the divorce dispute. Jamie McCourt refuses to either sell or rent the properties, and Frank McCourt continues to have to pay the mortgages.

Because the Dodgers are also now in bankruptcy, Frank McCourt’s annual income has fallen to $5 million. His income does not cover the court-ordered payments to his ex-wife, and he has declared in filings that he has spent $8 million on support for Jamie McCourt in the last year, compared to about $600,000 on his own expenses.

Jamie McCourt questions Frank’s personal financial situation, contending that he is exaggerating any financial difficulties he may be having. She also questions Frank McCourt’s ability to run the Dodgers, whose value has significantly decreased in the last two years.

Frank McCourt’s motion to lower his payments to Jamie McCourt will be heard next month.

Source: ESPN, “Frank McCourt seeks reduced payments,” Josh Fisher, 15 July 2011

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