McCourt marital pact on Dodgers ruled invalid
Wednesday, December 8, 2010
LOS ANGELES (AP) — A postnuptial agreement giving Frank McCourt sole ownership of the Los Angeles Dodgers was thrown out Tuesday by a judge, allowing McCourt’s ex-wife to seek half of one of baseball’s most storied franchises and leaving the team’s future uncertain.
Despite the ruling by Superior Court Judge Scott Gordon, the bitter saga over who owns the team is no closer to resolution. It could, however, force the feuding former couple to reach a settlement to avoid further off-field distractions.
The ruling wasn’t expected to affect team operations but does mean the Dodgers could eventually be shared under California community property law.
Gordon said there wasn’t a mutual understanding between Jamie and Frank McCourt about what the pact spelled out when they signed it in March 2004 in Massachusetts, shortly after the Dodgers were bought for about $430 million.
“The parties had mistaken belief and no agreement as to the meaning of the agreement, the content of the agreement, and the effect of the (agreement) on their property and property rights,” Gordon wrote in his 100-page tentative ruling.
The agreement was designed to spell out that the couple’s luxurious homes would belong to Jamie McCourt as a way to protect the properties from her ex-husband’s creditors.
However, the 10-page document has become a lesson in how to bungle a postnup. Two conflicting versions were signed, and both McCourts acknowledged they hadn’t read the agreement, something Judge Gordon highlighted in his ruling.
The testimony by both parties “paints a picture of two people who had no involvement in the drafting or execution of the (agreement) and related documents and further that they so entrusted all matters regarding the (agreement) to their lawyers, that they did not closely read or did not read at all, the drafts or final copies of the various (agreements) involved in this case,” Gordon wrote.
Jamie McCourt’s lawyer, David Boies, said his client was pleased with the decision, but she wants a reasonable resolution of divorce negotiations that involved the postnuptial agreement.
“It’s in the interest of her, her family, Dodger fans and the team,” to settle, Boies told The Associated Press. “She’s not going to insist on exactly half, but if she’s prepared to compromise, Frank has to look at this case with some realism.”
Lawyers for Frank McCourt plan to ask Gordon for a hearing to argue he is the sole owner of the Dodgers because he has title to the team, stadium and surrounding land — worth hundreds of millions of dollars.
“Without the agreements in place, it becomes the court’s job to determine which property is Frank’s and which is Jamie’s based on who holds legal title to the team,” attorney Marc Seltzer said in a statement. “The facts are crystal clear on this point. The Dodgers are solely in Frank’s name.”
The ruling came after an 11-day trial that focused on whether the agreement should determine who owns the team.
Frank McCourt contends the agreement gives the Dodgers to him. His estranged wife argues no one told her she gave up her purported stake in the team by signing the document.
The couple have been embroiled in a nasty and costly divorce trial, where legal bills alone are estimated to top $20 million.
The case has provided the public a rare glimpse into the inner workings of a Major League Baseball team. Through testimony and reams of court documents, observers have learned about the Dodgers’ finances and how the former couple’s lavish lifestyle affected the team.
Both sides gave differing accounts of what their intentions were when they signed the agreement, but one aspect was clear — neither of them read the agreement closely enough.
During the trial, Jamie McCourt, 56, maintained she was the team’s co-owner and would never have signed away her purported stake in the Dodgers had she known the agreement took it away from her.
Frank McCourt, 57, countered the pact was his wife’s idea so she could protect her separate property — a group of opulent homes — from his business creditors.
Both took the witness stand during the trial and gave snapshots of their nearly 30-year marriage.
Jamie McCourt’s legal team argued the pact wasn’t valid because their client didn’t have her own attorney when the agreement was signed, and Frank McCourt eventually agreed to make all their assets community property.
The lawyers also pointed out there were two versions of the agreement, due to a family lawyer’s error. One gave the Dodgers and related assets to Frank McCourt, and another did not.
The Dodgers were hemorrhaging tens of millions of dollars every year under previous owners before the team was purchased in 2004 for about $430 million most of which was financed by short-term loans, according to court documents.
Jamie McCourt testified that she and Frank McCourt frequently talked about selling the team if they couldn’t turn around its financial misfortunes.
She was fired in October 2009 as the team’s CEO, a job that paid her $2 million salary. She filed for divorce the same month, citing irreconcilable differences. The McCourts have been married since 1979.
Most of the McCourts’ assets have been tied up in real estate and they both argued in court documents they have been strapped for cash, despite their affinity for spending. Court documents indicated the former couple has taken out more than $100 million in loans from Dodger-related businesses.
Dodger fans were unsure how the judge’s decision would impact the team’s ability to reach the postseason, but they have been encouraged by a flurry of off-season moves that included the acquisitions of ex-Padres pitcher John Garland, Giants infielder Juan Uribe and bringing back hurlers Hiroki Kuroda and Ted Lilly.
“My initial reaction is that I want this whole divorce case to be over soon as possible so the ownership status can be finalized and we can move on,” said Scott Mosher, 43, of Yorba Linda.
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