Aug. 30 (Bloomberg) -- Frank McCourt’s claim to be the sole owner of the Los Angeles Dodgers was challenged today by his estranged wife in a divorce trial.
A lawyer for Jamie McCourt, 56, who filed for divorce in October, argued that she didn’t receive adequate legal advice before signing a 2004 marital property agreement when the couple bought the team and moved to California from Boston.
“At best it was the blind leading the blind,” her lawyer, Dennis Wasser, told Judge Scott M. Gordon in California Superior Court in Los Angeles. “Jamie had a lawyer who was saying to her he didn’t understand California community property law.”
Who ends up owning the Dodgers, which Forbes valued at $727 million, may hinge on what each was told by advisers when they entered into the agreement, said Scott Altman, a law professor at the University of Southern California who specializes in family law. A settlement during the trial is possible because both sides have a lot to lose by an adverse outcome, he said.
“You don’t know how much they hate each other, of course,” Altman said in a phone interview. “It’s important not to underestimate people’s irrationality when it comes to divorces.”
Jamie McCourt filed for divorce Oct. 27, six days after her husband fired her as chief executive officer of the baseball team. Frank McCourt, 57, accused her of insubordination and of “inappropriate behavior with regard to a direct subordinate.”
Lawyers for Jamie McCourt said last year that her relationship with that employee started after the marriage had fallen apart. The couple had been married for 30 years.
In May, Gordon ordered Frank McCourt to pay his wife $637,159 a month, including $225,000 for spousal support and $412,159 for the monthly cost of two homes in Malibu, California, one on Cape Cod in Massachusetts and four others. The judge ordered the couple to sell a property in Cabo San Lucas, Mexico, and use the proceeds to pay their lawyers.
The $421 million acquisition of the Dodgers from Fox Entertainment Group Inc. closed on Feb. 13, 2004. Frank McCourt claims the post-nuptial agreement after the purchase makes the team his separate property. His wife wanted the agreement to protect herself from the financial risk he took on when he bought the Dodgers with $330 million in loans, he says.
‘Education and Accomplishments’
“Despite her education and accomplishments, Jamie McCourt now claims she didn’t understand the marital property agreement she insisted her husband should sign,” Frank McCourt’s lawyer, Stephen Susman, said in his opening statement today. “She’s probably the first divorce lawyer to claim she didn’t understand her own post-nuptial agreement.”
Jamie McCourt, who has a business degree from the Massachusetts Institute of Technology Sloan School of Management and who was a practicing family lawyer, was the driving force behind the 2004 agreement, Susman said.
Jamie McCourt says the agreement was intended only to preserve an arrangement the couple used in Massachusetts to shield their family residences from business creditors by listing them in her name. The Dodgers, like the houses, remained their shared property, she contends.
“The claim that Jamie knowingly gave up her ownership interest in the Dodgers and related assets for ‘security’ is nonsensical,” her lawyers said in an Aug. 23 court filing. If the agreement is upheld, “Frank will be a billionaire and Jamie will own several houses saddled with debt that she cannot sustain,” they said.
The judge refused today to allow Jamie McCourt’s lawyers to present evidence of the current valuation of the Dodgers and other assets.
‘It is not relevant to this phase of the trial,” Gordon said. “We will cross that bridge when we come to it.”
Jamie McCourt claims there’s another reason why the 2004 agreement is invalid: Two inconsistent versions were created.
Three copies signed by Frank and Jamie McCourt on March 31, 2004, in Boston had an attachment that listed the Dodgers as Frank McCourt’s separate property. Three other copies signed by Jamie McCourt on March 31, 2004, in Boston and by Frank McCourt on April 14, 2004, in California have a different attachment that excluded the team from his separate property.
Because it can’t be concluded from the inconsistent versions of the agreement whether the McCourts intended to make the Dodgers Frank McCourt’s sole property, contract law requires the judge to conclude that “no contract was ever formed,” Jamie McCourt’s lawyers said in a court filing.
The judge agreed today to allow her lawyers to introduce evidence of the conflicting versions of the agreement.
Frank McCourt’s lawyers said in their own court filing that an earlier and incorrect draft of the attachment was “erroneously” attached to the copies signed in California.
“Jamie has repeatedly testified that she did not read the marital property agreement, including the exhibits, before she signed it,” Frank McCourt’s lawyers said. “She has testified instead that she understood simply that the agreement maintained the status quo by keeping the business assets, including business liabilities, in Frank’s name.”
Even if the judge finds that the McCourts entered into a contract, it would still be invalid and unenforceable because it is the result of “undue influence,” Jamie McCourt said.
Under California law, if a marital agreement gives one spouse an unfair advantage over the other, the burden is on the one with the advantage to prove the other entered freely into the agreement with full knowledge of the facts and consequences, according to Jamie McCourt’s filing.
She says the lawyer who represented the couple at the time they made the agreement never explained to her that she was giving up her rights to the Dodgers if they divorced.
Under the Massachusetts equitable distribution law, Jamie McCourt would have received about half the couple’s assets in a divorce, regardless of whose names they were in, she said.
Court findings of “undue influence” invalidating marital agreements typically occur when the disadvantaged spouse is a “stay-at-home mom” who has no understanding of her husband’s business, said Fred Silberberg, a Santa Monica, California-based family lawyer.
“In this case, you have two highly educated and sophisticated individuals,” Silberberg said in a phone interview. “She has a tough argument to make.”
The judge refused today to allow Jamie McCourt’s lawyers to call a legal expert as a witness to testify about the attorney in Boston who handled the 2004 agreement on her behalf.
Jamie McCourt, her husband said, insisted on the agreement to protect property in her name under California law. Her handwritten notes from Jan. 16, 2004, show she understood that, in a divorce, creditors could come after community property for debts of either spouse while the property of one couldn’t be sought for the debts of the other, according to Frank McCourt.
James Fox Miller, a Florida divorce lawyer representing Jamie McCourt, said in a phone interview that it took him “months” to learn California community property law.
“It doesn’t matter whether she was a Supreme Court justice,” Miller said. “Jamie McCourt would never in a million years have known what the agreement entailed.”
The trial in downtown Los Angeles is scheduled for 11 days from today until Sept. 30.
The case is McCourt v. McCourt, BD514309, Los Angeles County Superior Court (Los Angeles.)
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