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Dodgers May Need to Be Sold After Divorce Ruling, Lawyer Says

Jamie McCourt Ruled to Be Co-Owner of Dodgers
Jamie McCourt, estranged wife of Los Angeles Dodgers owner Frank McCourt, arrives back at court following a lunch break in Los Angeles in August. hotographer: Jonathan Alcorn/Bloomberg

The Los Angeles Dodgers may have to be sold after a California judge said in a tentative ruling that the postnuptial agreement that Frank McCourt claims makes the Major League Baseball team his sole property isn’t valid, a lawyer said.

The judge can order the team to be sold to the highest bidder to resolve the divorce dispute between McCourt and his ex-wife Jamie, said Fred Silberberg, a family lawyer in Santa Monica, California, in a phone interview. If one of them doesn’t want it to be sold, they will have to try to buy the other one out, said Silberberg, who isn’t involved in the case.

California Superior Court Scott M. Gordon said in the tentative ruling yesterday in Los Angeles that his decision is limited to the validity and enforceability of the couple’s 2004 postnuptial agreement and that he didn’t make any findings “with regard to the characterization of the parties’ property or interest in any property.”

“Neither party has produced credible evidence that both parties or either party fully and completely read and understood the marital property agreement before it was executed,” Gordon, who presided over a nonjury trial in September, said in his decision. “There was no mutual assent or meeting of the minds.”

Even without the postnuptial agreement, Jamie McCourt has no rights to the team, said Marc Seltzer, a lawyer for Frank McCourt. The judge will decide what is Frank McCourt’s and what is Jamie McCourt’s property based on who holds legal title to it, Seltzer said yesterday.

The judge’s ruling makes Jamie McCourt a co-owner of the team, her spokesman, Mark Fabiani, said yesterday.

‘Buy Frank Out’

“Ideally she would like to buy Frank out,” David Boies, a lawyer for Jamie McCourt, said yesterday in a phone interview.

Jamie McCourt is working with “a number of people” who are willing to help put together financing for a possible bid, Boies said without naming the potential financial backers.

The Dodgers’ have a net value of at least $500 million and whoever wants to buy the other side out would need to come up with at least $250 million, Boies said. The net value of the team could be higher because of media rights that are coming up for renewal, he said.

The couple’s real estate assets have a net value of about $60 million to $65 million, Boies said.

The couple, who were officially divorced in October after 31 years of marriage, went to trial in September over the validity of the postnuptial agreement they signed when they bought the Dodgers in 2004 and moved to Los Angeles from Boston.

Shielding Homes

Frank McCourt, 57, said at the trial that his wife sought the agreement because she wanted to shield the homes that were in her name from liabilities he assumed to acquire the team, including $330 million in new debt. The couple had held the homes in Jamie McCourt’s name and businesses in Frank McCourt’s name before they moved to California.

The agreement was needed to keep their assets separate under California community property law. Under California law, creditors of either spouse can seek payment from their shared assets.

In his tentative ruling, Gordon said there was no evidence that the couple knowingly gave up the rights they had under Massachusetts’ equitable distribution law in a divorce. In Massachusetts, unlike California, divorcing spouses are entitled to an equal share of the other’s separate assets.

Jamie McCourt, 56, who was a practicing family law attorney in Boston, said at the trial that she never knowingly would have given up her rights to the Dodgers in a divorce.

Scrivener’s Error’

The judge also said there hadn’t been sufficient evidence which of two contradictory versions of the postnuptial agreement reflected the couple’s intent. One version had an exhibit that included the Dodgers as Frank McCourt’s separate property and the other excluded the team from his sole property.

Frank McCourt’s lawyer said during the trial that the conflicting exhibits had been a “scrivener’s error” and that the purpose of the agreement was to make the team his sole property so that his business creditors couldn’t go after the houses that were in his wife’s name.

Under California law, judges will almost always need to divide community property equally based on their value, said Scott Altman, a family law professor at the University of Southern California. The judge could award the Dodgers to Frank McCourt if the couple has sufficient other assets as community property to compensate Jamie McCourt, Altman said.

‘Quick Settlement’

“I would not be surprised to see a quick settlement at this point,” Altman said in a phone interview. “This is a big loss for him.”

Frank McCourt may be forced to sell the team if he needs to come up with sufficient funds to pay his ex-wife, Altman said.

“It all depends on what she wants,” Altman said.

The McCourts failed to reach an agreement through mediation last month over who would control the team. Frank McCourt accepted a proposed settlement by the mediator, according to Seltzer. The mediator, Los Angeles Superior Court Judge Peter Lichtman, declared the parties to be at impasse, Seltzer said at the time.

Gordon said in his tentative decision that the parties have 15 days to file any objections. No hearings have been scheduled yet for objections to the tentative decision or to hear arguments on the ownership issue in light of the judge’s decision, according to the court docket.

The case is McCourt v. McCourt, BD514309, Los Angeles County Superior Court (Los Angeles).

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