Dodgers Divorce: Judge Gordon Throws Out Postnup

Judge rules in favor of Jamie McCourt in Dodgers ownership struggle








See the Statement of Decision.

The decision denying Frank McCourt's claim to sole ownership of the team is not expected to immediately affect day-to-day operations. He may use other legal strategies to challenge his ex-wife's case.

By Bill Shaikin and Carla Hall

Frank McCourt is not the sole owner of the Dodgers, a judge ruled Tuesday, a decision that keeps the team in legal limbo for what might be several more years.

Los Angeles Superior Court Judge Scott Gordon granted Jamie McCourt's plea to throw out a 2004 marital agreement that would have left her without an ownership share in the Dodgers.

"The court finds that the marital property agreement is not a valid and enforceable agreement," Gordon wrote in his ruling. "The court orders that the marital property agreement is set aside."

The ruling is not expected to have an immediate impact on the day-to-day operations of the team. Frank is expected to employ other legal strategies to dispute his ex-wife's claim to co-ownership of the team.

Frank could decide to appeal Tuesday's ruling. He already has notified the court he wants to use a different legal strategy in another claim to sole ownership of the Dodgers, one based on the concept that he bought the team with a company he established before his marriage to Jamie.

Frank's attorneys have said such a trial could be completed in one day and that all the necessary evidence is in the court record. Jamie's attorneys have said such a trial could require up to 60 days, preceded by months to collect new evidence.

Dennis Wasser, an attorney for Jamie, said he hoped the ruling would enable both sides to settle the case, for what he said would be the good of the Dodgers and the community. "We are very pleased that the marital property agreement has been invalidated. Now that Jamie has prevailed in this case, we hope it will be possible to resolve the matter in a reasonable way going forward."

Major League Baseball Commissioner Bud Selig has declined to comment on the case. The Times reported in September that the possibility of years of legal battles between the McCourts had prompted him to consider intervening on behalf of the Dodgers, but it is uncertain what options he might contemplate.

The McCourts also could use Gordon's ruling to renew settlement talks, with the validity of the 2004 marital agreement no longer a wild card in negotiations.

The sides have been unable to reach a settlement despite several rounds of discussions -- with and without mediators -- over the last year.

In the absence of a settlement, Gordon eventually would determine permanent spousal support. In May, Gordon ordered Frank to pay Jamie $637,159 per month in temporary support, including costs associated with the couple's homes.

The McCourts filed for divorce on Oct. 27, 2009, one week shy of what would have been their 30th anniversary.

In March 2004, two months after baseball owners approved their purchase of the Dodgers, the McCourts each signed a marital property agreement that specified the team belonged solely to Frank and the couple's homes belonged solely to Jamie.

In the initial phase of the divorce case -- and in a trial that lasted 11 days -- the only question before Gordon was whether the agreement was valid.

Frank asked Gordon to enforce the deal, arguing that Jamie was the driving force behind the agreement and that she had gotten exactly what she wanted from it -- that is, to protect the homes from creditors should the Dodgers suffer severe financial losses.

Jamie asked Gordon to overturn the agreement, claiming she never intended to surrender her rights to Dodgers ownership and never would have signed the document had she been explicitly informed of its impact in the event of divorce. She said she should be considered co-owner of the Dodgers.

As the trial approached, lawyers discovered the McCourts had signed six copies of the agreement, three of which listed the Dodgers as Frank's sole property and three that did not.

Larry Silverstein, the Boston lawyer who drew up the agreement, testified that he had botched the wording in the latter three copies and had corrected his mistake by replacing the relevant page in the agreement -- after the McCourts had signed the document, and without informing either of them of the alleged error.

Frank argued that Silverstein had made an unfortunate mistake but corrected it to conform with what Jamie had wanted -- that is, no financial responsibility for the Dodgers.

Jamie argued that Silverstein's blunder, whether innocent or intentional, resulted in two versions of the agreement with materially opposite terms. If one version said Frank owned the Dodgers and the other version did not, she contended, there never could have been an agreement in the first place.

bill.shaikin@latimes.com

carla.hall@latimes.com

Copyright © 2010, Los Angeles Times

Mediation for the McCourts

Mediation scheduled in McCourt divorce case

By GREG RISLING (AP) – 4 days ago

LOS ANGELES — Divorce lawyers for Frank and Jamie McCourt are planning to go into mediation as soon as Friday over who owns the Los Angeles Dodgers, The Associated Press has learned.

A person familiar with the case who requested anonymity because he was not authorized to speak publicly about settlement discussions told the AP late Tuesday that the two sides would meet in a downtown Los Angeles courtroom on Friday.

The mediation talks were first reported by Yahoo! Sports.

Jamie McCourt contends that she deserves a part of the team, while Frank McCourt argues that he is the team's sole owner. Earlier this week, she testified that she didn't read a postnuptial marital agreement which gave her estranged husband sole possession of the Dodgers.

An attorney who represented the couple and drafted the agreement said he replaced an addendum that excluded the Dodgers from Frank McCourt's separate property with wording that included the team and didn't notify Jamie McCourt about the switch.

Larry Silverstein, who is expected to resume his testimony Wednesday, said he made a "drafting error" when he prepared the agreement that didn't include the Dodgers, the stadium and the surrounding land, worth hundreds of millions of dollars from Frank McCourt's side of the ledger.

When Silverstein gave the documents to the McCourts to sign in March 2004, three had the team as Frank McCourt's separate property, and three others didn't. Jamie McCourt ended up signing all six; Frank McCourt signed three at the couple's Massachusetts home and the remaining three a couple of weeks later while he was in California.

The agreement is at the center of the dispute between the McCourts and could decide who owns the Dodgers. Superior Court Judge Scott Gordon must decide whether the pact is valid. He also could order the sale of the team.

Silverstein said the original plan was to have three copies of the agreement, one each for Frank and Jamie McCourt and one for himself. However, he decided at the last minute before the couple signed them to produce three other copies out of an abundance of caution.

"I was simply trying to have a set of protective documents," he said.

Silverstein said he doesn't recall switching the versions Frank McCourt signed in California that excluded the Dodgers with wording that did include the team, but believes he did so shortly thereafter after he looked at company records.

It wasn't until a few months ago, after forensic analysts were hired by both sides to examine the six copies, that it was determined Silverstein made the changes.

Jamie McCourt's attorney David Boies asked Silverstein if he thought it was OK to switch a legal document after it had been signed and notarized.

"In certain circumstances, yes," Silverstein replied.

Boies asked his fellow litigator, who has practiced law for more than 30 years, if he ever recalled a situation where an attorney had removed part of a legal document and replaced it with something else without the written permission of both parties.

"Express permission or implicit permission, no," Silverstein added.

Silverstein said he didn't tell Jamie McCourt about replacing the addendum that gave her husband the Dodgers. On Monday, she testified she never read the agreement, nor did anyone tell her, namely Silverstein, that she would be giving up her purported ownership stake in the team.

However, another attorney who worked at the same firm as Silverstein said he was directed by Jamie McCourt to come up with the marital agreement during a meeting at Dodger Stadium shortly after the team was bought in February 2004 for about $430 million.

Reynolds Cafferata said in conversations he had with Jamie McCourt, she asked him questions about California's community property provision and told him it was a family practice to keep assets separate.

"She said 'We do things differently. I own the houses, Frank owns the businesses,'" said Cafferata, who added Jamie McCourt wanted a draft agreement created quickly. "She was interested in having this done immediately."

Gordon on Tuesday excused several witnesses from testifying at the trial, including Major League Baseball general counsel Thomas Ostertag. The trial could end early next week. Gordon then has 90 days to make a ruling.

Copyright © 2010 The Associated Press. All rights reserved.

Douglas is being sued by his ex-wife, Diandra Douglas, who is claiming that she is entitled to 50 percent of his earnings from the upcoming 'Wall Street: Money Never Sleeps' as part of her divorce settlement from the actor, according to the New York Post. Michael and Diandra divorced in 2000, and he is currently married to actress Catherine Zeta-Jones, with whom he has two children, Dylan, 9, and Carys, 7.

If it seems strange that Diandra would be seeking her share of her ex-husband's salary for a movie he made a decade after their divorce was finalized ... well, it is. The suit appears to hinge on a clause in Michael and Diandra's divorce settlement that entitles her to 50 percent of any earnings Michael receives from any movies he did -- including residuals, merchandising and ancillary rights -- during their 23-year marriage. According to Diandra's lawyers, that provision includes any "spinoffs" of Douglas' movies.

The 1987 smash 'Wall Street' -- for which Michael won the Best Actor Oscar for his classic turn as Gordon Gekko -- was released during their marriage, and with the sequel set to hit theaters in September, Diandra is ramping up her case. "It's the same character, the same title, just years later," her lawyer, Nancy Chemtob, told Manhattan Supreme Court Justice Matthew Cooper at a hearing last Wednesday.Marilyn Chinitz, Michael's lawyer, however, simply thinks this is a case of life imitating art, with Diandra taking the famed Gordon Gekko line "greed is good" to heart.

"He doesn't want her to be an albatross around his neck forever," Chinitz said.

Michael and Diandra's divorce remains one of the costliest in Hollywood history. The pair's split was bitter, to say the least, with Diandra accusing Michael of sex and alcohol addiction and multiple infidelities. In 2007, Forbes magazine compiled a list of the 10 most expensive celebrity divorces and listed the Douglases' at number eight. Diandra walked away with an estimated $45 million and the couple's homes in Beverly Hills and Majorca.

Michael's legal team is seeking to have the case dismissed, arguing that the suit should never have been filed in New York in the first place, as the couple's divorce was finalized in California, and that the case has no merit because 'Wall Street: Money Never Sleeps' is a sequel, not a "spinoff." "They're not the same thing," Chinitz said in court.

Diandra's lawyer told the judge she filed the suit in New York because both she and Michael currently reside in the city, and noted that there's no legal reason the case can be heard only in California. Justice Cooper has delayed ruling while he considers whether he should keep the case or send it back to a California court; however, he revealed that he believes there is indeed a difference between a spinoff and a sequel.Michael and Diandra recently came together to support their son, Cameron, who was sentenced to five years in prison for his role in dealing methamphetamine and cocaine in New York City. During Cameron's April sentencing, Michael, who along with Diandra, Zeta-Jones and Kirk Douglas asked the judge for leniency, took a swipe at his ex-wife in a letter to the judge, describing Diandra as "a young mother without any parenting skills handed down from her own parents."

Moral of the story: SETTLEMENT AGREEMENTS ARE BINDING! Make sure you clarify property settlements.

Marriage and Business Don't Mix

Why Spouses Make Lousy Business Partners
By Stephen J. Dunn, Forbes.comToday

Last month I wrote a column for Forbes about the tax reasons that spouses make lousy business partners. First, business-related tax problems could threaten both spouses' assets and credit if they're partners. Second, if the marriage sours, one spouse might call in the Internal Revenue Service to investigate the other.

Now, from my own practice comes a case that makes my point. Ron, a longtime client, has given me permission to tell his story, provided he's not identified, as a warning to others. Ron called a few months ago. He said that he had found some correspondence indicating that his wife was having an affair. In the correspondence Ron's wife said that she was going to leave Ron in June of this year. In June they would have been married five years, and she would have, at that point, been entitled to a share of Ron's property under their prenuptial agreement. (She is Ron's second wife.)

At about the same time Ron began noting that key financial documentation of his business was missing. A flash drive containing sales and cash receipts data was missing. Ron's wife worked as the bookkeeper of his business. I asked Ron whether he had been reporting all of his business income on his tax returns. Ron said that he had not reported some income that he had been paid in cash.

I told Ron that it was a scenario I had seen all too many times in the past. She was going to divorce him and use his tax exposure to leverage a better financial settlement for herself in the divorce, and possibly report Ron to the IRS Criminal Investigation Division.

I advised Ron to see a divorce attorney. Ron was reluctant. He wondered if the facts really meant what they so clearly did mean (to all the world except Ron). He talked about reconciling with his wife.

I also advised Ron to do a voluntary disclosure with the IRS. This was an agonizing decision for Ron, as it would cost him dearly in additional tax and interest, and possibly penalties, as well as legal and accounting fees. But it would prevent Ron from being prosecuted for having failed to report some of his income.

Ron followed my advice. His divorce is nearly final. The IRS notified Ron two weeks ago that his voluntary disclosure had been accepted, meaning he isn't at risk of being prosecuted.

Last week a divorce attorney representing Ron's wife called Ron's divorce attorney and, not surprisingly, mentioned the income that had been omitted from Ron's tax returns.

Yesterday Ron received a text message from his soon-to-be ex-wife. In the message she acknowledged that she would not receive any of Ron's property because he "had all of his ducks lined up." She specifically mentioned Ron's voluntary disclosure to the IRS. Neither Ron, his divorce attorney nor I had mentioned the voluntary disclosure to Ron's wife or to her attorney. How do you suppose she learned of it? Is it possible she herself had gone to the IRS in search of an informant's reward? (For more on IRS and informants, click here.)

Stephen J. Dunn is a tax attorney in Birmingham, Mich., adjunct lecturer in the University of Michigan-Dearborn College of Business and author. Write to him at steve@demolaw.com.

Date of Separation and Why It Matters in California

DATE OF SEPARATION: WHY DOES IT MATTER?

So why does it matter? Short answer: California is a community property state. In California, the date of separation determines the end of the community.

The date of separation matters in division of property and in spousal support.

PROPERTY DIVISION

For example, John and Jane Smith marry 1/1/2000. They separate 12/31/2000.

Jane wins the lottery on 12/31/00. John wins the lottery on 1/1/01.

According to Family Code section 771, which states, "a) The earnings and accumulations of a spouse and the minor children living with, or in the custody of, the spouse, while living
separate and apart from the other spouse, are the separate property of the spouse. "

SO...Jane's lotto winnings are community, and John's are NOT.

SPOUSAL SUPPORT

For example, John and Jane Smith marry 1/1/00. John moves out 12/31/07, into his own apartment with his girlfriend and remained living with his girlfriend up through the date of trial.

John filed for divorce 1/1/2010.

Although John did not sleep in the family residence, he maintained continual and frequent contacts with Jane and children, including dinner every night in 2008 and 2009. John also maintained his mailing address at the family residence. John also took Jane on 2 trips in 2008. John also took Jane to social functions, friends’ homes, dinners for professional and academic groups, etc. in 2008 and 2009. John also sent Jane numerous Christmas, birthday and anniversary cards, including at least one card, in which John said he loved Jane. John and Jane continued to file joint tax returns and John paid all the household bills. John even brought his laundry home every week and Jane would wash and iron it. John and Jane did not have sex after 12/31/07. At all times during the period of physical separation prior to filing the Petition, Jane maintained she “desired” a reconciliation.

When was the date of separation?

Those are the exact facts of the case of In Re Marriage of Baragry (1977), 73 Cal.App.3d 444. The Court held that the date of separation was 1/1/10, the date of the filing of divorce.

TWO-PRONG TEST

The critical inquiry is whether the parties' conduct evidences a complete and final break in the marriage relationship.

For this, the Court uses a two-prong test to determine the date of separation: Objective and Subjective.

1. Objective Test
To answer the objective test, the court will determine when you started living apart from each other. That usually happens when one of you moves out of the family home. In today’s tough economic times, however, that is no longer an option for some, because it often is too expensive to maintain two separate residences. Even if spouses are still living in the same home, there are ways to ensure physical separation.

As California Courts put it, “Our conclusion does not necessarily rule out the possibility of some spouses living apart physically while still occupying the same dwelling. In such cases, however, the evidence would need to demonstrate unambiguous, objectively ascertainable conduct amounting to a physical separation under the same roof. (Marriage of Norviel) If this is a concern for you, you should always consult an attorney for more information.


2. Subjective Test
Physical separation is not enough to show that you separated. Some people are living separate from each other for extended periods but do not intend to end their marriage. That intent is the subjective part the court will consider. At what point did one or both of you think that the marriage was over? When did you decide that you no longer wanted to stay married? In essence, the court will look at your conduct toward each other to see when the marriage “ended.”

Please note: Marriage counseling is usually a good indicator that you are NOT intending to separate.

Debenhams Creates Divorce Registry

Debenhams Creates Divorce Registry
by Annie Scott (RSS feed) Jan 19th 2010 at 9:02PM

British department store Debenhams has a new kind of registry: Divorce.

In recent years as I've shopped for bachelorette party goodies, I've noticed a swell in tacky garb brazenly boasting "Newly Divorced" and "RIP Marriage," for themed parties of a different kind. The idea that divorce is something to celebrate is a controversial one.

According to DivorceRate.org, the divorce rate in America for a first marriage is 41%. The statistics are worse for second marriages, with 60% ending in divorce, and a staggering 73% of third marriages ending as well.

It's hard to speak generally about divorce, as each one is so different, but whether it's amicable or not, it signals the end of an era. Reuters reports that Debenhams new registry is "for those wishing to help a loved one with the pain."

So. Salt and pepper shakers?

Debenhams' head of retail services Peter Moore gave this statement: "A divorce means that one partner will be leaving the marital home and therefore be left without any essentials in their new house." The recommended gift list includes items like "cookware, cutlery, crockery, glasses, bed linen, towels, small electrical goods such as toasters and microwaves as well as non-iron shirts, large plasma screen TVs and computer games," according to Reuters. The registry has yet to appear online.

[via Reuters]

Tags: Debenhams, divorce, registry

Filed under: Wealth