Tuesday, December 7, 2010
Jamie McCourt wins court ruling
By Molly Knight
ESPN The Magazine
The judge presiding over the bitter battle for the Los Angeles Dodgers has granted Jamie McCourt's request
to throw out the marital property agreement that gives her ex-husband sole ownership of the team.
The decision isn't expected to affect team operations but means the Dodgers could be shared under California community property law. If the ruling stands, it is possible that the Dodgers could be sold if one of the McCourts can't buy out the interests of the other.
"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," Superior Court Judge Scott Gordon wrote in his 100-page tentative ruling.
Gordon found that the contract at the heart of the fight over the team was not valid or enforceable and that it must be set aside.
Frank McCourt's lawyer disputes that the ruling changes ownership of the Dodgers in any way.
"This ruling does nothing to change the ownership of the Dodgers," Marc Seltzer said in a statement. "Even without the marital property agreements in place, Jamie has no rights to the team.
"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. The facts are crystal clear on this point. The Dodgers are solely in Frank's name."
Dodgers general manager Ned Colletti downplayed the effect Tuesday's decision will have on the team.
"I think it's business as usual," Colletti said. "I am operating on the same process I did yesterday and as I did five years ago. [There is] no change to our thought process at all.''
Furthermore, Colletti said the ruling would have no impact on the team's 2011 budget, which has already been set.
Attorneys for Frank McCourt already have indicated to the court that they plan to file another claim that would give their client sole ownership of the Dodgers, arguing that he bought the team with a company he established before he married Jamie McCourt.
Jamie McCourt's camp lauded the decision.
"We are very pleased that the marital property agreement has been invalidated," attorney Michael J. Kump said in a statement. "Now that Jamie has prevailed on this fundamental issue, we hope that it will be possible to resolve this matter in a reasonable way going forward. The Dodgers are a valuable civic asset, and Dodger fans deserve stability in the front office, a winning team on the field, and a strong Dodger presence in the community."
Tuesday's ruling is supposed to bring an end to the first phase of the couple's contentious and costly division of assets.
Frank McCourt had asked Gordon to uphold the postnuptial agreement the couple signed in 2004 that gave him control of the Dodgers and gave Jamie McCourt the couple's considerable roster of multimillion-dollar homes. The McCourts were divorced last month after 31 years of marriage. They have four grown sons.
The ruling may lead both sides to resume settlement negotiations.
The ruling came after an 11-day trial that focused on whether the signed pact between Jamie and Frank McCourt in 2004 should decide 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. 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
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.
In his ruling, Gordon questioned their credibility and seemed astonished that such bright businesspeople as the McCourts didn't examine such an important legal document thoroughly.
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 said.
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.
Frank McCourt's attorneys countered that their client is recognized by Major League Baseball as the sole owner of the Dodgers, and Jamie McCourt never identified herself as a co-owner.
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.
When asked about the possibility of working for Jamie McCourt again, Colletti sidestepped the question.
"I work for the Dodgers, and I am honored to do so," he said.
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.
Molly Knight is a reporter at ESPN The Magazine. Information from The Associated Press was used in this report.