Postnup Tossed Out in High-Asset Divorce of LA Dodgers’ Owners

| Dec 8, 2010 | High-Asset Divorce |

Frank and Jamie McCourt, the joint owners of the Los Angeles Dodgers have been involved in a nasty high-asset divorce since Jamie was fired as CEO of the Dodgers in October 2009 and filed for divorce that same month. So far, the estranged couple has spent an estimated $20 million in legal bills.

The largest point of contention in the ending of the couple’s 30-year marriage has been who would receive ownership of the Dodgers. After an 11-day trial on the issue of a postnuptial agreement signed in 2004, a Los Angeles Superior Court tentatively ruled yesterday that the agreement is void.

According to the judge, the couple did not share the same understanding of the agreement when it was signed just after the couple bought the team. Frank McCourt argued that the postnuptial agreement gave him sole ownership of the team, while Jamie McCourt said she would never have agreed to such a thing.

Under California law, jointly-owned assets are considered community property during a divorce, and courts presume they are to be split 50/50 during property division. (Georgia law does not handle property division in the same way.) The postnuptial agreement was meant to change that presumption, but since the court found it to be void, the parties will have to come up with other evidence if they wish to prove the Dodgers are the sole property of one of them.

What Went Wrong With the McCourts’ Postnuptial Agreement?

Both prenuptial and postnuptial agreements (also called separation agreements in Georgia) are common in high-asset divorce cases. They are generally an effective way to protect each party’s financial interests, but they are contracts and are subject to all the same rules as other contracts.

In the McCourts’ case, two conflicting versions of the agreement were signed, and both parties admitted they had not read either version of the postnup before signing. One version of the agreement gave sole ownership of the Dodgers to Frank McCourt, but the other did not.

In addition, Jamie McCourt did not have her own lawyer when the agreement was signed, which courts often consider a sign of coercion.

“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,” the judge wrote in his 100-page ruling.

Jamie McCourt’s divorce attorney says that she wants to move forward with reasonable negotiations on the division of their assets. “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,” he said.

Frank McCourt insists that he is the sole owner of the Dodgers and associated property, which is 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,” said Frank’s divorce attorney. “The facts are crystal clear on this point. The Dodgers are solely in Frank’s name.”

Source: Atlanta Journal Constitution, “McCourt marital pact on Dodgers ruled invalid,” Greg Risling, December 7, 2010

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