A Los Angeles judge, relying largely on an earlier appellate decision in billionaire Ron Burkle’s divorce, has denied a bid by the ex-wife of Frank McCourt, the former owner of the Los Angeles Dodgers, to set aside the couple’s divorce settlement.
Jamie McCourt had claimed that the 2011 agreement should be dismantled because her ex-husband fraudulently portrayed the value of the Dodgers at below $300 million. He sold the team last year for $2.15 billion.
Los Angeles County, Calif., Superior Court Judge Scott Gordon disagreed, finding that Jamie McCourt, a practicing family law attorney for 20 years who was chief executive officer of the baseball team before the couple split, had sufficient documentation and knowledge of the value of the Dodgers assets when she signed the deal.
“In this case the Petitioner has failed to present credible evidence to show that she did not have a full and complete understanding of the value or nature of the assets,” Gordon wrote in an order on Monday. “She is very sophisticated and familiar with the businesses. The Petitioner was represented throughout the proceedings by multiple law firms, accountants and experts.”
The judge gave both sides 15 days to object to the order.
“We’ve said from the beginning this is a case that would be decided on appeal,” said Jamie McCourt’s attorney, Bertram Fields, a partner at Los Angeles-based Greenberg Glusker Fields Claman & Machtinger. “There are critical appellate issues, and we still remain confident that ultimately this judgment is going to be set aside.”
Robert Sacks, a partner in the Los Angeles office of Sullivan & Cromwell who represents Frank McCourt, did not return a call for comment.
The McCourts filed for divorce in 2010, six years after purchasing the Dodgers. In 2011, Frank McCourt filed the team’s petition for Chapter 11 bankruptcy. Jamie McCourt agreed to give up claims that she owned half of the baseball team in exchange for $131 million and the couple’s luxury homes.
Frank McCourt sold the team one year later to Guggenheim Baseball Management, a consortium led by Chicago’s Guggenheim Partners and former Los Angeles Lakers star Magic Johnson.
The sale prompted Jamie McCourt to file a motion last year to set aside the settlement, claiming fraud.
In April, Gordon held evidentiary hearings in the divorce case. At trial, Jamie McCourt argued that her ex-husband was well aware of the team’s real value, including a regional sports network, which inflated the team’s assets to close to $2 billion. She also asserted that her ex-husband falsely told her he wouldn’t sell the Dodgers. At the time she signed the agreement, she was represented by David Boies, chairman of Boies, Schiller & Flexner in New York; Michael Kump of Kinsella Weitzman Iser Kump & Aldisert in Santa Monica, Calif.; and Dennis Wasser of Wasser, Cooperman & Carter in Los Angeles, plus numerous financial advisers. She testified that she later ignored advice from Fields, whom she refers to in court papers as her “confidant,” not to sign the deal.
Frank McCourt, in response, argued that his ex-wife chose the certainty of $131 million cash and homes over the team’s assets, whose ownership and future was in dispute at the time of their agreement. He also claimed he provided Jamie McCourt with documents about a regional sports network for the Dodgers valued at more than $1.5 billion.
In his order, the judge found that Jamie McCourt, graduate of the University of Maryland Law School with a master’s degree in corporate finance from Massachusetts Institute of Technology, failed to prove that she wasn’t well informed about the potential sale price of the team.
“Given the Petitioner’s business and legal sophistication, graduate education in finance and her extensive managerial involvement in the administration and operation of the Dodgers, this testimony is not credible,” Gordon wrote.
The judge relied heavily on the Burkle decision, in which California’s Fourth District Court of Appeal found that a wife could not challenge the validity of a 1997 marital agreement if her representatives failed to review information that was made available to her. Burkle’s estranged wife sued to dismantle a postmartial agreement on the ground that he deceived her about the value of assets tied to pending merger.
“In many ways the circumstances presented in this matter are comparable to those that arose in Burkle, where the wife’s representatives did not review the information available to them,” Gordon wrote. “In this case, Petitioner has failed to produce sufficient credible evidence to show that the Respondent concealed or misrepresented any information about the RSN [regional sports network] or the Dodger assets.”
He found “no credible evidence” to support the theory that Frank McCourt told her he wouldn’t sell the Dodgers.
In 2010, before their divorce settlement, Gordon issued a favorable ruling for Jamie McCourt, finding that a 2004 marital agreement the couple drafted upon purchasing the Dodgers and moving from Boston to Los Angeles was invalid under California law. Frank McCourt argued that the agreement gave him sole ownership of the team, while Jamie McCourt claimed partial ownership based on the contract’s invalidity. She argued that her trusts and estates attorney, Lawrence Silverstein, a partner at Boston’s Bingham McCutchen, had switched part of the contract at the last minute to give her ex-husband sole ownership of the team.
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