Wednesday, October 28, 2009
This, friends, is the $800 million question, and I'd imagine we'll spend much of the next few months discussing it. This post won't hit everything, but I'm hoping it serves as a sufficient primer.
This is all subject to change once we see the documents. For now, all we have are Jamie's account in her application and various newspaper reports.
In 2004, Frank and Jamie executed an asset-transfer agreement which gave Frank the Dodgers and Jamie the couple's residences. The family lawyer supervised the process, and Jamie was not represented by independent counsel. Among other things, the agreement may serve to protect the couple's personal assets from creditors in the event the Dodgers failed.
Frank's lawyer has told the LA Times he is the sole owner of the Dodgers, relying on the signed asset-transfer agreement. Frank will also note that he is listed as the owner and "control person" of the team to Major League Baseball.
Jamie's application contends that the asset-transfer agreement is ineffective to divest her of her interest in the Dodgers. She says she thought the document was paperwork required to maintain the status quo of their ownership interests upon the move to California. She also says she never intended to transfer her interest in the Dodgers to Frank and that he essentially tricked her into doing it. Finally, Jamie asserts that Frank confirmed to their estate lawyer than he didn't mean the document to strip Jamie's ownership of the Dodgers (or his interest in the residences).
The unsigned agreement
According to Jamie's accounts, the couple asked the estate lawyer to draw up a new agreement confirming Jamie's position. This document was signature-ready in August 2008. Jamie says that Frank "repeatedly found reasons to avoid" signing the document, and that at some point in 2009, Frank told Jamie he wouldn't be signing them at all. That seems to me to be the breaking point of the marriage and the epicenter of this maelstrom.
So what's going on?
A whole lot. Both parties' positions and likely arguments have serious flaws. Remember that Jamie practiced law for over 20 years. She spent ten years as General Counsel to the McCourt Company, which was responsible for the real estate development business which propelled the couple toward extreme wealth.
Here's the thing: courts don't like it when lawyers use the "he tricked me" argument. Jamie's contention that she didn't know the effect of the document she signed will be much less effective than your average divorcee's. Between her requests for a pool large enough for long-distance swimming and unfettered access to Dodger greats, Jamie will have to explain to the judge why she didn't at least consult independent counsel. The judge is going to want to know why a successful, experienced lawyer should be able to say she was fooled into signing a document which gave up more rights than she intended.
Frank has problems here, too. Agreements are generally invalid in the absence of consideration; that is, both parties should generally give something up in order to get something back. Here, a judge will want to know what Jamie was getting in exchange for her rights to the Dodgers. The residences might not be enough, and Frank's lawyers will had better know this.
Frank will likely say that Jamie received peace of mind from the arrangement. She admits in her filings that she had always been concerned the real estate development business would fail and the couple would lose everything. That's why the residences were put in her name and not offered as security for the debts of the business. Jamie says she thought the signed agreement served only to maintain this arrangement as it concerns the Dodgers.
The weight the court gives the signed agreement will be ground zero of the battle for the Dodgers, and it's impossible to speculate as to what the court will do with this little information. I hope I've given you a solid foundation for the tempest to come. The future of our franchise is at stake, and the organization will be severely handcuffed until the question of ownership is resolved.