Sunday, September 19, 2010

Setting the stage for week two.

If you're new to the site, or would like a refresher on why we're here, you can check out the sort-of comprehensive trial guide I put together on the eve of the first day. Otherwise, let's take a few moments to talk about things to come this week and beyond.

The day will start with Jamie McCourt under direct examination from her own superstar trial attorney, David Boies. This was very much by design. By hammering Frank on the stand during the latter half of the first week and keeping Jamie to himself by the week's end, Boies effectively won the week. Frank, as would be expected of any of us, wilted some under direct, and Jamie hasn't had to suffer the same experience.

Until this week, that is. While Boies prefers to run at a pretty steady pace and use fatigue as a weapon, you can expect Frank's attorney, Stephen Susman, to attack aggressively. He'll use every available opportunity to force Jamie to concede that, yes, she was indeed concerned about the viability of the couple's business activity, and, yes, she did push for the MPA at the heart of this matter. At least that's what Susman will need to do to put his client in a position to own the Dodgers for the long run.

That's maybe a bigger issue than the trial itself. Yes, this litigation will determine the validity of the MPA. But that's likely just the first step. Whatever Judge Gordon's ruling, there are several specters lurking. First is the threat of continued litigation; whether it is by appeal or perhaps a different legal theory, whichever party loses on the MPA will surely extend this issue in the court room well past the end of next week. Next comes the bigger question: if a McCourt ends up with the team, will he or she have the financial wherewithal and public support to make it work?

It's not likely Jamie can walk with the team. Her lawyers concede that, if she wins on the MPA (and assuming that's the end of the litigation), neither McCourt would have the resources to take the other out. Besides, neither McCourt seems likely to willingly let the other control the team, regardless of who wins. No, if Jamie McCourt intends to own the Dodgers, she'd need help in the form of outside investors. Even more daunting, she'd need to get through Major League Baseball's approval process, which doesn't seem particularly promising at the moment.

For Frank, it's a bit easier, in theory at least. Win on the postnup, survive on whatever comes next, and leave no questions about who owns the club. However, there are voices ranging in volume from whispers to screams saying Frank simply doesn't have the money to keep the club himself. Especially if he's saddled with a hefty obligation to Jamie, the liquidity required to rescue the team from its self-imposed decline might be more than Frank could raise and sustain.

Or maybe not; if nothing else, Frank is a fighter whose ability to make something out of nothing is truly remarkable; it's how he got the Dodgers. In my book, the biggest question facing his long-term ability to own the Dodgers isn't cash, it's credibility. This protracted divorce has cost the Dodgers dearly in the goodwill department, and there is no question that "Anyone Else" is the fan favorite to own the Dodgers. And, unfortunately for Frank, the one surefire fix--winning--doesn't appear especially likely. Not when the young, cheap talent is no longer as young, as cheap, and, well, as talented.

But short of financial ruin or MLB intervention, Frank would get his chance if he survives the litigation. And how he'd handle that chance would be scrutinized as closely as an owner's decisions have ever been.

That's a conversation for a different day. Jamie's winning right now, and how she fares on the stand this week will go a long way toward telling us just how far in the future we should be talking. I checked into my hotel tonight, and I look forward to being at court bright and early tomorrow. Check back here for detailed, but infrequent updates. Follow me on Twitter (@DodgerDivorce) for immediate news and quick analysis.


  1. Lets go! Got my beer helmet and Jamie foam finger, lord knows anything is better than watching the Dodgers.

  2. Dollars to donuts she orchestrated this to avoid Sussman's cross X.

  3. Great article in the Times (NY Times, that is) about you Josh!

  4. The NYTimes article led me here, so I'm jumping in mid-stream. What is the "MPA"? Is that the same as the post-nup?

  5. The "MPA" is "Marital Property Agreement", and it is a postnuptial contract, to split properties ownership acquired in a marriage, or re negotiate a prenuptial contract, that divided assets before a marriage.

    The "MPA" is pretty much what this divorce case boils down to. Are the Los Angeles Dodgers separate property and does the MPA spell that out?

    I am always in the opinion that Frank was stupid to hold on to the Dodgers based on the MPA, because the intent of the contract was to shield assets, not to be a bombproof separate property document in case of divorce..

  6. Can we hang Bud Selig in the meantime? He's not only allowed all of this to be happening, but he also tarnished baseball's record book with his steroid scandal. Throw a heap of collusion on top of that and it's ironic when I hear people say he "saved the game". My ass.

  7. @okojo - the problem is, Frank has no other recourse than the MPA to claim that the Dodgers is his sole property in this community property state.

  8. I'm thinking that Jamie agreed that the LAD were Frank's separate property in exchange for the security (several hundred million) of all the other property. She well knew that Frank was a wheeler/dealer who had lost mega millions previously.

    When Frank dissed her, she decided to get more than even which is what often happens in divorce cases.

    With that said, I truly hope she wins and that the Judge orders that the team be sold.

  9. Mark you forgot the All-Star game ending in a tie, watering down the All-Star game with what looks like an NFL sized roster, giving the winner home field in the WS (better than alternating but still doesn't make sense to me, it should be based on record). I was watching "Eight Men Out" and laughed when they mentioned the Commissioner should be someone "outside of baseball" to make it look legit, so how does a guy like Bud get to steer ownerships for teams?

  10. In response to Greg..

    Actually, Frank has some other recourses, it just would cost him tens of millions to a hundred or so milions of dollars. He could buy Jamie out with some sort of structured payment with broadcasting right fees, give Jamie a structured payment and pay it off through a loan.

    He doesn't do this, because the McCourt are so highly leverage, they can't get quick cash. The best deal is some percentage of the broadcasting fees from 2013 onward goes to Jamie.

    Look, the whole point of community property for a 28-29 year marriage is that the value is split as close as 50/50 as possible. Frank was always going to have an uphill battle to have the MPA divide property in an even of a divorce, because California Family Law is pretty comprehensive on community property requirements. Unless Jaime specifically waives her rights to the Dodgers, and she gets an incentive in return, (houses, financial payout, etc) than the MPA would stick in court. The whole "a contract is a contract" argument is not one size fits all argument. The McCourts were heavily mixing their Dodgers' assets with their residential property assets, by taking over a $100 million in the franchise's value to pay for more property. They had top positions in the front office.

    If they seriously wanted the MPA to stand up in court, both would practice what the MPA was suppose to do, to separate assets, protect a spouse's assets and business from creditors from another spouse's business.

    By far the biggest faux pas in the MPA, isn't the words "inclusive" and "exclusive", it is that both spouses should had outside counsel look over the agreement. The mistakes weren't caught until Leah Bishop found them in 2008.

    Frank had other avenues, and both of them are being reckless in taking this case to trial. This case should had been settled back in October 2009, instead of one side trying to go for a decisive win.

  11. Spent the afternoon at the courthouse for the first time. I was absolutely amazed that the biggest divorce trial in the history of this city, or any city for that matter, was as absolutely low key as it was. There were numerous empty seats, with the key players and media sauntering in and out of the hallway. I stood inches away from Jamie and Boies at one point, while chatting with Rhett Bollinger of I almost literally bumped in Frank as I went back into the courthouse. Really quite remarkable that the trial is essentially business as usual at the civil court. It was a real pleasure meeting Josh, Rhett and Molly Knight. All of you very impressive, indeed. I will be back tomorrow to see if the mysterious Larry Silverstein appears. I thought that Jamie was doing her best Bill Clinton today, claiming to not understand what a deposition is.
    I must confess, I really have no clue as to the direction Judge Gordon is leaning. For that matter, I really have no idea how may or may not be telling the truth. They are both under oath. If Frank is manipulating the MPAs, he is taking an enormous risk. If Jamie is attempting to manipulate community property, that could be equally disastrous. Will someone be caught in a flat footed lie at some point? A half truth that could turn this thing on a dime? Right now it really does seem like they are both lying through their teeth, in my opinion. I just can't handicap Gordon's deference. He is a stone face up there.

  12. Oh, dear:

  13. @okojo 4:15pm:"I am always in the opinion that Frank was stupid to hold on to the Dodgers based on the MPA, because the intent of the contract was to shield assets, not to be a bombproof separate property document in case of divorce.. "

    What weight does the law give to the intent of a document when the intent conflicts with what the document says?

  14. in response to anon on 21/9/2010 10:33am

    California Community Property laws pretty much state that you can't just have an contract, like a post nuptial agreement, that states, "these are his properties, those are her properties" and it becomes a legally binding separate property agreement that can stand up during a divorce, or in other courts.

    What has to be done to make it pretty bona fide, is both parties WAIVE their rights to the other spouse's properties, like, "I, Jamie McCourt waive my right to contest the Properties of Frank McCourt in family law court and probate court"

    Second, most of the time, the California courts are looking that if a party waives their right to assets in a divorce, they are getting some sort of compensation, that is equal or close to equal to all the assets in q long term marriage like a financial payout or assets at an equal value. (duration of marriage is also crucial, especially most of the wealth was accumulated during the marriage)

    This is why the MPA is a bad document for Frank's side to totally rely on to retain total control of the Dodgers, with no financial recourse to Jamie. It is intent may be transmutation of the property, but it doesn't state any waiving of that right, to the other properties.

    Cases like the McCourt have been in the California Courts before, and most cases stress the emphasis of equal division of assets as the top priority, or as equal as they can possibly can be. There have been many Pre and post nuptial agreements set aside by the courts because the documents would be unfair in the division of the assets, even though the contracts were bona fide, or there was a waiver. It isn't the intent of the contract, or even the actual words, but if the contract can pass muster in the California Courts.

    Let me put it is this way, the MPA was never intended to be a comprehensive separate property agreement. . The intent was to show in a court of law, that the McCourts' residential property assets were not used in the running or purchasing of the Los Angeles Dodgers.

    If the McCourts amended this to put their two Malibu properties to the MPA, it wouldn't protect them for creditors, because they were directly bought with money connected to the Dodgers.

    It was stupid and reckless to go to trial for this divorce case. This should had been worked out in a conference room, and with structured payments.

    The weight of the law is that the priority is a fair division of assets, and if any legal document supersedes California law on fair division of community assets from a broken marriage, the document has to abide by California law on certain procedures, like waiver, and financial compensation.

    The gold standard for pre nuptial legal documents is the Britney Spears/ Kevin Federline divorce, he waived his rights, he also got a financial payout in return. One reason he and his lawyers didn't get very far in fighting it. (there were also not married for a long time)

  15. Thanks, okojo! Very interesting to view it all in that light.