Thursday, October 21, 2010

Getting past § 852(a).

As we've discussed in the past, one of the most important issues under Judge Gordon's consideration is whether extrinsic evidence of the McCourts' intent respecting the MPA is admissible. If not, Judge Gordon is left only to analyze the MPA itself and very limited evidence of its execution. This would certainly seem to favor Jamie; there are, after all, completely contradictory Exhibits to the MPA. But, just as excluding extrinsic evidence wouldn't make for an automatic Jamie win, neither would allowing it seal the deal for Frank.

If analyzed under California Family Code § 721(a) and 1500, rather than Jamie's preferred § 852(a), Frank wants the court to rely on several pieces of evidence showing Jamie always wanted the Massachusetts MPA, and that she derived significant benefit from it. Frank points to testimony from a number of witnesses claiming that Jamie never wanted the benefits and responsibilities of ownership, that she always wanted the assets divided, and that she wasn't nearly as harmed by the transaction as she claims. Yes, Frank admits, the raw dollar values of the couple's property under the MPA are not now, and were never, equal. But she was shielded from the risk of the entirely debt-driven transaction, and that matters.

Jamie's counsel responds to this line of argument by asserting several basic defenses to contract formation. Her side claims there was no mutual assent as to the material terms; how could they have agreed on something, they say, when there exist two signed and notarized--and wholly opposite--Exhibits? How could this agreement be upheld in the context of divorce, they say, when divorce wasn't contemplated during the MPA's formation? 

Frank's side counters that Larry Silverstein did discuss the MPA in the context of divorce during a meeting about a week before the execution of the document. It is also mentioned on the cover letter to the MPA. Except for the whole messing-with-the-documents part, Frank's argument today is largely the same as it was from the very beginning: Jamie wanted the protections of the deal. As fate had it, though, the Dodgers soared in value while the residential real estate--her nest egg--dropped like a lead balloon. Frank's side feels it disingenuous that Jamie, a lawyer, would seek to escape a document she drove. 

It sure feels like we've beaten most of the issues to death at this point. One we haven't discussed as much--fraud--is on deck.


  1. Yes, an attempt to defraud the creditors with the intentional execution of two exhibits, at the advice of a New York lawyer, is highly probable.

  2. I second "Fraud".

  3. Which brings us to the question, why haven't these two donkeys settled this thing outside of court?

    It seems obvious to me that Frankenjamie did this thing as a couple and it was done to protect assets from creditors. Is that illegal? I am told it is.

    Seems they are taking a risk they really don't have to take. Settle this thing. Sell the team, divide the money and get out of town.

  4. at this time, I don't think they can afford to the team due to the amount of money taken out of the team to date. if they sell, would not capital gains come about? the hit by the irs i believe will be massive. Not an accountant but I'll bet the feds and state will be wearing miners caps and crawl up you know what of each

  5. Are these all the comments from the same "Anonymous", seconding yourself? No? Has not a single one of you signed up at any of the six profiles below, nor can be bothered to invent some sort of handle to keep you apart? Gee.

  6. How long would an appeal process take if Frank looses? Would the appeal process have to take place before Jamie receives anything? I know Frank is planning on appealing the second the decision comes that he's got to split the team.

    I'm not as concerned about if Jamie looses. If she looses, nothing really changes for us as Dodger fans. Unless her compensation is so large that Frank is still forced to sell.

    Basically ... if Frank is going to be forced to sell through one avenue or another, how long would that take? Earliest scenario? Longest scenario?

  7. There are are two requirements for a valid transmutation - the writing requirement of 852 and the relational requirement of 721 (a) [spouses have power to transact with each other but only when the circumstances are pleasing to the fiduciary standard].

  8. Josh,

    You are not a lawyer, nor your focus appears far from Family Law. You looking at this from a 101 Contract Law perspective. I think the biggest flaw in this post is separating Frank and Jamie's actions when the MPA was typed up, the first version signed by Jamie in Massachusetts. In the end both actions were to help protect assets that Jamie and Frank acquired during the marriage.

    If Jamie was in solely in a business relationship with Frank, then I think the emphasis on how Jamie's actions solely benefitted her, is a better argument. Jamie's actions in helped setting up the MPA was to benefit both Jamie and Frank, because the intent was to help those assets for the marriage, and both spouses' intent was to stay married in 2004.

    The MPA was for the marriage, not for a specific person, but to managed risks for one entity, the marriage of Frank and Jamie McCourt. Whether Jamie was the main driving point in laying out their assets and shielding them from the buying and operating the Dodgers, the MPA was to benefit both the McCourts: as long as they were married.

    Jamie wasn't shielded from the risks of buying and running the Dodgers as of March 31st, 2004, the McCourts were shielded from the risks of buying and running the Dodgers. The MPA wouldn't protect some of the McCourts' antics after 2004, like the $60 million loan on the Dodger Stadium Parking Lot to buy the Lautner House in Malibu, but it would had protect assets IN THE MARRIAGE as of March 31st 2004.

    The problems of the MPA, both versions, is that it ran in limbo with California Family Law. Both McCourts have been trying to fix it since 2007, and it appears that it wasn't fixed because of other circumstances, mainly financial problems helped tear the McCourt apart.

    You can't downplay § 852 (a) and try to show that § 721 (a) has more precedent, or a better argument. By far the biggest argument for Jamie is the duration of the marriage, and how that fits into procedure of dissolution and splitting of assets.

    I don't know how Judge Gordon is going to rule on this. However, he has to go by previous cases, and follow California Community Property Law pretty succinctly. If he appears that he is doing something unorthodox or precedented, he has to back up his judgement with some pretty good legal precedents. To rule that the first MPA stands as a solid separate property agreement, he is not only have to show a good family law argument but a very good contract law argument as well. To be in the realm of California Family Law, it is much easier for Judge Gordon to waive the MPA and split the assets as close to 50/50 as possible.

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