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In re Marriage of McCourt (2015)

February 24, 2015

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This family law appeal involved a dispute over the proceeds from the sale of the Los Angeles Dodgers and related assets, including Dodger Stadium.

Frank McCourt purchased the Dodgers in 2004. Frank appointed his wife Jamie McCourt, who had a law degree and an MBA in corporate finance, as Vice Chairman of the Dodgers. She eventually took over responsibility for the team’s day-to-day management, and in March 2009 she became the Chief Executive Officer of the Dodgers. In October 2009, she filed for divorce.

During the divorce proceedings, Frank provided extensive disclosures regarding the value of the marital assets, including the Dodgers. During the same time, the Commissioner of Major League Baseball appointed a monitor to oversee the Dodgers’ operations due to concerns about the Dodgers’ ability to meet their payroll obligations. The Dodgers filed for bankruptcy in June 2011.

Frank and Jamie agreed to settle their dispute in October 2011. Frank agreed to pay Jamie $131 million in cash along with $50 million in real estate and other significant benefits. Jamie agreed to release all claims to the Dodger assets, and expressly waived any right to seek further compensation based on the ultimate sale price of the Dodgers. In March 2012, Frank agreed to sell the Dodger assets for $2.15 billion. Jamie then moved to set aside the settlement agreement, claiming that Frank had failed to disclose information regarding the potential value of the Dodgers. The trial court conducted an evidentiary hearing and denied Jamie’s motion. Jamie appealed.

Horvitz & Levy LLP was retained to represent Frank on appeal, in association with Susman Godfrey L.L.P. The Court of Appeal affirmed the trial court’s denial of Jamie’s motion to set aside the settlement agreement. The Court of Appeal agreed that Jamie failed to demonstrate that she was unaware of the potential value of the Dodger Assets when she signed the agreement. The Court of Appeal concluded that Jamie intentionally chose the security of a guaranteed $131 million payment, plus more than $50 million in other assets, over the uncertainty and risk presented by the valuation and sale of the Dodger assets. The Supreme Court of California denied Jamie’s petition for review.