It’s actually not the divorce of the Los Angeles Dodgers, but the divorce of real estate mogul Frank McCourt and his wife, Jamie. Some call it the Dodger Divorce, however, since this bitter litigation could determine the fate of the storied baseball team — an asset worth hundreds of millions.
The couple is fighting over ownership of the Dodgers in a Los Angeles courtroom, aided by a long list of leading litigators. Frank McCourt is represented by Stephen Susman of Susman Godfrey, among others, and Jamie McCourt’s legal team is led by David Boies of Boies Schiller. (For a more complete listing of the lawyers involved, see here.)
The high-powered firm is suddenly at the center of the drama because of work done by its lawyers. At issue is the wording of a document signed by both McCourts six years ago. According to media reports, three copies of the marital property agreement use the word “inclusive,” which would make Frank McCourt the sole owner of the Los Angeles Dodgers, and three copies say “exclusive,” which would make Jamie McCourt the co-owner of the venerable Major League Baseball franchise.
This is not the first time we’ve covered how a tiny difference in language — just two little characters, “in” as opposed to “ex” — could mean millions. Remember the single-digit error that could cost a real estate company tens of millions? See also the $900,000 comma and the $40,000 missing “L.”
Yikes. This is such stuff as lawyers’ bad dreams are made of. Law truly is a game of inches. (When bloggers make typos, commenters make fun of us; when lawyers make typos, people
die lose money — sometimes lots and lots of it.)
The lead lawyer from Bingham McCutchen, Larry Silverstein — no relation to the World Trade Center real estate developer, as far as we know — admits that he messed up in preparing the marital property agreement (MPA)….
An attorney acknowledged under oath Tuesday that he changed a key word in the contested property agreement between Frank and Jamie McCourt — after the parties had signed the agreement and without informing either one…. Silverstein changed the word “exclusive” to “inclusive” to indicate the Dodgers were Frank’s sole property and not subject to California community property law.
Silverstein said he made the switch simply to confirm the McCourts’ desire to put their homes in Jamie’s name and the team and other businesses in Frank’s name, so business creditors could not seize the homes.
“There’s nothing sinister,” said Steve Susman, another attorney for Frank. “They’re claiming it’s sinister because it’s all they have.”
This was supported by testimony from a former Bingham partner who also worked on the agreement:
Reynolds Cafferata, a witness for Frank McCourt, said he drew up a marital property agreement in 2004 at the request of Jamie McCourt because she wanted to make sure the homes that were in her name wouldn’t become community property when the couple moved to California from Boston and, as such, be exposed to her husband’s business creditors.
Cafferata said today at the couple’s divorce trial in Los Angeles that he discussed with Jamie McCourt the possibility of the businesses being the couple’s common property and the homes her separate property. She rejected that option because, if she was the Dodgers part owner, it would leave the houses more exposed to potential creditors, he testified.
“It was agreed the businesses would be Mr. McCourt’s,” Cafferata said in response to questions from Ryan Kirkpatrick, a lawyer for Frank McCourt.
This seems like a reasonable arrangement, and it might very well have been what the parties subjectively intended. See, e.g., Exhibit 1909 (email message to Jamie McCourt from her independent counsel, describing this set-up and advising Jamie that the agreements “are sufficient to accomplish your goals”).
But was the arrangement (houses for Jamie McCourt and business assets for Frank McCourt) properly reflected in the MPA — or MPAs, plural, since there are different versions floating around? Boies explored this with Silverstein in testimony this afternoon:
[Silverstein] testified Tuesday that when he gave the agreement to the McCourts to sign six years ago, a so-called drafting error that he made excluded the Dodgers as Frank McCourt’s separate property on three copies, and three others that didn’t.
While Jamie McCourt signed all six at the couple’s Massachusetts home, her husband only signed three there and the remaining three a couple of weeks later while he was in California.
It turns out the three that Frank McCourt signed in California excluded the team as his separate assets. Silverstein said he doesn’t recall switching those copies with wording that did include the team, but believes he did so shortly thereafter after he looked at company records. Silverstein said he didn’t tell Jamie McCourt about the switch.
Depending on what happens in the divorce, things could get ugly for Bingham, according to the Globe:
Silverstein and his firm could face a nine-figure liability claim should the losing McCourt blame him, according to several legal experts contacted by The Times.
“His competence is being challenged here,” said Laurie Levenson, a Loyola Law School professor and legal commentator. “If he’s shown to be incompetent at the trial, the next action could be malpractice.”
Silverstein, who was excused from the stand yesterday due to “health reasons,” must be under a huge amount of stress right now. Presumably he’s pinning his hopes on the next big development in the case: mediation talks, scheduled to start on Friday. If the discussions result in a speedy settlement, it could be good news for the warring McCourts — and for Bingham, caught in the cross-fire.
P.S. And good news for the Dodgers, paralyzed by these messy proceedings, and for the team’s fans (a group to which the WSJ’s Ashby Jones does not belong).
A bruising day for Bingham McCutchen in McCourt divorce trial [Boston Globe]
Attorney resumes testimony in McCourt divorce case [Associated Press]
Bingham Partner Admits to Altering Document at Heart of McCourt Divorce [Am Law Daily]
Attorney acknowledges changing key word in contested property agreement [Los Angeles Times]
McCourts to Mediate (At Last) [WSJ Law Blog]
Dodgers Owner McCourt’s Wife Didn’t Want to Co-Own Team, Lawyer Testifies [Bloomberg]
Mediation scheduled in McCourt divorce case [Associated Press via Bloomberg Businessweek]
Lawyer finds himself in middle of McCourts’ drama [Los Angeles Times]
Dodger Blues: Bingham Takes Center Stage in McCourt Divorce Drama [Am Law Daily]