A superior court judge ruled that the 2004 postnuptial agreement that granted Los Angeles Dodgers' owner Frank McCourt sole ownership of the franchise is not valid under California law, which may lead to the Dodgers being deemed shared property under California law.
The McCourts bought the team for about $430 million in March 2004, and signed the postnuptial agreement a few weeks later. Jaime McCourt's lawyers asked the judge to throw out the postnuptial agreement because one version gave the team to Frank McCourt and another called for joint ownership. In some copies of the agreement, the word "inclusive" is used, meaning Frank would be the sole owner, while in other copies, the word "exclusive" is used, meaning Jamie would be the co-owner. The lawyer who drafted the agreement admitted on the stand that he changed the agreement after it was signed, but insisted that he did not commit fraud by doing so.
The divorce dispute will decide who owns the baseball team, the stadium and the surrounding property, estimated to be worth hundreds of millions of dollars. Frank McCourt has filed an objection to the court's ruling and is expected to file an appeal, with sources saying that he will argue that he bought the team with a company he created before his marriage.
The Dodgers case illustrates the importance of proper planning for team owners, as the ownership of one of baseball's most storied franchises is being decided based upon the validity of a marital agreement. The lack of a valid postnuptial agreement has also caused franchise instability, which may have been a factor in the departure of several key executives recently.
Postnuptial agreements are less common than premarital agreements, and most states, including California, do not have statutes which govern their validity. Like a premarital agreement, the underlying premise of a postnuptial agreement is to provide the parties with rights with respect to property and support in the event of a divorce or death. Accordingly, when entering into a postnuptial agreement, it is vital that the statutory requirements are followed, financial disclosure is made and the agreement is not unconscionable. If the postnuptial agreement is held to be invalid, the parties will have to rely upon the laws of the state in which they are domiciled and those laws may not be favorable to the wealthier spouse, which, as we've seen, can get them stuck in quite a legal pickle.