In McCourt Trial for Control of Dodgers, a Classic Case of 'He Said, She Said'
LOS ANGELES -- If you believe Frank McCourt, his estranged wife Jamie is a social-climbing spendthrift who never wanted to buy the Los Angeles Dodgers and badgered him to guarantee her financial security. If you believe Jamie, Frank is a calculating operator who has selective memory and may have conspired with a lawyer to alter the couple's disputed marital property agreement.
All that's at stake in their dispute is control of the Los Angeles Dodgers, the iconic baseball franchise that the couple-- or maybe just Frank -- purchased for nearly $430 million in 2004.
The fifth day of the McCourts' divorce trial wrapped up Friday in Los Angeles County Superior Court, with Jamie finally taking the stand in the afternoon after nearly three full days of testimony from Frank.
As has been the case throughout the week, the spouses and their attorneys offered sharply different accounts of how the couple (shown in above photo, in better times in 2008) viewed ownership of their assets -- and the terms in their 2004 marital property agreement, which is the key document in the trial. Frank believes the MPA makes him the sole owner of the Dodgers, while Jamie contends that it should be invalidated because the couple signed two conflicting versions of the document. The trial will now take a two-week break and resume on Sept. 20.
Of course, the MPA would never have become an issue if the McCourts' marriage had not disintegrated over the last couple years. One of the biggest sources of tension, according to Frank, was the increasingly extravagant demands that Jamie made after the couple settled in Southern California.
In March 2008, Frank sent Jamie an email expressing his concern about the debt they had accumulated buying a series of luxury residences, including two ocean-front mansions in Malibu and a pair of compounds in Holmby Hills that are down the street from the Playboy Mansion. Jamie never responded to the note, according to Frank's testimony on Friday.
Later that month the couple had an estate-planning meeting, during which Jamie asked Frank to provide her with $250 million to secure her "nest egg" and financial future. "I thought it was ridiculous," Frank told Stephen Susman, his lead attorney. "It was a fundamental and philosophical difference about how we were going to lead our lives in the future."
On both Thursday and Friday, Frank answered questions from Susman, telling the court about his wife's long-standing insistence that he take legal and financial responsibility for their businesses, including the Dodgers. The practice started, he said, after the couple nearly declared bankruptcy during the severe real estate recession of the early '90s. At one point during that time, creditors came to the couple's home in Boston and demanded payment. "That freaked Mrs. McCourt out," said Frank. "She pleaded with me to find a way to separate personal assets from business assets" in order to protect the couple's homes from creditors.
From that point on, the couple's residences were put in Jamie's name, while Frank assumed all the risk and debts associated with their business ventures. When it came to buying the Dodgers, Frank said, Jamie was against the move because the purchase was funded almost entirely by massive loans from Bank of America and News Corp. She believed the Dodgers were a "risky" property and was unwilling to sign loans or funding guarantees related to the acquisition, according to Frank.
Susman cited a series of documents sent by the Dodgers to Major League Baseball that defined Frank as "the sole owner" of the club. Wearing his trademark cowboy boots, Susman, a noted litigator from Houston, also referred to a clause in Frank's will, added after the Dodgers' acquisition, that spelled out how the team was to be transferred upon his death. No such provision, Susman pointed out, was ever added to Jamie's will.
While there's no doubt that Frank held legal title to the Dodgers, there's considerable disagreement about the MPA -- and the spouses have vastly different memories of the events leading up to its signing on March 31, 2004. The document was created because the couple was moving to California, which has different laws than Massachusetts regarding marital property. According to California law, assets that are designated as "separate property" of one spouse belong to that person in the event of a divorce.
At the center of the MPA confusion is Larry Silverstein, the couple's Boston attorney. Despite his lack of expertise in California law, Silverstein prepared the 10-page document and first presented a draft of it during a meeting on March 23. He then emailed three separate drafts of the agreement to the couple on the morning of March 30, each of which specifically excluded the Dodgers from becoming Frank's separate property.
After a meeting with Frank on the afternoon of March 30, however, the word "exclude" was changed to "include," and Silverstein prepared six copies of the document for the couple to sign. The only problem: Three of the copies had the vital "include" clause, while the other three excluded the Dodgers -- and his other businesses -- from the agreement, making the team "community property" that belongs equally to Frank and Jamie.
Frank and Jamie did not sign all of the versions at the same time -- she signed all six on March 31, while he signed three that day, and the other three two weeks later in Los Angeles. Further complicating matters: The copies of the MPA excluding the team were altered after Jamie signed it, either by Silverstein or someone from his firm, Bingham McCutchen. (The original pages, which excluded the team from Frank, were found in Silverstein's files earlier this summer.)
Not surprisingly, Frank and Jamie have wildly contrasting recollections of how Silverstein explained the implications of the MPA. They even disagree over the first time they discussed it at all: According to Frank, the couple had an initial phone conversation about the document with Silverstein on March 3rd, when they were in Vero Beach, Fla., attending the Dodgers' spring training.
But on Friday, Jamie testified that March 3, 2004 was the date of the Dodgers' first spring training game, a day the couple spent watching their new team play and celebrating their purchase. She said she had no record or memory of any conversation with Silverstein on that day. "Unless we were in the stands talking to him, it's unlikely that we had a meeting with so many of our friends around," said Jamie. The only other time they discussed the MPA, Jamie testified, was during a March 23 meeting that included discussion of at least 19 other topics, according to notes she took that were exhibited in court. (One of the topics, according to the notes, was whether to put the McCourts' son Travis on the Dodgers' payroll.)
According to Frank, Silverstein then discussed the agreement with him over the phone and in person, and then went through the document "paragraph by paragraph" with the couple before they signed it on March 31. Jamie countered she never would have signed a document that required her to forfeit all ownership rights to the Dodgers. "The notion that I would give all that up without remembering it is preposterous," she told David Boies, one of her attorneys.
Silverstein, who cannot be compelled to come to California to testify, is nonetheless expected to take the witness stand when the trial resumes later this month. Jamie's side argues that Silverstein's firm pulled an illegal "switcheroo" of the MPA, thereby invalidating any version of the agreement. Susman says the discrepancy between the versions was due to an innocuous "clerical" error made by Silverstein.
In court, Frank said he was shocked to learn about the alterations to the document, but denied any role in the switch. Asked on Friday by Boies whether it was ever "right" to alter a document that has been signed and notarized, Frank was evasive. Silverstein "was doing the right thing, but he should have told us."