GUGGENHEIM’S DODGERS ORDERED TO REVEAL SECRET $ ARRANGEMENT IN JAMIE’S DIVORCE WITH FRANK

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Former Los Angeles Dodgers owner Jamie McCourt wants California’s family law courts to throw out her $131-million divorce settlement.  That’s why, according to the Los Angeles Times, the new owners of the Dodgers must reveal their financial arrangements with Jamie’s ex-husband/partner, Frank McCourt.  Got that?  We’re pretty sure Frank does too.

According to the Times article earlier this month, Los Angeles Superior Court Judge Scott Gordon denied the Dodgers request to seal a summary of the team’s deal with Frank McCourt.  The judge ordered the document to be made publicly available June 17, unless Guggenheim Baseball Management succeeds in an appeal before then.

Jamie McCourt’s attorney, Bert Fields, believes the financial summary could reveal that the deal was worth more than the Dodgers publicly announced sales price of $2.15 billion.  “It shows Mr. McCourt got value way beyond $2 billion.”  And that somebody totally got ripped off in their settlement negotiations.

In her request to have Judge Gordon throw out her divorce settlement, Jamie alleged that Frank fraudulently misled her about the value of the Dodgers and their assets.  Frank denies this charge.  And he also denies extraterrestrials run the White House.

Last year, Guggenheim paid $2 billion for the Dodgers, while an affiliated entity financed the purchase of the land surrounding Dodger Stadium for $150 million.  The accompanying financial arrangements Guggenheim attempted to seal include data about how Frank and Guggenheim were to share profits from the joint investment venture, which is the crux of this whole magilla.

In court, Guggenheim argued that financial disclosure would harm the Dodgers ability to lure another sports team to the Dodger Stadium site.  (Guggenheim’s ownership has since admitted that it is indeed in talks with the NFL about building a stadium on the stated site.)

Although Staples Center owner AEG still has plans to bring the NFL to South Park, the NFL has made it abundantly clear it has its tiny, greedy, little heart set on Chavez Ravine.  As a side note, the NFL made no mention of all the profits to be made – by everyone, except I guess poor, hungry Jamie – from the Chavez Ravine site.

ATTORNEY FEES AS SANCTIONS VALID WHEN FIDUCIARY DUTY VIOLATED

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So you’re thinking of leaving the spouse, and you think it might be a good idea to take a cash advance from the joint family credit card, just in case.  And you want to put the money in your own bank account, sacking the community with the debt, and not telling him about it.  And you think this is a good idea.  And, well…

Maybe you should think again.  That’s because California’s appellate courts have ruled that a trial court erred by not awarding attorney fees as sanctions under Family Code §1101(g) despite the fact it found during a dissolution trial that Wife had violated her statutory fiduciary duty by taking a $24,000 cash advance on a credit card before separation and transferring the funds to her personal bank account without informing her Husband.

The facts of Marriage of Fossum (2011) 192 CA4th 336, 121 CR3d 195 were that Wife, before separating from Husband, took a $24,000 cash advance using a credit card and transferred the funds into her personal bank account without informing Husband.  After the trial for the couple’s marital dissolution, the trial court ordered Wife to reimburse Husband for half the amount charged, but found that Husband was not entitled to an award of attorney fees even though she had violated her fiduciary duty under Family Code §721.

The appellate court reversed the judgment.  Regarding attorney fees, the court of appeal held that Husband was entitled to an award of attorney fees under section 1101(g) as a result of Wife’s breach of fiduciary duty.  Family Code §1101(g) states that its remedies “shall include, but not be limited to, an award to the other spouse of 50 percent, or an amount equal to 50 percent, of any asset undisclosed or transferred in breach of the fiduciary duty plus attorney’s fees and court costs.”

SEPARATION, TRANSMUTATION OF PROPERTY IN CALIFORNIA MARRIAGE

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Separate property in regards to marriage in California is covered under Family Code § 771.  It states that:  “The earnings and accumulations of a spouse and the minor living with, or in the custody of, the spouse, while living separate and apart from the other spouse are the separate property of the spouse.”

This period can include any time after initial separation but before reconciliation.  There is nothing in the statute to indicate that any property earned during a period when the parties were living ‘separate and apart’ should be characterized as community property.  Additionally, section 771 does not prohibit multiple separation dates when characterizing a community’s property.

If parties possess the intent to separate and end their marriage, California law dictates that any property acquired thereafter by a spouse is his or her separate property.  However, the law is clear in stating that behavior alone cannot transmute property.

California case law dictates that the character of property as separate or community is fixed as of the time it is acquired.  The character cannot be altered unless by some means recognized by law, judicial decree, or the parties’ agreement.  This is what transmutation is all about.

If it is community property when acquired, it remains so throughout the marriage unless the spouses agree to change its nature or the spouse charged with its management makes a gift of it to the other.  Moreover, separate property does not change its character automatically as a result of marriage, or use during marriage.

California has strict requirements as to what is required to transmute property.  It cannot be done by conduct alone.

Family Code § 852 imposes certain requirements on marital transmutations, including that a transmutation “is not valid unless made in writing by an express declaration that is made, joined in, consented to, or accepted by the spouse whose interest in the property is adversely affected.”  Furthermore, section 852 states the requirements for a valid transmutation in California.  A change in character is not valid unless made in writing by an express declaration that is “made, joined in, consented to, or accepted by the spouse whose interest in the property is adversely affected.”

COMMUNITY PROPERTY SEPARATION DATE IN CALIFORNIA

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California is a community property state.  Basically, this means that all property acquired by the two parties of a marriage in California is considered to be community property.

This presumption of community property is based on the premise that each partner to a marriage contributes services of value to the whole, and, with certain limitations and exceptions, both parties share equally in the profits.  So long as a spouse or registered domestic partner is contributing his or her special services to the marital community he or she is entitled to share in its growth and prosperity.

This, in essence, is what the community property system is all about.  And remember that the parties’ respective contribution to the community is what justifies and forms the basis for their joint ownership of the fruits of their respective labors.

California and Washington are the only states in the union that terminate the marital period at the date of separation of the parties, as opposed to the termination of status as a married couple.  This is due to the fact that upon separation, the parties no longer make joint contributions to the community.

Family Code § 771 covers this area:  “…the earnings and accumulations of a spouse and the minor children living with, or in the custody of, the spouse, while living separate and apart from the other spouse are the separate property of the spouse.”  This means that a judgment of dissolution is not necessary to terminate the community.  California case law has defined ‘living separate and apart’ as the parties having come to a parting of their ways with no present intention of resuming their marriage.

CHARACTERIZATION AND DIVISION OF PROPERTY; UNDUE INFLUENCE

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In regards to the division of property and assets, an important family law appellate court decision came down last year regarding a husband’s failure to rebut the presumption of undue influence that arose when he refinanced a house in his name alone and refused to convey title to himself and his wife in joint names after she quitclaimed her interest to facilitate a loan.

IRMO Fossum (2011) 192 CA 4th 336, 121 CR3d 195 involved a married couple that purchased a house in 1994, whereby they agreed that Husband would obtain a purchase money loan and take title to the house in his own name, and Wife would execute a quitclaim deed, due to the fact Husband’s credit was better than Wife’s.  Husband had promised to reconvey title to Wife after the close of escrow.  During the marriage, the couple had refinanced the home twice, making a similar agreement each time.  However, after the second refinance, Husband refused to put wife back on the title to the house.

During the parties’ ensuing divorce, Husband also claimed he was entitled to reimbursement for his separate property contribution to the downpayment on the house.  However, the trial court had heard “conflicting testimony as to whether the source of the funds drawn on the parties’ joint bank account came from their joint earnings working in Husband’s construction business in 1994, or was solely the fruit of Husband’s efforts and savings.”  The trial court held that the house was community property, and Husband appealed.

The California Court of Appeals affirmed the judgment with respect to the ruling on the house.  The appellate court determined that the trial court had found Wife’s testimony credible regarding the parties’ arrangements for taking title and that the downpayment came from money they had earned together.  Under California Family Code § 721, a presumption arose that Husband exerted undue influence in having his wife sign a third quitclaim deed on the basis of his promise that he would restore her name to the title, and Wife did not have to otherwise prove fraud or deceit.

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