An attorney's admission that he changed wording in the disputed marital property agreement between Frank and Jamie McCourt — after the couple signed it and without telling either one — has set the stage for a possible settlement, legal experts said Thursday.
The McCourts and their legal teams are scheduled to meet with a mediator Friday to try to settle their divorce, and with it ownership of the Dodgers.
After several rounds of unsuccessful pretrial settlement talks — including two tries with a mediator — the McCourts and their lawyers will try again behind closed doors in Los Angeles Superior Court. The sides could save years and millions in continued litigation should they strike a deal, under which Frank would be expected to keep the Dodgers and Jamie would be expected to get a nine-figure payoff.
If the public comments of the lawyers are any indication, the trial has only bolstered the confidence of each side that the other one should yield and settle.
"I think the other side is now hurting," said Steve Susman, an attorney for Frank. "That might lead us to something fruitful."
"I think our case has gotten stronger," said David Boies, an attorney for Jamie. "Whether that can extract a reasonable offer, who knows?"
The trial is scheduled to resume Monday, barring a settlement. Even if the sides reach a settlement in principle before then, the trial would probably continue given the financial complexities in drafting and finalizing an agreement that involves hundreds of millions of dollars, according to one of the attorneys on the case.
The trial is scheduled to end next week. Judge Scott Gordon would have up to 90 days to rule, but the parties could settle any time before then.
Larry Silverstein, the Boston lawyer who negotiated the agreement that Frank McCourt claims grants him sole ownership of the Dodgers, completed his third and final day on the witness stand Thursday.
Michael Kelly and Lynn Soodik, two veteran family law attorneys based in Santa Monica, each say Jamie's chances of winning at trial — and thus her leverage in settlement talks — increased after Silverstein's testimony.
Silverstein testified he botched the language in the agreement — three copies said Frank was the sole owner of the Dodgers; three more said the couple jointly owned the team — and then switched out the latter three copies without informing the McCourts.
"I've never heard of anything like that in my life," said Kelly, who has practiced law for 42 years.
Kelly said he thought the document switch tipped the scales in Jamie's favor and said courts generally do not uphold documents with conflicting language. Lisa Helfend Meyer, a Century City family law attorney, said the "ambiguity and confusion" in the documents puts Frank at "substantial risk" of losing.
Soodik said she thought the switch helped Jamie, but not to the degree that Jamie would be likely to prevail.
Soodik said the court can resolve conflicting language by asking what the parties intended, and testimony generally has shown Jamie got what she wanted — homes in her name and businesses in Frank's name, so creditors could not seize the homes if the businesses faltered. Under California law, Soodik said, Jamie could not have retained a right to the Dodgers upon divorce if she had agreed the team would be Frank's separate property.
"I still think he is in the driver's seat," Soodik said.
The outline of a settlement has been apparent for months. Jamie, who has argued the Dodgers should be community property, would drop her claim to ownership in exchange for a payout. Frank is believed to have offered just under $100 million and Jamie is believed to have asked for close to four times as much.
The Dodgers were rejected at least three times in requests for financing last year, court documents show, and Frank said he had to borrow $650,000 from his brother to make court-ordered support payments.
If Frank resists granting Jamie even a small percentage of ownership in the Dodgers, Boies said, then he might need to sell a minority interest in the team in order to afford the payout.
"They're going to have to give up some of their equity to a third party," Boies said.
However, Frank could keep the Dodgers all in his family and pay off Jamie by negotiating a front-loaded extension of the team's television contract with Fox.
"You may have figured out our deal," Susman said, smiling.
In any such deal, Silverstein's conduct could cost Frank millions more than he would have otherwise paid.
"Jamie McCourt is going to get a whole lot more money than he was offering because of Silverstein's testimony," Kelly said.
However, Soodik said, a settlement is far from guaranteed. Susman said in court that Frank might have been "wiped out" if he had not turned the Dodgers' financial losses around after his highly leveraged acquisition of the team.
"Some people want to settle because they're not risk-takers," Soodik said. "Obviously, he is, or he wouldn't have bought the Dodgers."