Nov 27, 2012

Instant Replay Creates All Kinds of Issues

Major League Baseball (MLB) is deciding this off-season whether to extend instant replay to other areas of the game. Meanwhile, former LA. Dodgers owner Frank McCourt is facing his own instant replay issue this off-season.After 30 years of marriage, a reported $20 million in attorney fees and a divorce settlement that awarded Jamie McCourt $131 million, McCourt finds himself back in court. McCourt’s ex-wife is requesting that the court set aside their June 2011 divorce decree based on her ex-husband’s misrepresentations as to the value of the Dodgers. During the divorce litigation, McCourt stated in court documents that the value of the Dodgers was about $300 million. However, the one time MLB franchise owner recently sold the Dodgers for a record setting $2.15 billion to Guggenheim Baseball Management (leaving McCourt with a reported 93 percent or roughly $1.7 billion of the marital assets). The alleged massive misrepresentation of the Dodgers’ value caused the former Mrs. McCourt to demand a review of McCourt’s home run agreement, crying it was foul.In California, under Section 2122 of the California Family Code, there are five grounds to set aside a judgment including actual fraud, perjury, duress, mental incapacity or mistake (CA FAM Sec. 2122). Considering that the recent sale realized a value of $2.15 billion, Jamie McCourt’s attorneys stated in the Los Angeles Times that even if McCourt’s figures were the result of mistake rather than fraud, the settlement should be set aside based on the errors.Similar to California Family Code Section 2122, in Illinois, a litigant may petition for relief from a judgment after 30 days, but within two years of the entry of the judgment, under Section 2-1401 of the Illinois Code of Civil Procedure (735 ILCS 5/2-1401(b)). “The purpose of a [1401] petition is to bring facts not previously known to the court at the time the judgment was entered, that if known would have altered, or affected, the judgment.”In re Marriage of McGlothlin, 312 Ill.App.3d 1145, 1147 (2ndDist. 2000) (internal citation omitted).To establish a Section 2-1401 claim three elements must be met: 1) the existence of a meritorious claim or defense; 2) due diligence in presenting the claim or defense to the circuit court in the original action; and 3) due diligence in filing the Section 2-1401 petition.In re Marriage of Halas, 173 Ill.App,3d 218, 223 (1stDist. 1988).Often the most difficult requirement to prove, due diligence, “requires that [a] petitioner have a reasonable excuse for failing to act within the appropriate time,i.e., that she reasonably failed to act, and not that she merely acted negligently.”Halas, 173 Ill.App.3d at 224. In determining reasonableness, a court should examine all the relevant circumstances, including the conduct of the litigants and their attorneys prior to the entry of the original judgment.”Id.As McCourt’s former wife’s lawyers recently stated in a Los Angeles Times article, even if the former wife cannot show fraud, mistake or due diligence, the magnitude of the sale price above the prior value may cause the court to set aside the judgment. In Illinois, under limited circumstances, courts may rely on equity to provide relief from a judgment despite the lack of due diligence. An Illinois practitioner can find case law supporting the position that “a Section 2-1401 petition should be used to prevent the enforcement of an unjust or unfair judgment.”:McGlothlin, 312 Ill.App.3d at 1149 (internal citations omitted).Post-decree litigation is hardly ever as memorable or exciting as reviewing a game-changing call; however, family law practitioners should note that issues of fraud, concealment or mistake in values of assets can be avoided with long-term planning in the judgment. This includes comprehensive language regarding the specific conditions that allow for the judgment to be reopened or specific provisions addressing how to treat assets that were undisclosed or proved to be undervalued during the discovery process.Without such language in their agreement, Frank McCourt’s attorneys will have to convince the court to let the original call stand.

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