Can California Divorce Court Force Sale of L.A. Dodgers Despite Federal Bankruptcy Court’s Control of the Team?

Jamie McCourt, the highly controversial co-owner of the Los Angeles Dodgers baseball team, is considering asking the family law divorce court to order all of her husband Frank’s business assets sold, including the team, according to a report in the LA Times.

This, of course, brings up the conflict we run into in family law cases — the authority of the California family court to make orders with respect to marital property, versus the power of the Federal court to control assets contained in a bankruptcy petition. In virtually every case, when the Federal court receives a petition for bankruptcy, an automatic “stay” (or “time out”) is placed on the ability of the California state court to make any orders with respect to property and/or debt contained within the petition. This same stay is the same order that stops the creditors’ calls to debtors.

Whenever federal law conflicts with California law regarding the same issue, the outcome is generally always the same — the federal law supersedes California law. This comes from the Supremacy Clause of the United States Constitution. However, Ms. McCourt’s attorneys are considering asking the family court to order the sale of the parent company that owns/controls the Dodgers, and apparently believe that if a potential buyer comes along who wants to buy the parent company, that the bankruptcy court might just permit the transaction.

The McCourt divorce has given us many juicy stories over the past year, including the takeover of the Dodgers baseball franchise by Major League Baseball. Stay tuned for how this latest development proceeds.