The “Inequitable” Billion-Dollar Divorce
Appeals Filed By Both Sides
Previously on this Blog, Livesay & Myers, P.C. senior associate Matthew Smith explained the decision rendered in the divorce action between Continental Resources CEO Harold Hamm and his now-ex-wife, Sue Ann Arnall. This case was, and is, noteworthy because the decision awarded Ms. Hamm almost one billion dollars ($955,481,842, to be precise) for her share of the marital estate. If the trial court’s decision stands, this will be one of the largest divorce settlements of all time. The highest recorded settlement to date was for the divorce of Russian oligarch Dmitry Rybolovlev ($4.5 billion dollars).
However, at present both parties to this proceeding have filed appeals to the Oklahoma State Supreme Court. Oklahoma, like Virginia, is an equitable distribution jurisdiction, where the court determines the extent of the marital property, excludes certain assets as the separate property of the parties, and then comes up with a fair division of the marital estate. The essential point each party raises in their appeal in the Hamm case is that the trial court’s decision was unfair, or “inequitable.”
Ms. Arnall’s appeal is the more traditional of the two—arguing that the court erred and gave her less than her fair share of the marital estate. At trial, she argued that her then-husband’s keen business mind was the driving force behind the extreme growth of Continental Resources, and that his contributions to the growth of the business made that growth part of the marital estate, to be divided as part of their divorce. Mr. Hamm, unsurprisingly, argued the opposite: that the gains to his wealth were due to the market in general, and that his efforts played little to no part in the growth of the company.
By the way, Virginia and Oklahoma treat the growth of separate property during the marriage in much the same way. In both states, if separate property is grown through the active efforts of a spouse, then the growth is marital; if the growth is caused just by the passage of time, not due to any effort expended on the part of the spouse, then that growth remains separate.
With her appeal, Ms. Arnall seeks to reargue this issue. She will try to prove that the court got it wrong and that more of Mr. Hamm’s personal fortune was earned due to marital efforts than the trial court found.
Mr. Hamm’s appeal, on the other hand, argues that the court gave Ms. Arnall more than her fair share of the marital estate. Which sounds like a reasonable argument—except that shortly after the trial Mr. Hamm publicly declared the court’s ruling “fair and equitable.” But something even more important happened after the trial: the price of oil dropped significantly, eating away at a great portion of Mr. Hamm’s individual wealth. The trial court’s decision directed a vast majority of the divorce settlement be paid in cash (as opposed to assets) to Ms. Arnall. In fact, Mr. Hamm, at the beginning of this year, wrote Ms. Arnall a check for the balance owed of $975 million. But with the post-divorce drop in oil prices, the assets that Mr. Hamm retained lost value, while Ms. Arnall’s share remained the same.
Submitting post-trial evidence as part of an appeal, as Mr. Hamm seeks to do, is somewhat unusual—and probably would not be allowed in Virginia. Under Virginia law, the court is directed to select a valuation date as close to the date of the trial as possible unless it would create an unfair result. Here, the Oklahoma court used the value of Mr. Hamm’s assets at the time of trial in determining what each party should retain. Mr. Hamm was directed to essentially “buy out” his wife’s interest in these assets so that he could retain the assets intact.
It appears that this saga, which has already gone on for years, will continue forward to the Oklahoma Supreme Court.
Billionaires are not the only ones who can benefit from quality legal representation. Equitable distribution cases can be quite complex, and representation by an experienced attorney is essential for anyone seeking a fair distribution of their marital estate. Livesay & Myers, P.C. has teams of divorce attorneys in Leesburg, Fairfax, Manassas and Fredericksburg, Virginia, with years of experience handling equitable distribution issues in Virginia. Contact us to schedule a consultation today.