Family Law Corner: Is Greed Good?

In 1998, Michael Douglas ended his 21 year marriage to Diandra Luker in a divorce that made #8 on Forbes Magazine’s list of the 10 Most Expensive Celebrity Divorces. 

In June of this year, Luker filed suit in a New York Supreme Court seeking 50% of the proceeds that Douglas will receive from the soon-to-be-released movie, “Wall Street 2: Money Never Sleeps” pursuant to the marital settlement agreement reached in their divorce.  According to an E!News source, the agreement states that Luker and Douglas are to equally split any earnings from any residuals, advertising, or spinoffs of movies during the marriage.  Luker’s suit turns on the definition of “spinoff” and whether “Wall Street 2” is a spinoff or whether it is a sequel, as Douglas argues.
During the initial hearing, Luker’s attorney argued “Wall Street 2” is the same character, same title, just years later; therefore, the agreement applies to Douglas’ earnings from this movie.  Supreme Court Justice Matthew Cooper stated that he believed there was a difference between a sequel and a spinoff, but deferred his judgment pending submission of further pleadings and another hearing in August.  

The determination of whether Luker will receive Douglas’ earnings will depend on the definition of “spinoff.”  Under In re Marriage of Corona (2009) 172 Cal.App.4th 1205, the statutory rules of construction and interpretation found in the Civil Code are generally applicable to marital settlement agreements that are incorporated into the judgment, as happened with the Douglas-Luker dissolution.  In re Marriage of Gowan (1997) 54 Cal.App.4th 80 further adds that an agreement must be analyzed in light of the parties’ intent.  Civil Code §1654 states that any uncertainty in an agreement must be interpreted most strongly against the person who caused the uncertainty.   In determining the definition of “spinoff,” the Court will need to determine whether the parties intended that Luker receive income in this situation and if either party caused the uncertainty in this contract.  Given the settlement Luker received (reportedly $45 million dollars and two large residences), it is likely that they mutually agreed to the terms of their settlement and it will be impossible to determine who caused the uncertainty.  No matter what the outcome, the lesson to take from the Douglas-Luker dissolution is to be very careful in drafting an agreement that accurately reflects the expectations of the parties.  There is no room for ambiguity in a marital settlement agreement.