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Jul 22 2011

Court Shoots Down Hubby’s Argument: “I’m a Genius -She Gets Nothing!”

This blog is all about strategy – how facts and evidence play out in the courtroom, the media and public opinion. Its also about how that strategy can be made effective. In today’s New York Law Journal, a decision by Justice Laura Drager of NY Supreme Court, shows that creativity can only go so far.
Henry and Nancy Silverman were married in 1978 and Nancy filed for divorce 31 years in 2009. In the three decades between Henry built up Cendant Corporation, his private equity firm, to a point where the firm had amassed the Silvermans $450 million in assets. Not happy with having to survive on $225 million, Henry tried to go after all the money. His argument was that the success of the business is solely attributable to his “innate genius.” He was prepared to offer scientific evidence of the claim by bringing in a psychologist to testify that psychological evidence establishes that “his unique personality traits,” or “personal capital” was the sole reason for the firm’s success. Henry’s lawyer was then prepared to argue that since his innate genius pre-dated the marriage it was not marital property and therefore any increase in net worth caused by the pre-marital property belongs only to Henry.

Judge Drager was having none of it. In her decision, she disallowed the evidence, first because she doubted that science could prove that a business’ success was due solely to the genius of its owner since the expert’s report did not take into consideration “the assistance of third parties or luck.” Secondly, she stated because that type of “pre-marital” asset is not the type of asset that can be quantified. IT is not the same as when a celebrity gets divorced and the ex-spouse says that they are entitled to a share of “growth” of the other’s celebrity during the marriage. Here, Nancy did not want the court to give her part of Henry’s “genius,” just part of the money earned during the marriage. Her are her words:

It is not in dispute that the Husband’s brought to his work innate abilities and acumen that helped cause the business to succeed.1 In determining how to distribute the assets accumulated as a result of that partnership, the court must consider the contribution made by the Husband based on his innate talents, business acumen, conduct and any other attribute or effort, with the contributions made by Wife, as she alleges, in managing the parties’ domestic and social life, in raising their daughter, as well as the social introductions or other efforts she claims to have made that assisted the Husband in his business. In purporting to prove that the success of the business is solely attributable to his innate genius, the expert opinion evidence offered by the Husband offers no assistance to the finder of fact in fashioning an equitable distribution of the estate based on the contributions of each party to the marital partnership.

Had this novel argument succeeded, every sole entrepreneur or professional could make the same claim and leave their spouses in the lurch. Our successes are of course built upon on our innate talents and particularly so in the private equity field where whoever is calling the shots and making the investments is key to the growth of the funds he/she is managing. Kudos to legendary divorce litigator Robert Stephan Cohen for coming up with the argument and to Judge Drager for correctly rejecting it.

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