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Judge issues $1B decision in Hamm case

Back in September, we discussed oil magnate Harold Hamm’s divorce, and how the case centered on the issue of active vs. passive appreciation. Hamm married his wife, Sue Ann, 26 years ago without entering a prenuptial agreement.

Because Hamm had already started the oil company Continental Resources at the time of the marriage, one might assume that the oil company would be considered separate property. However, in Oklahoma, if separate property increases during the marriage that amount can be considered “marital” as long as the appreciation was active and not passive.

As we explained in a follow-up post on the case, active appreciation means that the increase in value was due to the efforts or contributions that were made by one or both spouses. On the other hand, passive appreciation occurs when outside forces such as market factors cause the property value to increase.

At the time the divorce trial began in August, Continental Resources was worth $18 billion, most of which was attributed to growth during the marriage. However, the judge needed to decide how much of this appreciation was active and how much was passive. It was a $18 billion question that was finally decided last week.

In an 80-page ruling, the judge awarded Sue Ann roughly $1 billion, after concluded that just $1.4 billion of the company’s growth “resulted from efforts, skills, or expended funds of either spouse” during the marriage.

Sue Ann’s attorneys have already indicated that she plans on appealing the decision, which afforded her 6 percent of Hamm’s fortune. On the other hand, Hamm called the decision “fair and equitable.”

Because there is so much at stake in this case, it comes as no surprise that an appeal is being filed. We will keep you updated on the appeal as it progresses.

In the meantime, the case can already teach us many important lessons in family law; first and foremost, importance of entering a prenuptial agreement. Even though no couple wants to “plan” for a divorce, it sure beats a public and unpredictable trial that can span years.

Source: Reuters, “The $1 billion divorce: Why Harold Hamm’s ex-wife didn’t win more,” Joshua Schneyer, Nov. 16, 2014