The estranged wife of billionaire Ron Burkle is threatening to dismantle a 1997 post-marital agreement she says unfairly benefited the supermarket magnate, according to divorce papers filed in Los Angeles Superior Court.
After a contentious year and a half, Janet Burkle has appealed the decision of a private judge who ruled against her last month. She claims the earlier agreement is invalid because it fails to account for certain assets in her $30 million share of the community property, divorce papers say.
As a result, she says a spousal support waiver in the agreement should be lifted, and she is seeking $232,800 in monthly living expenses. She also says Ron Burkle has failed to make payments required under the agreement.
Ron Burkle, whose net worth was estimated last year by the Business Journal at $1.9 billion, says in court papers that he has abided by the agreement. He also said she waived spousal support as part of the 1997 agreement.
Both sides have taken to personal attacks in detailing their arguments during the divorce, according to filings in the court. In repeated requests to have additional security for their son, Ron Burkle has accused Janet Burkle of being an irresponsible parent. He claims she threatened the child’s safety by dating a personal trainer with a criminal record. Janet Burkle, meanwhile, says Ron Burkle has harassed her by conducting intrusive surveillance of her and her then-boyfriend.
“My husband cannot tolerate losing anything!” Janet Burkle said in a court declaration filed in the divorce. “I know that he views my leaving him as a loss, not necessarily in the personal sense, but in the sense of ‘win or lose.’ I cannot sense (sic) strongly enough that my husband will do anything to win! This has made him a tremendous success as a business person but not very successful husband or father.”
One of Ron Burkle’s attorneys, Patricia Glaser, told the Business Journal in an e-mail that “Jan obviously walked away from the table with a win/win environment in 1997 and she received the benefit of that win/win from 1997 until 2002.”
Janet Burkle claims the couple separated in 2002, a decade later than her husband alleges.
Burkle, who in a separate e-mail to this newspaper describes himself as “a private person,” has succeeded in getting some records from the divorce sealed, most of which outline personal details about the Burkles’ younger son. For that, he claims to have spent more than $100,000 in attorneys’ fees.
In his e-mail to the Business Journal, Ron Burkle describes his wife’s claims as “a final desperate attempt to extract money from me for a lifestyle which I find shocking.”
Last month, at a Superior Court hearing in Long Beach, his lawyers sought to seal a foot-high stack of documents under a new California law that became effective in mid-2004. The law, which has yet to be used in a high-profile case, loosens the requirements needed to seal financial information in a divorce.
At the hearing, Susan Seager, an attorney representing both the Los Angeles Times and the Associated Press, opposed the law on grounds it eliminates a judge’s discretion to weigh the privacy rights of an individual against the public’s right to know. The California Newspaper Publishers Association made similar arguments in opposing the legislation last year.
Los Angeles Superior Court Judge Roy Paul temporarily sealed the documents until he determines the applicability of the new law. Last week, Seager opposed Ron Burkle’s request to seal his wife’s appeal documents.
The Business Journal had obtained court documents prior to the sealing order, and it has received additional information through e-mails from Ron Burkle and his lawyers. Janet Burkle’s lawyer, Philip Kaufler, issued a statement saying, “We prefer to litigate this matter in the courthouse where it properly belongs and not in the press.”
Privileged life
In court papers, Ron Burkle cites his wife’s interest in publicizing his business affairs to the media, as well as his “constitutional right of privacy,” as reasons for his requests to seal the documents. “She will use the threat of such dissemination as leverage to attempt to extract a bigger financial settlement in this proceeding,” he said in a declaration filed in February 2004.
Burkle says his wife “greatly exaggerated the lavishness of the lifestyle which I lead,” but it is, by any measure, a privileged existence.
The Burkles took vacations with some of the area’s most prominent individuals, including billionaire Eli Broad and former Los Angeles Mayor Richard Riordan. They stayed at the White House and bought Jaguars and BMWs as gifts to one another. They made substantial contributions to local causes such as the Walt Disney Concert Hall, where his name is displayed. They regularly hosted dinners for UCLA, which named its Center for International Relations after him.
He is a friend of and investor with former President Bill Clinton, and has held numerous fundraisers for high-profile Democrats, including Sen. John Kerry and former Gov. Gray Davis.
In one declaration, he acknowledges that “many of my present and contemplated business activities directly involve labor unions. I believe that public dissemination of detailed information about my lifestyle (especially as exaggerated by Petitioner) could be very damaging to those relationships by making those union leaders uncomfortable with the concept of being associated by their rank and file members of working closely with someone who purportedly lives that kind of lifestyle.”
Much of Janet Burkle’s claims alleging inequities in the post-marital agreement center on timing: the draft was prepared just before her husband cut a string of billion-dollar business deals. Burkle, who built his wealth primarily through investments in supermarket chains, saw his net worth skyrocket in 1999 when his investment firm, Yucaipa Cos., sold its holdings in Fred Meyer Inc. to Kroger Co. in a $13 billion deal. Fred Meyer owned the Ralphs, Food 4 Less and Hughes grocery chains.
In divorce filings, Janet Burkle specifically mentions an earlier $4.8 billion merger of Ralphs and Fred Meyer that was announced the same month they signed the post-marital agreement, but which was not included as community property.
Had those business deals been included, as well as several other assets acquired in the years following the 1997 agreement, Janet Burkle might be entitled to a substantially larger share of her husband’s wealth, depending upon the date of separation. Under California law, the division of separate and community property occurs after the couple legally separate, a date Janet and Ron Burkle continue to dispute.
In the post-marital agreement, the couple resolved their different opinions about the separation date by agreeing to value the community property as of June 1997, about the time Janet Burkle filed for divorce. No hearings were held in the divorce after she signed the post-marital agreement, and the agreement assessed the community property at about $60 million.
She dismissed the original divorce case after filing for divorce a second time in June 2003.
Dispute over separation
As part of her recent claims invalidating the agreement, Janet Burkle alleges that she and her husband were not legally separated until 2002. She lists in court papers dozens of family functions and public events that occurred up to 2002 at which Ron Burkle introduced her as his wife.
Ron Burkle asserts they separated in the early 1990s. He defends the post-marital agreement, saying he was paying $400,000 to $500,000 per year in her living expenses during the five years they were married prior to the agreement, even though he says he has “significant evidence of living separate and apart from 1991 to 1997.”
(
See our related story
,
“Couple Bickers Over Lifestyle in Court Papers”
.)
Even if they were officially separated at the time they signed the agreement, Janet Burkle alleges her husband breached his fiduciary duty to her by concealing certain assets while negotiating the terms, court papers say.
California courts increasingly have enforced the rules of fiduciary duty that pertain to marital agreements, according to divorce lawyer Cary Goldstein, who is not involved in the case.
Under state law, the wage-earning partner must pay the full value of an asset as a penalty if the spouse proves he or she hid that asset and thus breached fiduciary duty. In most circumstances, the non-wage earning spouse gets 50 percent of the community property.
“If there is one person who really is controlling the finances, and controlling the assets, his fiduciary duty to the other spouse is very strong,” Goldstein said. “He’s going to be held accountable for any abuse of the fiduciary duty.”
Ron Burkle married Janet Steeper, a descendent of the Wright brothers, when he was 21 years old and an assistant manager of a Stater Bros. store in Upland. She was 19. “I married the first girl I kissed,” he said in the e-mail to the Business Journal. Soon after, they had a son and a daughter, now adults. Their third child was born in 1992.
By the accounts of both sides, the marriage began coming apart in the 1990s. In court papers, Burkle says he had been living at his newly purchased five-acre estate, Green Acres, which was once part of a 20-acre compound owned by the late silent film star Harold Lloyd. His wife stayed at their ranch in Yucaipa with their children.
In June 1997, Janet Burkle filed for divorce. At this point, the accounts begin to differ.
According to Janet Burkle’s appeal to the 2nd Appellate District, her husband gave her a diamond ring soon after the divorce filing and suggested they reconcile. During the last half of August, according to her appeal, the two went on a Mediterranean cruise.
“On their return from the cruise, however, Ron made it clear to Jan that the contemplated reconciliation would not be consummated by him unless and until she agreed to sign the post-marital agreement in essentially the form he had proposed,” wrote lawyers for Janet Burkle in her appeal.
She agreed in September but did not feel comfortable talking about financial issues with her husband, court papers say. At one meeting in September 1997, Janet Burkle read a five-page handwritten letter she wrote addressing her concerns about the property issues. But her lawyers hammered out most of the details of the agreement, leaving the negotiations between the couple at “arm’s length,” court papers say.
Questions about mergers
By the time they signed the post-marital agreement, they were living together at Green Acres, according to the agreement filed in the divorce papers.
Now, in her appeal, Janet Burkle claims her husband failed to disclose all the community assets at that time, which included the Ralphs-Fred Meyer merger. She says that merger was under negotiation in September and October 1997 but signed a day after Janet Burkle signed the post-marital agreement.
Burkle became chairman of the merged company.
Janet Burkle also claims the post-marital agreement was unfair because the community assets, which include primarily business partnerships, limited liability corporations, real estate and cash accounts, would remain in Ron Burkle’s possession until either one filed for a divorce.
A house he bought for her near the Green Acres compound in 2001, as part of the post-marital agreement, requires his signature on the deed, she says in court papers. She claims she cannot refinance the house because he refuses to sign the paperwork.
Under the post-marital agreement, Ron Burkle would pay her $1 million each year in cash or negotiable securities that represent rent, profit, appreciation and income from the community property until either person files for divorce. A divorce filing would trigger Ron Burkle’s cash payments of the community property to Janet Burkle.
In court papers, Janet Burkle claims that her husband has not paid the full $1 million per year since signing the agreement. Instead, he has credited those payments with non-cash purchases, such as the house he bought for her. He also has failed to make the first $5 million installment of her community property that became effective when she filed for divorce in June 2003. Instead, he agreed in September 2003 to pay her $3.5 million, which she rejected because she had already challenged the entire post-marital agreement.
Ron Burkle says he has complied with the agreement, which he calls fair. He notes that under the agreement she receives half of the $60 million in community assets “no matter what business losses I might sustain or other obligations I might incur.”
In addition, his lawyers claim in correspondence to her lawyers that she signed receipts in 1998, 1999 and 2000 acknowledging he paid her the $1 million each year, court papers say. He says he is entitled to the “offsets” included in the $3.5 million offer in September 2003 that she rejected. He said he has not paid her the second $5 million check, which came due in December 2003, because she relieved him of the responsibility when she “took the position that the agreement was ‘void and unenforceable,'” according to court documents filed in June 2004.
Agreement affirmed
Janet Burkle says her husband’s failure to pay his portion of the agreement has forced her to sell her stock and ask her grown daughter for money while seeking temporary monthly spousal and child support of about $232,800 per month and a child custody evaluation.
Ron Burkle, who reiterates that she waived her right to spousal support in the agreement, says that even if she is entitled to temporary support it would come closer to $73,000 per month, according to his estimates of her living expenses.
Further, signing the deed to her house “does nothing to protect Ron against further financial demands from Jan,” his lawyers said in a letter to Janet Burkle’s lawyers. Allowing her to sell the house would encourage her to move to Manhattan Beach with their son further away from Green Acres and threatens the child custody arrangement, he says in court papers. “What purpose does child support serve except to give Jan additional funds to burn?” wrote one of Burkle’s lawyers in a May 2003 letter, which was filed in the court.
After several hearings last spring, Stephen Lachs, a retired state judge serving as the private judge in the divorce, issued a tentative decision in September 2004, affirmed in December 2004, that validated the post-marital agreement. The decision says Burkle did not breach his fiduciary duty to his wife because he disclosed the community assets while negotiating the post-marital agreement.
The decision also says she acknowledged Ron Burkle paid her $1 million each year, as required in the agreement, but that he was “legally excused” from making payments toward the $30 million in community funds because she had already challenged the validity of the agreement.
As to the Ralphs-Fred Meyer deal, attorneys on both sides discussed the merger in the days before and after the Nov. 6, 1997, public announcement, the decision says. Although her lawyer sent a memo to his attorneys requesting she receive part of the appreciated value of shares impacted by the merger, the change was never made in the agreement, the decision says.
Janet Burkle, the decision states, had six months and at least seven attorneys, two accountants and a private investigative firm involved in the negotiations. “Never did he ever pressure her to sign the agreement at any point in time,” the decision says of Ron Burkle.
Janet Burkle has appealed that decision.
Security concerns
Personal attacks have become a part of the complex case.
In court papers, Ron Burkle alleges it is no coincidence that she made financial demands soon after she began dating Charles Allen, a personal trainer. Ron Burkle says Allen and his wife had been house-hunting in Manhattan Beach about the time she began to challenge the custody arrangement.
“I am concerned that Jan’s sudden demands for much more money suggests that she may well feel under pressure to give money to others,” he said in court papers filed in mid-2003.
He said her decision to invite Allen to her home threatened the security of their son. Court records show Allen was charged in 1998 with attempted murder, mayhem and assault with a firearm on a person. He was convicted of the latter charge.
Janet Burkle claims her relationship with Allen was nonexclusive and that she had not given him any extraordinary gifts. She said she had not introduced Allen to her son.
“My husband is extremely wealthy and powerful,” she claimed in court papers. “He is used to exerting control over all the people that he comes into contact with.”
Last year, in a civil harassment suit Ron Burkle filed against Allen, a judge ordered Allen to stay at least 300 yards away from Burkle, his home, his office, his car and his children. “Our wealth makes our child a potential target of abduction,” Burkle said in the divorce’s court papers. He called Allen a “real and viable threat” to his family.
He also accuses Janet Burkle of having tried to abduct their children, once in 1979 and again in 1997, court papers say. In one instance, he claims Janet Burkle hid the children at a hotel near Ontario International Airport. He says she planned to move them to Nevada.
She denies she ever tried to kidnap their children, explaining that the couple had temporarily separated during those times. During one incident, which happened while they were negotiating the agreement, she “feared he would take the children to exert power over” her, so she had her mother take them to a hotel for the evening, according to her July 2003 declaration.
In a January 2004 court declaration, Ron Burkle admits he has had a fear of abduction since 1973, when he was working at Stater Bros. at the time the daughter of the company’s owner was kidnapped. In court papers, Ron Burkle said he and Janet, whom he had just started dating, counted out the money to be put in four suitcases and delivered to the kidnappers of the 15-year-old girl. The girl was found alive three days later.
“That incident had a profound effect on me, since I knew the kidnap victim very well,” he said in the declaration. “Since that experience, I have had a heightened appreciation for the necessity of attempting to protect one’s family from potential kidnappers and other criminals.”
Burkle says that’s why he does not allow photographs of his son to be made public and that the family cars are registered under third party names. Family members and other drivers of family vehicles also have taken a “driver evasion course to learn how to escape from potential criminals,” according to the January 2004 declaration.
Surveillance claims
Allegations of car chases have become part of the divorce file. In November 2003, according to a declaration filed by Burkle, he was taking his son to school when Allen is alleged to have driven in front of his car and slammed his brakes as if to force Burkle to hit his car. Allen proceeded to follow him through the streets of Beverly Hills, Ron Burkle’s declaration says. At one point, he said Allen attempted to push him into oncoming traffic.
Allen’s attorney, Christopher Darden, had made similar allegations against Burkle in a May 2003 letter to Burkle’s attorneys. In the letter, Darden said his client was followed by Burkle’s employees on the San Diego (405) Freeway “in an aggressive manner, as if the driver intended to run my client off the road.” After he exited the freeway, the drivers followed him and cornered him in a cul-de-sac, the letter states.
Darden did not return repeated calls. Allen could not be reached. Glaser, Burkle’s attorney, said the claim was “baseless,” but noted that given Allen’s history, Ron Burkle “may feel he has concern that he is being followed.”
Janet Burkle had at one time sought a domestic violence order against her husband. She says he had private investigators conduct surveillance on her for more than a year, and he told her he was doing so to protect their son from Allen. He also told her Allen was cheating on her, according to a declaration she filed in the summer of 2003.
In one incident, she said she recognized one of Ron Burkle’s security people arriving at Jerry’s Famous Deli while she and Allen were having lunch in April 2003. The following month, she said, other security people followed her to a park while she walked her dogs. The Burkles’ daughter, who filed a declaration supporting the restraining order against her father, said Ron Burkle called her up to five times a day to tell her what her mother was doing.
His daughter has also sued her father for $938,000 in investments owed her. Burkle, who sought sanctions against his daughter in March, denies her claims and says she owes him about $76,000. A trial date is set for March 14.
