It appears the near billion-dollar divorce case of Continental Resources Inc. CEO Harold Hamm might be nearing its conclusion.
On Tuesday, in a 7-2 decision, the Oklahoma Supreme Court dismissed an appeal of the divorce judgment from Hamm’s ex-wife of 26 years, Sue Ann Arnall. The court ruled that she forfeited her right to appeal after depositing a $974.8 million check from Hamm in January.
In November, a judge ordered Hamm, who is the founder and majority shareholder of Continental, to pay his ex-wife nearly $1 billion to resolve the case. Initially, there was speculation that the case could be the largest in U.S. history, but only a fraction of Hamm’s $17.6 billion fortune qualified as marital property.
The point of contention was exactly how much of the value of Continental should be considered a marital asset. Generally, anything owned before marriage is considered a separate asset and anything acquired during the course of marriage is considered a marital asset.
Assets like stocks and property that appreciate in value over time are usually considered separate assets unless the increase in value was due to the efforts of the owner. When Hamm acquired Continental in 1967, the company was worth approximately $50 million.
“So the question becomes, along that continuum, what is Continental Resources?” said Cordell & Cordell Principal Partner Joe Cordell, in an interview with Bloomberg Television. “Is it more like that stock that was owned at the time they got married and it simply appreciated like if you owned stock in Standard Oil? Or is this instead that active efforts of a sort of genius entrepreneur of Harold Hamm?”
Cordell & Cordell Principal Partner Joe Cordell discusses Harold Hamm’s divorce case with Bloomberg TV.
The case put both parties in peculiar positions. On one side, Hamm’s camp essentially had to argue that the reason his company’s value skyrocketed had nothing to do with his abilities as a CEO. On the other side, Arnall’s team made the case that he built this multibillion-dollar company from the ground up.
After the initial judgment, Arnall argued that the ruling allowed Hamm keep the vast majority of the nearly $18 billion marital estate. Hamm also found fault with the ruling and both parties appealed the decision to the state’s high court.
According to Oklahoma law, since Arnall cashed the $974.8 million check, she accepted the benefits of the judgment and thus closed her right to appeal. Hamm’s appeal was allowed to proceed, although his attorney told The Oklahoman that it was too early to tell if he would continue to pursue.
The case also drew attention to the value of prenuptial agreements in negating some of the risk associated with marriage, particularly when an individual enters a marriage as the owner of a business or with especially valuable assets.
“Prenuptials are increasingly common and courts are now prepared to enforce them,” Mr. Cordell said in a December interview with Phoenix Money Radio regarding Hamm’s divorce. “At one time, they were very questionable, so clients felt that they would rather go bare, so to speak. I think now, for the most part, people realize marriage has a lot of risk associated with it.”