California Court of Appeals The Minnesota Supreme Court handed Michael Jackson's estate a victory Wednesday, issuing a final written opinion that says the singer's mother, Katherine Jackson, has no basis to challenge a lower court's approval of a $600 million catalogue deal with Sony.
The new opinion, which essentially adopted an interim ruling first reported Rolling Stone Last month, The New York Times described the secret deal struck by Sony in 2022 as a “joint venture” that estate executors John Branca and John McClain would be able to broker while Jackson’s estate remains in probate, a court-supervised process for handling probate disputes. (Details of the secret deal were first reported by Billboard This was later confirmed by Rolling Stone magazine..)
In the new 19-page opinion, the three-judge panel described the secret deal as a transaction that involved “the transfer of a substantial portion of the estate’s assets to a joint venture between the estate and a third party, in exchange for a substantial cash payment and an equity stake in the joint venture.” Catherine opposed the deal on the grounds that it violated the terms of her son’s will, specifically the provision that all of the estate’s assets must be distributed to a trust that names his children and his mother as beneficiaries once the will is closed.
In her appeal briefs, Katherine argued that allowing the estate’s “most valuable asset” to be transferred to a “new company” owned by “the sole owner of the estate” was fundamentally contrary to Michael’s wishes. She said the deal made it “impossible” for the executors to transfer “the entire estate” to the trust. The appeals judges rejected that position. They said Jackson’s will “gives the executors broad powers to administer the estate’s assets while the estate remains probated,” and therefore the previous judge did not abuse his discretion when he granted the motion to approve the deal.
“If a court order to ‘give’ an estate asset to a third party has the effect of giving it away, we may agree that the order violates the will. But the proposed transaction is not a gift or distribution of estate assets — it is an asset sale, in which the estate receives a large cash payment and an interest in a joint venture in exchange for the transfer of assets,” the three judges of the California 2nd District Court of Appeal said. The deal “neither reduces the value of the estate nor impairs the ability of future executors to transfer estate assets to the trust,” the judges said.
“The Probate Court did not err in concluding that Michael’s intention was to allow the executors to sell any estate assets, including those at issue in the proposed transaction,” the judges wrote in their conclusion.
Jackson's estate has been awaiting probate since his death in 2009, largely due to ongoing tax disputes with the IRS. Once probate closes, the entire estate will be transferred to the trust, with Jackson's three children designated as primary beneficiaries and Katherine as a lifetime beneficiary of a sub-trust that will revert to the main trust upon her death.
Catherine's lead attorney on the appeal and the estate's attorney did not immediately respond. Rolling StoneRequest comment.
The sale of the assets was negotiated to take advantage of a market that was “at its hottest ever,” according to an earlier appeals memorandum filed by the executors. The deal, struck amid Katherine’s appeal, allows the estate to maintain “effective control over Michael’s music” while diversifying its assets, the memorandum said.
In a heavily edited file obtained by Rolling StoneThe estate’s attorney, Jonathan B. Steinsapir, said the deal was “a fantastic deal” that gave the estate “the best of both worlds” in terms of tax benefits and profits. Under the deal, he said, the estate retains control over “critical decisions” regarding Michael’s name, image and likeness and day-to-day control of his trademarks. “Over the past 14 years, the executors have exercised their powers with extraordinary care and diligence, with extraordinary results,” he said. “As the probate court recognized in its decision, [underlying decision]“It started as a huge debt and ongoing liability, and has turned into a $2 billion legacy,” he wrote.
None of Michael’s three adult children — Prince, Paris and Biggie Jackson — filed written objections to the estate’s petition seeking court approval of the deal. Attorneys for Prince and Paris said at a hearing in March 2023 that they did not object. Court filings show that Biggie’s attorney reserved the younger sibling’s right to object. During the evidentiary hearing, Paris appeared briefly to say she was joining her grandmother but did not specifically state what her objection was, according to the new opinion released Wednesday. “The court later noted that she was ‘not really sure where Paris Jackson stands,’” the new opinion says.
In March of this year, Peggy’s lawyer, David Coleman, wrote to the court that his client considered the sale of the assets to be “critical,” both financially and personally, but did not support Catherine’s appeal. Coleman said his client “initially believed that the executors would have to prove to the court the necessity of the proposed transaction,” but once the deal was approved, he accepted that the deal could not be stopped. “The chances of the appeal being withdrawn were very slim, and Peggy did not want to incur the additional expense of pursuing the appeal,” the lawyer wrote.
Jackson was 50 years old when he died of an accidental overdose of the surgical anesthetic propofol at his rented Los Angeles mansion on June 25, 2009. The main hurdle to funding his estate is a tax dispute involving more than $700 million in alleged unpaid taxes and fines. According to the estate’s filings, the ultimate liability for the estate will be a “small fraction” of that amount thanks to legal maneuvering. The estate said the valuation of one remaining unidentified asset is holding up a final resolution of the tax case, and in the meantime, the IRS still has a lien on the estate’s assets.
Beyond the tax issues, Jackson’s companies are once again being named as defendants in lawsuits filed by two of his alleged molesters, Wade Robson and James Safechuck. The men allege the companies are responsible for abuse they suffered as children. A pretrial conference in the case is scheduled for Thursday in Beverly Hills.
