Real-Life Drama — Deborah Pratt Matter

AT ISSUE: After a writer-producer couple divorced, the wife sued her forensic accounting firm for inadequately analyzing her husband’s assets.

By Anne La Jeunesse

When television producers and writers Deborah Pratt and Donald P. Bellisario, who created the mega-hit “Quantum Leap,” divorced after seven years of marriage and two children, Pratt relied on her attorneys and the high-priced forensic accounting firm they hired to correctly evaluate the couples community property so that she would get her proper share.

But, it didn’t work out that way, Pratt believed she had not been well-served by her attorneys and hired Beverly Hills sole practitioner Philip Kaufler to pursue an accounting malpractice action against the initial accounting team. Kaufler turned Pratt’s settlement, which says left her with “nearly nothing” after taxes, into a $2,474,752 award.

Pratt initially agreed to a $1 million settlement, a lifetime spousal-support buyout of $185,000 and a monthly $5,775 child-support payment for both children, despite Bellisario earning an average of $2.7 million during each year of the marriage. The primary community assets included the television shows “Quantum Leap” and “Airwolf” and a $3 million home that underwent $2.7 million in renovations.

Within weeks of that initial settlement, Bellisario received nearly $700,000 as advances for profits for “Airwolf” which had not been included in the settlement. That money had been neither disclosed to nor discovered by Pratt’s legal team, Kaufler said.

After further investigation, Pratt filed a motion to set aside the divorce settlement based on Bellisario’s alleged fraudulent concealment of money certain to come from “Airwolf.” A year later, the court agreed, and that settlement was set aside, according to Kaufler.

Pratt then filed legal and accounting malpractice claims against her divorce lawyers and the accounting firm they hired, Gursey Schneider & Co.

The law firm was dismissed from the suit after it asserted that her claim against it was barred by a one-year statute of limitations. However, the accounting firm remained as a defendant because accounting malpractice actions are subject to two-year statutes of limitations.

Kaufler, who took over the case as Pratt’s attorney after the initial law firm was dismissed from the suit, contended that the accounting firm “committed multiple breaches of the standard of care” by allegedly completing an inaccurate and incomplete analysis of Bellisario’s income. A significant portion of Bellisario’s income continues to accrue after divorce as the result of work during the marriage.

Kaufler also alleged that the accountants erroneously interpreted Bellisario’s business contracts, failed to review related records from his involvement with Universal Studios and his theatrical agent, failed to review the most recent financial records relating to Bellisario’s payments from the studio and failed to include “Airwolf” as a community account receivable.

Bellisario’s contracts provided that after a certain number of episodes were produced, he would become an executive producer. This meant that he would continue to be paid on an upward scale whether or not he worked on the show. In addition, in an interesting clause in the agreement, the contract stated that if, during the time he was paid but not required to work, he came up with an idea for a new show, he would be paid for that. The payments for one position would be subtracted from the other position. All of this left him considerably well-off.

“He got $9.6 million for ‘Quantum Leap’ after the separation. The big issue was: How much of the $9.6 million was Deborah entitled to?” Kaufler says.

Their [the defendants’] position was that she was only entitled to part of the profits based on a formula of how many episodes were done over the course of the marriage vs. how many after the marriage. She ended up with almost no money after taxes were paid,” he says.

Kaufler proved to retired Judge Jerry K. Fields of Alternative Dispute Resolution Services in West Los Angeles, who arbitrated the matter, that even though Bellisario received payment for “Quantum Leap” after the marriage ended, because of the complex graduated payment structure involved in production contracts, the show was created during the marriage, so those earnings, despite time of payment, were community property.

Part of Bellisario’s contract stated that after 96 episodes were produced he would receive additional compensation, on an increasing scale, for each show, as executive producer.

“My argument was that even if he would have not been working for the studio at all, working at another studio, retired or was in Tahiti drinking strawberry daiquiris, if it’s 96 episodes, which came to $4.8 million, it’s still community property,” despite some of that money being paid after the divorce but while the show was still running, Kaufler says.

However, attorney Randall Dean, who represented the accounting firm sued by Pratt, communicated in a written statement that his clients’ work was performed at the direction of her divorce firm, to further divorce settlement negotiations.

“There were disputes in the underlying divorce over the interpretation of Bellisario’s contracts and whether the income received thereunder was community or separate property,” Dean writes.

“Plaintiff elected to settle the underlying divorce with the understanding that her settlement was potentially less than she would receive if she went to trial,” his statement continues.

Dean writes that Pratt did so because of her desire to move on with her own career as an executive producer of television shows.

His clients, Dean states, contended that any duty to analyze the contracts and appropriateness of the divorce settlement to which Pratt originally agreed rested with her attorneys.

The defendants’ Petition to Vacate the award on the grounds that Fields refused to hear material evidence and other unspecified misconduct was denied. The defendants are appealing the matter.

Fields, noting that misconduct is one of the few grounds on which to pursue an action against an award reached in binding arbitration, says the “misconduct” alleged was merely the fact that he agreed with the plaintiff over the defendants.

Kaufler says the alleged haphazard evaluation of Bellisario’s earnings, by what he says is considered to be the pre-eminent accounting firm in Hollywood, simply may have been because, while the case involved millions of dollars, it did not involve the kind of bigger-money clients the law firm the firm usually represents.

“Sometimes these firms get busy with bigger cases. I think that was a major part of it,” Kaufler says, noting that Pratt’s divorce attorney testified at the arbitration that he relied on the accounting firm because of their experience in family and entertainment.

“But, he shouldn’t have. He’s the lawyer, he’s supposed to be the captain of the ship,” Kaufler says.

Kaufler adds that Pratt had offered to settle the accounting malpractice case for $2.8 million, and she was offered only $150,000 near the end of the trial, though Dean says she was offered $250,000.