Professional Documents
Culture Documents
NY AG Sanctions Motion
NY AG Sanctions Motion
NY AG Sanctions Motion
:
.
-against
DONALD J. , et
TRUMP al . ,
Defendants .
New York , respectfully submit this memorandum of law in support of their motion for sanctions
pursuant to 22 N.Y.C.R.R. § 130-1.1 based on frivolous conduct by Defendants and their counsel
in asserting legal arguments in connection with the parties ' pending dispositive motions that were
previously rejected by this Court and the First Department in this action .
PROCEDURAL HISTORY
injunction and expedited preliminary conference ( NYSCEF No. 119 ) ( " PI Motion " ) . In opposing
Plaintiff's PI Motion , Defendants argued that the Attorney General had no standing or capacity to
maintain this action under Executive Law §63 ( 12 ) because there was no harm , and in particular no
harm to the public , relying on cases brought under the parens patriae doctrine and the decision in
People v.Domino's Pizza , Inc , Index No. 450627/2016 , 2021 WL 39592 ( Sup . Ct .
N.Y. Cty . Jan.
1 9
of
INDEX NO 452564/2022
:
.
Injunction and Expedited Preliminary Conference ( NYSCEF No. 126 ) ( “ PI Opp . Br .” ) at 8-11
(arguing that the Attorney General “ has no right to intervene " in the Defendants ' “ internal affairs
and management . . . and private contractual rights between [ Defendants ] and corporate counter
parties " as "those are private matters between sophisticated commercial parties , not matters of
Defendants also contended in the same brief that Donald J Trump's Statements
.
of
Financial Condition (" SFCs ") , " and the disclaimers explicitly set forth therein , conclusively
establish a defense a a matter of law to the Executive Law § 6 ( 12 ) fraud claim alleged in the
s 3
Complaint ” because it " forecloses Plaintiff from claiming any corporate counter party reasonably
relied in any material way on the information contained in the SoFCs . " Id . at 13 .
This Court soundly rejected these three arguments in its decision granting Plaintiff's PI
Motion . People of the State of New York v . Trump , No. 452564/2022 , 2022 WL 16699216 , at * 2
I")
(Sup . Ct . N.Y. Cty . Nov. 03 , 2022 ) (" Trump (NYSCEF No. 183 ) ( rejecting Defendants '
positions " that OAG has neither standing nor legal capacity to bring this action , " OAG must “ meet
the elements required to bring a parens patriae action to sue " under § 6 ( 12 ) , and § 6 ( 12 ) actions
3 3
are limited to cases involving consumer protection ) . As the Court explained , there is no need for
the Attorney General to show any public harm or the quasi -sovereign interest required under
parens patriae because " the New York legislature has specifically empowered the Attorney
General to bring [ an Executive Law § 63 ( 12 ) ] action in a New state court , " and Defendants
York '
attempt to restrict § 63 ( 12 ) to consumer fraud cases " is wholly without merit . " Id .
Further , the Court held that the disclaimer language in the SFCs did not provide any defense
at all to Defendants because the language “ makes abundantly clear that Mr. Trump was fully
2
2 9
of
INDEX NO 452564/2022
:
.
responsible for the information contained within the SFCs " and that "allowing blanket disclaimers
to insulate liars from liability would completely undercut " the " important function " that SFCs
serve " in the real world . " Id . at * 3 . Indeed , the Court noted that even under the cases Defendants
cited , they could not use the disclaimer as a defense because " the SFCs were unquestionably based
on information peculiarly within ” their knowledge . Id . The Court also noted that even if there were
a “ public harm ” requirement , this case would satisfy that requirement because the People have
articulated " a quasi - sovereign interest that touches a substantial segment of the population and is
I
distinct from the interests of private parties . " Trump , 2022 WL 16699216 , at * 2 ( citing cases ) .
On November 21 , 2022 , Defendants filed motions to dismiss ( NYSCEF Nos . 195 , 198 ,
201 , 210 , 220 , 224 ) ( " Motions to Dismiss " ) . Defendants again raised these same three arguments
to Dismiss of Defendants , The Trump Organization , Inc. , Trump Organization LLC , and Donald
J. Trump (NYSCEF No. 197 ) ( " MTD Moving Br .") at 3-11 ( Point I - " The NYAG Lacks Standing
22 ( Point III – “ Plaintiff's Fraud Claims are Barred by Documentary Evidence and Fail to State a
Claim " ) .
The Court rejected these arguments for a second time , noting that they " were borderline
frivolous even the first time defendants made them , " and observed that reading Defendants ' brief
" was , to quote the baseball sage Lawrence Peter ("Yogi ” ) Berra , ‘ Deja vu all over again . 999 People
General Enforcement actions such as the instant one , foreclosing any rational arguments against
capacity and standing " and that the disclaimers " shifted responsibility directly on to certain
3 9
of
INDEX NO 452564/2022
:
.
defendants " ) , aff'd in part and rev'd in part on other grounds , 217 A.D.3d 609 ( 1st Dep't 2023 )
III')
'
. The Court went further to admonish Defendants ' counsel for raising these
(" Trump
arguments for a second time , noting that “ sophisticated defense counsel should have known
better . " Trump , 2023 WL 128271 , at * 4 . After noting that such conduct may warrant an “ award
II
costs and financial sanctions against an attorney or party , " the Court exercised its discretion
[of]
and declined to do so , concluding they were unnecessary in light of the Court “ having made its
point . " Id . In its decision denying the Defendants ' Motions to Dismiss , the Court also rejected
Defendants ' additional argument that Plaintiff has no valid claim for disgorgement under § 63 ( 12 ) ,
holding that " disgorgement of profits i a form of damages " available in this § 63 ( 12 ) action . See
s
, at * 5 .
Trump , 2023
WL 128271
II
the Court's decision denying their Motions to Dismiss , Defendants raised ,
On appeal from
among other points , their standing , capacity , and disgorgement arguments , all of which were
of the people of the state of New York , to the supreme court of the
stateof New York " for disgorgement and other equitable relief . The
Attorney General is not suing on behalf of a private individual , but
is vindicating the state's sovereign interest in enforcing its legal
code including its civil legal code within its jurisdiction . We
have already held that the failure to allege losses does not require
dismissal of a claim for disgorgement under Executive Law
§ 63 ( 12) .
4 9
of
INDEX NO 452564/2022
:
.
4 , 2023 , Defendants moved for summary judgment ( NYSCEF No. 834 ) and
On August
rulings and admonition , Defendants exhume their previously -rejected standing , capacity ,
disclaimer , and disgorgement arguments in support of their motion and in opposition to Plaintiff's
motion .
as an issue
In their summary judgment brief , Defendants contend that , " whether framed of
standing or capacity , the scope of NYAG's authority depends upon a public interest nexus "
( or threat
requiring " some harm of harm ) suffered by the People ( i.e. , the public at large ) . "
Memorandum of Law in Support of Defendants ' Motion for Summary Judgment , dated August 4 ,
2023 ( NYSCEF No. 835 ) ( “ Defs . MOL ” ) , at 22. They add that this “ public interest ” concept “ is
reinforced by the doctrine of parens patriae , " which they contend " is fully applicable to actions
63 ( 12 ) . " Id .
brought under at 22 n.10 . Defendants further argue in the same brief that the
accountant's letter inserted at the beginning of each SFC has disclaimer language that puts users
" on complete notice not to rely upon them , ” id . at 42 , effectively insulating them from any liability
for false and misleading statements and values in the SFCs , and that disgorgement “ is not available
Defendants raise these same arguments in their recently -served joint brief opposing
Plaintiff's partial summary motion . See Defendants ' Brief in Opposition to Plaintiff's Motion for
Partial Summary Judgment , dated September 1 , 2023 , at 52-57 ( Point III.A— “ The NYAG Lacks
Authority To Maintain Suit " ) , 58-59 ( arguing Mazars disclaimer , among other language in the
SFC , put users of the SFCs " on complete notice to seek additional information " ) , 69-72 (Point
5 9
of
INDEX NO 452564/2022
:
.
ARGUMENT
The Court has the discretion to " impose financial sanctions upon any party or attorney in a
civil action or proceeding who engages in frivolous conduct , " and may impose sanctions " against
merit in law and cannot be supported by a reasonable argument for an extension , modification or
that are false . " 22 N.Y.C.R.R. § 130-1.1 ( c) . In determining whether conduct is frivolous , the Court
shall consider , among other things , " whether or not the conduct was continued when its lack of
legal or factual basis was apparent , should have been apparent , or was brought to the attention of
Here , the lack of legal bases for Defendants ' standing , capacity , disclaimer , and
disgorgement arguments should have been readily apparent to Defendants and their counsel from
the prior rulings of this Court and the First Department . Indeed , a to the standing , capacity , and
s
disclaimer arguments , this Court already “ brought to the attention of counsel [ and] the part[ ies ] "
id . , that these arguments were " borderline frivolous " and sanctionable when raised for the second
v . Carol Mgmt . Corp. , 260 A.D.2d 27 , 34 ( 1st Dep't 1999 ) ( affirming an award of sanctions where
record was "replete " with circumstances where frivolous nature of the conduct was brought to the
attention of the parties or counsel ) ; Gassab v . R.T.R.L.L.C. , 69 A.D.3d 511 , 513 ( 1st Dep't 2010 )
(affirming trial court's imposition of costs and sanctions against plaintiff " after having been
6 9
of
INDEX NO 452564/2022
:
.
warned by the motion court that his motion to vacate barely escaped the imposition of costs and
sanctions " ) .
Further , because Defendants and their counsel were previously admonished by the Court
that their conduct in raising previously -rejected arguments was frivolous and sanctionable , and
because defense counsel should have known better ," Trump , 2023 ,
" sophisticated WL 128271
II
at * 4 , the Court should impose sanctions against Defendants and their counsel in the maximum
allowable sum a follows : ( i ) against all Defendant collectively in the total amount of $ 10,000 , to
s
Finance ; and ( ii ) against all attorneys on Defendants ' briefs in support of , and opposition to , the
pending dispositive motions collectively in the total amount of $ 10,000 , to be deposited with the
Lawyers ' Fund for Client Protection . See 22 N.Y.C.R.R. § 130-1.2 , 130-1.3 ; Leventritt v.
§
Exkstein , 206 A.D.2d 313 , 314 ( 1st Dep’t 1994 ) ( holding trial court " properly imposed monetary
sanctions of $ 10,000 each upon plaintiff and her counsel " for frivolous conduct ) ; Cattani v .
Marfuggi , 26 Misc.3d 1053 , 1060 ( Sup . Ct . N.Y. Cty . 2009 ) ( imposing sanctions on " both plaintiff
his counsel's attention , and they persisted" ) ; cf Entm't Ptns . Group , Inc. v . Davis , 198 A.D.2d 63 ,
.
64 ( 1st 1993 ) ( sanctions of $ 10,000 imposed against “ each of the individual defendants "
Dep't
CONCLUSION
Based on the foregoing , the People respectfully request that the Court grant Plaintiff's
motion for sanctions against Defendants and their counsel , along with such other and further relief
7 9
of
INDEX NO 452564/2022
:
.
LETITIA JAMES
Attorney General of the State of New York
By
:
/ s / Andrew Amer
Andrew Amer
Colleen K. Faherty
Alex Finkelstein
Sherief Gaber
Wil Handley
Eric R. Haren
Mark Ladov
Louis M. Solomon
Stephanie Torre
Kevin C. Wallace
8 9
of
INDEX NO 452564/2022
:
.
CERTIFICATION
Pursuant to Rule 202.8 -b of the Uniform Civil Rules for the Supreme Court & the County
Court ("Uniform Rules " ) , I certify that , excluding the caption , signature block , and this
certification , the foregoing Memorandum of Law contains 2,070 words , calculated using Microsoft
LETITIA JAMES
Attorney General of the State of New York
By : / s / Andrew Amer
Andrew Amer
Office of the New York State Attorney
General
28 Liberty Street
New York , NY 10005
Phone : ( 212 ) 416-6127
[email protected]
9 9
of