The squeeze is on.
I observed last week that Donald Trump’s financial peril is real. It’s also getting more perilous by the moment. Everyone’s eyes still glaze over at the $355 million disgorgement judgment in the New York state civil fraud case, which is more like $450 million when interest is factored in. Trump filed his notice of appeal in that case on Monday.
More on that momentarily. First, let’s deal with the more pressing matter of late January’s $83.3 million jury verdict won by E. Jean Carroll in her second civil trial against Trump in Manhattan federal court (the Southern District of New York, or “SDNY”).
Federal law (Appellate Procedure Rule 4) gives a party 30 days to appeal, but that time can be extended by various kinds of post-trial motions, which Trump’s lawyer, Alina Habba, has indicated the former president will be filing by sometime next week. But an appeal does not automatically stay enforcement of the judgment — the process by which either the defendant pays up or the plaintiff starts litigation to seize the defendant’s assets until the full amount of the judgment is satisfied.
Instead, the onus is on the defendant to persuade the court to delay enforcement of the judgment.
Under Civil Procedure Rule 62, there is an automatic stay on enforcement for the first 30 days after the judgment is formally entered on the court’s docket — and in this case, as I’ll come to, there may be some confusion about when that happened. After that 30-day automatic stay, the defendant may seek additional forbearance from the judge on the case. Such a stay for appellate purposes (among others), is supposed to be secured by a bond or other form of security, which must be approved by the court. Presumptively, the funds posted must be in the amount of the judgment, plus interest, but the court may modify that amount to account, for example, for any post-trial ruling that reduces the amount of the judgment.
In this instance, the jury returned its $83.3 million verdict in favor of Carroll on January 26. Judgment was formally entered on the SDNY case docket on February 8. I believe Rule 62’s automatic 30-day stay started running the day after formal entry of the judgment, which would mean it runs until March 10. But an order issued this past Sunday by Judge Lewis Kaplan, who presided over the trial, could be read to suggest that the automatic stay started running the day of the jury verdict, in which case it would lapse on February 28 — i.e., tomorrow.
Why did the judge issue an order on a Sunday? Well, because Team Trump waited until last Friday (February 23) to ask for a stay beyond the automatic 30-day period. In that motion, Habba, Trump’s main counsel on the case, (a) did not offer to post any bond, and (b) asked Judge Kaplan to assume that the verdict is infirm and will be set aside, or at least significantly reduced — notwithstanding that the verdict was based on rulings and jury instructions directed by Kaplan.
Suffice it to say that Kaplan was not amused. On that point, bear in mind that Habba is already on thin ice with his Honor: As detailed here, a few days after the verdict, she intimated in a letter-brief that the judge had a close professional relationship with Carroll’s principal lawyer, Roberta Kaplan (no relation), such that he should potentially have been disqualified. The argument was, to be charitable, very weak — largely based on (a) well-known public information that the judge and plaintiff’s counsel had overlapped briefly at the same law firm nearly three decades ago, when Roberta Kaplan was a junior associate and Lewis Kaplan was a senior partner who was about to become a federal judge; and (b) a claim in the New York Post, attributed to an unidentified partner at the same firm, that the now-judge had mentored the then-novice associate.
Habba backed down after Roberta Kaplan vigorously denied claims (apparently she and the judge barely knew each other) and threatened to seek professional sanctions against Trump’s lawyer. (Habba sheepishly said she was just asking questions, not leveling allegations.) Moreover, although it’s obviously not Habba’s fault that her famously uncontrollable client has been scathing in a number of his public statements about Kaplan, those diatribes are not helping her standing with the court. Needless to say, this is not a good position to be in when you are asking the judge for relief that he doesn’t necessarily have to give you.
In his succinct order Sunday, Judge Kaplan denied Trump’s requested stay, at least for now. He acidly noted that Trump “seeks that relief without posting any security.” He also observed that Trump’s request was submitted “twenty-five days after the jury verdict in this case, and only shortly before the expiration of Rule 62’s automatic stay of enforcement of the judgment.”
Kaplan’s emphasis that 25 days had elapsed right before his reference to the automatic stay period of 30 days could be construed as suggesting that Trump was down to his last five days. Nevertheless, the judge did not say the automatic stay period ends this Wednesday; he said Trump had filed “only shortly before the expiration” of the 30-day period. That is sufficiently inexact that he could have meant the period expires March 10 — which I believe is the correct date, and one that will be upon us soon enough. Ergo, I assume that Carroll’s date to begin enforcing the judgment — unless Kaplan grants a stay based on Trump’s ponying up security for the $83.3 million-plus interest — is March 10, not February 28.
Kaplan could not resist snarking that “Mr. Trump has moved for an ‘administrative stay’ of enforcement” pending the disposition of his post-trial motions. The sneer quotes highlight that the stay Habba has asked for is not actually administrative — as more experienced counsel would grasp, Trump is asking for a court-ordered stay pursuant to rule governing civil judicial proceedings.
The judge gave Carroll until the close of business Thursday (January 29) to file any opposition to Trump’s request (which she will surely oppose). Trump then has until Saturday at 5 p.m. to respond (happy weekend, defense counsel!).
To cut to the chase, I believe Trump should assume he is going to have to arrange to post security in the neighborhood of $90 million within the next few days. Team Trump is filing post-trial motions next week, so the former president’s time to file a notice of appeal will be pushed back — he’ll have 30 additional days to appeal once Kaplan rules on (and almost certainly denies) the defense’s post-trial motions.
But if Trump wants Kaplan to prevent Carroll from seeking immediate payment of the exorbitant judgment amount, it looks like Trump will have to post security, pronto.
In the interim, as I said at the top, Trump on Monday filed a notice of appeal with respect to the New York civil fraud case. In New York, the trial court that rendered the judgment is called the supreme court, and appeals of its rulings are taken to the intermediate court, known as the Appellate Division (here, Appellate Division First Department, which is responsible for appeals from the supreme court in Manhattan).
New York’s appellate process is similar to the federal process in that Trump’s filing of a notice of appeal does not automatically stop the plaintiff — New York State, represented by attorney general Letitia James — from beginning to enforce the judgment. To stop enforcement while he appeals, Trump has 30 days from the formal entry of the judgment — here, until March 25 — to post a bond in the amount of the judgment plus interest (i.e., around $450 million).
Last week, Judge Arthur Engoron, the elected progressive Democrat who presided over the case and pronounced the astonishing verdict in the bench trial, denied Trump’s request that the judgment be stayed.
In the state case, I thought Trump’s request for a stay was reasonable and should have been granted. We’re talking about a fraud case in which (a) there were no fraud victims, (b) James made novel use of New York fraud statutes, (c) Engoron found an eye-popping $355 million in damages (over $100 million more than James said she was seeking when the trial started), and (d) the Appellate Division has already reversed Engoron in this case (when, even before the trial started, the judge tried to order the cancellation of Trump’s business certificates).
Moreover, Trump was not asking Engoron to postpone interminably the deadline for posting of a bond; rather, he was asking for a reasonable delay to structure assurances for a huge amount of money that may require complex financial arrangements — and that will entail some delay since Engoron has put Trump’s businesses under a monitor. Trump’s requested delay would not have prejudiced the state: Under the verdict, interest is accruing at around $112,000 per day, and a delay so Trump could finalize an enormous bond would not stop the interest charges from continuing to mount. And Engoron well knew that this is not Trump’s only bind; he must pull together the $450 million in financing for a bond in the state case at the same time he must pull together about $90 million in financing for a bond in the above-discussed Carroll case.
The Democrat-controlled state government and judicial system strategically timed civil and criminal actions to damage Trump’s presidential campaign. (As we’ve noted, the criminal trial of Manhattan district attorney Alvin Bragg’s hush-money case is scheduled to start on March 25.) It is difficult to come to any conclusion other than that elected Democrats are quite intentionally putting Trump in a squeeze: His appellate rights could be rendered illusory unless he can pull together a daunting amount of financing on a very tight time frame.