A divided New York appeals court on Thursday threw out a half-billion-dollar judgment against President Trump, eliminating an enormous financial burden while preserving the fraud case against him, a remarkable turn in the battle between the president and one of his fiercest foes.
“While harm certainly occurred, it was not the cataclysmic harm that can justify a nearly half billion-dollar award to the state,” wrote Peter Moulton, one of the appeals judges whose lengthy and convoluted ruling reflected deep disagreement among the five-judge panel.
While the court effectively upheld the fraud ruling against the president, several of the justices raised major questions about the case. And their decision allowed Mr. Trump to move to New York’s highest court, giving him another opportunity to challenge the finding that he was a fraudster.
Despite the complexities, Thursday’s ruling handed Mr. Trump a financial victory and a modicum of legal validation. It represented a setback for New York’s attorney general, Letitia James, who is one of the president’s foremost adversaries and a target of a retribution campaign. The case had been a career-defining victory after she campaigned for office promising to bring Mr. Trump to justice.
Mr. Trump responded on social media, declaring victory and praising the court for having “the Courage to throw out this unlawful and disgraceful Decision.”
Alina Habba, who had represented Mr. Trump in the case and is now the top federal prosecutor in New Jersey, said that the decision confirmed “what we have said from the beginning: The attorney general’s case was politically motivated, legally baseless and grossly excessive.”
Still, the decision fell short of the full vindication the president had been seeking in his fight against Ms. James. In denying Mr. Trump’s bid to throw out the case, the court kept in place the ruling that he had committed fraud, an ignominious distinction for a sitting American president.
Ms. James filed the case against Mr. Trump and his family real estate business in 2022, accusing them of inflating his net worth to obtain favorable loan terms. After a monthslong trial, the judge overseeing the case ruled last year that Mr. Trump was liable for fraud, denting the mogul image that enabled his political rise.
Mr. Trump was not compelled to pay the penalty while he appealed the case.
Thursday’s ruling came almost a year after judges heard those oral arguments, an unusual delay that reflected the legal and political complexities of a case against a sitting president. Ultimately, the case was so divisive that the five appellate court judges failed to form a true majority.
Justice Moulton’s opinion upholding the case and wiping out the financial penalties received one additional vote, from the chief judge, Dianne Renwick.
Another judge, David Friedman, who has been skeptical of the accusations for years, wanted to throw the case out entirely, believing Ms. James had lacked the power to bring it.
Two other judges concluded that Ms. James had the authority to file the case, but wanted to provide Mr. Trump a new trial. Those two judges, arguing that “a remarkable situation has necessitated a remarkable solution,” agreed to let the fraud judgment stand so that the case could continue to a higher appeals court. The judges, John Higgitt and Llinet Rosado, said they did so “after much consideration, with great reluctance.”
From the beginning, the case infuriated Mr. Trump, who has sought revenge against Ms. James. His Justice Department has opened multiple inquiries into her and her office. One is a criminal investigation into her personal real-estate transactions, while the other is a civil rights inquiry into her office for its conduct in investigating Mr. Trump.
Representatives for Ms. James did not immediately respond to requests for comment Thursday morning.
Ben Protess is an investigative reporter at The Times, covering President Trump.
Jonah E. Bromwich covers criminal justice in the New York region for The Times. He is focused on political influence and its effect on the rule of law in the area’s federal and state courts.
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