Trump Lawyers Assert Stormy Daniels Is On The Hook For $20,000,000 Damages

Attorneys for the Defendants in the lawsuit filed by Stormy Daniels, including the President, have removed the case to Federal Court and are claiming that Daniels owes $20 million for her alleged breaches of a settlement agreement.

Lawyers for President Trump have responded to the lawsuit filed by adult film star Stormy Daniels to invalidate the settlement agreement entered into in October 2016 by seeking to remove the case to Federal Court and alleging that Daniels is liable for some $20,000,000 in damages under the agreement’s liquidated damages clause:

President Trump, weighing in directly on the Stephanie Clifford case for the first time, claimed in court papers filed by his lawyers on Friday that the porn actress who alleges she had an affair with him violated a confidentiality agreement at least 20 times, exposing her to damages of at least $20 million.

President Trump’s lawyers filed two motions on Friday in United States District Court in California in a public legal fight that Ms. Clifford, whose stage name is Stormy Daniels, started last week. That’s when she sued to get out of an agreement that she had struck to be paid $130,000 to stay silent about an affair she alleges to have had with Mr. Trump starting in 2006.

Mr. Trump formally joined his legal team’s response to Ms. Clifford’s suit in a motion, filed Friday, to move the case from state court in Los Angeles, where Ms. Clifford filed her claim, to federal court.

Mr. Trump’s reason for asking that the case be moved probably concerns the Federal Arbitration Act, which makes arbitration the preferred forum for resolving many kinds of disputes. Federal courts have applied that law more strictly than state courts, particularly ones in California. Mr. Trump may be hoping that his chances of keeping the dispute in arbitration and out of public view are better before a federal judge than a state one.

Until now, Mr. Trump had kept his distance from the legal wrangling, leaving it to his personal lawyer, Michael Cohen, to take the lead in refuting Ms. Clifford’s claims. And the White House has refused to say how involved Mr. Trump had even been in the initial agreement with Ms. Clifford, signed in October 2016.

When Mr. Cohen brought a temporary restraining order seeking to silence Ms. Clifford in late February, he did so on behalf of a shell company he used to pay her through, not on behalf of Mr. Trump.

Mr. Trump’s name surfaced in one of two motions his legal team filed Friday in Los Angeles. One, in the name of the shell company, Essential Consultants, sought to move the suit to federal court from Los Angeles Superior Court, where Ms. Clifford filed the suit.

The second motion, filed on Mr. Trump’s behalf, states that he joins Essential Consultants in seeking the change of venue and ends with the statement, “Mr. Trump intends to pursue his rights to the fullest extent permitted by the law.”

Representing Mr. Trump in his case was a new lawyer, Charles Harder, who is best known for bringing the Hulk Hogan sex tape case that effectively put the gossip news site Gawker out of business roughly two years ago. Mr. Harder previously represented Melania Trump in a case against The Daily Mail.

Mr. Trump’s team filed the motions one day after news broke that “60 Minutes” was planning to run a segment featuring Ms. Clifford and her lawyer, Michael Avenatti, on March 25. Mr. Trump’s representatives have denied the allegations that he had an affair with Ms. Clifford.

Mr. Avenatti responded late Friday that the president was engaging in “bullying tactics” aimed at moving the case “behind closed doors, outside of public view and scrutiny.”

He seized on the monetary damages the president’s team indicated it was seeking. “The fact that a sitting president is pursuing over $20 million in bogus damages against a private citizen, who is only trying to tell the public what really happened, is truly remarkable — likely unprecedented in our history,” Mr. Avenatti said. He added, “We are not going away and we will not be intimidated by these threats.”

There are two aspects to these new developments, the request to remove the case to Federal Court and the claim for damages allegedly owed by Daniels for breach of the settlement agreement. Additionally, it should be noted that the Notice of Removal was originally filed by Essential Consultants, LLC, the shell company established by Trump attorney Michael Cohen to transmit the payment of $130,000 to Clifford/Daniels in 2016, and was later joined by an attorney purporting to represent Trump, who is referred to in the settlement agreement as “David Dennison.”

With respect to the removal request, this is something that a Defendant in a case filed in a state court lawsuit is generally entitled to do provided that two conditions are met. In some instances, a case can be removed to Federal Court if the claims arise under Federal law. In this case, though, that isn’t the case since the claims asserted in the lawsuit filed by Daniels are raised pursuant to the 2016 settlement agreement and doesn’t appear to directly implicate any Federal law. This means that the lawsuit can only be removed if it falls within the diversity jurisdiction of a Federal District Court, which requires that two conditions are met. The first requirement is that there must be diversity between the Plaintiff and the Defendant, meaning that the Plaintiff and Defendant are residents of different states. Based on the allegations in this case, that appears to be the case. The second requirement is that the amount in controversy in the case must be at least $75,000. This requirement appears to be satisfied by the fact that the amount that was originally paid to Daniels in October 2016 was $130,000, well above the legal requirement.

In addition, the Defendants claim that Clifford/Daniels is liable for up to $20,000,000 in damages due to alleged violations of the settlement agreement pursuant to the provision in the settlement agreement that provides that she would be liable for $1,000,000 in damages for each violation of the confidentiality provisions of the agreement. The pleadings filed by the Defendants don’t go into detail regarding what these violations consist of, but they likely include instances such as the interview that Daniels gave to In Touch magazine back in 2011 which was held back from publication as well as the various media appearances that Daniels has made in the past month or so since this story became public, including the interview with Anderson Cooper that is scheduled to air on March 25th. As the case goes forward, the Defendants would be required to provide proof of such violations of the agreement, of course, and Daniels and her attorney will no doubt try to argue that the liquidated damages provision of the agreement is unreasonable and invalid. Leaving that aside, though, the case will now move forward in Federal Court in California rather than state court.

The Defendants reasons for removing the case to Federal Court are fairly easy to understand. Specifically, it’s likely that they believe that the procedures in a Federal Court are more likely to work to their advantage than those in California’s state courts. For example, it’s far more common for Federal District Court Judges to decide legal claims, and sometimes entire cases, based on the pleadings rather than hearing testimony and argument. This would likely appeal to Trump’s attorneys most specifically since it would limit the extent to which any allegations regarding the relationship between Trump and Daniels would be publicly reported. Second, from the pleadings, it seems likely that the Defendants will seek to enforce the arbitration provisions of the October 2016 agreement. In that regard, the Defendants would want to invoke the provisions of the Federal Arbitration Act and are relying on the fact that Federal Courts have been generally more sympathetic to such defenses than state courts have been. Forcing the case into arbitration, of course, would mean that any proceedings and filings in this matter would be secret and might never be made public.

All of this comes, of course, just a day after we learned that the 60 Minutes interview with Daniels would air on March 25th and that, according to the allegations of the attorney representing her, that Daniels was threatened in some manner. In interviews later in the day, Daniels’ attorney implied that these threats have come since Donald Trump became President. Last night’s filings likely mean that there will be much more to come in this case and that any Administration hopes that this storm would disappate will not come to pass.

Here is a copy of the Notice of Removal filed by Essential Consultants, L.L.C.:

Stephanie Clifford v. Donald Trump et al Notice of Removal by Doug Mataconis on Scribd

And the Notice of Joinder filed by the attorney representing President Trump:

Stephanie Clifford v. Donald Trump Et Al Joinder by Doug Mataconis on Scribd

FILED UNDER: Donald Trump, Law and the Courts, Politicians, US Politics,
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook

Comments

  1. Bob@Youngstown says:

    BTW, Didn’t Trump sue Bill Maher for 5 million?




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  2. James Pearce says:

    I hate to say I told you so…but told ya so.
    – Faust




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  3. grumpy realist says:

    This is simply trying to stampede Stormy, obviously. How in the hell can you send something to arbitration when the contract which has it as one of its clauses hasn’t been signed by all parties?




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  4. CSK says:

    Trump is in such a frenzy to muzzle her that she must have some serious, major dirt on him, something that will totally demolish his self-image. It’s not that he had an extra-marital affair; he’s boasted about that in the past.




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  5. Liberal Capitalist says:

    Does the fact that David Dennison (nee Donald Trump) did not actually sign the agreement make it an incomplete contract and therefore non-binding?

    The atty did sign as a witness to David Dennison’s signature, but the Dennison signature line itself was blank. And the atty did not sign on behalf of David Dennison. So… ?

    Why would that not get thrown out in either arbitration and court?

    And, with the 20M breach damages, does this mean that our POTUS is admitting to the extramarital affair?

    And if so, why are conservative heads not exploding? Have their words of superiority and morality been entirely abandoned for a POTUS that loves tax breaks and deficits?

    With this lawsuit aided presidential admission, does that open the floodgates for the 22 other women that trump has abused?

    And Melania… What I would not do to know what is going through her head… Is she pondering Vanessa Trump’s departure? I have no doubt that her pre-nup is bound by a Dennison-like non-disclosure agreement.

    Mueller, fired staffers, vacant posts, uncontrolled family… it’s all collapsing around him.

    There ain’t no more strawberries.




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  6. OzarkHillbilly says:

    Legal questions:

    #1 How can trump sue her when he never finalized the agreement by signing it? Does not his lack of signature remove him from the agreement?

    #2 What actual damages does Cohen or his shell company suffer if she talks? Seems to me if he there is no actual pain and suffering from her actions it limits rather severely how much money they/he can get.

    trump never signed it because he wanted to be able to deny being a part of the arrangement but now that it is being breached he feels he can sue? Too cute by half.




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  7. CSK says:

    @Liberal Capitalist:

    Of course there are no more strawberries. And he’s long since lost his marbles.




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  8. Joe says:

    Normally, the failure of one party to a contract to sign it would not bar the non-signing party from suing on the contract. Normally, that party would simply sign the contract on the way to the courthouse. The problem here is not simply the failure of a signature. The problem is that the person who didn’t sign the contract claims he was not aware of the contract. You can’t agree to something you are not aware of even if Ms. Clifford had agreed with it. If the other party to the contract, Trump, was not aware of it, there never was an agreement.

    So the question here is whether the shell company’s signature is enough to create an agreement, even where the clear principal – Trump – did not by his own statements make an agreement. While this will be for a court to decide (apparently, a federal one), I think Ms. Clifford would argue that the shell was only a nominal party to the contract. It has no substantial role (other than to wire money) and no independent interest in the confidentiality. It makes no warranties, etc., etc.

    I suppose Trump, now having joined the fray, could “sign” the agreement and become the real plaintiff. Even then his frequent denials would be an interesting basis to attack the existence of the agreement.

    One other detail. To know whether there is diversity you would have to know the state citizenship of all owners of the LLC (because, unlike a corporation, an LLC is treated like a partnership for diversity purposes). I am guessing we know that Cohen is the sole member of the LLC, so this issue probably goes nowhere.




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  9. OzarkHillbilly says:

    @Joe: Thanx. Question 3#: It has already been notarized without his signature. Signing it on the way to the courthouse is not valid unless it is notarized again? But that 2nd notarization can not validate Daniels’ signature so does that need to be re-notarized or is the original faulty (as I have read, have to go back to remember what was wrong with it) notarization valid in so far as her signature at least?




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  10. Kylopod says:

    @Bob@Youngstown: I am not going to look up the exact amount now, but Trump did–or at least threatened to–sue Maher after Maher challenged him to prove his mother wasn’t an orangutan.

    The lawyers here can correct me if need be, but I think that sort of thing was settled in the 1980s in the libel case over a Hustler magazine parody piece that speculated on the precise nature of the relationship between Jerry Falwell and his mom. Falwell sued; it went to the SCOTUS, which ruled unanimously against him. The upshot was that it isn’t libel or slander to state something which if taken literally would be untrue and malicious, if the only people who would take such a statement literally are effing morons.

    Did I get my legal terms correct?




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  11. NW-Steve says:

    Question for Doug, since IANAL

    Is the request for removal automatic (or so in effect)? Does Stormy have an recourse to prevent it?




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  12. MarkedMan says:

    @Liberal Capitalist: Melania, I assume, is hoping she can last until Barron is 18. I suspect she would not want a custody fight with Trump.




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  13. Rick Dement says:

    My question for lawyer types is: where is the harm? How would any of these revelations harm Trump? Don’t they have to demonstrate harm or is that just for regular people?




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  14. PJ says:

    @MarkedMan:

    Melania, I assume, is hoping she can last until Barron is 18. I suspect she would not want a custody fight with Trump.

    Well, would treason be a reason for her to get full custody…

    “Your Honor, my husband is plotting to overthrow the US government with the help of Russia. I have these documents and recordings to prove it. My husband is not fit to have any kind of custody of the United States nor of our son.”




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  15. Joe says:

    @OzarkHillbilly:

    Under most circumstances a signature does not have to be notarized to make it valid and binding on a contract. The core issue here is whether both (or all) parties to a contract intended to be bound to the same terms – “a meeting of the minds.” The customary way to show you intend to be bound is to sign your name to a document, but very few agreements have to be documented to be binding. Those few fall under the Statute of Frauds. I see no reason that this contract would fall under the Statute of Frauds. But I still think it Trump’s claim to have been unaware of this agreement fatally undermines his attempt to enforce it.

    @NW-Steve:

    Removal is automatic, but Ms. Clifford could oppose it in the federal court by proving that it did not merit removal – presumably because there is a lack of complete diversity. If she showed that the LLC had an owner who lived in California, diversity would be defeated and the federal judge would send the case back to state court. That strikes me as unlikely.

    It also strikes me as unlikely that the federal judge will order this back to arbitration because the core question in Ms. Clifford’s suit is whether there is an agreement in the first place. Without a meeting of the minds on the basic agreement, there is no agreement to require arbitration.

    @Rick Dement:

    Although there are limitations, the point of having “liquidated damages” is that the parties reach agreement as part of their contract what a breach would be worth.




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  16. grumpy realist says:

    @Joe: Not back to arbitration if the first question is whether there was a meeting of minds, surely? That’s a matter for the courts.

    And Trump’s claiming “I knew NOTHING about this” would seem to undercut any meeting of the minds.

    (As has been said: “an oral contract isn’t worth the paper it’s signed on.”)




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  17. MarkedMan says:

    @PJ: While Melania certainly had the wherewithal to navigate a route from a middle class existence in a small Slovenian town to luxury apartment life in downtown Manhattan, but alas, she’s not a super spy. While I would love for her to have recordings of Trump talking about his treasonous behavior or his other crimes, it seems pretty unlikely.




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  18. MarkedMan says:

    @grumpy realist:

    an oral contract isn’t worth the paper it’s signed on.

    I’m sure Joe and the other lawyers here have more solid opinions than mine, but my understanding is that all contracts (or, as I just found out from Joe, all contracts not under the Statute of Frauds*) including oral ones, are binding. What makes oral ones problematic is that it is easy for one party to invent new clauses or delete existing ones after the fact, and extremely difficult for the other party to prove it.

    In any case, this is a written contract, and she signed it and took payment. It seems to me she could have been a bit cleverer and waited until he publicly stated that he doesn’t know anything about the contract. At that point she could have said Trump didn’t sign it and it appears he doesn’t even know about it so I’m giving the money back and won’t be bound by it. At least to my layman’s ears, that sounds like a leg to stand on. But as much as I want her to be able to talk, it seems to me (again, I’m a layman) that by talking before a court had ruled as to the validity of the contract she has opened herself up to serious damages.

    *I originally read that as “Statue of Frauds”, and thought, ‘Now there’s a tourist attraction I would visit…’




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  19. Joe says:

    @MarkedMan:

    I think the question here is whether the signature by Essential Consultants makes a binding contract between Clifford and Essential Consultants and whether Trump can benefit from an agreement he not only didn’t sign, but said he didn’t know about – therefore an agreement he did not make. Essential Consultants both signed the contract and performed its sole obligation by making the payment.

    There is a separate question about whether Cohen breached the agreement – by making its existence known – before Clifford started talking and whether that breach voided Clifford’s obligations.

    We’ll see. Perhaps it will be randomly assigned to Judge Curiel – the mad Hoosier.




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