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Trump can be sued in foundation case

Trump can be sued in foundation case

A trial court judge in New York City has rejected a motion to dismiss the Attorney General’s suit against President Donald J. Trump and the Trump Foundation, holding that a sitting President may be sued in a civil action based on unofficial acts.  The AG has sued Trump, three children also serving as trustees, and the Foundation for breach of fiduciary duty, waste and wrongful related party transactions, and has sought to terminate the foundation and bar the individual defendants from serving as directors of nonprofit organizations.  (See Ready Reference Page:  “The Charges Against the Trump Foundation)

The Court said the defendants failed to cite a single case in which a court has dismissed a civil action against a sitting president on Supremacy Clause grounds where the action is based on the president’s unofficial acts.  On the contrary, the Attorney General cited the U.S. Supreme Court’s decision in Clinton v. Jones, where the Supreme Court held that the president does not have immunity and is “subject to the laws” for “unofficial acts.” 

“The allegations raised in the Petition do not involve any action taken by Mr. Trump as president and any potential remedy would not affect Mr. Trump’s official federal duties,” the Court said.

The Court also rejected three other arguments that the court lacked jurisdiction over a sitting president.  The defendants argued that state court proceedings should not be permitted against sitting presidents because they can reflect “local prejudice” against “unpopular” federal officials.  “State courts, however, possess the same ability as federal courts to dismiss vexatious lawsuits,” the Court said.

The defendants argued that federal courts are better able to manage cases against a sitting president to avoid interfering with official duties, but the Court called the argument “meritless.”  State courts are equally capable of accommodating the president’s needs and of giving deference to presidential responsibilities, it wrote.

Finally, the defendants argued that federal courts are better suited to address legal issues that arise in cases against federal officials.  But “here, resolution of the petition is governed entirely by New York law, thus a federal court’s alleged superior knowledge of federal law is inapposite,” it said.

The Court also rejected claims to dismiss based on the statute of limitations, stating that the complaint alleged a “continuing wrong” from continuous and pervasive failure of the trustees to fulfill their fiduciary duties.

The Court dismissed other objections raised to specific counts of the complaint.  (People v. Trump, Supreme Ct., New York County, Index No. 451130/2018, 11/23/18.)

Supreme Court of NY

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