PEOPLE BY JAMES v. TRUMP (2023)

Order, Supreme Court, New York County (Arthur F. Engoron, J.), entered January 9, 2023, which denied defendants’ respective motions to dismiss the complaint, unanimously modified, on the law, to dismiss, as time-barred, the claims against defendant Ivanka Trump and the claims against the remaining defendants to the extent they accrued prior to July 2014 (with respect to those defendants subject to the August 2021 tolling agreement) and February 2016 (with respect to those defendants not subject to the August 2021 tolling agreement), and to modify the caption to reflect that Donald J. Trump, Jr., is sued both personally and in his capacity as trustee for the Donald J. Trump Revocable Trust, and otherwise affirmed, without costs.

The New York Legislature enacted Executive Law § 63(12) to combat fraudulent and illegal commercial conduct in New York. Under this provision, “[w]henever any person shall engage in repeated fraudulent or illegal acts or otherwise demonstrate persistent fraud or illegality in the carrying on, conducting or transaction of business, the attorney general may apply, in the name of the people of the state of New York, to the supreme court of the state of New York” for disgorgement and other equitable relief (Executive Law § 63[12]).  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 (see Alfred L. Snapp & Son, Inc. v. Puerto Rico ex rel. Barez, 458 U.S. 592, 601, 102 S.Ct. 3260, 73 L.Ed.2d 995 [1982];  see also People v. Coventry First LLC, 52 A.D.3d 345, 346, 861 N.Y.S.2d 9 [1st Dept. 2008] [finding that claims including a claim under Executive Law § 63(12) “constituted proper exercises of the State's regulation of businesses within its borders in the interest of securing an honest marketplace”], affd 13 N.Y.3d 108, 886 N.Y.S.2d 671, 915 N.E.2d 616 [2009]).  We have already held that the failure to allege losses does not require dismissal of a claim for disgorgement under Executive Law § 63(12) (see People v. Ernst & Young LLP, 114 A.D.3d 569, 569–570, 980 N.Y.S.2d 456 [1st Dept. 2014]).  Finally, in authorizing the Attorney General to sue for any repeated or persistent fraud or illegality, the Legislature necessarily “invested that party with authority to seek relief in court” (Matter of World Trade Ctr. Lower Manhattan Disaster Site Litig., 30 N.Y.3d 377, 384, 67 N.Y.S.3d 547, 89 N.E.3d 1227 [2017];  see Silver v. Pataki, 96 N.Y.2d 532, 537–538, 730 N.Y.S.2d 482, 755 N.E.2d 842 [2001]).

Defendants’ arguments that the Executive Law § 63(12) claims are governed by a three-year limitations period are unavailing (see CPLR 213[9]).  We have already found that CPLR 213(9) applies retroactively (Matter of People v. JUUL Labs, Inc., 212 A.D.3d 414, 416–417, 181 N.Y.S.3d 537 [1st Dept. 2023]).  We reject defendants’ invitation to reconsider our decision that retroactive application is inconsistent with certain decisions of the Court of Appeals (see id. at 416, 181 N.Y.S.3d 537;  People v. Allen, 198 A.D.3d 531, 532, 156 N.Y.S.3d 171 [1st Dept. 2021], lv dismissed 38 N.Y.3d 996, 168 N.Y.S.3d 3, 188 N.E.3d 129 [2022], lv denied, appeal dismissed 39 N.Y.3d 928, 177 N.Y.S.3d 202, 198 N.E.3d 477 [2022]).  We also find that retroactive application of CPLR 213(9) – enabling the Attorney General to continue lengthy and complex investigations, which often cannot begin until years after the conduct at issue, and which may have been extended in reliance on the six-year statute of limitations – was a reasonable measure to address an injustice (see World Trade Ctr., 30 N.Y.3d at 399–400, 67 N.Y.S.3d 547, 89 N.E.3d 1227;  PB–36 Doe v. Niagara Falls City Sch. Dist., 213 A.D.3d 82, 84–85, 182 N.Y.S.3d 850 [4th Dept. 2023];  cf.  Brothers v. Florence, 95 N.Y.2d 290, 299–300, 716 N.Y.S.2d 367, 739 N.E.2d 733 [2000] [describing necessity of retroactive application of legislation shortening statute of limitations in response to judicial decision]).

Similarly, we decline to reconsider our decisions finding that certain executive orders tolled statutes of limitations during the pandemic (see Murphy v. Harris, 210 A.D.3d 410, 411, 177 N.Y.S.3d 559 [1st Dept. 2022]), and that this toll was properly authorized (Brash v. Richards, 195 A.D.3d 582, 584–585, 149 N.Y.S.3d 560 [1st Dept. 2021]).

Applying the proper statute of limitations and the appropriate tolling, claims are time barred if they accrued – that is, the transactions were completed – before February 6, 2016 (see Boesky v. Levine, 193 A.D.3d 403, 405, 147 N.Y.S.3d 2 [1st Dept. 2021];  Rogal v. Wechsler, 135 A.D.2d 384, 385, 522 N.Y.S.2d 123 [1st Dept. 1987]).  For defendants bound by the tolling agreement, claims are untimely if they accrued before July 13, 2014.  The continuing wrong doctrine does not delay or extend these periods (see CWCapital Cobalt VR Ltd. v. CWCapital Invs. LLC, 195 A.D.3d 12, 19–20, 145 N.Y.S.3d 61 [1st Dept. 2021];  Henry v. Bank of Am., 147 A.D.3d 599, 601–602, 48 N.Y.S.3d 67 [1st Dept. 2017]).  We leave Supreme Court to determine, if necessary, the full range of defendants bound by the tolling agreement.  The record before us, however, indicates that defendant Ivanka Trump was no longer within the agreement's definition of “Trump Organization” by the date the tolling agreement was executed (see Johnson v. Proskauer Rose, LLP, 2014 N.Y. Slip Op. 30262[U], *19–22, 2014 WL 317839 [Sup. Ct., N.Y. County 2014], affd 129 A.D.3d 59, 9 N.Y.S.3d 201 [1st Dept. 2015]).  The allegations against defendant Ivanka Trump do not support any claims that accrued after February 6, 2016.  Thus, all claims against her should have been dismissed as untimely.

Plaintiff has provided evidence that defendants Donald J. Trump Revocable Trust, DJT Holding, Managing Member, Trump Endeavor 12 LLC, and 401 North Wabash Venture LLC have their principal place of business in New York (see Cruz v. City of New York, 210 A.D.3d 523, 524, 179 N.Y.S.3d 25 [1st Dept. 2022] [“General jurisdiction exists over a corporate entity only in the state(s) in which it is incorporated and has its principal place of business”];  see also Ford Motor Co. v. Montana Eighth Jud. Dist. Ct., ––– U.S. ––––, 141 S Ct 1017, 1024, 209 L.Ed.2d 225 [2021];  compare Chufen Chen v. Dunkin’ Brands, Inc., 954 F.3d 492, 500 [2d Cir. 2020]).  Thus, plaintiff has made a “sufficient start” in demonstrating personal jurisdiction over these defendants (see Matter of James v. iFinex Inc., 185 A.D.3d 22, 30, 127 N.Y.S.3d 456 [1st Dept. 2020]).  Although the Trust should have been sued through its trustees (see e.g. Liveo v. Hausman, 61 Misc.3d 1043, 1044–1045, 86 N.Y.S.3d 378 [Sup. Ct., Kings County 2018]), the record indicates that the sole trustee is a defendant in this case and has been fully able to represent the Trust's interests.  Thus, relief for this error should be limited to amending the caption (see Harlem 2201 Group LLC v. Ahmad, 2018 N.Y. Slip Op. 30588[U], *44, 2018 WL 1626402 [Sup. Ct., New York County 2018];  see also Matter of People v. Leasing Expenses Co. LLC, 199 A.D.3d 521, 522, 159 N.Y.S.3d 1 [1st Dept. 2021] [affirming relief under Executive Law § 63(12) against family trusts and trustees, where the defendants were trustees in their capacity as such]).