Stormy Daniels may beat Donald Trump in the court of public opinion, but in a court of law, I think David Dennison has the upper hand over Peggy Peterson.
It’s no slam dunk. The publicly available legal documents would make for a terrific final exam in a law-school contracts class. But I doubt many pundits opining about the dispute have taken the time to read them. Here are a few observations about Stephanie Clifford/Stormy Daniels/Peggy Peterson’s complaint against Donald J. Trump/David Dennison/Essential Consultants LLC:
When practicing law full time, I saw many settlements with a lot more zeroes that were not as structured and thorough as what Trump’s lawyer, Michael Cohen, negotiated with Daniels’ former counsel. There is nothing boilerplate about the settlement agreement or its side letter.
That attention to detail and the fact that the agreement was executed just 11 days before Election Day, at a time when Cohen would presumably have been very busy with his most important client, make me wonder whether this document was created just for Daniels, or if it had been used by Cohen in the past. Hmm.
The amount: $130,000. Not a huge sum. No wonder Daniels has seller’s remorse now that Trump is president. My hunch is that she was as surprised as everyone else on Election Night at the outcome. This case between a (now) president and porn star would have had a lot more value if the pollsters and pundits had been more accurate.
Daniels claims the contract she signed committing to silence in return for $130,000 is null and void because Trump never signed it. Her lawyer, Michael Avenatti, told me on CNN last Saturday that Section 8.6 of the settlement agreement requires as much.
Sounds compelling, except that Section 1.1 of the agreement identifies the parties as “EC, LLC” and/or David Dennison …”
Steven E. Young, a Los Angeles-based senior business lawyer, told me by email: “Regardless of the failure to get ‘DD’s’ signature (and it was an either/or requirement on who signed for Trump), Ms. Clifford accepted the $130,000 payment and thus ratified the extremely well-drafted Confidential Settlement Agreement, with knowledge of that purported defect. It was neither a ‘draft’ nor a ‘hush agreement’ as characterized by Ms. Clifford’s … legal counsel in her court complaint. It was a finished document in final form, containing a well-drafted, valid and binding arbitration provision that I anticipate will be fully enforced by the judge assigned in the Los Angeles Superior Court.”
On CNN, I told Avenatti that regardless of the signature issue, the deal seemed to have the essential elements we were taught necessary back in law school: offer, acceptance, and consideration. He disagreed.
If Daniels believed Trump’s signature was essential, she could have said so at the time of the settlement and refused to accept his payment. No doubt that is why she is offering to return the money now. Whether Cohen accepts it remains to be seen. Under a “disgorgement” provision in Section 5.1.1, he stands to collect $1 million each time Daniels breaks the confidentiality she promised. Maybe that is why he claims to have taken the unheard-of step of paying the settlement from his own home equity loan.
Throughout the agreement there is language that obligates Daniels to return certain property to Trump, if it exists. Section 3.1(C) for example requires the deliverance of “… video images, still images, email messages, text messages, Instagram message …)”
When I asked Avenatti if his client had returned any of the like to Trump, he refused to answer. “I’m not going to answer that question, but here’s what I’m going to say, Mr. Trump — and Mr. Cohen and others — better be very, very careful relating to statements publicly as to whether this actually happened or not,” he told me.
His refusal raises the question: Is there a “blue dress” in this case?
By filing a complaint for declaratory relief in the Superior Court for Los Angeles, Avenatti is seeking to end-run the result of what he referred to as a “bogus arbitration proceeding” against Daniels.
Trump was not a participant to the arbitration, presumably because Cohen was able to convince the arbitrator that his participation was not necessary by virtue of the “and/or” language noted above. The arbitration was conducted by the Honorable Jacqueline A. Connor, a retired judge of the Superior Court of California.
Trump will now have 30 days to respond after being served. His response will be interesting. Among his options will be: to contest the complaint by arguing to uphold the underlying agreement and arbitration decision; ignore the complaint and allow Daniels to obtain a declaratory judgment enabling her to speak; or take the position that the underlying agreement was negotiated without his knowledge or involvement but is nonetheless binding upon Daniels. The latter could necessitate some explaining by Cohen as to why he had not kept his client informed.
Of course, none of this may matter if Daniels appears on 60 Minutes, is compelling, and prevails in the court of public opinion.