Bankruptcy Judge Allows Rudy Giuliani to Appeal $148 Million Defamation Verdict
Bankruptcy Judge Allows Rudy Giuliani to Appeal $148 Million Defamation Verdict

By Caden Pearson

A New York bankruptcy judge has allowed Rudy Giuliani to appeal a $148 million defamation verdict so long as he uses pre-approved donors for legal expenses.

U.S. Bankruptcy Judge Sean Lane, in his order on Tuesday, specified that such fees and expenses must not be paid from Mr. Giuliani’s current assets.

“Any fees and expenses incurred by the Debtor and his advisors in the Freeman Litigation in connection with any Post-Trial Filings and the Notice of Appeal shall not be paid by, and shall not result in a claim against, the Debtor or his estate,” Judge Lane wrote.

The former New York City mayor filed for bankruptcy protection late last year, one day after he was ordered to immediately pay $148 million to two former Georgia election workers. Ruby Freeman and her daughter, Wandrea Moss, sued him for defamation while he was working as a lawyer for former President Donald Trump.

In early January, Mr. Giuliani asked the New York bankruptcy judge overseeing his case to lift the automatic stay, a legal provision that pauses certain proceedings during bankruptcy, for the “limited purpose” of filing post-judgment motions to modify the judgment.

Judge Lane, from the Southern District of New York, granted the limited relief on Tuesday.

The judge’s order permits Mr. Giuliani to file a notice of appeal and post-trial motions in the Freeman case.

However, Judge Lane stated that the former mayor must obtain the judge’s consent for any external payment of legal fees and expenses, which can’t come from Mr. Giuliani’s current assets.

Furthermore, any parties paying such fees or expenses are prohibited from seeking reimbursement from Mr. Giuliani or his estate until the court approves such payments.

According to the order, Mr. Giuliani is required to provide at least five business days’ notice to the Objecting Parties and the official committee of unsecured creditors before filing any post-trial motions, except for any motions filed on Feb. 20.

“For the avoidance of doubt, the automatic stay is modified solely as set forth above and the Post-Trial Filings shall be adjudicated in the discretion of the District Court. Except with respect to the filing of a Notice of Appeal, any appeal of the Freeman Litigation shall remain subject to the automatic stay,” Judge Lane wrote.

Ms. Freeman and Ms. Moss sued Mr. Giuliani for defamation and emotional distress, alleging he spread false claims about their conduct during the 2020 election.

A widely circulated video clip after the 2020 election implicated the election workers in allegedly mishandling ballots, damaging their reputation. Although later cleared by a Georgia Elections Board investigation, the women argued that the harm was already done. The pair claimed they were subject to relentless abuse.

Attorney Michael Gottlieb urged the jury to award significant damages, emphasizing the need for punitive damages to send a message that Mr. Giuliani’s actions wouldn’t be tolerated.

The multimillion-dollar payout the women were seeking would spell “the end” for Mr. Giuliani, his attorney, Joseph Sibley, told the court, equating it to be “the civil equivalent of a death penalty.”

One day after being ordered to pay $148 million to the Georgia election workers, Mr. Giuliani filed for Chapter 11 bankruptcy, listing $10 million in assets.

In a Dec. 20 ruling, U.S. District Court Judge Beryl Howell, an appointee of President Barack Obama, supported the two election workers’ claim that Mr. Giuliani lacked immediate financial means to pay them after a 30-day delay on the payouts was lifted.

Ms. Freeman and Ms. Moss raised concerns with the court that Mr. Giuliani might possibly “alienate or dissipate“ assets during the 30-day payment delay. Judge Howell cited Mr. Giuliani’s ”uncooperative” behavior, mounting debts, and numerous legal battles as reasons to believe he might hide financial assets from future judgments.

On Dec. 11, the day the defamation damages trial commenced, Mr. Giuliani backed his statements about the former election workers, asserting to reporters that “everything I said about them is true.”

Mr. Giuliani acted as President Trump’s legal adviser in 2020.

Apart from facing financial difficulties, Mr. Giuliani is one of 19 individuals, along with President Trump, who have been indicted by a grand jury in Fulton County, Georgia. The indictment is related to their efforts to challenge the results of the 2020 presidential election in the state.

Tom Omizek contributed to this report.

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