James' World 2

A divided New York appeals court on Thursday threw out a half-billion-dollar judgment against President Trump, eliminating an enormous financial burden while preserving the fraud case against him, a remarkable turn in the battle between the president and one of his fiercest foes.

“While harm certainly occurred, it was not the cataclysmic harm that can justify a nearly half billion-dollar award to the state,” wrote Peter Moulton, one of the appeals judges whose lengthy and convoluted ruling reflected deep disagreement among the five-judge panel.

While the court effectively upheld the fraud ruling against the president, several of the justices raised major questions about the case. And their decision allowed Mr. Trump to move to New York’s highest court, giving him another opportunity to challenge the finding that he was a fraudster.

Despite the complexities, Thursday’s ruling handed Mr. Trump a financial victory and a modicum of legal validation. It represented a setback for New York’s attorney general, Letitia James, who is one of the president’s foremost adversaries and a target of a retribution campaign. The case had been a career-defining victory after she campaigned for office, promising to bring Mr. Trump to justice.

Mr. Trump responded on social media, declaring victory and praising the court for having “the Courage to throw out this unlawful and disgraceful Decision.”

Alina Habba, who had represented Mr. Trump in the case and is now the top federal prosecutor in New Jersey, said that the decision confirmed “what we have said from the beginning: The attorney general’s case was politically motivated, legally baseless and grossly excessive.”

Still, the decision fell short of the full vindication the president had been seeking in his fight against Ms. James. In denying Mr. Trump’s bid to throw out the case, the court kept in place the ruling that he had committed fraud, an ignominious distinction for a sitting American president.

Ms. James filed the case against Mr. Trump and his family real estate business in 2022, accusing them of inflating his net worth to obtain favorable loan terms. After a month-long trial, the judge overseeing the case ruled last year that Mr. Trump was liable for fraud, denting the mogul image that enabled his political rise.

Mr. Trump was not compelled to pay the penalty while he appealed the case.

Thursday’s ruling came almost a year after judges heard those oral arguments, an unusual delay that reflected the legal and political complexities of a case against a sitting president. Ultimately, the case was so divisive that the five appellate court judges failed to form a true majority.