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Michael Avenatti is ordered to pay $4.8 million to former law partner

Posted: 7:50 PM, Oct 22, 2018
Updated: 2018-10-22 23:50:08Z

Michael Avenatti's week is off to a bad start, at least in court.

On Monday, a California judge hit Avenatti with a $4.85 million judgment for failure to pay the debt owed to his former Newport Beach law partner, a court representative told CNN.

The order stems from an agreement that allowed Avenatti's law firm, Eagan Avenatti, out of bankruptcy in 2017. As part of the agreement, Eagan Avenatti LLP agreed to a settlement with his former non-equity partner Jason Frank's law firm and the IRS.

The firm agreed it would pay $4.85 million in two installments. If a payment was missed, that amount would balloon to $10 million.

Eagan Avenatti LLP failed to make the first payment and found itself in default, which put Avenatti himself in a financial pickle.

Avenatti, who has become a household name as porn star Stormy Daniels' hard-hitting attorney in her case against President Donald Trump, had personally guaranteed the payment of $4.85 million -- meaning he was on the hook if his firm didn't pay. When Jason Frank Law PLC was not paid, he sued in federal and state court, and Los Angeles Superior Court Judge Dennis Landin ruled in favor of him on Monday.

Frank's attorney Eric George told CNN that Avenatti had attempted to delay the case by trying to get it moved to federal court, but failed in his effort.

"He thought he could gum up the works and file something last minute and the state court would throw up his hands. The trial judge saw through it and ruled on the merits of our motion," George said.

Earlier this year, Frank had won a judgment against the Eagan Avenatti firm for the $10 million that had been agreed to in the same settlement. Now Frank has won his second case for the money personally guaranteed by Avenatti.

"I am very pleased with today's judgment. I am hopeful that Michael Avenatti will finally decide to honor his debts to me and his and his firms' debts to the numerous other creditors," Frank said.

Avenatti settled with the IRS this year as another condition to get out of bankruptcy. He ultimately agreed to pay the IRS $800,000.

Avenatti responded to the judgment and comments by Frank and his attorney, saying in a statement to CNN, "Any judgment issued against me will be deducted from the over $12 million that Jason Frank owes me and my law firm Avenatti & Associates as a result of his fraud. We look forward to receiving his check for over $7 Million."

CNN was unable to find any case of fraud or judgment brought by Avenatti and Associates.

"More disingenuous nonsense," George said when asked about Avenatti's allegation. "Mr. Avenatti himself doesn't believe it. Nor should anyone else. Mr. Avenatti never brought any such claims against Jason Frank. Nor could he, since the bankruptcy court settlement agreement released all such claims."

The $4.85 million judgment against Avenatti came on the same day of another judgment against Eagan Avenatti, for failure to pay rent.

The trial was set for Monday but no one from Eagan Avenatti showed up in court, according to court documents. Supervising Judge Robert E. Moss ruled in favor of the landlord.

According to the lawsuit, Eagan Avenatti has failed to pay four months of rent totaling totaling $213,492.59. The total amount owed to the plaintiff -- 520 Newport Center Drive LLC, a Delaware limited liability company -- is $153,429 after subtracting the security deposit the law firm had to forfeit.

In a statement to CNN, Avenatti said he no longer owned the firm.

"As for EA rent issues, you would have to ask the person responsible for that as I am no longer the owner and haven't been for months," he said.

In the court filing, Avenatti's name is the only one signed on behalf of the law firm on the rental agreement, which was entered into court documents.

Avenatti is openly exploring a presidential run in 2020, and has said multiple times that if he runs, he will release his tax returns.

"A lot of misinformation being thrown about re my tax returns. Be clear - on Aug. 12 (This Week interview on ABC), I stated I would release my tax returns if I ran. On Sept. 28 (Texas Tribune interview), I stated the same thing. Both on video. My position remains the same," Avenatti tweeted on Sunday.