In a short filing on Friday morning, the Trump legal team withdrew the filing with US District Judge Donald Middlebrooks after his Thursday warning.
“Plaintiff, PRESIDENT DONALD J. TRUMP, by and through his undersigned counsel and pursuant to Fed. R. Civ. P. 41(a)(1)(A)(i), hereby voluntarily dismisses his claims in this action against Defendant, LETITIA JAMES, without prejudice,” the letter to the judge said.
The withdrawn lawsuit attempted to protect Mr Trump’s trust from Ms James, whose $250m civil suit outlines allegations of fraud at the Trump Organization.
Mr Trump, in the suit filed against the former Democratic presidential candidate Ms Clinton, former FBI director James Comey and dozens of other officials, alleged that they tried to rig the 2016 election by falsely accusing his campaign of links to Russia.
“This case should never have been brought,” wrote Judge Middlebrooks of the Southern District of Florida in his order. “Its inadequacy as a legal claim was evident from the start.”
Judge Middlebrooks said the sanctions were warranted because the former president had exhibited a “pattern” of misusing the courts for his political agenda.
“No reasonable lawyer would have filed it. Intended for a political purpose, none of the counts of the amended complaint stated a cognizable legal claim.
“A continuing pattern of misuse of the courts by Mr Trump and his lawyers undermines the rule of law, portrays judges as partisans, and diverts resources from those who have suffered actual legal harm.”
Citing his recent legal action against the Pulitzer Prize board, Ms James, CNN and other tech companies, the judge said Mr Trump was a “prolific and sophisticated litigant who is repeatedly using the courts to seek revenge on political adversaries”.
“He is the mastermind of strategic abuse of the judicial process, and he cannot be seen as a litigant blindly following the advice of a lawyer."
The judge ruled that Mr Trump and his lawyer Alina Habba would be jointly liable for $937,989 in sanctions.
“The amount of fees awarded in this case, while reasonable, is substantial,” judge Middlebrooks wrote.
Ms Habba and another lawyer were previously sanctioned in November by the same judge and were asked to pay $50,000 in a penalty to the court and $16,274 in legal fees to one of the defendants.
He added: “I find that the pleadings here were abusive litigation tactics.
“The Complaint and Amended Complaint were drafted to advance a political narrative; not to address legal harm caused by any Defendant.”
In Thursday’s order, Ms Clinton got what was reported to be the biggest award of fees for a single defendant at nearly $172,000.
Judge Middlebrooks, who was appointed by former President Bill Clinton in 1997, threw out Mr Trump’s case in September last year, calling the suit “a two-hundred-page political manifesto outlining his grievances against those that have opposed him”.
The lawsuit accused Ms Clinton and other defendants of conspiring to “weave a false narrative” during the 2016 election and sought $70m in damages. It claimed that the defendants falsified evidence to deceive law-enforcement agencies that made “even the events of Watergate pale in comparison”.