FLORIDA SUPREME COURT

Judicial Ethics Advisory Committee

Opinion Number: 2011-02
Date of Issue: February 7, 2011

ISSUE

Whether a senior judge who owns several residential mortgages on properties and receives income from those properties is prohibited from handling mortgage foreclosure matters?

ANSWER: No.

FACTS

The inquiring retired judge owns several residential mortgages on properties which are income producing.  The inquiring judge asks whether he/she is prohibited from handling mortgage foreclosure matters as a senior judge.

DISCUSSION

In Section B(1) of the Application of the Code of Judicial Conduct, “a retired judge eligible to serve on assignment to a temporary judicial duty, hereinafter referred to as ‘senior judge’, shall comply with all provisions of this Code except Sections 5C(2), 5E, 5F(1), and 6A.”  Canon 5D governs financial activities and applies to the inquiring senior judge. The inquiring senior judge has been approved for a temporary assignment of handling the severe backlog of mortgage foreclosures that are in his/her jurisdiction.  The inquiring judge owns several mortgages on residential properties and sits in the capacity of a mortgagee on those loans.  The inquiring judge asks if any sections of the Code prohibit him/her from handling mortgage foreclosure matters. 

Nothing in Canons 5D(1)(a) and 5D(2) prohibit a judge from owning residential mortgages and deriving income from those properties.  Canon 5D(1)(a) provides that a judge shall not engage in financial and business dealings that may reasonably be perceived to exploit the judge’s judicial position.  Furthermore, Canon 5D(2) provides that a judge may, subject to the requirements of this Code, hold and manage investments of the judge, and members of the judge’s family, including real estate, and engage in other remunerative activity.

The Commentary to Canon 5D(1) cautions that a judge must avoid financial and business dealings that involve the judge in frequent transactions or continuing business relationships with persons likely to come either before the judge personally or before other judges on the judge’s court. It further explains that “this rule is necessary to avoid creating an appearance of exploitation of office or favoritism and to minimize the potential for disqualification.”  Additionally, the facts submitted by the inquiring senior judge do not reflect that the judge has invested in, nor has any stock ownership in, any banking institution which may come before the judge.  See, e.g., JEAC 96-13 (judge having a de minimis interest in a banking institution should recuse if no appearance is made by adverse party, or, if adverse party appears, the judge shall make disclosure of stock ownership interest where a corporation in which stock is owned is a party to the mortgage foreclosure action).  Instead, the inquiring judge is standing in the same shoes as a lending institution by securing the borrowers’ loans on several residential properties.  We conclude that under the facts submitted, there is no violation of Canon 5D(1).

Furthermore, Canon 5D(2) permits a judge to hold and manage investments in real estate and to engage in other remunerative activity.  Here, the inquiring senior judge is essentially acting as a mortgagee, owning each residential mortgage, and deriving income from each mortgagor/borrower.  Under these circumstances, nothing prohibits the inquiring judge from handling mortgage foreclosure matters as a senior judge unless the inquiring senior judge is placed in the unusual circumstance of personally initiating a foreclosure action against any one of the borrowers who should default on the residential mortgages.  In the event that this situation arises, then the inquiring senior judge should discontinue handling mortgage foreclosure matters in which the judge's ruling on an issue reasonably could be perceived  as providing the judge with persuasive authority in the judge's favor, or some other advantage, in the judge's own case. 

One Committee member believes that the judge may have a duty to disclose to the parties that the judge is either involved in a foreclosure action as a mortgagee, or has previously been involved as a mortgagee, or reasonably anticipates becoming involved as a mortgagee.  This Committee member believes that it is not just the judge's potential for creating persuasive authority that a party or an attorney representing a mortgagor would  reasonably be concerned about, but that the judge may have a bias against mortgagorsIf the judge's disclosure reflects that the judge has had bad experiences with non-paying mortgagors, the party may very well have a reason to seek to have the judge disqualified. 

REFERENCES

Fla. Code of Jud. Conduct, Canon 5D(1)(a), Canon 5D(2); Commentary to Canon 5; Application to the Code of Judicial Conduct, Section B(1).

Fla. JEAC Op. 96-13.

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The Judicial Ethics Advisory Committee is expressly charged with rendering advisory opinions interpreting the application of the Code of Judicial Conduct to specific circumstances confronting or affecting a judge or judicial candidate.

Its opinions are advisory to the inquiring party, to the Judicial Qualifications Commission and the judiciary at large. Conduct that is consistent with an advisory opinion issued by the Committee may be evidence of good faith on the part of the judge, but the Judicial Qualifications Commission is not bound by the interpretive opinions by the Committee. See Petition of the Committee on Standards of Conduct Governing Judges, 698 So. 2d 834 (Fla. 1997). However, in reviewing the recommendations of the Judicial Qualifications Commission for discipline, the Florida Supreme Court will consider conduct in accordance with a Committee opinion as evidence of good faith. See Id.

The opinions of this Committee express no view on whether any proposed conduct of an inquiring judge is consistent with the substantive law which governs any proceeding over which the inquiring judge may preside.  This Committee only has authority to interpret the Code of Judicial Conduct, and therefore its opinions deal only with the issue of whether the proposed conduct violates a provision of that Code.

For further information, contact: Judge Kerry I. Evander, Chair, Judicial Ethics Advisory Committee, Fifth District Court of Appeal, 300 South Beach Street, Daytona Beach, Florida  32114-5002.

Participating Members:
Judge Roberto Arias, Judge Robert T. Benton, Dean Bunch, Esquire, Judge Kerry I. Evander, Judge Jonathan D. Gerber, Judge T. Michael Jones, Patricia E. Lowry, Esquire, Judge Jose Rodriguez, Judge C. McFerrin Smith, III, Judge Richard R. Townsend, and Judge Dorothy Vaccaro.


Copies furnished to:
Justice Peggy Quince
Thomas D. Hall, Clerk of Supreme Court
All Committee Members
Executive Director of the J.Q.C.
Office of the State Courts Administrator
Inquiring Judge (Name of inquiring judge deleted from this copy)