Opinion Number: 97- 33
Date of Issue: December 2, 1997
JUDGE RENTS OFFICE SPACE UNDER A "BLIND TRUST" TO LAWYERS; WHETHER THE INQUIRING JUDGE MUST DISQUALIFY HIMSELF UPON DISCLOSURE TO LITIGANTS REGARDLESS OF PARTICIPANTS ACKNOWLEDGMENT AND WAIVER OF CONFLICT OF INTEREST
Is there a conflict of interest when a judge rents office space to attorneys that appear before the judge, even though the office building is managed under a "blind trust," which precludes the judge's involvement in the management of the building? ANSWER: Yes. A judge is prohibited from engaging in financial and business dealings with lawyers likely to come before the court on which the judge serves. A "blind trust" under these circumstances does not insulate a judge from the dictates of Canon 5. Should the parties decline to waive the conflict of interest pursuant to Canon 3F, and if the judge is unable to minimize the number of cases in which he is disqualified, the judge must divest himself of the office building as soon as he can do so without serious financial detriment to himself.
Must a judge who rents office space to attorneys that appear before him disqualify himself where the litigants through their attorneys have signed an "Acknowledgment and Waiver of Conflict of Interest" form?" ANSWER: No. So long as the judge complies with all the procedures set forth in Canon 3F by, inter alia, disclosing on the record the basis of the judge's disqualification, the judge need not disqualify himself.
Prior to assuming the bench, the inquiring judge owned and practiced law in an office building. He rented space to other attorneys and continues to do so as a judge.
In an effort to avoid a conflict of interest and the appearance of a conflict, the judge placed the management of the building in a "blind trust." By doing so, the removed himself from the management "loop."
Currently, the judge makes disclosures to all affected litigants and attorneys regarding the landlord/tenant relationship whenever an attorney/tenant appears before the judge. Furthermore, the judge offers to disqualify himself if anyone is uncomfortable with his presiding over any matter. Should the parties or their attorneys have no opposition to the judge presiding over the proceedings, the judge provides the attorneys with a form entitled, "Acknowledgment and Waiver of Conflict of Interest." The attorneys are expected to sign the form on behalf of their clients.
The inquiring judge desires to know whether a conflict of interest is created by his leasing office space to attorneys that appear before him when the management of the building is performed under a "blind trust." In the event that the "blind trust" does not insulate the judge from a conflict of interest, the inquiring judge desires to know whether he is mandated to disqualify himself even though the parties and their lawyers are aware of the conflict and sign an "Acknowledgment and Waiver of Conflict of Interest."
Canon 5 of the Code of Judicial Conduct establishes the standard that a judge must regulate his or her extrajudicial activities to minimize the risk of conflict with the judge's judicial duties. While a judge may hold and manage investments including real estate, the judge may only do so subject to the requirements of the Code. See, Canon 5D(2). Specifically, Canon 5D(1)(b) provides, "A judge shall not engage in financial and business dealings that involve the judge in frequent transactions or continuing business relationships with those lawyers or other persons likely to come before the court on which the judge serves." [Emphasis added]. The rule is necessary to avoid creating an appearance of exploitation of the judge's office and to minimize the potential for disqualification. Commentary to Canon 5D(1).
Additionally, Canon 5D(4) requires the judge to manage his investments to minimize the number of cases in which the judge is disqualified. It also requires the judge to divest himself of investments that might require frequent disqualification. The divestment shall take place "[a]s soon as the judge can do so without serious financial detriment." Id.
This Committee has previously addressed issues involving the ethical propriety of judges who lease real property to lawyers or parties who frequently appear before the judge. In each instance, a majority of this Committee concluded that it would be inappropriate for the judge to lease property to attorneys that appear before the judge, because it could result in disqualifications. In some instances, the majority called for the judge to disqualify himself from sitting on cases involving the attorney/tenant.
In Opinion 90-1, a majority (seven members) of this Committee expressed the view that it would be inappropriate for a judge to lease a vacant lot owned by the judge to the Department of Corrections. The Committee noted that the frequency of persons representing the Department appearing before the judge could result in frequent disqualifications as a result of Canon 5C(1) of the Code of Judicial Conduct.
In Opinion 87-17, a majority of this Committee concluded that the judge who owns an office building directly across the street from the Courthouse should not rent that space to the Public Defender who serves the judge's court. It found that Canon 5C(1) of the Code of Judicial Conduct precludes financial and business dealings which reflect adversely on the impartiality of the judge, or that involve the judge, in frequent transactions with lawyers or persons likely to come before the court in which the judge serves. It also noted that the Canon provides that the judge should manage his investments and other financial interests to minimize the number of cases in which the judge is disqualified.
A minority (two members) opined that such a landlord/tenant relationship does not violate Canon 5C(1), and would not adversely reflect on the judge's impartiality. They saw no reason for the judge to disqualify himself.
In Opinion 85-8, a majority (six members) of this Committee found no impropriety in a judge leasing real property to an attorney for use as a law office. However, the majority stated "Öin view of the extent of this relationship, both tenant/landlord and creditor/debtor, you should recuse yourself and not sit on cases involving this attorney." It cited Canon 5C in support of its conclusion.
A minority (three members) of the Committee took the view that disclosure of the relationship would avoid the necessity of it would be sufficient for the judge to disclose the relationship with the attorney to the parties and offer to recuse himself in cases involving the attorney/tenant/creditor. One of the members even suggested that if there was a hardship situation such as the attorney being the only lawyer in the county, the judge is required to divest himself of the investment.
Lastly, in Opinion 78-19 a majority of this Committee held that a judge is ethically permitted to maintain an interest in an office building or parcel of property that he owns with his former law firm. Notwithstanding, he should disqualify himself from any legal matters that might come before him involving his partners in view of the relationship.
A minority of the Committee opined that "As soon as he can do so without serious financial detriment should divest himself of investments and other financial interest that might require frequent disqualifications."
The Code of Judicial Conduct does not make a distinction for real property that is owned by a judge but which is managed through a "blind trust." Rather, the Code is concerned with the clear conflict of interest that arises when a judge has business and financial dealings that involve the judge in frequent transactions or continuing business relationships with attorneys that are likely to come before the court on which the judge serves.
In the instant case, the inquiring judge is not insulated from the landlord-tenant relationship by the use of a "blind trust." The relationship that exists between the judge and the attorneys that appear before him is a conflict of interest. While the judge has made a good faith effort to avoid this dilemma by using a "blind trust," it is insufficient to avoid the dictates of Canon 5D. Under such circumstances disqualification is required in the event that the judge does not make disclosure to the parties and their attorneys or they decline to waive the conflict pursuant to the procedure set forth in Canon 3F of the Code of Judicial Conduct.
Some of the opinions cited herein suggest that the judge is automatically and under all circumstances disqualified from presiding over cases in which he serves as the attorney's landlord. These opinions were rendered prior to the Florida Supreme Court's adoption of the current Code, which is based upon the American Bar Association's 1990 Model Code of Judicial Conduct.
Canon 3E(1) of the current Code of Judicial Conduct requires, "[a] judge to disqualify himself or herself in a proceeding in which the judge's impartiality might reasonably be questioned." The Canon also requires a judge to "keep informed about the judge's personal economic interests." Canon 3E(2).
Canon 3F provides a mechanism for avoiding disqualifications where a judge should otherwise be disqualified. This Canon is applicable to the current inquiry, since the facts presented to this Committee fall within the purview of the quoted portion of Canon 3E(1) and (2). Canon 3F provides:
A judge disqualified by the terms of Section 3E may disclose on the record the basis of the judge's disqualification and may ask the parties and their lawyers to consider, out of the presence of the judge, whether to waive disqualification. If following disclosure of any basis for disqualification other than personal bias or prejudice concerning a party, the parties and lawyers, without participation by the judge, all agree the judge should not be disqualified, and the judge is then willing to participate, the judge may participate in the proceedings. The agreement shall be incorporated in the record of the proceedings.
Should the inquiring judge successfully avail himself of the procedures delineated in Canon 3F (as he appears to be currently doing with use of the "Acknowledgment and Waiver of Conflict of Interest" form), he is need not disqualify himself. The inquiring judge is cautioned that if he is unable to minimize the number of cases in which he is disqualified as a result of renting office space to attorneys that appear before him, the judge must divest himself of the office building as soon as he can do so without serious financial detriment. See, Canon 5D(4).
Florida Code of Judicial Conduct, Canons 3E(1); 3E(2); 3F; 5C(1); 5D(1)(b); 5D(2); and 5D(4)
Florida Judicial Ethics Advisory Committee Opinions 90-1 (February 14, 1990); 87-17 (November 3, 1987); 85-8 (May 21, 1985); and 78-19 (September 7, 1978).
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 to 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. Petition of the Committee on Standards of Conduct Governing Judges, Opinion No. 90,133 (Fla. September 4, 1997). However, in reviewing the recommendations of the Judicial Qualification Commission for discipline, the Florida Supreme Court will consider conduct in accordance with a Committee opinion as evidence of good faith. Id.
For further information, contact The Honorable Scott J. Silverman, Chairman, Judicial Ethics Advisory Committee, The Richard E. Gerstein Justice Building, 1351 NW 12th Street #513, Miami, Florida 33125.
Participating Members: Judges Cardonne, Green, Charles J. Kahn, Lisa D. Kahn, Patterson, Rushing, Silverman, Smith, Tolton, and Attorney Novicki
Copies furnished to:
Justice Charles T. Wells
All Committee Members
All Members of the J.Q.C.
Office of the State Courts Administrator (Name of judge deleted from this copy)