FLORIDA SUPREME COURT

Judicial Ethics Advisory Committee

Opinion Number: 2014-17
Date of Issue: August 5, 2014

ISSUES

1. Must a presiding judge disclose to all parties in a case of that judge’s business relationship as landlord to one of the parties?

ANSWER: Yes.

2. Does the judge’s relationship as a landlord to a bank/party disqualify the judge from hearing the cause of action?

ANSWER: Yes.

3. May a judge, regardless of the disqualification requirement, hear the case if the parties waive disqualification after a proper disclosure?

ANSWER: Yes.

4. Must the judge divest the judge’s ownership interest in properties being leased to the banking institutions?

ANSWER: No, unless the judge’s tenants are likely to come before the court on which the judge serves.

FACTS

The inquiring judge, the judge’s mother, and the judge's brother jointly own developed and undeveloped real estate. The inquiring judge and the family members are currently negotiating a lease for an office unit with a prospective tenant, a commercial bank. The inquiring judge’s ownership in the unit is 20.66% and, if the lease is approved, the judge’s monthly rental income will be $325.40. The inquiring judge does not believe that this bank, the prospective tenant, will appear before the judge very often. In addition to this tenant, the judge and the judge’s family members also lease real estate to another commercial bank. This second bank submits monthly lease payments to the judge’s sister-in-law who in turn deposits the judge’s portion ($623.47) into the judge’s account. The judge is presiding over some cases wherein this second bank is a party.

The judge recognizes Canon 5D(1)’s admonition that “a judge shall not engage in financial and business dealings that (a) may reasonably be perceived to exploits the judge’s judicial position, or (b) involve the judge in frequent transactions or continuing business with those lawyers or other persons likely to come before the Court on which the Judge serves.” The inquiring judge wants to know if Canon 3E(1)(c) qualifies the provisions in Canon 5D(1). That is, whether the judge’s financial activities and the continuing landlord-tenant relationship with these two banks should not disqualify the judge from hearing any cases in which either of these banks are parties, because Canon 3E(1)(c) would require the judge to have “any other more than de minimis interest that could be substantially affected by the proceeding.”

 

DISCUSSION

Canon 3E sets forth rules governing disqualification. That Canon provides, in relevant part, that:

(1) A judge shall disqualify himself or herself in a proceeding in which the judge’s impartiality might reasonably be questioned, including but not limited to instances where:

. . . .

(c) the judge knows that he or she individually or as a fiduciary ... has an economic interest in the subject matter in controversy or in a party to the proceeding or has any other more than de minimis interest that could be substantially affected by the proceeding...

Additionally, Canon 5D(1) provides that:

A judge shall not engage in financial and business dealings that

. . . .

(b) 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.

The Commentary to Canon 3E further clarifies the judge’s disqualification obligations and also indicates that judges should disclose to lawyers and parties information that the lawyers or parties may consider relevant to the question of disqualification. This commentary makes it clear that the judge could be subject to disqualification, “regardless of whether any of the specific rules in Section 3E(1) apply.” That is, a judge would be disqualified whenever the judge’s impartiality might reasonably be questioned. Therefore, pursuant to Canon 3E and it’s commentary, the inquiring judge should disclose to all parties or their attorneys the judge’s landlord-tenant relationship with one of the parties.

The second question posed by the Inquiring Judge is whether the judge’s business relationship, as landlord to one of the parties, would require disqualification. The Committee believes that the business relationship as landlord of one of the parties, albeit one of the bank’s office branch or office, is sufficient for a party to reasonably question the judge’s impartiality.

The Committee does not have sufficient facts to find that the landlord-tenant relationship present here gives the Inquiring Judge anything other than a de minimis interest that could be substantially affected by the proceedings as prohibited in Canon 3E(1)(c). It is clear, however, that should the nature of the proceedings, pending or impending before the Judge, be such that could substantially affect the value of the leasehold interest or the bank’s ability to pay the rent, the Judge would be disqualified  under Canon 3E(1)(c); and the Florida Code of Judicial Conduct’s definition of “economic interest.”

The Committee has previously dealt with disqualification issues wherein the Inquiring Judge either owned stock in companies or had business interests or relationships in companies related to one party.

In Fla. JEAC Op. 10-25, the Committee found that the judge could own stock in an insurance company which underwrote bail bonds throughout the United States, even if the judge would be called upon to forfeit bonds, set aside forfeitures or remit forfeitures on bonds that were underwritten by that same insurance company. The Committee found that the financial interest of the judge or any benefit to the judge’s financial interest, respectively described by the inquiring judge as “tiny” and the benefit as “infinitesimal” and “extremely attenuated”, was insignificant. The Committee thus found the judge’s interest to be de minimis as defined by the Canons. There, the Committee opined that

[i]t is clear from [Canon E(1)(c)and(d)(iii)] that the intent of Canon 3E is to require disqualification only if the judge has an economic interest in the subject matter...or has...more than a de minimis interest that could be affected by the proceedings.

Thusly, because the legal proceeding pending before that judge would not substantially affect the value of the judge’s stock, the judge did not have an “economic interest” as defined by the Canons and disqualification was not required under Canon 3E(1)(c)or(d)(iii).

However, while disqualification may not be mandated by Canon 3E(1)(c) or (d)(iii), it nevertheless could be under Canon 3E(1) and/or 5D(1)(b). The Committee does not find that Canon 3E always qualifies Canon 5D’s prohibition of “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.” Canon 3E(1)(c) may, on occasion, generally resolve the question of disqualification due to the nature of the business relationship, as that found in Fla. JEAC Op. 2010-25, however it cannot resolve the type of business relationship found herein.

The Committee has dealt with and issued ethical opinions in a number of inquiries involving relationships of business partners of judges and real estate partnerships or interests of judges, including landlord-tenant relationships.

In Fla. JEAC Op. 10-02, the JEAC held that the Canons required the disqualification of a judge from all cases in which the county was a party and was represented by the County Attorney’s staff, because the judge was a partner in a building partnership with the county attorney. The Committee based its opinion on Canon 3E’s general requirement of disqualification “whenever the judge’s impartiality might reasonably be questioned, regardless of whether any of the specific rules in section 3E(1) apply.” See also the JEAC opinions cited in JEAC Op.10-02. In Fla. JEAC Op. 07-10, this Committee held that the Canons required disqualification from all cases wherein lawyers from a local legal aid office appeared, because the judge rented the office building to the legal aid office. This blanket disqualification, the Committee found, was mandated by Canon 5D(1)(b).

Long before Fla. JEAC Op. 07-10 was issued, the JEAC had already addressed ethical issues involving a judge leasing property to lawyers who were likely to appear before the judge and had consistently opined that disqualification was mandated. As noted in Fla. JEAC 07-10, “[i]n all instances, the Committee has concluded that when a landlord/tenant relationship exists between a judge and an attorney/tenant who appears before that judge, it creates a conflict of interest requiring disqualification.” This blanket disqualification was likewise mandated when the judge rented office space under a “blind trust” to lawyers who were likely to come before the court in which the judge served. Fla. JEAC Op. 97-33; See also, Fla. JEAC Op. 85-08. Similarly in Fla. JEAC Op. 00-34, the Committee opined that disqualification was required by Canon 3E(1) where the judge was receiving payments from a former law firm pursuant to a promissory note. There, the Committee noted that

[a]lthough the inquiring judge has no direct financial interest in the law firm, the judge has an interest in the overall ability of the firm to make payments pursuant to the promissory note and thus has an interest in the future financial success of the firm. Furthermore, a disclosure, whether inadvertent or otherwise, by a lawyer, that the lawyer is making periodic payments to a judge would create in the public eye a perception of impropriety, and the impartiality of the judge might reasonably be questioned.

Here, like in the above cases, Canon 3E(1) and 5D(1)(b) require the Inquiring Judge to be disqualified. The fact that the above opinions dealt with transactions between judges and lawyers is of no consequence. Canon 5D(1)(b) makes it clear that Judges are prohibited from involving themselves in frequent transactions or continuing business relationships with, not only “those lawyers,” but with “other persons likely to come before the court on which the judge serves.” (Emphasis added). The Committee considers “persons” to include a corporation or a business entity. Therefore, the inquiring judge should be disqualified from hearing the cases in which the judge’s tenants are parties.

The parties, however, can always waive disqualification under the remittal procedure found in Canon 3F. Thereunder, after a judge has fully disclosed the basis for disqualification, the parties and their attorneys may agree that the judge should not be disqualified. Fla. JEAC Op. 02-19.

Lastly, Canon 5A(4) and 5D(4) would require the judge to divest itself of the ownership interests in these properties, only if the judge is unable to minimize the number of cases wherein disqualification is required. Fla. JEAC Ops. 10-02; 07-10; 07-02, 01-11; and 00-34.

 

REFERENCES

Fla. Code Jud. Conduct, Canons 3E, 3E(1), 3E(1)(c), 3E(d)(iii); 5D(1), 5D(1)(b) and 5D(4).

Fla. JEAC Ops. 10-25; 10-02; 07-02; 07-10; 02-19; 01-11; 00-34; 97-33; and 85-08.

_____________


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.    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 Petition of the Committee on Standards of Conduct Governing Judges, 698 So. 2d 834 (Fla. 1997).

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

For further information, contact Dean Bunch, Chair, Judicial Ethics Advisory Committee, 3600 Maclay Boulevard, South, Tallahassee, Florida 32312.

Participating Members:
Judge Roberto Arias, Judge Nina Ashenafi-Richardson, Judge Robert T. Benton, Dean Bunch, Esquire, Judge Lisa Davidson, Judge Jack Espinosa, Jr., Judge Jonathan D. Gerber, Judge T. Michael Jones, Judge Barbara Lagoa, Patricia E. Lowry, Esquire, Judge Michael Raiden, and Judge Richard R. Townsend


Copies furnished to:
Inquiring judge (Name of the Inquiring Judge deleted)
Justice Charles T. Canady, Justice Liaison
John A Tomasino, Clerk of Supreme Court
All Committee Members
Executive Director of the Judicial Qualifications Committee
Office of the State Courts Administrator