June 13, 1996
Digest: A judge who is the owner of a local insurance and real estate agency (1) should exercise recusal in matters involving persons who are holders of insurance policies obtained through the judge’s agency (2) should exercise recusal in matters involving real estate clients from whom property was bought or sold through the agency for a two-year period following such a transaction (3) may not allow the agency to submit bids to secure village insurance contracts.
Rules: 22 NYCRR 100.3(E)(1); 100.4(D)(1).
A newly-elected village judge is the president, treasurer and sole shareholder of a general insurance and real estate agency located in the village. The judge asks several questions concerning clients and policyholders who may be appearing before the court and the relationship between the judge’s business and the village.
As to policyholders, the Committee is of the opinion that recusal is required. The judge’s agency is presumably earning commissions or other compensation resulting from the sale of insurance policies, and it would therefore follow that in such circumstances that the “judge’s impartiality might reasonably be questioned...” 22 NYCRR 100.3(E)), were such persons to appear before the judge.
As to “...real estate clients who have either purchased or sold property through the agency,” the Committee is of the view that there should be recusal for a period of two years following the conclusion of the particular transaction and the earning of the fee.
The judge also asks “whether there is a conflict in my agency bidding on and writing the insurance for the Village ...” In this regard, the inquirer cites an unpublished opinion of the Office of the State Comptroller (80-444) indicating that, as a matter of statutory law, there is no conflict because the judge is not empowered as village officer to negotiate or otherwise approve the contract on behalf of the village. However, in response to an inquiry by the Committee to Counsel’s Office of the Office of the State Comptroller, it was readily acknowledged that the 1980 Opinion of the Comptroller has no direct bearing on the question of judicial ethics and was based solely on an interpretation of various provisions of the General Municipal Law.
In the Committee’s opinion there is a conflict of interest that precludes the judge’s agency from bidding on village insurance contracts. Section 100.4(D)(1) of the Rule Governing Judicial Conduct states:
(D) Financial Activities
(1) A judge shall not engage in financial and business dealings that:
(a)may reasonably be perceived to exploit the judge’s position.
(b)involve the judge with any business, organization or activity that ordinarily will come before the judge, or
(c)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.
In the Committee’s opinion, section 100.4(D)(1) bars the judge from allowing the agency from bidding on the village’s insurance contracts.