March 16, 2016
Note: Although it does not affect the outcome here, please see Opinion 17-143 for current guidance about a judge’s obligations at the end of a landlord/tenant relationship, where there is no other social or professional relationship between them.
Please Note: This opinion has been modified by Opinion 21-22(A) concerning a judge’s obligations when a party is appearing without counsel. As stated in Opinion 21-22(A), “we no longer prohibit remittal of disqualification merely because a party is unrepresented. We hereby modify our prior opinions to abolish that requirement.” This also affects opinions “where disclosure (or disclosure and insulation) is mandated in lieu of outright disqualification” (see id. fn 3).
Digest: A judge must disclose the ongoing relationship when an attorney appearing before the judge is currently holding money in escrow for the judge. If the escrowed funds are released without controversy, the disclosure obligation ends when the escrow arrangement terminates. Should controversy concerning the escrowed funds arise, then the judge must disqualify in matters involving the attorney for the duration of the controversy and for two years thereafter.
Rules: 22 NYCRR 100.2, 100.2(A); 100.4(D)(1)(a) - (c); 100.3(E)(1); 100.3(F); Opinions 16-21; 15-08; 13-176; 12-32; 11-125; 08-171/08-174; 08-166; 04-42; 97-44.
This judge is involved in a few transactions where local attorneys are escrowees.1 One holds the judge’s money in escrow “for the purpose of paying rent” on a residence where the judge’s child and the attorney’s child are living; it appears the judge’s child is tenant or subtenant of the attorney’s child. Certain other attorneys hold money in escrow for real estate matters in which the judge is a buyer or seller. He/she asks if he/she may preside in unrelated matters when these attorney escrowees appear.
A judge must always avoid even the appearance of impropriety (see 22 NYCRR 100.2) and must always act to promote public confidence in the judiciary’s integrity and impartiality (see 22 NYCRR 100.2[A]). A judge must not engage in financial or business dealings that (a) may reasonably be perceived to exploit his/her judicial 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 or continuing business relationships with persons likely to come before the judge’s court (see 22 NYCRR 100.4[D][a]-[c]). A judge must disqualify him/herself in a proceeding where his/her impartiality “might reasonably be questioned” (22 NYCRR 100.3[E]).
A judge who is receiving money from an attorney in concluding a prior business arrangement between them is disqualified, subject to remittal, from cases in which the attorney appears (see Opinion 97-44). The obligation continues for two years from the date of the final payment (see id.). The Committee has applied the same standard to many significant financial and business relationships between judges and attorneys, including that of law firm colleagues, landlord/tenant relationships and other office sharing arrangements, and retention as an expert witness (see e.g. Opinions 12-32; 08-166; 04-42). That is, the judge is disqualified, subject to remittal, throughout the relationship and for two years after the relationship completely ends (see id.).
By contrast, these escrow relationships will involve less frequent and less substantial contact between the judge and attorney escrowees. Indeed, if the escrow transaction ultimately proves amicable, so the funds are disbursed with no controversy, it is unlikely to call the judge’s impartiality into question.
To avoid any appearance of impropriety, if a lawyer escrowee appears before the judge when the escrow relationship exists, the judge must fully disclose that relationship. After such disclosure, if a party objects to the judge’s continued participation in the case, the judge has the sole discretion to decide whether to exercise recusal (see Opinion 13-176). Because disclosure is mandated here in lieu of disqualification, the judge must simply disqualify him/herself if any party is proceeding without legal representation (see id.). Disclosure remains mandatory until final disposition or distribution of the escrow assets; thereafter, assuming the escrow was released without controversy, the judge has no further obligation to disclose. Of course, if the judge doubts his/her ability to be impartial in a particular matter, then disqualification is required (see Opinion 13-176).
If controversy about the escrowed funds arises, the judge must disqualify if the attorney escrowee appears, until two years after the matter ends (including release or disbursement of all escrowed funds) (cf. Opinion 15-08).2
1 Significantly, the inquiry reveals no other social, personal, or business relationship between the attorneys and the judge (see e.g. Opinions 11-125 [social relationship]; 08-171/08-174 [attorney-client relationship with an attorney or his/her law firm colleague]).
2 Disqualification may be remitted if all parties are represented by counsel, subject to “the usual three-step process” involving full disclosure on the record, independent agreement by the parties and their lawyers, and the judge’s own conclusion that he/she can be impartial and is willing to preside (Opinion 16-21). Thereafter, the judge “must incorporate the parties’ and their attorneys’ agreement into the record of the proceeding” (id.).