Opinion ID: 552207
Heading Depth: 1
Heading Rank: 2

Heading: recusal--disqualification

Text: 65 Judge Hull stated in open court at a hearing on the question of his disqualification, as before indicated, that his daughter resigned from the law firm that had represented FDIC on June 30, 1989. He had recused himself previously on the basis of his daughter's association with the Morton firm involved as a counsel for FDIC, and we believe under the circumstances of this record that it was appropriate for him to have recused himself. He nevertheless reentered the case or cases on April 3, 1989 when Aetna moved to consolidate them for trial. The same circumstances that had persuaded Judge Hull to recuse himself previously, however, still prevailed on April 3, 1989. 10 A decision on the merits of any important issue in any of the seven cases, moreover, could or might constitute the law of the case in all of them, or involve collateral estoppel, or might be highly persuasive as a precedent. Thus, even if the Morton firm were not counsel of record for FDIC in all of the seven cases but only some of them, and was not of counsel in the three cases reassigned by Judge Hull to himself, we would find that the circumstances would indicate to a reasonable party, such as Aetna, that his partiality might be implicated, and/or that Sec. 455 would apply. 66 Aetna, by virtue of Judge Hull's April 1989 order, was faced with separate trials in seven cases involving substantially similar issues and similar controlling questions of law as to the interpretation of the same blanket bond provisions in each case. Aetna was thus substantially involved and interested in Judge Hull's order, and had a legitimate basis to seek clarification and then to raise the disqualification issue. Judge Hull's order of April 24, 1989 (while his daughter was associated with the Morton firm and had apparently made an appearance in a deposition of a key witness) also clearly indicated that he intended to proceed promptly with a trial and disposition in the three cases he assigned to himself. 67 Again, during the same time span (prior to June 30, 1989), the magistrate entered a pretrial order in one of the reassigned cases (CIV-3-85-1242) and set a trial date for a first trial before Judge Hull. This was the first trial date for any of the seven previously consolidated cases. 68 We find no basis for the claim that Aetna was merely seeking to delay in its pursuit of disqualification. Without any explanation or notice, the judge who had disqualified himself for a specific reason--his daughter's association with a law firm interested in similar substantial issues of Aetna's liability on a common bond arising out of similar Butcher family activities in different banks taken over by FDIC--suddenly reentered the consolidated cases, although his daughter's association with the firm continued, and decided issues of significant import (severance and pretrial schedules). 69 As indicated in SCA Services and in Moody, there were circumstances present here which supported Judge Hull's initial decision to recuse himself in all the Aetna-FDIC cases. There was no justifiable basis in April of 1989 for the judge to become involved again in any of the consolidated cases; no change of circumstances had occurred. The only basis claimed at the time was that the cases were old and needed to be tried. It is commendable for the chief judge of a district court to be concerned about the state of the docket in his court, but the FDIC-Aetna controversies were properly out of his hands at all times until June 30, 1989, the earliest date when his daughter's association with the Morton firm ended. The entry of the orders by, and as directed by, Judge Hull during April 1989 were therefore improper. Aetna's motion for disqualification should have been granted. 70 Judge Hull's remarks at the January 10, 1990 hearing confirm the basis for our conclusion, however reluctant we may be to invoke disqualification as to a district judge who has acted to speed disposition of long pending cases. We have discussed primarily the daughter's association as a basis for disqualification because it involves appearance of partiality and also conflict of interest principles under Sec. 455(b)(4) and (b)(5)(ii). As to the assertion that Judge Hull was associated with another company which had bond claims pending on a similar Aetna blanket bond, Judge Hull made no denial. Instead, he emphasized in the January 10, 1990 hearing that by February 1st I'll be out of it [Brandon & Hull]. J/A A-133. We believe that this circumstance adds weight to the conclusion that Judge Hull should have recused himself. 11 Judge Hull also stated on the record that he owned a one-half interest in Brandon & Hull, and evidently Aetna ... is the carrier, and he did not deny that Aetna provided Brandon & Hull a similar indemnity policy to those involved in the cases at issue. 71 The last basis for disqualification--Judge Hull's financial interest in a bank acquired by the Butcher interests--was also discussed at the January 10, 1990 hearing, and the following colloquy occurred between the judge and Aetna's attorney: 72 I held a substantial interest in stock of Andrew Johnson Bank, which was formally [sic] the C & C Bank of Greene County and which belonged to Butcher and a group of his associates, okay, C.H. Butcher and his associates, all right; and the scenario goes there, as I understood it--and I'm not sure I did understand it, and that's another reason I wanted to have the hearing here--these are two cases that I have. One of them involves the bond that was issued to the former United American Bank of Hamilton County and the other one involves a bond issued by our company to the C & C Bank of Roane County; that's the two cases that I've got. The one from the Knoxville case has already been assigned to Judge Jordan. 73 . . . . . 74 I was trying to figure out where there was a conflict with the note that the FDIC owned with a bank up on Washington County, that's what I'm trying to get to. I can't see how they conflict, but they may. 75 . . . . . 76 The bank that I have some stock in does have an interest in that proceeding; so the question is for me, how does that, that, the--further, further I believe that, that the, that the note that Jake and Sonja Butcher had was an unsecured note, and it's not one of the--at least in this case--it's not one of the alleged fraudulent transactions or embezzlement transactions that Jake Butcher participated, is alleged to have participated in. How does that conflict with these cases, I guess that's my question? 77 Mr. Simms: We believe that through your financial interest in the Andrew Johnson Bank-- 78 The Court: All right. 79 . . . . . 80 I don't understand exactly what the conflict is. 81 Mr. Simms: We believe that the Andrew Johnson Bank's interest in that claim, the FDIC's claim against Mr. Butcher, is traceable to you. Mr. Butcher is a party in one or more of these cases, and, therefore, that financial interest is, is--you are disqualified because you have a financial interest in that claim by the FDIC as one of the parties. 82 J/A 134, 135, 137, 138-39 (emphasis added). 83 We make no judgment about whether an actual conflict of interest existed, but we believe this was but another factor mandating disqualification of Judge Hull when considered in conjunction with the other factors already discussed. All of these considerations in combination make it clear that we should mandate that Judge Hull should have recused himself in 1989 from making decisions in any of the consolidated FDIC-Aetna cases. 84 Petitioner Aetna argues that a number of orders entered by Judge Hull and an order entered by Judge Jordan must be vacated in light of our writ of mandamus directing Judge Hull to recuse himself. First, petitioner contends that Judge Hull's April 24, 1989 order directing the magistrate to set the UAB-Knoxville, C & C Roane, and UAB-Chattanooga cases for trial and Judge Hull's October 30, 1989 order reassigning the UAB-Knoxville case to Judge Jordan should be vacated. Respondents argue that these orders were ministerial in nature and were entered pursuant to Judge Hull's power to control the court's docket and prepare the cases for trial. See 28 U.S.C. Sec. 137. 85 Judge Hull's October 30, 1989 order need not be vacated, however, because even a judge who has recused himself ought to be permitted to perform the duties necessary to transfer the case to another judge. See In re Cement Antitrust Litigation (MDL No. 296), 673 F.2d 1020, 1024-25 (9th Cir.1981) ([W]e refuse to construe the word 'proceeding' to include the performance of ministerial duties such as assigning a case to another judge). The April 24, 1989 order similarly involves ministerial duties and need not be vacated. 86 Aetna also argues that Judge Hull's April 3, 1989 order denying its motion for a consolidated trial and Judge Hull's April 9, 1990 order granting the FDIC partial summary judgment must be vacated. Respondent FDIC argues that Liljeberg v. Health Services Acquisition Corp., 486 U.S. 847, 863-65, 108 S.Ct. 2194, 2203-05, 100 L.Ed.2d 855 (1988), permits a court to apply relief retroactively in certain circumstances. Liljeberg involved a Fed.R.Civ.P. 60(b) motion arguing that a final judgment ought to be vacated. Such a motion does not appear to have been made in the present case. At any rate, Liljeberg provided: 87 [I]n determining whether a judgment should be vacated for a violation of Sec. 455(a), it is appropriate to consider the risk of injustice to the parties in the particular case, the risk that the denial of relief will produce injustice in other cases, and the risk of undermining the public's confidence in the judicial process. 88 Id. at 864, 108 S.Ct. at 2204. 89 In the present case, the risk of undermining the public's confidence in the judicial process is significant. Permitting Judge Hull's partial summary judgment order to remain in spite of the fact that section 455(b)(5) warrants his disqualification would substantially undermine the public's confidence in the judicial process. 12 Further, his refusal to consolidate the cases for trial may be perceived by the public as an attempt by Judge Hull to retain at least some of the original seven cases. The risk of injustice to the parties if the orders were to remain intact is significant as well, for Judge Hull's disqualification is based upon an objective determination that presumably was codified due to the inherent threat of bias. Therefore, these orders should be vacated except with respect to the Knoxville case which has been tried. Consolidation is for the convenience of parties, witnesses, etc. To require the Knoxville case to be retried as part of a consolidated case would be to penalize the parties and witnesses and cause further injustice. 90 Finally, petitioner argues that Judge Hull participated in a discussion with Judge Siler and Judge Jordan that led to Judge Jordan's reinstatement of the January 16, 1990 trial date in the Knoxville case. 13 Respondent FDIC correctly replies that petitioner's proper recourse for a claim of bias against Judge Jordan would be a section 455(a) motion seeking to disqualify Judge Jordan. Therefore, Judge Jordan's order should not be vacated. 91 We do not intend to express any opinion concerning the merits of consolidation, or severance, with regard to the seven cases in dispute. The petition for mandamus is GRANTED for the purposes stated, and the matter is REMANDED for further prompt proceedings in accordance herewith. 92