Court Opinion

ID: 4239802
Source: CourtListenerOpinion
Date Created: 2018-01-26 21:25:12.30799+00
Date Added: 2024-06-11T14:49:01.242354
License: Public Domain

01/26/2018
               IN THE COURT OF APPEALS OF TENNESSEE
                          AT KNOXVILLE
                         Assigned on Briefs January 10, 2018

                   STUART ELSEROAD v. KAITLIN COOK

                   Appeal from the Circuit Court for Knox County
                      No. 131861 Gregory S. McMillan, Judge

                       ___________________________________

                           No. E2018-00074-COA-T10B-CV

                       ___________________________________

This is an accelerated interlocutory appeal as of right, pursuant to Tennessee Supreme
Court Rule 10B, from the trial court’s denial of a motion for recusal. Petitioner contends
the trial judge should have recused himself because Petitioner “was directly involved in a
decision-making process that ultimately resulted in an effect on the [judge’s] finances.”
Petitioner also contends recusal is required because “the Judge based his ruling almost
exclusively on his own statements that he was unaware of the Petitioner’s involvement in
his loan application process,” which statements made him “a material witness.” Having
reviewed the petition for recusal appeal, pursuant to the de novo standard as required
under Rule 10B, § 2.01, we affirm the trial court’s decision to deny the motion for
recusal.

              Tenn. Sup. Ct. R. 10B Accelerated Interlocutory Appeal;
              Judgment of the Circuit Court Affirmed and Remanded

FRANK G. CLEMENT JR., P.J., M.S. delivered the opinion of the Court, in which CHARLES
D. SUSANO JR. and BRANDON O. GIBSON, JJ., joined.

Darren V. Berg, Knoxville, Tennessee, for the appellant, Stuart Elseroad.

Forrest L. Wallace, Knoxville, Tennessee, for the appellee, Kaitlin D. Cook.

                                       OPINION

      The underlying dispute arises from a divorce proceeding. The plaintiff is Stuart
Elseroad (“Petitioner”), and the defendant is Kaitlin Cook (“Defendant”).
        This appeal arises from the trial judge’s decision to deny Petitioner’s motion to
recuse. Tenn. Sup. Ct. R. 10B governs appeals from orders denying motions to recuse.
Pursuant to § 2.01 of Rule 10B, a party is entitled to an “accelerated interlocutory appeal
as of right” from an order denying a motion for disqualification or recusal. The appeal is
perfected by filing a “petition for recusal appeal” with the appropriate appellate court.
Tenn. Sup. Ct. R. 10B, § 2.02. The only issue we may consider in a Rule 10B appeal is
whether the trial judge should have granted Petitioner’s motion to recuse. Duke v. Duke,
398 S.W.3d 665, 668 (Tenn. Ct. App. 2012).

       Our standard of review in a Rule 10B appeal is de novo.1 See Tenn. Sup. Ct. R.
10B, § 2.01. “De novo” is defined as “anew, afresh, a second time.” Simms Elec., Inc. v.
Roberson Assocs., Inc., No. 01-A-01-9011CV00407, 1991 WL 44279, at *2 (Tenn. Ct.
App. Apr. 3, 1991) (quoting Black’s Law Dictionary 392 (5th ed. 1979)). In a “de novo”
appeal, “the appellate court uses the trial court’s record but reviews the evidence and law
without deference to the trial court’s rulings.” Black’s Law Dictionary (10th ed. 2014).
Therefore, we examine the factual record anew, with no presumption of correctness, and
reach our own conclusion.2

       If we determine, after reviewing the petition and supporting documents, that no
answer is needed, we may act summarily on the appeal. Tenn. Sup. Ct. R. 10B, § 2.05.
Otherwise, this court must order an answer and may also order further briefing by the
parties. Id. Tenn. Sup. Ct. R. 10B, § 2.06 also grants this court the discretion to decide the
appeal without oral argument.

       Based upon our review of the petition and supporting documents, we have
determined that neither an answer, additional briefing, nor oral argument is necessary,
and we elect to act summarily on the appeal in accordance with Tenn. Sup.Ct. R. 10B, §§
2.05 and 2.06.

                                              ANALYSIS

        In this appeal, Petitioner states, in relevant part:

        1
          Prior to the adoption of Tennessee Supreme Court Rule 10B, effective July 1, 2012, the
appellate courts reviewed recusal decisions pursuant to the more deferential abuse of discretion standard.
See Duke v. Duke, 398 S.W.3d at 668 n.2 (citing State v. Hester, 324 S.W.3d 1, 73 (Tenn. 2010)).
        2
         An appeal that is “de novo” is distinguishable from “the de novo standard of review” pursuant
to which the “appellate courts review factual findings de novo on the record and accord these findings a
presumption of correctness unless the evidence preponderates otherwise.” See In re Carrington H., 483
S.W.3d 507, 524 (Tenn. 2016); see also Tenn. R. App. P. 13(d).

                                                    2
On December 21, 2017, the Petitioner, by and through counsel, filed a
Motion for Recusal. In his motion, the Petitioner noted that he was an
employee at a “local financial institution,” where he worked as a “market
valuation officer” and that the Judge had an ongoing business relationship
with the bank. He alleged he “was directly involved in a decision-making
process that ultimately resulted in an effect on the Court’s finances.”
Because of certain banking laws, the Petitioner was not more specific in his
motion, and he did not attach an affidavit, intending instead of presenting
live testimony at the hearing.

The trial court conducted a hearing on Friday, January 5, 2018. At the
hearing, the Petitioner was sworn and called to the stand. The Petitioner
testified that he was an employee of Southeast Bank, as a “market valuation
officer.” He said he dealt “with appraisals, evaluations, determining the
value of property and collateral for banking purposes, financing purposes”
and noted he had been employed there since August, 2016. At this point in
the proceedings, the Court stated “Is the issue in this case that I applied for
a home equity line of credit and mortgage at Southeast Bank? A mortgage
line that was subsequently granted and a home equity line that was
subsequently granted?” . . . The following exchange then occurred:

       Mr. Berg: Yes, your Honor.

       THE COURT: What’s the basis for a recusal under those
       circumstances?

       Mr. Berg: Well, your Honor, it’s my understanding that there
       was a refinance application and it had to go to a secondary
       something and it increased the interest rate.

       THE COURT: And?

       Mr. Berg: And that resulted in the ---

       THE COURT: Was that his decision?

       THE WITNESS: Yes.

       THE COURT: I’m unaware of that. I got the loan approved
       from Southeast Bank. My home has been refinanced. I don’t
       see a reason for recusal. If that is the only factual
       circumstances that you’re relying on, I’m unaware of Mr.
       Elseroad’s participation in that in any way, shape, or form,

                                      3
       until you brought it to my attention. It had no effect
       whatsoever on this Court. . . . There is no basis for recusal
       under the facts and circumstances in this case. Motion is
       denied.

       Mr. Berg: Your Honor, respectfully, under Rule 104(a), I
       would like to get a proffer, because I’m entitled to go to the
       Court of Appeals on the denial.

       THE COURT: You may absolutely have a proffer of evidence
       after my case is concluded today at the end of my docket, but
       there is no factual circumstance or any basis for me to recuse
       myself based upon your Motion having established and your
       agreeing with me that those are the two facts at issue, that I
       applied for a loan, that I received a loan, and that I accepted
       it, and that I have no knowledge whatsoever of Mr.
       Elseroad’s participation in that process at any point until you
       Motion for Recusal.

       Mr. Berg: Yes, your Honor, I understand, with one caveat.
       It’s my understanding, from Mr. Elseroad, that his testimony
       will be that he was involved in the decision that resulted in an
       increase in the interest rate.

       THE COURT: Yes. I’m not aware of it. I applied for it. I was
       told, here is the deal, and I accepted the deal. . . . I was
       unaware of Mr. Elseroad’s involvement.

After the Court refused to consider or hear the testimony of the Petitioner
on his involvement with the Court’s refinance application, a Rule 104(a)
proffer of evidence was conducted outside the presence of the Judge, but
opposing counsel was present. During the proffer, the Petitioner testified
that in layman’s terms his job at the bank “deals with evaluating property
and collateral for underwriting purposes for a bank, financing.”

He testified that in the fall of 2017 (October), the Judge’s application for
refinance came across his desk and he was asked “to see if we could find
justification for a higher [appraisal].” He said the loan application was from
“secondary market” which “are loans that we intend to sell, rather than keep
in-house.”

Regarding the Judge’s statement that he was unaware that the Petitioner
worked at Southeast Bank, the Petitioner testified that he had “been in the

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court, in Judge McMillan’s courtroom, many times since I’ve been
employed there, and he’s ruled on various number of measures and orders
and motions since” and that he believed the judge knew he worked at the
bank as a result. . . .

The Petitioner testified that he conducted a review of “comparables that
could justify a higher valuation” but that he ultimately decided a higher
valuation was unwarranted. The Petitioner testified that a bank record exists
with his name on it relating to his denial of the request for an increase in the
appraisal. He said, “the reason why they wanted - we wanted to scrutinize
this deal is because the appraisal came in extremely low underneath the
original value of the house in the original appraisal of the house, by a
considerable amount, so they wanted another set of eyes on it.” The
Petitioner testified that because of his decision, a gap was created because
of what the Judge owed and the appraised value which thus required “a
HELOC that was going to close simultaneous.”

He said the purpose of the HELOC was so the Judge could obtain the
necessary cash in order to close the refinance. The Petitioner explained that
“[t]he HELOC bridged the gap, because his collateral was insufficient for
the purposes of refinance, because that would endanger our position as a
bank . . . .” The Petitioner testified that to the best of his knowledge, the
document containing his signature—which denied the request for an
increase in the appraisal and resulted in an increase in the interest rate —
was contained in the Judge’s “loan package.” . . .

As to the effect of his decision, the Petitioner testified that the resulting
credit rate was “much higher than your standard mortgage rate” and that the
resulting increased amount over the life of the loan constituted a substantial
amount. The Petitioner explained his employer instructed him not to testify
as to any sum certain because that number “is protected information.” The
Petitioner said he believed the judge could not be impartial in his case
because he knew the Petitioner worked for the bank, noting “he shut down
argument without hearing the evidence momentarily ago, and the fact that,
if there wasn’t a bias against me present, there certainly will be, I believe, if
he is able to remain on the case.”

Subsequent to the hearing and the offer of proof, the trial court entered an
Order, denying the motion. In the Order, the Court states that the motion
was not filed with an accompanying affidavit. The undersigned
intentionally decided to not file an affidavit, instead choosing to present
live testimony, because the subject matter concerned the Judge’s personal
finances and was potentially embarrassing information. The undersigned

                                       5
       also thought the Judge might well take the matter up in Chambers. In any
       event, the motion was “supported by an affidavit under oath, a declaration
       under penalty of perjury on personal knowledge or by other appropriate
       materials.” The “other appropriate materials” supporting the motion was the
       sworn testimony of the Petitioner. Further, the transcript of the hearing, Ex.
       B, does not reveal the Judge refused to hear the motion on the basis that no
       affidavit accompanied the same. Indeed, he took live testimony from the
       Petitioner in the form of three questions and answers before terminating the
       introduction of evidence and deciding the motion.

(Internal citations to the record omitted).

      The petition goes on to state that the trial judge should have recused himself
because the decision made by Petitioner had “a direct, negative effect on the Court’s
personal finances and the effect was substantial,” and that the trial judge should have
recused himself for two reasons:

       the court showed actual bias against the Petitioner by failing to allow him
       to testify as to the facts supporting his motion and he relied on his own
       statements of lack of knowledge in ruling on the motion, thus making him a
       witness, and a judge cannot preside over any matter wherein he is a
       witness.

        The foregoing considered, we have identified the following three issues that
require our analysis: (1) Whether the trial judge showed actual bias against Petitioner by
failing to allow Petitioner to fully testify as to the facts supporting his motion for recusal;
(2) Whether recusal is necessary based on Petitioner’s allegations that the trial judge was
aware that Petitioner had “a direct, negative effect on the Court’s personal finances and
the effect was substantial;” and (3) Whether the trial judge is a material witness to this
matter.

                                              I.

       Petitioner contends the trial judge showed actual bias against Petitioner “by failing
to allow him to testify as to the facts supporting his motion [for recusal].” We disagree.

        A motion to recuse should be granted when judges have any doubt about their
ability to preside impartially in a case or when “a person of ordinary prudence in the
judge’s position, knowing all of the facts known to the judge, would find a reasonable
basis for questioning the judge’s impartiality.” Davis v. Liberty Mut. Ins. Co., 38 S.W.3d
560, 564 (Tenn. 2001) (quoting Alley v. State, 882 S.W.2d 810, 820 (Tenn. Crim. App.
1994)); Tenn. Sup. Ct. R. 10, RJC 2.11(A). The relevant portion of the Code of Judicial
Conduct provides:

                                              6
       (A) A judge shall disqualify himself or herself in any proceeding in which
           the judge’s impartiality might reasonably be questioned, including but
           not limited to the following circumstances:

              (1) The judge has a personal bias or prejudice concerning a
                  party or party’s lawyer, or personal knowledge of facts
                  that are in dispute in the proceedings.

Tenn. Sup. Ct. R. 10, RJC 2.11(A).

       The terms “bias” and “prejudice” generally refer to a state of mind or attitude that
works to predispose a judge for or against a party; however, “[n]ot every bias, partiality,
or prejudice merits recusal.” Alley, 882 S.W.2d at 821. To merit disqualification of a trial
judge, “prejudice must be of a personal character, directed at the litigant, ‘must stem from
an extrajudicial source and result in an opinion on the merits on some basis other than
what the judge learned from . . . participation in the case.’” Id. (quoting State ex rel
Wesolich v. Goeke, 794 S.W.2d 692, 697 (Mo. App. 1990)).

       However, “[i]f the bias is based upon actual observance of witnesses and evidence
given during the trial, the judge’s prejudice does not disqualify the judge.” Id. It is for
this reason that “[a] trial judge’s adverse rulings are not usually sufficient to establish
bias.” State v. Cannon, 254 S.W.3d 287, 308 (Tenn. 2008). “Rulings of a trial judge, even
if erroneous, numerous and continuous, do not, without more, justify disqualification.”
Id. (quoting Alley, 882 S.W.2d at 821).

      The rationale for this proposition has been explained by our Supreme Court as
follows:

       [T]he mere fact that a judge has ruled adversely to a party or witness . . . is
       not grounds for recusal. See Hines, 919 S.W.2d at 578. Given the
       adversarial nature of litigation, trial judges necessarily assess the credibility
       of those who testify before them, whether in person or by some other
       means. Thus, the mere fact that a witness takes offense at the court’s
       assessment of the witness cannot serve as a valid basis for a motion to
       recuse. If the rule were otherwise, recusal would be required as a matter of
       course since trial courts necessarily rule against parties and witnesses in
       every case, and litigants could manipulate the impartiality issue for
       strategic advantage, which the courts frown upon. See Kinard, 986 S.W.2d
       at 228.

Davis, 38 S.W.3d at 565.

                                              7
        Based on the foregoing authority, the contention that the trial judge showed bias
by refusing to allow Petitioner to testify in support of his motion for recusal is not
sufficient, standing alone, to justify recusal. Moreover, Petitioner failed to comply with
Rule 10B by not attaching an affidavit that verified the specific factual grounds
supporting disqualification of the judge. Therefore, his failure to comply with Rule 10B
provides a basis to deny the petition without a hearing on the motion.

      As we noted earlier, Tenn. Sup. Ct. R. 10B governs appeals from orders denying
motions to recuse. Section 1.01 of Rule 10B clearly and concisely identifies the means by
which a motion for recusal is to be presented to the court.

      Any party seeking disqualification, recusal, or a determination of
      constitutional or statutory incompetence of a judge of a court of record, or a
      judge acting as a court of record, shall do so by a timely filed written
      motion. The motion shall be supported by an affidavit under oath or a
      declaration under penalty of perjury on personal knowledge and by
      other appropriate materials. The motion shall state, with specificity, all
      factual and legal grounds supporting disqualification of the judge and shall
      affirmatively state that it is not being presented for any improper purpose,
      such as to harass or to cause unnecessary delay or needless increase in the
      cost of litigation.

Id. (Emphasis added).

       Petitioner failed to attach an affidavit or declaration to support the factual
allegations in the motion. Because Petitioner failed to comply with the rule with a
mandatory provision of Rule 10B, the trial judge would have been justified to deny the
motion summarily without a hearing, evidentiary or otherwise. Accordingly, the trial
judge’s decision to limit the extent to which Petitioner could testify in support of his
motion is not grounds for recusal. See Davis, 38 S.W.3d at 565.

                                           II.

       Petitioner contends recusal is required because the trial judge was aware that
Petitioner had “a direct, negative effect on the Court’s personal finances and the effect
was substantial.”

       Although Petitioner contends the trial court refused “to allow him to testify as to
the facts supporting his motion [for recusal],” the trial judge conducted a hearing on the
motion for recusal. During the hearing, Petitioner stated the facts upon which he relied,
and counsel for Petitioner was afforded the opportunity to present his argument on the
recusal issue. During the hearing, Petitioner’s counsel emphasized the facts upon which
Petitioner relied. After the trial judge was informed of the specific factual grounds

                                            8
supporting the motion for recusal, the judge denied having any knowledge of the facts
relied on by Petitioner and denied the motion.

       We find no error with this decision because Petitioner failed to identify any factual
basis to support his suspicion or unfounded belief that the trial judge knew or even
suspected that Petitioner had made a decision that adversely affected the trial judge’s
application for a loan. Moreover, the trial judge stated with clarity that he had no
knowledge that Petitioner played any role in the loan application process. The trial judge
also stated that he was unaware that there had been an opportunity for a lower interest
rate, and he was not aware that Petitioner was involved in a decision that resulted in an
increase in the interest rate. As the judge succinctly put it, “I applied for [the loan]. I was
told, here is the deal, and I accepted the deal. . . . I was unaware of [Petitioner’s]
involvement.”

        Although Petitioner believes the judge knew of his involvement in the loan
process, which suspicion is merely based on the fact that the judge knew Petitioner
worked for the bank, this belief or suspicion lacks a factual foundation. As the trial judge
stated in the order denying the motion for recusal:

       3. At the hearing, Plaintiff took the stand and disclosed that he worked as a
       market valuation officer for a local bank. In the course of that employment,
       Plaintiff indicated that an adverse decision was made that affected the
       Court’s finances.

       ***

       8. The Court was unaware of Plaintiff’s employment prior to the Motion for
       Recusal being filed on December 21, 2017. Prior to Plaintiff’s motion, the
       Court was unaware of any role played by Plaintiff in the bank’s internal
       process.

Based on these and other facts identified in the order denying the motion to recuse, the
trial judge reasoned:

       9. Having engaged in an arm’s length transaction with a local financial
       institution to refinance a debt some three months before its maturity, the
       Court does not believe that, under the current standard, a person of ordinary
       prudence in the judge’s position, knowing all of the facts known to the
       judge would find a reasonable basis for questioning the judge’s
       impartiality. In re Hooker, 340 S.W.3d 389,395 (Tenn. 2011).

We agree. Petitioner has failed to identify any fact upon which a reasonable person could
conclude that the trial judge knew Petitioner had any involvement in the loan process.

                                              9
Moreover, there is no basis in fact for the trial judge to have a bias against Petitioner
because, as the judge explained, “I applied for [the loan]. I was told, here is the deal, and
I accepted the deal.” Thus, in the judge’s perspective, there was no “negative effect” on
his finances. Therefore, we have concluded that a reasonable person would come to the
same conclusion, based on Petitioner’s unsubstantiated suspicions. As Petitioner correctly
notes in the petition, even if a judge believes he or she can be fair and impartial, the judge
should disqualify himself when “‘the judge’s impartiality might be reasonably
questioned’ because ‘the appearance of bias is as injurious to the integrity of the judicial
system as actual bias.’” Bean v. Bailey, 280 S.W.3d 798, 805 (Tenn. 2009) (quoting
Tenn. Sup. Ct. R. 10, Canon 3(E)(1)). However, the facts upon which Petitioner relies in
this case are simply insufficient to cause the trial judge or reasonable person to question
the impartiality of the judge or the integrity of the judicial system.

                                             III.

       Petitioner also contends the trial judge can no longer preside over this case
because he made himself a witness. Specifically, Petitioner relies on RJC §2.11 of Tenn.
Sup. Ct. R. 10, which states that a judge must disqualify himself where he “was a
material witness concerning the matter.” The petition goes on to state that the trial judge
made himself a witness because “the Judge based his ruling almost exclusively on his
own statements that he was unaware of the Petitioner’s involvement in his loan
application process.” We find this contention unpersuasive.

        Section 1.03 of Rule 10B requires every judge who denies a motion for recusal to
“state in writing the grounds upon which he or she denies the motion.” Thus, if a party
contends the trial judge has knowledge of facts or circumstances that occurred outside of
the courtroom, the judge is under an affirmative duty to state whether he or she does or
does not have knowledge of the alleged facts or circumstances that may require recusal.
In this case, the trial judge fulfilled his duty by stating that he had no knowledge of the
facts or circumstances upon which Petitioner relied in seeking the judge’s recusal. In fact,
the judge stated from the bench during the hearing on the motion, “I’m unaware of
[Petitioner’s] participation in that in any way, shape, or form, until you brought it to my
attention.”

       The trial judge denied having any knowledge of the extrajudicial facts of
circumstances Petitioner relies on, and this fact, without more, does not make the judge
“a material witness concerning the matter,” the matter being the divorce proceedings. To
the contrary, the trial judge’s response has no bearing on the substantive issues in the
parties’ divorce, only the motion for recusal. Accordingly, the statements made by the
judge from the bench and in the order denying the motion to recuse do not require recusal
based on RJC §2.11 of Tenn. Sup. Ct. R. 10.

                                             10
       We also find it disingenuous for Petitioner to contend that the trial judge must
recuse himself based on the judge’s response to the motion for recusal. If this were the
case, every judge who may be justified in denying a motion to recuse on the basis he or
she had no knowledge of extrajudicial facts or circumstances would, nevertheless, have to
be recused based on statements the judge made in denying the motion. This contention is
neither logical nor the intent of Rule 10B.

      For the foregoing reasons, we find Petitioner’s argument that the trial judge is a
“witness” which compels his recusal to be without merit.

                                    IN CONCLUSION

       The judgment of the trial court is affirmed, and this matter is remanded with costs
of appeal assessed against Petitioner, Stuart Elseroad.

                                                 ________________________________
                                                 FRANK G. CLEMENT JR., P.J., M.S.

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