767 P.2d 538 (Utah 1988)

[In announcing his ruling, the trial judge noted that he had had personal experience as a borrower from the defendant. Thirty-nine days after the ruling, defendant moved to disqualify the judge for bias. The district court granted the motion. and plaintiff appealed. The Supreme Court reversed. holding that defendant's motion to disqualify the judge was untimely, and that the judge was not required to recuse himself sua sponte.]

Given the importance of impartiality and the duty of a judge to recuse him- or herself sua sponte when necessary, we next address the issue of whether Judge Rigtrup should have disqualified himself on his own motion. In this context, we analyze the issues of apparent and actual bias raised by Prudential and addressed by Judge Fishler in his ruling.

Standards for judicial disqualification are established by statute and the Code of Judicial Conduct. which this Court adopted in 1974 and which is patterned after the ABA Code of Judicial Conduct of 1977. Utah Code Ann. 78-7-1 (1987) provides for disqualification if the judge is a party, has an interest in a case, is related to either party, or has been an attorney for either party in the action. The statute allows a waiver of disqualification if both parties consent, a point not at issue here.

Canon 3C of the Code of Judicial Conduct (hereafter 'Code') is more comprehensive than the statute in prescribing instances when judicial disqualification is warranted. In this case, the parties have based their arguments for and against disqualification on the Code. For this reason, we address the disqualification issues in the context of the Code.

The Madsens contend that the Code is an ethical code only and that a violation of the Code should not result in the invalidation of all of a judge's previous rulings. They argue that a violation should result only in discipline of the judge and not in a penalty to an innocent party who may have expended large amounts of time and money only to have a large part of the lawsuit invalidated because of a judicial disqualification. While most of the Code is aimed exclusively at the regulation of judicial behavior, Canon 3C not only regulates judicial conduct, but it also seeks to avoid unfairness by insuring each litigant an impartial judge. Because we conclude that disqualification of the trial judge was not appropriate, we do not address further the issue of retroactive invalidation of a trial judge's rulings.

Prudential argues that Judge Fishler was correct in disqualifying Judge Rigtrup because Judge Rigtrup had personal knowledge of disputed evidentiary facts, displayed bias against Prudential, and had a financial interest in the outcome of the case. These allegations impute actual bias. but Judge Fishler specifically found no actual bias. Moreover, as shown below. none of Prudential's allegations of bias withstands scrutiny.

A. First, Prudential argues that Judge Rigtrup had personal knowledge of disputed evidentiary facts and, thus, violated Canon 3C(l)(a). The issue before Judge Rigtrup was whether Prudential earned a net profit on the Madsens' budget payments. Prudential claimed a net loss in the handling of such funds. Prudential asserts that it had waived insurance premium payments of certain borrowers, including Judge Rigtrup, in 1977 and gave those borrowers the option of continuing their escrow accounts or discontinuing them altogether in 1979. For that reason, Prudential asserts. the judge had independent knowledge of the disputed issue from which Judge Rigtrup jumped to the conclusion in his ruling that Prudential could have and would have discontinued the Madsens' reserve, or otherwise changed its handling procedures, rather than lose money in requiring them.

Judge Fishler was not persuaded that Judge Rigtrup had any knowledge concerning the facts in dispute in this case and found that this allegation would not support a claim of bias. Judge Fishler was correct. Although Judge Rigtrup had knowledge of his own dealings with Prudential some six and eight years before the trial, that knowledge did not bear on the issue of whether Prudential made a profit on the budget payment accounts. Prudential cites no record support to the contrary.

B. Next. Prudential argues that remarks made by Judge Rigtrup just before delivering his ruling evidenced prejudice. Prudential specifically asserts here. as it did before Judge Fishler. that the remarks made by the judge, including the comment, "I have cussed financial institutions." revealed a bias that warranted disqualification. Judge Fishler's memorandum decision does not mention this allegation as a basis for his disqualification order.

Concededly, Judge Rigtrup was somewhat less than diplomatic in expressing what his thinking had been many years ago about financial institutions and how his thinking had evolved over the years. Nevertheless, Judge Rigtrup's own remarks in context explain the isolated instances thought by Prudential to show bias. The judge stated:

I think I've made general comments throughout that I have cussed financial institutions, and customers do simply because they see inherent injustice about that. And my perspective today, after 23 years [have] passed, has become much, much different at the end of the 23 years. Far before that I could see the cost of money was markedly greater, and that I would be a damn fool to prepay. So I paid faithfully every month for 25 years, and not a day sooner or a day later. And I'm just commenting generally in terms of  unjust or whatever. The tension is between that to be gained and that to be lost, I suppose, in my eyes. And I have a feeling that class actions are a form of champerty and maintenance in that the one that substantially gains is the lawyer or the expert. Mr. Madsen stands to gain little, except he has struck a blow for freedom, I suppose, in the form that the consumer has achieved balance.

Later the judge stated:

The tension is that in terms of the magnitude of the wear, what is to be gained by Mr. Madsen is de minimis. On the other hand, if the Court looks at economic realities, the high cost of money, high cost of labor and high cost of everything else, there is a societal interest in maintaining healthy, vital financial institutions that have the ability to fund building construction. homes, and so forth, in our community. And I simply observe that probably the savings and loan associations have been very instrumental and important in that particular process. I simply make those as an overview statement say to [sic] what has troubled me, and it's troubled me for a long time.

Canon 3C(l)(a) states that a judge should disqualify himself if he has 'personal bias or prejudice concerning a parry.' Although litigants are entitled to a judge who will hear both sides and decide an issue on the merits of the law and the evidence presented. they are not entitled to a judge whose mind is a clean slate. Each judge brings to the bench the experiences of life, both personal and professional. A lifetime of experiences that have generated a number of general attitudes cannot be left in chambers when a judge takes the bench. Refusing to disqualify himself in Laird v. Tatum 409 U.S. 824 (1972), Justice Rehnquist responded to a motion to recuse nunc pro tunc:
Proof that a Justice's mind at the time he joined the Court was a complete tabula rasa in the area of constitutional adjudication would be evidence of lack of qualification, not lack of bias.


[N]either the oath, the disqualification statute. nor the practice of the former Justices of this Court guarantees a litigant that each judge will start off from dead center in his willingness or ability to reconcile the opposing arguments of counsel with his understanding of the Constitution and the law.

Id. at 835, 838-39 (memorandum opinion of Rehnquist, J.) (emphasis in original). One commentator has stated:
Supreme Court Justices are strong minded men, and on the general subject matters which come before them, they do have propensities, the course of decision cannot be accounted for in any other way.

J. Frank. Disqualification of Judges: In Support of the Bavh Bill. 35 Law & Contemp. Probs. 43, 48 (1970). Obviously, the same is true for all judges. Concerning comments made in court during a case, a commentator stated:

The traditional judicial view is that if a judge can be disqualified for bias following a comment or ruling during the court proceedings, there is no limit to disqualification motions and there would be a return to 'judge shopping.' Any judicial comment or ruling gives the appearance of partiality in the broadest sense to the adversely affected party. Suppose a judge who is the trier of fact comments during a hearing that a parent has had the opportunity to improve himself in order to make a home for his child but has made no effort to do so. Can the judge be disqualified for bias and prejudice? Whenever a judge hears any evidence, he develops an attitude which may change as the evidence develops. As long as the judge decides the case only after all the evidence is submitted, there appears to be no harm in such a comment. Such judicial comments made before a jury would constitute an improper expression of opinion on the evidence, but those statements made out of their hearing do not require recusal.
L. Abramson. Judicial Disqualification. at 23 (emphasis in original) (footnotes omitted). As long as a judge does not allow the 'propensities' to obscure the evidence and will decide the case only after all the evidence is heard, then disqualification is generally not warranted by a judge's comments. See Banks v. Department of Human Resources, 141 Ga. App. 347, 348-49, 233 S.E.2d 449, 450 (1977), overruled on other grounds. Chancey v. Department of Human Resources. 156 Ga. App 338, 340, 274 S.E.2d 728, 730 (1980).

Judge Rigtrup's remark that he had 'cussed financial institutions' was simply a statement about an attitude he had had many years earlier, at a time when he was less knowledgeable about the operations of financial institutions. Viewed in its entirety and in the context in which that statement was made, there is no evidence of disqualifying bias in Judge Rigtrup's remarks. Indeed, it appears that Prudential saw no impropriety at the time the remarks were made, as demonstrated by its failure to object.

C. Prudential next contends that because Judge Rigtrup was at one time a Prudential borrower, he had a financial interest in the outcome of the case. Prudential claims that the judge is either a 'potential' member of the existing plaintiff class or a 'potential' member of an alleged plaintiff class which has never been certified. This 'potential' membership, Prudential claims, gives Judge Rigtrup sufficient financial interest in the outcome of the case to warrant disqualification Prudential asserts that amended complaints filed by the Madsens have added new legal theories to the case and have sought enlargement of the plaintiff class. The result, Prudential claims, is a plaintiff class whose boundaries are imprecise.

Notwithstanding Prudential's assertions, this cue has a precisely defined plaintiff class. consisting of Prudential borrowers whose trust deeds contain language identical to the Madsens' trust deed. The class was certified by Judge Croft in 1977. Prudential does not argue, and we find nothing in the record to indicate, that Judge Rigtrup is a member of that class. While it is true that the Madsens did seek to enlarge the class. a new plaintiff class has never been certified. Allegations alone do not act to enlarge an existing class.

Judge Fishler held that Judge Rigtrup may therefore have a financial interest which would be substantially affected by the outcome of the proceeding as defined under Canon 3C(l)(c). (Emphasis added.) Judge Fishler erred. Judge Fishler and both sides on appeal have overlooked a critical point - the meaning of the term 'financial interest' in Canon 3C(3)(c). Canon 3C(3)(c) states that 'financial interest' means ownership of a legal or equitable interest, however small, or a relationship as director, advisor, or other active participant in the affairs of a party (Emphasis added). In other words, without an ownership interest, no financial interest exists.

In Virginia Elec. & Power Co. v. Sun Shipbldg. & Dry Dock Co.. 407 F. S upp. 3 2 4 (E. D, Va.), vacated sub nom, on other grounds, In re Virginia Elec. & Power Co., 539 F.2d 357 (4th Cir. 1976), a trial judge was asked to disqualify himself because he was a customer of the plaintiff public utility, and a verdict favorable to the plaintiff could result in a personal benefit to the judge of approximately $100 realized as a reduction in utility rates. The judge stated:

Clearly, whatever interest the Court may have in the subject matter in controversy, it does not constitute a 'financial interest' as defined [by the Code of Judicial Conduct and 28 U.S.C. 455]. It has 'ownership' of no interest--legal or equitable . . . . [T]he Court actually has 'a vague and undefined interest. not ownership, in a credit or accounting adjustment.'
407 F. Supp. at 327. The United States Court of Appeals for the Fourth Circuit reversed on other grounds but stated in its opinion that the trial judge correctly concluded that 'he did not 'own' a legal or equitable interest in the subject matter.' In re Virginia Elec. & Power Co., 539 F.2d 357, 366 (4th Cir. 1976). The appellate court noted that the trial judge's interest was analogous to a 'bare expectancy' in property law and concluded that 'Judge Warriner I owned' just what the owner of a bare expectancy has-- nothing at all.' Id. at 367.

Judge Rigtrup also owned nothing. Therefore, he had no financial interest in the case as defined by Canon 3CM(c), and disqualification on this basis was unwarranted.

D. Finally, while Prudential has not raised the issue, we briefly examine whether Judge Rigtrup's disqualification would be warranted under the portion of Canon 3C(l)(c) which calls for disqualification when the judge or a close relative has 'any other interest that could be substantially affected by the outcome of the proceeding . . . . '  The Reporter for the Code of Judicial Conduct interpreted 'any other interest' to mean an economic interest. E. Thode, Reporter's Notes to Code of Judicial Conduct 63-67 (1973). Unlike the term 'financial interest,' 'any other interest' does not require ownership and includes lesser economic interests. At least one trial judge has disqualified himself after finding that 'any other interest' includes the possibility of receiving a $100 rebate on utility payments. Virginia Elec. & Power Co., 407 F. Supp. 324. It could therefore be argued that Judge Rigtrup's potential membership in an alleged class constitutes 'any other interest' and requires disqualification.

Although the term 'any other interest' is usually confined to economic interests, further definition of the exact types of economic interests which fall under the ambit of the term is difficult.

In any event. the interest must be 'substantially affected' to require disqualification. Professor Wright has stated: The concept [of 'any other interest') is necessarily an imprecise one. It has been suggested that it should be read 'to depend on the interaction of two variables: the remoteness of the interest and its extent or degree.' C. Wright, A. Miller, & E. Cooper, 13A Federal Practice and Procedure 3547, at 603 (1984) (footnotes omitted). Another frequently cited article has illustrated the point as follows:

If the interest strongly resembles a direct interest-for example, stock held in a subsidiary (or parent) of the corporate party-any amount should disqualify, just as does any stock held in the party itself. As the interest becomes less direct, such as that in an enterprise carrying on business with the party, only if the extent of the interest is itself substantial can the judge's impartiality reasonably be questioned.
Note, Disqualification of Judges and Justices in Me Federal Courts, 86 Harv. L. Rev. 736, 753 (1973).

Courts which have considered the issue have followed this approach, examining both the nature of the interest and the extent of the interest. In In re Virginia Elec. and Power Co., the Fourth Circuit relied on that approach to hold that a trial judge interest in a possible rebate on utility payments was a minimis interest and that disqualification was not required. 539 F.2d at 368. See also Alaska Oil Co. v. A1aska. 45 Bankr. 358, 361-62 (D. Alaska 1985).

Aetna Life Ins. Co. v. Lavoie. 475 U.S. 813 (1986), is similar in significant respects to this case. In Aetna, the insurer discovered after an opinion had been issued that a justice of the Alabama Supreme Court who was the author of the per curiam opinion had filed two actions against insurers in state court alleging issues nearly identical to those presented to the court on appeal. One of the suits involved only that justice. The other was a class action in which the class apparently included all members of the Alabama Supreme Court. The United States Supreme Court addressed separately the disqualification issue with respect to the individual justice and the other members of the Alabama court, is members of the uncertified class. The Court held that the individual justice should have recused himself because the opinion which he had authored had 'the clear and immediate effect of enhancing both the legal status and the settlement value of his own case.'  475 U.S. at 824. However, the Court refused to hold that the other members of the Alabama court should have been disqualified because of their potential status as members of a class of plaintiffs in a class action lawsuit. The United States Supreme Court stated:

Any interest that they might have had when they passed on the rehearing motion was clearly highly speculative and contingent. At the time, the trial court had not even certified a class, let alone awarded any class relief of a pecuniary nature . . . . At some point. '[t]he biasing influence . . . [will be] too remote and insubstantial.
475 U.S. at 826 (quoting Marshall v. Jerrico, Inc., 446 U.S. 238, 243 (1980)).

In this case, Judge Rigtrup is, at most, a potential member of an alleged class. As such, his position is similar to eight of the nine justices of the Alabama Supreme Court in Aetna who might have found themselves class members. Under those circumstances, the United States Supreme Court refused to find in favor of disqualification, and we do likewise here. If any existing certified classes are expanded to include Judge Rigtrup or any new class were certified that included him. Judge Rigtrup would have to disqualify himself from further proceedings. We assume, of course, that he would not undertake to rule on a motion to certify a class or to expand a class if he could thereby become a party by virtue of his ruling.