Judge says mortgage is not grounds for recusal

Daily Record, The (Baltimore), Aug 26, 2002 by Peter Geier

A federal magistrate judge hearing an $80 million case against Bank of America has rejected a contention that the bank's $110,000 mortgage on his Baltimore County home creates a conflict of interest.

Plaintiffs' lead counsel Rodney R. Sweetland III filed the recusal motion after U.S. Magistrate Judge Paul W. Grimm socked him with personal sanctions in the case, Ausherman et al. v. Bank of America Corp. et al.

On Friday, Grimm declined to recuse himself, citing recently published advisory opinions in the Guide to Judicial Policies and Procedures which address the exact point Sweetland raised.

"[U]nlike stock ownership which is an automatic ground for recusal, debt securities do not constitute a financial interest on the part of the debtor," Grimm wrote.

"Common sense compels this conclusion," he added.

A "routine debt" like a fully secured mortgage cannot be affected by the outcome of litigation involving the mortgagee, Grimm wrote.

"A loss for the bank, even if ruinous, would not extinguish or reduce the obligation of the mortgagor to repay, or undermine the value of the property securing the loan. Similarly, a victory for the bank, regardless of how substantial, affords no possible benefit to the mortgagor," he said.

In any event, Bank of America no longer holds the mortgage, according to a footnote in Friday's opinion.

"In addition, as of August 16, 2002, as part of a routine refinancing transaction initiated before the motion to recuse was filed, the loan underlying the mortgage at issue here was paid in full. The new mortgagee is not a Bank of America entity," Grimm wrote.

Sweetland said that the plaintiffs were "respectful" of Grimm's opinion but will file an objection next week with U.S. District Judge Marvin J. Garbis, to whom the case is assigned.

Sweetland represents two dozen plaintiffs who allege that an employee at a Bank of America subsidiary sold their credit histories to a third party without their authorization. Grimm was given the case just over a year ago to hear and resolve the parties' discovery disputes.

"What [the recusal statute] asks on its face is [that a judge disqualify himself] if anybody is left with a sense or feeling of unease," Sweetland said. "We got that feeling from that 47-page discovery order by Judge Grimm."

In that discovery order, dated July 23, Grimm imposed a sanction on Sweetland of $8,649 for failing to provide complete and nonevasive answers to interrogatories and referred him to the court's disciplinary committee. Sweetland has a motion pending to reconsider this order.

Sweetland said he intends to file an objection to Grimm's order denying his motion for recusal with Garbis "sometime next week."

"On point, there doesn't seem to be any published opinion on the issue that anyone has cited, apparently because there hasn't been one," he said, adding that he "wasn't able to find anything on Westlaw and Lexis that addresses this issue."

Nor had Bank of America's lawyers, using their considerable resources, been able to turn up anything, Sweetland said.

"Judge Grimm is an impresario of legal search. The judge says the issue was recently addressed in the published advisory opinions in the Guide to Judicial Policies and Procedures, but that's not a binding authority, it's a persuasive authority," he said.

"I believe that this is a matter of first impression," Sweetland said.

Ava Lias-Booker, lead counsel for Bank of America, said she was pleased with Grimm's opinion, which she said "speaks for itself." She declined further comment on the case.

Robert Condlin, a professor at the University of Maryland School of Law, said there could be a didactic purpose underlying Grimm's dispositive memorandum.

"I think that when judges issue an opinion like that," Condlin said, "they are showing the lawyers what they expect of them, sending a message that is sometimes too subtle for lawyers and goes over their heads. What they're saying is: 'This is how you should prepare yourself and this is how you should argue,'" Condlin said.

Grimm declined to comment on the case and the specific issue.