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Financial Activities - Ex. 1 - Activity 1

A judge-elect considers her commitments - owning rental properties

Summary

Although New Mexico is among the minority of states that allows its judges to engage in business activities while serving on the bench, there are several significant restrictions on such activity. Under NMRA 21-500 D, a judge may not engage in financial and business dealings that may reasonably be perceived to exploit the judge's judicial position, or that are likely to involve the judge in frequent transactions or continuing business relationships with those lawyers or other persons likely to come before the court on which the judge serves.

Exercises

Sonya Ortiz celebrates her election as a magistrate judge. She has been a successful and respected businesswoman and volunteer in East Fork for many years and is eager to repay her community through this important public service.

Upon her election, Judge-elect Ortiz wants to examine her financial commitments to determine whether any of them would pose ethical problems.

Which of these activities might pose an ethical problem for Judge Ortiz?

For each activity that creates an ethical problem, try to pick the correct explanation (more than one answer may be correct).

Activity 1: She is a partner, with a long-time business associate, in ownership of a small apartment complex and a commercial building renting to lawyers and bail bondsmen.

Does Judge Ortiz have an ethical problem over the rental property?

1. Yes, because she cannot own rental property.
A full-time judge may only manage and participate in a business that is either closely held by the judge or a member of the judge’s family, or a business entity primarily engaged in investment of the financial resources of the judge or members of the judge’s family, NMRA 21-500 (D) (3). Thus Judge Ortiz may not continue as a partner with her business associate, a non-family member, in joint ownership of the rental property. The judge must sell her partnership interest as soon as reasonably possible but within one year of taking the bench at the latest. NMRA 21-901 (E) and Commentary. Judge Ortiz also would have the option of trying to buy out her partner and become sole owner, which would not be a conflict under NMRA 21-500 (D) (3), except for the limitation explained in the next paragraph. The commercial real estate presents a problem in that the tenants are professionally involved with the courts, and might appear in front of the judge. It may appear as if the judge is using her judicial power to keep them as her tenants, since they may be afraid to find other quarters if it would upset the judge. NMRA 21-500 (D) (1)(b). Even a part-time municipal judge or a probate judge would have a problem with the commercial real estate because of the apparent conflict of interest described above. NMRA 21-901 (B) (1) (C) (d) (i). But a part-time judge would not be subject to the rule against owning a business jointly with a non-family member. See NMRA 21-901 (C) (1) (d).
2. Yes, because she cannot own rental property jointly with a non-family member.
A full-time judge may only manage and participate in a business that is either closely held by the judge or a member of the judge’s family, or a business entity primarily engaged in investment of the financial resources of the judge or members of the judge’s family, NMRA 21-500 (D) (3). Thus Judge Ortiz may not continue as a partner with her business associate, a non-family member, in joint ownership of the rental property. The judge must sell her partnership interest as soon as reasonably possible but within one year of taking the bench at the latest. NMRA 21-901 (E) and Commentary. Judge Ortiz also would have the option of trying to buy out her partner and become sole owner, which would not be a conflict under NMRA 21-500 (D) (3), except for the limitation explained in the next paragraph. The commercial real estate presents a problem in that the tenants are professionally involved with the courts, and might appear in front of the judge. It may appear as if the judge is using her judicial power to keep them as her tenants, since they may be afraid to find other quarters if it would upset the judge. NMRA 21-500 (D) (1)(b). Even a part-time municipal judge or a probate judge would have a problem with the commercial real estate because of the apparent conflict of interest described above. NMRA 21-901 (B) (1) (C) (d) (i). But a part-time judge would not be subject to the rule against owning a business jointly with a non-family member. See NMRA 21-901 (C) (1) (d).
3. Yes, because she may not rent to lawyers and bail bondsmen.
A full-time judge may only manage and participate in a business that is either closely held by the judge or a member of the judge’s family, or a business entity primarily engaged in investment of the financial resources of the judge or members of the judge’s family, NMRA 21-500 (D) (3). Thus Judge Ortiz may not continue as a partner with her business associate, a non-family member, in joint ownership of the rental property. The judge must sell her partnership interest as soon as reasonably possible but within one year of taking the bench at the latest. NMRA 21-901 (E) and Commentary. Judge Ortiz also would have the option of trying to buy out her partner and become sole owner, which would not be a conflict under NMRA 21-500 (D) (3), except for the limitation explained in the next paragraph. The commercial real estate presents a problem in that the tenants are professionally involved with the courts, and might appear in front of the judge. It may appear as if the judge is using her judicial power to keep them as her tenants, since they may be afraid to find other quarters if it would upset the judge. NMRA 21-500 (D) (1)(b). Even a part-time municipal judge or a probate judge would have a problem with the commercial real estate because of the apparent conflict of interest described above. NMRA 21-901 (B) (1) (C) (d) (i). But a part-time judge would not be subject to the rule against owning a business jointly with a non-family member. See NMRA 21-901 (C) (1) (d).
4. There is no ethical problem with any of the rental property.
A full-time judge may only manage and participate in a business that is either closely held by the judge or a member of the judge’s family, or a business entity primarily engaged in investment of the financial resources of the judge or members of the judge’s family, NMRA 21-500 (D) (3). Thus Judge Ortiz may not continue as a partner with her business associate, a non-family member, in joint ownership of the rental property. The judge must sell her partnership interest as soon as reasonably possible but within one year of taking the bench at the latest. NMRA 21-901 (E) and Commentary. Judge Ortiz also would have the option of trying to buy out her partner and become sole owner, which would not be a conflict under NMRA 21-500 (D) (3), except for the limitation explained in the next paragraph. The commercial real estate presents a problem in that the tenants are professionally involved with the courts, and might appear in front of the judge. It may appear as if the judge is using her judicial power to keep them as her tenants, since they may be afraid to find other quarters if it would upset the judge. NMRA 21-500 (D) (1)(b). Even a part-time municipal judge or a probate judge would have a problem with the commercial real estate because of the apparent conflict of interest described above. NMRA 21-901 (B) (1) (C) (d) (i). But a part-time judge would not be subject to the rule against owning a business jointly with a non-family member. See NMRA 21-901 (C) (1) (d).