Opinion 11-31
March 9-10, 2011
Digest: A full-time judge may continue to receive renewal commissions for insurance policies he/she sold before taking office and may retain and renew his/her existing insurance agent and insurance broker licenses only if they are legally required for this purpose.
Rules: 22 NYCRR part 100 (Preamble); 100.2; 100.2(A); 100.3(E)(1); 100.4(D)(1); 100.4(D)(1)(a)-(c); 100.4(D)(3); 100.4(D)(4); Opinions 05-130(A); 00-03 (Vol. XVIII); 97-09 (Vol. XV); 96-91 (Vol. XV); 96-55 (Vol. XIV); 95-100 (Vol. XIII); 95-12 (Vol. XIII); 93-44 (Vol. XI).
Opinion:
A full-time judge asks whether he/she may retain his/her insurance agent and broker licenses solely for the purpose of receiving renewal commissions for insurance policies he/she sold before taking office. The judge states that, with respect to those policies, he/she is contractually entitled to renewal commissions from the insurance companies “based upon the original sale only,” without his/her further involvement and “requiring no other service or administration of policies.”
A judge must always act to promote public confidence in the judiciary’s integrity and impartiality (see 22 NYCRR 100.2[A]), and may not engage in financial and business dealings that (a) may reasonably be perceived as exploiting the judge’s judicial position; (b) involve the judge with any business, organization or activity that ordinarily will come before the judge; or (c) involve the judge in frequent transactions or continuing business relationships with lawyers or other persons likely to come before the court on which the judge serves (see 22 NYCRR 100.4[D][1][a]-[c]). A full-time judge also is prohibited from serving as an employee or other active participant of any business entity (see 22 NYCRR 100.4[D][3]).1 Finally, a judge must disqualify him/herself in any matter in which his/her impartiality might reasonably be questioned (see 22 NYCRR 100.3[E][1]) but must also manage his/her financial interests “to minimize the number of cases in which the judge is disqualified” (22 NYCRR 100.4[D][4]).
The Committee has not previously addressed whether a full-time judge may hold an insurance agent or broker license. The Committee has previously advised, apparently relying on the predecessors to Sections 100.4(D)(1) and 100.4(D)(3),2 that a full-time judge “may not apply for a real estate broker’s or sales license under any circumstance” (Opinion 95-100 [Vol. XIII]). However, the specific question raised in Opinion 95-100 (Vol. XIII) was a narrow one: whether a judge could “accept a transfer of his spouse’s real estate broker license ... to avoid the spouse’s ‘conflict of interest’” (id.). The Committee advised that such conduct was not permissible (see id.). And, in Opinion 05-130(A), the Committee relied on Opinion 95-100 (Vol. XIII) in advising that a full-time judge may not “retain or renew” a real estate broker’s license once he/she assumes judicial office (see Opinion 05-130[A]).
Here, the judge only wishes to collect renewal commissions for insurance policies the judge sold as an insurance agent or broker prior to assuming the bench. In the Committee’s view, this is analogous to a judge receiving legal fees for legal services performed before the judge assumed the bench, which the Committee has previously advised is permissible (see Opinions 05-130[A]; 00-03 [Vol. XVIII]; 97-09 [Vol. XV]; 96-91 [Vol. XV]; 95-12 [Vol. XIII]; 93-44 [Vol. XI]). It is even permissible for a judge to collect contingency fees that were earned before the judge assumed judicial office (see Opinions 05-130[A]; 96-91 [Vol. XV]; 93-44 [Vol. XI]) as well as legal fees previously earned that were “not payable for ‘one or more years’” (Opinion 95-12 [Vol. XIII]).
Therefore, the inquiring judge also may continue to receive renewal commissions for insurance policies he/she sold prior to taking office and may retain and renew his/her insurance licenses solely for that purpose, but only if the judge is legally required to do so (cf. Opinions 05-130[A]; 00-03 [Vol. XVIII]; 97-09 [Vol. XV]; 96-91 [Vol. XV]; 95-12 [Vol. XIII]; 93-44 [Vol. XI]). In the Committee’s view, retention and renewal of insurance licenses, if legally required to permit receipt of renewal commissions for insurance policies a judge sold prior to assuming the bench, and not to sell or service any insurance policies, does not create any impression that a full-time judge is engaged in impermissible business activities or otherwise create an appearance of impropriety (see 22 NYCRR 100.2). Furthermore, requiring a judge to forego income earned prior to taking office is not reasonable under these circumstances (see 22 NYCRR part 100 [Preamble] [the Rules Governing Judicial Conduct are “rules of reason” to be applied “in the context of all relevant circumstances”]).
Of course, the judge must disqualify him/herself as required (see generally 22 NYCRR 100.3[E][1]; see also Opinion 96-55 [Vol. XIV] [part-time judge who owns an insurance agency should disqualify him/herself from matters involving persons who are holders of policies obtained through the judge’s agency]) and may not continue to maintain his/her licenses and accept renewal commissions if doing so involves the judge with any business, organization, or activity that ordinarily would come before the judge (see 22 NYCRR 100.4[D][1][b]) or involves the judge in frequent transactions or continuing business relationships with persons likely to come before the court on which the judge serves (see 22 NYCRR 100.4[D][1][c]; 22 NYCRR 100.4[D][4]).
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1 For the purposes of this Opinion, the Committee need not take into account the temporary administrative suspension of Rule 100.4(D)(3) as it will not affect the outcome.
2 Former Section 100.5(c)(2) specifically prohibited full-time judges from participating in entities engaged in any form of insurance; the current Rules do not contain this prohibition.