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A judge’s ownership of stock in a parent corporation with a value over $1,500 is a financial interest within the meaning of Code Civ. Proc. § 170.1 and requires disqualification of the judge where the subsidiary is a party to the action

California

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USA

A Judge’s Interest in a Parent Company Disqualifies Them from a Matter in Which a Party is a Wholly-Owned Subsidiary of the Parent Company In Chaganti v. Superior Court, H048373 (Cal.Ct. App. December 27, 2021), the petitioner sought a writ of error coram vobis after discovering that the judge who summarily adjudicated two of his causes of action in a civil lawsuit owned stock in AT&T Corp. The defendants in the action were wholly-owned subsidiaries of AT&T Corp. The petitioner argued that the judge’s AT&T Corp. stock ownership at the time of the adjudication disqualified him under Cal. Code Civ. Proc. § 170.1. A judge is automatically disqualified if they have a legal or equitable interest in a party to the proceeding that exceeds $1,500 Cal. Code Civ. Proc. § 170.1(3)(A) and Cal. Code Civ. Proc. § 170.5 provide that if a judge has a legal or equitable interest in a party that exceeds $1,500, the judge is automatically disqualified. “Legal or equitable interest” applies to a judge’s interest in the parent of a wholly-owned subsidiary party The California Court of Appeal for the Sixth District found that the Legislature’s express reference to a “legal or equitable interest in a party” in Cal. Code Civ. Proc. § 170.5 indicated that the Legislature did not intend for the scope of the financial interest disqualification rule (Cal. Code Civ. Proc. § 170.1) to depend on the nature of any corporate organizational structure. The fact that the judge’s financial interest is in a parent corporation rather than directly in the wholly-owned subsidiary does not change the appearance of judicial bias, which the legislature intended to address with Cal. Code Civ. Proc. §§ 170 – 170.9. Petitioner satisfied all the requirements for obtaining a writ of error coram vobis A writ of error coram cobis is available only where the error could not be corrected in any other manner. In this case, the Judge’s failure to disqualify himself before ruling on the summary adjudication motion could not be corrected in any other manner. Additionally, the petitioner could not have raised this issue until he discovered evidence of the judge’s financial interest in AT&T Corp. and that evidence did not exist until after the judgment was entered. Disposition The Court granted the writ of error coram vobis with the petitioner recovering his costs for the writ proceeding. The Court directed the superior court to vacate the judgment and the order granting summary adjudication.

April 14, 2022
Chaganti v. Superior Court, H048373 (Cal.Ct. App. December 27, 2021)
California Courts