North Carolina Business Litigation Report

Cruising And Recusing: Motion To Recuse Is Stricken By The North Carolina Business Court

This post is about an Order Striking a Motion for Recusal by the North Carolina Business Court, in J. Freeman Floor Company, LLC v. FreemanThe Motion was stricken because it was procedurally defective, but the factual allegations which the Plaintiff claimed warranted recusal were interesting, as was the way in which Judge Diaz handled those allegations.

The Plaintiff moved to recuse Judge Diaz from hearing the Defendant's Motion for Sanctions.  The argument for recusal ran like this: Plaintiff asserted that (1) Defendant's counsel (Winson) had  been counsel for Carnival Cruise Lines, (2) Carnival Cruise Lines had in the past been represented by Hunton & Williams, (3) Judge Diaz had formerly been an attorney with Hunton & Williams (even at the same time he was a Superior Court Judge, said the Plaintiff) , and (4) Judge Diaz had improperly reopened the case (which had been dismissed) in order to hear the Rule 11 Motion. 

The specific allegations made in the Motion for Recusal were that:

Mr. Winson has close and substantial ties with Hunton & Williams by virtue of his long and substantial relationship with Hunton & Williams' clients Carnival Corporation and Carnival Cruise Line.  Judge Diaz has close and substantial ties with Hunton & Williams due to his long and recent association with Hunton & Williams.  Mr. Winson's substantial ties to Hunton & Williams and Judge Diaz's substantial ties to Hunton & Williams creates a conflict of interest which Plaintiffs in good faith believe would prevent Judge Diaz from being fair and impartial to the Plaintiffs with regard to Mr. Winson's Rule 11 motion which was purposefully set before Judge Diaz in a closed case file which had to be re-opened in order to bring said motion before Judge Diaz, despite the fact that Mr. Winson could have filed the Rule 11 motion in the new case file which would not have been heard by Judge Diaz.  Thereafter, Mr. Winson removed the new case file to business court and purposefully requested that Judge Diaz be assigned to the case.  For these reasons, Plaintiffs in good faith do not believe that they will receive a fair and impartial decision with regard to Mr. Winson's Rule 11 motion.

The Motion to Recuse further alleged that Judge Diaz, who has been a Superior Court Judge since 2001, had been appearing in Court for Hunton & Williams clients as recently as 2006.  It referenced as support for this assertion several federal court opinions decided between 2003 and 2006 in which Judge Diaz was listed as counsel of record along with another Hunton & Williams attorney. (The Plaintiff was right about Judge Diaz being listed as counsel in those cases, but they all were filed before Judge Diaz took the bench).

The Plaintiff claimed that as a result of these facts there was an appearance of a "special relationship between Mr. Winson and Judge Diaz," and that this "would tend to give the appearance of impropriety." 

Judge Diaz didn't get to the merits of the Motion in his Order, but instead struck the Motion because it was filed without a brief, in violation of Business Court Rule 15.2.  He noted that the Rule violation would ordinarily result in a summary denial of the motion, but gave the Plaintiff ten days to refile its Motion (with a Brief).  The ten days have run out, and the Motion hasn't been refiled.

That's probably because notwithstanding the striking of the Motion, Judge Diaz gave the Plaintiff a direct response to its assertions showing that they didn't have any basis. The highlights are as follows:

  • With regard to the allegations that he had been practicing law while a Judge, Judge Diaz said "[s]ince taking the oath of office as a superior court judge in November 2001, I have not practiced law, whether with my former firm Hunton & Williams, LLP or any other firm. Indeed, such activity would be patently inconsistent with my oath as a judge and would also violate the North Carolina Code of Judicial Conduct. See N.C. Code of Judicial Conduct, Canon 5(F) (“Practice of law. A judge should not practice law.”)."
  • With regard to the allegations that Hunton & Williams had represented Carnival, Judge Diaz stated that was "news to me," and that "to the best of my knowledge and recollection, I never represented Carnival . . . during my tenure at H&W."
  • On whether he had a relationship with Carnival's former General Counsel, Judge Diaz said that he "had never met Mr. Winson during my tenure at H&W" and that the first time he had encountered him was by telephone when Winson was in Court on another Business Court case.
  • On the point of whether it was proper to reopen the case to hear the Rule 11 Motion, Judge Diaz observed that "the law is clear that a trial court retains jurisdiction to hear a motion filed pursuant to Rule 11 of the North Carolina Rules of Civil Procedure, even after the case is dismissed."  

The picture at the top is of one of Carnival's fleet of cruise ships, the Carnival Fantasy.

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Mack Sperling
Brooks Pierce, LLP
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