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Court of Appeal:
Judge’s Stock in Party’s Parent Company Requires Recusal
Sixth District Issues Rare Writ of Error Coram Vobis Based on Plaintiff’s Discovery, After Filing Notice of Appeal,
That Judge Who ‘Gutted’ His Case Has Holdings in AT&T; Defendants Are Its Wholly Owned Subsidiaries
By a MetNews Staff Writer
The Sixth District Court of Appeal has issued a writ of error coram vobis, a rarity, based on the discovery by the petitioner, while his appeal was pending, that when a judge adjudicated two causes of action against him, that bench officer owned stock in AT&T Corp., parent of the two defendant companies.
It was undisputed that on Aug. 20, 2018, when Santa Clara Superior Court Judge Theodore C. Zayner granted summary judgment on two causes of action in favor of defendants Cricket Communications Inc. and New Cingular Wireless PCS LLC, he owned stock in AT&T with a market value between $10,001 and $100,000. This was revealed by Zayner on a statement of economic interests (Form 700) for 2018, filed with the Fair Political Practices Commission on Feb. 19, 2019.
The case went to trial before a jury, in the courtroom of another judge, and the plaintiff, attorney Naren Chaganti, lost on the remaining causes of action. Cricket and New Cingular, the real parties in the writ proceeding, acknowledged, however, that Zayner’s ruling “effectively gutted” Chaganti’s case (an action for breach of contract, fraud, and negligence relating to a commercial lease on property in Missouri).
The plaintiff was later to declare that in August 2019, after filing his notice of appeal, he “serendipitously discovered” the judge’s statement of economic interest for 2018.
Issue Defined
Acting Presiding Justice Franklin D. Elia authored Monday’s opinion which directed the Superior Court to vacate the judgment and the order granting summary adjudication. The issue, he said, was whether Zayner was disqualified under Code of Civil Procedure §170.1—which requires recusal where a judge “has a financial interest in… a party to the proceeding”—notwithstanding that AT&T was not itself a party.
The jurist noted that under §170.5, “financial interest” is defined as having “a legal or equitable interest in a party of a fair market value in excess of one thousand five hundred dollars ($1,500)....”
Elia wrote:
“[W]e can only conclude that the Legislature did not intend to exclude from the financial interest provisions a judge’s ownership interest in a party’s parent corporation. We take note of the obvious: The mere fact that the judge’s financial interest is through a parent corporation rather than directly in the wholly owned subsidiary makes no difference with respect to the appearance of bias, which these statutes were intended to address. A construction of the disqualification statutes that depends on corporate organizational structures would be inappropriately restrictive and subvert the Legislature’s intent to create clear, stringent rules that do not depend on evidence of actual bias.”
No Alternative Remedy
The real parties argued that a writ of error coram vobis—based on matters not presented in the trial court and could not have been—may be issued by a court of review only where there is no right of appeal, and Chaganti did have such a right. Elia responded:
“Judge Zayner’s failure to disqualify himself before ruling on the summary adjudication motion cannot be corrected in any manner other than by a writ of error coram vobis. Although real parties claim that Chaganti has a remedy in his appeal from the judgment, this claim is incorrect. The appeal is limited to the appellate record, and the factual basis for Judge Zayner’s disqualification does not appear in the appellate record. No other remedy is available. Hence, Chaganti satisfied this requirement.”
Another requisite for issuing such a writ, the real parties pointed out, is due diligence, asserting that Chaganti could have uncovered Zayner’s ownership of AT&T stock sooner. The contention was apparently based on Zayner’s statement of economic interests for 2017 showing stock ownership in that year, the year prior to the hearing on summary adjudication.
Due Diligence Shown
Focusing on the judge’s statement for 2018, filed the following year, Elia said:
“Chaganti adequately demonstrated that he could not have raised this issue until he discovered the evidence that provided the basis for Judge Zayner’s disqualification, and that evidence did not even exist until after judgment was entered. Since it was Judge Zayner’s duty to disclose this information, it would be improper to place the burden on a party to be constantly on alert for new evidence of a judge’s disqualification. By acting swiftly upon discovering the evidence of Judge Zayner’s disqualifying interest, Chaganti exercised due diligence.”
The case is Chaganti v. Superior Court, 2021 S.O.S. 6800.
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