Jp Morgan Chase Bank, N.a., Res. v. Michiko Stehrenberger, App. ( 2016 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
JPMORGAN CHASE BANK, N.A., No. 73493-8-1
Respondent, DIVISION ONE
~cr-
V.
a
MICHIKO STEHRENBERGER, ) UNPUBLISHED
Appellant. ] FILED: April 25. 2016 V.
Cox, J. - A judge shall disqualify himself or herself from any case in which
the judge's impartiality might reasonably be questioned.1 But the Code of
Judicial Conduct does not require a judge to disqualify himself or herself when
the judge only has a de minimis economic interest in the case.
Here, Michiko Stehrenberger moved for relief under CR 60(b)(11), seeking
to vacate a judgment based on the alleged failure of judges to disqualify
themselves from her case. Because the judges had only de minimis interests in
the case, the trial court properly denied her CR 60(b)(11) motion. Additionally,
the court did not abuse its discretion when it restricted Stehrenberger from filing
additional motions without first obtaining the court's leave. We affirm.
In 2007, Stehrenberger executed a promissory note to Washington
Mutual. In 2008, Washington Mutual failed, and the Federal Deposit Insurance
Corporation placed the bank in receivership. Under a purchase and assumption
1 CJC 2.11(A).
No. 73493-8-1/2
agreement, JPMorgan purchased all of Washington Mutual's assets, including its
loans. In 2010, Stehrenberger defaulted by failing to make payments to
JPMorgan under the terms of her promissory note.
In 2011, JPMorgan commenced this action on the delinquent note.
Stehrenberger answered and asserted numerous defenses and counterclaims.
After extensive discovery by Stehrenberger, JPMorgan moved for summary
judgment on the delinquent note and Stehrenberger's counterclaims. The trial
court granted JPMorgan's motion.
Stehrenberger appealed, arguing that JPMorgan lacked the authority to
enforce the promissory note because it had never physically possessed the
original promissory note. This court disagreed and affirmed the judgment in favor
of JPMorgan.2 Stehrenberger petitioned for review, which the supreme court
denied.
After the supreme court denied review, Stehrenberger moved for relief
from the judgment under CR 60(b)(11). She argued that the trial judge and the
panel of judges on this court that decided her prior appeal had violated the Code
of Judicial Conduct. Specifically, she claimed they failed to disclose financial
interests related to J.P. Morgan Chase and also failed to disqualify themselves
from ruling on her case. She also sought to have a different trial judge decide
her current motion.
2 JPMorgan Chase Bank. N.A. v. Stehrenberger. noted at 180 Wn. App.
1047, 2014 WL 1711765, review denied. 337 P.3d 325 (2014).
No. 73493-8-1/3
The trial judge declined to assign the motion to another judge. He also
denied her motion. The judge determined that her CR 60 motion failed both
procedurally and on its merits. Specifically, the court determined that
Stehrenberger failed to establish non-disclosure of an economic interest in
violation of the Code of Judicial Conduct.
After Stehrenberger filed several additional motions, including motions to
subpoena the trial judge and members of this court who decided her case, the
trial judge entered an order restricting Stehrenberger from filing additional
motions without the court's leave.
Stehrenberger appeals.
DISQUALIFICATION
Stehrenberger argues that the trial judge and members of this court were
disqualified from ruling on her case. We disagree.
Due process, the appearance of fairness doctrine, and the Code of
Judicial Conduct may require that a judge disqualify him or herself from hearing a
case under certain circumstances.3
"The Due Process Clause [of the federal constitution] entitles a person to
an impartial and disinterested tribunal in both civil and criminal cases."4 But the
common law and state codes of judicial conduct generally provide more
3 In re Marriage of Meredith. 148 Wn. App. 887, 903, 201 P.3d 1056(2009).
4 Tatham v. Rogers, 170 Wn. App. 76, 90, 283 P.3d 583 (2012) (quoting
Marshall v. Jerrico. Inc.. 446 U.S. 238, 242, 100 S. Ct. 1610, 64 L. Ed. 2d 182(1980)).
No. 73493-8-1/4
protection than due process requires.5 Thus, courts generally resolve questions
about judicial impartially without using the constitution.6
Under the appearance of fairness doctrine, judges must both be impartial
and appear to be impartial.7 "A judicial proceeding satisfies the appearance of
fairness doctrine only if a reasonably prudent and disinterested person would
conclude that all parties obtained a fair, impartial, and neutral hearing."8 The
claimant must submit proof of actual or perceived bias to support an appearance
of fairness violation.9
Parties may raise an appearance of fairness claim in a CR 60(b)(11)
motion.10 A judge violates the appearance of fairness doctrine by failing to
disqualify himself or herself when the Code of Judicial Conduct requires.11
Washington's Code of Judicial Conduct provides that judges shall
disqualify themselves in "any proceeding in which the judge's impartiality[] might
5]d,
6ld at 92.
7ld at 80.
8 Id. at 96.
9 GMAC v. Everett Chevrolet. Inc.. 179 Wn. App. 126, 154, 317P.3d 1074
(quoting Magana v. Hyundai MotorAm., 141 Wn. App. 495, 523, 170 P.3d 1165(2007)), rev'd on other grounds. 167 Wn.2d 570, 220 P.3d 191 (2009).
10 Camarata v. Kittitas County, 186 Wn. App. 695, 713, 346 P.3d 822(2015).
11 Tatham. 170 Wn. App. at 94.
No. 73493-8-1/5
reasonably be questioned."12 One such circumstance, for example, is where the
judge has "has an economic interest^] in the subject matter in controversy or in a
party to the proceeding."13 But this requirement does not apply to de minimis
interests.14
De minimis interests include:
(1) an interest in the individual holdings within a mutual or common
investment fund; . .. [or]
(3) a deposit in a financial institution or deposits or proprietary
interests the judge may maintain as a member of a mutual savings
association or credit union, or similar proprietary interests.[15]
"A judge should disclose on the record information that the judge believes
the parties or their lawyers might reasonably consider relevant to a possible
motion for disqualification, even if the judge believes there is no basis for
disqualification."16
If a judge disqualified under this rule discloses the economic interest on
the record, the parties may agree that the interest is de minimis and that the
judge is qualified.17
12 CJC 2.11(A).
13 CJC 2.11(A)(3).
14 CJC 2.11 cmt. 6.
15 Id
16 CJC 2.11 cmt. 5.
17 CJC 2.11(C).
No. 73493-8-1/6
As a preliminary matter, the trial judge did not abuse his discretion by
hearing Stehrenberger's CR 60 motion himself rather than transferring it to a
different judge. A trial judge may properly hear a motion that accuses him or her
of "violating the appearance of fairness doctrine by presiding over a trial and
failing to disclose potential conflicts of interest."18
Moreover, the trial judge did not violate the Code of Judicial Conduct.
Stehrenberger identified three interests she argued disqualified the trial judge:
ownership of Washington Mutual stock, a retirement account that owns
JPMorgan securities, and two mortgages/deeds of trust with JPMorgan. These
interests are de minimis and do not require recusal or disclosure.
First, the trial judge's Washington Mutual stock was a de minimis interest
because there was no evidence that this stock became JPMorgan equity when it
purchased Washington Mutual. As explained earlier, Washington Mutual failed
and the FDIC placed it in receivership. Any Washington Mutual stock that the
trial judge owned presumably became worthless at that point. And as the trial
court found, Stehrenberger did not present any evidence to show that this stock,
rather than becoming worthless, became equity in JPMorgan when it purchased
Washington Mutual from the FDIC.
Second, the trial judge's retirement accounts did not require
disqualification in this case. The comments to the Code of Judicial Conduct
establish that "interest[s] in the individual holdings within a mutual or common
18 Tatham. 170 Wn. App. at 88-89.
No. 73493-8-1/7
investment fund" are de minimis.19 Here, the State invests the judge's retirement
plan in "a diversified pool of investments" which includes holdings in JPMorgan.
Accordingly, the trial judge had only an interest in an individual holding within a
common investment fund, which is a de minimis interest.
Finally, the trial judge's mortgages/deeds of trust did not create an
economic interest. Financial deposits, "proprietary interests the judge may
maintain as a member of a mutual savings association or credit union, or similar
proprietary interests," are de minimis interests. To the extent that a
mortgage/deed of trust is a financial interest, it is a similar de minimis interest
under this rule. Stehrenberger fails to cite any authority indicating otherwise.
For similar reasons, the panel of judges on this court who decided her
prior appeal were not required to either disqualify themselves or disclose
economic interests. As explained earlier, any interest in JPMorgan through the
judicial retirement plan is de minimis. Likewise, the appellate judges'
mortgages/deeds of trust did not require recusal.
The only other financial interest Stehrenberger identified was one of the
appellate judge's ownership of a JPMorgan bond. This interest was also de
minimis. That judge's public disclosure forms indicate ownership of a JPMorgan
bond valued between $4,000 and $19,999. Under the circumstances of this
case, this bond was insufficient for that judge's impartiality to "reasonably be
questioned."20 This case involved a $50,000 promissory note on which
19 CJC 2.11 cmt. 6(1).
20 CJC 2.11(A).
No. 73493-8-1/8
Stehrenberger owed $46,598.53. Given JPMorgan's size, there was no
reasonable possibility that an adverse ruling on this case would impact
JPMorgan's finances to such an extent as to put it at risk of default on its bond
obligations. This possibility was so remote that the appellate judge had no more
than a de minimis economic interest.
In sum, neither the trial judge nor the panel of this court violated the Code
of Judicial Conduct.
Under the facts of this case, determining whether the Code of Judicial
Conduct was violated also resolves whether there was either a violation of due
process or the appearance of fairness.
Due process requires recusal only in "extraordinary situation^]."21 Here,
the de minimis financial interests Stehrenberger identifies are not an
extraordinary situation. Rather, the Code of Judicial Conduct "provide[s] more
protection than due process requires" on this issue.22
Similarly, there is no violation of the appearance of fairness doctrine. Just
as the de minimis interests are insufficient to create a situation where the judges'
impartiality is reasonably questioned, these interests are also insufficient to
violate the appearance of fairness doctrine. "[A] reasonably prudent and
21 Caperton v. AT. Massev Coal Co.. Inc.. 556 U.S. 868, 887, 129 S. Ct.
2252, 173 L. Ed. 2d 1208 (2009).
22 Id. at 890.
No. 73493-8-1/9
disinterested person would conclude that all parties obtained a fair, impartial, and
neutral hearing."23
Thus, the trial court properly denied Stehrenberger's CR 60(b)(11) motion.
Because of our resolution on this issue, we decline to reach the parties'
arguments about whether Stehrenberger complied with that rule's procedural
requirements.
Stehrenberger argues that retirement plans with holdings in JPMorgan are
not de minimis interests because the judges' decision could "substantially
affect[]" these interests. Specifically, she argues that the decision in her case
could "impact [JPMorgan's] ability to collect on a bulk of other Washington
Mutual-related assets."
The record does not support this argument. Stehrenberger's argument
was that JPMorgan could not enforce the note because it had never physically
possessed it.24 JPMorgan was required to prove that Washington Mutual had
possessed the note, not transferred the note to anyone else, and that the note's
whereabouts could not be determined.25 Thus, Stehrenberger's case was fact-
intensive and unlikely to affect other assets received from Washington Mutual.
23 Tatham, 170 Wn. App. at 96.
24 JPMorgan Chase Bank. N.A.. 2014 WL 1711765 at *3.
25 Id.No. 73493-8-1/10
Stehrenberger also relies on Tumev v. Ohio26 to argue that the interests in
this case were not de minimis. But that case is distinguishable. In Tumev. a
mayor who adjudicated cases received a $12 salary supplement for convictions,
but no supplement for acquittals.27 Additionally, fines imposed by the mayor
funded the village government, which the mayor ran.28 Thus, in Tumev. the
financial interest was direct—the mayor received the salary supplement only for a
conviction.
In contrast, for the reasons explained earlier, the financial interests in this
case are so attenuated as to be de minimis.
FILING RESTRICTION
Stehrenberger argues that the court abused its discretion by ordering her
not to file additional motions without the court's leave. We disagree.
Courts have discretion to impose "reasonable restrictions on any litigant
who abuses the judicial process."29 Although due process provides a right to
access the courts, this right is not unlimited.30 Courts "'are mindful of the need
for judicial finality and the potential for abuse of this revered system by those who
26 273 U.S. 510, 47 S. Ct. 437, 71 L. Ed. 749 (1927).
27 Tumev. 273 U.S. at 523.
28 Id at 533.
29 In re Marriage of Giordano. 57 Wn. App. 74, 78, 787 P.2d 51 (1990).
30 Yurtis v. Phipps, 143 Wn. App. 680, 694, 181 P.3d 849 (2008).
10
No. 73493-8-1/11
would flood the courts with repetitive, frivolous claims which already have been
adjudicated at least once.'"31
But mere proof of litigiousness does not support imposing filing
restrictions.32 Additionally, trial courts "'must be careful not to issue a more
comprehensive injunction than is necessary to remedy proven abuses, and if
appropriate the court should consider less drastic remedies.'"33
Here, the trial court did not abuse its discretion in imposing filing
restrictions on Stehrenberger. As the court noted, her case had been decided on
the merits and affirmed on appeal. After her appeal, the trial court had denied
her post judgment motions. After this denial, she moved to subpoena the trial
judge and the panel of this court who decided her case on appeal. The trial court
determined that these continued post judgment motions were "without legal or
factual basis [and] constitute^] abuse of the judicial process."
As the court noted, Stehrenberger had received her day in court. And
because JPMorgan had consistently received awards of attorney fees, the trial
court could reasonably conclude that attorney fees were an insufficient sanction
to deter frivolous filings.34 Accordingly, requiring the court's leave to file
additional motions was a reasonable restriction.
31 ]d at 693 (quoting In re Pers. Restraint of LaLande. 30 Wn. App. 402,
405, 634 P.2d 895 (1981)).
32
Id.33 Jd (quoting Whatcom County v. Kane. 31 Wn. App. 250, 253, 640 P.2d
1075(1981)).
34 See Stehrenberger. 2014 WL 1711765 at *6.
11
No. 73493-8-1/12
ATTORNEY FEES
Both parties seek attorney fees on appeal. We conclude that JPMorgan is
entitled to an award of attorney fees on appeal.
Parties in Washington may recover attorney fees if a statute, contract, or
recognized ground of equity authorizes the award.35 Here, the promissory note
provides for attorney fees in an action to enforce the note. Because JPMorgan
prevails, it is entitled to an award of attorney fees on appeal, subject to
compliance with RAP 18.1.
We affirm the superior court's orders and award JPMorgan attorney fees
on appeal, subject to its compliance with RAP 18.1.
CofiLZJ>
WE CONCUR:
^Q^Wflk.
35 LK Operating. LLC v. Collection Grp.. LLC. 181 Wn.2d 117, 123, 330
P.3d 190 (2014).
12