Because a visiting judge used a subjective, instead of objective, legal standard in deciding a disqualification and recusal motion, an Austin lawyer convicted of theft from the Pedernales Electric Cooperative will get a second chance to argue that the trial judge shouldn't have presided over his case.
The 3rd Court of Appeals has abated the appeal filed by former Clark, Thomas & Winters shareholder Walter Demond and remanded the case. The Austin appellate court instructed the visiting judge, Senior Judge Bert Richardson, to use a different legal standard during a new disqualification and recusal hearing regarding 424th District Judge Daniel H. Mills.
"The record does not clearly establish as a matter of law that Judge Mills should or should not have been recused. Furthermore, Judge Richardson has not considered or determined whether a reasonable person would doubt Judge Mills's impartiality," says the Aug. 27 opinion in Demond v. State.
If Richardson finds at the hearing that Mills should have been disqualified or recused, then Demond's conviction would be void.
Gibson, Dunn & Crutcher partner Jim Ho, who represents Demond, says he's happy with the decision.
"We believe these convictions are fundamentally flawed for the simple reason that it is irrational to send someone to prison for using property with the owner's consent," says Ho.
State's attorney Dustin Howell, an assistant solicitor general within the Texas Office of the Attorney General, didn't return a telephone call seeking comment. OAG spokesman Tom Kelley declines comment and writes in an email that the new hearing may happen in early November.
The 3rd Court's opinion explains that Demond was convicted of misapplication of fiduciary property, theft and money laundering. He was sentenced to 10 years' imprisonment for each offense, but the sentences were suspended, and Demond was placed on community supervision.
"The State alleged that between November 1996 and March 2007, Bennie Fuelberg, the general manager of the Pedernales Electric Cooperative (PEC), conspired with Demond to funnel over $200,000 in PEC funds through Demond's law firm" to others, says the Aug. 27 Demond opinion. [See " Clark, Thomas & Winters Agrees to Pay Millions to Former Client," Texas Lawyer, June 29, 2009, page 1.]
The 3rd Court notes that Demond's appeal raises some identical issues as an appeal in another case, Fuelberg v. State.
The Fuelberg opinion explains that, before trial, both Fuelberg and Demond filed motions to disqualify or recuse Mills, alleging that, as a PEC member, Mills had a "financial interest" and was a "putative victim" in the case. Mills declined to recuse himself, and Richardson denied the motions.
Fuelberg was convicted of misapplication of fiduciary property, theft and money laundering. Howell represents the state in Fuelberg's and Demond's appeals.
David Botsford, who represents Fuelberg on appeal, says he thinks Mills should have been recused and disqualified, partially because he alleges that Mills was a victim of Fuelberg's alleged offense.
"I will say that to the day I die, just because a judge should not sit in a case where his impartiality could reasonably be questioned by a member of the public," explains Botsford.
He adds, "We think Judge Mills made some very serious evidentiary miscues at trial that allowed in hearsay and violated Mr. Fuelberg's confrontation rights, and, absent those trial errors, a jury would not have convicted him."
The 3rd Court noted that the case involves an issue of first impression: "Does a judge's participation in a member-owned utility cooperative disqualify him from hearing cases that might affect the cooperative financially?"
The Fuelberg opinion explains that the PEC is a member-owned electric cooperative that operates as a nonprofit. The PEC collects money from members to pay its business expenses, and it returns excess revenues to members. The court ruled that the PEC's distributions to members "function as a refund to members for previous overcharges," and they "in no way equate to an ownership interest in the PEC."
The 3rd Court decided Mills didn't have a "disqualifying pecuniary interest" and that Richardson didn't err when he denied the motions on that basis.
However, the 3rd Court found that Richardson hadn't determined whether Mills was an injured party or whether a reasonable person would doubt his impartiality. Instead, Richardson "applied a subjective standard to determine whether Judge Mills was in fact impartial, relying solely on Judge Mills's own subjective state of mind and beliefs concerning whether he could be fair and impartial."
Instead, Richardson should have applied "an objective reasonable-person standard," says the Fuelberg opinion, remanding the case for a hearing and decision based on that standard.
In the Demond opinion, the 3rd Court reached the same conclusions based on "the reasons stated in our opinion in Fuelberg."
3rd Court Justice Scott K. Field wrote both opinions. The panel for both cases included Field, Chief Justice Woodie Jones and Justice Bob Pemberton.