A regional presiding judge recently determined that a Dallas County district judge’s decision to appoint her campaign treasurer as the receiver in a breach of contract dispute she’s presiding over doesn’t merit her recusal.
Judge Ray Wheless denied a motion from Wiley Bros. Management Corporation to recuse Dallas County District Judge Ashley Wysocki in a ruling issued Aug. 11. Judge Wheless reached the decision without setting a hearing on the matter that was referred to him Aug. 9 after Judge Wysocki declined to recuse herself. The recusal motion was filed in response to Judge Wysocki’s appointment of James Stanton, her campaign treasurer, as receiver in the underlying case.
“As far as disqualification, the defendant attempts to argue that Judge Wysocki has acquired direct interest in the subject matter of the case,” Judge Wheless wrote. “This court is unable to decipher what the alleged interest is. The receiver, when paid his fees for his services, is entitled to spend his fees however he chooses. The is no argument that Judge Wysocki is entitled to receive or will be paid any portion of Mr. Stanton’s fees.”
The judge wrote that while in “extreme circumstances political contributions from a party can support a judge’s recusal,” Texas law is clear that “a judge is not subject to recusal because of campaign contributions received from an attorney.”
“And as for the argument that somehow Judge Wysocki and James Stanton are related within the ‘third degree of sanguinity’ there would have to be proof that Judge Wysocki and Mr. Stanton are related by blood,” Judge Wheless wrote. “No such argument is made in the motion for disqualification.”
The plaintiffs in this case are 26 individuals who are members of three limited partnerships that were formed to invest in commercial real estate. The defendant, Wiley Bros., is the general partner of those limited partnerships.
The plaintiffs filed suit Oct. 22, alleging Wiley Bros. had breached its contract and fiduciary duties to the limited partners by “badly” mismanaging the assets of the limited partnership, “including by letting properties fall into disrepair.”
“For example, following tornado in 2019, defendant failed to repair or rehabilitate damaged limited partnership properties,” the lawsuit alleges. “Defendant received at least $5 million in insurance payments to repair these properties. Nevertheless, three years later, these properties lie vacant, blighted, and unsecure. Defendant’s failure to repair and lease these properties has cost the limited partnerships millions of dollars in lost revenue.”
According to court documents, there was a hearing before Judge Wysocki on the issue of who to appoint as receiver where counsel for the plaintiffs presented the names of three attorneys who could do the job, including Stanton.
Counsel for the defendants did not propose the names of any potential receivers, and on appeal argued they had not been “invited” to offer a list of potential receivers.
The lawsuit already has taken a trip to the Fifth Court of Appeals in Dallas. On July 12, Wiley Bros. asked that court for an emergency stay of the appointment of the receiver, which was denied.
In the recusal motion filed Aug. 7, Wiley Bros. alleged Stanton is Judge Wysocki’s “largest political donor” in addition to being her campaign treasurer. Appointing Stanton to the role, Wiley Bros. argued, “questions her impartiality going forward and shows a personal bias to both the subject matter and a party to this case.”
“Indeed, through the pendency of this case, Judge Wysocki’s hand-picked receiver will be recouping significant financial benefits from the entities subject to receivership while serving as one of her top political managers,” Wiley Bros. argued in the motion. “If that were not enough, Stanton is a close ally and friend of plaintiffs’ lead counsel, Trey Cox, who served as Stanton’s campaign treasurer years prior.”
Wiley Bros. is represented by G. Michael Gruber and Brian E. Mason of Greenberg Traurig and Bryan P. Stevens. Stewart H. Thomas and Elizabeth M. Reed of Hallett & Perrin.
The plaintiffs are represented by John T. Cox III and Sydney A. Scott of Gibson Dunn.
The case number is DC-22-14969.