Advisory Opinion No. 2015-9 Approved: March 10, 2015 Re: Philip M. Overton QUESTION PRESENTED: The Petitioner, a member of the Westerly Town Council, a municipal elected position, requests an advisory opinion regarding whether the Code of Ethics prohibits his participation in the Town Council’s discussions and decision making relative to litigation involving Westerly Granite Company, LLC, given his insurance agent-client relationship with one of the owners of Westerly Granite Company, LLC. RESPONSE: It is the opinion of the Rhode Island Ethics Commission that the Petitioner, a member of the Westerly Town Council, a municipal election position, is prohibited by the Code of Ethics from participating in the Town Council’s discussions and decision making relative to litigation involving Westerly Granite Company, LLC, given his insurance agent-client relationship with one of the owners of Westerly Granite Company, LLC. The Petitioner is a member of the Westerly Town Council (“Town Council”), having been elected in November 2014. He represents that the Town of Westerly (“Town”) is involved in litigation in Rhode Island Superior Court and Rhode Island Supreme Court relative to a quarrying operation located in Town. He informs that the quarry is owned by Westerly Granite Company, LLC (“Westerly Granite”). He states that Westerly Granite leases the property to COPAR Quarries of Westerly, LLC (“COPAR”). He represents that there are two separate court proceedings: 1) COPAR and Westerly Granite’s appeal of a cease and desist order issued by the Town to cease all quarrying activity, which is presently pending at the Supreme Court; and 2) a private law suit commenced by some residents of the Town against COPAR, Westerly Granite and the Town, which is presently pending in Superior Court. The Petitioner states that, in his private capacity, he is a financial planner and insurance agent in Town. He represents that he previously sold two disability insurance policies to George Comolli, the first in 1997, and the second in 1998. He states that Mr. Comolli is a director and part-owner of Westerly Granite. He informs that he last reviewed the insurance policies with Mr. Comolli seven years ago. However, he represents that he is the insurance agent for these two policies and Mr. Comolli could contact him to review them at any time. He states that he receives a combined total of approximately $15 each year from the insurance company as an ongoing commission for Mr. Comolli’s insurance policies. He represents that he will receive this annual payment from the insurance company until the insurance policies are cancelled or their terms expire. Given the above representations, the Petitioner seeks guidance as to whether he may participate in the Town Council’s discussions and decision making relative to the Westerly Granite/COPAR litigation matters, given his business relationship with Mr. Comolli, a part-owner of Westerly Granite. Under the Code of Ethics, a public official must recuse himself from participation when his business associate or employer, or a person authorized by his business associate or employer, appears or presents evidence or arguments before his state or municipal agency. Commission Regulation 36-14-5002 (“Regulation 5002”); R.I. Gen. Laws § 36-14-5(f). The Code of Ethics also prohibits a public official from using his public office or confidential information received through his public office to obtain financial gain for himself, his family, his business associate, or any business by which he is employed or which he represents. Section 36-14-5(d). Additionally, a public official may not participate in any matter in which he has an interest, financial or otherwise, that is in substantial conflict with the proper discharge of his duties or employment in the public interest. Section 36-14-5(a). A substantial conflict of interest exists if an official has reason to believe or expect that he, any person within his family, a business associate or an employer will derive a direct monetary gain or suffer a direct monetary loss by reason of his official activity. Section 36-14-7(a). A business associate is defined as “a person joined together with another person to achieve a common financial objective.” Section 36-14-2(3). A person is defined as “an individual or a business entity.” Section 36-14-2(7). In determining whether a relationship between two parties constitutes an ongoing business association, the Ethics Commission examines the nature of the association and the scope of the business dealings between the parties and looks to, among other things, whether the parties are conducting ongoing business transactions, have outstanding accounts, or there exists an anticipated future relationship. A.O. 2011-44 (opining that an ongoing accountant-client and landlord-tenant relationship between a North Smithfield Town Council member and an architect constituted a business associate relationship). In contrast, the Commission has found that no business association exists under the Code of Ethics when a prior business relationship between a public official and a private party has ended and there is no ongoing or anticipated future relationship between the parties. In such instances, a public official may participate in matters involving his or her former business associate, assuming no other conflicts are present. See A.O. 2011-9 (opining that an East Providence City Council member was not required to recuse from the City Council’s discussion and decision making relative to litigation involving a business in which her former employer was an interested party, based upon her representations that their employment relationship had ended, she did not anticipate working for that employer again, and she was paid in full for all services rendered). Here, it is clear that the insurance agent-client relationship constitutes a “business associate” relationship as that term is defined in the Code of Ethics, similar to attorney-client, accountant-client and landlord-tenant business associations. See e.g. A.O. 2013-21 (attorney-client); A.O. 2011-44 (accountant-client); A.O. 2013-10 (landlord-tenant). The Petitioner is the insurance agent for Mr. Comolli’s two insurance policies, receiving an annual commission totaling approximately $15 from the insurance company. Therefore, unless and until Mr. Comolli’s insurance policies are cancelled or expire, the Petitioner and Mr. Comolli have an ongoing business relationship. Accordingly, the Petitioner is prohibited by the Code of Ethics from participating in any Town Council matters that will have a direct financial impact on Mr. Comolli, including any litigation matters involving Westerly Granite, of which Mr. Comolli is a part-owner. For all of these reasons, it is the opinion of the Ethics Commission that the Petitioner is prohibited by the Code of Ethics from participating in the Town Council’s discussions and decision making relative to litigation involving Westerly Granite, given his insurance agent-client relationship with Mr. Comolli, a part-owner of Westerly Granite. Notice of recusal shall be filed with the Ethics Commission in accordance with section 36-14-6. This Advisory Opinion is strictly limited to the facts stated herein and relates only to the application of the Rhode Island Code of Ethics. Under the Code of Ethics, advisory opinions are based on the representations made by, or on behalf of, a public official or employee and are not adversarial or investigative proceedings. Finally, this Commission offers no opinion on the effect that any other statute, regulation, ordinance, constitutional provision, charter provision, or canon of professional ethics may have on this situation. Code Citations: § 36-14-2(3) § 36-14-2(7) § 36-14-5(a) § 36-14-5(d) § 36-14-5(f) § 36-14-6 § 36-14-7(a) Commission Regulation 36-14-5002 Related Advisory Opinions: A.O. 2013-21 A.O. 2013-10 A.O. 2011-44 A.O. 2011-9 Keywords: Business Associate Recusal