Advisory Opinion No. 96-73

Re: Charles B. Allott, Esq.


Whether Charles B. Allott, an Alternate Member of the Portsmouth Zoning Board of Review, a municipal appointed official who works in the private sector as a Senior Title Attorney for the Chicago Title Insurance Company, would violate the Code if he participated in matters in which an attorney who is an agent or approved attorney for his company appeared on behalf of an applicant.


It is the opinion of the Rhode Island Ethics Commission that the Code of Ethics will not prohibit the Petitioner, a municipal appointed official from participating in matters in which an agent or approved attorney of Chicago Title Insurance Company appears before the Zoning Board of Review since the Petitioner and the agent/approved attorney are not "business associates" under the Code of Ethics.


1. Facts

Before a real estate closing for either a sale or a refinance, the mortgagee/lender requires the purchaser to obtain a loan title insurance policy. A purchaser also may obtain such a policy. A title insurance policy provides the mortgage holder and/or land owner with indemnification against losses as a result of unidentified defects of title or from loss of a lien priority. The average premium for a title insurance policy is a one-time fee of approximately $130.00.

In this state, as in most states, attorneys act as agents for title insurance companies, such as Chicago Title. More specifically, an attorney can act as a) a full agent, by producing and issuing a policy for the company; or b) an approved attorney, by issuing a certification of title and application for title insurance, thereby permitting Chicago Title to issue a policy directly to a client. For acting as either an agent or approved attorney, an attorney receives a percentage (between fifty to sixty percent) of the total title insurance premium. According to the Petitioner, most agents and approved attorneys in Rhode Island do business with a number of title insurance companies. Although an attorney may suggest a particular title insurance company, the mortgagee/lender has the ultimate authority to select such a company.

The Petitioner is employed as a Senior Title Attorney for the Chicago Title Insurance Company (Chicago Title). As a Senior Title Attorney, the Petitioner is responsible for addressing legal issues concerning the status of real estate titles and the practices of real estate conveyancing in Rhode Island. The Petitioner is paid a "flat salary" and does not receive commissions from the sale of title insurance. The Petitioner represents that he, as a Senior Title Attorney, has no control or involvement with decisions affecting agents and authorized attorneys. The Petitioner now seeks guidance as to whether he may participate in matters in which an agent or approved attorney for Chicago Title appears before the Zoning Board of Review on behalf of clients for various types of zoning relief.

2. Analysis

Under the Code of Ethics, the Petitioner, as an alternate member of the Portsmouth Zoning Board of Review, may not participate in any matter in which he has an interest, financial or otherwise, which is in substantial conflict with the proper discharge of his duties in the public interest. See R.I. Gen. Laws §§ 36-14-5(a), 36-14-7(a). An official will have an interest in substantial conflict with his or her official duties if it is likely that a "direct monetary gain" or a "direct monetary loss" will accrue, by virtue of the public official's activity, to the official, a family member, a business associate, an employer, or any business which the public official represents. See R.I. Gen. Laws § 36-14-7(a). Also, pursuant to R.I. Gen. Laws § 36-14-5(d), the Petitioner is prohibited from using his public position or confidential information received through his position to obtain financial gain, other than that provided by law, for himself, a business associate, or any business by which he is employed or represents. A "business associate" is defined as any individual or entity joined with a public official "to achieve a common financial objective." See R.I. Gen. Laws § 36-14-2(8).

Here, the Petitioner is concerned with whether he will violate the Code if he participates in matters in which agents or authorized attorneys for Chicago Title, his employer, appear before the Zoning Board of Review on behalf of clients of their law practices on unrelated zoning matters. To determine whether the Petitioner has conflict, we must decide whether his relationship with the agents or authorized attorneys creates a business association. In past advisory opinions involving insurance agencies/companies, we have required an official to recuse himself or take other special precautions if a client of his or her insurance agency appeared before his or her board. See A.O. 91-81 (opining that a member of the Middletown Town Council must recuse himself if any client of his insurance agency appeared before the Council); A.O. 90-79 (recommending that the petitioner, a member of the House of Representatives who also served on the Public Buildings Authority, to decline future renewal or insurance business from those businesses or entities which appeared before him in his capacity as a member of the Public Buildings Authority); A.O. 86-46 (advising a member of the Board of Commissioners of the Solid Waste Management Corporation to abstain from any further participation concerning the selection of an engineer for work on the state's solid waste program where a client of his insurance firm stood to gain as a subcontractor if the engineer at issue was awarded the contract). However, we have permitted an official who served in his private capacity as an insurance agent to participate in a matter affecting his client where there was no financial nexus between the action to be taken by the official and the official's commission or income. See A.O. 93-21 (permitting a member of the West Warwick School Committee who was an applicant's insurance agent to consider an application for a victualling license since there was no significant financial nexus between the granting of the license and the insurance agent's commission or income).

After considering this request, the relevant provisions of the Code, and past advisory opinions addressing the scope of a business associate relationship in the insurance industry, we conclude that the Petitioner will not violate the Code of Ethics if he participates in matters involving agents or authorized attorneys for Chicago Title since his relationship with such individuals does not establish a business association. This conclusion is based on the Petitioner's representations that a) he does not receive any commissions from the sale of title insurance, a one time fee of approximately $130; b) he is not involved, as a Senior Title Attorney, with any decisions affecting agents/authorized attorneys; and c) the matters to be considered by the Zoning Board of Review concern unrelated zoning matters on behalf of clients not associated with Chicago Title. Since he is not directly affected financially by the actions of the agents/authorized agents or financially associated with such individuals, the Petitioner does not share a common financial objective with such individuals. Accordingly, it is our opinion that his relationship with the agents/authorized attorneys does not in and of itself create a business association which triggers the prohibitions set forth in R.I. Gen. Laws §§ 36-14-5(a) and 5(d) thereby necessitating recusal. We advise the Petitioner, however, that should the interests of his employer, Chicago Title, appear before the Zoning Board of Review he should follow the notice and recusal provisions set forth in R.I. Gen. Laws § 36-14-6.

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business associate

private employment