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the nuances vary by state, but a judge is suppose to disqualify himself/herself where they have a business relationship, a financial interest, or a familial relationship with a party or attorney. There is no prohibition against the judge presiding where a friend is a party, but a judge is suppose to disqualify himself/herself where he/she believes there is a substantial doubt as to his or her capacity to be impartial, or where a person aware of the facts might reasonably entertain a doubt that the judge would be able to be impartial.
So, should the judge have disqualified himself or herself? You are the person aware fo the facts, so you would be the one to tell me, but it sounds like the potential need for disqualification was there. Best of luck.
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