I’m having trouble trying to understand "judge everyone favorably". If I turn a blind eye and I don’t use my mind and say "he’s a tzaddik, he’s correct he only does what’s right, he doesn’t have bad middot", then that means I have to listen to what he tells me and do as he says because if I don’t then did you really judge favorably? By not hanging out with that person and not doing as they say, your actions are showing otherwise, that you really don’t believe you judged. So how can I possibly be commanded to judge favorably but at the same time use my brain to get out of bad situation and not be around people that bring me down?

The Living Torah is very practical and not at all naïve. Although every case is a little different and must be dealt with subjectively, in general, you should surely stay away from one who “brings you down”, but give him the benefit of the doubt and judge him favorably to understand and explain to yourself what brought him to act that way. Very often it’s not his fault, and he is a victim of unfortunate circumstances, but that doesn’t mean you should suffer or lose out morally.