CAI amicus brief continues to assert homeowner representation

CAI continues to file amicus curiae briefs before the courts, federal and state, alleging that it is an educational and advocacy organization and that it represents homeowners. It repeatedly asserts in its amicus brief[1] (US Court of Appeals case, Horist v. Sudler,[2] that CAI is an international organization dedicated to providing information, education, resources, and advocacy. The brief asserts that

• “[CAI] will provide important assistance to the Court by presenting a broader view of how the outcome of this case will affect the entire community association industry”;
• “These [information] formats include conducting seminars, online learning, and webinars”;
• “The purpose of CAI is to provide guidance for both the creation and operation of community associations.”

CAI Mission

Nowhere in this 13 page brief do the CAI attorneys — Gabriella R. Comstock and J. Philip Calabrese — state that CAI is a tax exempt, 501(c)6 business trade entity[3]. Understand that a business trade entity cannot have consumers – in this case the HOAs – since this would be a conflict of interest. CAI implies and suggests that its activities are in the best interests of a tax exempt entity, as the IRS states, whose general purpose “must be devoted to improving business conditions.” But HOAs are not businesses and they, too, are organized by charter or articles of incorporation as nonprofits themselves.

CAI’s 1973 Articles, Third states: “The corporation is organized for the following educational and scientific purposes.”

However, its 2018 Bylaws states it purpose is the success of HOAs (emphasis added):

CAI has been founded as a non-profit tax exempt membership association dedicated to advancing the success of community associations and those involved in or serving community associations as set forth in its Articles of Incorporation, including, without limitation, research, education and advocacy regarding community associations.

Adding to the confusion, this purpose differs significantly from its amicus description (emphasis added):

CAI is an international organization dedicated to providing information, education, resources, and advocacy for community association leaders, members, and professionals with the intent of promoting successful communities through effective, responsible governance and management.

CAI Membership categories, revised

Furthermore, way back in 2005 CAI had to abandon HOAs per se as members but added “volunteer members” (now “Homeowner Leaders”), loosely referring to this category as individual homeowners, members, board members, association leaders and “residents who live in a community association.” The Bylaws defined these volunteers as being a member of the HOA, of any governmental board, council, committee, news editor or unspecified volunteer. However, the 2018 CAI Bylaws confuses just who are Leaders and who are volunteers, allowing managers who are also members to be eligible as a Leader, as well as remaining their CAI manager membership, but not as a Volunteer.[4] Manager influence is increased over pure members by the 2018 Bylaws.

The majority of CAI members are its attorneys and managers/firms with “volunteers” having only 2 seats on its 12 member Board of Trustees from the membership categories (the President, President-elect and Immediate Past President are also Trustees).[5] It is quite clear that CAI is extremely biased toward the survival and acceptance of the HOA legal scheme, from whom its members derive their revenues, and that its claim to membership representation is grossly without merit.

Yet the US appellate court in Horist was never told this side of the story about CAI. In my view, this brief violates the Rules of Professional Conduct for attorneys under Rule 42, E.R. 3.3, Candor Toward the Tribunal (ABA rule as well as state Bar rules including Illinois). The amicus presented to the Court promoted CAI: “A contrary holding would adversely affect the interests of CAI members in Illinois and lead to increased costs and other unintended consequences.” The brief also states that “The purpose of CAI is to provide guidance for both the creation and operation of community associations,” which essentially provides for services by CAI member attorneys and HOA managers to the consumers of its member services. It is a conflict of interest that serves CAI best.

And to the point, CAI proclaims that “Each year CAI advocates on behalf of community associations and their residents before legislatures, regulatory bodies, and courts” (emphasis added). This is an outright conflict of interest and an attempt to be the protector of the HOA entity’s interest as well as its members! Using the business management / employee analogy, CAI represents the management faction and not the employee faction. Employee — HOA member – representation must be by means of a true member “union” or professional association.

Court integrity

Although I am not a lawyer and I am not giving legal advice or opinion, it is my understanding that an amicus brief is submitted to each party for approval, and if rejected by a party the Court determines its acceptance. In Horist the Court accepted the highly prejudiced brief in favor of the HOA thereby giving legitimacy to the statements and clear misrepresentations contained therein.  The CAI brief argued the “right to action” issue (see Note 2, Table of Contents, Arguments, I(A)).

If the courts are to maintain their impartiaity and integrity, they must cease giving deference to CAI and its member attorneys, stepping outside the CAI box and getting all the facts. In a democracy the fundamental basis of the law is justice for the people!

 

References

[1] Horist v. Sudler et al, No. 18-2150, 7^th Cir. (IL Oct. 21, 2019).

[2] CAI amicus brief.

[3] See CAI 2018 IRS tax exempt form 990. See also, see IRS, Business Leagues.  “Trade associations and professional associations are business leagues. To be exempt, a business league’s activities must be devoted to improving business conditions of one or more lines of business as distinguished from performing particular services for individual persons.”

[4] CAI 2018 Bylaws, Article VI, Section 3(B).

[5] Id., Article III, Section 3(A)).