Judicial system forces HOA member to defend statute constitutionality

In the good ol’ medieval days the Emperor or King could do no wrong, because he was the law unto himself.  Until, say, 1215 in England where the Magna Carter, written by the nobles against King John of the Robin Hood tale,  placed restrictions on his power.

By the time of the American Revolution, the state representatives distrusted federal power and adopted the separation of powers doctrine whereby each branch could serve as a check on the other branches.  While the legislatures (Congress) would write the laws the judiciary could declare them in violation of the Constitution. The best reasoning I came across for  this was that the legislators were not lawyers and that they could get confused time to time and not fully understand the laws.  Never mind that each state legislature has a Rules Committee with lawyers whose duties are to examine the constitutionality of a bill.

Now come the supreme courts to set them straight and rule on constitutionality.    But, and a big BUT, the judiciary adopted a new doctrine, one that says all approved bills have the presumption of constitutionality.  Goodbye Rules Committees that continue to mislead the public that they serve as a valid check on constitutionality.  A challenge could still made by any public person affected by the new law.

In regard to our area of interest, HOA-LAND, that means the average homeowner or HOA can institute, or defend, a constitutionality challenge with the burden that unconstitutionality must be overwhelmingly made in court.  This what Annette Cohen is currently facing in her defense of legally valid OAH decisions that are enforceable.  (See AZ HOA due process by OAH being challenged once again.)  So the game is rigged against the homeowner who, to preserve her OAH decision, must fight the constitutionality challenge, alone.  But, what about agency and legislature support?

In 2009-10 I was heavily criticizing the failure of the agency and Legislature to file a brief in defense of the HOA – OAH bill.   In the next session the Legislature passed  HB2774, Ch. 105 (2010) making it clear that state officials and entities could not be compelled to intervene and defend statute constitutionality.  I proudly named it “The Take That George” bill.

Note that if she loses, it’s a huge loss for all HOA members in Arizona.

One would think that the legislature would defend its passing a bill into law. Apparently not, when it comes to HOA laws.  By law, an agency is the entity to handle HOA complaints that then seeks “professional” legal help by turning the complaint over to OAH (Office of Administrative Hearings) for adjudication.  One would think it,  now ADRE (real estate department), would defend its process of handling HOA complaints.

As of this writing, there is no court filing of a notice of appearance by the ADRE attorney, the AG, or by the Legislature, which would be required before the AG can file its brief.

 

Illinois court spells out HOA BOD fiduciary duties

First, let me point out to many HOA directors that the HOA is not a social club, but is a binding contractual relationship between the BOD and the members.

BOUCHER v. 111 EAST CHESTNUT CONDOMINIUM ASSOCIATION, INC., 2018 IL App (1st) 162233 (Appellate Court) concerning the fining of a member while withholding material facts.

¶ 35 Directors of a condominium association owe fiduciary duties to unit owners similar to the duties corporate directors owe to shareholders, insofar as the unit owners trust the directors to use the owners’ money for maintenance, repair, and improvements to the building. The unit owners and residents also entrust the board to make decisions on behalf of all members of the association concerning the conduct of association members in and around their homes. . . . The high degree of trust the members must accord to the association imposes on the directors very strict fiduciary duties, particularly with respect to decisions concerning the unit owners’ and residents’ conduct in their home.

¶ 36 Thus, each board member here has strict duties to treat the unit owners “with the utmost candor, rectitude, care, loyalty, and good faith—in fact to treat [them] as well as [he] would treat himself.” . . . . When investigating charges of misconduct against a unit owner, the duty of candor imposes on the board members an obligation “of full, fair, complete, and timely disclosure of material facts.”

¶ 38 The Anderson court found that a condominium association did not properly assess fines upon a unit owner because the association failed to provide the unit owner with an opportunity to be heard in a fair manner. The Anderson court held that before imposing fines, the association had a duty to give the accused unit owner “an opportunity to know the facts on which the agency is asked to act, to cross-examine witnesses and to offer rebuttal evidence.”

¶ 48 The business judgment rule permits a trier of fact to presume that a corporate board made its decisions “on an informed basis, in good faith and in an honest belief that the actions taken are in the best interest of the company.”

¶ 52 While the declaration may limit liability for business decisions made in good faith, it cannot limit liability for violations of the duties of honesty, candor, full disclosure, loyalty, and good faith.

AZ HOA due process by OAH being challenged once again

After 7 years in effect, Arizona’s OAH adjudication of HOA disputes is once more under challenge as an unconstitutional statute, violating the separation of powers doctrine.  Carpenter Hazlewood tried 3 times in 2008 – 2011 and eventually had the old statutes declared unconstitutional.  After the decision, the statutes were changed to accommodate the court’s decision.  (SB 1148, Ch. 185 2011).

The case is CBS-136 HOA v. Cohen, LC 2018-00316 in Maricopa Superior Court.  My fear, as with the earlier cases, no one from the Legislature or DFBLS (now ADRE) or the AG will come to the defense of the statutes.  So, we can expect another defeat with another “in your face” to homeowners —  we don’t really care!

However, this time being too big may work in our favor.  It’s my understanding that if a statute is declared unconstitutional means that it was never law.  That would make the OAH petitions over the past 7 years without effect, or not legal, since no law existed at the time.  It would be like a dirty prosecutor whose cases are now subject to appeal and reexamination to see if they survive scrutiny.  What havoc that would create!

Very interesting!

AZ Rules of Judicial Conduct & Turtle Rock HOA

I thought it would be of general interest for all to know that all states have a code of judicial conduct.  Here are excerpts from the Arizona code as applied to the SC order not to publicize the Turtle Rock HOA appellate opinion, which favored the membership on due process protections.

For more information on Turtle Rock see, AZ Supreme Court Prohibits publication of decision on HOA notice of fines; AZ SC ‘improvident’ decision in Turtle Rock HOA petition; and Turtle Rock CAI brief urged depublication.

In addition, since most people do not understand the meaning of “improvident” as used in the SC’s order and used to justify the order, here’s the highly respected Black’s Law Dictionary definition:

A judgment, decree, rule, Injunction, etc., when given or rendered without adequate consideration by the court, or without proper information as to all the circumstances affecting it, or based upon a mistaken assumption or misleading information or advice, is sometimes said to have been “improvidently” given or issued. (2nd Ed.).

Of or relating to a judgment arrived at by using misleading information or a mistaken assumption.(7th Ed.).

 

Arizona Code of Judicial Conduct

Arizona Rules of the Supreme Court, Rule 81.

(relevant excerpts; “comments” are part of the Rule)

Preamble

An independent, fair, and impartial judiciary is indispensable to our system of justice.

Judges should maintain the dignity of judicial office at all times, and avoid both impropriety and the appearance of impropriety in their professional and personal lives. They should aspire at all times to conduct that ensures the greatest possible public confidence in their independence, impartiality, integrity, and competence.

Terminology

Impropriety” includes conduct that violates the law, court rules, or provisions of this Code, and conduct that undermines a judge’s independence, integrity, or impartiality.

“Judge” means any person who is authorized to perform judicial functions within the Arizona judiciary, including a justice or judge of a court of record.

CANON 1, Rule 1.2

A judge shall act at all times in a manner that promotes public confidence in the independence, integrity, and impartiality of the judiciary, and shall avoid impropriety and the appearance of impropriety.

Comments

  1. Conduct that compromises or appears to compromise the independence, integrity, and impartiality of a judge undermines public confidence in the judiciary.
  2. The test for appearance of impropriety is whether the conduct would create in reasonable minds a perception that the judge violated this code or engaged in other conduct that reflects adversely on the judge’s honesty, impartiality, temperament, or fitness to serve as a judge.

CANON 2, Rule 2.4 External Influences on Judicial Conduct

(C) A judge shall not convey or permit others to convey the impression that any person or organization is in a position to influence the judge.

Comment.  An independent judiciary requires that judges decide cases according to the law and facts, without regard to whether particular laws or litigants are popular or unpopular with the public, the media, government officials, or the judge’s friends or family. Confidence in the judiciary is eroded if judicial decision making is perceived to be subject to inappropriate outside influences.

 

 

Here’s why HOA statutory power to fine must be outlawed

Deborah Goonan does an excellent ‘story telling’ of the events surrounding the Arizona Turtle Rock litigation. It is a story to be spread about all states since the AZ SC acted to prevent its favorable publication for use as precedent. MUST READ!

deborahgoonan's avatarIndependent American Communities

Do we really need or want HOAs to be The Enforcers?

Arizona Constitutional Rights advocate George K. Staropoli recently published a few posts on an important appellate court opinion in Turtle Rock III HOA vs. Lynne Fisher, involving a homeowners,’ condominium, or cooperative association‘s statutory right to impose monetary fines upon members who violate covenants, restrictions, rules, and regulations.

In brief, the homeowner, Fisher, appealed a lower court’s ruling that Turtle Rock HOA was entitled to collect fines and penalties of more than $3,800. Fisher argued that the fines were excessive, that her rule violation did not result in any measurable damage to the associations, and that she was denied due process in the form of proper notice by way of a written schedule of fines to be imposed for specific violations.

While the appellate court upheld the lower court’s order for Fisher to clean up the interior…

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