Category: Opinion

 In its August 31, 2009 email, CAI Arizona proudly announced (emphasis added)

 “The Central Arizona Chapter, in conjunction with The Leadership Centre, is hosting a Municipal Officials HOA Conference.”  

 This email goes on to say,

 Join us for a panel discussion with your local mayors and city officials focusing on how Arizona HOAs can work better with your city and what services cities offer HOAs, including dispute resolution and assisting in municipal infractions (i.e. street parking,barking dogs, trespassing) in HOAs.

 Represented cities will include: Chandler, Gilbert, Mesa, Paradise Valley & Scottsdale . . . Avondale, Buckeye, Glendale, Goodyear, Surprise-Sun City & Peoria.

What is CAI trying to accomplish?  It appears that CAI is seeking a public-private co-operation in support of the private, contractual, authoritarian HOA form of government by democratic public government!  It is astonishing that we see 11 municipalities taking part in this program to better provide “dispute resolution” and dealing with “municipal infractions.”   Talk about getting government off our backs!   Here CAI is seeking a synergy with autocratic forms of government within the democratic municipality.

An examination of the commonplace HOA “constitution” reveals a fixation on a corporate objective of maintaining property values and a complete absence of protections of members rights, as US citizens.  There is no HOA Bill of Rights, or no Declaration of Rights as found state constitutions.  And, given the widespread support and backing for the strict enforcement of the covenants by vested corporate interests, namely the members of the national business trade organization known as CAI, the lawyers and management firms, one is easily led to the conclusion that the HOA is closer to fascism than to a democratic form of government. 

Benito Mussolini, the Italian dictator who was the founder of fascism in 1922, wrote:

Against individualism, the Fascist conception is for the State; and it is for the individual in so far as he coincides with the State…. Liberalism denied the State in the interests of the particular individual; Fascism reaffirms the State as the true reality of the individual.   Benito Mussolini, Fascism:  Fundamental Ideas

This quote can be read as,

Against individual member rights, the homeowner association concept is for the HOA; and it is for the individual in so far as he conforms to the covenants, bylaws and rules and regulations of the HOA . . . the free expression of individual rights and freedoms rejected the HOA in the interest of the individual; the homeowner association concept reaffirms the HOA as the true objective of member obligations and duties.

Aren’t these municipalities aware of the anti-constitutional position of CAI?  That it opposes the application of the Constitution to HOA governance!  That CAI-AZ fought to deny homeowners bona fide dispute resolution, without any cost to the municipality, by the state’s Office of Administrative Hearings? 

And now CAI appears to seeking police powers for the HOA to enforce public ordinances, while having opposed legislation that public streets are to be controlled by public government ordinances and not the private HOA covenants! 

 Can a group, of private persons opt to write a new state constitution and laws without approval, or the acquiescence by the legislature delegating such powers to the HOA?  I think not! 

 What is motivating these municipalities??  Surely not adherence to the state constitution.

 I am reminded of , “Beware the Jabberwock, my son”

Homeowners associations fail to follow solid financial procedures.

AZ Capitol Times, States draw down rainy day funds (excerpt)

(http://azcapitoltimes.com/blog/2009/08/27/states-draw-down-rainy-day-funds/) By Stateline.org Published: August 27, 2009 at 8:01 am

Faced with historic revenue drops, lawmakers in states across the country tapped rainy day funds in fiscal years 2009 and 2010 . . . .

Nationally, this spending [by state governments] comes on the heels of heavy use of rainy day funds in fiscal 2009, when several states pared down their reserves by billions of dollars.

The recent eagerness to draw down reserves has rekindled a long-running debate in states about how much to put into these funds, which in practice exist in all states except Arkansas, Kansas and Montana.

Not all such funds are called “rainy day funds.” Minnesota’s is called a “budget reserve fund,” Louisiana’s a “budget stabilization fund,” and in New Jersey, such reserves are simply referred to as the budget surplus. States typically build up the funds during flush years to prepare for lean years.

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Now, as I’ve argued over and over again, responsible and prudent HOA boards should have established these reserves many years ago. In the corporate world, the equivalent of public “rainy day funds” is referred to as “contingency for bad debts” as described by standard CPA procedures.

Why haven’t they been adopted? Because this prudent managerial act is viewed as a negative, and no HOA negatives are permitted to be spoken, seen or heard Not even by the national lobbying organization claiming to be the educational expert for HOAs, CAI, that uses this contingency in its own corporate financial statements.

I wonder if HOAs were held accountable to the state and were required to maintain reserves under the law, and the laws were effectively enforced, would HOAs be viewed by pro-HOA supporters as, “We got a good thing here.”

 

Wake up Legislatures! You’ve been had! Stop blindly supporting HOAs!

Do CAI member attorneys and lobbyists  Carpenter and Hazelwood qualify for appointment as Judge Pro Tems?

 Carpenter Hazelwood partners, Carpenter and Hazelwood, were appointed as Maricopa County, AZ Superior Court Judge Pro Tems by Presiding Judge,  MUNDELL, Barbara Rodriguez . 

 Recall that CAI, (Carpenter was the CAI chapter’s lobbying co-chair) opposed legislation to level the litigation playing field, SB1162 and HB2724 (2008), bills that would have imposed fines on abuse of process by attorneys at OAH or in the courts.   SB1162 and HB2724 (both defeated, and both attempted to provide effective levels of due process protections for homeowners in terms of fair adjudication by an independent tribunal, OAH) that contained the same litigation reforms as well as a prohibition on HOA “ex post facto” amendments.   Ex post facto laws are prohibited by the Constitution, which is not applicable to HOA governments. This bill would have brought HOA justice into line with the Constitution. 

 And, after 2 years of litigation,   Nancy Waugaman wins her legal battle that sustains AZ Office of Administrative Hearings (OAH) findings of board error that was based on CAI attorney advice.     From the decision,

 First, the Association’s interpretation renders meaningless the phrase “total voting power” or, at minimum, construes it to mean “votes cost by those present.” That reading is unsupported by both the plain language of the statute and the Association’s actions . . . .

 The original 2007 OAH findings in Waugaman reveals that the board acted on their attorney’s advice: “Following the discussion in executive session, the Board, upon recommendation of its attorneys, passed a Resolution interpreting . . . .”

 The persistent role of the  Carpenter Hazelwood law firm in pursuing these unconstitutionality challenges raised the question of who were they fighting for?  The two separate HOAs?  Or, all the HOAs in Arizona?  This objective of “all HOAs” reflects the interests of the CAI national lobbying trade group: that of keeping constitutional protections away from homeowners in HOAs. 

 “In the context of community associations, the unwise extension of constitutional rights to the use of private property by members . . . .”  (CAI amicus curiae brief, p. 19, to NJ appellate court in Twin Rivers HOA free speech case).

 Will these CAI member attorneys best serve the interests of the judicial system, of justice, and the people of Arizona?  Let Presiding Judge Mundell know how you feel!  (See Waugaman-Carpenter).

  For more information . . .

 the complete document sent to Judge Mundell –  Waugaman-Carpenter

 The initial Waugaman and Merrit v. Phoenix Townhouse filings, with links at

The State of Arizona will not protect buyers of HOA homes!

 With respect to the default ruling in Merrit (in chronologial order):

Intervenor files for justice in OAH constitutionality case

Intervenor motion denied in OAH fair trial constitutionality case

New facts in HOA constitutionality due process case

Judicial integrity: support Constitutional protections or the New America of HOAs

Actions by AZ judge in HOA constitutionality case found ethical

 

Protecting HOAs and protecting individual liberties: Two state supreme court holdings

Addendum  A.   Cohen v. Kite Hill Community Assn, 191 Cal. Rptr. 209 (1983)

 It is interesting to note that even in California the rights and freedoms of individual owners in associations were placed on a higher level than in the Villa holding (see above post link), some 21 years later.  What changed?  The state laws governing HOAs were not established as a separate set of laws in 1983, and recourse was made to corporate and other civil code statutes.  That changed just 3 years later with the adoption of the Davis-Stirling Act in 1986.

 In reading Cohen, there is only one reference to state laws, and that pertained to contract law, Civ. Code § 1668.  Otherwise, legal doctrine and contract law were applied with respect to the question of the valid enforcement of board duties and obligations under the CC&Rs.   

The homeowner complaint read:

 Plaintiffs’ complaint alleged that the Association and its architectural committee, in approving the [homeowner’s] construction plans, had: (1) breached the covenants contained in the Declaration; (2) breached their fiduciary duty owed to plaintiffs; (3) breached their duty of good faith and fair dealing; (4) been negligent; and (5) committed “willful misconduct or other intentional conduct.”

 The court reasoned,

 It is a settled rule of law that homeowners’ associations must exercise their authority to approve or disapprove an individual homeowner’s construction or improvement plans in conformity with the declaration of covenants and restrictions, and in good faith. . . . [T]he power to approve plans … must not be exercised capriciously or arbitrarily.'”

 In a thoughtful article on Concepts of Liability in the Development and Administration of Condominium and Home Owners Associations (1976) 12 Wake Forest Law Review at page 915, the authors, Hyatt and Rhoads, note the increasingly “quasi-governmental” nature of the responsibilities of such associations. . . . As a ‘mini-government,’ the association provides to its members, in almost every case . . .

 With power, of course, comes the potential for abuse. Therefore, the Association must be held to a high standard of responsibility: “The business and governmental aspects of the association and the association’s relationship to its members clearly give rise to a special sense of responsibility upon the officers and directors…. This special responsibility is manifested in the requirements of fiduciary duties and the requirements of due process, equal protection, and fair dealing.”

 And to the point of the matter,

 Thus, like any government, the Association must balance individual interests against the general welfare. No decision of the Committee could possibly be deemed “arbitrary” as to an individual homeowner if it were based upon a superseding duty to the community at large. The Association’s duty of good faith subsumes an obligation to reconcile in a fair and equitable way the interests of the community with the interests of the individuals residing therein.

 Although the Declaration vests “sole discretion” in the Committee and allows for reasonable variances, their decisions must be “in keeping with the general plan for the improvement and development of the Project,” and of course, must be made in good faith and not be arbitrary.

 And with respect to CC&Rs verbiage to hold the board harmless,

 The law has traditionally viewed with disfavor attempts to secure insulation from one’s own negligence or wilful [sic] misconduct, and such provisions are strictly construed against the person relying on them, particularly where such person is their author.

 Furthermore, it is the express statutory policy of this state that “[a]ll contracts which have for their object, directly or indirectly, to exempt anyone from the responsibility for his own fraud or willful injury to the person or property of another, or violation of law, whether willful or negligent, are against the policy of the law.” (Civ. Code, § 1668.)

Once again we see the negative effect on individual liberties within the State of California as a result of pro-HOA statutes. Notice how the tone has changed between Villa and Cohen.