Supreme Court activism makes new law, just like in HOA cases

The following is relevant to many, many decisions, views and mindsets of the courts in HOA cases. I have encountered such “howevers” and “not applicables” in many HOA decisions. Here is a relevant excerpt of Chief Justice Roberts’ justification for the Court’s Obamacare decision.  My comments are in square brackets “[]”.

“Petitioners’ arguments about the plain meaning of Section 36B are strong. But while the meaning of the phrase “an Exchange established by the State under may seem plain “when viewed in isola­tion,’ such a reading turns out to be ‘untenable in light of the statute as a whole.  In this instance, the context and structure of the Act compel us to depart from what would otherwise be the most natural reading of the pertinent statutory phrase.

“Reliance on context and structure in statutory interpre­tation is a ‘subtle business, calling for great wariness lest what professes to be mere rendering becomes creation and attempted interpretation of legislation becomes legislation itself.’  For the reasons we have given, however, such reliance is appropriate in this case, and leads us to conclude that Section 36B allows tax credits for insurance purchased on any Exchange created under the Act. [Regardless of federal or state]. Those credits are necessary for the Federal Exchanges to function like their State Exchange counterparts, and to avoid the type of calamitous result that Congress plainly meant to avoid.  [The end justifies the means].

“Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them. If at all possible, we must interpret the Act in a way that is con­sistent with the former, and avoids the latter. Section 36B can fairly be read consistent with what we see as Congress’s plan, and that is the reading we adopt.”

The dissenter Justices wrote:

“The Court holds that when the Patient Protection and Affordable Care Act says ‘Exchange established by the State’ it means ‘Exchange established by the State or the Federal Government.’ That is of course quite absurd, and the Court’s 21 pages of explanation make it no less so.”

What we have here is the making of new law by the majority of Justices, people, choosing to ignore long held legal doctrine on interpreting laws.  We are no longer under the rule of law, but under the rule of man.

I recall Justice Jackson’s analysis of the finality of Supreme Court decisions.

In the 1953 Supreme Court case, Brown v. Allen (334 US 443), Justice Robert Jackson commented,

“We are not final because we are infallible, but we are infallible because we are final.”  

(Jackson was the head of the US delegation to the Nuremburg Trials of Nazi war crimes).

 

Regulatory agency enforcement of HOA violations

There has always been a secondary mechanism for enforcing civil law violations that homeowners have been told very little about. In fact, the national ‘educational’ business trade organization has fought against this method from time immoral.

The enforcement of civil law can be found in such state (and federal) regulatory agencies as real estate, banking, medical, registers of contractors, bars, hair salons, etc. Except for HOAs.  Why not?

While state legislatures have intentionally avoided explicit delegation of authority to HOAs, their abdication of their constitutional responsibilities by a do nothing, hands-off attitude is an implicit delegation of authority. This failure to protect HOA members has caused much harm and injury to   individual homeowners, and has caused much divisiveness and disharmony within HOA communities. The various state HOA acts are devoid of any effective supervision, control, or oversight and should be declared unconstitutional.  A regulatory HOA agency solves both the constitutional and civil enforcement defects.

Read the complete paper at HOA regulatory enforcement.

See Model AZ regulatory agency bill and AZ Model regulatory HOA agency fact sheet.

AZ Model regulatory HOA agency fact sheet

Explanation

This proposed bill was adapted from Florida’s SB 1348 (2015) and specifically tailored for Arizona. (It was initially proposed in 2008 by Florida’s Cyber Citizens for Justice, http://ccfj.net).  Its objectives are the creation of a state agency called the Department of Homeowners Associations headed by a Commissioner, and the creation of an HOA advisory board to make recommendations to the Commissioner.  It was modeled along the lines of the AZ Department of Real Estate.

Understand that the bill must specify in detail the powers, authority and procedures to follow in conformance with the law.

The format of the bill follows generally accepted standards for bill drafting.  It uses CAPS for new words and strike-outs for deletes.  These are the important provisions of the bill.  The remainder, in normal formatting, is presented as unchanged wording that must appear as required by bill drafting standards.  Generally, they may be ignored. Each part of the statutes is introduced with “Section n,” not part of the statute, followed by the title of the actual statute being changed, such as “Section 33-1806.” A descriptive, either a “is repealed” or “is added”  in total, or  “is amended” phrase follows. Changes are then presented along with the required unchanged wording of the section.

Adapting to other states. The areas to focus on in order to understand the proposed agency are those, as mentioned above, in CAPS and strike-outs.  They may be incorporated into the statutes of other states as is.  However, no complex bill is without links or references to other statutory sections that relate and bear directly on the validity of the new agency.  These ‘links’ would need to be modified and adjusted, most likely extensively, if the bill is to be introduced outside Arizona.  It requires someone with sufficient understanding of bill formatting and who can work with legislative staff to assist in making these necessary adaptations.

The descriptions given below may contain the advisory, “IGNORE,” which identifies code unique to Arizona and probably needs to be changed if adapting for use in other states.

Understanding the bill, Sec. by Sec.

Note that the bill contains seemingly duplicative changes.  One addresses 33-1200 et seq. (and following) and the other addressing 33-1800 et seq. This is because the 1200 sequence pertains to condos and the 1800 sequence pertains to HOAs (planned units).

Sections 1 and 2 add additional wording to title of existing statutes. IGNORE.

Section 3 adds the Department of Homeowners Associations and establishes the office of an HOA commissioner under Title 41, Chapter 20, 41-2325.  Paragraph (A)(3) defines the duties and powers of the department, including the authority to use the Office of Administrative Hearings (OAH) for dispute resolution. Subsections (B) and (C) present the intent and purpose of the bill.

Section 4 adds the powers of the Commissioner to enforce the condo and HOA statutes, which under subsection (B) includes training and education requirement.  Subsection (C) grants the Commissioner the power to set rules that have the power of law. Many agencies have been granted his power, including the real estate department.

Sections 5 and 6 detail the procedures to follow and powers of the Commissioner to handle complaints and investigate complaints, respectively.

Section 7 specifies the penalties for violating the proposed bill statutes, a requirement absent from HOA governing documents, but required by public criminal law.  It’s a notice requirement.

Section 8 adds the funding requirement of $4/door to support the agency.

Section 9 adds the establishment of the HOA advisory board. Subsections (A) and (B) specify the breakdown of the homeowner dominated board.  Subsection (E) defines the authority to recommend revisions in the best interest of the public.

Sections 10 – 16 specify the procedures regarding HOA disputes and OAH hearings since the existing agency is set to expire in 2019. It just moves current law into a new section of code, Chapter 20.  IGNORE.

Sections 17 and 18 revise linked statutes to the addition of Chapter 20 above.  IGNORE.

Section 19.  Omitted in error.

Section 20 repeals the existing OAH funding.

Supreme Court says corporations cannot be used to evade Constitution

The recent non-HOA decision by the US Supreme Court in DOT v. Assn American Railroads[i] has a direct bearing on the constitutionality of the HOA legal scheme.   This case dealt with the legal status of AMTRAK — is it or is it not a government entity — and was there an unconstitutional delegation of legislative authority.  While I have argued that HOAs are de facto private governments based on their powers, authority and functions, I now make the argument that as a de jure (according to the law) private corporation, HOAs have been unconstitutionally delegated legislative powers. “[R]ecognizing that the power to fashion legally binding rules is legislative.”[ii]

Implicit delegations of legislative powers are described in The Restatement Servitudes[iii] and numerous state statutes carry implicit delegations of legislative powers.[iv]

With respect to violations of the Constitution, the Supreme Court decision in DOT  held 1) that private parties cannot draft agreements to circumvent the Constitution by declaring that an entity, specifically a corporation, is a private organization, 2) that such a determination is made by the courts based on the corporation’s functions, powers and authority, and 3) that in order for a private entity’s delegation of legislative authority to be constitutional, there must be control, supervision and accountability to the state.

I have presented my case that, in the absence of explicit enabling acts, there is implicit unconstitutional delegation of legislative power to private HOAs, particularly in regard to legally binding rules, without accountability.

Read the complete paper at Delegation.

[i] Dept. of Transportation v. Assn American Railroads, 135 S.Ct. 1225 (2015)

[ii] Supra 1, p. 17.

[iii] Restatement Third, Property (Servitudes), Susan F. French, Reporter, p. ix (American Law Institute 2000).

[iv] For a sample of implied rulemaking statutes by state, see:  Arizona: ARS 33-1803(A) and (B) for HOAs; 33-1242(A)(1) for condos. California: Civil Code §§ 4340-4370 (Part 5, Chapter 3, Article 5, Operating Rules). Florida HOAs:  Title XL, § 720 et seq. do not explicitly address rules per se, but speak to enforceable “guidelines” and “standards”; Florida Condos:  Title XL, § 718 et seq. (in particular, § 718.1035, the general statement on “association rules”). Nevada: “NRS 116.31065  Rules.  The rules adopted by an association” (with 5 “musts” imposed on the HOA).

Arizona HOA regulatory bill needs your support.

Last Friday, June 5th,  I emailed a revised AZ model bill to AZ legislators for sponsorship in January 2016.  It was initially drafted this past January, too late for introduction in 2015.  See model HOA regulatory agency bill.

“Summary.   This bill establishes a department of homeowners associations with full direct regulatory authority over Ch.9 and Ch. 16 associations under the direction of a commissioner. It provides for receiving complaints, investigations, filing legal actions, issuing civil penalties, rulemaking, and education as well as establishing an Advisory Board to provide recommendations to the commissioner.   Funding is provided by a $4 per unit fee per year. The processing of HOA disputes by DFBLS is stricken and processing is replaced  by the department of homeowner associations.”

Arizonans, email your legislator and demand sponsorship in 2016!  I will meet with any legislator to clarify and to answer any questions.  This bill affects the general public across the state and attempts to restore law and order to HOA-Land.  It deserves to be made law ASAP!

As you all know, HOAs are private persons and lawmaking is mandated to state legislatures as set forth in their respective constitutions. And you know that the state does not supervise HOAs, but has adopted a ‘hands off’ posture — no penalties for HOA board violations, for instance. “[i]t is a well established theory that a legislature may not delegate its authority to private persons over whom the legislature has no supervision or control.” (McLoughlin v. Pima, 58 P.3d 39 (2002).  This bill would provide constitutionally required legislative supervision and control.

Read the proposed regulatory bill:  Regulatory agency