Narrow interpretations of HOA law and Rule 11(a): CAI game plan?

 In order to understand CAI’s adversarial position to homeowner reforms and its activities to promote litigation challenges, we need to look into its activities and not its lofty pronouncements. As you know, Rule 11(a) requires that the attorney perform a reasonable inquiry into the genuine issues of law or fact of the HOA allegations before undertaking any law suit. (See HOA attorney failure to inquire into merits of a complaint — R Civ P. 11(a)). We can get a good idea of CAI’s motivations for pursuing litigation from its activities with respect to HOA reform laws.

In spite of strenuous opposition by advocates, the sponsor, Arizona Rep. Montenegro, pursued this bill, HB 2441, to the very last floor vote before it was soundly defeated. (See CAI soundly thrashed by Arizona Senate). His support for this disgraceful bill can only stem from 1) that he is true believer in the New America of HOA-Lands, or 2) that he succumbed to the heavy influence of the national trade organization, CAI.

Advocates had attempted to inform Montenegro and the legislators of CAI’s real intent, which was not the betterment of the community or the state of Arizona, but its own self-interests – control of the HOA landscape.  As further evidence of this opposition to the intent of the law, the former CAI chapter president and lobbyist, Scott Carpenter of Carpenter Hazlewood, released examples of what could be seen as “how HOAs can get around the law.”

In my comment to New Arizona laws for 2011 session — thanks to the legislators, I critique Carpenter’s “reasonable rules” that HOAs may impose on the recording of HOA meetings, the new HB 2445 law. One is a 24-hour prior written notice to the board, which can easily “disappear” at its convenience. Also, among is “reasonableness” are that all recordings must be on tripods and must use batteries – seems contradictory with respect to its stated concerns about safety issues. And that the HOA has a right to obtain a copy of the recording – at a reasonable cost. H’mmm, maybe the feel paranoid and that its own recordings won’t capture everything? Or is he just putting up obstacles “to make life difficult?”

Again, a CAI attorney, Carolyn Goldschmidt, takes up another controversial issue with respect to applicability of Title 10 statutes for nonprofit corporations and Title 33 statutes on HOAs and condos. (By the way, the resurrected statutes for ALJ adjudication of HOA disputes, SB 1148, does not permit the ALJ to decide issues outside of Title 33). Basically, does ARS 10-3708 or ARS 33-1812 control the holding of HOA elections and meetings? In an attempt to avoid the HOA statutes with respect to meetings and elections, Goldschmidt narrowly argues that an election without a meeting is valid under Title 10. Yet Title 33 contains strict requirements for meetings and elections – notice, ballot, agenda and quorums.

The HOA held an election that was not part of the meeting, as it claims, and the subsequent meeting just counted the votes but took no action. Say what? Isn’t a “certification” or a counting of election results at an annual meeting an “action”? And, as Goldschmidt well knows as she had participated in several OAH complaints, this dispute would not fall under the Office of Administrative Hearings jurisdiction by an ALJ. (And neither would the other very important common laws found in Chapters 6 and 3 of the Restatement (Third) of Property: Servitudes).

It is these actions in the real world and not the pontifications by CAI and it seminars, conferences, articles, columns or interviews that reflect what CAI is all about. That reflect CAI attorney pursuits of litigation, advertising and advising loopholes in the laws using narrow interpretations of the law, which can be highly questionable under Rule 11(a). And it is not about principles of democratic government within the New America of HOA-Lands or making for a better America or community, its about power over the HOA second form of political government. And attorney fees.

If charged with violating Rule 11(a), and so judged, can the HOA file against the attorney for its attorney fees?

New Arizona laws for 2011 session — thanks to the legislators

 
HOA laws for the 2011 session:
 
 The 7 new  laws, out of 22 bills introduced, affect due process protections for homeowners that levels the “litigation playing field”;   homeowner meeting rights, including the right to record board meetings, as a check on abusive boards and attorneys; new restrictions on transfer fees;  free speech rights to fly flags and political signs; and restrictions on fees for leasing signs.
 
They are:  HB 2245, HB 2609, HB 2717, SB 1148, SB 1149, SB 1326,  and SB 1540.  All homeowner friendly, and as many would say, making for a better community and a better Arizona. 
 
This Arizona session has been the largest pro-homeowner crop of HOA reforms in my 11 years of advocacy. 
 
And it also included a sharp rebuff to CAI in its desperate attempt to retain influence over HOA boards through lobbying our legislators.  HB 2441, the minority control / no court appeals  bill – failed.  Now, they alone, are setting out to put the spin on these new laws by offering seminars and classes. 
 
The public has no alternative to this pro-HOA special interrests propaganda since the news media remains firm in its policy of No Negatives About HOAs.  It would be impossible for the media to explain the new laws without reference to the abuses and lack of homeowner protections in HOA regimes.
 
Thanks to the tenacity of several outspoken Arizona advocates, the laws become effective on July 20th.

Can CC&Rs be personalized for each homeowner? YES!

An interesting case was just decided by the Mississippi appellate court that addressed personalized, individual homeowner variations to the CC&Rs. In Long Meadow HOA v. Harlandthe court upheld individualized deeds that modified the subdivision’s CC&Rs that permitted a church to be built within the HOA. Unfortunately, it’s too late for all of us currently living in an HOA regime.

Leaving aside the questions of a contract by constructive notice that permits the surrender of your rights and freedoms as bona fide, and that covenants contrary to public policy are null and void, the adhesion contact nature of the CC&Rs can be pierced. It can be modified by a true exchange, a bargaining, a give and take as is required for a valid. legally binding contract.

From the court records, the persons who owned and sold the lots in the development wrote individualized CC&Rs for each buyer, which were apparently contained or referenced in the individual deed to the property. The court record shows that the owner/declarant “included a protective covenant in the deed that specified . . . .“ The record is silent on the existence or recording of a “all for one and one for all” subdivision CC&Rs as we know exist almost everywhere. Apparently such “one for all” is not necessary.

In fact, the Harlands wrote a contingency clause in their purchase contract to protect them in the event they were not permitted to build a church, with a return of their $5,000 escrow payment. (Understand that there are 3 legal documents as part of your purchase: the purchase contract itself, the deed with its standard wording, “subject to CC&Rs,” and the CC&Rs themselves).

Problem is, the lobbyist HOA attorneys tell the developer NO, don’t do it! And the real estate department, and the realtor associations, say nothing to inform the average home buyer, the consumer public, that he can negotiate the purchase contract.

I am sure that this decision will be challenged, especially in other states. It would turn HOA-Land upside down.

HOA attorney failure to inquire into merits of a complaint — R Civ P. 11(a)

  

I’ve mentioned several times that there are many instances where the HOA attorney could easily be seen as a co-conspirator against the homeowner.  I cited civil court rule R 11(a) – found in all states – that says,

 

“that to the best of the signer‟s knowledge, information, and belief formed after reasonable inquiry [the document] is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law; and that it is not interposed for any improper purpose.”

 

In other words, the filing a suit to collect attorney fees, win or lose.  Problem is that the HOA winds up paying when the homeowner does standup in court and demands evidence and facts.  But, in any case, the attorney gets the $$$.

 

While this case does not involve unsubstantiated violations by the HOA, or unreasonable interpretations of the governing documents or statutes, it well illustrates a very important defense argument.  In this Arizona case, CAI HOA attorney Maxwell contested HOA’s second position to the first mortgage lender’s lien, arguing that the statute applied  to first mortgages in time only.  Of course, there was the usual demand for attorney fees  since the HOA lost.  I guess that includes fees for the appeal, too.  

The court found as to the good faith of the filing attorney that,

 

“The good faith component of Rule 11 is not based on whether an attorney subjectively pursues claims in good faith, but instead is judged on an objective standard of what a professional, competent attorney would do in similar circumstances . . . . The trial court determined sanctions were appropriate because there was “no statutory basis or any extension of statute that would lead counsel to presume that Plaintiff had priority over a first deed of trust filed by the Bank[s].”

 

The appellate court said it quite pointedly: “As discussed above, the language in § 33-1807 is clear and unambiguous. Yet, both here and below, VJA bases its arguments on an interpretation of the statute that is contrary to its plain language.”

 

Don’t be afraid to remind your attorney about this Rule 11(a)  — they are usually hesitant to attack their fellow attorneys as they may be next so charged. 

Villa de Jardins Assn v. Flagstar Bank, CA-CV 2010-0177, (Ariz. App. Div. 2, Apr. 22, 2011).

HOAs and the media: The media has failed as watchdogs of democracy

 

Tom Brokaw defines “the greatest generation” as “American citizens who came of age during the Great Depression and the Second World War and went on to build modern America.”  Among them were journalists Edward R. Murrow and Walter Cronkite. “Fellow journalists considered Murrow one of journalism’s greatest figures, noting his honesty and integrity in delivering the news.” He stood up to defend American values during the 1950s McCarthy era quest to uncover Communists in America. Murrow “criticized McCarthyism and the ‘Red Scare’, contributing if not leading to the political downfall of Senator Joseph McCarthy.”

And there was Walter Cronkite, “the most trusted man in America,” and of whom the Dean of ASU’s Cronkite School of Journalism had said, “The values that Mr. Cronkite embodies – excellence, integrity, accuracy, fairness, objectivity – we try to instill in our students each and every day.” (Walter Cronkite and ASU).

Both would be appalled by what has happened to journalism and the news media today, with their quest for profits and entertainment over reporting the facts.   The media is failing their role in a democratic society and to America. Their silence on important issues is a constraint on free speech.

The crux of our democracy is the ability of citizens to obtain honest, truthful and balanced information, and the credibility and integrity of the individual journalist and communications professional are crucial in that effort.  (Arizona State University, Cronkite School Academic Integrity Policy).

 

And no where has the media’s complicity in withholding the truth from the American people been so obvious than with respect to the homeowner associations. Its has failed to “tell it like it is.” Some 20% of Americans, and growing each year, live under a homeowner association private government regime.  Whenever some event occurs reflecting a problem with HOA governance and living, the media has treated it as a local neighborhood issue. The media has selectively ignored the messages about the substantive issues pertaining to the lack of democratic institutions and the loss of constitutional protections. And it has repeatedly ignored the sources of authoritative advocate information available on the internet, such as The Truth in HOAs disclosure.

There are parallels between the acceptance of Hitler and Nazism by the common German with the quiet acceptance of the new world order of HOAs. In regard to the “good” German people and those who could understand what was happening, they went along

In the usual sincerity that required them only to abandon one principle after another, to throw away, little by little, all that was good [and]when men who understand what is happening — the motion of history not the single events or developments — when such men do not object or protest, men who do not understand cannot be expected to.  

(They Thought They Were Free, Milton Mayer, 1955).

The media is guilty of not trying to understand and report what is happening.  And there is no excuse for its policy of “No Negatives About HOAs.” One would think that the watchdogs of democracy fell under the same spell, the same con, as the advisers to the Emperor in Hans Christian Andersen’s The Emperor’s New Clothes. “‘Stupid I certainly am not,’ thought the official. ‘Then I must be unfit for my post. But nobody shall know that I could not see the material.'” That to speak out would make them unfit for their place in the new world order, The New America of HOA-Lands.

And after a little child had spoken out while on parade, “The Emperor himself had the uncomfortable feeling that what they were whispering was only too true. ‘But I will have to go through with the procession,’ he said to himself.” It appears that the journalists and the media as a whole have decided to go through with the procession.