Tag: Arizona

Will AZ Supreme Court do justice for 1 million HOA members?

The two issues for review sought in the Gelb OAH constitutionality Petition to the Arizona Supreme Court are, in my layman’s view: 1) a legal procedural issue centering on the appellate rules of court, ARCAP 13(b)(3), and 2) the real issue at hand of the constitutionality of OAH adjudication of HOA disputes (technically, the authority of DFBLS to receive complaints that are forwarded to an ALJ at OAH). In both the Gelb appellate opinion and the earlier Meritt superior court ruling the basis for the decisions was the identical analysis of the same two Arizona cases, Hancock and Cactus Wren.

 

My commentary will focus on the first issue: ARCAP 13(b)(3) that relates to the procedure for filing a cross-appeal. It involves some contradictory or vague wording as to when a party must file a cross-appeal. A cross-appeal is just an appeal brought by the other party, the appellee, raising its own issues for review. Gelb maintains that the HOA had to file a cross-appeal and it didn’t. The rule in question, ARCAP 13(b), reads:

 

3. The brief of the appellee may, without need for a cross-appeal, include in the statement of issues presented for review and in the argument any issue properly presented in the superior court. The appellate court may affirm the judgment based on any such grounds. The appellate court may direct that the judgment be modified to enlarge the rights of the appellee or to lessen the rights of the appellant only if the appellee has cross-appealed seeking such relief.

 

The Petitioner/Appellant believes that the appellate court enhanced the HOA’s rights above than was specified in the superior court decision, and the HOA had violated the rule. Therefore, the decision was invalid, without force. The Petition points out that the HOA raised the constitutionality issue not in its appeal of any issue in the OAH decision, but in its motion to dismiss. The HOA’s authority was simply to cite that a lower court, a trial court that does not set precedent for other cases, had decided the unconstitutionality of DFBLS. (Presumably, the Meritt superior court case, which was a default decision based on an even earlier superior court case, Waugaman, all brought by Carpenter et al. The appellate court accepted this argument.) Furthermore, in the Petition, Gelb pointed out that the issue of constitutionality was never subject to a presentation or discussion of legal arguments (much like the Meritt case) and was an abuse of discretion by the court.

 

It is interesting to note the time frame during which the Carpenter Hazlewood law firm attempted to get an opinion of unconstitutionality – all for the good of its clients, three different HOAs. (See The State of Arizona will not protect buyers of HOA homes! for links to documentation supporting the following). It is interesting to note that in Gelb, the HOA had won the DFBLS case, so why would it want to vacate that decision by filing a constitutionality challenge?

 

On Aug. 4, 2008 Meritt filed a complaint with DFBLS. On Aug. 8, 2008, Gelb filed an appeal of its OAH/DFBLS ruling. However, since nobody, but nobody, including Meritt, the AG, or the legislature responded to defend DFBLS it was decided rather quickly. In Meritt, on Oct. 10th, after the OAH decision on Oct. 3, 2008, Meritt had quit claimed his deed to Big Henge, but that didn’t stop Carpenter Hazlewood from filing an appeal to the superior court on Oct. 23rd. Meritt no longer had standing to sue, and the case was moot. Although Carpenter Hazlewood added John Hernandez as a co-plaintiff in the appeal, Hernandez did not file a complaint with DFBLS — he was not a DFBLS petitioner — only Meritt did, and so Hernandez also had no standing to sue.

 

This raises strong questions of violations of professional conduct rule 42, Candor to the Tribunal, E. R. 3.3. David Dodge, former Chair of the Disciplinary Commission for the Arizona Supreme Court, wrote about “Perjury Pitfalls” in the January 2006 issue of the Arizona attorney: “There are lines that lawyers cannot cross in their endeavor to increase ‘the bottom line,’ and their duty of candor toward the court cannot be sacrificed to please a client.”

 

Other events at DFBLS/OAH provide insights into the attempt by Carpenter Hazlewood to stop OAH adjudication of HOA disputes, where 42% of the complaints were won by the homeowner. On the same day of the ALJ decision, Oct 3rd, Carpenter sought an expansive order — the one he obtained in Meritt that applied the ruling to all HOAs — which was denied on Oct. 10th, the same day Meritt quit claimed his deed.

 

On Jan. 28, 2009, in the superior court appeal, Judge McMurdie ruled DFBLS unconstitutional, and upon request by Carpenter Hazlewood, reaffirmed on Feb. 24, 2009 that his decision applied to all HOAs. Ten days later, on Mar. 6, 2009, Carpenter Hazlewood filed its Motion to Dismiss in Gelb citing the trial court Meritt decision. (It was too late to file an amended complaint). Carpenter could not raise the constitutionality argument at the time the appeal was filed, back on Aug. 8, 2008. The Gelb appeal was necessary in order to obtain the elusive opinion that could serve as precedent in future cases.

 

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The supreme court has yet to accept the Petition for a decision. If it does and finds in favor of Gelb on the above issue, it will probably not entertain the real issue of the constiutionality of OAH adjudication. Its opinion would vacate the appeallate court holding and DFBLS/OAH would then be required, under law, to hear HOA disputes once again.

HOA disputes: judicial activism with a political agenda

Our judicial system rebounds with mottos, slogans, quotes end even chiselings on building facades attesting to the goal of “justice for all” or “equal justice under the law.” But we must ask whether justice was served in the Arizona ruling in Gelb v. DFBLS[1] that struck down an independent tribunal’s adjudication of HOA disputes?  We must ask:  Was the ruling judicial activism in support of a political agenda?

In the underlying Hancock case, the court held,

 The separation of powers doctrine does not forbid all blending of powers, but only is intended to keep one branch of government from exercising the whole power on another branch . . . Courts today also recognize that absolute independence of the branches of government and complete separation of powers is impracticable. . . .We also believe public policy favors such a blending of powers here.

With the above understanding, we must ask how the Gelb court arrived at its opinion that,  “In accordance with well-established legal authority, the HOA has overcome the presumption of constitutionality . . . “

 Read the full Commentary at HOA judicial activism.

 

HOA due process protections: Arizona OAH vs. NV Ombudsman

 

The HOA statistics provided by the Nevada Ombudsman Report for 2010 stands in sharp contrast to the success of the terminated Arizona OAH adjudication of HOA disputes.  It shows 55% of the HOA complaints were resolved, while the Intervention Affidavit (complaint) Report reveals that a mere 4.5% had gone on to an ALJ for adjudication. The Ombudsman Report also shows that of the indicated 1,260 complaints, only 25% made it to a conference hearing, of which 55% were resolved. In total, about 14% of the complaints were resolved. (It should be noted that the number of complaints indicated on the two reports reveal a marked discrepancy of 1,260 on one and 493, or 512, on the other).

 

Some people would point to these numbers and say, “See, we told you so. HOAs are 95% good, but we do have these malcontents and disgruntled people.” Others would say that the Ombudsman office operates like State Bars where very few complaints make it to a judicial hearing, and only after being screened by their brethren.

 

Other states with an ombudsman office haven’t fared any better. In California, the Ombudsman can be vaguely discerned through the bureaucratic mist, while in Florida the outspoken homeowner rights advocate group, CyberCitzens for Justice, repeatedly criticizes the handling, or lack of handling, by Florida’s DBPR “ombudsman” agency. Both have been in existence for over four years.

 

In Arizona, after a brief 2 plus years, its agency that handled HOA disputes by means of the independent Office of Administrative Hearings (OAH) was declared unconstitutional[1]. In contrast to the reported Nevada 4.5% heard by an ALJ, just about 80% of the complaints were heard by an ALJ at Arizona’s OAH. In contrast to these other large states, an ALJ at OAH heard some 66 cases of which 42% were won, for the vast majority, by the Pro Per homeowner against the HOA and its attorney.

 

No wonder the CAI member law firm made repeated attempts to silence OAH[2], and after 3 shots at the apple it won in Gelb v. DFBLS, CA-CV 09-0744 (Ariz. App. Div. 1, Oct. 28, 2010). The well documented OAH adjudication had revealed the stark reality of HOA abuse, and the denial of the equal protection of the law under the corrupt HOA hearing process where the accusers judged the accused. (To say, as some have, that the homeowner openly and with full knowledge accepted this condition is incredulous!) In the two years prior to the passing of the bill granting DFBLS/OAH power to adjudicate HOA disputes, the Arizona Legislature had failed to pass bills that would ease the burden on homeowners going before the Justice of the Peace courts. It rationale was that it would create an uncertain burden on the JP courts because of a potential tidal wave outcry for justice.

 

The adjudication of HOA disputes by the Office of Administrative Hearings in Arizona was a landmark advance in due process protections for homeowners and should be adopted in all other states. It’s powers were limited and the parties had rights to appeal to the civil courts. It did not usurp the role of the judiciary nor violate the separation of powers doctrine, but assisted the civil courts by providing justice within reasonable costs for the individual homeowner. Case law contains many rulings that such benefits and purposes do not violate the separation of powers doctrine, and many such instances exist today. (It should be noted that all OAH petitions were brought by the homeowner).

 

The Arizona Legislature cannot pick and choose what portions of the Constitution it wishes to enforce and which it wishes to ignore. In order for it to acquire obedience in conscience from the people, its legitimacy rests on valid and just laws. Due process protections for HOA residents must be restored by means of an “acceptable to the courts” revision of the applicable statutes.

Notes

1. 
Independent tribunal adjudication of HOA disputes in AZ held unconstitutional.

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

Who prosecutes on behalf of homeowners in HOAs?

Qui Pro Domina Justitia Sequitur

(‘who prosecutes on behalf of Lady Justice?’)

 

 

Attorney Penny Koepke appeared on the Nov. 19th Arizona KPHO TV segment, “HOA Disputes,” as the demure and soft spoken attorney from the Ekmark & Ekmark law firm, and spoke in favor of the demise of due process protections for homeowners. (See http://www.kpho.com/local-video/index.html and select “HOA Disputes”). The court case discussed in this news segment was Gelb v. DFBLS (in re Sedona Casa Contenta HOA).

 

Please note that the Carpenter Hazlewood law firm, which pursued the constitutionality challenge to the state agency adjudication of HOA disputes in three cases leading up to the Gelb decision, does not appear in the KPHO segment. Partners Carpenter and Hazlewood, as well as Curtis Ekmark, are all members of the national HOA lobbying trade organization (not an educational 501(c)3 organization), Community Associations Institute, CAI. Ms. Koepke does not admit to being a member, but frequently speaks and lectures at seminars and conferences for CAI.

 

In 2004, Ms Koepke also appeared before the Arizona House FMPR committee hearing on the HOA foreclosure reform bill, HB 2402. She addressed the committee and responded to questions by the bill’s sponsor, Rep. Farnsworth, for about 21 minutes. (The audio CD is available from the Clerk’s office archives for a small fee).

 

Following this hearing, I produced a segment on HB2402 from the House audio CD. In her testimony Ms Koepke had stated that she was an ethical person of integrity who foreclosed only as a last resort upon the instructions of her HOA clients. However, she had a problem with making use of alternative methods of collecting debts as are available to all lien holder in other arenas, and saw no moral issue with completely stripping the homeowner of all his equity for a few pieces of silver. Her justification was that they were “scofflaws” who needed to be punished to deter future untimely payments. In the complete audio, you will hear the committee Chair informing Ms Koepke that such actions were “unconscionable.” I added a commentary as an addendum, which presented a few background cases and incidents in which Ms Koepke was involved. This short commentary video can be found at Foreclosures.

 

It should be apparent by now, with respect to foreclosures and due process protections in general, that a homeowner can get a better deal from the IRS than from his HOA backed by attorneys. There is no requirement in the HOA “contract” — the CC&Rs “constitution” — requiring the HOA to be fair, just, compassionate, conciliatory or charitable. Remember: “It’s the contract, stupid,” and you are not protected as one would think under state laws and constitutions.

Independent tribunal adjudication of HOA disputes in AZ held unconstitutional

An Arizona appellate court declared that the independent tribunal adjudication of HOA disputes by the Off. of Admin. Hearings was unconstitutional. After four attempts, the Arizona CAI law firm of Carpenter Hazlewood Delgado & Wood had finally obtained its long sought victory. (See Gelb v. Casa Contenta HOA, CA-CV 09-0744, Ariz. App. Div. 1, Oct. 28, 2010).

If you followed my time line in the Merrit case (2008), Carpenter was desperately seeking to get OAH declared unconstitutional.  It started with Brown v, Terravita, but no decision was made.  Next followed Waugaman where Judge Downie decided it was unconstitutional, but applied the decision only to the HOA at issue.  Along came Merrit v. Phoenix Townhouses and a decision was quickly made to take the case up on the constitutionality question, wherein Carpenter sought the Downie ruling to be applied to ALL HOAs.  However, Merrit got out of the HOA before the appeal was made, making it a moot question without a concrete issue. However, the decision was not challenged except by me, and I was snubbed and denied any further filings in the case. (See The State of Arizona will not protect buyers of HOA homes! for the case study and court filings.)

At the same time as Merrit, perhaps Carpenter realizing this serious problem of standing to sue, raises the constitutionality question in Gelb at the superior court trial level (see ¶ 6) – just in case.  This was in Aug 2008, at the time Merrit was going on.  There was really nothing new in the Gelb decision as it reads from both Cactus Wren and Hancock, like with Downie in Waugaman, except the slap at the legislature trying to get around the courts that was made by Downie is missing.

 Question:    The HOA had won at the Office of Administrative Hearings.  Gelb was contesting the decision.  Why on earth would the HOA’s attorney challenge the constitutionality of the decision, which upon a win, would invalidate the OAH decision in favor of his client, the HOA????  Who was Carpenter working for????