CAI – Page 29 – HOA Constitutional Government

Complaint filed with NJ Supreme Court for CAI lack of “candor to the tribunal”

A complaint was filed with the NJ Supreme Court against CAI for a lack of “candor to the tribunal” with respect to statements made in CAI-NJ’s amicus curiae brief in Mazdabrook v. Khan. Excerpts from the complaint letter follow.

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Two attorneys for the Community Associations Institute (CAI) NJ Chapter, Karpoff and Macysyn, sought and received permission to file an amicus brief and to make oral arguments. They signed certifications as to the truth of the statements made and content of their brief.

I submit that the arguments to file a brief and to make oral arguments contained misrepresentations and false and misleading statements as to the true nature and purpose of CAI. These misrepresentations lead the Court, and amicus readers, to believe that CAI is not in a conflict of interest position as its true interests, which oppose the interests of the homeowners associations and the of HOA member homeowners.

The Macysin certification says the brief is brought on behalf of CAI itself, as a friend of the court to help it in its decision. Yet, throughout the certification one is confused as for whom CAI is representing: CAI itself, the HOAs, or the homeowners. These are conflicting representations.

In the 24 paragraph certification, Macysin fails to inform the Court of the legal tax exempt status of CAI as a 501(c)6 tax-exempt organization as of 1992. CAI chose the vendors and became a trade group so it could avoid the limitations of an educational organization and become actively involved in lobbying in all the states. (The usual course of action is for the consumer group, which is seeking assistance, to set up its own nonprofit educational organization. It then would invite the vendors as affiliate or associate, second-class, members).

It should be clearly understood that the production of harmonious and vibrant communities is juxtaposed to the true interests of the CAI members. Rather, the best interest of its true members is to keep the HOA heavily dependent upon the services of its attorney and management members, to foster adversarial relations, hostility and divisiveness, and to deny democratic reforms under the state and US Constitutions. The CAI record before state legislators and in the courts, including here in New Jersey, speaks for itself.

The CAI-NJ prepared HOA board resolution (Appendix B, page 6), gives the impression that the HOA board’s decision to join CAI is a valid act. What this resolution accomplishes is to allow the HOA board to address homeowner concerns about a conflict of interest. It provides the board with a reasonable justification for joining CAI — education for the benefit of the HOA.

However, the basis for a board to sign-off is that CAI is the “Great Educator” and that CAI has no conflict of interest as a business trade group whose tax-exempt grant is to help its members, not consumer HOAs. The resolution does not state that CAI is a 501(c)6 trade group or that since it was created in 1973 to solve problems with HOAs it has failed to do so for the past 39 years, or that it has repeatedly opposed constitutional protections for homeowners.

Sanctions were sought against these CAI attorneys.

The sounds of silence: failing to publish legal opinion on illegal acts by HOA managers

If the guardians, those disciplinary and oversight entities protecting the integrity of the Arizona Supreme Court, which itself is the guardian of the integrity of the State of Arizona, fail in their duties and responsibilities under the Arizona Rules of the Supreme Court, what becomes of us?

Many of you are familiar with the old teaser, “If a tree falls in the middle of the woods, and there’s no one around, does it make a sound?” Then, if a CAI member firm— an HOA attorney or manager — violates the law and the public is not noticed, did they really violate the law? And, if there are events leading to the conclusion of abuse and a gross defect in the HOA legal concept, and the media fails to report them to the public, are there really serious defects in the HOA legal scheme?

Readers of these Commentaries are aware of the serious charges made against a CAI member attorney in DC Lot Owners v. Maxwell & Morgan. An awareness brought to the public’s attention not by public disclosure, as the records have been sealed by court order, but by a few individuals.

Readers are now being made aware of the recent State Bar UPL Opinion, 12-01, issued in March 2012, relating to the legal acts that may be performed by HOA managers. (This supersedes the 2004 UPL opinions previously reported here, and directly applies to HOA managers. The opinion is based on an interpretation of Rule 31, Regulation of the Practice of Law, of the AZ Supreme Court Rules.)

I am told that the UPL opinion is available, but not on the State Bar’s web page for UPL opinions, or on any State Bar web page. Yet, its UPL opinion web page proudly declares,

The State Bar’s UPL (unauthorized practice of law) Advisory Committee now provides attorneys and consumers with non-binding written advisory opinions. The opinions interpret the UPL Supreme Court Rules and the Certified Legal Document Preparer Code.

These are the sounds of silence in HOA-Land. These are the acts and omissions by the members of that unspoken alliance of No Negatives About HOAs. These revelations are not the result of public disclosure, but by the efforts of a few individuals. And these few individuals do not include members of the media.

One can only conclude that the State Bar also has a public policy of protecting HOAs, and their attorneys and managers.

Judicial misconduct complaint filed for sealing records in AZ case against HOA attorney

A complaint was filed against a Pinal County, AZ judge for the sealing of records in this civil case in violation of the Arizona Rules of the Supreme Court, Rule 123(d) that requires a statement to be made giving the reasons for the sealing of case records. The case involved charges of aiding and abetting and disgorgement, among others, filed by a court appointed Receiver looking for some missing $650,000 in HOA funds. The charges were against a well-known CAI member attorney.

There is no record of this case on the Pinal County Superior Court official public website, not even an entry that the case was sealed, and not even an entry that the case was dismissed. This very disturbing act recalls the secret proceedings of Star Chamber justice with its own version of doing justice. A motion asking the judge to unseal the records was denied by the county clerk, leading to this complaint of judicial misconduct.

The complaint of judicial misconduct was two-fold: a black-letter violation of law in regard to Rule 123(d), which simple states, “Upon closing any record the court shall state the reason for the action, including a reference to the statute, case, rule or administrative order relied upon;” and a complaint that the entire record of this case has been denied public access.

The judicial complaint set forth grounds for unsealing the records.

On behalf of the American public, and in light of the public’s strong interest in the judicial treatment of homeowner association attorneys and the longstanding public policy in favor of open access to judicial records, the undersigned, George K. Staropoli, hereby moves the Court to unseal all court records in this case.

Staropoli has operated two nonprofit internet websites to provide nationwide information, news, legal actions, and commentary on events, incidents and developments pertaining to homeowners associations for over twelve years. They are a blog, HOA Constitutional Government, and an informational site, Citizens for Constitutional Local Government, in support of homeowner rights and in opposition to the inequities of the existing HOA legal scheme. Staropoli has been acknowledged in several legal texts and treatises, and quoted in other books and in the news media.

And in further support of public access,

Rule 123(c), Public Access to the Judicial Records of the State of Arizona, of the Arizona Rules of the Supreme Court pertaining to Judicial Conduct, states that all court records are presumed to be open to the public, except “some court records” for confidentiality, privacy or if in the best interests of the state. Rule 123(d) requires the court to show cause for sealing “some court records,” including the legal basis for such action.

The Arizona Rules of Judicial Conduct, Rule 81, emphasizes that “an independent, fair, and impartial judiciary is indispensable to our system of justice” and that the judiciary is to preserve the “principles of justice and the rule of law.” Judges “should aspire at all times to conduct that ensures the greatest possible public confidence.” It is inconceivable as to what state interests exist that would overwhelmingly override these precepts, and not to inform the public accordingly.

It was then argued that the attorney, Charles Maxwell, comes with unclean hands having been subject to serious sanctions regarding “fraud upon the court” and filing a frivolous suit. And it was also argued that Maxwell is a public persona as a result of providing seminars and classes in the law to the public regarding HOAs, and as a highly respected member of CAI and its College of Community Association Lawyers.

Speaking in judicial lingo, the heavy burden falls to the party seeking to hide the records to overcome all of the above.

The Arizona Commission on Judicial Conduct will conduct an investigation of the complaint, No. 12-148, in due order.

For more reading, see,

1. Allegations filed against AZ HOA attorneys in sealed case

2. What happened to the AZ lawsuit against HOA attorney for aiding & abetting missing $650,000?

Traitors and turncoats: HOA directors as CAI members

In every state HOA directors have a fiduciary duty to the HOA, to act in good faith, and as a prudent person would (as he would spend his own money). Why then, are HOA directors also CAI members? CAI is a vendor, a business trade organization formed to support the business interests of its members, mainly attorneys and managers. To say that the vendors and the consumers share the same goals is to question the speaker’s mental state.

It’s understandable for consumers to seek assistance from vendors, as happens in many different industries, but to join and support a vendor organization? The usual procedure is for the vendors to become associate or affiliate members of the consumer organization, which in our case would be an HOA organization. (Those HOA associations of associations, like ECHO in California and SCOHA in Arizona, are just fronts for a CAI controlled entity.)

How and why did this occur? It began at the very start with the initial 1974 composition of CAI that had HOAs as a member category, although not quite explicitly stated. Each of the 5 categories was to be equally represented in governing CAI: 1) builders and developers, 2) homeowner leaders of associations, 3) association managers, 4) public officials, and 5) other vendors.[i] At that time, CAI was a 501(c)3 educational organization and not a trade group. But this changed in the period of 1989 – 1993.

At the 1989 CAI retreat, controversy emerged on just who CAI represented given the fact that HOAs were consumers, not vendors. According to the CAI “historian” Donald R. Stabile, “One participant commented that the CAI . . . builder and developer group viewed CAI as a consumer organization teaching consumers how to sue the builders” to which another responded, “CAI is a professional organization and not a consumer group; that it was never intended to be a consumer group”. [ii]

Stabile continues discussing this important turnabout period in CAI history when it felt the need to become a business trade group, yet still retain the homeowners as members. In regard to homebuyers and residents, “To be sure, getting them interested in CAs [HOAS] was an important element in enhancing the popularity of this new form of housing” [read, mass marketing of HOAs]; and, “The advice they [the buyers] received from CAI was consistent with what [CAI developers and managers] needed consumers to be hearing”.[iii]

As to the thoughts of the 1973 Founders of CAI at this juncture, Stabile adds that they “deemed it important for attaining legitimacy for the CAI as a voice for the entire industry” [iv] and to relate “positive aspects to the public especially regarding public policy issues”.[v] (They have since dropped that line). Concern centered that a “more consumer-oriented organization” would supplant CAI, and that “other citizens’ associations, which were consumer motivated, might become the national representative.” [vi]

It seems that the roots of a great con started in that 1993 period that altered the purpose and mission of CAI, when lobbying for their members predominated under the guise of promoting vibrant and harmonious communities. In 2005, some 13 years later, CAI finally dropped the façade of representing HOAs – HOAs were no longer members. All through this period CAI, and many of its attorney members, had addressed legislatures saying that they represented homeowners and HOAs. And still today this claim appears quite frequently in CAI public statements.

What we have today is the faithful follower Team Players and the dogmatic True Believers (see The HOA Privatization Scale) simply denying reality like the Emperor in the fairytale, The Emperor’s New Clothes.[vii] When a little boy cried, “He has no clothes,” the Emperor realized that he had been duped. Yet, he continued to believe in his delusion since he could not admit having being wronged by con men.

For whom does the HOA director – CAI member serve? Isn’t this an outright conflict of interest? Does he serve as a “patriot” for the HOA, under legal requirements and dictates? Or, for the CAI business trade group as a “turncoat” to his HOA? HOA members must reject board memberships in CAI that are paid for by member assessments. These directors/officers are traitors, turncoats, and fifth columnists, all believing that they are doing good for the HOA.

Further reading:

For a detailed, non-CAI history of HOAs and CAI, see The Foundations of Homeowners Associations and the New America.

Notes

[i] Community Associations: The Emergence and Acceptance of a Quiet Innovation in Housing, Donald R. Stabile, (Greenwood Press 2000) p. 117.

[iii] Id, p. 133.

[iv] Id.

[v] Id, p.131.

[vi] Id., p. 129.

[vii] The Emperor’s New Clothes, Mindfully.org (http://www.mindfully.org/Reform/Emperors-New-Clothes.htm), June 7, 2012.

Allegations filed against AZ HOA attorneys in sealed case

Of the 66 General Allegations in the court appointed Receiver suit against the HOA’s former attorney, CAI and CCAL members Maxwell and Morgan, I have prepared a list of 13 allegations that I consider representative of the allegations. On behalf of the public and its constitutional right to know, they are listed because the court completely sealed the records in DC Lot Owners v. Maxwell & Morgan, CV 2010-004684, Pinal County Superior Court, AZ, so that an online public inquiry results in a “not found.”

I have not been notified by the court of any such order to close the records, nor was I permitted to see a copy of the order to seal the records. Such failure to provide a notice and reason for closing court records violates the Arizona Supreme Court Rule 123(d): “Upon closing any record the court shall state the reason for the action, including a reference to the statute, case, rule or administrative order relied upon.”

Understand that an allegation is a claim of wrongdoing by a party to be proven in court. I am sure many readers will identify with similar activities by other attorneys that have occurred in their HOA.

To understand these allegations, some clarifications are in order:

“Majority Owners” is a group of owners who took control of the HOA.
“Braslawsce” refers to the underlying law suit that resulted in the appointment of the Receiver, who is bringing this suit against the HOA attorneys.

Read the selected allegations here.

See, Arizona court protection of CAI member attorneys