Tag: constitution

AZ bill, SB 1148, seeks to restore OAH adjudication of HOA disputes

The Arizona bill, SB 1148, seeks to overcome the objections of the appellate court in Gelb, and restore due process protections to homeowners in HOAs by means of OAH adjudication. (See Advocate submits amicus brief in AZ supreme court appeal of HOA due process).  Below is the explicit statement of intent for this legislation, of which one purpose is to  protect the consumer who buys a home in an HOA.

Sec. 4. Legislative findings and intent; department of fire, building and life safety; community disputes

It is the intent of the legislature to find, determine and clarify all of the following after careful consideration of the case Gelb v. Department of Fire, Building and Life Safety, 1 CA CV 09-0744, filed October 28, 2010 (Ct. App. 2010):

1. The department of fire, building and life safety has exercised substantial responsibility for many years in the enforcement and application of state laws and private contracts that regulate the relationships between those who reside in and those who control certain types of common housing, namely, mobile home park residential communities.

2. The legislature has determined that while the direct licensure of mobile home parks and their owners may not have been necessary, the regulation of their private, legal relationships with their tenants has been and continues to be an important consumer protection function of the department of fire, building and life safety and that department has developed considerable expertise in interpreting, enforcing and applying the statutes relating to these mobile home communities and in interpreting, applying and enforcing the terms of the leases, rules and other documents that regulate the relationship between the residents of the mobile home parks and the owners and managers of those parks, and doing so in a cost-effective manner for the residents.

3. The legislature further determines and finds that while direct licensure and regulation of condominiums and planned communities may not be necessary at this time, the legislature has repeatedly found over the years that owners in condominiums and planned communities are frequently subjected to inconsistent, unreasonable and often unlawful enforcement and application of the declarations, rules and bylaws that govern their communities, their managers and their boards of directors, and owners are often unable to afford the cost of formally litigating their disputes in the superior court.

4. The legislature further finds that the continuing use of the existing hearing officer function in the department of fire, building and life safety will provide for an efficient use of already-established common interest community expertise at this agency, will provide an important consumer protection for owners in condominiums and planned communities and will efficiently and effectively provide for resolution of these common interest community disputes without the expense, formality and difficulty of requiring a trial in the superior court in every instance, and will do so without the cost and bureaucratic complexity of creating an entirely new administrative body to perform these important functions, while still maintaining the ability and right to recourse in the superior court, and without threat to the core functions of the judiciary.

AZ bill reasserts state supremacy over HOAs

For several years at the Arizona Legislature bills with a very limited restatement, or reminder, that civil government controls public streets were proposed.  Each year they were defeated by the special interests —  read that to include the HOA boards acting as representatives not of the homeowners, but of the legal fictitious person, the HOA.

 
This year we see Arizona’s CAI LAC co-chair Scott Carpenter writing in his Arizona Legislative Session blog – surrounded by his firm’s advertising, links and buttons to pay fines, but speaking for himself, says he – about intrusions into the government of the independent HOA principalities.  He objects to Sen. Harper’s HB 2140, a bill to prohibit HOAs from denying homeowners their second amendment rights to carry arms, or more correctly, from prohibiting HOA interference with all those rights protected under Article II of the Arizona Constitution.  Article II is Arizona’s Declaration of Rights, the state’s version of the Bill of Rights, which all states have in one form or another.
 
Carpenter’s law firm had also fought to have the statutes providing for an independent tribunal to hear HOA disputes by DFBLS/OAH, which provided due process protections with fair and just hearings, declared in violation of the Arizona Constitution.  He now stands in opposition to and objects to the recourse to the Arizona Constitution to protect all the rights of homeowners.  Apparently he sees the Constitution as working solely on behalf of the HOA principality, but not for the homeowner— as it secedes from our constitution and from our system of democratic governance.  Welcome to the New America of HOA-Lands.
 
Carpenter continues his plunge into the secession from local government by HOAs, echoing as Robert H. Nelson discussed in Chapter 20, “Neighborhood Secession”, Private Neighborhoods: the transformation of local government (Urban Inst. Press 2005), while seeking the protection of the Arizona courts to enforce the HOA “constitution.”   (Interestingly, Private Neighborhoods references this writer’s 2000 statement to the Arizona Legislature on a Homeowners Bill of Rights, p. 102).  Carpenter cannot have it both ways!  He cannot deny constitutional protections for homeowners and then seek those protections for the HOA!   Such a position would be a repudiation of what this country stands for, and his oath to support the Constitution that he took when he was admitted to the State Bar:  “The Oath of Admission to the Bar:  I, (state your name), do solemnly swear that I will support the Constitution of the United States and the Constitution of the State of Arizona;”
  
What a sad state this country has come to when the legitimate political government of the state must reassert itself as the supreme law of the land.
 
Congratulations to Sen. Harper for this long awaited bill in support of the people.

HOA Case History: state actors or mini/quasi government

  1. Cohen v. Kite Hill,142 Cal App 3d 642 (1983) (A homeowners association board is in effect “a quasi-government entity paralleling in almost every case the powers, duties, and responsibilities of a municipal government.”)
  2. Gerber v. Long Boat Harbour, 757 F Supp. 1339 (M.D. Fla. 1991) (court enforcement of private agreements in condo declarations is a state action; flag; free speech).
  3. Hudgens v. NLRB 424 US 507 (1976) (functions of a municipality, citing Marsh; shopping center)
  4. Marsh V. Alabama, 326 US 501 (1946) (company town and public functions)
  5. Shelly v. Kraemer 334 US 1 (prohibitive state actions by use of judicial enforcement as state was fully aware of the illegal use of the courts; judicial enforcement harms constitutional rights)
  6. Williamson v. Lee Optical, 348 US 483, (1954) (rational basis for scrutiny)
  7. Damon v. Ocean Hills Journalism Club,  85 Cal. App. 4th 468; (2000) (quasi-government; board meetings public forums similar to government body;defamation)
  8. Laguna Publishing Co. v. Golden Rain Found. of Laguna Hills, 131 Cal. App. 3d 182 (1982) (HOA has attributes that “in many ways approximate a municipality . . . close to a characterization as a company town.”)
  9. Surfside 84 v. Mullen Ct. of Special Appeals of Maryland, No. 495 (September 1984) (state action; procedural due process; lack of notice; CAI Reporter).
  10. Brock v. Watergate 502 So. 2d 1380 (Fla. 4 Dist. App. (1987)( public functiuons test; close nexus criteria; HOA lacks character of a company town)
  11. Committee for a Better Twin Rivers v. Twin Rivers, 929 A.2d 1060 (NJ 2007) (HOA not state actor per NJ Scmidt version of Marsh; Not US but NJ Const. case).
  12. Indian Lake v. Director of Revenue, 813 SW 2d 305 (not civic organization)
  13. Midlake v. Cappuccio, 673 A 2d 340, Pa. Super. (1996) (condo is a pvt organization, not muni govt; not a company town)
  14. Riley v. Stoves, 526 P.2d 747, Ariz. App. Div. 2 (1974) (state action; classification; enforce age restrictions;”court to enforce constitutional commands”; restriction was a permissible government interest).
  15.  S.O.C. v. Mirage Casino-Hotel, 43 P 3rd 243 (Nev. 2001) (state action; public functions; delegating functions to private persons; commericial advertising on private property).
  16. Terre Du Lac Ass'n, Inc. v. Terre Du Lac, Inc., 737 S.W.2d 206 (Mo. App. 1987). (quasi govt) (how a homeowner's association operates as a "quasi-governmental entity," not authority for the concept that an association's "quasi-governmental" actions are state actions;).
  17. Westphal v. Lake Lotawana, 95 SW 3d 144 (Mo. App. 2003) (no support for “close nexus” state action).

Note:

  1. The above cases in bold are color coded. Red is adverse to constitutional protections; Blue is favorable; black in neutral.
  2. There are 3 case against and 4 cases in favor. Two were not dispositive. The “against” cases were all based on a “public functions” test.
  3. The non-bold cases concern related issues not involving an HOA/condo, such as state action, public functions, or mini/quasi governments.

  4. The above findings are not exhaustive and reflect the analysis of some 153 HOA/condo , state action cases on a federal and state level.

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.

 

 _____________

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.