Tag: democracy

If Trayvon HOA is sued, who should share the blame?

As indicated in the media and earlier (What is an HOA’s duty of care liability to its members and to all others?), the HOA could be sued under a number of legalities as determined by the facts.  It is important to ask what factors led to the use of Zimmerman by the HOA.   Under the legal doctrine could  the homeowner members and even the public policies of the state that amount to a “hands-off” accountability toward HOAs — they can do no wrong — be held liable?

The latest media report (Homeowner association could be sued in Martin case) reminds everyone that the homeowners would most likely have to reach into their pockets.

“So, if you’re going to send out a newsletter saying, ‘Hey, he is the captain. Whatever he says goes,’ you have now basically rented a free police officer for your neighborhood,” Clark said. “He certainly took on that role with the homeowners association, and it seems to me that they recognized that.”

Who would pay in the event of such a lawsuit would probably be determined by the type of insurance coverage the association has, Clark said. Some policies may be wide enough to cover Zimmerman’s actions. If there is no policy or the policy in place is very narrow in its coverage, homeowners likely would have to pay out of their own pockets through higher monthly assessment fees because most associations don’t have very deep reserves, he said. He noted that policies typically cover about $1 million.

Many will cry out that it would be unfair and just to make the homeowners pay for the neglect, if true, by the board.  But would it?   It is obvious that the board of directors, the legal body responsible for managing the HOA would be first and foremost.  But what about the homeowners themselves, who have oversight control through the election and recall of board members?

 Under a “ re ipsa loguitor” (a form of circumstantial evidence that permits a reasonable person to surmise that the most probable cause of an accident was the defendant’s negligence) theory, do the homeowners have a share of the blame in actions by the HOA’s agents?   Would the fact that HOA members are well known to apathetic with respect to the acts and actions of their elected boards absolve them of any failure to act?

In turn, the homeowners could argue that the homeowners’ hands are tied, for the most part, by the adhesion contract CC&Rs that permit an imbalance of powers to the HOA over the rights and liberties of the members, and by statute. That the ineffective  pro-HOA state laws reflect a public policy in support of the survival of the HOA at the expense of the homeowner.  (See The public policy of the states with respect to HOAs).

Laws that have no enforcement penalties against HOA board wrong-doing may explain some of the members’ apathy  — “What’s the use?”  You can’t fight city hall.”  Laws that Alexander Hamilton called, “recommendations.”   “If there is no penalty [for] disobedience, the resolutions or commands which pretend to be laws will, in fact, amount to nothing more than advice or recommendation.” (Federalist #15).

It is difficult to understand the rationality for this hands-off policy that flies in the face of our system of governance, with its checks and balances and separation of powers doctrines felt necessary to restrain the power of government.   “If angels were to govern men, neither external nor internal controls on government would be necessary.” ( James Madison, The Federalist papers, # 51).

In answer to the question posed here as to who should share the blame, the answer must be “all the above.”  And state legislatures are in the power seat to make the needed changes to fulfill the special interest propaganda of healthy and harmonious communities. All that the state legislatures have to do is to do justice and  SAY NO to the special interests!

why shouldn’t HOA directors be held for criminal activities if the shoe fits?

The latest AZ-CAI chapter’s Call to Action, Apr. 5, 2012, objects to the AZ bill, HB 2160, that would make violations of the HOA elections procedure a Class 1 Misdemeanor. No reason s offered as to why not. The bill clearly states that only if the violation is an intentional violation, which is only fair considering the importance of fair and just elections in a democratic society. And aren’t we told by CAI that HOAs are the model of democracy?

Again, CAI resorts to scare tactics by focusing on the penalties under a class 1 misdemeanor. And that the fines, that can be as high as $20,000 for the HOA corporation, would be passed on to the homeowners. What an excellent approach to get member involvement, don’t you think, CAI? BTW, the Call does point out that the bill is to stop “electioneering,” you know, to stop the political machine interference so the people can “throw the bums out.”

The “we are poor volunteers” doing community good argument appears, but the presumption is that they are indeed doing good by opposing elections reforms. It ignores the fact that the bill addresses intentional acts by the political machine running the HOA for its own personal agenda. And the “death of the HOA” argument if we hold directors accountable for their acts is there, too. Well, should we support corrupt and incompetent entities used by a few for their personal agendas, entities that can ruin a member through fines and cruel foreclosure?

Finally, in an admission that not all actions by directors are covered by insurance — surprise, surprise – the fear of no insurance coverage is used. You know, it is not the acts of the directors themselves that is the precipitating cause of such refusals by insurers. No, not the directors, us poor volunteers.

I can hear those directors saying, “Damn! And we had it so good not being held accountable. Gee, I don’t think HOA life is such a good idea now that the “free ride” is over.”

I am well aware of the frequently used techniques that amount to legalized extortion by the HOA or its agent, the management firm. The 2 common instances are forcing the member to talk to the HOA attorney, and to sue on unsubstantiated and frivolous allegations. In the first instance, the member who is given notice of unpaid assessments but does not receive a detailed accounting of the alleged debt. So he rightfully asks the HOA for a statement of his account, not provided by the attorney, but is told to talk to the attorney. Why?

If the manager of president is not sure, he should contact the attorney on his dime and not the member’s dime – attorneys costs are charged back to the member. This is a legitimate request for corporate records and not attorney-privilege concern. And the HOA attorney knows this.

The second instance is the notice of a violation by the  attorney on HOA statements that would fail “reasonable cause” tests.  These allegations are acted upon without any attempt to “check out” the HOA charges, as it must necessarily be concluded, violating R. Civ. P. 11(a), “that to the best of the [attorney’s] knowledge, information, and belief formed after reasonable inquiry it is well grounded in fact and is warranted by existing law.”

The attorneys know that in the vast majority of these cases the homeowner will not go to court and either pay, if he can, or take the default judgment by the court. One JP Court judge told a homeowner in such a case that, “Normally, these type of HOA cases are default decisions . . . “ I would say that that amounts to legalized extortion with the attorney cooperating and looking the other way. See Code of Professional Conduct below).

(Sadly, Arizona bills with meaningful penalties against the HOA failed: SB 1240 would have awarded triple damages against HOA for selective enforcement actions; HB 2455, would have held the directors directly personably liable for member attorney fees; and HB 2731, would have held directors personally liable for lawsuits not made in good faith. They will be back next year, and the year after until put into law.)

HB 2160, elections reforms with meaningful penalties, gives the member a solid footing to take away control of the HOA by political machines and rogue boards. It awaits final votes.

Rules of the Arizona Supreme Court, Part V, Regulation of the Practice of Law, D, Lawyer Obligations, Rule 42.

1.2 (d) A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent

1.13 (b) If a lawyer for an organization knows that an officer, employee or other person associated with the organization is engaged in action, intends to act or refuses to act . . . that is a violation of a legal obligation to the organization, or a violation of law . . . .

The public policy of the states with respect to HOAs

In order to understand what this Commentary is addressing, here is a general definition of “public policy.” First, “public interest” refers to the “common well-being” or “general welfare.” “Public policy” is generally defined as,

A principle that no person or government official can legally perform an act that tends to injure the public.

Public policy manifests the common sense and common conscience of the citizens as a whole that extends throughout the state and is applied to matters of public health, safety, and welfare. It is general, well-settled public opinion relating to the duties of citizens to their fellow citizens. Public policy enters into, and influences, the enactment, execution, and interpretation of legislation.

Yet, with respect to HOAs we find that, over the years and in almost every state, the acts and actions, the absence of acts and actions, and the statements and communications by state legislators, government officials and court decisions have created a pro-HOA public policy. I summarized this policy as,

The Public Policy of the states with respect to Homeowners Associations.

1. To protect and defend the HOA;

2. That “you are on your own,” and not inform those now living in HOAs, or about to buy into an HOA, that they will not be protected by the state against HOA wrongs and that HOA violations will go unpunished;

3. To allow HOAs to violate contractual provisions and state laws, as such lawlessness does not constitute an issue of public interest warranting state involvement and protection;

4. To ensure the survival of the HOA, even if it requires the denial of rights and freedoms enjoyed by those not living in HOAs;

5. To protect and defend HOAs as if they were necessary for the security of the state, warranting the suspension of constitutional protections.

AZ HB 2160, HOA elections reform, provides misdemeanor penalties

One of the most needed bills for enforcement to protect the rights of homeowners in HOAs is Arizona’s HB 2160, which passed the House and goes on to the Senate.  This bill makes “A corporation or other entity that intentionally violates subsection [ ] of this section is guilty of a class 1 misdemeanor.”

In a subculture where legalized extortion goes unpunished, and where recourse to democratic election processes to elect and replace corrupt government “officials” are woefully inadequate, the Arizona Legislature is finally putting its foot down on such acts against public policy. HOAs hide behind the fact that they are private contracts and are not bound by constitutional protections while proclaiming how HOAs are a great town hall democratic institution.

However, the newly elected President-elect of CAI’s College of Community Association Lawyers, Arizona’s Scott Carpenter, protests this bill: “Where is the evidence that voting ballots should have a cloud of criminal prosecution having over it? Criminalizing the counting of homeowners association and condominium association ballots should outrage Arizona’s citizens.” (Criminalization of HOA Elections).

Why should citizens be outraged? While complaining about no justification to hold violators accountable, Carpenter offers know valid reason not to.  Perhaps the newly elected President-Elect doesn’t understand the difference between criminal and civil law. Let me explain.

Civil law is in regard to disputes between two parties, like a contractual dispute. Criminal law, on the other hand, are violations against the state and its laws. Nothing new, nothing different. It is there to “protect society . . . from those forces that most threaten the peace, the harmony . . . and society as a whole.” It is there to deter and to punish.

This bill is an affirmation that the violations of state laws by HOA boards and officers, and their agents, are contrary to the good of the greater society and must cease. The bill says that HOAs are no longer independent principalities doing as they wish without fears of liability for wrongful acts. If this is too much for some people, that their “free ride” is over, well, then they can just move out! But, the American system of government that treats all people equal and applies the law equally, and that now applies to HOAs, cannot continue to tolerate this separation from constitutional government.

It is the gross and prolonged failure of the industry to police itself in the midst of such abuse that has caused the legislature to act. It is the gross and prolonged failure of the “national HOA educator” organization with all their attorney lobbyists to work in support of, and not in opposition to, these bills that protect society as a whole that has caused the legislature to act.

A Class 1 Misdemeanor is an offense that carries up to 6 months in jail (ARS 13-707(A)(1)), and up to $2,500 in fines (ARS 13-802(A)). Neither are mandatory. However, a fine for a misdemeanor committed by an enterprise is up to $20,000 (ARS 13-803(A)), but is not mandatory either.

The legislature does no wrong when enacting HOA laws, or does it?

Where have you gone, Joe DiMaggio

A nation turns its lonely eyes to you.

What’s that you say, Mrs. Robinson

Joltin’ Joe has left and gone away.

(Hey, hey, hey . . . hey, hey, hey)

 

(from the song, Mrs. Robinson, Simon & Garfunkel, 1967)

Franklin Delano Roosevelt recognized that a country in crisis needs to confront the illusions that led it astray and return to the values that can form a firmer foundation.

(Rediscovering Values On Wall Street, Main Street and Your Street, Jim Wallis, 2010)

 

As many state legislatures are now dealing with HOA reform legislation, I examine the question of unconstitutional bills being made law, and the failure of legislators to understand their acts under the “due process of law” restrictions of the 5th and 14th Amendments.  Essentially, the legislature cannot enact laws that favor one group over another without an explicit, valid justification for such laws. The legislature must cease protecting HOAs at the expense of the rights and freedoms of its citizens who live under these regimes.

Looking at our current condition in every state with HOA “Acts”, we must understand that, conforming to the historical pattern for civilizations and nations, the US is on the downside of its “life-cycle.”   The people, and their elected representatives, have forgotten its reasons-for-being — the values, principles and beliefs that founded this experiment in representative democracy.   We have become a nation under the rule of man, not law, as well demonstrated by  our concern for who gets  to be the next US Supreme Court Justice, the next person to determine and to make law.

As formerly held with respect to kings and emperors of long along, we have returned to the notion that the legislature can do no wrong and is above reproach, as well demonstrated by the legal doctrine that all laws are presumed to be constitutional.  The oversight by the courts is a myth in reality, because a strong burden is placed on the people to prove beyond a doubt that the law violates the Constitution.   And the legislative Rules committees that are obligated to check the constitutionality of a bill is also a myth.  In short, we have returned to “The sovereign can do no wrong.”

Due Process of Law constraints

However, the fundamental due process of law obligations set forth in the Constitution do impose restrictions on legislative free-wheeling law making.  Essentially, “due process of law” requires not only proper procedures be followed, but the law at issue must be valid and legitimate.  To enforce a law solely as to the procedural processes would make a mockery of legitimate government, if the law to be enforced is unconstitutional itself.  This point is made quite clearly and empathetically by Timothy Sandefur (Harvard Journal of Law & Public Policy, Winter 2012, p. 337),

“One can easily imagine such a legislature enacting a statute vesting lynch mobs . . . to adjudicate and punish perceived wrongs . . . or a statute assigning automatic death penalty for such vague ‘crimes’ as being ‘uppity.’”

For those readers who believe that this statement is wholly unbelievable and unreal, it is quite close to what is occurring with HOA statutes across the country. They easily amount to special laws for special groups without a legitimate government justification and interest.  Justifications that would pass the requisite judicial scrutiny other than just “a reasonable government interest.” (The silence by the legislatures and government officials as to a legitimate government interest for HOA laws only confirms the lack of any valid justification. See Rights of Man, Thomas Paine.)

Legitimate Law Making

What then, does due process of law impose on the legitimacy  of legislature lawmaking?  Sundefur argues that, “The Due Process Clause was written to ensure that government does not act without reasons, nor for insufficient, corrupt or illusory reasons.”  (p. 287); “This obligates the government to act in a lawful manner.” (p. 290).  He defines a lawful act as “a use of the state’s coercive powers in the service of some general rule that realistically serves a public, not a private end” (my emphasis), and is “a prohibition against government acting in an arbitrary way.” 

In other words, where there is no rational purpose or explanation for the law, as we see with many HOA laws, the law is not legitimate.

“Legislation that singles out a particular business . . . for no legitimate reason or uses irrelevant distinctions as an excuse for treating people differently . . . exercises government power in an arbitrary way.” (p.308).

We are well aware that many statutes deny homeowners rights that they would otherwise enjoy if they were living outside the HOA regime.  (I will skip the arguments concerning a valid contract under contract law, the lack of genuine consent, and the superiority of servitudes law over constitutional and contract laws that allows for the surrender of rights and freedoms under these conditions.)  We know that many HOA statutes can be seen as punitive, such as foreclosure rights; fines without proper due process; granting of “open” liens; allowing HOA fines to accumulate while adjudication of a dispute begins or is occurring; and the mandate that assessments be paid regardless of any dispute with the HOA.

 Sandefur argues that statutes of this type that “burden a group for no other reason than that the victims exercise too little political influence to defend themselves . . . are more like  punishments than law,” and maintains that “Legislation of this sort is arbitrary, based on no other principle except the ipse dixit of force.”  That is, Sandefur is saying, by the mere pronouncement or enactment by the legislature without any justification of supporting arguments – an ipse dixit – the legislature is commanding obedience to the law.

 

If angels were to govern men

Allow me to address the question of why. Why is this happening, especially with HOA statutes?  First, we have forgotten that the structuring of government was based on the realities of human nature, and not on some idealized standard of behavior that the people must strive to attain.  (This level of behavior, for example, would be the unrealistic demand that if HOA members would only get involved in HOA government all problems would go away.)

Second, as Madison wrote, “If angels were to govern men, neither external nor internal controls on government would be necessary.”   The “presumption of constitutionality” doctrine stands in contradiction to the realities of this country and the structuring of government.  It allows the legislators, like HOA boards, to be unaccountable for their acts in passing all sorts of laws without regard to the restrictions of the due process of laws clause.   It is just another example of Sandefur’s argument that ipse dixit laws go unchecked because the people have too little political influence. 

As an aside, as I now write,  Arizona’s HCR 2104 would require every bill  to state the authority under the Arizona Constitution that would  allow this legislative action.  Sadly though, the bill was not meant to go anywhere as it is a “vehicle” or placeholder bill.  It has been sitting, not even heard, in the Judiciary  Committee, and the session ends in April.

And the worst due process of law offense of all is for the legislatures and courts to stand aside and allow these de facto, authoritarian governments to exist outside the social contract known as the Constitution of the United States of America.