Tag: judicial scrutiny

Business Judgment Rule: an outstanding con job!

In short, the business judgment rule (BJR) is an unconstitutional delegation of legislative powers to a private entity.  The rule essentially allows the judge to defer to the HOA board as best to decide the matter,  denying the due process of law for citizens to be heard in court.  It is an unequal protection of the laws! However, the lawsuit was before the court to obtain an independent and supposedly unbiased application of the law. Think about it! The court is rubberstamping the BOD’s decision. Say what!

It’s nothing more than an understandingly successful con job fostered upon HOA members.  The BJR is a poster child for the need for advocates to be fully educated about the laws, government, and the courts.  STOP THE CON!

First, be aware that you will not find “business judgment rule” anywhere in state statutes and codes, that’s why it’s referred to as a “rule.”  What the reader will find are references to the duties and obligations of directors and officers to be fair, without conflicts, and acting in the best interest of the HOA. This is the basis for the misguided presumption.

Let me explain as best as I could and keep this complex issue as simple as possible. The courts’ adoption and continuing support for  the BJR avoids and ignores several constitutional issues at play: 1) delegation of legislative powers, 2) the HOA as a state actor, functioning in the place of municipal government, and 3) the judicial scrutiny doctrine testing the constitutionality of a laws. 

Read the full paper here: the con job

Judicial Scrutiny standards judge claims of constitutionality

Claims regarding the constitutionality of laws are subject to judicial review. Generally speaking, and simplifying matters considerably, courts use three different standards to adjudicate constitutional claims: (1) rational basis review; (2) intermediate scrutiny; (3) and strict scrutiny. The “standard of scrutiny” applied to a particular claim is of critical legal importance and usually determines whether the claim will succeed.  

The first standard — rational basis review — is the most forgiving.  Under rational basis review, a litigant challenging a law on constitutional grounds “bear[s] the burden of proving that it does not bear a rational relation to any conceivably legitimate governmental purpose—even a hypothetical one.”  With vanishingly few exceptions, nearly all laws satisfy this standard.

The second standard, known as “intermediate scrutiny,” raises the stakes considerably.   Under this . . .  a law “must serve important governmental objectives, and . . . the discriminatory means employed must be substantially related to the achievement of those objectives.”  

The third standard of review, which is the most rigorous, is “strict scrutiny.”  Under strict scrutiny, “the government must prove that the challenged law is both narrowly tailored and the least-restrictive means available to further a compelling governmental interest.”  Strict scrutiny applies in areas such as racial and religious discrimination, and it also applies to many claims involving free speech.

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I have yet to see any valid government justification in support of the HOA legal scheme that deprives citizens of their constitutional and fundamental rights. Some have argued that it eases the state/county’s financial burden as a legitimate government interest. However, the HOA scheme must be reviewed under strict scrutiny as it damages the members’ rights and freedoms. Furthermore, the claim that the member agreed to the Declaration and surrendered and waived his rights has come under criticism as an invalid surrender in the courts.

Source: Constitutional Standards of Scrutiny (link: Supreme Court of Tennessee Blog)