Tag: justice

AZ Supreme Court denied hearing the Gelb Petition to restore ALJ adjudication of HOA disputes

Yesterday, May 24th, the Arizona Supreme Court simply DENIED hearing this Petition to vacate the lower court ruling that the Arizona agency, DFBLS, had violated the separation of powers doctrine when hearing  HOA disputes .  Disappointing, but not surprising given the new laws to take effect on July 20th, that addressed the separation of powers opinion. It still allows DFBLS to deny accepting complaints since ARS 41-2198(3), the statute authorizing DFBLS, was not vacated. It still stands.

Consequently, in the event that a complaint is filed on or after July 20th and DFBLS denies accepting the complaint, another challenge to the constitutionality of the law would be necessary. If DFLS accepts the complaint, rest assured that Darth Vader is ready with another challenge.

Why is this possible? Doesn’t the appellate court opinion serve as precedent and that’s that? NO, the door was opened by the Court! The Court in addition to its regular fashion of terse announcements, DENIED or ACCEPTED, added an order under its powers to do so, AZ Supreme Court Rule 111(g), that the Gelb decision was not to be published. Not being published means that it is not binding authority, or precedent. It seems then that the door is open and res judicata – already decided – doesn’t apply.

Why allow another shot” at constitutionality? Maybe, as I have argued, the arguments in support of the law relied on the same two cases, Cactus Wren and Hancock, accepted as controlling in both Gelb and in Waugaman (in the only other case that involved a decision, the superior court decision Troon v. DFBLS, Waugaman, LC2007-000598, Maricopa County), left something to be desired. Like the entire body of constitutional law and on the administrative procedures act concerning the acceptance of quasi-judicial authority of executive agencies. Yes, sharing does occur, and none of the applicable rulings were based on the extent of the agency’s regulatory functions, as the DFBLS cases were, (Gelb essentially followed the arguments in Waugaman).

July 20th will be the next phase of the fight by homeowner rights advocates for due process and the equal protection of the laws. The AZ Supreme Court just “punted.”

See AZ Supreme Court to decide whether  or not to proceed on Gelb and HOA adjudication

Do not buy an HOA controlled home in Arizona — you are on your own!

In Arizona, neither its Attorney General nor real estate department, ADRE, will  get involved in HOA issues. The AG’s broad authority includes consumer protection involing real estate transactions and white collar crimes. ADRE’s stated mission also claims that it protects consumer home buyers: “We want to protect consumers from being harmed in real estate transactions.” Like with the AG, there’s is no exception in the laws for transactions and acts involving HOAs. (These agencies can’t explicitly exclude HOAs without incurring charges of violations of the constitutional prohibition against the unequal application of the laws).

The AG’s office, under its revised web site for the new AG, offers a number of consumer guides from auto purchases, Indian arts & crafts, predatory lending, and telephone scams, but not a word about HOAs. There is no “Truth in HOAs” pamphlet Its “Protecting Consumers” reads (emphasis added),

Consumer fraud, as defined by Arizona law, is any deception, false statement, false pretense, false promise or misrepresentation made by a seller or advertiser of merchandise. In addition, concealment, suppression or failure to disclose a material fact may be consumer fraud if it is done with the intent that others rely on such concealment, suppression or nondisclosure. Merchandise may include any objects, wares, goods, commodities, intangibles, real estate or services.

ADRE has Commissioner’s Rules, having the effect of law, that includes R4-28-1101, Duties to Clients. It, too, cautions about revealing material facts (emphasis added),

A. The licensee shall also deal fairly with all other parties to a transaction.

B. A licensee participating in a real estate transaction shall disclose in writing to all other parties any information the licensee possesses that materially or adversely affects the consideration to be paid by any party

When asked, for the third time over 7 years, why ADRE doesn’t enforce this rule when it comes to HOA transactions, its typical answer dealt with their non-regulation of HOAs, and, in this recent reply (emphasis added),

However the Department has to be advised, typically by way of official complaint, that there is an apparent abuse of the laws occurring. At that time, the Department would investigate and proceed from there. Without knowledge of a perceived violation occurring, the investigation cannot begin.

What we have here is a failure to act, a failure of government authorities to make their allegations about consumer protection — in effect their propaganda that deceives the people — a reality. It’s an instance of “the tail wagging the dog.” In regard to ADRE, the people, not the agency, must act. The agency will not act under its powers until some individual claims that a violation had occurred. I say again, ADRE wants you, the homeowner to file a complaint before it acts — “the Department has to be advised, typically by way of official complaint.”

But, what about adopting another approach like that used by police departments with their Internal Affairs department, which on its own, investigates seemingly suspect behavior, without a person having to come forth. This failure makes the true role of ADRE is BPOA— the Benevolent and Protective Order of Agents.

These deceptions reflect the deception found in the judicial branch misleading motto, ”Equal Justice Under the Law.” We all know that the laws can be unjust and selectively enforced, and we know that this is true of the HOAs laws in all states. And these deceptions reflect the ills of our society, the “Not me, I’m not responsible” attitude by those in authority.

“Blaming the wolf will not help the sheep much. The sheep must learn  not to fall into the clutches of the wolf.” Gandhi.

How is your state doing? Any better? Are you protected when you by into an HOA controlled home in your state? I think not! Will you sign the Truth in HOAs Disclosure Agreement  before you buy? Read and find out. Remember, you are on your own.

The acceptance of Privatopia and the New America of HOA-Land

In his recent interview on OnTheCommons, Evan McKenzie suggested that his new book, Beyond Privatopia, is a collection of his past papers. If so, I believe the following gives a glimpse into what the reader can expect.

In 2004, Arizona advocates had a tough fight to get HB 2402 passed into law. It was to eliminate HOA foreclosures, but we had to settle for no foreclosures for fines, retaining foreclosure for assessments.

McKenzie gave his views on HOA foreclosure and the need for HOAs to survive during this hard fought battle in his Privatopia Papers Blog of March 12 and 13, 2004. (Scroll down and read the March 12th entry, “The plain truth about HOA foreclosures…”, then read his defensive entry of the 13th, “More on foreclosure.” I, too, took offense to his views.

McKenzie’s comments were not at all helpful to the people suffering this gross injustice of this law. His statements reflected the views of the legal-academic aristocracy that the state must survive, that the state comes first. And by “state” I mean the HOA. That the New America of HOA-Land is a legitimate government of the people.

An excerpt from this lengthy entry sums it up,

A third [objection] is the lack of any alternative [by advocates] that would allow HOAs to continue functioning, and advocating instead for positions that would almost certainly destroy common interest housing and leave millions of people in major financial trouble. . . . HOAs would end up competing with all the other creditors–credit card companies, tax collectors, etc.–for the money they need to fix the roof this month. Net result: the existing owners bear the burden for the non-payers. . . . That is a completely unsustainable situation.

I’ve always been against associations having dictatorial power. I’m also against going to the opposite extreme and leaving them powerless. If we go from banana republics to failed states, most people won’t like the latter any better than the former, and somebody will have to pick up the pieces of failed CIDs. Who will that be?

McKenzie presumes that the status quo preserves the HOA, and that susbstantive reforms will only leave the HOA powerless and lead to its inevitable failure. As a political scientist, he does not address the questions that maybe, just maybe, with their current defective legal scheme that HOAs should be allowed to fail. He avoids “muni-zation”, creating special HOA “taxing districts” as public entities, as an alternative. He does not address the question as to why HOAs deserve government protections to foreclose for failures to pay “taxes” as if it were a public entity. The HOA has no hard cash outlays to recoup as a lender does.

Perhaps he fears that real democracy will destroy the HOA that needs strict enforcement of “laws” and an unquestionable obedience to its often arbitrary and capricious objectives in order for it to survive. That public government intrusion is worse than today’s unaccountable private HOA government intrusion. He no longer speaks in the same terms of the constitutional arguments as he did in the 1994 Privatopia.

History shows that successful social and political change involved both an intellectual group to guide and show the way, and an operational group to make their thoughts a reality — working together. You just need to look at the American Revolution, the Irish and Indian independence movements, and the rise of communism in Russia, China and Cuba. There are no intellectual leaders for HOA reforms, and that is a prime reason why the “pink flamingo groups” are not united.

In Gandhi’s dealings with the British Raj for independence, the Brits reminded him that India was a British Colony. He replied, “India belongs to the Indians.” 

In America today, America belongs to the people, not to the HOA regime.

What the HOA laws say and don’t say, and unjust narrow readings

 

The unjust HOA statutes on the books in almost all states were written with the help and guidance of the national pro-HOA lobbying organization known as Community Associations Institute – CAI. Many of these laws, in addition to a narrow reading for questionable Rule 11(a) litigation,  use phraseology leading the reader to believe that HOAs are fair, just and democratic governments. But, when the uniformed read and apply them, like in the case of many HOA managers and boards, they adopt an unjust strict and narrow, “black and white” reading of the words.   

A few examples, as commonly found in both the CC&Rs and statutes, are: 1) with respect to violations alleged by the HOA before it may fine a member, “after an opportunity to be heard”; and 2) with respect to homeowner access to HOA corporation records, “privileged communication” or “attorney – client privilege,” and “contemplated” or “pending” litigation. The attorneys well know the legal concepts behind these terms and how they are unjustly used by the unknowing to the detriment of the homeowner.

First, with respect to HOA violation hearings, a narrow reading of the law simply says that the HOA hold a meeting to allow the member to speak before it finds him guilty of violations. It does not have to meet the legal doctrine of due process protections of a hearing by an independent tribunal where the accused can confront the evidence and witnesses, and may bring witnesses and present his evidence. The law neither requires any adherence to minimal hearing procedures for a fair trial, such as mediation rules, or the rules as set forth in the state’s APA laws regarding hearings before administrative law judges (ALJ). The law and the CC&Rs don’t require them to! But the HOA defenders offer these covenants as just procedures.

 Second, “attorney – client” privilege or “privileged” communications is another “half-truth” misapplied by the unknowing to prevent access to legitimate corporate records, such as detailed financials; contracts, including management firm and attorney contracts; monies paid to the HOA attorney in pursuit of litigation, etc. Privilege is raised not by the attorney, or at the attorney’s insistence, but by the board.

The meaning of “privileged attorney communications” is well established legal doctrine pertaining to attorney work product – the notes, communications pertaining to strategy and tactics in regard to litigation. It is well established that attorney-client privilege does not apply to corporate records.  But the uninformed use it to refuse the homeowner’s legal request, which leaves the homeowner to indeed consider litigation to obtain what is legally valid.

And when is “pending litigation” a fact? Wouldn’t one think that it would require that the HOA was informed by a reliable person, like an attoreny, that if so-and-so doesn’t occur he will sue? Or, is it simply that the board raises this in any context where it refuses to provide the business documents by saying, “I think the homeowner is going to sue”, or “Let’s sue him”?  That is pure and simple “abuse of process.”

Why would a board refuse to proved HOA business records? Wouldn’t that be an indication that they have something to hide? Isn’t that a violation of the board’s duty to the HOA nonprofit corporation to act 1) in good faith , 2) as a prudent person would in similar circumstances (as if it had to spend its own money), and 3) for the benefit of the HOA? And not to protect their activities.

 Apparently the board is unaware, or hasn’t been properly informed by its attorney, that “A director is not acting in good faith if the director has knowledge concerning the matter in question that makes reliance [on competent legal advice] unwarranted.” Like, maybe, the allegations of a violation are false and contrived, or the “facts” are not true, or that “Mr. X is lying. (The quote is taken from an Arizona statute, but the point is that his good faith reliance cannot be claimed as a defense when the director had other knowledge.)

One would think that the HOA attorneys, especially those “illustrious” members of CAI’s College of Community Associations Lawyers, would know all this. And that these CAI lawyer – lobbyists would be at the forefront of HOA reform legislation to correct these injustices. Doesn’t CAI promote the message (see its web site) that they are “Building Better Communities” and “dedicated to fostering vibrant, competent, harmonious community associations.” Yet, they work against these simple reforms. How can CAI make such statements and not work to create a just and legitimate form of community government?

Narrow interpretations of HOA law and Rule 11(a): CAI game plan?

 In order to understand CAI’s adversarial position to homeowner reforms and its activities to promote litigation challenges, we need to look into its activities and not its lofty pronouncements. As you know, Rule 11(a) requires that the attorney perform a reasonable inquiry into the genuine issues of law or fact of the HOA allegations before undertaking any law suit. (See HOA attorney failure to inquire into merits of a complaint — R Civ P. 11(a)). We can get a good idea of CAI’s motivations for pursuing litigation from its activities with respect to HOA reform laws.

In spite of strenuous opposition by advocates, the sponsor, Arizona Rep. Montenegro, pursued this bill, HB 2441, to the very last floor vote before it was soundly defeated. (See CAI soundly thrashed by Arizona Senate). His support for this disgraceful bill can only stem from 1) that he is true believer in the New America of HOA-Lands, or 2) that he succumbed to the heavy influence of the national trade organization, CAI.

Advocates had attempted to inform Montenegro and the legislators of CAI’s real intent, which was not the betterment of the community or the state of Arizona, but its own self-interests – control of the HOA landscape.  As further evidence of this opposition to the intent of the law, the former CAI chapter president and lobbyist, Scott Carpenter of Carpenter Hazlewood, released examples of what could be seen as “how HOAs can get around the law.”

In my comment to New Arizona laws for 2011 session — thanks to the legislators, I critique Carpenter’s “reasonable rules” that HOAs may impose on the recording of HOA meetings, the new HB 2445 law. One is a 24-hour prior written notice to the board, which can easily “disappear” at its convenience. Also, among is “reasonableness” are that all recordings must be on tripods and must use batteries – seems contradictory with respect to its stated concerns about safety issues. And that the HOA has a right to obtain a copy of the recording – at a reasonable cost. H’mmm, maybe the feel paranoid and that its own recordings won’t capture everything? Or is he just putting up obstacles “to make life difficult?”

Again, a CAI attorney, Carolyn Goldschmidt, takes up another controversial issue with respect to applicability of Title 10 statutes for nonprofit corporations and Title 33 statutes on HOAs and condos. (By the way, the resurrected statutes for ALJ adjudication of HOA disputes, SB 1148, does not permit the ALJ to decide issues outside of Title 33). Basically, does ARS 10-3708 or ARS 33-1812 control the holding of HOA elections and meetings? In an attempt to avoid the HOA statutes with respect to meetings and elections, Goldschmidt narrowly argues that an election without a meeting is valid under Title 10. Yet Title 33 contains strict requirements for meetings and elections – notice, ballot, agenda and quorums.

The HOA held an election that was not part of the meeting, as it claims, and the subsequent meeting just counted the votes but took no action. Say what? Isn’t a “certification” or a counting of election results at an annual meeting an “action”? And, as Goldschmidt well knows as she had participated in several OAH complaints, this dispute would not fall under the Office of Administrative Hearings jurisdiction by an ALJ. (And neither would the other very important common laws found in Chapters 6 and 3 of the Restatement (Third) of Property: Servitudes).

It is these actions in the real world and not the pontifications by CAI and it seminars, conferences, articles, columns or interviews that reflect what CAI is all about. That reflect CAI attorney pursuits of litigation, advertising and advising loopholes in the laws using narrow interpretations of the law, which can be highly questionable under Rule 11(a). And it is not about principles of democratic government within the New America of HOA-Lands or making for a better America or community, its about power over the HOA second form of political government. And attorney fees.

If charged with violating Rule 11(a), and so judged, can the HOA file against the attorney for its attorney fees?