Tag: justice

HOA taking of property rights can be a constitutional violation

This Florida appellate case, Duvall v. Fair Lane Acres, Inci, has important ramifications for the loss of property rights that are taken away by private entity homeowners associations. The court held that, “These property rights are constitutionally protected, and the trial court erred in ordering the Homeowners to sign the [association] Agreement by which they would be required to surrender these rights.” Here, a voluntary association — that under the declaration was required to provide certain services to all lot owners — attempted to impose additional requirements on and the withdrawal of services from non-members. Fair Lane sought to compel membership by such actions. It even drafted a new declaration and sought, rightfully, the consent of all the lot owners. The Plaintiffs did not consent.

 

With respect to property rights, it is very important to understand that in this instance there was no agreement or covenant that all owners were mandatory members of a homeowners association. Also, the declaration’s explicit covenants were upheld with respect to stated services, and non-stated obligations had to be consented to by each individual lot owner. With bona fide HOAs, the courts have imposed the broad, open-ended “agreement to agree” covenant, pertaining to amending the declaration by majority vote, applicable to those not consenting. By such rulings, in my view, the courts have violated the long standing property rights of lot owners, placing servitudes law above constitutional law. The application of these court rulings, a rejection of equal justice for all and the constitutional prohibition of ex post facto laws, render the declaration at the time of purchase meaningless.

 

Understanding the above, and speaking of homeowners associations, look to your declaration to determine what was explicitly granted to the HOA or obliged to by the lot owner. And that includes any valid amendment to the declaration, if any. All too often the HOA has taken broad liberties and the courts have treated the HOA as if it had the attributes of public government, and ignored the declaration and the owner’s protected property rights. The Duvall court held,

 

The most valuable aspect of the ownership of property is the right to use it. Any infringement on the owner’s full and free use of privately owned property, whether the result of physical limitations or governmentally enacted restrictions, is a direct limitation on, and diminution of, the value of the property and the value of its ownership and accordingly triggers constitutional protections. Snyder v. Bd. of Cnty. Comm’rs, 595 So.2d 65 (1991).

 

To impose a limitation on who can use and enjoy property is a direct restriction on the Homeowners’ ownership rights in their properties. . . . Similarly, to restrict the ability to transfer property by imposing an obligation to seek the approval of the Association is an improper infringement on the Homeowners’ property rights.ii



Putting aside the legal doctrine that homeowners have fully consented to everything and all things done by the HOA, the taking of a homeowner’s property rights by private organizations should be raised in all challenges where the HOA exceeded the rights granted to it by the CC&Rs or state laws.

i   Duvall v. Fair Lane Acres, Inc, No. 2D09-5089 (Fla. 2nd Dist. App., Dec. 1, 2010).

ii  See in general, Ethical obligations of attorneys to HOA members (HOA attorneys supporting transfer fees on sellers).

A legitimate and valid government: obedience in conscience

 

In 2004 I wrote about The Legitimacy of HOA Governance, quoting the writings of constitutional scholar Randy Barnett:i

 

A constitution that lacks adequate procedures to ensure the justice of valid laws is illegitimate even if it was consented to by a majority . . . constitutional legitimacy can even be seen as a product of procedural assurances that legal commands are not unjust”. . . .”A law may be ‘valid’ because it was produced in accordance with all the procedures required by a particular lawmaking system, but be ‘illegitimate’ because these procedures were inadequate to provide assurances that a law is just.

 

Barnett speaks of justice by explaining, “the founders’ view that ‘first come rights, and then comes the Constitution’. The rights that precede the formation of government they call ‘natural rights’ … For these are rights that the people possess before they form a government and therefore retain; they are not positive rights created by government.”

Natural rights define a private domain within which persons may do as they please, provided their conduct does not encroach upon the rightful domain of others. As long as their actions remain within the rightful domain, other persons — including persons calling themselves government officials — should not interfere without a compelling justification.”

And, more directly relating to HOAs where homeowners are assumed to have given their unanimous consent to be governed by the HOA, Barnett wrote,

If there are some rights that cannot be waived or transferred even by the consent of the right-holders, then the unanimous consent regimes [including HOAs], to be legitimate, must offer procedural assurances that these inalienable rights have been protected.

In other words, these inalienable rights are independent of any form of government and that a legitimate government cannot take away or restricted. And this is why I cannot over emphasize the important of arguments based on fundamental principles of American government in our efforts to obtain justice. And this is our biggest problem in fighting HOA governance and its legitimacy over homeowners. This bypasses the important question of contractual consent.

These attitudes and beliefs on the legitimacy of laws and government, and the people’s obligation to obey in good conscience, are not new. They can be found dating back some 260 years in Emmerich de Vallet’s, The Law of Nations.i Exchanging the word “nation” with “homeowners association” would not affect the content of this treatise, except in areas pertaining to the objectives and goals of the HOA society — set forth in its declaration — as compared to a democratic constitution where the primary concern is the people and not the state.

Vattel wrote, “If the greater part of a free people . . are weary of liberty, and resolved to submit to the authority of a monarch,—those citizens . . . though obliged to suffer the majority to do as they please,—are under no obligation at all to submit to the new government . . . . “ (P. 48). In contrast to the HOA constitution, which by its very nature repudiates a democratic government of the people, by the people, for the people, democratic government’s primary concern is to provide for justice. “This obligation flows from the object proposed by uniting in civil society, and from the social compact itself.” Our own Preamble lists “establish justice” first among its objectives. And Vattel cautions, as advocates today ardently have repeatedly sought redress, “The best laws are useless, if they be not observed” and that “a penal sanction becomes necessary, to give the laws their full efficacy.”

In April of this year I wrote The legitimacy of HOA boards and state legislatures , continuing to quote the views of Barnett,

That [the homeowners’] acquiescence to obey these unjust [HOA] laws and covenants cannot be misconstrued and interpreted as having  consented in good conscience to have agreed with the laws or with the HOA’s governing documents.  

 

The vast majority of these HOA and condo statutes and “acts” do not measure up to qualify as legitimate laws.  Our public government, realizing that it cannot achieve a voluntary acceptance and willingness by homeowners to obey these laws in conscience,  must resort to repressive and punitive laws as found in any other dictatorship or banana republic, even those with a facade that the people have a right to vote.  These unjust laws mimic the private government “constitutions”, the governing documents of these planned communities, with their authoritarian HOA governments.

In our recent past, we have witnessed the Rule of Law drifting off into oblivion with increasing encroachments by the short-sighted Rule of Man. By Man who has been preoccupied and narrowly focused on his own personal agenda of “what’s in it for me”, his political legacy, his allegiance first and foremost to the objectives and dogmatic principles of his political party rather to the good of the country and his fellow man.

America has lost its direction and the reason for its being. It is a necessity at this time for all to recapture those reasons for being and to re-establish their rightful position in guiding the actions and decisions of our elected representatives. Only We the People can restore the lost America of our origins. And those who defend the HOA legal scheme, for whatever their perceived benefits, have chosen to accept an authoritarian regime and to have denied and renounced our democratic system of government.

As stated in the Law of Nations, the people who disagree with the majority’s preference for a democratic government, and who have a right to disagree and who prefer HOA governance — who find democratic laws as illegitimate to which they cannot be bound in good conscience — are the ones who should pick up and move, not the majority who still prefer democratic government: “they may quit a society which seems to have dissolved itself in order to unite again under another form: they have a right to retire elsewhere, to sell their lands, and take with them all their effects.” To the bewilderment of many Americans, in our New America, this renunciation of and succession from American constitutional government is acceptable to all our branches of government: executive, judiciary, and legislative.

notes

i  Randy Barnett, Restoring the Lost Constitution: The Presumption of Liberty (Princeton Univ. Press 2004).

ii The Law of Nations or, principles of the law of nature, applied to the conduct and affairs of nations and sovereigns, Emmerich de Vattel, 1758, (Joseph Chitty, ed., 1883), http://www.constitution.org/vattel/vattel-01.htm.

Is America a nation under the rule of law, or of men?

This Monday, November 29th, the Supreme Court is expected to decide whether or not it will accept the Petition on the issue of President Obama’s status as a citizen and to have validity qualified as a President of the US. (Kerchner, No. 10-446)i. The Petitioners make several arguments equally applicable to HOA principalities with respect to the failure of the courts to protect the citizens of this country under its constitutional duties and obligations. HOAs are allowed to supersede and circumvent the supreme law of the land and are treated as principalities independent of and not subject to the Constitution.

Is the Constitution a meaningful document, or just a piece of paper that only serves as a basis to debate exceptions to its application? In other commentaries, I have written that America is no longer under the rule of law, but of men, and those living in HOAs have suffered as a result of the deterioration of this once honorable and noble standard and ideal. The application of the Constitution, as required of all public governmental entities, to de facto private governments is not an issue to state legislatures and those public interest organizations. Such actions relegate the Constitution to a meaningless piece of paper, and men now rule the country following their beliefs, principles and self-interests as evident in many third-world countries.

In Twin Rivers, the NJ Supreme Court rejected constitutional protections of free speech for homeowners in HOAs in favor of the “business judgment rule.” In Arizona, the appellate court found no problem in preferring the corrupt HOA due process “hearings” over independent tribunals by an administrative hearings agency. In contrast, the Supreme Court opinion, in the Kelo eminent domain case, redefined “public use” to mean “public purpose”, and demonstrated a pro-active court and the influence of men, not law, on the American people. All such questions raise the question of, “Where stands the Constitution?”

The Kerchner Petition addressed the role of the judiciary in upholding the balance of powers under the Constitution by not deferring to the legislature to solve all issues. Kerchner argues for the courts to standby their obligations to maintain that balance of powers,

The constitutional issue also cannot be decided by the political parties and a voting majority. Our nation is ultimately guided by the Constitution and the rule of law, not by majority rule. Allowing the political parties and the voting majorities to decide constitutional issues would be tantamount to amending the Constitution without going through the amendment process prescribed by Article V of the Constitution and abandoning the basic principles of republican government. p.29.

The courts, after rejecting the application of constitutional protections, as in the above-mentioned cases, offered consolation to homeowners by informing them that the legislature can “correct” the laws. (As homeowners have been told by numerous state attorneys generals who have broad powers to act, but refuse to do so). How can the Congress or a legislature correct a law when that law has been has been relegated secondary status in accordance with the court’s opinion of what’s good for society? As well said in Kerchner above, majority vote cannot amend the Constitution, and to allow majority vote to override the Constitution makes it meaningless. The supreme law of the land must control, as explicitly stated in the Constitution, and not the rule of men. Get a new Supreme Court Justice and we can get new constitutional laws. Kerchner adds,

 

But what happens when Congress also refuses to perform its constitutional duty . . . ? Surely the Constitution would not leave someone like the petitioners without any remedy to protect the same rights which the Declaration of Independence and the Constitution recognize as their unalienable rights to life, liberty, and property. (See Marbury v. Madison, “where there is a right there is a remedy”).

. . . .

If neither Congress nor the Executive branches of government will give the petitioners that protection to which the Constitution entitles them, they should have access to the courts to be able to protect and vindicate their own rights to that protection. This right to access to the courts is more critical when both the executive and legislature are acting in concert to deprive the petitioners of their right to this protection. p. 30.

This is the sad state of affairs in America today, where the Constitution has been ignored by the courts and the legislatures in favor of private de facto HOA principalities that owe little allegiance or obedience to our system of government. Where public government in total approves of the homeowners association with its repudiation of our American system of government. Where men rule according to their particular beliefs, and those beliefs often hold the Constitution secondary to their personal agendas.

 

i  Kerchner v. Obama, II, No. 10-446, Petition for a Writ of Certiorari, Sept. 30, 2010.

Who prosecutes on behalf of homeowners in HOAs?

Qui Pro Domina Justitia Sequitur

(‘who prosecutes on behalf of Lady Justice?’)

 

 

Attorney Penny Koepke appeared on the Nov. 19th Arizona KPHO TV segment, “HOA Disputes,” as the demure and soft spoken attorney from the Ekmark & Ekmark law firm, and spoke in favor of the demise of due process protections for homeowners. (See http://www.kpho.com/local-video/index.html and select “HOA Disputes”). The court case discussed in this news segment was Gelb v. DFBLS (in re Sedona Casa Contenta HOA).

 

Please note that the Carpenter Hazlewood law firm, which pursued the constitutionality challenge to the state agency adjudication of HOA disputes in three cases leading up to the Gelb decision, does not appear in the KPHO segment. Partners Carpenter and Hazlewood, as well as Curtis Ekmark, are all members of the national HOA lobbying trade organization (not an educational 501(c)3 organization), Community Associations Institute, CAI. Ms. Koepke does not admit to being a member, but frequently speaks and lectures at seminars and conferences for CAI.

 

In 2004, Ms Koepke also appeared before the Arizona House FMPR committee hearing on the HOA foreclosure reform bill, HB 2402. She addressed the committee and responded to questions by the bill’s sponsor, Rep. Farnsworth, for about 21 minutes. (The audio CD is available from the Clerk’s office archives for a small fee).

 

Following this hearing, I produced a segment on HB2402 from the House audio CD. In her testimony Ms Koepke had stated that she was an ethical person of integrity who foreclosed only as a last resort upon the instructions of her HOA clients. However, she had a problem with making use of alternative methods of collecting debts as are available to all lien holder in other arenas, and saw no moral issue with completely stripping the homeowner of all his equity for a few pieces of silver. Her justification was that they were “scofflaws” who needed to be punished to deter future untimely payments. In the complete audio, you will hear the committee Chair informing Ms Koepke that such actions were “unconscionable.” I added a commentary as an addendum, which presented a few background cases and incidents in which Ms Koepke was involved. This short commentary video can be found at Foreclosures.

 

It should be apparent by now, with respect to foreclosures and due process protections in general, that a homeowner can get a better deal from the IRS than from his HOA backed by attorneys. There is no requirement in the HOA “contract” — the CC&Rs “constitution” — requiring the HOA to be fair, just, compassionate, conciliatory or charitable. Remember: “It’s the contract, stupid,” and you are not protected as one would think under state laws and constitutions.

Appellate court holds HOA board to fiduciary obligations of good faith and negligence

The California appellate court in Telford[i] has taken a long sought defense in favor of homeowners against the negligence and bad faith dealings by the board, stating that the homeowners’ association is not relieved “from liability for breach of its fiduciary duties because it occupied ‘a particularly elevated position of trust’ due to its quasi-governmental status and ‘the many interests it monitors and services it performs.‘” (Emphasis added). The court added that:  “because a homeowners’ association stands in a fiduciary relationship with the member homeowners,” a failure to monitor the project was a breach of its fiduciary duties to the memebrs in general. (Understand that the board does not have a fiduciary duty to any one specific member).

This single opinion strikes at one defect in the HOA legal scheme that was necessary for the widespread adoption and mass marketing of HOAs, the “free ride.” No longer will HOA boards get a free ride under the business judgment rule, but will now be held to act responsibly under its quasi-governmental legal status. The “free ride” laws and rulings were necessary to get uninformed, untrained and, in many cases, conscripted members, to join the board without any accountability. Now, this holding places a real-life awakening to the propaganda and myth that the HOA has no downside.

In this case, plaintiff Telford filed suit against the board on the basis of an approved construction project by a neighbor, charging a loss of quiet enjoyment, emotional stress, public and private nuisance, and negligence in enforcing compliance with the governing documents. (It is important to note that this was not a claim of contractual violations). Telford also charged that the approval “was not only negligent, but unreasonable, arbitrary and in bad faith” as its approval was based on friendships between the board and the member. Here, we are not only concerned with those broad powers and obligations granted to the board, but the application of the business judgment rule [BJR] that governs the broad, discretionary powers granted to the board. The Court repeated the precise ruling in Lamden (often neglected in CAI attorney citations): “deference is accorded only if the association has acted ‘upon reasonable investigation, in good faith and with regard for the best interests of the community association and its members.’” BJR is not a grant of unlimited powers to the board.

Furthermore, with respect to a breach of fiduciary duty, the Court stated that a “breach of fiduciary duty is a tort.” And as I mentioned elsewhere, a tort is a common law wrongful act that allows for punitive damages against the board and/or individual director. A tort provides a strng counter-measure against the one-sided financial damages that HOA boards are entitled under state laws and the governing documents.

A second very important opinion that is addressed in Telford is the HOA board’s defense that there is an exculpatory clause in the governing documents; that is, a clause that grants the board immunity from liability as a result of its actions. The Court held, however, that this type of clause was against public policy and therefore invalid:

The law has traditionally viewed with disfavor attempts to secure insulation from one’s own negligence or wilful misconduct[.] “Furthermore, it is the express statutory policy of this state that `[a]ll contracts which have for their object, directly or indirectly, to exempt anyone from the responsibility for his own fraud or willful injury to the person or property of another, or violation of law, whether willful or negligent, are against the policy of the law.’”

Punitive damages are monetary compensation awarded to an injured party that goes beyond that which is necessary to compensate the individual for losses, and that is intended to punish the wrongdoer.

Punitive damages can serve to “police” the HOA board in view of the fact that state laws and the governing documents do not contain penalties, and serve to protect boards from accountability.  See Public Policy, Tort Law and Planned Communities[ii].
 
 

 

 

Reference 

i Telford v. Sagewood HOA, No. E048483, Cal. App. 4th Dist., Nov. 16, 2010.

ii  http://pvtgov.org/pvtgov/downloads/policy-torts.pdf