Tag: law

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.

Calif. HOA laws and community service districts

November 18, 2010

                                                                                                                                   email letter

Mr. Brian Hebert

Executive Secretary

California Law Review Commission
4000 Middlefield Road, Room D-1
Palo Alto, California 94303-4739

                                                                                       re: Study H-855

                                                                                       Memo 2010-8

                                                                                       CID Law

Dear Mr. Hebert:

 I am quite disappointed with the Commission’s continued effort to replace the Davis-Stirling using a carbon copy with revisions dealing with the minutia of CID operations.  And still refusing to recognize CIDs as de facto governments, much as Cuba is an unrecognized but de facto government.  Furthermore, CLRC has seen fit to retain the placement of these special laws for the governance of communities under the Civil Code. 

 It appears that the special interest agenda, promoted by the national lobbying trade organization, Community Associations Institute (CAI), still dominates the Commission’s thinking.  Is the Commission aware of CAI’s repudiation of the US Constitution when it wrote in its amicus brief to the NJ appellate court in Twin Rivers that, “In the context of community associations, the unwise extension of constitutional rights to the use of private property by members . . . ” ? Committee For A Better Twin Rivers v. Twin Rivers Homeowners Association (TRHA), Docket No. C-121-00, 2004.

Davis-Stirling and the Commission’s proposed rewrite continue to reflect the State’s exercise of “coercive power”, and “significant encouragement, either overt or covert”  with regard to CIDs.  The CID Laws portray the CID  in a “symbiotic relationship” with the state, “entwined with governmental policies,” and the state government is “entwined in [the CID’s] management or control.”  Such conditions give easy rise to declaring the CID as a state actor.  (See the summary of state action criteria as set forth by the US Supreme Court in Brentwood Academy v. Tennessee Secondary School Athletic Ass’n, 531 U.S. 288, 2001).

I cannot understand why the Commission continues to permit agreements by private parties to create local, private governments that are authoritarian and that deny homeowners their rights and freedoms to which they would otherwise be entitled.  These “declarations” and CC&Rs are just that – devises to circumvent the application of constitutional protections and prohibitions with respect to local communities.  The unsuspecting public is bound to these so-called agreements by virtue of taking hold on their deed sight unseen, without ever having to read, understand or sign these CC&Rs.  The filing of these CC&Rs alone are necessary and sufficient to bind the homeowner, under servitude laws, and not contract law; where the legal-academic aristocrats offer advice that if a conflict exists between servitude law and constitutional law, servitudes law should prevail. (See Restatement Third, Property: Servitudes, § 3.1, comment h).

 It is even more disturbing when existing California law, and similar laws in other states, permit the ability to attain the advertised benefits to the greater community of California and to the local CID community under municipality laws.  In general, they are the special taxing district laws, and in California they are the District and Community Service District Codes (see Government Code, Title 6, §§ 58000 and 61000 et seq. below for the relevant excerpts).  If town hall democracy, local autonomy and the “voice of the community” are indeed the objectives of good government, then the District Code  will meet these objectives, where the replacement of Davis-Stirling is nothing more than a top-down imposition on the local community of special laws for private organizations.  The CID would be subject to the 14th Amendment as are all other public entities, and the laws of the land would indeed be equal for all people.

 I outline the simple method for accomplishing the transformation of CIDs to taxing districts in Chapter 2 of
Understanding the New America of HOA-Lands  (attached for your edification and convenience).  Chapter 3  explores ideal HOA constitutions and Chapter 4 is a lengthy discussion of the two forms of American political government:  HOAs and public entities.


 The Commission should cease and desist its current efforts to further promote the establishment of the second form of American political government, the CID, and return to supporting the principles of democratic government under the US and California Constitutions.

 

Respectfully,

George K. Staropoli

President

Citizens for Constitutional Local Government

 

References

California  Government Code Title 6,  Districts, Division 1, General, § 58000 et seq., and in particular Division 3, Community Service Districts, § 61000 et seq. as relevant.

 

§ 61001.

(a) The Legislature finds and declares all of the following:

(1) The differences among California’s communities reflect the broad diversity of the state’s population, geography, natural resources, history, and economy.

 

(b) The Legislature finds and declares that for many communities,community services districts may be any of the following:

(1) A permanent form of governance that can provide locally adequate levels of public facilities and services.

(3) A form of governance that can serve as an alternative to the incorporation of a new city.

 

(c) In enacting this division, it is the intent of the Legislature: (1) To continue a broad statutory authority for a class of limited-purpose special districts to provide a wide variety of public facilities and services.

(3) That residents, property owners, and public officials use the powers and procedures provided by the Community Services District Law to meet the diversity of the local conditions, circumstances, and resources.

 

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

Understanding deference to HOA boards and overturning bad precedents

A recent California case, Affan v. Portofino Cove HOA, highlights several important aspects of legal precedent and the judicial deference doctrine that all advocates must understand. First, in California, as applied to maintenance decisions only, the court in Lamden v. La Jolla made a reasonable clarification of the business judgment rule and established the “judicial deference” doctrine.

This court ruled:

It is important to note the narrow scope of the Lamden rule. It is a rule of deference to the reasoned decisionmaking of homeowners association boards concerning ordinary maintenance. It does not create a blanket immunity for all the decisions and actions of a homeowners association. The Supreme Court’s precise articulation of the rule makes clear that the rule of deference applies only when a homeowner sues an association over a maintenance decision that meets the enumerated criteria.

The Lamden opinion made clear, however, that the rule applies only in limited circumstances. The court described those specific circumstances as follows: “Where a duly constituted community association board, upon reasonable investigation, in good faith and with regard for the best interests of the community association and its members, exercises discretion within the scope of its authority under relevant statutes, covenants and restrictions to select among means for discharging an obligation to maintain and repair a development’s common areas, courts should defer to the board’s authority and presumed expertise.”

You must understand the ruling, the courts reasoning, and the criteria that make for a valid defense by the HOA, such as, “duly constituted board”, “reasonable investigation”, “in good faith and in the best interests of the community”, “exercises its discretion . . . within . . . its authority”. And the Court added, “The judicial deference doctrine does not shield an association from liability for ignoring problems; instead, it protects the Association’s good faith decisions to maintain and repair common areas.” (emphasis added).

The court in Affan also removed the managers from protection under this defense since they are not an HOA.

Second, the Affan court clearly found fault with the trial court’s conclusion made without substantial evidence, like a dicta (opinions by authority without any foundation being supplied, as found in too many decisions favoring HOAs). “The trial court never decided, based on the evidence . . . . Instead, the court simply concluded as a matter of law, ‘based upon Lamden,’ that defendants were not liable for negligence . . . “ The court overruled the trial court and required a decision based on evidence.

Third, the Affan court illustrates out how the Lamden court overruled the business judgment rule and established the ‘judicial deference” rule, rejecting precedent in the name of justice and fairness. Unjust and unfair precedents favoring the HOA can be and must be overturned!