I am confused by two CAI Arizona supreme court briefs in defense of the HOA in CAO v. Dorsey;[i] one by Scott Carpenter and the other by Krupnik, a former Carpenter attorney and, along with Scott, a member of the CAI attorney’s group, the College of Community Associations Lawyers (CCAL). In my view dealing with CAI over 23 years in several states, it reflects the awareness by CAI of the potential loss of its dominance over HOA boards and state legislatures.
The CAI Krupnick brief
In Krupnick’s brief, she argues that condos are a creature of state law otherwise they could not exist. We all know that state HOA laws and Acts favor the HOA against member rights.
“Sui generis presents a view of HOAs as private government principalities supported by your state legislature and is used to justify special laws for a special organization, the HOA. But the condominium is a unique form of real property ownership and . . . are created and governed by specific statutory schemes that deal with ownership, administration, transfer, and termination of commonly held property interests. More fundamentally, it is that statutory scheme, not the common law, that frames the issues in this controversy”[ii]
Does that make them state actors — arms of the state?[iii] Existing constitutional law is inadequate to support this model of local governance [sui generis] and so, in violation of US and state constitutions, we see all those HOA/PUD/condo “Acts” in almost every state. These Acts constitute a parallel supreme law of the land with sharp contrasts to the US Constitution.
Krupnik stresses state laws control and “reasonable expectations”[iv] is not involved. “the amendment to A.R.S. § 33-1228 . . . does not significantly impinge on the parties’ reasonable expectations.” Her argument is that it would create problems for the administration of the HOA to have so many grandfathered clauses as the governing documents are amended from time-to-time. Gee, for over 247 years we have lived with the protection of grandfathered clauses in the public domain. What’s the problem? The fear mongered survival of the HOA and CAI’s member income stream, that’s what!!
In my early days a CAI member emailed me saying: “What are you doing, George? We have a good thing going here.”
The CAI Carpenter brief
I focus on an important aspect of this brief.
Carpenter follows Krupnick’s argument on the need for uniformity, citing a precedent which held that “majority and minority owners alike were subject to a uniform set of rules which were consistent with the parties’ collective expectations at the time of contract.” Adding, “If left unchecked, the Opinion will very quickly leave Arizona community associations struggling to discern which versions of the state’s robust statutory schemes apply to which owners in their communities.”
Carpenter raises a valid question, one that I concluded with in my commentary on CAO, should the HOA need to ask each owner if he agrees to be bound by state law? And also asked for agreement to reasonably expected future amendments to forced sale in a takeover scenario. How can one agree to something ill defined? This is a question to mislead the focus of the lawsuit. Carpenter ignores contract law that requires a bona fide meeting of the minds and an understanding of the explicit terms, and any assertion to be bound by iffy amendments in the future is without validity.
Obviously, contract law implicitly raises the question of surprises and a true meeting of the minds. No putting one past the other party in a violation of good faith. We know that there is wide misrepresentation in the selling process!
“By focusing on the amorphous concept of an owners’ reasonable expectations at the time they took title subject to an association’s declaration, the Court of Appeals has ignored an important reality: the statutes which apply to owners and associations must be applied uniformly, unless they contradict a pre-existing express term of the contractual covenants.”
He is arguing that ex post facto HOA amendments are valid, and the constitutional protections do not apply to private contracts. After all, according to CAI HOAs are sui generis and have their own “constitution” outside the US Constitution. Carpenter makes the anguished plea — my interpretation –
“By creating an untenable and unworkable rule which deeply burdens associations and the owners who comprise them, the Court of Appeals’ Opinion will make it nearly impossible for any future association to effectively terminate their condominium.”
Poor baby! It’s a cost of doing business under the HOA legal scheme, but CAI wants more favorable treatment. It’s an HOA defect because of the limited number of payees to support the HOA — the members who are severally and jointly responsible for the viability of the HOA. (If Pete can’t pay, we’ll get it from Joe or Mary who can pay). Is that a reasonable expectation of members?? I don’t think that have any idea of their financial obligations.
Please note that five other amicus briefs were filed in favor of the homeowner, CAO, including one by the Cato Institute and one by Arizona’s Goldwater Institute. Only CAI opposed the appellate decision.
Notes
[i] CAO v. Dorsey, CA-CV 21-0275 (Ariz. App. Div.1, 2022).
[ii] Why aren’t HOAs held as state actors based on USSC criteria? (2019).
[iii] Id. The US Supreme Court has held state laws that are “supportive”, “cooperating,” “encouraging,” and “entwined” in both public policy . . . and in the “management and control” of the HOA create state actors.
[iv] See HOA constitutional “takings” and reasonable amendments.
HOA Constitutional Government 