Tag: linkedin

Is CAI’s ‘lack of candor to the tribunal’ intentional?

In my recent complaint letter to the NJ Supreme Court (Complaint filed with NJ Supreme Court for CAI lack of “candor to the tribunal”) arguing that CAI lacked “candor to the tribunal” — a violation of attorney professional conduct, RPC 3.3 —  I also charged that the misrepresentation was not accidental or simply an oversight, but was intentional.  “This failure is intentional as evidenced that both the CAI-NJ and CAI ‘Central’ websites do not refer to 501(c)6 status at all.”   

Evidence was provided from several web pages from both CAI-NJ and CAI “Central” that clearly show a co-mingling of representations, an implication that CAI is an educational organization with HOA membership,  and a failure to clearly state that CAI is a 501(c)6 trade organization.

Furthermore, the very fact that CAI-NJ found it necessary to prepare a standard form to justify the validity for HOAs to pay CAI membership fees shows an awareness by CAI of a possible conflict of interest.  It shows CAI advocating for its own agenda and for its HOA clients to breach their fiduciary duties to their members under the law and governing documents.

Further evidence of intentional misrepresentation and a complete disregard of the truth can be found in a 2008 amicus curiae brief to the Colorado appellate court in Booth Creek Townhouse v. Bassick (No. 07 CA 2531)[1].   Here, 3 years after dropping HOA membership in 2005 and 16 years after becoming a business trade group, CAI repeats its boilerplate certification of interest and justification to assist the court.

CAI is a national educational organization . . . . Nationally, members include . . . homeowners associations and condominium associations . . . .” and “CAI is uniquely situated to provide information to this court because all parties within this industry are represented by this organization. 

It would have been entirely acceptable if CAI had just indicated that it promoted and supported the Colorado version of UCIOA, CCIOA (effective 1992) and its subsequent amendments, and let the statutes speak for themselves.  But, this alone would indicate a bias toward protecting HOAs.

No, the evidence is quite clear and convincing that CAI’s repeated misrepresentations were not just a slip of the mind.  These persons are not just Joe Schmoes, but self-proclaimed community associations experts and who provide seminars to the uninformed public.

[1] While a search of Colorado court cases fails to show a record of this case, CAI nevertheless did prepare and file this brief.  “CAI Files Amicus Brief on Behalf of Homeowner in $550,000 Judgment (10/08)”  (Link found on http://www.caionline.org/govt/news/Pages/CAIHeads-UpArchive.aspx June 21, 2012).  (The homeowner charged HOA for failing to perform its maintenance duties. CAI believed that the HOA’s failure to maintain the property was “egregious,” and the “association was so blatantly . . . and unwilling to perform its required duties.”)

 

Complaint filed with NJ Supreme Court for CAI lack of “candor to the tribunal”

A complaint was filed with the NJ Supreme Court against CAI for a lack of “candor to the tribunal” with respect to statements made in CAI-NJ’s amicus curiae brief in Mazdabrook v. Khan.  Excerpts from the complaint letter follow.

________________________________________________________

Two attorneys for the Community Associations Institute (CAI) NJ Chapter, Karpoff and Macysyn, sought and received permission to file an amicus brief and to make oral arguments. They signed certifications as to the truth of the statements made and content of their brief. 

I submit that the arguments to file a brief and to make oral arguments contained misrepresentations and false and misleading statements as to the true nature and purpose of CAI.  These misrepresentations lead the Court, and amicus readers, to believe that CAI is not in a conflict of interest position as its true interests, which oppose the interests of the homeowners associations and the of HOA member homeowners. 

The Macysin certification says the brief is brought on behalf of CAI itself, as a friend of the court to help it in its decision. Yet, throughout the certification one is confused as for whom CAI is representing: CAI itself, the HOAs, or the homeowners.  These are conflicting representations.

 In the 24 paragraph certification, Macysin fails to inform the Court of the legal tax exempt status of CAI as a 501(c)6 tax-exempt organization  as of 1992. CAI chose the vendors and became a trade group so it could avoid the limitations of an educational organization and become actively involved in lobbying in all the states. (The usual course of action is for the consumer group, which is seeking assistance, to set up its own nonprofit educational organization. It then would invite the vendors as affiliate or associate, second-class, members).

 It should be clearly understood that the production of harmonious and vibrant communities is juxtaposed to the true interests of the CAI members.  Rather, the best interest of its true members is to keep the HOA heavily dependent upon the services of its attorney and management members, to foster adversarial relations, hostility and divisiveness, and to deny democratic reforms under the state and US Constitutions.  The CAI record before state legislators and in the courts, including here in New Jersey, speaks for itself. 

The CAI-NJ prepared HOA board resolution (Appendix B, page 6), gives the impression that the HOA board’s decision to join CAI is a valid act.  What this resolution accomplishes is to allow the HOA board to address homeowner concerns about a conflict of interest.  It provides the board with a reasonable justification for joining CAI — education for the benefit of the HOA.

However, the basis for a board to sign-off is that CAI is the “Great Educator” and that CAI has no conflict of interest as a business trade group whose tax-exempt grant is to help its members, not consumer HOAs. The resolution does not state that CAI is a 501(c)6 trade group or that since it was created in 1973 to solve problems with HOAs it has failed to do so for the past 39 years, or that it has repeatedly opposed constitutional protections for homeowners. 

Sanctions were sought against these CAI attorneys.

Final Order: HOA management firm engaged in unauthorized practice of law

Every state has rules regarding the unauthorized practice of law governing what activities constitute acting like a lawyer.  The certified Legal Document Preparer Board of the Arizona Supreme Court found AAM, LLC, both a CAI and Arizona Association of Community Managers (AACM) member, had engaged in such activities, which are commonly found in many other HOAs and with many other management firms/managers. (In Arizona, it’s Supreme Court Rule 31). 

In regard to AAM, many of the State Bar’s Hearing Officer  findings were dismissed and overturned in the Board’s May 24, 2012 Findings of Fact and Conclusions of Law (LDP-NFC –09-L094 and LDP-NFC-10-L026,   not to be found on the State Bar or Supreme Court websites).  The Board found AAM had exceeded its authority as a certified document preparer and violated Rule 31 in that, among other things,

  1. represented the HOA in violation of Rule 31, including signing and submitting lien documents as such were not incidental to its regular business activities;
  2. submitted documents that it had prepared to third-parties, such as collection letters, and filing court motions and complaints;
  3. represented HOAs in small claims court;
  4. although there existed a contract between AAM and the HOA to act as a representative of the HOA, such a contractual arrangement is subject to Rule 31, which cannot be overridden by private agreements;
  5. offered legal advice when it gave, through newsletter statements, made statements about “possible  legal rights, remedies, defenses, options or strategies;”
  6. through its offers to “coordinate payment plans” debt payment plans, AAM was not giving general information but was offering to negotiate with the HOA on behalf of the homeowner;
  7. “offered to negotiate homeowners” legal rights, remedies, defenses, options or strategies;”

 

It is interesting to note that former Arizona Supreme Court Chief Justice Zlaket was called as a witness by AAM.  He stated that “the purpose of the certified legal document preparer rules as protection of the public from charlatans who didn’t know what they were doing, from document prepares who were harming customers by preparing the wrong documents.”

 

 The full, detailed, 55 page Board document can be found at Legal Document

CC&Rs and waivers of constitutional rights in HOA-Land

This June 13th extremely important NJ Supreme Court opinion in Mazdabrook deals with the fundamental constitutional question that the homeowner had waived his rights when he agreed to the CC&Rs  covenants, which are broadly stated, vague, or implied. I have repeatedly argued that homeowners do not!  This opinion will have national impact as other states will follow suit.

Mazdabrook involved  the right of a homeowner to place political signs on his  private property.  The NJ Supreme court said there was no waiver of free speech rights.

Moreover, Khan did not waive his constitutional right to free speech. To be valid, waivers must be knowing, intelligent, and voluntary, and a waiver of constitutional rights in any context must, at the very least, be clear. Khan was not asked to waive his free speech rights; he was asked — by different rules in three documents — to waive the right to post signs before getting Board approval, without any idea about what standards would govern the approval process. That cannot constitute a knowing, intelligent, voluntary waiver of constitutional rights. . . . . Instead, the exercise of those rights can be subject to reasonable time, place, and manner restrictions. Finally, covenants that unreasonably restrict speech may be declared unenforceable as a matter of public policy.  (P. 5).

In other words, that  waiver must meet specific requirements, including an explicit statement of a waiver rather than an broad interpretation or implied waiver as is the current status of CC&Rs.  However, understand that rights can be waived if these requirements are met.

Waiver is the “intentional relinquishment or abandonment of a known right or privilege.” Although rights may be waived, courts “indulge every reasonable presumption against waiver of fundamental constitutional rights.” To be valid, waivers must be knowing, intelligent, and voluntary.

The NJ Supreme Court seemed to have educated itself about the spread of CC&Rs with its boiler-plate wording that imply or are interpreted as a waiver, and takes a slap at comment h under § 3.1, Validity of Covenants (Restatement (Third) Property: Servitudes), that argued for the doctrine of equitable servitudes (covenants) to be held superior to the Constitution.

 The proliferation of residential communities with standard agreements that restrict free speech would violate the fundamental free speech values espoused in our Constitution — the “highest source of public policy” in New Jersey. (P.11).

Validity of CC&Rs to bind

Not addressed and unanswered in this opinion is the fundamental question, by extension of what constitutes a waiver, is the question of the validity of the CC&Rs. Is the doctrine of constructive notice sufficient for the CC&Rs to be held as a binding contract?   If the  CC&Rs are held as invalid, then the question of the waivers of rights becomes moot.

How can the simple notice to the county clerk bind anybody to anything, and be considered a waiver of any right or an agreement to be bound in general?  Especially when it is required that, “To be valid, waivers must be knowing, intelligent, and voluntary.”  There is not even a warning in bold, capitalized, large font stating, at purchase time, that the “Taking this deed alone binds you to the CC&Rs sight unseen, without having to read, sign or agree to it.”

Background information.  This case made references to the Twin Rivers free speech case of 2007, the controlling NJ Schmidt case (as did Twin Rivers), and was also based on violations of the NJ Constitution.  Once again, ACLU and The Rutgers Constitutional Law Clinic, Frank Askin Director, filed an amicus curiae brief.  NJ CAI filed an amicus in opposition.  Both were allowed to present oral arguments on the question of  waivers of constitutional rights under HOA CC&Rs.  It is legal, but not binding precedent outside of NJ.

See HOA member Declaration of US and State citizenship.

The sounds of silence: failing to publish legal opinion on illegal acts by HOA managers

If the guardians,  those disciplinary and oversight entities  protecting the integrity of the Arizona Supreme Court, which itself is the guardian of the integrity of the State of Arizona, fail in their duties and responsibilities under the Arizona Rules of the Supreme Court, what becomes of us?

Many of you are familiar with the old teaser, “If a tree falls in the middle of the woods, and there’s no one around, does it make a sound?”   Then, if a CAI member firm— an HOA attorney or manager — violates the law and the public is not noticed, did they really violate the law?  And, if there are events leading to the conclusion of abuse and a gross defect in the HOA legal concept, and the media fails to report them to the public, are there really serious defects in the HOA legal scheme? 

Readers of these Commentaries are aware of the serious charges made against a CAI member attorney in DC Lot Owners v. Maxwell & Morgan.  An awareness brought to the public’s attention not by public disclosure, as the records have been sealed by court order, but by a few individuals. 

Readers are now being made aware of the recent State Bar UPL Opinion, 12-01, issued in March 2012, relating to the legal acts that may be performed by HOA managers.  (This supersedes the 2004 UPL opinions previously reported here, and directly applies to HOA managers.  The opinion is based on an interpretation of Rule 31, Regulation of the Practice of Law, of the AZ Supreme Court Rules.)   

I am told that the UPL opinion is available, but not on the State Bar’s web page for UPL opinions, or on any State Bar web page.  Yet, its UPL opinion web page proudly declares,

The State Bar’s UPL (unauthorized practice of law) Advisory Committee now provides attorneys and consumers with non-binding written advisory opinions. The opinions interpret the UPL Supreme Court Rules and the Certified Legal Document Preparer Code.

These are the sounds of silence in HOA-Land.  These are the acts and omissions by the members of that unspoken alliance of No Negatives About HOAs.  These revelations are not the result of public disclosure, but by the efforts of a few individuals.   And these few individuals do not include members of the media.  

One can only conclude that the State Bar also has a public policy of protecting HOAs, and their attorneys and managers.