Tag: litigation

All state “may/shall” statutes imply HOAs as state actors

The use of the words “shall” and “may” have generally accepted meanings in state laws and statutes. Their use in bills and laws relating to HOA-Land raises the highly controversial question of: Are HOAs state actors?  “The overlooked impact and consequence of this word is to legalize activities and actions that were all-to-fore not legal rights granted to the HOA.”[1]

Arizona’s HB 2575 creates HOAs as state actors with the slick use of the legal differences between these terms. BUT, as applied to sui generis HOAs, implicitly create state actors. The bill introduces a new section (emphasis added) with, “ARS 33-1820. Powers of the association. Subject to the provisions of the declaration, the association may:” A 12 item list is presented mimicking the CC&Rs, a common tactic to legitimize contractual challenges to the governing documents. Very clever!

Item 4 is particularly onerous because of the use of the introductory “the association may.” A 12 item list is presented mimicking the CC&Rs, a common tactic to legitimize contractual challenges to the governing documents. Very clever!

Item 4 was particularly onerous because it permitted the HOA Board to lobby in the name of the members.

“[the association may ] 4. Institute, defend or intervene in litigation or administrative proceedings in its own name on behalf of itself or two or more members on matters affecting the association or planned community or the members’ interests.”

After 3 sessions ending with “ret on cal,” (retain on calendar)  I emailed my may/shall state actor argument (as summarized here) to the legislative leadership resulting in the sponsor’s amendment rewording item (4). In relevant part, “the association may not institute, defend or intervene in litigation or arbitration in its own name on behalf of itself or a member.”

Thus, a potential constitutionality challenge was avoided as I had instituted in 2013, and won, with the help on a nonprofit legal organization, Arizona Center for Law in the Public Interest (ACLPI).[2]

Although the bill passed out of the House with the other argument that the 12 items also reflect an implied state arm it was a major victory 1) on a broad constitutionality issue and 2) a punch in the nose to CAI who actively sponsored this bill, according to the AZ Homeowners Coalition.  CAI can be beat!

There are other arenas to challenge and expose CAI for what it is and stands for.  I present some 56 events over 24 years that serve to guide what worked and what did not work for advocates to successfully challenge the Evil Empire. Organized into 4 sections: On Reform Legislation, On The Bill of Rights, On the Judiciary, and On Civics.[3]  Available on Amazon, paperback or Kindle.

References

[1] See in general, Are HOA state actors created by statutory use of shall/may? (Section 2, paragraphs 5 +). (2019).

[2] Suing the AZ Legislature: AZ Attorney General admits SB 1454 HOA to be invalid and without effect.

[3] Read the book, HOA Constitutional Government: the continuing battle. 

The neglected court Rule 11(b)

An informative Arizona case, Potter v. Arizona House [Potter],  brought forth claims that Rules of Civil Procedure 11(b) [FRCP] were violated by plaintiff and sanctions were awarded under 11(c).  Potter in his lawsuit discovery request sought Arizona House of Representatives public records, and also sought communications records between a private,  third party person and the Representative being charged. She refused claiming as a private person she was not subject to public records disclosure laws.

She filed a Rule 11(b) complaint citing (b)(1) and (b)(2) that the request was improper and to harass and delay, and that the claims were unwarranted —  “frivolous”. The court had evidence and ruled that Potter was vexatious litigant – in short just a troublemaker – that didn’t help Potter and the court did not dismiss her charges;  sanctions were justified.

This Commentary brings an important message to those homeowners who have complained on social media about their HOA many times, on many issues, over a period of time. You have probably been seen, not charged, as a troublemaker tying up the court’s time. Not helpful. 

To make my point, allow me to quote the phrase from the old Dragnet TV police series of the 1950s:  “Just the facts, Mame. Just the facts.”

See in general,  HOA members fail to invoke their strongest weapon — Rule 11, representations to the court (2018).

 References

Potter.   Potter v. Arizona House, CA-CV 23-0213, Ariz. App. 1 (2-1-2024).

FRCP-11. Note this FRCP Representations section can also be found in state rules of civil procedure, R 11 (b). Both contain R 11(c) that provides sanctions for violations.

Federal Rules Civil Practice (FRCP-11)

“(b) Representations to the Court. By presenting to the court a pleading, written motion, or other paper—whether by signing, filing, submitting, or later advocating it—an attorney or unrepresented party certifies that to the best of the person’s knowledge, information, and belief, formed after an inquiry reasonable under the circumstances: (1) it is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation; (2) the claims, defenses, and other legal contentions are warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law; (3) the factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support after a reasonable opportunity for further investigation or discovery; and (4) the denials of factual contentions are warranted on the evidence or, if specifically so identified, are reasonably based on belief or a lack of information.”

Beware settlement agreements and gag orders

In reality, Life does not go according to Hoyle.

We are all quite aware that many lawsuits are settled with a gag order attached, especially when CAI is involved (not in this lawsuit).  To my surprise and disbelief, in Arizona, a gag order is not material to an agreement between to parties in a lawsuit.

A recent Arizona appellate decision involved a court ordered settlement conference in which the parties verbally agreed to the terms of the settlement and a written agreement was prepared to be submitted to the court. The homeowners removed the HOA’s version with respect to a gag order, informing the HOA they did not agree to the gag order. The court was informed that the digital recording of the settlement conference was not available for an unknown reason, whereupon the court then ordered litigation and a hearing as to the settlement agreement.  H’mmmm!

The trial court held that the HOA’s version was valid, which not surprisingly was appealed. Following Arizona’s precedent, the court would support the trial court’s ruling “if the trial court’s disposition is correct for any reason.” It seems that the judicial system back’s its own kind – judges make no mistakes. The justification for upholding the HOA’s version was found in Rule 80(a) of the rules of civil procedure.  

First, the fact that the parties agreed to put the agreement in writing doesn’t count if there is an agreement.  Second,

The law “favors enforcement when it is clear that the parties intended themselves to be bound,” and “absent or uncertain terms are not fatal to the enforceability of an otherwise binding contract.

In other words, picky, picky no matter what impact it has on the parties. How can the court hold that an agreement was reached when there are 2 versions and only one party signed? Yes, the judicial system has its flaws!  BEWARE! 

Source: Robertson v. Sierra Pines, CA-CV 23-0069 (ARIZ. App. Div1 (9-14-2023).

Never, ever say this to the court

In this Arizona appellate decision [1], the plaintiff, Danko, failed to follow the Rules of Civil Procedure that every state has.  The defendant, Leavitt,  filed for dismissal due to a deficient brief, upon which the plaintiff begged the court for leniency for failing to comply with the Rules. He claimed that he was filing pro per, without a lawyer.   Plaintiff further asserted that “his claims should not be dismissed because of “meaningless” rules.” The court “found Danko had not sufficiently pleaded facts to support any of his other claims and dismissed them with prejudice as well” as required by the Rules.

The terse reply by the court makes the point that rules are rules.   

“In furtherance of these goals, we have “a responsibility to see that litigants conform to an acceptable, minimal level of competency and performance and we owe this responsibility to the judiciary, the bar and, more importantly, to all litigants and the people as a whole. An appellant who fails to make a bona fide and reasonably intelligent effort to comply with the rules will waive issues and arguments.”  

“Waived” means the party surrenders all rights to continue.

The court made a strong statement on not granting any leniency to pro per litigants;

Further, we hold litigants like Danko who choose to proceed without representation to the same standards as attorneys. Indeed, requiring a reviewing court to expend significant time and effort to make a party’s arguments for them not only wastes finite judicial resources, but is additionally improper because it trespasses dangerously close to the realm of impermissible advocacy.

Take heed!  Rules are rules. Learn the rules before going to court.

Notes

1.  Danko v. Leavitt, No. 1 CA-CV 22-0525 (Ariz. App. Div.1, 8-17-2023).

HOA willful blindness

An interesting aspect of the law came to my attention unexpectedly arising from the Trump lawsuits: willful blindness. This post takes a broader view of the HOA-Land legalities.

“Willful blindness, also known as conscious avoidance, is a judicially-made doctrine that expands the definition of knowledge to include closing one’s eyes to the high probability a fact exists.” ( The Supreme Court’s Willful Blindness Doctrine Opens the Door to More Wrongful Criminal Convictions | The Heritage Foundation).

The mens rea fundamental principle to uphold a wrongful act  required actual knowledge of  the wrongdoing by the accused, and can be found quite commonly in the statutes. So, evidence of actual knowledge had to be proven. This principle, although it had good intentions, failed to address the question of the accused lying, “I didn’t know I violated the law.  Honestly!”

But what if the evidence clearly shows that it had to be obvious to any reasonable person that the law was being broken?  What then? In the name of justice, the courts accepted the willful blindness doctrine. “C’mon, everybody knows that the act was a violation of the law” and cannot be denied by claiming dumb ignorance.

“the prosecution must show that the defendant was aware of a high probability of the fact in question but deliberately avoided confirming it. The prosecution must prove that the defendant was subjectively aware of the risk involved and that he or she consciously avoided learning about it.” (Willful Blindness Law and Legal Definition | USLegal, Inc.).

HOA willful blindness affirmative defense

I am sure most readers are aware of alleged lies made by the HOA, its managers, and directors, including its lawyers that come as a surprise to the average owner. “They’re lying, they’re lying,” the homeowner shouts to no avail. What to do? Take charge now that you are informed about the law, and even educate your attorney likewise, to raise an affirmative defense.  You charge the HOA with willful blindness as its obvious it violated the law by knowingly turning a blind eye to its actions.  Example, not reading the obvious applicable governing documents or state laws on the issue at hand.

“An affirmative defense is a defense in which the defendant introduces evidence, which, if found to be credible, will negate criminal liability or civil liability, even if it is proven that the defendant committed the alleged acts. The party raising the affirmative defense has the burden of proof on establishing that it applies.” (affirmative defense | Wex | US Law | LII / Legal Information Institute (cornell.edu)).

Please take note on how powerful this doctrine is in holding the board of directors and managers to the wire when acting outside the law. It will put stop to their outright falsehoods and lies, and hold then to knowing the law and governing documents. It will require their attorneys to make the law and governing documents clear to the board.