Tag: New Jersey

Corporatism in America: IL Supreme Court grants HOA police powers to arrest and detain

see-no-evilS
See no evil, hear no evil, speak no evil

“We are not final because we are infallible,
but we are infallible because we are final.”[i]

This Commentary excerpts relevant arguments from the court’s opinion in Poris v. Lake Holiday[ii] relating to police powers and false imprisonment.  I find it necessary to use excerpts so you, the reader, can follow the issues and analysis as they actually occurred before the court.  I believe this is the best way to understand public policy and how the laws are interpreted by the HOA attorneys and courts.  Please read through this lengthy commentary, and discuss with others.

 

FIRST, let’s look at the analysis of the appellate court’s finding that the stopping of the member for an HOA rule violation was unlawful. The appellate court held,

“Specifically, plaintiff [homeowner] argued that: the Association was not authorized by law to stop vehicles and detain drivers;

 “[S]ecurity guards occupy the same status as private citizens.

 “[HOA] security officers were attempting to assert police powers that they had neither the right nor the power to assert. [my emphasis].

 “Because [the HOA] restrained plaintiff for violating an Association rule, not a criminal law, plaintiff established the elements necessary for his false imprisonment claim.”

It is important to understand the detailed reasoning as to why the HOA had no powers to arrest was given:  

“The appellate court concluded that security officers are without legal authority to stop and detain drivers for violating Association rules, because those rules are enacted by the Association, not the General Assembly, and therefore do not constitute an ’offense’ . . . .”

NOW, let’s see how the 7 wise men of the Illinois Supreme Court saw the law. 

Police powers.

 “Plaintiff contends that only the Illinois legislature has the authority to create a private or public police department. . . . Plaintiff and the appellate court err in viewing this issue as one involving private citizens improperly attempting to assert police powers. . . . The appellate court failed to consider the Association’s enforcement of its rules and regulations in the context of its authority as a voluntary association to enact and enforce those rules and regulations.

 “[Since] courts generally will not interfere with the internal affairs of a voluntary association absent mistake, fraud, collusion or arbitrariness. . . . plaintiff generally complains that the Association was unlawfully exercising police powers and authority . . . . However, plaintiff does not, and cannot, argue that the Association and its security officer did not act consistently with its bylaws, or its rules and regulations . . . . ¶

”Plaintiff also argues that the Association is exceeding the legislative powers granted to not for profit homeowner’s associations in enacting and enforcing its traffic rules.  . . . each corporation shall “have and exercise all powers necessary or convenient to effect any or all of the purposes for which the corporation is formed.”  [IL statute].  . . . Regulating and enforcing traffic rules is reasonably necessary to maintain the Lake Holiday roadways.

“The Association rules and regulations were enforced only on Association property, and citations for violations of the rules and regulations were only issued to Association members. Consequently, the Association was not unlawfully exercising police powers that it did not possess, but rather was acting within its authority as a voluntary association to adopt and enforce its own rules and regulations.

 “We can discern no logic in allowing a private homeowners association to construct and maintain private roadways, but not allowing the association to implement and enforce traffic laws on those roadways.”

 And finally, false imprisonment.

 “[T]he appellate court erred in analyzing [the HOA’s] stop of plaintiff in terms of a private citizen effecting a citizen’s arrest, rather than analyzing the stop as pursuant to Association rules and regulations. . . . These facts would lead a person . . . to believe or entertain a strong and honest suspicion that plaintiff was guilty of violating Association rules. Consequently, [the HOA] had probable cause to believe that an offense was committed by plaintiff, which is an absolute bar to plaintiff’s claim for false imprisonment. [my emphasis].”

 

My perspective

 In Poris we have another instance of a state supreme court holding private contracts superior to the Constitution (See NJ supreme court opinion in Twin Rivers[iii]).  Apparently, the only thing that the Constitution has to say is an absolute “no contract interference.”  Note how the court adopted a narrow reading of the laws as it parsed and examined the precise wording of the laws, not stepping back in its alleged legal wisdom seeing only the trees and not the ugly forest.

 The court cleverly ignored the question of detaining non-members, and the question of public streets.

Think of the implication that a non-profit, any non-profit, can enforce its rules even by detain and arresting its member.  And think of the impact on the US Supreme Court question, and Arizona laws (SB 1070), dealing with similar issues of detention, probable cause, and reasonable suspicion by police officers to demand “your papers” to uncover illegal immigrants.

 I can summarize the Illinois opinion with the simple statement by William Pitt, part of which appears on the façade of the Arizona Supreme Court building: 

Unlimited power is apt to corrupt the minds of those who possess it: and this I know, my lords, that where law ends, tyranny begins!”[iv]

 For more on corporatism, see In a democracy approaching corporatism, HOAs are iconic 

Endnotes

[i] Justice Robert Jackson, Brown v. Allen, 334 US 443 (1953). (Robert H. Jackson was also US Attorney General and chief US prosecutor at the Nuremberg Trials).

[ii]Poris v. Lake Holiday, 2013 IL 113907 (Jan. 25, 2012). (It should be noted that I cannot find any record of the amicus curiae for the HOA, an Illinois Association of Lake Communities).

[iii]Committee for a Better Twin Rivers v. Twin Rivers, 929 A.2d 1060 (NJ 2007).

[iv] This statement was made by Lord Chatham (William Pitt) to the British House of Lords in January 1770.

Columbia Association: the iconic HOA private government ploy to circumvent the Constitution

In the ExploreHoward.com letter to the editor, CA should not be exempted from Homeowners Association Act, the reader is told that this master, master HOA is seeking legislation to have it declared not to be an HOA.  The writer strenuously objects, saying,

The purpose of the proposed legislation is to immediately exempt CA [Columbia Association] from some of the protections afforded Columbia residents by the Consumer Protection Act, and to exempt CA from all future amendments to the HOAA [HOA act]. . . .  The real purpose of CA’s attempted subversion of the residents’ protections is based on CA’s refusal to disclose the annual compensation of all of its employees, as required by the Consumer Protection Act.

The CA attorney’s defense is, according to the letter, “that CA has enough protection for residents in its bylaws and other documents so that statutory protections are unnecessary.”  Didn’t we hear that in Twin Rivers where the NJ Supreme Court said homeowners were protected by the business judgment rule, so no need to get all riled about the loss of constitutional protections?

What is CA all about?  Howard County, MD contains the city of Columbia with its Columbia Association, a mega, mega, master association that resembles a large city rather than a subsection.  Its Pubic Information Guide refers to CA as

A nonprofit public benefit corporation” — which has no legal definition or standing — with “nine villages and Town Center are organized into 10 village community associations . . . . Each of Columbia’s nine villages and Town Center has a community association, which is an independent, incorporated, nonprofit civic association. 

 The Articles of Incorporation, along with the Covenants of the nine villages, provide CA with all of the rights, powers and authority it needs to carry out its purposes. The two documents empower CA to collect the annual charge and promulgate rules governing the use of facilities, the integrity of architecture and aesthetics, and so forth. The documents themselves can be consulted for further information. (Part II, How CA is Organized and How It Works).

 CA has a 2012 budget of over $67 million.

The way this private government works is that the HOAs are mandatory HOAs with covenants running with the land.  In their “Covenants,” CC&Rs for everybody else, there is the tie-in wording granting the non-profit corporation, CA, control over the HOA communities.  The HOAs elect representatives to the CA board.  It is similar to other master private governments.

Since all entities are private contractual arrangements, Columbia Association is an independent principality on the scale of the charter organizations of the 1600s through 1800s.  You may recall two of the most notable enterprises: The British East India Company (operating mainly in India) and the Dutch East India Company (controlled what is now known as Indonesia).

Here and now, CA makes use of the various subdivision HOA covenants running with the land, the CC&Rs, to entrap homeowners into bondage under their de facto but unrecognized private government.  And it has to resort to newspeak by referring to them as “villages” and the CC&Rs as “covenants.”

 

Does mandating HOAs using “shall” establish HOAs as state actors?

A common joke of the 1950s related to communist Russia’s 5-Year economic plans. It was a top-down plan that always failed.  The joke went:

In Russia You can buy any shoes you want as long as they are black.   Why is that? Because they only make black shoes.

Jump to 2012 America.

In America you can buy any new home you want so long as it’s in an HOA.  Why is that?  Because they only build new homes with an HOA.

 

A.                Does the use of the word “shall” establish the HOA as a state actor?

1.                  Monroe Township

I begin by an examination of the hard-core Monroe Township, NJ HOA ordinance[i] which states, in part, my emphasis,

“A homeowners’ association shall be established for a multifamily development or a development consisting of 100 dwellings or more. . . . The homeowners’ association shall be established for the purpose of owning and assuming maintenance responsibilities for the common open space and common property designed for or located within a development.”[ii]

Please understand that many states define an HOA as having common areas and amenities. Note the territorial implication of the HOA government, “located within”.)  But, the ordinance doesn’t stop there. It includes, “The organization shall incorporate the following provisions: (1) Membership by all property owners in the project shall be mandatory.” [iii]

Now, the ordinance is very craftily worded to pertain to owning property and “assuming maintenance responsibilities,” and not touching on any aspect or implication of governing.  Except, of course, the town must explain just what “assuming responsibilities” means if not managing or governing.  It could simply mean a hired hand, a contractor, if the word “responsibilities” were omitted.

The intent of the ordnance is clearly stated in subsection (E)(4), which says in part, “The organization shall clearly describe in its bylaws all the rights and obligations of each tenant and owner, including a copy of the covenant . . .  and the fact that every tenant and property owner shall have the right to use all common properties. . . .  These shall be set forth as a condition of approval and shall be submitted prior to the granting of final approval

Doesn’t this wording indicate an awareness that the HOA is concerned with more that performing maintenance functions?  Why would a planning board be concerned with the terms of a private contractual agreement beyond its sole authority in regard to property ownership and maintenance?  There are laws governing property rights and tenancy that surely would not be duplicated in the Declaration.

No, the planning board is fully aware, or else it’s intentionally negligent, of the legal status of HOA through state statutes and commonly used boilerplate declarations.  In other words, the planning board cannot escape its responsibility for requiring HOA governance by saying we don’t look at or approve of the governing documents. Regardless of board’s awareness, the mandate for submitting the HOA governing documents and the required approval by the planning board establishes the HOA as a state actor subject to the 14thAmendment.

 

2.                  Arizona mandates

Gilbert, AZ has a mandated HOA requirement that says, emphasis added,

A homeowners or property owners association shall be created to maintain and operate landscaping, open space, recreation facilities, private streets, utilities, and/or other facilities held in common ownership. The documents creating the association shall provide that this obligation continue in perpetuity. Evidence of compliance with this Article shall be submitted with an application for a final subdivision plat or minor subdivision.[iv]

 

This requirement is not as detailed as that of Monroe Township, but still centers on subdivisions with common areas and property, which defines an HOA in Arizona.  Again, as long as the governing documents cover maintenance, the planning boards ignore the other covenants that affect the homeowner’s equal application of the laws and due process rights. But the fact remains, as with Monroe Township, ignorance of the declaration does not absolve the planning board of its responsibility for establishing HOAs as state actors.

The Chandler, AZ ordinance[v] states,

40-1. – Policy.

It has become common for developers to satisfy certain of the conditions of approval for subdivisions by use of commonly owned property maintained by a Homeowners’ Association (HOA) composed of the property owners within that subdivision. These [subdivision] facilities and amenities become conditions to and a part of the approved subdivision with which the developer must comply. Without these facilities and amenities, the subdivision would not have been approved by the City and the development would not have proceeded.

It is hereby adopted as a policy of the City of Chandler, Arizona, that when Homeowners’ Associations are given such responsibilities pursuant to the zoning and subdivision approvals which allowed such properties to develop . . . .

 

It is a more wishy-washy statement, but the bottom line is that the developer will indeed form an HOA if he wishes to be approved, and not want to oversee the subdivision in perpetuity as required by the ordinance.  Here, the planning board says, No, not me! Him, the developer! His choice in establishing private governments.  This is about the same choice given to a homeowner if he wants to live in a new home, isn’t it?  And again, the planning board adopts a Not my job when it comes to approving the HOA governing documents.

 

B.                 Are the planning boards exceeding their authority by mandating HOA private governments for sub-divisions?

Part A, above, leads to the serious concern of low level divisions of a town or city demanding and establishing private governments without any oversight or accounting.  While delegating such legislative functions to a private entity is unconstitutional, the planning board itself has not been delegated authority to create such private governments over subdivisions within the state.  It has exceeded its authority!

 

For more information, see HOA Case History: state actors or mini/quasi government;

 

Notes

[i]  Monroe Township Zoning Ordinances, § 175-113. Homeowners’ associations. 

[ii] Id., subsection (A).

[iii] Id., subsection (E).

[iv]Gilbert, AZ  Zoning Regulations, Article 4.9: Common Area Ownership and Maintenance, Section 4.903.

[v]Part VI, Chandler, AZ Code of Ordinances, Chapter 40 – HOMEOWNERS’ ASSOCIATION IMPROVEMENTS.

 

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.