Tag: OAH

AZ CAI attempts to unduly influence the courts

In Arizona’s Thompson v. Albertson,[1] the Arizona Supreme Court ruling in Kalway[2] was put to the test and challenged by CAI in its amicus brief.  Kalway held that

“The general-amendment-power provision and general-purpose statement were not sufficient to provide notice of future amendments. We interpret such restrictions to reflect the reasonable expectations of the affected homeowners.  We hold that a general-amendment-power provision may be used to amend only those restrictions for which the HOA’s original declaration has provided sufficient notice.”

The appellate Court addressed CAI’s 42-page amicus brief, which the court does not usually perform but special attention was warranted.  In short, CAI sought the appellate court to modify the AZ Supreme Court’s ruling that the case was a memorandum and not mandatory precedent. And as such, it did not consider its decision as mandatory precedent.  Therefore, the ruling applied only to the case at hand.

Not the first time CAI attempted to influence the Court. In 2011 CAI AZ had tried 3 times to have the court’s decision that OAH adjudication of HOA disputes was unconstitutional. I had filed as pro se amicus that was accepted and resulted, as I firmly believe, resulted in changing the appellate court decision as an opinion to a memorandum without precedent standing.

“The [AZ Supreme] Court in addition to its regular fashion of terse announcements, DENIED or ACCEPTED, added an order under its powers to do so, AZ Supreme Court Rule 111(g), that the Gelb decision was not to be published. Not being published means that it is not binding authority, or precedent. It seems then that the door is open and res judicata – already decided – doesn’t apply.”[3]

[In Thompson] Discussion, Section IV. The Amicus Curiae Brief

“¶31 Community Associations Institute (‘CAI’) filed an amicus curiae brief requesting ‘clarification’ and possible ‘limitation’ of Kalway. Whether Kalway should be clarified or limited is a question for our supreme court. . . .  (‘The lower courts are bound by our decisions, and this Court alone is responsible for modifying that precedent.’). We therefore decline CAI’s invitation to reach beyond the specific facts of this case to provide ‘direction and guidance.’”

Simply said, the appellate court rejected CAI’s attempt to overrule the AZ Supreme Court.

####

Thompson v. Albertson, No. CA-CV 23-0082 (Ariz. App. Div 10 10-24-2023

AMICUS CURIAE BRIEF OF COMMUNITY ASSOCIATIONS INSTITUTE (CAI) (FILED WITH THE WRITTEN CONSENT OF THE PARTIES)

Mark Lines – #020553

SHAW & LINES, LLC

Counsel for Community Associations Institute

First, CAI continues to misrepresent itself and claim it’s “serving more than 74 million homeowners . . . CAI is representing not only itself, but also its tens of thousands of members on this important issue.” CAI fails to inform the Court of that the homeowner “volunteers” constitute an estimated 32% of its membership and have an estimated meager 14% representation in its governing board of trustees.[4]

CAI membership, at most, consists of a miniscule .05% (.00048).

Of the 33,000 CAI members, a minority of some 10,800 are ‘volunteers’ and not attorneys or managers.

‘Volunteers’ (CAVL) represent a miniscule .016% (.00016) of HOA members.

Second, the CAI argument. The AZ Supreme Court decision in Kalway[5] made reference to the vague term, “reasonable expectations” when considering the validity of HOA amendments. (The supreme court realized that the common procedural covenant that any amendment passed by the necessary vote was valid regardless of its impact on the members).

What the original declarant might have intended, and what owners first reasonably expected of the eventual use and improvement of those lots must be considered in the context of time, and reasonableness should be measured by the collective voice, exercising their contractual right to lawfully amend their covenants.

“Indeed, a “covenant can be amended to refine it, correct an error, fill in a gap, or change it in a particular way.” Kalway,  . . . That’s the power and right of the owners collectively, through a majority vote, if the dictates of time demand it.”

CAI had argued against the reasonable expectations test as being too vague when all was clear and precise in the existing amendment procedures.  The Court rejected the amicus brief because  CAI had the audacity and the arrogance to ask the appellate court to overrule a supreme court decision.  Unreal!

There cannot be change without change

As long as advocates remain silent and fail to criticize CAI’s misrepresentations —
“candor to the tribunal” ethical code violations —  before the court, the legislature, and the media CAI will remain the voice of HOA-Land.

“To succeed you must accept the world as it is  and rise above it.”

[1] Thompson v. Albertson, No. CA-CV 23-0082 (Ariz. App. Div 1)  10-24-2023.

[2] Kalway v. Calabria Ranch HOA, LLC, 252 Ariz. 532.

[3] (See AZ Supreme Court denied hearing the Gelb Petition to restore ALJ adjudication of HOA disputes).

[4] See “Why CAI is the Evil Empire.

[5] Supra n. 2.

HOA attorney seeks homeowner arrest for not attending attorney fee meeting

In this instance, how does the court, in its obligation to do justice, determine if there has been dishonesty or grossly negligent behavior without an opportunity for the homeowner to examine the HOA’s affidavit?  Here, both judges protected the HOA as incapable of doing any evil, sua sponte (on its own).

Essentially, in my view, failing to allow the homeowner to question the signed affidavit of an HOA manager is not conducive to homeowner justice.  The liberal interpretation of the business judgment rule taken here is that, as I’ve indicated elsewhere, the board can do no wrong because average people become angels when they become an HOA board member.[1]

In order to understand the events in this situation leading to the request for the arrest of the homeowner for failing to attend a meeting, you need to understand the background of the case.  It’s lengthy, but needs to be read through.

Case History

The Arizona ALJ (Brian Brendan Tully) at OAH granted summary judgment (October 2012) for Terravita in regard to a request for minutes to an alleged executive meeting.[2] The order further states that the judge “concludes that . . . there are no issues contained in the Petition that require an evidentiary hearing.”  However, without an evidentiary hearing, where the homeowner could contest the allegation that it was indeed an executive meeting, the judge essentially took the word of the HOA’s attorney, the CAI member, Curtis Ekmark. In his discussion, the judge once again assumes the validity of Ekmark’s assertion that it was indeed an executive meeting, and argues that the homeowner did not show he had a legal right to executive minutes.

In Arizona, the court operates on a notice basis, that is, just give sufficient information that the complaint is valid, and then present your detailed evidence before the court.  That was not allowed in this case.

Homeowner filed superior court appeal[3] contesting the ALJ’s decision as “contrary to law, an abuse of discretion, arbitrary and capricious.”  

6. Administrative Law Judge Brian Brendan Tully’s October 4, 2012 Decision in 12F -H 12120 14-BFS, based exclusively upon certain “statements, claims and contentions (sic)” made by Respondent, Terravita Community Association, Inc., in its pleadings, denied Petitioner (Plaintiff) a hearing which would have brought forward the facts of the contested matter based upon evidence, witnesses’ sworn testimony and argument upon the merits of the matter’s facts and the planned community statutes relevant to those facts, instead, Tully vacated the matter from the calendar of the Office of Administrative Hearings.

 The homeowner further argued

 Plaintiff [homeowner] will timely request this Court hold an evidentiary hearing that will adduce evidence, present sworn witness testimony and offer argument in furtherance of the Court reversing the decision in 12F-H1212014-BFS and the agency’s action based upon the Court’s reviewing the administrative record (no hearing/no transcript) and evidence to be presented at an evidentiary hearing denied Petitioner at the OAH

Terravita’s relevant Answer was a reliance on the business judgment rule, which states that the court will defer the judgment of a corporation’s board as they know more than the judge.  In its reply to a request for an evidentiary hearing, Ekmark says homeowner must show the evidence that was already rejected by the ALJ as irrelevant.  (Remember the issue was a declaration that the meeting was an executive meeting and the ALJ didn’t want to hear anymore).   Ekmark concludes with, “Mr. Brown [homeowner] has had ample opportunities to present facts contrary to the Association’s position; yet, he has completely failed to do so.”  Did he???

Brown’s reply, beyond a criticism of Ekmark’s arguments about new evidence and failure to show evidence, got to the obvious legal question of the faithful acceptance of a statement without the right to a hearing on the validity of the statement:

[T]he presentation of evidence is necessary to the Court’s findings of fact and conclusions of law in furtherance of a just decision to include, but not limited to, the veracity of the affiant’s affidavit, an affidavit prepared under the supervision of  the Defendant-Appellee’s attorney, submitted with the Defendant-Appellee’s Answer (Pollock, a credentialed community manager, PCAM, CAAM, attended the March 27, 2012 meetings [Executive Session and Regular Meeting] of the board of directors and knew, or should have known, the “e-session” violated the planned community statutes).

However, the superior court appeal found no error and upheld the ALJ’s summary judgment decision.  “TCA has provided to this Court authorities and arguments in support of its position. This Court concludes the authorities and arguments provided by TCA are well-taken, and this Court adopts those authorities and arguments in support of its decision.”  (Judge McClennen of 11-22-2013). The judge apparently, like the ALJ, ignored the homeowner’s allegations.

Under R  Civ. P. 43(a), an affidavit is a written statement by a witness in lieu of the witness appearing in court in person. The opposing party must stipulate to the acceptance of an affidavit to be accepted by the court as evidence.  Rules of Evidence, Rule 609, allows for the impeachment of a witness. This did not allowed to occur here.

An appeal was filed by Brown on 7-14-2014, CA-CV14-0455, Div.1.

Arrest Warrant

Apparently, the HOA attorney firm of Ekmark & Ekmark wants their fees paid as per the court ruling. On August 8, 2014 it filed several documents with Judge McClennen for contempt of court for failing to submit to a subpoena to attend a debtor’s meeting (to discover how the attorney would collect its fees), and the arrest of Mr. Brown for contempt.  All over a question of the legitimacy of an executive board meeting.

According to the homeowner, who apparently did get access the Terravita’s financials and moneys spent on attorney fees for this litigation, the attorney fees amounted to $57,344.10.  Of course, the HOA has no cause for alarm since it won the case and does not have to pay this amount.  But, if it loses in the appellate court, what then?  HOA litigation is a gamble in favor of the HOA, and joy to the attorneys cause they get paid win or lose.

BTW, Judge McClennen washed his hands of jurisdiction on August 11, 2014 after receiving the filings from Ekmark.  “This Court no longer has jurisdiction and will take no further action in this matter.”

References

[1] Business judgment rule misinterpretation. In my commentary on the business judgment rule, Illinois appellate court awards punitive damages for reckless indifference by condo, I quoted the court’s reminder about what this rule means:

 “The rule protects directors who have been careful and diligent in performing their duties from being subjected to liability for honest mistakes of judgment. . . . [But where there is] evidence of bad faith, fraud, illegality, or gross overreaching, courts are . . . at liberty to interfere with the exercise of business judgment by corporate directors.”

 [2] Brown v. Terravita, No. 12F-H1212014-BFS, Administrative Law Judge Decision, Office of Administrative Hearings, October 4, 2012.

[3] Brown v. Terravita, LC2012-000699, Maricopa County.

AZ HB 2371 allows unlicensed managers to represent HOAs in disputes

This video covers the Arizona Senate GE committee hearing on a bill that would allow unlicensed HOA managers to represent HOAs.  It shows the AZ legislature abdicating and supporting HOA-Land rule over democratic rule, and over the Constitution. It shows a banana republic, “I see no problems,” mentality.

See Arizona’s HB 2371 empowers unlicensed HOA property managers to avoid UPL.


Here are my comments at several points in the video.

My opening statement

Hi, I’m George Staropoli, also known on the internet as HOAGOV.   I am once again, reluctantly, before the camera with another HOA legislative documentary. My material comes from events at the Arizona Legislature, and from the legislators themselves.

Viewers will be alerted to the following comments at appropriate points in the video. They are provided to assist you in understanding of what’s really going on.  With this in mind, I strongly recommend that you take time to read my HB 2371 Commentary (on this date) on my website before continuing — the link is now being shown.

This video will also be posted to my HOA Constitutional Government website along with my detailed comments — the link is on the screen.

Let’s view the hearing . . .

Opening comments by Ugenti:

You just witnessed the sponsor’s “opening statement.”  Note her motive for the bill: Let me quote her, “Every year there is a plethora (many, many) of personal HOA legislation . . . as well as industry HOA legislation.”  She stated that she combined all those bills “working through a stakeholder process and allowing the stakeholder process to filter the proposed legislation   . . . representing a consensus from the AZ realtors, and AACM (AZ Association of Community Managers, the beneficiary of this bill).”  She further added “to spare the members from the agony of voting up or down on personal pieces of legislation.”

Now, what was she saying?  First the “personal” bills come from homeowners while the other legislation is “HOA industry legislation.”  She put the bills through a stakeholder process and used the process to filter the bills. She failed to say, however, that no homeowner advocates participated in this stakeholder filtering process, which was brought to light in her House GOV testimony, and not denied.

Ugenti said nothing  about fixing HOA problems and making HOAs better for everyone, especially the real stakeholders — the homeowners.  Not even entertaining an amendment to address issues of substance relating to constitutionality, fair and just laws, and of other homeowner concerns as emailed to her.

Now let me explain that in her earlier statement to the House GOV committee, she also said that she wanted to avoid any controversial bills.  But, think about it.  If there is serious opposition, based on authoritative sources, wouldn’t that that create a controversy?  So, her choice was to deny any opposing views, and only pick the special interest agenda – the stakeholder agenda.  Isn’t Ugenti failing to understand that these problems are not singular or personal to just one homeowner?  I mean, after hearing more of the same from others and the media, you would think she could take a hint!  Apparently not!

Homeowners appear to have been given short rift, and have been placed “at the bottom of the food chain,” defenseless and being gobbled up by everyone else.  And here I thought our representatives are supposed to represent the people, not the moneyed special interests.

Art. II, Sect. 2, of the AZ Constitution states, “Governments . . . are established to protect and maintain individual rights.”  Did I miss something?

Furthermore, in an outright act of favoritism toward the special interests, as shown in the video, Ugenti asked for questions that she or the stakeholders can answer.

Let’s return to the video . . . .

Homeowner email:

Please understand what has happened in this staged scenario with this constituent email, which the legislators viewed as having a “personal issue” with her association  —  homeowner owners only bring personal problems while the special interests deal with non-personal agendas.

With the several email dealing with issues and problems of substance, why was the single email chosen for airing before the committee?  Why? Because it serves to reinforce the sponsor’s false argument that homeowners only deal in personal issues, which justifies her leaving out the homeowners from serious, authoritative HOA industry specialists! There was no mention of the non-personal, substantive constitutional issues brought to the attention of the legislators in my emails and commentary, or in two other homeowner advocate emails that I have personal knowledge.  Nothing! Silence!  Not a word!

The legislators “hear no evil, see no evil, and speak no evil.”

Let’s return to the video . . .

 

Conclusion

You have now witnessed another episode of “the unspoken alliance of no negatives about HOAs.”  Did you hear any of the objections that were emailed to the committee? NO!   You did not hear that the bill would allow unlicensed HOA property managers to represent HOAs in small claims court, or before an administrative law judge at the Office of Administrative Hearings?   Did you know that even licensed paralegals are not allowed to represent others?  Did you know that the current law applies to all hearings from all agencies before OAH?

Don’t tell me that the legislators, AACM, CAI, or the sponsor of  HB 2371 don’t know about the 2012 AZ Supreme Court opinion on HOA managers  engaged in the unauthorized practice of law, and the decision against for numerous UPL violations against one CAI/AACM member?  C’mon!  The legislators were sent copies of these decisions.  The viewers of the hearing video would not think any such events against unlicensed mangers had occurred.  In court, hiding exculpatory evidence (evidence in favor of the defendant) is a crime!  But, apparently it’s OK in the legislature.

And rather than do what is just, fair and reasonable, and that is to require proper licensing for managers if they are being allowed to represent HOAs, HB2371 is silent on education!

What we have here is a special law for special private entities, without even a whisper of any legitimate justification.  The bill is an unconstitutional special law violating the AZ Constitution, ART II, section 13, which states, “No law shall be enacted granting to any citizen, class of citizens, or corporation other than municipal, privileges or immunities which, upon the same terms, shall not equally belong to all citizens or corporations.”  In other words, no special laws for special people are permitted.

Section 32 states, “The provisions of this Constitution are mandatory, unless by express words they are declared to be otherwise.”   Where are the “express words” in this bill to override the Constitution?

What you have witnessed is the homeowner, the real stakeholder, has been cut out from the legislative process. What we have here is legislative support, cooperation, entwinement, and a symbiotic relationship between the state and the HOA, thereby making good cause for HOAs to be declared arms of the state, or state actors, subject to the 14TH Amendment protections.

It must still pass the Rules committee and the final vote of the entire Senate before becoming law.  Passing this bill into law would be unconscionable!  

WELCOME TO THE NEW ARIZONA OF HOA-LAND

 

AZ legislation needed to insure justice and to stop OAH abuse

Legislation to stop further HOA abuse at the Arizona Office of Administrative Hearings is in order today. Signs of potential abuse are surfacing, and we must act ASAP to stop it immediately.

From the OAH website, “Pointers” link, here’s what OAH has to say in 2001 about pre-hearing conferences: THE PRE-HEARING CONFERENCE – IT WORKS (emphasis added).

Once a request for a hearing date is filed with the Office of Administrative Hearings, the parties can expect a setting within a quick and short time, leaving a precious minimum of adequate time for pre-hearing discovery and preparation. A pre-hearing conference will help counsel and parties to get around these two obstacles. Both discovery and a reasonable timeline – which will insure better preparation for an effective hearing – can be obtained through a pre-hearing conference. Early settlement discussions can also be triggered. . . . One possible negative of an early request, however, is that the other side may not be fully prepared, but this exposes a situation that you may wish to know early.

The above reads much like the “quick and dirty” technique — my words — of a motion for summary judgment, legal as it may be. It contains contradictory assertions that justice will be served due to pre-hearing conferences, and that the “other side may not be fully prepared, ” which in our HOA context applies to the Pro Per homeowner.

It appears that the two Petitions invoking the pre-hearing conference, of the first 3 OAH Petitions, reflects a move to “get the case quickly closed.” Note that the pre-hearing conference must be requested, and we know by whom, or by the sua sponte by the ALJ, “on his own”. My recollection of the initial 2006 – 2009 phase recalls just a few pre-conference hearings. The 2001 belief, unsupported in the HOA adjudication environment where the homeowner does not use an attorney, states,

Once a pre-hearing conference has been held, the Administrative Law Judge and counsel will know each other better. Subsequent status or telephonic conferences are easier to have once everyone knows each other better. Therein lies a powerful but not always evident benefit of an early pre-hearing conference – positive rapport and trust can be established among the participants.

There is a legitimate concern of an abuse of process. The belief expressed above assumes that the HOA attorney is acting in good faith and not abusing the process. However, 2008 legislation, in particular HB 272 4 and SB 1162, challenged this assumption (sadly, they were defeated). See Arizona HOA cases update — OAH and HOA adjudication at OAH: a rebirth of constitutionality, abuse, and legislation. There is no reassurance that justice will be done by this procedure — this is NOT civil court, and to turn OAH into civil court only serves the HOA attorneys.

There is no mention of allowing the homeowner to revise his Petition or Response, or to extend the hearing date, or to allow more time for discovery by the homeowner. The important value of OAH adjudication is to level the litigation playing field in the interest of fair play and justice, and not to force the homeowner to hire an attorney to deal with the rules of civil procedure as used in the courts. And I have a further concern, because (emphasis added)

Under the rules of the Office of Administrative Hearings, the Administrative Law Judge is not required to memorialize the outcome of a pre-hearing conference (see OAH procedural rule 19-112). Therefore, the best practice is to request that the Administrative Law Judge issue a written pre-hearing order memorializing all directives and agreements.

This means no minutes and no audiotaping which served the interests of justice so well in the first go-around of OAH adjudication in the 2006 – 2009 period. These invaluable hearing audiotapes exposed the conduct and attitudes of the HOA and its attorneys, allowing the public to hear the nature of the HOA’s evidence and justifications for its actions. It is hard to reconcile their performance at OAH with their public statements implying a good faith, for the community, motive.

It appears that the HOA attorneys, like their HOA clients, do not want the public to know what really goes on in HOAs — hurts property values. Homeowners demand justice and fair play, and expect the Legislature to act accordingly and to protect them from abuse — helps property values.