Tag: unclean hands

Trump Era lessons for HOA Reformers

Before you turnoff not wanting to hear anything involving Donald Trump, that would be  big mistake. A BIG mistake!  Trump is a model of successful power politics at work that have not been adopted by advocates.

There are two important lessons that should be employed if substantial reforms are the object.  First, Trump is noted for attacking his accusers raising the argument of unclean hands.

“The legal term clean hands refers to a defense in a civil lawsuit regarding a contract, which allows a defendant (the person being sued) to claim that the plaintiff (the person suing) has engaged in wrongdoing. If the defendant is successful in proving the plaintiff had unclean hands through bad or illegal behavior, the plaintiff would not be able to obtain a remedy from the court.”

This tactic is so ripe for application against rogue HOA boards and officers, including CAI and the HOA managers.  Easily demonstrated if time is taken in the course of claims to collect this evidence for the court.  And also, when advancing proposed reform bills to your legislature – CAI will be whispering in the halls of the legislature.  Let the legislators know!

Second, and very effective, is to use CAI’s words and documents against it — there is plenty of fodder. Very difficult to explain after exposing a litany of common attitudes and hypocrisy.  Look at what Trump is facing in his numerous indictments.

What are reformers afraid of?  When getting very little anyway there is very little to lose.

HOA foreclosures and unclean hands

I’ve come across a few cases involving the markedly low HOA auction price as compared to the market value of the home. Previously, I compared this situation to the US Supreme Court’s finding that punitive awards more than 10 times the damages violates the 8th Amendment and constitutes cruel and unusual punishment. (See State Farm v. Campbell, 538 U.S. 408 (2003)). But other decisions pertaining directly to foreclosures, which did not address the 8th Amendment, are also to be considered.

In the 1984 Tennessee Supreme Court non-HOA case, Holt v. Citizens Central Bank (688 S.W.2d 414), the court reversed long standing doctrine regarding foreclosure sales.  The view that “a price of ten percent of the fair market value would probably shock the conscience of any court” and “that inadequacy of consideration so great as to shock the conscience of the court, standing alone, was sufficient to warrant voiding the sale” was thrown out.  In place, the court held, along with decisions in Texas and North Carolina, that

If a foreclosure sale is legally held, conducted and consummated, there must be some evidence of irregularity, misconduct, fraud, or unfairness on the part of the trustee or the mortgagee that caused or contributed to an inadequate price, for a court of equity to set aside the sale.

The question for homeowners in foreclosure is whether or not the HOA comes with unclean hands[i]?  Are there elements of “irregularity, misconduct, fraud, or unfairness” on the part of the HOA?

In the Tennessee 2011 appellate case, Brooks v. Rivertown (No. W2011-00326-COA-R3-CV memorandum decision[ii]), the court upheld the denial of an HOA foreclosure because the HOA could not specify an exact amount owed. It upheld the Holt decision since it found irregularities in the HOA’s bookkeeping; and the HOA also failed to follow its required 30-day notice in non-judicial foreclosure, amounting to unclean hands.

For those in foreclosure, you need to ask for an accounting by the HOA, which must show your legitimate challenges to the HOA’s recordkeeping, like I paid but the HOA ignored me, etc.

Notes

[i] “The principle that a party cannot seek equitable relief or assert an equitable defense if that party has violated an equitable principle, such as good faith.” Black’s Law Dictionary, 7th Ed.

[ii] A memorandum decision means that no new law was made, and that just old law was applied.  Consequentially, there is no reason for binding precedent status.

The unclean hands of the HOA

I have spoken of the unclean hands of the HOA in “HOA Common Sense No.4, Consent to be governed” and in “No.8, Draconian punishment and intimidation.”  Unclean hands is a legal doctrine that denies a plaintiff’s (HOA) complaint if the plaintiff has done anything wrongful or unfair relating to the issue at hand. If a defendant (homeowner) can show the plaintiff had “unclean hands,” the plaintiff’s complaint will be dismissed or the plaintiff will be denied judgment.

In his dissenting opinion in Olmstead v US  (1928)[1] Justice Brandeis wrote (my emphasis),

The governing principle has long been settled. It is that a court will not redress a wrong when he who invokes its aid has unclean hands. The maxim of unclean hands comes from courts of equity. But the principle prevails also in courts of law. Its common application is in civil actions between private parties. Where the government is the actor, the reasons for applying it are even more persuasive.

The court’s aid is denied only when he who seeks it has violated the law in connection with the very transaction as to which he seeks legal redress. Then aid is denied despite the defendant’s wrong. It is denied in order to maintain respect for law; in order to promote confidence in the administration of justice; in order to preserve the judicial process from contamination.

This doctrine also applies to the government at all levels.  As Brandeis continued in his dissent,

In a government of laws, existence of the government will be imperiled if it fails to observe the law scrupulously. Our government is the potent, the omnipresent teacher. For good or for ill, it teaches the whole people by its example. Crime is contagious. If the government becomes a lawbreaker, it breeds contempt for law; it invites every man to become a law unto himself; it invites anarchy.

And it also applies to HOA private governments, because it’s an equitable protection.  We all know that HOA boards have, in all too many instances, grossly dirty unclean hands.  We see the anarchy with 50 different state laws and the 324,000, more or less, independent CC&Rs “constitutions.”

 

Note

[1] Olmstead v. U.S., 277 U.S. 438 (1928).  This case involved federal wiretapping, which back in 1928, the SC found no violation of the Constitution.