AZ SB1162: preventing Off. Admin. Hearings abuse of process

Abusive conduct and unjust actions by Arizona homeowner association attorneys in violation of ARS 12-349 and the Rules of Professional Conduct 11(a) prompted legislators to protect homeowners from these aggressive HOA attorneys. SB 1162 provides punitive awards for unjust actions and CAI is opposed to the bill. “The AZLAC will continue to work with the legislature to get this bill stopped, but we need your support!” (CAI Call To Action, May 14, 2008).

Yet, CAI claims that it has no problem with the attorney fee restrictions for administrative hearings. Of course not, they are currently prohibited. Astonishingly, CAI speaks of “certain situations” without providing clarification as to the true meaning of the legislation. What the bill does is to prohibit awarding attorney fees unless there’s a finding of unjust conduct that is “without substantial justification.” That’s entirely different from the impression given by CAI’s Call To Action.

SB1162 would do two things: (1) provide for awarding the winning party in an administrative action attorneys’ fees in certain situations, and (2) restrict certain types of amendments. The AZLAC has no objection to the portion regarding attorneys’ fees in an administrative action. We do have concerns about the amendment provisions. (CAI Call To Action, May 14, 2008; emphasis added).

Here’s what the bill actually says (emphasis added),

41-2198.02(C). In an action regarding a condominium or planned community, The administrative law judge shall not award attorney fees or costs and a court shall not award attorney fees or costs in any appeal from an administrative order unless the administrative law judge or court makes a finding that the attorney or party did the following [lists unjust actions].

If CAI has no concern for attorney fees under OAH, why has LAC co-chair Ekmark explicitly sought (as of in its May 16, 2008 Response in OAH case 08F-H088015-BFS) attorney fees under ARS 12-340 et seq., which SB 1162 seeks to impose on OAH HOA complaints? Currently, attorney fees are not awarded under OAH statutes. Could it be that, if the bill becomes law, CAI is setting the stage for another constitutional challenge to OAH authority (three decisions have already been challenged in Superior Court appeals)? Or could it be that CAI truly wants SB1162 to become law, thereby giving legitimacy to its request for fees?

Ekmark has asked for fees under ARS 12-349, presumably because he believes the homeowner’s petition failed to state a claim and should be dismissed, along with all such similar failures by Pro Per homeowners. And since the homeowner failed to state a claim, the court should penalize the petitioner, usually an average citizen without legal skills, for filing the petition “without substantial justification”. In other words, it appears that CAI believes that the poor unknowledgeable homeowner must be penalized for making an honest error, while skilled HOA attorneys know how “to make it look good.” It sounds that CAI indeed wants the bill to pass. It seems that CAI has “worked” the legislators into a no-lose situation: ALJs grant fees under the new law, or CAI continues litigation to declare the bill unconstitutional.

Another HOA attorney tactic is to immediately seek summary judgment, forcing the homeowner to respond in detail, but the Pro Per homeowner is completely unaware of how to respond under the Rules of Civil Procedure and generally loses. Will the HOA attorneys also seek fees under ARS 12-349 in these instances?

It appears that, after reading SB1162 and CAI’s Call To Action, the attorney authors seem to be violating, if the Call were filed in court, of precisely acting in a manner that the bill seeks to prevent – unjust actions. The bill quite clearly defines the unjust actions as (emphasis added),

41-2198.02(G). “[W]ithout substantial justification” means that the claim or defense constitutes harassment, is groundless and is not made in good faith.

References
“Good faith, a state of mind consisting in (1) honesty in belief or purpose, (2) faithfulness to one’s duty or obligation . . . (4) absence of intent to defraud or to seek unconscionable advantage.” (Black’s Law Dictionary).

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Published in: on May 18, 2008 at 4:23 pm  Comments (2)  

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  1. I will review the Hearing. Please email me privately: your complaint and any pertinent excerpts from documents, like CC&Rs, bylaws, etc. You can fax to 480-907-2196.

  2. I had an administrative hearing on May 2 of this year and it was just appalling. I don’t want to go into the ALJ’s behavior toward my wife and me, but the result of the hearing has destroyed our HOA. I brought a complaint alleging 17 violations of law and our documents. The ALJ dismissed the harassment one (selective enforcement of rules for revenge) because it’s not disallowed by the documents (this is an odd finding: if it were specifically allowed, it would be unenforceable as unconstitutional and opposed to public policy, so why should it be necessary to put it in the documents?). He decided against us on 2 items based on verbal testimony that should have been, but could not be, supported by the HOA records.
    He dismissed two for absurd reasons: a complaint that the board refused to appoint a nominating committee over the last 3 years was dismissed because the 2007 election was over (like dismissing the case against a murderer because the victim is already dead). He dismissed a complaint of the president violating the by-laws in regard to an animal complaint because 11 weeks after I filed the complaint, the county took the dogs away from the owner. These last two were the ALJ’s own inventions, not arguments of the board’s lawyer. Since they aren’t questions of law, he is not permitted to use them, and we were not even permitted to argue them. ALL OF THE REST OF THE COMPLAINTS WERE IGNORED!
    My conclusion is that this new ALJ (I think it was his first HOA case) was unwilling to find in favor of an honest taxpayer against an HOA’s lawyer. There’s simply no other way of interpreting this grossly improper behavior.
    I complained to the director of OAH, Cliff Vanell, who refused to talk to me and blew me off by mail.
    I am looking for a forum. It is clear, at least with this lawyer, that OAH’s mission statement is a fraud and that the claim that a petitioner doesn’t need a lawyer is grossly misleading. Can you give any advice on getting this publicized? The case number is 08F-H088008-BFS. The audio file is on-line.


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