Will AZ Supreme Court do justice for 1 million HOA members?

The two issues for review sought in the Gelb OAH constitutionality Petition to the Arizona Supreme Court are, in my layman’s view: 1) a legal procedural issue centering on the appellate rules of court, ARCAP 13(b)(3), and 2) the real issue at hand of the constitutionality of OAH adjudication of HOA disputes (technically, the authority of DFBLS to receive complaints that are forwarded to an ALJ at OAH). In both the Gelb appellate opinion and the earlier Meritt superior court ruling the basis for the decisions was the identical analysis of the same two Arizona cases, Hancock and Cactus Wren.

 

My commentary will focus on the first issue: ARCAP 13(b)(3) that relates to the procedure for filing a cross-appeal. It involves some contradictory or vague wording as to when a party must file a cross-appeal. A cross-appeal is just an appeal brought by the other party, the appellee, raising its own issues for review. Gelb maintains that the HOA had to file a cross-appeal and it didn’t. The rule in question, ARCAP 13(b), reads:

 

3. The brief of the appellee may, without need for a cross-appeal, include in the statement of issues presented for review and in the argument any issue properly presented in the superior court. The appellate court may affirm the judgment based on any such grounds. The appellate court may direct that the judgment be modified to enlarge the rights of the appellee or to lessen the rights of the appellant only if the appellee has cross-appealed seeking such relief.

 

The Petitioner/Appellant believes that the appellate court enhanced the HOA’s rights above than was specified in the superior court decision, and the HOA had violated the rule. Therefore, the decision was invalid, without force. The Petition points out that the HOA raised the constitutionality issue not in its appeal of any issue in the OAH decision, but in its motion to dismiss. The HOA’s authority was simply to cite that a lower court, a trial court that does not set precedent for other cases, had decided the unconstitutionality of DFBLS. (Presumably, the Meritt superior court case, which was a default decision based on an even earlier superior court case, Waugaman, all brought by Carpenter et al. The appellate court accepted this argument.) Furthermore, in the Petition, Gelb pointed out that the issue of constitutionality was never subject to a presentation or discussion of legal arguments (much like the Meritt case) and was an abuse of discretion by the court.

 

It is interesting to note the time frame during which the Carpenter Hazlewood law firm attempted to get an opinion of unconstitutionality – all for the good of its clients, three different HOAs. (See The State of Arizona will not protect buyers of HOA homes! for links to documentation supporting the following). It is interesting to note that in Gelb, the HOA had won the DFBLS case, so why would it want to vacate that decision by filing a constitutionality challenge?

 

On Aug. 4, 2008 Meritt filed a complaint with DFBLS. On Aug. 8, 2008, Gelb filed an appeal of its OAH/DFBLS ruling. However, since nobody, but nobody, including Meritt, the AG, or the legislature responded to defend DFBLS it was decided rather quickly. In Meritt, on Oct. 10th, after the OAH decision on Oct. 3, 2008, Meritt had quit claimed his deed to Big Henge, but that didn’t stop Carpenter Hazlewood from filing an appeal to the superior court on Oct. 23rd. Meritt no longer had standing to sue, and the case was moot. Although Carpenter Hazlewood added John Hernandez as a co-plaintiff in the appeal, Hernandez did not file a complaint with DFBLS — he was not a DFBLS petitioner — only Meritt did, and so Hernandez also had no standing to sue.

 

This raises strong questions of violations of professional conduct rule 42, Candor to the Tribunal, E. R. 3.3. David Dodge, former Chair of the Disciplinary Commission for the Arizona Supreme Court, wrote about “Perjury Pitfalls” in the January 2006 issue of the Arizona attorney: “There are lines that lawyers cannot cross in their endeavor to increase ‘the bottom line,’ and their duty of candor toward the court cannot be sacrificed to please a client.”

 

Other events at DFBLS/OAH provide insights into the attempt by Carpenter Hazlewood to stop OAH adjudication of HOA disputes, where 42% of the complaints were won by the homeowner. On the same day of the ALJ decision, Oct 3rd, Carpenter sought an expansive order — the one he obtained in Meritt that applied the ruling to all HOAs — which was denied on Oct. 10th, the same day Meritt quit claimed his deed.

 

On Jan. 28, 2009, in the superior court appeal, Judge McMurdie ruled DFBLS unconstitutional, and upon request by Carpenter Hazlewood, reaffirmed on Feb. 24, 2009 that his decision applied to all HOAs. Ten days later, on Mar. 6, 2009, Carpenter Hazlewood filed its Motion to Dismiss in Gelb citing the trial court Meritt decision. (It was too late to file an amended complaint). Carpenter could not raise the constitutionality argument at the time the appeal was filed, back on Aug. 8, 2008. The Gelb appeal was necessary in order to obtain the elusive opinion that could serve as precedent in future cases.

 

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The supreme court has yet to accept the Petition for a decision. If it does and finds in favor of Gelb on the above issue, it will probably not entertain the real issue of the constiutionality of OAH adjudication. Its opinion would vacate the appeallate court holding and DFBLS/OAH would then be required, under law, to hear HOA disputes once again.