What led to the AZ supreme court constitutionality challenge to HOA adjudication?

Ever wonder how and why this statute granting DFBLS the right to submit HOA disputes to an ALJ for adjudication was challenged as unconstitutional?

Chris Gelb filed her petition (08F-H088012-BFS, Apr. 22, 2008) with DFBLS citing violations of her governing documents, and  a violation of the duty of directors under Title 10, 10-3830, as well as a violation of §§ 6.12 and 6.13 of the common law Restatement of Servitudes (2000 ed.). 

In general, Sec 6.12 deals with the authority of the court to overturn board decisions, and 6.13 deals with duties of the board to its members.   Gelb alleged discrimination against her in regard to a landscaping issue –  the type of gravel chosen by the board.   Gelb lost on the legal technicality that  the  “no discrimination” covenant applied only to the CC&Rs and not to the Design Guidelines.  (Raises the question as to why the winners, Carpenter, filed the constitutionality challenge).

She lost the case on the governing documents claim, and the other two were dismissed as being outside  OAH jurisdiction. The broader issues of a rational and equal treatment of members found in both of the dismissed claims would have probably brought about a favorable decision.  

The superior court decision in Phoenix  Townhouse v OAH, DFBLS had just declared the statute before us as unconstitutional, and Jason E. Smith, the Carpenter Hazlewood attorney of record in both cases, jumped at the opportunity to obtain an appellate decision, using Gelb,  that would serve as precedent.  All as a result of the gravel chosen by the HOA board.

Justice will still be lacking without the ALJ being able to consider these two important areas of law affecting HOAs. 
Published in: on January 24, 2011 at 1:12 pm  Comments (1)  
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  1. The limited authority of Administrative Law Judges (Office of Administrative Hearings) to only interpret and enforce Arizona statute (Title 33, Chapters 9 and 16) and an association’s documents is too restrictive.

    The department’s authority should include well settled Arizona case law (1) and the Restatement of the Law (3d) of Property – Servitudes (2) as found in the following:

    (1) Johnson v. The Pointe Community Association, Inc., 205 Ariz. 485, 73 P.3d 616 (2003) [example of well settled case law relevant to association governance]

    (2) Equal Treatment (not found in Title 33 and too often not found in an association’s governing documents)

    As there is merit to authorizing DFBLS, OAH and its ALJs to interpret and enforce well settled Arizona case law and the Restatement (Servitudes), the authority should be included in SB1148.

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