Narrow interpretations of HOA law and Rule 11(a): CAI game plan?

 In order to understand CAI’s adversarial position to homeowner reforms and its activities to promote litigation challenges, we need to look into its activities and not its lofty pronouncements. As you know, Rule 11(a) requires that the attorney perform a reasonable inquiry into the genuine issues of law or fact of the HOA allegations before undertaking any law suit. (See HOA attorney failure to inquire into merits of a complaint — R Civ P. 11(a)). We can get a good idea of CAI’s motivations for pursuing litigation from its activities with respect to HOA reform laws.

In spite of strenuous opposition by advocates, the sponsor, Arizona Rep. Montenegro, pursued this bill, HB 2441, to the very last floor vote before it was soundly defeated. (See CAI soundly thrashed by Arizona Senate). His support for this disgraceful bill can only stem from 1) that he is true believer in the New America of HOA-Lands, or 2) that he succumbed to the heavy influence of the national trade organization, CAI.

Advocates had attempted to inform Montenegro and the legislators of CAI’s real intent, which was not the betterment of the community or the state of Arizona, but its own self-interests – control of the HOA landscape.  As further evidence of this opposition to the intent of the law, the former CAI chapter president and lobbyist, Scott Carpenter of Carpenter Hazlewood, released examples of what could be seen as “how HOAs can get around the law.”

In my comment to New Arizona laws for 2011 session — thanks to the legislators, I critique Carpenter’s “reasonable rules” that HOAs may impose on the recording of HOA meetings, the new HB 2445 law. One is a 24-hour prior written notice to the board, which can easily “disappear” at its convenience. Also, among is “reasonableness” are that all recordings must be on tripods and must use batteries – seems contradictory with respect to its stated concerns about safety issues. And that the HOA has a right to obtain a copy of the recording – at a reasonable cost. H’mmm, maybe the feel paranoid and that its own recordings won’t capture everything? Or is he just putting up obstacles “to make life difficult?”

Again, a CAI attorney, Carolyn Goldschmidt, takes up another controversial issue with respect to applicability of Title 10 statutes for nonprofit corporations and Title 33 statutes on HOAs and condos. (By the way, the resurrected statutes for ALJ adjudication of HOA disputes, SB 1148, does not permit the ALJ to decide issues outside of Title 33). Basically, does ARS 10-3708 or ARS 33-1812 control the holding of HOA elections and meetings? In an attempt to avoid the HOA statutes with respect to meetings and elections, Goldschmidt narrowly argues that an election without a meeting is valid under Title 10. Yet Title 33 contains strict requirements for meetings and elections – notice, ballot, agenda and quorums.

The HOA held an election that was not part of the meeting, as it claims, and the subsequent meeting just counted the votes but took no action. Say what? Isn’t a “certification” or a counting of election results at an annual meeting an “action”? And, as Goldschmidt well knows as she had participated in several OAH complaints, this dispute would not fall under the Office of Administrative Hearings jurisdiction by an ALJ. (And neither would the other very important common laws found in Chapters 6 and 3 of the Restatement (Third) of Property: Servitudes).

It is these actions in the real world and not the pontifications by CAI and it seminars, conferences, articles, columns or interviews that reflect what CAI is all about. That reflect CAI attorney pursuits of litigation, advertising and advising loopholes in the laws using narrow interpretations of the law, which can be highly questionable under Rule 11(a). And it is not about principles of democratic government within the New America of HOA-Lands or making for a better America or community, its about power over the HOA second form of political government. And attorney fees.

If charged with violating Rule 11(a), and so judged, can the HOA file against the attorney for its attorney fees?

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Published in: on May 6, 2011 at 12:51 pm  Comments (2)  
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  1. […] Institute – CAI. Many of these laws, in addition to a narrow reading for questionable Rule 11(a) litigation,  use phraseology leading the reader to believe that HOAs are fair, just and democratic […]

  2. “In order to understand CAI’s adversarial position to homeowner reforms and its activities to promote litigation challenges, we need to look into its activities and not its lofty pronouncements.

    We can get a good idea of CAI’s motivations for pursuing litigation from its activities with respect to HOA reform laws.”

    Too many filechurning members of the “association bar” are notorious for pursuing frivolous, bad-faith, abusive litigation against their corporate clients’ individual homeowner members aided and abetted by largely uninformed bobble-headed boards of directors unable or unwilling to simply say “No” to the malfeasant who happen to carry a bar card.

    Consider the wisdom of an associate attorney’s comments (Carpenter, Hazlewood, Delgado & Wood, PLC, a charter member of TGTCSS) published April 18, 2011 on a Tucson homeowner association website’s “Discussion Form” re SB1148, DFBLS, OAH, administrative forum to hear contested matters between associations and their members and his “excitement (sic)” at the flood of new cases to defend as a consequence of the resurrection of the still “wanting (still unconstitutional?)” administrative hearing.

    “I never said I did not want an administrative forum to hear complaints. You simply believed that because I’m on the “other side” from you. But what the state has provided, twice now, leaves a tremendous amount wanting, not the least being the constitutional validity of the program. The filing fees were outrageous, and homeowners often got burned in the process and ended up going to court after a debacle in the administrative forum. I don’t expect anything different this time around because the Department of Fire, Building and Life Safety has no interest or expertise in HOA issues, and it will have to recover enough in filing fees to pay the administrative law judges in the Office of Administrative Hearings to conduct the adjudications, just like last time.

    It is not impossible for you to give legal advice – it is just illegal to do so. But what we do on this forum is not giving legal advice because neither of us have clients we are representing. We are just debating legal issues. That’s a critical difference. As a result, threats to report me to the bar are meaningless and petty, and the same can be said about your emails to my managing partner complaining about my postings here. But it seems you now are a bit more willing to engage in a debate on the issue.

    I will discuss the administrative hearing process with anyone at anytime, including anyone of the names you dropped in your prior post. Unfortunately, no one bothered to ask my opinion during the debate on the bill even though it was my case that brought down the system previously. I’m as excited as anyone about the resurrection of the process because I will have a new flood of cases to defend. I am not so excited for my clients, who will be dragged through the process over the most petty of violations just so some homeowner can say “I told you so.”

    Maybe the state legislature will continue to tweak the system to make it constitutionally valid. Maybe you could lobby them for that since you so ardently believe that homeowners need this forum.” Jason Smith, CHD&W, April 18, 2011

    Sadly, and all-too often, the association’s attorney is as equally uninformed as his/her client or has simply failed to inform himself/herself about the facts of their client’s “case,” the applicable law and/or has failed to determine if he/she can make a good faith and non-frivolous argument in support of their client’s “complaint.”

    Smith’s “keen understanding” of the DFBLS’s petition filing requirements and the OAH’s function…”I saw several owners pay $2,000 filing gees only to be told by the administrative law judge that they did not have authority to hear the case as they filed it…” is belied by the Department’s (DFBLS) Petition and Response and its Rules for the Office of Administrative Hearings. Further, Smith’s uninformed comments defy credulity and suggest his “motivation for pursuing litigation” is neither meritorious nor offers a good faith non-frivolous argument for the extension, modification or reversal of law but rather resounds in music to the filechurner’s ears, the ringing of his/her law firm’s cash register.

    The filing fee paid to the DFBLS ($550 single complaint petition versus $2,000 for multiple complaint petition [no limit…2, 3, 4, 5…or more] is the only fee and/or department cost to petitioners.

    The filing fee for a civil complaint in the Superior Court is $301 (effective 4/15/10). There is no limit to the amount of attorney fees and costs following the initial filing fee ($5,000; $10,000; $15,000; $25,000; $50,000; $100,000 or more) as evidenced by the “association bar’s” most practiced filechurners.

    The filing fee for a civil complaint and summons in the Scottsdale Justice Court is $80. There is no limit to the amount of attorney fees and costs following the initial filing fee.

    The filing fee for a Small Claims Complaint (Justice Court – Small Claims) is $38

    “And the procedural issues can be just as tricky as in court, so tackle it without an attorney at your own risk.”

    The “tricky” OAH Prehearing and Hearing Procedures may be found in the Arizona Administrative Code rules R2-19-101 thru R2-19-122, twenty-two (22) easy to read and easy to understand procedural rules by those capable of a modicum of comprehension while distressing to those suffering from WSD (word sense disambiguation) as evidenced by far too many lawyers. (See Ekmark’s Administrative-law cases not considered actions and the successful 91% of unrepresented lay petitioners [21/23] in 23 of 46 decided matters.)

    Administrative-law cases not considered actions, The Arizona Republic, June 30, 2007, Curtis Ekmark:

    “Administrative-law cases differ from traditional litigation…not considered actions, therefore, the Rules of Civil Procedure and the Rules of Evidence many not apply…Attorney’s fees may not be recoverable pursuant to the statutes as these hearings are not considered actions.”

    How can you tell a lawyer is lying? Other lawyers look interested.

    “Compared to court filing fees of less than $100 for justice courts and about $300 for superior courts, it’s not really reasonable,” gives dissembling a bad name.

    Of the 66 individual homeowner petitions filed with the DFBLS (not a single petition filed by an association) and heard by the OAH from November 3, 2006 thru August 11, 2008 (a miniscule fraction [0.0090%] of the 7,360 cases heard by the OAH in 2006), 89.40% of the Petitioners (homeowners) appeared pro se (unrepresented by counsel) while 100% of the Respondents (associations) appeared represented by counsel (one, two, three or more lawyers); homeowner petitioners were the prevailing party in 23 (50%) of the contested matters; associations and their lawyers were the prevailing party in 23 (50%) of the contested matters; the remaining 20 contested matters were settled or vacated on or before 08/11/08.

    The OAH record (disposition of the first 66 petitions) belies the “association bar’s” proclamation that “95% of all HOAs are good” (at least 50% were adjudicated “bad”), that SB1148’s predecessor (HB2824, 47th Legislature, 2nd Regular Session, 2006) would overwhelm the DFBLS and OAH with homeowners’ “frivolous” complaints (less than one percent of the OAH’s 2006 hearings) and, presumptively, homeowners’ contested matters are either best suited to the Superior Court or are simply best suited to the “association bar” and “expensive litigation (sic)”…when pigs fly.

    Perhaps not informing oneself respecting the DFBLS/OAH facts and truth re association contested matters is reflective of the civil practice of members of the “association bar” or is a seemingly unimportant quaternary skill of far too many lawyers.

    Diogenes the Cynic, searching for an honest member of the “association bar,” would be sadly disappointed.


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