HOA adudication at OAH: a rebirth of constitutionality, abuse, and legislation

It seems that with the “rebirth” of Arizona administrative agency adjudication of HOA disputes in 2011, CAI and other the pro-HOA supporters want to stifle this due process protections that has leveled the litigation playing. Although not the answer to all issues, with its 42% win ratio favoring Pro Per homeowners, it is a very good start. In continued attempts to deny homeowners a fair and just hearing, the first OAH case in 2011 reveals a challenge to the constitutionality of the new statute, feeble as it may be. To better understand the issues at hand, let’s review the activity took place in two arenas in 2008: the courts and at the legislature.

1. Courts. After several prior years attempts to obtain a just hearing process in HOAs, a hard fought battle resulted in the passing of HB 2824 in 2006 that established OAH adjudication of HOA disputes. After a full year of complaints in 2007, 2008 started with several constitutional challenges to the new laws. Starting early in 2008 with Waugaman and the OAH appeal to the superior court, the new statute was found unconstitutional. At the close of the year the Merrit OAH case broadened the court ruling to apply to all HOAs. At the same time of Waugaman, Gelb filed an OAH Petition that resulted in an appellate court affirmation of the superior court ruling in 2010, making the ruling precedent.

2. Legislation. While the CAI attorneys attempted to end OAH adjudication, legislation was introduced in 2008 to stop the abuse of process at OAH, whereby the HOA attorneys were trying to make OAH just like a civil court proceeding with the formality of the rules of court. The two prominent bills, HB 2724 and SB 1162, were defeated, but they caused panic in CAI and with HOA attorneys. Among other things, these bills sought:

HB 2724

“notwithstanding any provision of the declaration, an amendment to the declaration is void and unenforceable against any unit owner who entered the association before the adoption of the amendment unless the amendment was approved by unanimous consent of all unit owners . . . .”

the association shall enforce that provision of the condominium documents against all other unit owners who can reasonably and readily be determined to be in violation. . . . the association bears the burden of proving that the association enforces that provision uniformly. . . . Any provision in the condominium documents that is not uniformly enforced pursuant to this section is deemed unenforceable for purposes of any pending enforcement action.

Except as expressly prescribed in this chapter, the requirements of this chapter including any rights conferred by this chapter shall not be modified by agreement or otherwise waived. A person shall not use any device to evade the limitations or PROHIBITIONS of this chapter.

SB 1162 (two separate issues presented)

A. Amendments. An amendment to the condominium documents does not apply to any court or administrative action filed before the amendment is adopted.”

B. Attorney fees – penalties.

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 any of the following:

1. Brought or defended a claim without substantial justification.

2. Brought or defended a claim solely or primarily for delay or harassment.

3. Unreasonably expanded or delayed the proceeding.

4. Engaged in abuse of discovery.

If the administrative law judge or court makes a finding pursuant to subsection C of this section, the administrative law judge or court may allocate the payment of attorney fees among the offending attorneys and parties . . . [This was designed to punish the abusers, the HOA attorney and HOA, as the homeowner was overwhelmingly a Pro Per.]

“without substantial justification” means that the claim or defense constitutes harassment, is groundless and is not made in good faith.

Please bear in mind that, “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).

Are we seeing a second attempt at abuse of process in OAH adjudication? Today, the first Petition was challenged with a feeble constitutionality challenge. Of the first 3 Petitions filed, 2 resulted in the quick use of a civil court permitted Motion to Dismiss being filed with one Petition having already been dismissed. In the newest Petition, filed just last week, the HOA has not yet responded. As I have previously written, the other Petition appears to be proceeding with a pre-hearing conference, where I suspect a discussion of the Motion to Dismiss will occur. The OAH records are not clear. From the OAH stated purpose of pre-hearing conferences and topics for such a hearing (A.R.S. § 41-1092.05(F)), it seems the question of OAH jurisdiction will be raised a a legal matter – “Clarify or limit procedural, legal or factual issues.”

If this is indeed the case, using motions to dismiss to over-power the homeowner and to avoid any audiotape record of the hearing — an invaluable resource not readily available in trial court proceedings — I strongly urge that legislation be introduced as indicated above to put a stop to this abuse. Legislation to stop “ex post facto” amendments, which is a violation of Constitutional restrictions, must be proposed and sponsored in January.

If, on the other hand, the Petitions did not conform to the statutes for OAH adjudication, then all those looking to file a Petition must read the OAH letter from its Director addressing homeowners in HOA proceedings — Homeowner Petitions Against An Association. A must read for all.

Published in: on October 16, 2011 at 10:35 am  Comments (2)  
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  1. […] among others include such topics as, HOA email ‘meetings’ – intent of the law — bad faith HOA adjudication at OAH: a rebirth of constitutionality, abuse, and legislation Legal-academic aristocrat – advocate exchange on HOA bad faith conduct HOA boards cannot escape […]

  2. […] challenged this assumption (sadly, they were defeated). See Arizona HOA cases update — OAH and HOA adjudication at OAH: a rebirth of constitutionality, abuse, and legislation. There is no reassurance that justice will be done by this procedure — this is NOT civil […]

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