AZ House committee fooled into rejecting HOA attorney fee restraint – SB1289

Dear Arizona House LIA Committee members:

Allow me to clarify the background of this bill, SB 1289, as I, a non-lawyer, see it.

There is a notorious case ((Terravita) in which an HOA amended its CC&Rs to specifically be awarded attorney fees if it won a hearing before OAH Office of Administrative Hearings).  This covenant in the CC&Rs flies in the face of existing law and should have been rejected by the HOA’s attorneys who are CAI members.  In Semple v. Tri-City Drywall (1992) the court held,

May the trial court pursuant to ARS 12 341.01(A) award to the prevailing party attorney’s fees incurred in the proceedings before the Registrar of Contractors? We hold that the statute does not provide for such an award . . ..” [1]

In Brown v. Terravita [2] the AZ appellate court held,

we have found no authority -including the plain language of the statute — to support the notion that the Legislature intended to integrate A.R.S. § 33-1805 as part of the declarations, bylaws, articles of incorporation, and rules of all planned communities.”

However, this decision was ignored, apparently, by the CAI attorneys. Terravita’s 2013 CC&Rs amendment flaunted Arizona law.

“Attorneys’ Fees in Administrative Proceedings. In the event the Association incurs legal expenses and costs . . . in an administrative action or proceeding, including but not limited to, proceedings before an Administrative Law Judge, and any appeal thereof, the Association shall be entitled to recover its attorneys’ fees . . . if the Association is a prevailing party in such action . . . .”  (Article XVII, Section 17.08(4) Terravita CC&Rs).

This is a prime example of the use of a private contract to get around constitutional protections, like the equal protection of the law and due process.  The bill would prevent HOA attorneys from amending CC&Rs to bypass state laws, and claim legitimacy because of the private contractual nature of the CC&Rs.  The bill prohibits any such CC&Rs provisions.

The HOA amendment procedure makes use of the “deprivation of owner rights” amendment clause in the CC&Rs whereby a person’s property rights are damaged without his consent.  Another private nature of HOAs that stands in sharp contrast to constitutional protections against eminent domain takings and the 14th Amendment.

Only a judge can award attorney fees!  In Brown the court acknowledged this covenant, “That provision authorized fee awards to prevailing parties in actions instituted to enforce the CC&Rs.” The covenant was not addressed by the court as Brown did not claim a violation of the CC&Rs, but of state law.

Now comes CAI strongly opposing SB 1289, apparently seeking to prohibit the use of this private contractual devise to bypass constitutional protections.     SB 1289 prevents the (OAH) Administrative Law Judge and Commissioner from awarding attorney fees to HOAs. It has long been the policy and law of OAH not to award attorney fees, as attorneys are not required.  But, HOAs like to hire attorneys and if the HOA loses, who pays the attorney?  Attorney fees are awarded by civil courts if the complaint involves a contractual dispute and the contract allows for attorney awards.  General favoring the HOA and silent if the homeowner wins.

Here are those CAI/AACM members plus CAI stalwarts who opposed the bill (from the RTS records).  Only 4 affiliations are not identified. AACM is the CAI trained managers in the CAI School of HOA-Land:

“Kathe Barnes, Self(01/31/2017); Jason Barraza, AZ ASSN OF COMMUNITY MANAGERS (AACM)(02/01/2017); Kayte Comes, Self(02/01/2017); Quinten Cupps, Self(02/27/2017); Kevin DeMenna, COMMUNITY ASSOCIATIONS INSTITUTE(01/31/2017); Ryan DeMenna, COMMUNITY ASSOCIATIONS INSTITUTE(01/31/2017); Connor Doyle, Self(02/28/2017); Mary Jo Edel, Self(02/28/2017); William Eisert, Self(02/27/2017); Carolyn Goldschmidt, Self(01/31/2017); Clint Goodman, Self(02/06/2017); Julia Holland, Self(02/27/2017); Mark Holmgren, Self(02/07/2017); Matthew Johnson, Self(02/24/2017); Spencer Kamps, HOME BUILDERS ASSOCIATION OF CENTRAL AZ(02/01/2017); Lynn Krupnik, Self(01/29/2017); Mark Lane, Self(02/01/2017); Linda Lang, Arizona Association Of Community Managers(02/01/2017); Brian Morgan, Self(02/01/2017); Jeff Sandquist, AZ ASSN OF COMMUNITY MANAGERS (AACM)(02/01/2017); Vicki Sears, Self(02/01/2017); Adrianne Speas, Self(02/01/2017); Mark Wade, Self(02/01/2017);”

Unstated affiliations:

Barnes (CAI member), Comes (CAI chapter staff), Cupps (CAI member), Doyle (CAI member), Edel (CAI member), Wisert, Holland (CAI member), Holmgren, Johnson, Krupnik (CAI lawyer), Lane, Morgan (CAI lawyer), Sears (CAI member), Wade (CAI chapter president).

 Unidentified as CAI lawyers: Goldschmidt, Goodman, Krupnik, Speas, and Morgan.

 

Notes

  1. Semple v. Tri-City Drywall, 838 P.2d 1369 (Ariz. App. Div.1 1992).
  2. Brown v. Terravita, CA-CV 14-0455 (Ariz. App. Div. 1 2015).

 

 

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Published in: on March 1, 2017 at 4:52 pm  Comments (2)  

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2 CommentsLeave a comment

  1. Request the Chairman move reconsideration of SB1289 on any subsequent LIA Committee agenda (on or before March 22, 2017).

    House Rules: 9.C.3

    The committee chairman (presiding officer) other than the chairman of the Committee on Rules shall prepare an agenda and distribute copies to committee members, the Information Desk and the Chief Clerk’s Office by 5:00 p.m. at least five days before the committee meeting. Absence of a bill, memorial or resolution from the committee agenda will prohibit its consideration unless unanimous consent of all committee members is obtained. Unless a reconsideration motion has been offered and failed, a chairman may place a measure that failed in committee on any subsequent agenda.

    WMB

  2. Thank you–can I do something?


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